Broeksmit: A New Era of Opportunity
(Image by Michael Tucker)
SAN DIEGO–The landscape in Washington, D.C. is changing, and MBA views it as a “new era of opportunity,” said MBA President and CEO Bob Broeksmit, CMB, here at the MBA Commercial/Multifamily Finance Convention and Expo.
“Part of what makes our democracy so strong is that every four years, we go through a national reckoning to decide where we, as a nation, want to go next,” Broeksmit said. ”The decisions we made in November are now taking hold in Washington, bringing with them a new set of people, priorities, and policies. It’s our job at the MBA to make sure these changes, this reinvention, help our industry continue to promote the growth that makes America so strong.”
Broeksmit noted the new presidential administration and Congress have brought a large number of new leaders to Washington, including both elected officials and appointed positions. “We were prepared for this even before the election results came in,” he added. “For months, we’ve been in close communication with key decision-makers from the House and the Senate to the halls of the West Wing; from housing authorities to banking regulators. And not only are we speaking directly with the new people in charge—we’re forging even deeper connections with leaders we’ve known and worked with for years. Many of them are now in positions to shape policy at the highest levels. And we’re letting them know that we’re here to help.”
MBA’s message is simple: Now is the time to invest in communities, promoting vibrant commercial areas and plenty of housing, including multifamily. “To make this vision a reality, we need every agency doing its part, and we need every capital source to be empowered,” Broeksmit said. “That’s how we build flourishing communities—and we’re telling policymakers that companies like yours are ready to lead the way.”
Broeksmit said President Trump and his recent appointees understand that if you want to address the lack of affordable housing, it takes investment. If you want to convert obsolete office properties, it takes investment. Our communities thrive on investment, he said.
One benefit of an organization like MBA is that its size and strength bring with it access, Broeksmit said. “A great example is Bill Pulte, who’s been nominated as director of the Federal Housing Finance Agency,” he said. “Bill knows the value of real estate investment, and he also knows how residential, multifamily, and commercial markets strengthen each other. It will be nice to have someone so knowledgeable at FHFA. I’ve met and spoken with Bill multiple times in recent weeks, and I’ve come away encouraged by what I’ve heard. I also met with the president’s new Secretary of Housing and Urban Development, Scott Turner. He’s deeply committed to making residential and multifamily construction easier.”
Broeksmit noted MBA is talking with housing regulators about stopping what he calls the “HUD-ification” of the GSEs. “We should keep them focused on their actual job of improving liquidity,” he added. “FHFA shouldn’t micro-manage everything Fannie and Freddie do. Nor should they distract them from their core missions of providing liquidity, stability and affordability. What really matters is fulfilling their missions—because Americans benefit when they do.”
The new Administration is ready to do more with the Opportunity Zones program that President Trump created in his first administration, Broeksmit said. “Key Congressional leaders, like Senate Banking Committee Chairman Tim Scott, and members of the new Administration, like Scott Turner, have deep experience with the Opportunity Zone programs,” he said. ”As a result, Opportunity Zones are getting renewed interest – whether to provide more affordable rental housing or to help convert obsolete office properties.” He added that MBA is ready to help make Opportunity Zones an effective tool to promote investment in our communities.
But the cooperation MBA is seeing from the new administration doesn’t mean it will always be easy, Broeksmit noted. “A week and a half ago, the administration’s enthusiasm to move fast led to uncertainty around a number of government programs, including FHA multifamily lending,” he said, citing the Jan. 27 memo from the Office of Management and Budget that called on federal agencies to suspend payments for federal grants, loans, insurance and loan guarantees. “Rest assured; our team was on it. We had a staff office as we do at all our conferences, and it turned into a ‘War Room.’ So, between sessions during a conference for 700 people, we were huddling in the War Room, talking to people back in Washington, and very quickly getting the word to the people in charge–and it wasn’t necessarily clear who was in charge, because the political appointees hadn’t even gotten in yet–that if the memo were to take effect the next day, closings on both single-family and multifamily real estate would stop in their tracks.”
“By the end of that day, we had both FHA and VA put out in writing that their single-family programs were exempt [from the freeze],” Broeksmit said. “Even if this thing comes back at some point or in some fashion, we have assurances that those programs are not affected. I was personally proud of the way the team pulled together with no notice and got those reassurances. And it’s my commitment to you that we will continue to do that.”
MBA is not just focused on regulation, Broeksmit said. “We’re also shaping key pieces of legislation. The most important, by far, is the major tax policy debate driven by the expiring Trump tax cuts – something that has to pass before the end of the year. We’re telling the White House and Congress that their top priority should be extending the parts of those 2017 changes that promote investment and real estate business stability. Policies like the 1031 Like Kind Exchange, the Section 199A pass-through deduction, and the current treatment of business interest deductibility for real estate are key levers for investment decisions that have been proven to work.”
Commercial real estate is capital intensive, and tax policy is a key element of attracting that capital, Broeksmit noted. “I don’t know if you remember the tax debate in 2017, but it was intense. This one will be no different,” he added. “There are a lot of competing priorities, and unlike eight years ago, there’s a bigger focus on deficit spending, which can impact long-term interest rates. Our industry knows better than anyone how important that is to investment decisions. Rest assured that MBA understands your priorities and is working to represent them in the halls of Congress.”
The good news: MBA is already getting a friendly reception. “In meetings with key House and Senate tax writers, they are open to our arguments regarding commercial real estate and multifamily development as a driver of the economy,” Broeksmit said. “But the final details of this tax debate will take months to hammer out and we still have work to do.” He added that MBA works every day with other like-minded real estate trade groups on the range of issues important to commercial real estate.
“Our combined voices are impossible to ignore,” he said. “And I’m confident that when a tax bill passes, it will respect the importance of tax policy to investment decisions—and communities will benefit as a result.”
Another opportunity MBA sees is one it’s been talking about for more than a decade Broeksmit said: “The time may finally be ripe for the GSEs–Fannie Mae and Freddie Mac–to exit conservatorship. I don’t have to tell you that conservatorship was never meant to be permanent. It was always supposed to be a stopgap measure until the situation improved. Well, that day is getting closer. The GSEs are retaining capital, and FHFA has implemented many necessary reforms.”
“But at the MBA, we’re more insistent than ever that releasing the GSEs must be done right,” he said. “There’s too much at stake, and if it’s done in a rush, the results won’t be pretty. We’re delivering this message loud and clear, and we’re making clear what the right kind of release would look like. Most importantly, the market needs an explicit government guarantee on mortgage-backed securities. Without it, there’s no way to ensure the liquidity through all economic cycles that supports affordable single-family and multifamily lending.”
The change in administration, taxes, and the GSEs are all tremendously important to the industry. MBA is working on them and more, Broeksmit said. “We need a vibrant commercial real estate finance market–and we won’t accept anything less. But before I conclude, I want to emphasize that we need your help to make the most of these opportunities. Whether it’s tax policy, GSE reforms, or regulation of banks, CMBS, life companies, or others, policymakers and regulators in Washington need to hear your voice. We can do the day-to-day work, but when a vote’s coming up and victory is on the line, nothing is more effective than a message from you. We know that you make a difference every day. You finance the offices, grocery stores, and hospitals that serve communities. You finance apartments that families need–whether they’re putting down roots or aging in place. And every day, in countless ways, you make our cities and towns better places to live, work, and play.”
MBA is proud to represent commercial real estate finance specialists, and its powerfully committed to delivering for them. “We see many opportunities to directly strengthen commercial and multifamily finance in the days ahead,” Broeksmit said. “At the end of the day, everything we do at MBA is designed to empower you.”
