3/25/21 Richmond Mastermind Meeting

Richmond March 2021 – Key Take Aways 

• Guest speakers. Deb Walker and Ron Wainwright with Cherry Bekaert, shared the following Presentation: “Biden’s Tax Plan and it’s Effects on Commercial Real Estate and Employer Retention Credit”.
  • The Employee Retention Credit or “ERC” is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021.  The rules have changed in 2021 from 50% of qualified wages (maximum $10,000 per employee per year) to 70% of qualified wages (still maximum of $10,000 per employee per quarter).
  • The maximum credit in 2020 was $5,000 per employee but now in 2021 the maximum credit is $28,000 per employee, an increase of $23,000.
  • Tax Rates (probable increase in ordinary rates) – from 37% to 39.6%; and the highest bracket begins at $400,000.  Also, probable increase in corporate tax rates from 21% to 28%.
  • Residential Property – proposal of $15,000 first time homebuyer credit; proposal of $5B low-income renter’s credit, which would limit rent to 30% of income for qualifying taxpayers and qualifying taxpayer is one who earns too much to qualify for Section 8.  Also, a proposal of increased depreciable life for multi-family properties who opt out of interest expense limitations.
• Mike Cobb with CoStar reported that with the release of the Bureau of Labor Statistics report in March, Richmond saw a downward revision from 70% to about 58% recoup of jobs.  Richmond’s economy has a 41% recovery rate from April 2020.
• PPP is still a big topic according to Caroline Estill with First Citizens Bank, as they are closing their portal at the end of the month for the 2^nd round.  With that said, there has been a ‘mad dash’ of people submitting their applications, 500 have been submitted over the last 2 days.  Seeing quicker turnaround time on forgiveness of PPP loans.  Rates are continuing to go up, but, still at historically low.  Seeing a ton of acquisition in the medical and dental space.
• Andy Little with John B. Levy & Company has seen the 10-year treasury yield explode over the past 3 months.  The 10 year now is about 160 but went as high at 175.  Fannie and Freddie introduced a Sponsor Initiated Affordability Incentives for Multi-Family borrowers.  The incentives will be offered in lowering borrower’s costs, for those who preserve or create a minimum of 20% of units as affordable to those earning less than 80% of area median income.
• Charlie Kreye with Draper Aden Associates says the only delay he is seeing in construction is weather!  The demand for green energy is driving a lot of opportunity in solar and wind.  Industrial is still surging with a massive need for warehouse space.  To his surprise, he is seeing a couple of hotel ideas kicking around.  Also, starting to see some public sector clients in anticipation of taking advantage of infrastructure money that may be coming available.