Real Estate's Biggest Industry Lobbyists Tell Us What Will Be In The Next Stimulus Bill
All eyes are on Washington this week as legislators debate the details of the next coronavirus relief bill.
But with the clock running out before the CARES Act expires at the end of July, it’s looking less likely that the industry will have any answers before the first or second week of August.
“There’s no possibility of getting it together in the next two days: We’re going to hit the cliff,” National Multifamily Housing Council President Doug Bibby said on the Walker & Dunlop weekly webcast.
This week, Walker & Dunlop CEO Willy Walker brought together the heads of three of the largest real estate industry lobbying groups: Bibby, Mortgage Bankers Association CEO and President Bob Broeksmit, and Real Estate Roundtable founder and CEO Jeff DeBoer.
All three were in agreement that the Democratic House of Representatives and the Republican-held Senate would not be able to come to a consensus on a new stimulus bill before August. They expect that Congress will enact a temporary extension of the CARES Act, with a new bill coming around Aug. 8 or Aug. 15.
The Republicans’ proposal, unveiled earlier this week, sets aside $1 trillion in stimulus funds, far less than the Democrats, who proposed a $3 trillion stimulus in the HEROES Act in May. The final number is expected to land somewhere in the middle: Bibby and Broeksmit predicted a $1.75 trillion package, while DeBoer estimated $2 trillion.
“The real question, though, is how those funds are being allocated,” DeBoer said. “Are they going to solve COVID-related problems, or solve issues that were pre-existing?”
The Democrats’ proposal would renew the $600 weekly supplement to unemployment insurance that was packaged in the CARES Act, extending the benefit through at least January 2021. In the real estate world, those extra funds are seen as crucial to keeping renters, landlords and lenders afloat in the current economic climate.
Congressional Republicans argue that extending such benefits may keep Americans out of the workforce, and have proposed to cut the supplement to $200 per week, but send out another round of $1,200 stimulus checks to American households.
While the supplement cut would be a blow, the Republican proposal does have one component that is very attractive to many in the real estate industry: an end to the federal eviction moratorium for buildings with government-backed financing, which make up around 70% of the American multifamily market.
On the webcast, Walker decried the eviction moratorium for breaking down the relationship between landlords and their tenants, predicting that an extension of the moratorium would mean more tenants simply refusing to respond to their landlords and fewer landlords trying to work through financial problems with their tenants.
“When you have an eviction moratorium, there is a propensity for people to go dark on you,” Walker said. “The owner and tenants stop working with each other. You lose the ability to maintain your community.”
Bibby argued that while an eviction moratorium may seem appealing to the media and political constituents, it creates a cycle of disinvestment and puts the livelihoods of tens of thousands of owners across the country at risk. However, he added that, given the choice between cutting the $600 per week unemployment supplement to $200 and keeping the eviction moratorium, he would keep the moratorium.
“[The Republican proposal] is not a good bill for the multifamily industry,” Bibby said. “Renters are operating with a very thin margin. If you cut unemployment to $200 per week, rent is now vying with food, healthcare, car payments and whatever other costs renters have. It would put a lot more stress on the system.”
Broeksmit above all recommended that legislators not quibble over exactly how the stimulus money is allocated, but make sure that they don’t let stimulus funding disappear for even a day.
“An imperfect compromise is going to emerge, and that’s all right because we need to get the funding out quickly,” Broeksmit said. “Some people are going to make too little, some people are going to make too much. We don’t have time to get it perfect.”
In addition to putting cash in the hands of Americans, the new stimulus bill will also cover funding for businesses. According to DeBoer, the Real Estate Roundtable has been advocating for a more robust rental assistance program for small businesses. He has also been pushing to change rules surrounding Paycheck Protection Program loans: currently, PPP recipients are required to spend 75% of their funding on payroll expenses, a proportion that DeBoer and his team are trying to lower.
“We’ve very much been focused on it from the get-go,” DeBoer said. “We’re not trying to take more from people who need jobs, but provide businesses with flexibility. Maybe they have to pay their rent and utilities to stay afloat. I think we may see additional flexibility in the new bill.”
The bill will likely offer some sort of liability protection to businesses that bring their employees back into the office, or against lawsuits that would claim damages for having contracted the coronavirus on a business’s premises.
But while the new stimulus bill will have wide-ranging repercussions, Bibby, DeBoer and Broeksmit agreed that much of the recovery effort will depend on who wins the upcoming election. The president in 2021 will be able to choose staff for the recovery and marshal enormous funding to bail out Americans, especially if the president’s party also controls the House and Senate.
When asked to predict the outcome of the 2020 election, Bibby and Broeksmit both said former Vice President Joe Biden would come out on top. The latter two also predicted that Democrats would sweep the House and Senate, giving them a mandate to reform tax policy and make other sweeping legislative changes.
DeBoer said that if the election were held today, Biden would likely win, but that there is still a long road to November.
Next Wednesday, the Walker Webcast will take a hiatus as Walker & Dunlop announces its Q2 earnings.
This feature was produced in collaboration between the Bisnow Branded Content Studio and Walker & Dunlop. Bisnow news staff was not involved in the production of this content.