COVID-19: Minnesota Resources
March 25, 2020
Fellow NAIOP members,
The following is a summary of items impacting our state and industry during the COVID-19 pandemic. These issues change daily and we will update you when we have more information impacting our industry. If you have any questions on any of these issues, please contact NAIOP Minnesota at firstname.lastname@example.org or (952) 928-4647.
Additionally NAIOP and the Minnesota Chamber are looking at potential property tax relief as a way the state can help businesses during this emergency.
Senate and House leaders and the White House reached an agreement on a $2 trillion economic stimulus bill designed to provide relief to individuals, businesses, and state and local governments. The legislation is expected to take the following actions important to the commercial real estate industry:
- Provides a technical correction to the Qualified Improvement Property (QIP) depreciation drafting error from the 2017 Tax Cuts and Jobs Act that resulted in a 39-year depreciation period for QIP, rather than making it eligible for immediate expensing. This correction is a top NAIOP federal priority and its inclusion is a result of our efforts over the last two years.
- Allows 5-year carryback of net operating losses (NOL) for non-REIT businesses for 2018, 2019 and 2020.
- Increases the limitation on deductible business interest from 30% to 50% of EBITDA (earnings before interest, taxes, depreciation, amortization) for 2019 and 2020.
- Excludes from income the cancellation of debt related to new, emergency small business loans.
- Provides small businesses, many of whom are your tenants, with $367 billion in loan assistance so they can keep employees on payrolls and continue paying obligations.
Municipality / Department of Labor and Industry Update
One of the top concerns of our members right now relates to maintaining progress on their construction projects – including new ground-up construction, tenant improvements and capital projects. We are hearing from our members that each municipality is treating entitlements, permit reviews, and inspections differently. We advise calling the city in which your project is located for the latest update.
The Department of Labor and Industry (DOLI) indicates that municipalities cannot limit inspections or other construction-related services. Below is the correspondence from the Minnesota DOLI to cities explaining how to contact them about this issue.
Message to Cities: Contact the Department of Labor and Industry before reducing services related to enforcement of the State Building Code
Some local governments have, or are considering, reducing their services. However, as the construction industry continues to build and renovate buildings, from houses to hospitals, it is important that timely inspection services are maintained.
If your city has, or is considering, reducing inspection services, you must contact us at the number below to ensure that enforcement of the State Building Code is maintained in your municipality by the designated building official. Ceasing all inspection services is not an option.
Continuing Education Changes Proposed
NAIOP joined our other partners in commercial real estate to press upon legislators and the Department of Commerce a few changes to continuing education in this time of emergency.
Our coalition’s main message is:
As trade associations representing real estate licensees, primarily in the commercial real estate industry, we are submitting recommendations for consideration regarding the upcoming MN Real Estate License Renewal cycle on June 30.
Each of our organizations offers a multitude of continuing real estate education credits to our members. By and large, all these credits are requested for in-person, classroom setting. We conduct our courses in this manner because our members appreciate the element of personal interaction and networking that takes place before and after the educational component.
As leaders contemplate the issues at hand, we present our thoughts on real estate licensure. Whether handled by legislative action or executive order, we ask you to consider the following:
- Should legislation or order be drafted, share the contents of proposed action for a brief review period with this group.
- Not place any currently licensed broker or agent into inactive status on June 30 unless requested by the licensee.
- Provide an extension of the Real Estate License Renewal scheduled on June 30 and allow the Department of Commerce the flexibility to determine that timeframe based on orders that limit social gathering.
- Temporarily relax online education rules for already approved classroom-only courses to allow live presentations utilizing web-based tools (i.e. GoToMeeting, Zoom), where education providers are able to monitor live attendance.
NAIOP Corporate Resources
NAIOP launched a website on COVID-19 industry impacts and adjustments: https://www.naiop.org/covid-19. This site tracks state-by-state information on eviction/rent moratoriums, options available for tenants/employees and landlords/businesses and more, as well as information on industry and business impacts. NAIOP has also started a webinar series addressing COVID-19, and information on upcoming and archived webinars will be posted on this new site.
Governor Walz Executive Orders
Since the COVID-19 outbreak, Governor Walz has issued many executive orders to control the virus, increase support for workers and businesses, and other emergency needs. In total, Governor Walz has issued 20 executive orders in response to the COVID-19 outbreak. Following the federal government's change, the governor also announced Minnesota's individual income tax day has changed to July 15.
Below are the Executive Orders issued by Governor Walz:
The Minnesota Department of Health has created a page with the most recent guidance, updates and resources related to COVID-19.
Unemployment and Small Business Help
Two of the governor’s executive orders help our tenants specifically. Executive Order 20-05 eliminates the waiting period on unemployment insurance, making benefits available to COVID-19-impacted employees immediately. Also, this order waives the ordinary five-week benefit limitation for business owners who have become unemployed as a result of COVID-19. View more information on unemployment benefits.
Tenants should also be aware of Executive Order 20-15 that will provide small business emergency loans. These loans will be a part of a new account run by the Department of Employment and Economic Development in an effort to provide small business relief to those impacted by COVID-19 quickly, even before Federal Small Business Administration loans are available.
State Legislative Action
The Minnesota Legislature has suspended normal business operations to respond to the COVID-19 pandemic. Prior to recessing, the House and Senate met at the Capitol into the early morning hours on March 17 to pass $200 million in support for care providers to combat COVID-19. Governor Walz signed the COVID-19 and Rural Finance Authority (RFA) funding later that day.
Prior to adjourning, both bodies also passed a joint resolution to recess until April 14, to comply with Minnesota Department of Health (MDH) and Center for Disease Control (CDC) guidelines against large gatherings. Leaders in the House and Senate stated at that time that they will continue to work and will reconvene before April 14 if there is agreement requiring immediate action.
The legislature is expected to come back already on March 26 to address a few emergency issues, including small business assistance, helping workers in need, and ensuring long-term care facilities receive the funding and support they need at this time. The legislature has had one presumptive positive case in the House of Representatives and those offices have been closed since this was discovered.