Schneider Introduces Bipartisan Legislation to Support Retailers Struggling During the Pandemic
WASHINGTON – Today, Congressman Brad Schneider (IL-10) introduced the Retail Revitalization Act to support retailers struggling to stay afloat during the pandemic by enabling more private sector investment in the industry. The bipartisan legislation, introduced with fellow Ways and Means Committee member Congressman Darin LaHood (IL-18), provides a business-to-business solution to infuse much-needed capital into the struggling retail industry. Specifically, it would modernize tax provisions to allow real estate investment trusts (REITs) to invest more in their retail tenants.
The retail industry has been hit harder by the COVID-19 pandemic than almost any other industry, with some major retailers having already filed for bankruptcy and more on the cusp. Retailers urgently need more capital, but few landlords are willing or able to make a meaningful investment in their retail tenants under current tax provisions. These outdated and restrictive provisions paralyze the private sector from aiding the retail industry during this time of financial crisis.
“The COVID-19 pandemic has decimated the retail sector, resulting in lost jobs and shuttered doors. Retailers across the county are already facing bankruptcy, liquidation or large-scale job losses. Allowing REIT landlords to infuse more capital into their retail tenants will help offset the retail sector’s devastating losses caused by the pandemic and save jobs,” said Congressman Brad Schneider.
“The COVID-19 pandemic and state-mandated closures have decimated Illinois small businesses, particularly our retail industry. Retailers need more funding as they work to recover from the pandemic and this legislation will help infuse critical private capital into small businesses struggling,” said Congressman Darin LaHood. “I am proud to join my Ways and Means Committee colleague, Congressman Brad Schneider, in this effort and look forward to working with him to help save Illinois retailers.”
“As one of the largest shopping mall owners in the U.S., we have seen first-hand the devastating effects the pandemic has had on many of our tenants,” said Brian Kingston, CEO of Brookfield Property Group. “A modernization of the REIT rules—like those contained in the Retail Revitalization Act—will allow us to respond to our tenants request for further assistance, in turn allowing them to keep their doors open, save thousands of jobs, and continue to generate millions in tax revenue for federal, state, and local governments.”
“The pandemic is crushing many commercial businesses that rely on direct contact with their customers. The Retail Revitalization Act will mobilize private capital and help build a bridge to the other side of this public health crisis,” said Jeff DeBoer, CEO of the Real Estate Roundtable. “This bipartisan legislation, if enacted, will preserve jobs, save taxpayer dollars, and strengthen local communities.”
“The Retail Revitalization Act (RRA) is essential to support and save retailers, jobs and communities across the United States,” said Stanley Shashoua, Interim CEO of JC Penney and Chief Investment Officer at Simon Property Group. “The retail industry has been hit hard by COVID-19, and there is a lack of capital directed towards saving retailers as we have seen when retailers file for bankruptcy and liquidate their assets. The RRA is crucial to saving jobs and communities, as well as state revenues by supporting real estate and sales taxes.”
The bipartisan Retail Revitalization Act would modernize REIT rules by amending the current REIT tax regime to (1) increase the capacity of a REIT to own the equity of a tenant from 10% to 50%, and (2) conform the ownership attribution rules used for determining what is considered related party rent under the REIT rules to the general ownership attribution rules of the Internal Revenue Code (as similarly applied in other contexts), and (3) eliminate the so-called “double downward” attribution of related party rents that is out of date and not consistent with the modern commercial realities of businesses and REITs. Lastly, the Act would also make corresponding changes to the limitation on space that a REIT can lease to its taxable REIT subsidiary.