A Conversation on the Federal, State and Local Initiatives Responding to the COVID-19 Crisis

Well, welcome.

On behalf of the New York Metro chapter of the Councils of Real Estate, welcome to our morning webinar, a conversation on the federal, state and local initiatives responding to the COVID 19 crisis with James Nelson of Avis and Young and Reggie Thomas from rebny. It's my pleasure to introduce James. He's principal and head of Avis and Young's Tri State Investment Sales Group, where he leads a group of three dozen professionals in the sale of multifamily office development, development and retail properties. In addition to being a board member of our own chapter of the Council of Real Estate, he is chairman of REBNY's Commercial Board of Directors, a board member of both the Citizens Budget Commission and the Catalog for Giving, board member of the Young Men's Women's Real Estate association of New York, and founder of the Real Estate Services alliance and the Colgate Real Estate Council. So, James, with that, I'll hand it over to you and let's get rolling.

Thanks so much, Neil, and really appreciate everything that you do for counselors of real estate. It's been a real privilege to be a part of it. It's such an incredible organization and it is a global association with really the emphasis being on counselors and what you know, I couldn't see a more fitting time now for our clients, for the industry to get our advice. And so happy to begin this conversation. So with us today, thrilled to have my good friend Reggie Thomas, who is senior vice president of government affairs for rebny, the real estate board in New York. And Reggie's got a tremendous background in the public sector. He worked with Scott Stringer when he was borough president. He spent time in the city council. God bless you. And he was also deputy legislator for both Mayors Bloomberg and de Blasio. So no stranger to working on both sides of the aisle. So, Reggie, thank you for joining us. And thank you again for everything you're doing for the industry. I mean, Rebny has just been so front and center on this with the daily updates and just letting us know everything we need to know.

Yeah, no. Thanks again for having me, James. We love working for you all. And so we're gonna continue to keep plugging away 247 to make sure we're doing all we can to advocate for the industry and have us weather this crisis.

Perfect. So I know last time we did this, and for those of you who did not see the first rendition of this, where we had this conversation right after they rolled out the Initial Cares act, that's something that you can find on my YouTube channel. So that was a great discussion, Reggie. So thank you for having that with us. And now to come back and talk about where things stand today. So again, we're really going to have this be rapid fire because we'd like to finish our presentation within the next 30 minutes and then allow time for Q and A. So why don't we just jump right into it and outline the latest of the federal stimulus plan, which I believe is being called 3.5 of the triple P. And this was another $310 billion that was made available to small businesses, totaling 659 billion. But maybe tell us what other provisions were included in this most recent addition of the stimulus plan.

Yeah, thanks for that, James. And you know, it's, it's interesting just what in the world has happened just over, you know, the past two weeks? As probably everyone on the webinar knows, the initial paycheck protection program, which is hundreds of billions of dollars, actually ran out of funding. And so as a result, you know, Republicans and Democrats and the president kind of had to come together and determine a plan forward on how to kind of refill that pot. Republicans that wanted just a straight extension just to go ahead and just put more money in. But you know, we'll get to this in a little bit. The Democrats were definitely concerned about the implementation of ppp, specifically the fact that there were a lot of community and local banks who maybe didn't have access to it, a lot of small creditors and credit unions, and also a lot of MWBs who maybe didn't get access to that funding as quickly as possible compared to some of the other major companies out there. So along with our refilling it, 250 billionaires still love that 310, it's unrestricted. 60 billion or so. It's set aside for those community based lenders and those smaller banks are just referenced. And then on top of that, they put in some extra money, including the economic injury disaster loan program. So the EIDL is sort of the step one, if you will, when you want to apply the strings are a lot less there for that program. So they added $60 billion to that. Along with that they did 75 billion for things like hospitals, other money for equipment, things of that nature. So that's where the long and short of where we are with stimulus.

Perfect. And I don't want to spend too much time on it. But I know there was some challenges and even some criticism with the first tranche that went out. I know it sounds like the LA Lakers initially might have benefited from it. And being a Knicks fan, we definitely want to make sure they give that back. They certainly don't need it anymore money to build their roster. But also, you know, in all seriousness, you know, some, some of the, the big banks who were maybe extending these just to the, you know, their private clients and maybe this wasn't made available to the smaller businesses. So I don't know if you'd have any commentary on that.

Yeah, no, it was, it was definitely interesting to kind of see how the program played out, just to kind of give the 10 second background. I mean, it's important to remember that when Congress authorized this and the President signed this into law, the banks basically had seven days or less to kind of get the program up and running. And for banks to execute on a program that's hundreds of billions of dollars, you know, there are a lot of details that had to get worked out. As one example, you know, one of the major banks, national banks, you know, decided to only service their client, current checking account clients, because there's a lot of due diligence that has to be made on these accounts. And obviously banks are concerned whether or not they're going to get that money funded from the federal government the way the program is lined out. So there are a lot of, there are a lot of things that have to get fixed with this. But you know, you see this in the press reports, but Congress is definitely looking at the next round to make sure that there are the appropriate guardrails in place to make sure money gets to those businesses that need it.

Perfect. And again, even though we're going to be answering questions at the end of this, we don't want you to forget your questions. So go ahead, put your questions in the Q and A box as we go along and we'll come back to them. And hopefully as we go along we might also answer some of them as well. Okay, so what future stimulus do you think could still be forthcoming and what changes or modifications to this has rebny asked for in this relief?

So Congress is expected to resume their work in the coming weeks. And so we've had quite a, quite a lot of discussions about what are sort of realistic priorities. Right. I mean, there are things that, you know, we think we really want to go after like things like salts. At the same time we also have to go after state and local aid. And so there's a lot of things and it's important to know, to have priorities with all this. One thing that REDMI did, we joined with a number of other business groups to ask for reforms to the paycheck protection program. So first, the 7525 split of, you know, being able to only use upwards of 75% performance payroll costs, you know, that has to change that New York is inherently a different market where your overhead is significantly more than just labor. That's sort of one major reform that we've asked for, another major item that we're all pushing for. And I want everyone who's watching to kind of help join this call, and we'll have some action calls on this. But state and locally, this is critical. We've heard Governor Cuomo talk about this every day on the press conference where he talks about New York State being the number one donor state compared to some other states who are saying, I don't know about state and local funding, are actually the ones who actually are recipients of federal dollars compared to what they put back into the pocket. So we're going to be advocating very heavily on state and local aid, and we're joining forces with quite a lot of people to do that. So I'd say those are some of the major items that are kind of on the table. But, you know, it's always a moving target. We talk to members of the New York congressional delegation and other members of Congress every day. And so based on that, we're always kind of refining and retraining what we believe.

Perfect. And any hope for additional mortgage relief. I know, and I'm talking beyond Fannie and Freddie, and I know that the government said that they would, or Fannie and Freddie rather made statements that they would not begin foreclosure proceedings. They would give forbearance in exchange for the landlords keeping the tenants in place. But any other, you know, potential mortgage relief, that, that's, that's in sight.

Yeah, and thanks for bringing that up because that, that definitely is a pretty big priority, not just for the real estate industry, but a lot of folks who are looking for reforms in the next round. You know, I think, you know, with Fannie and Freddie, residential mortgages especially, I mean, that only covers what, 25% of the residential mortgage market. Right. So you, you still had the rest of the residential mortgage market who didn't get any relief. And we also got zero relief on commercial mortgages as it relates to any kind of federal mandate. So those are two major priorities that we're looking for, because in all of our conversations, elected officials, they look to the industry and say, hey, what can you do about rent for, you know, for renters and for small businesses. And we tell them first things first. I mean, we got to get reform on commercial mortgages and the rest of the residential market because it's much tougher for property owners to still pay their property taxes. They'll pay for all their costs and still pay for a mortgage, while at the same time offering rent concessions and rent forgiveness or rent forbearance to their own tenants who they need revenue from.

Perfect. And then this is also a very hot topic, which is business interruption insurance. And right now, you know, it would seem that Covid certainly does not fit into the previous definition for business insurance. I know Rebny has been a huge advocate for expanding the definition. Of course, for the insurance companies to weather, I mean, they would just be flooded with requests, as I'm sure they already have been. So no doubt, I would imagine the federal government would have to backstop this. So any thoughts there on the likelihood?

Yeah, it's one of those things where, you know, it was easy, I think, for a lot of advocates and a lot of external folks to say, hey, insurance just paid these claims. But you know, they explicitly, in many cases, they explicitly put into the, into their contracts that pandemics are not included and it would just frankly bankrupt them, which then of course the ripple effects would be dramatic if they were somehow legally forced to pay a lot of. So one of the big requests we have is for the federal government to backspace stop a lot of these claims. But also it's important to kind of learn the lessons from this and what we do moving forward. I mean, for a lot of tenants who are looking to sign commercial leases and you know, for those of you who are property owners in these transactions, I mean, that's a big contingency now is in this new world post COVID 19, how exactly are we building these types of things into contracts? And so it's important that the federal government creates some sort of prospective program as well that ensures some level of confidence that when a tenant signs a lease or property owner takes on a tenant, that they too will have some sort of recovery mechanism. God forbid this were to ever happen again.

I know certainly for new leases, it's a very hot topic about the COVID provision and what happens if there's another pandemic. But yeah, in the meantime, to have some business interruption insurance would certainly go a long way. And Valentin Stoller, thank you for your question in advance. Has the state also made requests for the same type of business interruption insurance coverage? Or is this really something that has to happen at the federal level?

Yeah, unfortunately, it's one of those things where, you know, we believe kind of where the, where everything lies, it's going to be incumbent on the federal government. The amount of money that, you know, that this would potentially cost is pretty significant. As a result, it's the type of thing that we're likely going to need to go to the federal government on.

Okay, so before we jump over to the state, anything else on the federal level? I mean, I know last webinar we did, we talked about some of the tax relief with the loss carry forwards being able to be applied further back. Anything else that our listeners need to be aware of that the federal government is doing in the way of relief?

Yeah, so, you know, I mentioned this briefly before and thanks for talking about sort of the tax items which the IRS and everyone should do this. I mean, in terms of the last webinar we had till now, the IRS has actually put up two updated bulletins about some of the tax provisions. So just important to kind of keep updating yourself on that, especially going directly to the source irs. You know, we talked a little bit about state and local aid. This is going to be the big battle for our city and our industry the next couple weeks. And so, you know, we're going to have, you know, advocacy opportunities for everyone who's watching. Literally just one click advocacy where you can write to your member of Congress to let them know how critical this is. And yeah, they should come home at the end of May with delivering a stimulus package for New York directly.

Perfect. And just because I've been referring to this previous webinar, Matt, if you could just post the link on the chat so everyone can see if they want to access that previous webinar. Okay, so let's go to the state. And first of all, could not be happier to hear that REBNY's president, Jim Whelan, was appointed to the New York Forward Reopening Advisory Board. So I guess what is the latest time frame on opening up the state and the city up? And then I guess what, what is the interplay between our governor and the mayor? Because who actually at the end of the day, makes that decision for New York City?

As Jim Whalen, our president, always likes to remind us, the city is technically a creature of the state. I mean, it was created by the state. So the governor, as we can tell from the interplay, has oftentimes unfortunately had to put his foot down a little bit sometimes when the mayor maybe goes ahead of what the governor thinks is Appropriate. So the governor basically put the state on shutdown or on pause through May 15, no matter what. Right. So we're about two weeks away in the governor's press conference, which, by the way, I think everybody should watch these press conferences every day. Remy does not schedule meetings or conference calls during when the governor is up just to get the latest. But, you know, in it, he talked about looking to potentially reopen other certain sectors or certain parts of the state around May 15. But it's important to remember that it's not just simply a, you know, flip the switch and everybody kind of goes back. Right. The first thing is sort of public confidence. People need to have confidence that the subways are going to be relatively clean, that when they go to a dense commercial office building, that they're actually going to be able to, you know, limit their exposure to the virus. So confidence is sort of a big thing. The second big item is public health, because, you know, if we start reopening the economy, you run the risk of seeing a spike in exposure rates and hospitalizations as what's happened in other parts of the world where they may have opened up the economy a little too quickly. So it's important that when we do this, we follow the math, the science data, and actually take some time to assess. So even though the state is technically on pause through mid May, no one watching should suddenly expect that we're back up and running on May 16th or maybe in as far as June 1st. It could definitely bleed into a little time after that. So the governor has put out this first role. They're all looking at sort of ways we can reopen the economy in a smart, effective way. The mayor also did something similar. The interplay between the mayor and the governor. It's. It's no different, I guess, that I'm sure, in other. Other battles between mayors and governors. But, you know, the governor really does have the vast majority of the direct power. He has the ability to determine sort of when schools are opening, when businesses are. Are opening. It's really coming on the city to do the enforcement. And so we're going to see that interplay happen over the next couple of weeks. And the other thing to remember is, you know, the governor talks about sort of the ecosystem of Connecticut, New Jersey, New York acting in unison. What happens Long island affects what happens here in New York. And so, you know, it's just really important that we have one singular response to this. And a lot of this we're relying on the state board.

Perfect. And I think it might be A good time also to point out that you've got a lot of great information that you have on your Korona Resource hub on the rebny.com website. So, Matt, if you could also post the link to that page because you put a lot of the timely information on there. There's also a white paper that you all wrote outlining the stimulus plan, which people can refer to. But also, I know you're working on kind of best practices of opening up offices, because there's a lot that goes into how to get everyone safely to work. And I'm glad you mentioned the transportation piece, because that in my mind is so key to what we're doing. Just maybe the definition of essential services right now. So construction jobs right now are all on hold with the exception of those that are, I believe, for affordable housing or for emergency use. So maybe you could just clarify because I've received a lot of questions about when can we get construction projects started again?

Yep. And thanks for asking that, because there's been even more news stories of those that may have won, maybe slightly above what they were permitted to do under the essential services update. And we're relying on the state's Economic Development Corporation estate to actually kind of put forward what's essential, what's not. They've determined that certain affordable housing projects are essential, critical infrastructure, things of that nature. And so if those are, if you kind of fit that bucket, if you will, being essential service, you basically apply to the ESD portal or through the City DoB to say, I'm an essential project. DoB does do a review of it. They issue the permit, but just as important, they do auditing. And Commissioner LaRocca at the Department of Buildings, I think, has done, you know, great job with the agency that you want to make sure that things are being done appropriately. So you just simply have to really just apply. There is, you know, it takes a couple days to get that application done or approved, but once you're approved, you're allowed to start. But, you know, once you also start construction, you still got to make sure you're following as much of the public health safety guidelines as you possibly can to make sure that the site is as safe as possible.

And as far as the professionals who are essential, and my ego is certainly not bruised that real estate brokers are not deemed essential. So, yeah, I'm very much in lockdown mode. But we do have other members of CRE who are other services, whether it's appraisers who need to do inspections, whether it's you know, property condition reports, environmental, you know, out of those suite of professionals. I mean, should any of us be actually attempting to do inspections to try to keep business moving forward?

Yeah, and thanks for clarifying that, because I know there's been a lot of confusion over the past sort of two weeks or so about this. ESD was pretty clear, at least in their latest statement on this, which is, you know, real estate is considered to be a. Obviously, you know, the transactions that everyone does really does generate significant revenue for the city and state, you know, POTS right now. But, you know, these are things that should be done virtually, you know, in person. Showings are not. Still not encouraged or recommended at all. So it's the type of thing where we need to transition as much as possible to a virtual environment. And so, you know, if you have an appraiser, you know, doing something where the person's at home and you're, you know, literally face timing, you know, the state has made a number of changes to encourage these types of things. So, for example, notary requirements have been relaxed because before when you're closing transaction, you got to get all the parties in the room and the notary to physically be there. A lot of those things have been waived. So if there are impediments that members of the real estate industry are having that are based on, like, regulations or laws that prevents them from actually doing the essential services digitally, they should let us know. We're in constant contact with the state and they've been very receptive to the suggestions we've made to make sure these showings and these things can be done virtually as much as possible.

Perfect. So now I want to talk about some of the bills that are being proposed at the state level. I know one of your favorites, S8125, the rent relief bill. So we've been hearing a lot, I believe, from Senator Generis saying that maybe tenants should not be paying rent. I for one, was relieved to hear our governor say that rents are. Government's not going to interfere with private contracts, and that's between landlords and tenants. But I'll get off my soapbox and ask, do you think this rent bill, what's the likelihood that that happens? Is there any, anything else that's going on in the state level that would be a big impact to the real estate industry?

Yeah, thanks for bringing that up because, you know, I think we were definitely concerned in mid March, end of March, when this bill looked like it was getting some traction. As a reminder to the viewers, you know, the new York State legislature kind of has two target dates that are really critical. The first is April 1, which is technically when the budget has to get passed. And then the second is around June 1, June 2 on the state legislature ends. And so in the run up to April 1, budget, there's a lot of things that are not directly budget related that kind of can get mixed in. And so there was some traction on this. But you know, one of the big items is education to elected officials. Once they start hearing the fact that property owners are having issues paying even their mortgages, having to then pay property taxes, utilities, insurance, everything else, and the critical nature of rent revenue to making sure that maintenance staff gets paid, especially because of their work on the front lines, they started to get it. A number of people had actually taken their name off the bill once they were educated more on this. The state Senate announced yesterday that they were having a task force to take a look at a number of housing proposals. And so there are seven or eight elected officials on that. And so we're educating them about this bill the way we've done about others to make sure that they understand sort of the real world issues with implementing a law like this and what this can mean for their ability to allocate tax resources correctly to help a lot of smaller property owners. You know, we, we are always concerned about bill. I mean, this is a hyper politicized environment and people are especially sort of on the edge of their seats, if you will. So, you know, it's really important that whenever we do these types of educations or outreach or advocacy efforts, that we just spend time really educating elected officials to make sure they understand how when they pull one policy lever, there are about 10 or 12 different consequences that could come out of it. So we're being cognizant of it. We are always reviewing it and we'll continue those conversations at the scale.

Absolutely. And in all seriousness, I mean, I think that the state did a great job under a lot of pressure to get this budget done. And there were some bright spots for the real estate industry as well. Both the REAP and the ICAP programs were extended, which are vital to businesses still growing in the boroughs. But that being said, this all comes at a cost. I mean, I've heard estimates whether New York State is going to have a $6 billion shortfall. I mean, do we have to be concerned about the financial stability of our state and maybe then we can talk about the city next?

Yeah, no, we should be right. I mean, the governor has been clear about it. He's been transparent about it. He's not trying to, like, hide anything. You know, we really are going to have to depend on the federal government to provide real aid, you know, especially to cities and states that for decades have put more into the federal coffers than we've received. And so it's one of those times where we're 50 states for one country and, you know, New York is in time of need, California, Connecticut, etc. And so we're really going to have to rely on the federal government to fill the gap here.

Perfect. Yeah, I was glad to hear that our governor did end up spending some time down in the White House, and so hopefully some positive things come out of that. Okay, so now going to the city, and I think I asked the question before about opening protocol, but, you know, one thing that I saw that was proposed the other day was our mayor saying that 100 miles of streets would be closed to traffic. So is that. Is that going to happen? And if so, what would be the timing for that?

Yeah, it's great that you mentioned that because it's been a hot topic in the news lately because the mayor was very reticent, and even the Department of Transportation at last week's City Council hearing was very reticent about this idea of just opening up 75 miles of streets. The city council speaker and a lot of council members were really pushing hard on this to the point where they even introduced a bill that even if the mayor didn't want to do it, it would force them, excuse me, to open up 75 miles of streets. And so the speaker, the city Council and the mayor came to an agreement earlier this week. The mayor is going to open up 100 miles of streets, 40 of which I think are going to be done over the next month and a half or so and the remainder throughout the rest of the summer. And it's really a concern about sort of where we are as it relates to social distancing, recreation time. Before the webinar started, you know, James and I were just talking about sort of, thank goodness, it's almost like a little cold and rainy out of New York right now. I'm wearing a sweater because of that, because otherwise, if it's sunny and people will be out there, run the risk of higher transmission of the virus. And so it's something that's going to be sort of playing out over the next couple of weeks and months. And, you know, depending on your viewpoint, it could be a great thing for the city or if not managed correctly, could almost Accelerate sort of the spread of the virus. So, you know, enforcement is key. Personal responsibility is key. New Yorkers should know that. You know, just because, let's say Broadway might be open for a period of 2 miles, they still gotta wear their mask. They're going for a jog still wearing a mask and, you know, take ownership over this.

Thank you for mentioning that. So now let's talk about. And I want to really acknowledge Rebny for leading the way. I mean, very early on in this crisis, there was a full page ad saying that Rebny was going to suspend evictions for days and its members. And that certainly gives comfort to those who are not able to pay based on financial challenges as a direct result. But I believe now you've got the city council that's proposing, you know, in a way to extend this for another year. You also have a potential May rent strike, which I was happy to hear that our mayor said that might not be a good idea. So. And I think you might all have had something to say about that. So thank you again. But, yeah, let's talk about the status of, you know, what's going on with any potential rent strikes, evictions. How does this all play out in the months to come?

You know, it's, you know, my thoughts on this has kind of evolved a little bit in the sense that, no, I still think it's a bad idea. Clearly, I think the industry agrees it's a bad idea. But it was really troubling over the past week, seeing elected officials host seminars online about the rent strike, because I found it to be completely irresponsible in the sense that we need to focus on those New Yorkers who need the help the most. And there are these anecdotal stories of people who, let's say, went to the Hamptons, have told their property owner or their landlord, hey, I don't have to pay you rent, because they felt as though government was doing this, because this is the rhetoric that's out there. Even though I moved out, I have no legal obligation or I have no obligation to help pay for maintenance workers and all the other expenses that goes towards running buildings right now. And so the May 1st rent strike, it's sort of a public campaign by a number of the housing groups. You know, it remains to be seen how much traction it's going to get. You know, we are seeing, you know, a downtick in sort of the number of collections as the months are going by. So, yeah, it's unclear sort of how impactful or how much It'll resonate. You know what I do, what I did appreciate though was, you know, the city council had a hearing. My God, it's all blurred. They had a hearing on Tuesday at this point that basically extend the eviction moratorium months ahead. So if you've been impacted by Covid, you have an eviction mortgage room through April of next year. As a reminder, the governor said 90 days. You know, the real estate board had said 90 days. And you know, we found it to be a bit disingenuous for the city council to say, hey, we're going to extend seven months out for everyone impacted by Covid because let's face it, everyone's been impacted by Covid. So that wasn't exactly the best way to go about it. Other issue with what the city council did is they basically, as part of their bill, they said city marshals and city sheriffs cannot move forward on execution of evictions or execution of money jumps. The problem with that is that sheriffs and marshals act on the orders of a court. And so you have the city council telling these sort of officers or agents of the court, don't worry about what the courts are telling you. We're telling you what to do. I mean, it's sort of like a Constitutional Crisis 101. So we were really happy that a lot of council members came out at that hearing and actually talked about the place of property owners and what they're going to have to deal with if there is a rent strike, if they aren't getting may rent in and sort of the ramifications on sort of the city revenue stream and also just their ability to operate perfect.

So I'm going to ask one last question because I want to open this up for questions. So if you haven't already, please type your questions into the Q and A box. So, and I'm going to actually take my last question and combine it with a question from Angela Mulder. Angela, thank you for asking this. But in the city, is there any chance for property tax relief? And as we know, a lot of the property taxes are actually shouldered onto the tenants as a way of pass throughs. And if the tenants aren't paying rent, I'm going to assume they're probably not going to pay taxes. So this is going to fall back on the landlords again. So that's part one. And then part two is the city also has very large challenges with our budget. I think under Mayor Bloomberg, if I'm not mistaken, the City's budget was 85 billion. I think we're now probably up to close to 100, although I did see our mayor so that he would cut back by 2 billion. So, you know, I know there's that push and pull with property tax and the city's budget because the real estate industry, I believe, supports over half the city's budget.

Right. And so, you know, I think first, first things first. I think that everyone kind of now understands or is seeing firsthand, you know, how much the city's budget has kind of ballooned over the past five, six years. And a lot of this you can talk up to labor contracts not being settled and you can kind of say whatever you want about it. But when Mike Bloomberg left office, I want to say the city budget was around like the low 60s, I want to say, and now it's coming close to 100 billion or 95 billion or so. So, you know, government spending has increased 50%, if you will, over the past six years. And so, you know, there are important things like universal pre k that, you know, I think everyone agreed with the mayor on and there were some major investments on things like affordable housing. So, you know, it ebbs and flows about sort of whether or not government is spending correctly. But right now we're in this moment where, yeah, we're going to have to cut back. We're going to have to take a look at some hard choices about what are city priorities and what aren't in order to help us weather the storm. Property taxes are going to be a big political discussion over the next couple of months. I think it's one out of every two city dollars raised in taxes is from the realtor industry. And so it's sort of been the industry that's always been hit the hardest or looked to whenever there's a shortfall in sort of city budgets. So it's definitely going to be the topic of major political conversation. I'm happy. James, you talked about, you know, commercial rent tax. A lot of the pass throughs. That's one thing that a lot of elected officials and policymakers are talking about. You know, when we do get the economy back up and running, do we provide relief to small businesses by eliminating the commercial rent tax or suspending, do we suspend sales tax to encourage spending? I mean, these are policy levers that are all on the table and everything is being explored. James, I think you might be on mute.

Let's see, I'm trying to grab the questions at the same time. So Thomas Fink asks and we might need an economist on board. I might, Hugh, if You want to raise your hand and you're welcome to take a crack at this question too. But he asks, what do you think of the additional Treasury FAQ directed at private equity and VC companies? Will it hurt future growth in the economy? And then he also asks, how do you see the multi trillion dollar deficit weighing on future economic performance? So, Reggie, I don't know if you want to take a stab at it. I am certainly not an economist. I know that the government is printing a lot of money to do all this, but do you want to take a stab at this? Or if we have one of our CRE board members who want to graciously raise their hand and take a jump on this grenade, please let us know.

So I'll take the second part because as much as I wish I was a venture capitalist, I definitely have not. So on the second part, listen, I think any additional federal spending that increases the deficit is always going to be a cause for concern, right? I mean, you know, we were downgraded a couple of years ago, and so it's always going to be a matter of concern, right? You know, it's one of those things where we kind of have to weigh the short term versus the long term. And it's one of those things where, you know, I do personally, I do think that additional federal spending, even if it grows the deficit, is just appropriate given sort of where we need to go in getting the economy back on its footing so we can actually begin to close some of those budget holes. You know, there are all these other federal reforms that have to be made, especially on things like Social Security and other government spending, defense contracting. I mean, you name any policy topic at the federal level as it relates to spending and it'll result in sort of a political riot on two ends of the political spectrum on that issue. But it's one of those things on a personal level. I think sort of the short term gain is critically important to get us back up and running. Perfect.

Thank you. Jennifer asks it's one thing to open New York City, but how does this overlap with public transit between states, NJ Transit, MTA? If they do not allow for safe, healthy social distance commute, many residents will be uncomfortable commuting regardless if the city opens. Does anyone address the commuting practices of residents throughout the tri state?

Yeah, that's a great question, Jennifer, because you know, the governor has kind of made it clear that a lot of the things that he's doing is going to be in conjunction with neighboring states. I know that for at least New York City subways, you got to have a mask when you're on there, right. It's one of those things that they more or less required at this point. You know, I'm surprised if New Jersey Transit and LARR haven't already done that. But you know, we expect that when the governor starts making announcements on reopening the economy, transportation is number one. Because if folks don't have confidence in the transportation system, I mean, forget it. We're going to have to go back to the federal government to ask more money for the mta. So it's something that we do expect that there will be announcements or requirements on sort of facial coverings, socially distancing on a lot of these, a lot of these ways to get in and out of the city. And not for nothing, I have a feeling when we start opening the economy, we might only see 20% of the ridership initially. So socially distance hopefully will be actually a little bit more pragmatic and easier.

Perfect. Hugh Kelly asked our thoughts on a holiday special servicers to try to suspend any of the foreclosure proceedings. I mean, it would seem pretty common practice now that most lenders are giving forbearance of any three months, even longer. So I think the hope here is that we all get back to semi normal by then. We can get some tenants back in paying rent. But yeah, I mean, if this keeps going, there certainly could be a case to be made for that. We do a lot of work with special servicers and one of them told us they're getting hit with default notices every three minutes. So that there's certainly going to be a wave there and it would completely overwhelm the system if these kind of all went through it at once. Other questions we have, I heard the restaurant owners have requested a separate federal $120 billion relief package. Do you have any sense of the odds of something like that might pass?

So another really good question, because there are a lot of requests right now to the federal government as it relates to relief.

The hotel industry too, right? I mean, it's hotel airlines and I.

Hope airlines, because I have two flights I gotta get refunded or get credits on. So let's hope for that when it's warmer weather. But you know, on a serious note, there are a lot of requests to federal elected officials. You know, Rebny, over the past week, I mean, we've talked to quite a lot of leadership on both sides of the aisle and they've been clear to us that, listen, it's going to be A heavy lift in general for a lot of the things that we're all advocating for. Their initial view was to really use the paycheck protection program as a vehicle to get folks up and running. But the New York congressional delegation understands that there had to be a lot of reforms. Like, for example, this idea that you have to access the program or get your payroll back up and running by June 30 is a bit ridiculous for New York City. There's no way that all the businesses in New York who have access to this program are ever going to get back up and running by June 30th. And so to answer your question, I think it's. I think it's important that the hospitality groups put out that type of request because we got to get it out there. You know, I just don't know if any single one fund would be established solely for hospitality. And I think they're going to look for other avenues or other levers or other programs they've established to make reforms to, to get money going to these businesses.

Okay, great. Rosario, great. Great to see you. And your question, have there been further discussions with Congress regarding the post process or freezing salt because of COVID Glad.

You brought that up. It's the number one question I think we've been getting on a policy level from quite a lot of our members. And so it was interesting, right, because I think that the president kind of gave an inclination that he might be more open to it than in the past. I know that quite a lot of members of the Senate Republican leadership are still adamantly opposed to it. I do think that if there was a time to do it, it would be now, at a time when we really need to get years of the economy going. The salt issue has been an impediment to economic growth, especially people actually just moving out of New York State, people spending less because now they're obtained the deduction they normally got. And so I think that the time is ripe for some level of advocacy on it. And the New York congressional delegation, it was funny when we, whenever we talk to them, it's one of the things that we always bring up and they say, we got it, we got it, we got it. But it's one of those things where, you know, I wish the New York congressional delegation had all the final decisions, if you will, because this would have been done a long time ago. But, yeah, believe us, you know, we are advocating heavily for this to be revisited, especially right now. Yeah.

Jonathan Shine asked about tax relief for homeowners, and I think by extending the IRS filings and also the the payments that were sent directly to homeowners hopefully will go away ways in that regard. Albert Wu, thank you for joining. Asking about if developers are looking to catch up once they open up construction sites. What do you think the likelihood is of construction sites being allowed to work 24 hours around the clock?

I believe my dear friends of the city council would take my head off if we react to everything.

I like how you're thinking though, Albert. Yes. Let's get things moving again. Michael Hedden, are you aware of any programs or initiatives to promote tourism and bring the tourists back to pre Covid levels?

Yeah, it's going to be huge, right? Because just take a look at the hotel occupancy, right. Like it just it plummeted over the past six weeks. And so we need people to have trust that New York City is a safe, healthy place to come to. They don't have concerns. A lot of this is just public confidence and international confidence in that. And so as part of the governor's New York Forward task force, take a look at reopening the economy. That is a big part of how do we attract the same level of forests and sort of attraction visitors than we did pre Covid.

Perfect. Peyton. We'll try to find those two IRS tax bulletins and send those to you or post it on the chat. I don't know if Matt can find those right now, but if not, Reggie, maybe you guys can post that to your Korona hub. Bill, Ken, for class A apartments that have seen little or no delinquency of loss, have the cap rates changed? This is kind of more of a market question. You know, I look back to 2007 to 2009 looking at peak to trough and their cap rates expanded by 85 basis points for multifamily. Office and retail were up at 150 basis points. So you know, I think long term, you know, multifamily is definitely still viewed as one of the safer investments. Obviously, you know, if you, if you look at the spectrum of the asset classes, hotels without doubt are going to be hit the hardest then retail office again really that could be a whole separate webinar on the future of office. I actually for my next radio show, Real Estate Investing live from New York, I interviewed Scott Rechler and he has a lot of thoughts on kind of the future of office and that. So I would urge you all to check that out as well. So we are right at 45 minutes. I think we got a couple more questions on the chat function. So, Julia Hoagland. And maybe this is a great way also to kind of talk about the interplay between the state and the Fed. And I know you alluded to this before, but, I mean, New York traditionally has given so much more to the federal government than it receives back. So, you know, the fact that we are a donor state, does this give us, you know, more leverage to get more stimulus in the future? And how do you see that all play out?

So it's, it's been amazing just on a personal level, the amount of, like, family I have across the country who have been sending you text messages saying, I had no idea New York State was the number one donor state. Right. It was. It's great that the governor has really leaned into this because it's important to have that conversation, right. For all of those years where New York was a donor state. And then during our time of need, you know, there's talking of state and local aid. You know, I think we're really proud that the governor has kind of put that into the forefront of a lot of people's minds. But, you know, Washington, D.C. is a. Is a very unique place. And so it remains to be seen whether or not that's going to resonate. But what I will say is that this idea of a donor state and recipient state has never been more a part of the public conversation than it's been just in the past week or so. And I'm talking about like the last 10 years. This has never really come up as a moment of friction, but now it's become that. And so they are having some serious conversations. And, you know, I can imagine different members of Congress are putting it into each other's faces a little bit about how much they're putting into the federal coppers, but not receiving the same amount back. So it's going to help a lot as it relates to our collective advocacy. See on state.

Awesome. Reggie, this was incredible. I mean, we went through an incredible amount of information. I think we answered almost all of our questions. Neil, I'm going to turn it back to you. If you want to take chairman's prerogative and ask another question or have last word, I defer back to you. Thank you for having us today.

Well, thank you, James, and thank you, Reggie. This was really, really content rich and we really appreciate the up to the minute observations and thoughts on all of this. I think we'll call time and we'll wrap it up and just remind everybody that there will be more of these sponsored by the Metro area councilors of Real estate chapter. So watch your emails, stay tuned and be safe and be well. Thanks everybody for your time this morning.

Thank you, everyone. Take care.

Bye Bye.