'They're Playing A Dangerous Game': CRE Leaders On Congress Leaving Without Passing Relief Bill
WASHINGTON, D.C. — Senators left the nation's capital this week without passing another coronavirus relief bill, and they are not scheduled to return until after Labor Day.
Commercial real estate leaders, who last month expressed strong confidence that Congress would pass a bill before leaving for recess, are upset with the legislative body's failure to act and concerned about what it could mean for the industry.
"It was very surprising to me that they basically put down pencils and went home," said Walker & Dunlop CEO Willy Walker, a commercial real estate finance leader who regularly speaks with national politicians about issues affecting the industry.
Peebles Corp. CEO Don Peebles, a prominent developer and Democratic donor who met with President Donald Trump shortly after the 2016 election, said it was "irresponsible and inconsiderate" for Congress to leave while millions of Americans remain unemployed.
"The American people can not take a vacation from the impact of this pandemic and therefore Congress should not leave until they come up with a solution that provides economic support for the American people," Peebles wrote in an email to Bisnow. "The plan must also provide critical support for small businesses so they can survive and get through this crisis while continuing to provided jobs and services to the American people."
Another 963,000 Americans filed for unemployment in the week ended Aug. 8, and the total number of people collecting unemployment benefits was 15.5 million, the Wall Street Journal reported. The weekly and total figures are down from this year's peak, but they are still well above the worst of the Great Recession, when the number of people receiving unemployment benefits peaked at 6.6 million.
Trump signed a series of executive actions last weekend that extended the weekly enhanced unemployment assistance — but reduced it from $600 to $400 a week — delayed payroll tax collection, deferred student loan payments and told agency heads to consider halting evictions. Real Estate Roundtable CEO Jeff DeBoer, one of the industry's most influential lobbyists, said these steps aren't enough.
"The presidential executive orders are positive measures, but they are not a full substitute for legislation," DeBoer said. "Legislation that builds on the short-term relief enacted this spring is sorely needed."
Walker also said the executive orders are insufficient, and he still believes Congress will pass a bill when it returns in September.
"It's still my hope and expectation that we get something from Congress, but I also think that they're playing a dangerous game," Walker said.
Walker praised the early action Congress and the Federal Reserve took at the start of the crisis to put liquidity in the market, but he said they have now failed to follow up on that action.
"To now all of the sudden go into defensive mode or, 'Let's wait and see how bad it gets,' that's disappointing because I don't think that there's anybody out there who doesn't think that, with more than 14 to 15 million Americans still unemployed, that we're not going to see a significant deterioration in a multitude of financial metrics if they don't do something on a more broad basis to put liquidity into the American taxpayers' pocketbook," Walker added.
The apartment industry has pointed to the federal unemployment assistance as a primary reason that rent collections have remained strong. Nearly 80% of renters had paid August rent by Aug. 6, despite the expiration of the unemployment assistance in late July, according to the National Multifamily Housing Council.
NMHC Chairman David Schwartz said the CARES Act benefits expiring could potentially worsen the housing affordability crisis, and he said the executive orders are not enough.
"While President Trump announced executive orders relating to rental assistance and continued unemployment benefits, it is unclear when and if those resources will be available to families," Schwartz said in a statement. "NMHC continues to urge the Trump administration and Congressional leaders to restart negotiations and reach a comprehensive agreement on the next COVID relief package."
Walker said he has been pleasantly surprised by the consistent collections numbers, but he worried what the prolonged period of high unemployment and reduced federal assistance could mean in the coming months.
"Nobody really knows what the step down from $600 to $400 means as it relates to rent payments and how much money people have to pay rent," Walker said. "The question is: What happens in September and October if you don't have additional stimulus? There's no way you can think rent rolls will hold up the way they have without additional stimulus given the number of Americans who are still unemployed."
When Congress returns in September, not only will it be less than two months from an election, it will have another looming, high-pressure deadline. Congress must pass a funding bill by Sept. 30 to avoid another government shutdown.
"Congress will face even greater relief needs when they return in September, but at the same time politics will make negotiations even more difficult," DeBoer said.
Walker said the election could push Congressional leaders to pass a bill to show voters that they took action on the crisis, but given their surprising failure to pass something before leaving for recess, he said nothing is a guarantee.
"I think the writing is on the wall that they have to get something done," Walker said. "At the same time, they clearly think August can come and go and that the economy and that businesses and individuals can survive without stimulus money. Maybe they know more than I do, because I would have thought they'd already have felt the pressure to pass something."
