Energy Efficiency & Dodd-Frank Regulations

  • REAL ESTATE ROUNDTABLE LEADERSHIP – Taubman Succeeds Neidich as Roundtable Chairman for FY2013, Urging Real Estate to be “Pro-Active” on Legislative Priorities Including Job Creation, Deficit Reduction, Tax Reform; Fed Extends “Operation Twist” as it Lowers Economic Growth Forecasts
  • ENERGY EFFICIENCY POLICY – Shaheen, Portman Seek Senate Action on Bipartisan Efficiency Bill With Provisions on Non-Regulatory Building Energy Targets, Retrofit Loan Guarantees
  • DODD-FRANK REGULATIONS – Derivatives End-Users Continue to Press for Clear Exemptions from Dodd-Frank’s Margin, Inter-Affiliate Swaps Requirements; Senators Concerned about Risk Retention Regs’ Potential Impact on CRE Credit Flows  

REAL ESTATE ROUNDTABLE LEADERSHIP

Taubman Succeeds Neidich as Roundtable Chairman for FY2013, Urging Real Estate to be “Pro-Active” on Legislative Priorities Including Job Creation, Deficit Reduction, Tax Reform; Fed Extends “Operation Twist” as it Lowers Economic Growth Forecasts

At The Roundtable’s 2012 Annual Meeting last week, real estate industry and trade association leaders elected Taubman Centers, Inc. Chairman, President and CEO Robert S. Taubman to succeed Dune Real Estate Partners CEO Daniel M. Neidich as the organization’s chairman. The new 21-member board andincoming leadership of The Roundtable’s policy advisory committees begin their terms on July 1.

Eagle x225 _8244

Taubman Centers, Inc. Chairman, President and CEO Robert S. Taubman, left, will succeed Dune Real Estate Partners CEO Daniel M. Neidich as The Roundtable’s chairman on July 1.

“It’s been a real privilege to work with our dedicated board and Washington staff these past three years,” said Neidich, who became Roundtable chairman in July 2009. “Together, we have weathered the worst of the financial storm and Great Recession, and our industry continues its slow but steady recovery,” he continued. “The organization we have built for more than a decade — which continues to grow in stature in Washington’s policymaking circles — is in very good hands with Bobby Taubman, and I am honored to place its future in his very capable hands.”

As a token of appreciation for his leadership, Neidich was presented with a bronze statue of an eagle in flight —entitled “Vigilance.”

Taubman takes The Roundtable’s helm amid renewed concern over the slow pace of job creation and economic recovery, and escalating concern over potential fallout from eurozone debt problems (including the potential equities market volatility that could affect commercial mortgage-backed securities [CMBS] spreads and real estate market liquidity). [The Federal Reserve this week downgraded its projections for U.S. economic growth, opting to extend its “Operation Twist” program to year-end in order to put continued downward pressure on long-term interest rates and, hopefully, facilitate borrowing by businesses and consumers.]

Robert Taubman Roundtable Podium x200 _8233

Taubman said the industry will “need to be pro-active” on its legislative priorities, “whether the focus is deficit reduction, tax reform, energy efficiency or building security matters.”

“I’m really honored to have been asked to lead this incredible organization,” Taubman said at last week’s meeting, noting that The Roundtable “successfully addressed many pressing issues” under Neidich’s three-year tenure. “During a time when the markets and economy seemed ready to shut down, Dan kept us focused on our core issues of tax, sustainability, capital and security,” he continued.

To foster a broad recovery in commercial real estate and ensure a positive result on major policy issues awaiting action in Washington, Taubman said the industry will “need to be pro-active” on its legislative priorities, “whether the focus is deficit reduction, tax reform, energy efficiency or building security matters.”

New to the board for FY2013 are:

 Real Estate Roundtable members Richard B. Clark (Brookfield Properties Corp.), Ross Perot, Jr. (Hillwood), and Robert J. Speyer (Tishman Speyer)

 Trade association leaders Tim Byrne (Lincoln Property Company), who is an Executive Committee Member of the National Multi Housing Council (NMHC); Theodore (Ted) Eliopoulos (CALPERS), who is chairman of the Pension Real Estate Association (PREA); Brad M. Hutensky (Hutensky Capital Partners), the new chairman of the International Council of Shopping Centers (ICSC); and Nancy Johnson (Carlson Hotels), chair of the American Hotel & Lodging Association (AH&LA).

Six national real estate trade associations (out of a total of 17 that hold permanent membership in The Roundtable) are represented on the board in any given year. National Association of Real Estate Investment Trusts (NAREIT) Chairman Donald Wood (Federal Realty Investment Trust) and National Association of Realtors (NAR) President Maurice Veissi will remain on the board for FY2013.

FY2013 Board of Directors - IMAGE

Download a full list ofFY2013 Real Estate Roundtable board members – pdf

Also staying on the board this year: William C. Rudin (Rudin Management Company, Inc.), who will continue to serve as Roundtable Secretary; Thomas M. Flexner (Citigroup), who will serve as Roundtable Treasurer; Debra A. Cafaro(Ventas, Inc.); Michael Fascitelli (Vornado Realty Trust); Roy Hilton March(Eastdil Secured); Scott Rechler (RXR Realty); Richard Saltzman (Colony Capital); and Douglas W. Shorenstein, (Shorenstein Properties LLC).

Stepping down from the board next month are former Roundtable Chairman Christopher Nassetta (Hilton Worldwide) and Roundtable members Jeffrey Schwartz (Global Logistic Properties) [who served as Roundtable Treasurer], and Martin E. (Hap) Stein, Jr. (Regency Centers Corp.).

Also leaving the board are American Resort Development (ARDA) Chair Don Harrill (Orange Lakes Resorts), ICSC Chair David Henry (Kimco Realty Corp.), Mortgage Bankers Association (MBA) Immediate Past Chair Michael D. Berman (CWCapital), and BOMA International Chairman and Chief Elected Officer Boyd R. Zoccola (Hokanson Companies, Inc.).

FY2013 Committee Officers - IMAGE

Download a full list ofFY2013 Real Estate Roundtable policy advisory committee leadership – pdf

Neidich thanked the outgoing board for their invaluable contributions, saying their collective energy, wisdom, and industry experience were “instrumental in helping The Roundtable navigate the twists and turns of the past year, and a decisive factor in the policy achievements” being reported to the membership at the close of the fiscal year.

At the same time, Taubman welcomed the insights, diversity and breadth of the new board — which he said would help The Roundtable “continue to evolve into an organization for the real estate industry that offers a perspective on big-picture policies that cut across asset type and entity classification.”

Roundtable members last week also approved a new slate of leaders for the Sustainability Policy Advisory Committee (SPAC); Real Estate Capital Policy Advisory Committee (RECPAC); Research Committee; Tax Policy Advisory Committee (TPAC); and Homeland Security Task Force (HSTF).

# # #

Return to Top


ENERGY EFFICIENCY POLICY

Shaheen, Portman Seek Senate Action on Bipartisan Efficiency Bill With Provisions on Non-Regulatory Building Energy Targets, Retrofit Loan Guarantees

Senators Jeanne Shaheen (D-NH) and Rob Portman (R-OH) on Tuesday held a press conference to call for a Senate vote this summer on their bipartisan energy efficiency bill (S. 1000), which cleared the Senate Energy Committee last summer on an 18-3 vote and on which The Roundtable has provided significant input.

Shaheen_Portman

 Senators Jeanne Shaheen (D-NH) and Rob Portman (R-OH) called for a Senate vote this summer on their bipartisan energy efficiency bill (S. 1000)[Watch video of the press conference]

The bill has a diverse base of support, including companies such as United Technologies Corp., business organizations such as the U.S. Chamber of Commerce, and nonprofit advocacy groups such as the Alliance to Save Energy, the Air-Conditioning, Heating and Refrigeration Institute, the American Chemistry Council, the National Electrical Manufacturers Association, and the National Association of Manufacturers.

A study released last month by the American Council for an Energy-Efficient Economy (ACEEE) calculated that the bill would spur the creation of 80,000 jobs by 2020 and 159,000 jobs by 2030 — a combination of direct jobs in construction and manufacturing of efficient products, indirect jobs at companies such as equipment wholesalers, and jobs induced by the infusion of money into the economy by newly hired workers. The study also concluded that homeowners and businesses would see a 3-to-1 return on investments made possible by the Energy Savings and Industrial Competitiveness Act (S. 1000).

At the June 19 press conference, Portman said the fully-offset legislation uses low-cost tools to encourage the use of efficient technology that saves businesses and consumers money. “At a time when folks in Washington can’t seem to agree on anything, we should be able to find common ground in energy efficiency,” he said.

Sens Bennet and Shaheen w G Sweeney

Senate Energy Committee member Jeanne Shaheen (D-NH),center, participated in a Roundtable panel discussion in January on energy efficiency issues with Gerard H. Sweeney (President and CEO, Brandywine Realty Trust),right; and Sen. Michael Bennet (D-CO), left.

Shaheen, who participated in a Roundtable panel discussion at the “State of the Industry” meeting in January regarding energy efficiency issues, noted on Tuesday that the “real estate community” had provided constructive input and consultations on S. 1000.

As discussed in The Roundtable’s newly released 2012 Annual Report —Managing Risks and Opportunities — Shaheen and Portman have moved away from language that would have created a model federal building code administered by the Department of Energy (DOE) — which could have become the basis for new mandatory energy efficiency codes at the local or state levels. In a written statement submitted to the Senate Energy Committee last June commenting on an earlier draft of the Shaheen-Portman bill, The Roundtable explained that such prescriptive, “one-size-fits-all” approaches would not account for varied building types, tenant plug-load uses, or regional climatic variations.

The statement also said federal building codes on energy efficiency are unnecessary, given the increasing stringency of existing ASHRAE (American Society of Heating, Refrigerating and Air-Conditioning Engineers) and IECC (International Energy Conservation) codes, and DOE’s active role in the consensus-based processes administered by these organizations.

 2012_AnnualRep 150x192 Cover

The Roundtable’s newly released 2012 Annual Report —Managing Risks and Opportunities 

As our 2012 Annual Report states, Senators Shaheen and Portman are now inclined to have DOE serve in more of an advisory role to ASHRAE and other organizations that develop building codes, as well as state/local governments. Their proposed legislation also would incorporate economic impact analyses, assessments of small business impacts, and allow for public comment and information sharing whenever DOE offers non-binding energy efficiency targets for buildings — all notable policy improvements over the current procedures by which energy standards are established for buildings.

Additionally, the legislation includes positive language on federal loan guarantees for energy retrofit projects in commercial buildings. Despite concern over failed loans to solar equipment manufacturer Solyndra this past year, we maintain that federal backing for energy retrofits would facilitate job creation cost effectively and that a retrofit loan guarantee pilot program could be developed with minimal risk to U.S. taxpayers.

Although many forward-thinking property owners and developers have invested significant resources to “greening” their portfolios over the past decade, high upfront costs and a lack of financing remain among the greatest barriers to increased investment in energy retrofits — particularly amid the ongoing credit challenges facing commercial real estate.

Roundtable President and CEO Jeff DeBoer is scheduled to testify at a Senate Environment Committee hearing next week on the subject of “Financing Efficient Buildings.”

# # #

Return to Top


DODD-FRANK REGULATIONS

Derivatives End-Users Continue to Press for Clear Exemptions from Dodd-Frank’s Margin, Inter-Affiliate Swaps Requirements; Senators Concerned about Risk Retention Regs’ Potential Impact on CRE Credit Flows

Representatives from the Coalition for Derivatives End-Users (which includes The Roundtable) descended on Capitol Hill on Tuesday to urge amendments to the Dodd-Frank Act that would clearly exempt derivatives end-users from burdensome margin and inter-affiliate swap requirements. At the same time, the proposed amendments seek to more effectively focus new regulations on the systemic risks that the 2010Dodd-Frank Act was intended to address.

Capitol clouds

Representatives from theCoalition for Derivatives End-Users (which includes The Roundtable) descended on Capitol Hill this week to urge amendments to the Dodd-Frank Act that would clearly exempt derivatives end-users from burdensome margin and inter-affiliate swap requirements.

Derivatives end-users are commercial entities (including real estate firms) that rely on derivatives products to protect themselves from everyday business risks, such as interest rate spikes. This allows them to better manage development and operational costs as well as their balance sheets.

Although the Dodd-Frank statute includes strict capital and margin requirements for custom derivatives contracts, it gives regulators final say over which entities must meet the new requirements. Margin proposals unveiled by financial regulators last year only exacerbated ambiguity over potential margin requirements among end-users.

Businesses groups participating in Tuesday’s “fly-in” meeting on the Hill said companies should not be confronted with a minefield of new regulations when they attempt to use derivatives as a risk mitigation tool and in ways that help raise funds and make productive investments. The reforms they support are consistent with the intent of Congress when the Dodd-Frank Act was passed nearly two years ago.

These reforms were included in an amendment (to the Senate farm bill) that Sens. Mike Crapo (R-ID) and Mike Johanns (R-NE) introduced last week. The amendment, which was rejected during today’s Senate voting on the farm bill, would exempt derivatives end-users from margin requirements. (These proposed reforms were also included in two bills passed by the House in March: H.R. 2779, legislation to exempt inter-affiliate swaps from the regulatory requirements of Dodd-Frank’s Title VII; and H.R. 2682, which would create a partial exemption from margin requirements for derivatives end-users.)

In another area of Dodd-Frank relevant to commercial real estate — pending regulations governing “risk retention” by mortgage securitizers — a bipartisan group of 12 Senators on Tuesday wrote to U.S. banking regulators expressing concern that their March 2011 risk-retention (“skin-in-the-game”) proposal could hurt credit flows to commercial real estate and the residential mortgage sector.

  Frank_Dodd_Podium_outside

Rep. Barney Frank (D-MA), left, and former Sen. Chris Dodd (D-CT)

The letter said the pending rule goes “in the wrong direction and takes away the flexibility Congress intended by applying a rigid approach and adding extraneous features, such as the Premium Capture Cash Reserve Account and an excessively rigid down-payment requirement in the Qualified Residential Mortgage exclusion.”

Dodd-Frank’s risk-retention provision requires banks that package loans into securities to retain 5 percent of the credit risk on their balance sheets. By requiring issuers/sponsors to retain an economic interest in the assets they securitize, this provision seeks to better align the interests of sponsors and investors (and, thus, to better safeguard bondholders.)

However, pending implementing regulations fail to acknowledge or to account for existing “incentive alignment mechanisms” and forms of risk retention, such as the existing “B-piece” investor retention and special servicing structure for commercial mortgage-backed securities (CMBS).

Given the array of concerns industry participants have voiced about the proposed regulations, The Roundtable has joined other stakeholders in urging regulators to consider re-proposing the entire risk retention rule following the initial public comment period, rather than moving on to a final proposed rule.

# # #

Source:  The Real Estate Roundtable

Advertisements

Comments are closed.