25: How The PPP Benefits Real Estate With James Capalino

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Welcome. This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program you'll learn about the world of commercial real estate and find out why it is one of the largest investment opportunities in New York and around the world. Now here is your host, James Nelson.

This is James Nelson, your host of Real Estate Investing Live from New York with show number 25. And once again for this week, again in the midst of this crisis, we want to make sure and provide our listeners with the best possible and up to date information. So we are once again going to have a departure from our typical investor spotlight and panels to bring to you the most current information on the federal stimulus and benefits that are available to your businesses. And so I want to share with you an interview that I did with James Cappellino and Jeffrey Lee from Capilino and Company. They're a full service government relations and consulting firm working at the city, state levels, but also have some incredible insight to share on how this federal stimulus can be beneficial to you specifically with that payment protection plan that we all have been hearing so much about. So again, just with the timeliness of this, wanted to make sure and share this with you. And I hope within the weeks to come as we all get through this, we can return to our regularly scheduled programming. So wishing you all the best.

Yeah. Okay. I think we are great and wow, we have 71 people who have showed up to join us. So this originally went out to the Colgate Network and first and foremost we hope that you and your families and everyone are doing safe, are being safe and are well. These are certainly challenging and unprecedented times, but we wanted to make sure and keep the Colgate Real Estate Network alive. And so I want to thank Chad Cooley and Thomas Campbell who are our co chairs and Jillian Cole who have from Colgate who has continued to support our efforts. And so we thought that a webinar would be a really great way to bring everyone together to let you all know what's going on out there and give you all a chance to connect. So with us today we have another former alum, Jim Cappellino, who is CEO of Capilino & Co. And had the pleasure of working with him now for years. And introduced initially through the Colgate Network and with him is Jeffrey Lee and Capilino and Company. They are recognized as New York's premier urban problem solving strategists. So Jim's background combines senior management roles in government, public relations, real estate and consulting management. So their company is overseeing the growth of some of the most well respected government relations and strategic consulting practices in New York. Under his leadership, his company has become the number one lobbying firm in New York City responsible for helping some of the most well known companies achieve success in New York, including Airbnb, the Met related companies and Uber. So really great to have you both with us today. I guess I can just quickly introduce myself. James Nelson, class of 98. I don't know if you all can see, but I've got my Colgate sweatshirt on today, so. But yes, I've been really thrilled to be part of the Colgate Real Estate Council since its and I always forget how long it's been, but I think we're probably almost going on 10 years now. But I'm at Avis and Young in investment sales and so I know all of our businesses have clearly been affected by this. And so we wanted to dive in today and give you all a sense of what stimulus has been passed and where there might be help that's on its on its way. So we do want this to be interactive so there's a Q and a button for you all if you can type in your questions along the way. We're happy to take answers or try to answer them as we go along, but why don't we just jump right into this. And Jim, you want to tell us a little bit about the CARES act, what was recently passed and what the implications are, just to set the stage.

Thank you very much, James. And I want to echo your sentiments to our to our audience. Today is a sobering day for those of you who are trying to wrap your heads around the chronology of this whole thing. Ladies and gentlemen, it was only 100 days ago today that the United States government was informed by China that a mysterious virus had begun to attack people in the province of hunan. And in 100 days, our nation has been brought to its knees along with a good portion of the Western world. This, I will remind you, has yet to hit Sub Saharan Africa, a good part of Latin America, etc. Etc. So I have to say it, we are this will be the omnipresent in our lives for months and months to come. In that context, I think a couple of statistical reference points are important. As of this morning, about 14% of the people who were employed 60 days ago in the United States of America are unemployed. As you know from having read your Politico and your other online instruments and printed papers today, approximately 16.5 million Americans have filed for unemployment. State and local governments are being brought to their knees by the loss of tax revenue and the hospital system, needless to say, in the absence of massive federal financial support, simply will not survive. It'll never get back on its feet again without massive, and I'm talking about hundreds and hundreds of billions of dollars of financial assistance. I believe, having been a close observant and an active player in the real estate economy of the city of New York since I moved to New York in 1985 to go to graduate school, the New School for Social Research, where I have a master's degree, and then simultaneously work for Ed Koch and run his congressional office in New York. That the real estate industry in New York let the rest of you speak about. The rest of the nation has never seen a crisis of this proportions. And most of the major real estate firms, whether they are brokerage, whether they provide services like design and construction management, et cetera, et cetera, will fight for survival in this context. Well, I hope we can have at some point, James, during the course of this conversation a little bit of a discussion about the implications for office leasing. I'm going to go way out on a limb and of course James is going to give me a frown. And I understand this, that this if the experience of remote working is judged successful by most companies, we will see over the course of the next two or three office leasing renewal cycles in New York, significant non renewals. You'll see companies renew a fraction of the space because they have learned how to adapt and they can live with the notion that with 10 or 15% of the office space they now lease, they can bring enough people into the headquarters office or the field office or whatever and work face to face to the extent they need to. And the rest of the work week will just revolve around exactly the kind of remote communication we're having today. So now let's try to dive down into sort of where this mess sits with respect to federal support. And I'm going to ask Jeff who's really been living this day by day. Because my firm is about 50 people, we divided ourselves once the crisis hit, New York State, New York City and the five task forces. And Jeff leads the task force that is driving financial assistance in the direction of clients and recent clients who need help to be able to survive. The big development today, as you probably have read, is that the Senate was not able to come to agreement on the next tranche of $250 billion worth of support for basically the payroll protection plan that was essentially where the money was going to go. The battle, for those of you who are interested, revolves around a major dispute between the Democrats led by Speaker Pelosi, and the Republicans, led by Speaker McConnell. Pelosi believes that a substantial portion of that 250 does not, should not go at this point to the payroll protection plan because the 350 is just in the process of being spent. And I'm sure if we opened up for discussion, James, and we have business leaders who are actually worried about whether they can make the biweekly payroll, that's bi monthly payroll that's coming up next Monday. I mean, I don't know anybody in New York. For those of you who has been successful in getting through the approval, the SBA approval process, okay. And I got over 240 clients. Everybody who's applied has been told by their banker that their application is being reviewed and going to credit committee and all this other, excuse me for using Yiddish, Sherm Hazaray, but nobody's actually said, you know, here are the five digit code you type in to download the money into your account. Now, hopefully that will start happening in the next week or two. So we didn't get, we don't, we don't have any senatorial action. And my sources in Washington tell me that until The speaker and Mr. McConnell and Mr. Schumer have a chance to have further discussions, it's unlikely anything will occur in terms of backfilling that. So the Jeff, why don't we just dive in into sort of the major planks of the CARE Act.

And Jeff, before you do that, I just want to add on and Jim, thank you so much for underscoring the magnitude of this. And it's certainly nothing that I think any of us have ever experienced. So I think that was very, it was great that you set it up in this way and all the widespread implications. But just on that last note about the triple P, because been hearing a lot about that recently and I guess and this is through the lenders, this is akin to the SBA 7 loan. And just speaking to my clients, I was only aware of one who said that his application was actually received and that he is under the impression that he's going to receive the loan this week. So I'm going to actually text him now. It's supposed to be today. I'll give you a live update. But everyone else said they were either put on a waiting list, anecdotally hearing that Saturday night when it opened up, when the banks opened up for these applications, most of them, their Full allocation was gone within hours.

So.

And most, as you mentioned, these businesses are right now waiting in the queue. So again, just to kind of complete the picture there, Jeff, it would be great to hear about what James, to.

That one thing for everybody's benefit, ladies and gentlemen, if you know this, then I'll be real quick. In the absence of a prior business banking relationship, personal banking relationships don't count. Let me repeat, in the absence of a prior business banking relationship that predates February 12, your application will not be read. So, you know, we happen to bank at TD for our commercial banking. I personally use Chase for my personal banking. But we went to TD right away and they have done everything that they can to try to help accelerate our application. But my banker Paul Markoff tells me that every single morning he comes to the bank and there is a line of people down Broadway trying to see somebody inside the bank to find out how they apply. And they have no pre existing relationship with this bank. They might as well be visiting Mars. They're not even on the right plan. So be prudent about how you spend your time, guys. Don't hit your head against the wall trying to convince Bank America to take your application if you've had no prior relationship with bank of America. Mr. Lee and I just want to.

Briefly add upon that. Thanks, Jim. So briefly add upon that that Jim, you mentioned the roadblock with the Senate right now. But one of the pieces that's sort of a contentious piece is that question of the preexisting lender. Lots of folks are realizing, hey, I'm having a tough time. I mean, there are a couple things going on here. One is there's a limitation. If you don't have that pre existing lender relationship, it's harder. Two, also seeing just anecdotally that it's the bigger banks that are, that seems to be more sophisticated that are already working with the sba. And a lot of these community banks are not trying to get into this next boost of funding. They'll go into the paycheck protection program will be to open it up to a broader pool of lenders and to mandate that a big chunk of that new money gets put out by small community banks, whether they're community development finance institutions, other kinds of community banks, thinking that those are the folks that have the relationships with the mom and pop businesses, they'll be more invested at getting that capital out. So I just want to throw that in there.

And we do have some good news on the chat form, David Weinstein has told us that they were approved yesterday, so.

All right, congratulations. Would you mind telling us what bank.

David, if you feel comfortable sharing in the chat box?

National bank, or is it a community.

Yeah, national or community bank. We'll see if we get that answer. Well, Jeff, because I know we kind of jumped into what's currently happening right now, and there is so much going on, but, Jeff, take us back a little bit and let's explain to our listeners who applies for the Triple P plan. David's telling us it was a community bank with SBA experience. Stay away from the nationals for this exact reason. Thank you, David.

Yeah, that's great. Yeah. So, you know, I mean, there's a lot in the CARES program or CARES bill, I should say, Certainly the paycheck protection program is the piece that's getting the most attention right now. There are other pieces, and maybe we can touch upon them later. So it's not just one thing. And there are, you know, the SBA programs and the patient protection program is included in this category, are targeted at small businesses. That's typically defined as 500 employees or less. There's a little nuance in there, but that's sort of the shorthand way of understanding it. And, you know, in terms of eligibility and how to use those funds, you know, intentionally, it's being kept really broad. But there was a rule issued by the treasury and by the SBA just in the past few days that made it clear that the loan proceeds, 75% of those loan proceeds should be used for payroll. Right. That wasn't made clear in the bill itself, but the rule made that clear. So, obviously, the point of this is to use that money to keep workers on the job, to keep your staff employed, to keep that money flowing through the employees and into the economy. So that's a core part of that.

Explain, if you would, what some of the permissible uses of the other 25%.

Yeah, you know, it's generally for operating expenses, and it does include rent. So payroll being very important. But for that other piece outside of payroll, it can be for rent, it can be. It can be for operating expenses as well. As I should say, this is very important, obviously, in this current. With this current health epidemic, which is health care expenses for employees providing health care, that 25% that's eligible. So that's just a little bit about. About the eligibility, who can apply and generally speaking, what it's good for. The other thing that is particularly attractive about the paycheck protection program is the partial forgivable nature of the loan. James Is that worth kind of touching upon that a little bit?

Yeah, I think that would be helpful.

So, so the idea is this money shouldn't just go into a company bank account and just sit there. Right? Again, the idea is get this money out the door. And so the forgivable piece has to do with how these borrowers, these companies are going to deploy these loan proceeds within the first eight weeks of receiving the loan proceeds. So again, to the extent that loan proceeds are used for those eligible purposes, whether it's payroll, mortgage interest, rent, employee health care and probably a couple other minor things, but for those main categories, the amounts spent within the first eight weeks are forgivable. So I think that's something that's really attractive because essentially that's a lifeline for these companies for eight weeks. There is, and again, payroll and headcount, there is a mechanism such that your portion of your loan that's forgivable starts to get reduced if a borrower reduces its headcount or reduces its salary for sort of typical salaried folks that are making less than six figures. So when these borrowers are going to either reduce headcount within the eight week period or if they're going to reduce salaries within that eight week period, there's a little bit of fine print there, but essentially those are some things that could then cut into how much is forgiven. Nonetheless, it's an attractive thing because these categories of expenses are huge, are extremely important, and are going to represent a big piece of what employers are concerned about and what they're paying out of their pocket.

Perfect. So I guess this goes back to what Jim was saying earlier. Whether or not there is enough funding here to meet this need. And again, if you just use that, you know, those anecdotes that as of, you know, on a Saturday night that most of these banks reach their capacity. I mean, how big is this need? You know, is the additional 250 billion, is that something that you all think is prudent now or will that even meet the need?

Well, look, one interesting metric just to use as a yardstick, and it's not an encouraging one from the vantage point of those of us who run small businesses, is that this morning the Fed announced that it had released $2.3 trillion to buy junk bonds and corporate debt. Let me repeat, junk bonds and corporate debt, 2.3 trillion. And I checked with a friend of mine who's sort of in that market today and he said that the activity levels were off the charts. I don't know if any of you have relationships in banking or finance, et cetera. But he said the activity levels were off the charts. So I can assume that within a relatively short period of time, a substantial amount of that 2.3 trillion will, will flow into the hands of corporate America and Wall street to help make sure that there aren't defaults on these bonds. Because obviously the Fed is concerned about this domino effect, which could even undermine a substantial number of fairly large banking institutions depending on how much of that stuff they've issued and they hold. I don't, Jeff, I'm not aware. Look, my general sense, James, is that we will see over the course of the trajectory of the pandemic. So let me just give everybody sort of this is based on my firm's continuing dialogue with state and city health, New York state and New York City healthcare officials and some relationships we have at NYU and at Mount Sinai. We think that the stay in place shelter and home social isolation policies will be in effect until early to mid June. That this notion that Governor Cuomo will go along with any relaxation of them on May 1 as prayed for by you know who, is complete fiction and that he will insist on that. And if you actually look at the epidemiology as of this morning, I can report to you that yesterday we reached a new, consistent with the projections, guys, we reached a new high of deaths in New York City of 799, but the hospitalizations dropped off substantially and the number of people going into ICU was about half of what it was three days before then. So there is something to these models and these predictions. Now having said that, I also believe that the Democrats. I'm not trying to turn this into a partisan issue, guys, but I believe the Democrats in both the House and the Senate will push for round three of carriers and probably round four on the theory that what you can't do is get businesses back up and running and then basically have them exhaust. And Jeff can comment on this because he's seen a lot of this and this is one of the major criteria he would use at edc, which is you never, you never, when you're, when you run EDC, you never give the applicant their last $5. That's a scenario, right, Jeff? Complete failure. So you give them the $5 if you believe that behind the $5 there's another $5 in the pipeline that'll hit them in two or three weeks and keep going. So following that sort of that silly analogy, that's why I think the Democrats are going to push like hell that there will Be round three and probably round four. And given the fact that the President's poll numbers continue to hold up, I mean, let's put the cards on the table. The President's poll numbers continue to hold up. Why would the White House object? You have any thoughts, Jeff?

Yeah, I mean, a lot to unpack in there, but I mean, look, I think that just one thing is that, you know, this is a loan. And to your point, the SBA is looking to get paid back. So they are going to be looking to the health of these companies prior to the COVID 19 epidemic because they want to know that these folks are going to bounce back and get money coming back in. If you were a failing business a year ago, this is probably not the right program to use. So just responding to the piece about appetite for, for getting money out and willingness to get money out, you know, that's something to keep in mind. And James, also just going back to.

Your question about Jeff, can I just make a slight, just a slight adjustment to that, if you don't mind and if I'm wrong, you'll correct me. But I'm just going back to what our controller told me about what he had to submit by way of documentation. And if any of our listeners have had a different experience, James, please ask them to let us know. But to the best of my knowledge, we were only required to submit two basic statements. They wanted to see last year's federal tax return and they wanted to see a list of every single employee by age. They didn't ask for Social Security numbers and by compensation. And that was basically what was required. They didn't ask for P and L. They didn't ask for a certified financial statement. So I'm operating on the assumption that there are probably a fair number of applicants who are not exactly the most credit worthy applicants in the world. But that's not the purpose of the program. The purpose of the program is to keep people on the payroll and to keep money flowing into the US Economy. And I'm hoping that I'm right and that the evaluation criteria really, really, you know, you gotta be an honest taxpayer. You can't have not filed federal income tax returns for the last three years. And you got to have an existing bank account and you need to be able to document that you actually have a group of employees, full time employees who merit this. So anyway, any questions you want to put to us, James, or any comments.

We are getting questions. And thank you for those who are adding. If you do have a question, please, please type it in in the Q and A box. So we did have a question from Andrew Welcheck, who's asking, if you've laid off employees and then get a Triple P loan and hire new people to fill the old slots, can you still get forgiveness?

Okay, so let me take a stab at that. I'll take a stab, Jeff, and then you can. Okay, so what my controller told me was that our banker Paul Markoff said, whatever you do, don't lay anybody off. He said, it is not.

Whether that's.

Jeff, whether that's baked into the statute, I don't know.

But Paul said, well, it's certainly. Yeah, Jim, you're absolutely right in that. In that. So. So you're absolutely right. I think I mentioned before the forgivable or the forgiveness conditions. Right. So baked into that is that once you get that loan, it is, you're going to be adversely impacted if you, if you do layoffs to reduce salaries. But you know, in terms of that specific question that Andrew raised, there's some detail there that, you know, we can certainly look into. And by the way, I'm just going to throw out our contact information for folks that want to follow up after at Capellino. We've got a new team and communications line covid19apolino.com Feel free to email us your questions as well. But on that point, there are, without going too deep into the weeds.

The.

Act is basically looking at pre existing headcount. And if you're applicant for a loan, you can estimate or you can sort of quantify your headcount in a couple of ways. You can either look at your average monthly headcount for the first two months of 2020, or you can look at your average monthly headcount for roughly the first half of 2019. So I think they're given some flexibility there in terms of your specific timing. I think that's something we have to dig into a little bit more. But that's just some general guidance in terms of what time period the SBA is going to be looking at in terms of getting your number of average employees. And then they're going to ask if that's your average, where are you at right now? And we can dig into that some more.

Perfect. And another question on the triple P from John Cicciorello asking how do the mechanics of securing triple P loans and affecting their full forgiveness work for sole proprietors or independent contractors who technically may not have employees or payroll costs in the traditional sense, but who are clearly are eligible by the letter of the triple P. Interim final ruling of April 3rd.

Can you answer that, Jeff?

Well, that's a big one. John Cicciorello. Yeah, in terms of sole proprietors, independent contractors. Good question. I've mainly been looking at entities, so corporations and other, whether it's LLCs, corporations, other business structures and would have to dig into that. So sorry, I don't have a better answer for you on that one. I think we'd have to dig in. But feel free to reach out and we can dig in. I'm wondering if that's the John Cicero I know from edc. Maybe it's another one. But regardless, that's a question that we can dig into.

Perfect.

John Cicero, if you email us, we've got a knowledgeable source in government that we can pose that question to and we can respond by email. Thank you.

Yeah, I know for the brokers out there too, in the real estate industry who are independent contractors, 1099 who have, you know, they operate under an LLC. I've received some of those questions as well. So I would like to get discuss some of the other stimulus that's out there, but just to kind of flesh out the rest of the CARES act, which I think was 1400 pages if I'm not mistaken. But is it worth also maybe discussing some of the benefits for individuals? You know, there was checks that were issued based on incomes and then also I don't know if you want to touch on some of the unemployment benefits that are now available.

Yeah, I mean, James is certainly right. There's a lot in that package, Net cares package. And as Jim just mentioned before.

We.

Are certainly going to see a fourth round and more and we're going to see an interim round hopefully as well. But there's a lot to unpack that was in that CARES Act. The average Jane and Joe across the country is, you know, most interested in the $1,200 individual relief just for our audience today. You know, we were thinking that for real estate businesses or general businesses, you know, we tried to focus on what's relevant from an employer or real estate business perspective, you know, in terms of going after that. But certainly, look, there's a connection, right. The idea is that you've got people that may need to take sick leave. Obviously this is impacting people's health. There are people that may need to take time off to work as caregivers for their family or their loved ones or their children. So whether it's childcare leave or other kind of caregiver leave, those are benefits that the caregiver Sorry. That the CARES act essentially put into place and at the same time created a tax benefit through payroll taxes for companies that are going to be providing that benefit. So that's. So that's another thing that's out there. I just want to throw out a couple other things I think are interesting. The payment paycheck protection loan is getting all of the attention and rightly so. Right. It's. How often do you hear about a forgivable loan that has a 1% interest rate? Not all the time, but there's another loan program that has been in there before, but got new sort of expanded flexibility and expanded capacity. That's the economic injury disaster loan that's been out there, but it's got, you know, further additional juice behind it. I think it's something that businesses should consider. Probably a longer conversation of comparing the two, but I think it's something to also consider. And one thing I'll just mention there is that sort of bundled into the CARES act using the same criteria as that economic injury disaster loan is this grant. It's sometimes called an emergency advance on that economic injury disaster loan, but it's an advance that does not have to get paid back. So it's essentially a grant of up to $10,000. So this can be something that could be a very powerful shot in the arm. It's supposed to move quickly. We'll see if that does move quickly. I have not heard about that money being deployed yet, at least at scale. I've not heard that. But nonetheless, the goal is if you are a business and you are going through the economic injury disaster loan application without doing anything additional, you should be able to access potentially up to a $10,000 award for the same kind of stuff that we talked about. Right. Payroll, rent, mortgage, and in some cases material to just keep your business running. So that's stuff that's most relevant to mom and pop businesses, family businesses that still come under that SBA size. I do want to just briefly touch upon, I don't know what kind of segment of our audience, but it's just worth mentioning that the CARES act also created a very high level structure, did not provide details, but did create a very high level structure for assistance for mid sized and large businesses. We're talking pretty big. We're talking north of 500 employees, going all the way up into the thousands. But the act did create a structure basically where the Federal Reserve now has over $450 billion worth of money behind it, whether that's in terms of direct loans or guarantees or sort of credit assistance to incentivize additional capital going out to these larger businesses. So we're seeing this progression, obviously, with small businesses being the backbone of being the main employer for Americans in every state. The priority is going to be on the SBA programs, which are for the smaller businesses. When the feds wake up and the Federal Reserve gets the SBA program under control, still TBD when that's going to happen. But when that regains some control and some order and starts functioning, they will let the next turn to what these programs look like for the larger companies. So I thought I'd just throw that out there. James as well.

No, I think it's great. And we're getting some more comments on the Eidl as it relates to the Triple P. And David once again told us that he's 10 days out on the Eidl application with no response without the money hitting his account on the three days promised. And just be aware that this $10,000 does get deducted from the Triple P proceeds.

So.

So you can't double dip there. But, David, first of all, congratulations for being on top of this 10 days ago. And with the Triple P, seems like you were really on top of this. And we have another question from.

Yeah, just ask David to do something. David, in the remaining two hours of the day, would you please call the district office of your Congress, your representative, and raise hell about what you're experiencing. That we've got to build pressure in the House of Representatives to put pressure on the federal agencies and require. It takes thousands and thousands of calls. But your representative needs to understand that these programs not function.

Thank you. Yeah. Very important. And how we can help advocate to get a quicker turnaround, because that really is the key to these programs. These only really work unless if you get the money into the hands of the small businesses. And if it takes another month or two, it might very well be too late. So Daniel Persesius asked the question, can he apply for triple P to pay for building staff? Or maybe that's more, you know, maybe that would work for the emergency relief. Yeah.

Is his entity the employer?

Daniel? Yeah. Is your entity the employer? Because it's interesting, I was speaking to another client this morning who told me that he actually had filed separately for each building because they were three separate LLCs. So I don't know if that's.

Yeah. I can also just add on that, knowing the details of, you know, for obviously those on the, on the real estate, in the real estate community here know that sometimes the building staff could be employee. Depends on what building staff you're talking about. Right. If they are employees of your company, then, you know, my understanding is that that gets viewed as payroll and that becomes an eligible expense, meaning you can use, you can use paycheck protection program funds to pay for those payroll expenditures. If they're third party contractors, that's possibly a different ballgame. If they're independent contractors, that's possibly a different ball game and probably a more deeper into the weeds conversation.

Can I just say, sorry, Jeff, My understanding is it is decidedly a different ballgame that the applicant for. If somebody on this call is part of a real estate investment or company, whatever, and that ownership group has retained somebody to clean and maintain their buildings, the owner of that company has to apply for protection. This is not a third party transferable, authorized activity, for lack of a better way to say it. Mr. Nelson, does that make sense?

Yeah, no, that's. Thank you for the clarification. I think that's very, very helpful. So, yes, certainly seems that there's definitely help available. But the question then is how quickly will this all come? Maybe Jeff or Jim, you want to answer? Are there other relief programs that are in the works? You know, my sense is, you know, if you think back to our last financial crisis, it was really kind of a top down approach where shore up the financial institutions, stabilize the market and then get that trickle down. Whereas here we're injecting hopefully the businesses and you're hoping that will flow up. But in the meantime, and Hector asked this question, you know, what do I do when tenants aren't paying rent? And you know, is there any assistance for landlords who are not receiving rent? Maybe we talk about now about the interplay with the, with the lenders as well.

Yeah, let me just. Jim Capelina, why don't you, why don't you share your thoughts and I'll go after it.

Guys, as a general proposition.

Those of.

Us in the real estate ownership sector are, to quote a great American shit out of luck. Most, most states will, will take steps, maybe north of the Mason Dixon line more than south of the Mason Dixon line, will take steps to prevent evictions and to discourage landlords from, from taking other steps in civil litigation, at least for a period of 90 days for tenants who are in arrears. That's just the political reality, guys. We are just beginning to see the outlines of what relief package Governor Cuomo may come forward with in this sector. And it's. Jeff, my sense is that given just the precarious state of finances of both the state and the city that it's probably not likely to be very big. Right?

Yeah. I mean, you know.

Jeff, failing at Lords is not terribly popular.

Yeah, I think that's right. There is, it's worth mentioning, there's a little bit out there. But how applicable that is to, you know, the wide community of real estate owners is a question. So, you know, the situation of the question was the resident are not paying rent. What recourse do landlords have? And Jim, I totally agree with you. This is from a political perspective, not the first constituency that's going to be in line to get help. You know, there is that executive order, at least from a New York State perspective, that Cuomo's administration put out that freezes evictions for 90 days. Right. So going out through late June, the idea being, look, this is something that landlords are going to have to just be patient on as we as a society and civic folks try to figure out what can be done there. There is, I just want to mention that to the extent that you've got multifamily financing that underlies your property. So for the multifamily property owners that have resi tenants, there is a 90 day forbearance. So if you got a multi family that is backed by Freddie Mac or Fannie Mae, there is a 90 day forbearance in place. You can, you know, essentially access that to, you know, to stop making debt service payments for a limited amount of time. Obviously that, you know, talking to some folks in the real estate and housing community, because this is really specific to housing. It's something that has strings attached as well. So I don't think it's something that you'd want to take lightly, but nonetheless want to mention that that is out there as well. And you know, James, if you don't, maybe this is a good pivot because, you know, we talked about the federal programs and what's out there and then we just talked about the Fannie and Freddie. Want to also mention that while not getting the same kind of attention and maybe not the same kind of dollars, but in a more targeted and more local kind of way, there is, there are a variety of resources that I could touch upon just briefly on a state and local level.

Jeff, before we get to that and before we leave the federal stage, just because we've got one question and then a comment. And David Weinstein, you, you've been so helpful with some of these comments. I'm going to patch you on in a minute to talk if you're happy to share with us because you also talked about some of the changes with the IRS tax code, accelerating depreciation. Maybe we could just invite you on to talk to the group about that. But before we get to that, Dick Fleming, who's with Community Development ventures out of St. Louis, he's asking about what happens with round three and round four federal action if President Trump's numbers start to go down. And also asking about what happens with some of these governors who might be looking to prematurely open for business. And how does that present future challenges?

Why don't you take the first one, Jeff?

Yeah, I mean, look, you know, round three and four action, Right. So round three is the CARES act, and we're talking about an interim bill to boost some of that round three CARES act stuff, and then we'll start looking at round four. I haven't heard any. How definite, or rather I should say I have not heard specific clarity on what might go into round four. But look, every indication that we're seeing is that this is a crisis of scale and severity that no one has experienced and hopefully we never will again. And I think, Jim, maybe you mentioned this before, but I don't see any way that we don't do a fourth round of federal action. And to your point, we do potentially further rounds as well. And just want to briefly, very briefly, touch upon, without taking it too much in another direction, that from what we've seen, just looking at data, look, how do you get businesses running when your workforce is, A, afraid to go to work and B, getting folks sick on the job? So, you know, in terms of the question of prematurely opening, look, there's probably little we can do to control some folks in political positions of power. But, you know, I mean, I think that just from a science perspective, you gotta look at lessons learned in other jurisdictions, which is you gotta clamp down on the disease, and that's what's key to first do before business reopens. But anyway, not to pontificate.

Yeah, there's a lot there. So difficult not to. But. All right, David, I'm gonna allow you to talk right now. So you should be unmuted if you can.

Just.

That last comment that you made about the additional benefits that the federal level for the tax treatment, are you on?

I think I am. Okay, so basically, we are. We are shopping center owners in five states, and we, like the rest of y', all, were small business. So we look to the tax code a lot of times for relief. One of the things that hammered us under the 2000, 19, 17, 19 tax code with Trump was the modifications of net operating losses, the modifications on the limitation of business interest, and of course, qualified improvement properties. What this new CARES act did under all these different sections is that instead of depreciating over 39 years, you can literally retroactively the 2018 qualified for bonus depreciation. And it's specific. Oddly enough, retail and restaurant businesses have a special benefit and they can qualify for 100% depreciation when it would have been 50. So there's a number of these little kinds of things that go back several years and spread forward, allowing you to refile your 2018 and your 2019 taxes. And when you're looking at your 2020 taxes, it lets you eliminate that 30% limitation on business interest deduction and jacking it to 50%, which is really important if you have real estate loans. And then I guess the last thing I guess would be there's a lot of tax things in here, but the modification of net operating losses allows you to carry back to 2018. So if you have any net operating losses as a result of this lead depreciation, you'll get a check from the irs. So I wouldn't overlook those things outside of the simple handing of money through various loans.

James, can I ask a question of David?

Oh, of course.

That was just phenomenal. Thank you for that, those insights. Is there any chance that what you just cited is written up in any of the cpa? Why, I'd love to share that with our clients.

So I emailed you a 13 page document that we wrote up for our tenants because again, we wrote this up so we can negotiate with our tenants from a standpoint of, well, you can't pay the rent, but you can pay triple nets. And here's how we can help you with your cash flow. And we wrote up this document to send to them to say, hey, look at this, this, this, this and this. So we weren't just saying, you know, hey, pay me. We were giving them alternatives. So what we did is we read the entire code. I am an accountant by trade, but I don't practice.

And then I.

And as you'll see it, it's in your emails now, it's got the cares section. So there's section 2306, 2304, 5, 6, 7 applies to what I just spoke about. But there's a lot more in this code that's going to be really interesting to the accountant types. So you can use that as a basis, forward that to your accountant and say, hey, tell me why I don't qualify. And if you want to share this with anyone else, you're welcome to. Again, we just did it for ourselves and our tenants.

Will you take a look at that tomorrow? And then let's. We'll get that to Anton Weiss, who's our cpa, and we'll also discuss it with Lindsey Safran. Alright, great.

Will do.

Thank you so much for sharing. I'm really happy this is interactive. We're all learning from each other here. So this has been fantastic. So I do want to be cognizant of the time. Although we did start a minute or two late, but. Yeah, Jeff, let's go ahead and jump to the state level. I think we've done a really thorough job of talking about what's available at the federal level.

Yeah, just so on the state level and local level. So on the state level, I think it's just worth mentioning. The reality here is that there's so many questions and look, credit to you, James, for pulling together webinars like these to get information out to the real estate community, to the business community. What the state has done. And they've had this network in place, but they have a network of small business development centers, they have a network of entrepreneurship assistance centers, and they also have a network of the small lenders, also known as community development finance institutions. But namely, those first two are kind of publicly supported business support centers, where if you are a business owner and you're trying to get help and you're trying to navigate much, as we're discussing the SBA paycheck protection loan application process, questions about it, that's what they're there for. You know, I talked to colleagues at ESD recently and they emphasized that point that there's technical assistance available through those small business development centers, also known as SBDCs, and their entrepreneurship assistance centers. And one other thing I'll just mention is that they even activated this group called the Business Mentor New York Volunteer Task Force. It kind of describes itself, but it's professionals that are in finance, accounting, law, etc. That have kindly volunteered their time and resources that's in need. So you can, if you just, you know, type in ESD and COVID19, you'll see it again. You can reach out to myself as well and we'd be happy. Briefly, I just wanted to get the name of the business continuity loan fund and I won't spend too much time on that. Can folks hear me okay? Sorry, my connection might be a little bit bad.

Jeff. I wanted to ask you. You want to say something more because I want to ask you a question.

Yeah, go ahead, jump in.

Colgate friends, our firm has a strategic relationship with a it's not a household investment banking name but for those of you in the investment banking world you would know the firm but I'm not going to tell you the name of the firm but it is a extremely well capitalized firm in New York. And Jeff and I and a couple of our colleagues had a conference call with senior leadership of that firm today as part of our continuing collaboration. Jeff, just outline conceptually what kind of situations and quotes do you think our friends at Kay would would be willing to take a look at in the event that friends of ours from the Colgate community out there who are preferably principals in businesses that are looking for or bridge financing. Why don't you just run through what you think because very, very interested in being in fairness, entrepreneurial but helpful. Go ahead.

Yeah, well said, well said. So you know we talked about the assistance that's out there from traditional banks. Right? I think we've covered that. You've got a host of specialty lenders out there that play in the space of what you could call rescue financing finance professionals and part of that scale that they want to play at. But if business that is looking for very significant capital needs that ideally are short term. So meaning you know, you've got a good solid business model, fundamentally speaking you're a very strong business nonetheless you are impacted for 12 to 24 months. But there's a, you know, a kind of verifiable way to show hey you know what, when life returns to normal in 18 to 24 months we're going to be a really strong company. Again don't take my word for it but here's some documentation we anywhere it really doesn't pay for those folks to get involved when it's less than 50 million. But again if you're a big company, real estate or non real estate, these folks have the appetite again as long as you have solid fundamentals to provide rich financing to get you through that period or even a longer period of time. But that's the kind of thing where they've got appetite.

Someone out there either is involved or knows somebody who's desperately looking for this kind of financial support. Just Send Jeff a COVID 19 sort of a quick synopsis and we will never get a conference call scheduled. You'll and senior officers of our financing partner and obviously we do this without consideration just turn you over to the firm and Hope for the best. Thank you, Jen.

Yeah, no, it's incredibly helpful. I mean this is tremendous information that you all have shared. I think we covered pretty much everything. Maybe the only last piece to touch on would be at the city level. And I don't know if this is now over, but New York city was offering $75,000 no interest loans. Has that come and pass or is that still available as well?

You know, it's been moving so quickly. The last I checked was a couple of days ago and like all things that government does, it relies on a network of private sector capital providers and originators and servicers. So I've been talking to some of those folks. That loan program at least as of a couple days ago was still live, still taking applications and still a real resource that folks should be considering. So again, that's the New York Business Continuity Loan Fund. Really easy to find and there are a lot of small community development finance institutions based in New York City that are available to deploy that kind of capital.

Say the name again, Jeff, please.

New York Business Continuity Loan Fund.

Does it run out of edc?

It's Small Business Services. If you just go to New York City Small Business Services website you'll find all the information on that program.

There's guys. What I would suggest is if you do end up applying, probably would make sense to drop Jeff through COVID 19 and email and then when inevitably the application process has got you ready to jump off the Brooklyn Bridge. Before you jump, we can make a call to our friends at SBS because we know the leadership team there and at EDC well. And try to try to see if we can help expedite the application review process. Process.

Perfect. Well, this has been a fantastic discussion and I want to thank you both for joining us today and for the Colgate network to spreading the word out there. Yes, yes and I did. You guys have been such a great source for information in this challenging time. So definitely sign up for their daily email blast as well. I put on the chat room the link to the website www.capilino.com Covid-19 relief for businesses. So you have that a lot of information. I'm also going to make a quick plug for rebny, the real estate board in New York. If you go to rebny.com for those of you who are doing real estate here in New York, they have tremendous information on their site as well and also have a hub there on their website with the latest information including another webinar if you want to hear another hour of me moderating.

You can, you can go hear the.

Interview that I did with Reggie Thomas, but this one really helps us kind of talk about the practical application here and really appreciate your joining us again today and just wishing everyone on this call the best, your family, stay safe, stay indoors. We're going to all get through this as soon as possible.

Thank you, James.

All right. Thanks again, everyone.

Stay safe, stay healthy and feel free to reach out to us if folks have questions.

Perfect. Thank you again. Take care.

Take care.

Thank you for tuning in this week to real estate investing live from New York. Please join your host James Nelson for another program next Tuesday at 7pm in New York, 4pm Pacific Time on the Voice America Business Channel. All shows are rebroadcast Wednesday mornings at 7am Eastern Time, 4pm Pacific Time as well as always on Demand. We'll talk again next week.

Sam.