AIMS Update: New Tax Reform Proposals Would Increase Multifamily Investment Costs | National Apartment Association

AIMS Update: New Tax Reform Proposals Would Increase Multifamily Investment Costs

 

 

National Multi Housing Council | AIMS Update
National Multi Housing Council | AIMS Update
November 25, 2013
JOINT LEGISLATIVE PROGRAM NEWS
Disparate Impact Case Settled Before Reaching Supreme Court
Legal Challenge to EEOC's Criminal Background Guidance
Investors Propose Takeover of the GSEs, White House Calls Bids a "Nonstarter"
New Tax Reform Proposals Would Increase Multifamily Investment Costs
Hearing Held on NFIP Reform Implementation
NAA/NMHC Pro-Apartment Campaign Wins Major Honors
NAA/NMHC Urges Caution on Proposed Cuts to Housing Funds for Service Members
TRIA Hearing Highlights Importance of Federal Backstop
Immigration Reform Stalled in Congress
NAA News
Registration Now Open for the 2014 NAA Capitol Conference
 • NAA Comments on Uniform Residential Landlord Tenant Act
JOINT LEGISLATIVE PROGRAM NEWS
 
Disparate Impact Case Settled Before Reaching Supreme Court

On Nov. 13, a settlement was reached in an important fair housing lawsuit, Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., just a few weeks before the U.S. Supreme Court was scheduled to hear oral arguments. A court ruling would have affected apartment owners, managers and developers nationwide by determining the validity of HUD’s February 2013 “discriminatory effects rule,”, also known as disparate impact.  The rule calls into question some often used industry and business practices, such as resident screening.

NAA/NMHC weighed-in on the case, joining other real estate groups in filing an amicus brief with the court that argued that disparate impact liability is a judge-made rule that improperly extends the scope of the Fair Housing Act and creates de facto protected classes.

On Nov. 19, the House Financial Services’ Oversight and Investigations Subcommittee held a hearing to review the legal and theoretical aspects of disparate impact and explored the consequences of its use in a variety of contexts, including housing and lending policy.
Share: LinkedIn Facebook Twitter
Return to Headlines
Legal Challenge to EEOC's Criminal Background Guidance

The State of Texas filed a lawsuit on Nov. 4 against the Equal Employment Opportunity Commission (EEOC) in federal court challenging the agency’s April 25, 2012 guidance on the use of arrest and conviction information in employment decisions. 

According to the EEOC, its Guidance limits the ways firms can consider an employee’s or applicant’s criminal background information. The agency cautions that, under the disparate impact theory, the use of criminal background information may not disproportionately impact a class protected under the Civil Rights Act. This is unless an employer can establish that its policy is sufficiently job related and consistent with business necessity, even if the company's practices are applied neutrally without discriminatory intent.

Texas argues that the disparate impact theory is unconstitutional and says it has the authority to bar convicted felons from state employment. In addition, they say the EEOC’s guidance is actually a regulation improperly issued without the necessary statutory authority granted by Congress, and without complying with regulatory procedures.

Share: LinkedIn Facebook Twitter
Return to Headlines
Investors Propose Takeover of the GSEs, White House Calls Bids a "Nonstarter"

Investors continue to pitch the takeover of much of the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, with Fairholme Capital Management Funds submitting a proposal on Nov. 14 to purchase the GSEs on behalf of private investors in a $52 billion deal.  The next day, reports surfaced that private equity hedge fund Pershing Square acquired nearly 10 percent stakes in both the GSEs for $500 million.

However, on Nov. 20, the White House said that simply restructuring the GSEs would be a “nonstarter” because it wouldn’t

NEC Director Gene Sperling

address their central role in mortgage finance. Gene Sperling, director of the National Economic Council was quoted in the related Wall Street Journal article saying, “I want to make clear our administration believes the risks are simply too great that this would re-create the problems of the past.”

This all comes at a time when the Senate Banking Committee is working on a draft bill to gradually wind down the GSEs.  NAA/NMHC have been engaged with the Committee and the sponsors of legislation by Senators Bob Corker (R-TN) and John Warner (D-VA).  This has included looking at private investment, as well as preserving the multifamily mortgage activities that have performed so well for more than two decades.  We have submitted details on how a related transition and system could work.

Share: LinkedIn Facebook Twitter
Return to Headlines
New Tax Reform Proposals Would Increase Multifamily Investment Costs

This week, Senate Finance Committee Chairman Max Baucus (D-MT) released three staff discussion drafts to overhaul portions of the tax code related to depreciation, the taxation of multinational businesses, and tax filing and fraud prevention. The depreciation proposal would have a significant negative impact on the cost recovery of multifamily buildings, while the international proposal would relax FIRPTA rules that act as a barrier to foreign investment. The details of both these proposals can be reviewed here. Chairman Baucus released each of his three proposals in legislative form, but the Finance Committee staff has emphasized the provisions are drafts.                      

Senator Max Baucus

No legislative action in the Senate has been planned, but NAA/NMHC are actively expressing concern over the cost recovery proposals.  We are also concerned about his goal of using revenues raised to reduce corporate tax rates. The overwhelming majority of multifamily properties are held by so-called flow-through entities that pay business taxes under the individual income tax system. As a result, our opposition to being asked to finance corporate tax reductions will continue. House Ways and Means Chairman Dave Camp (R-MI) also appears to have deferred panel action on comprehensive tax reform legislation he is drafting, but there is a possibility legislative language could be released in December.

In a win for multifamily, on Nov. 20 Chairman Camp indicated that he does not plan to further modify estate tax laws as part of reform legislation. NAA/NMHC strongly support the current estate tax system that provides for a $5.25 million exemption, 40 percent top rate, and retention of stepped-up basis rules.

Share: LinkedIn Facebook Twitter
Return to Headlines
Hearing Held on NFIP Reform Implementation

As reported in the last edition of this newsletter, Congress enacted the Biggert-Waters Flood Insurance Reform Act of 2012 to extend the National Flood Insurance Program (NFIP) for five years while enacting reforms to help address the program’s $24 billion debt load. The reforms were designed to return NFIP to solvency by phasing in revised pricing on the nearly 20 percent of all policyholders who pay a subsidized rate. Absent this national program, many apartment owners would likely not have access to flood insurance, since the private market has never stepped into this space in a meaningful way.

The House held a hearing on Nov. 19 to assess the ongoing implementation of the Act. NAA/NMHC and a coalition of industries representing the policyholder community wrote a letter to FEMA seeking a meeting to begin a process for identifying the most challenging provisions of the new law and to seek clarification, or other assistance, with compliance.

NAA/NMHC is uncertain of the full impact of the implementation of the law, but we are interested in hearing from membership about whether or not you are experiencing significant changes in your policies. 
Share: LinkedIn Facebook Twitter
Return to Headlines
NAA/NMHC Pro-Apartment Campaign Wins Major Honors

The joint NAA/NMHC “Apartments. We Live Here” initiative earned major recognition as one of 2013’s top campaigns, taking home honorable mentions in the Public Affairs Campaign and New Site categories of the PR News 2013 Digital PR Awards. The awards represent the industry’s top honors in the PR and communications digital space.

The Public Affairs Campaign category honors an initiative that “measurably influences opinion about an issue that affects a wide swath of the public on a national or local level.” The NAA/NMHC public affairs campaign earned the awards despite having a significantly smaller budget than other honorees, such as Blue Cross Blue Shield, the Business Roundtable and Airlines for America. This was also the industry’s first-ever comprehensive communications effort.  In the New Site category NAA/NMHC joined a similar group of honorees.

The awards are the latest in a series of recognition the campaign has earned since its inception earlier this year, including multiple design awards, the Videographer Award of Excellence, a case study feature in PR Week , among others. In addition, the campaign is a finalist in the Best Website and Best Use of the Internet or Digital Tools categories of the PR Daily Media Relations Awards. To learn more about the campaign, please click here.

Share: LinkedIn Facebook Twitter
Return to Headlines
NAA/NMHC Urges Caution on Proposed Cuts to Housing Funds for Service Members

Following sequestration-driven budget cuts, the Department of Defense (DoD) is required to slash its budget by almost $500 billion over the next decade. On Nov. 7, the Senate Committee on Armed Services held a hearing that focused on the broad impacts of DoD budget cuts, including service member pay and benefits.  Of concern to housing providers, reductions to the Basic Allowance for Housing (BAH) are under consideration. NAA/NMHC submitted a statement to be entered into the official hearing record given the potential implications for both privatized military housing providers and market-rate providers operating in military communities.

The NAA/NMHC statement calls critical attention to the role that privatized military housing providers have played in modernizing military housing, as well as the potential impact of BAH reductions on America’s service members and their families. Specifically, BAH reductions could increase out-of-pocket housing expenses for nearly one million of the nation’s troops. And for the two-thirds of the military population living off-base in conventional private-sector housing, any BAH reduction, or period of flat BAH rates, will shrink the funds service members have available for housing costs.

On Nov. 8, an article on the potential reductions to the BAH program was published in the Wall Street Journal and quoted NMHC Senior Director of Energy and Environmental Policy Paula Cino who emphasized, “The sooner that we really understand what the potential changes can be, the better we can respond and mitigate any damage to the program moving forward.”
Share: LinkedIn Facebook Twitter
Return to Headlines
TRIA Hearing Highlights Importance of Federal Backstop

A second hearing was held by the House Financial Services Committee recently to discuss the future of the Terrorism Risk Insurance Program (TRIA), which is set to expire in December 2014. While TRIA was originally intended to be a temporary program, NAA/NMHC and others argue that the federal backstop continues to be necessary because terrorism risk remains every bit as uninsurable today as it was 10 years ago.  This program is unquestionably critical to multifamily owners and developers because it is a line of insurance coverage required by lenders.

Bipartisan legislation has been introduced in the House, but roadblocks to passage are inevitable. Critics of the reauthorization claim that the existence of the program prevents private market participation and demands specific program reforms to minimize taxpayer exposure. The Senate has not yet acted, but Committee leadership has expressed a strong desire to extend the program.

Share: LinkedIn Facebook Twitter
Return to Headlines
Immigration Reform Stalled in Congress

Immigration reform continues to draw attention from Congress and the Administration as the legislative year draws to a close.  On Nov. 5, President Obama and Vice President Biden met with business leaders at the White House to discuss the economic benefits of immigration reform, and ask the attendees to press action on the issue with Congressional leaders.  In the House, Republican members are starting to express support for moving a comprehensive bill similar to the “Gang of Eight” measure that passed the Senate earlier this year.  However, at this time the group is a minority unlikely to move the currently stalled measure. 

House Speaker Boehner

NAA/NMHC remain committed to comprehensive immigration reform that simplifies the current patchwork of regulations for property owners and managers, allows employers to verify the immigration status of prospective employees, and provides visa programs to supplement the domestic labor market where shortfalls exist.

On Nov. 13, Speaker John Boehner (R-OH) dealt what may be the most decisive blow to a possible negotiation on immigration in the 113th Congress, saying he would not negotiate, or “conference” with the Senate on the immigration reform bill they passed earlier this year.  Many had hoped that the “Gang of Eight” bill, having drawn bipartisan support in the Senate, would prompt action on the issue in the House, but at this time that does not appear to be the case.  Judiciary Committee Chairman Bob Goodlatte (R-VA) has repeatedly indicated he will move a series of smaller, targeted bills concerning immigration reform in the 113th Congress, but has not clarified his preferred strategy past that point at this time.

Share: LinkedIn Facebook Twitter
Return to Headlines
NAA News
Registration Now Open for the 2014 NAA Capitol Conference

Invest your political capital wisely by participating in the 2014 NAA Capitol Conference – the nation’s largest gathering of apartment industry advocates. The annual conference will be held from March 9 – 11, culminating in Lobby Day on Capitol Hill on March 12. Registration is now open.

Use your currency as an advocate to encourage Congress to address the long-term needs of the apartment industry. Invest in your political capital at the 2014 NAA Capitol Conference!
Share: LinkedIn Facebook Twitter
Return to Headlines

NAA Comments on Uniform Residential Landlord Tenant Act

The Uniform Law Commission is a national organization charged with making individual state laws, such as the landlord-tenant law, uniform across the country. The organization is composed of judges, lawyers and legal scholars who draft model legislation for state legislatures to consider.

NAA serves as an “observer” to the ULC’s plans to update the landlord-tenant act. In response, NAA has created a 40-plus member working group composed of affiliated associations across the nation to review the model legislation and propose comments for the ULC’s consideration. The NAA Working Group has conducted nearly a half-dozen conference calls and drafted a comprehensive comment letter to reflect the industry’s concerns.

During the ULC’s recent meeting, NAA staff and select members of the NAA Working Group presented our comment letter to the commission. ULC members commended the group on the thorough nature of the letter’s recommendations. The commission, however, tabled further consideration until the March meeting and has extended the date for final ratification of the model legislation from summer 2014 to summer 2015.

While NAA has been involved in the effort to update the landlord-tenant act, we maintain that state’s landlord-tenant laws have evolved independently to reflect each state’s individual needs. The diversity of rental housing, not only within the industry but also from state to state, and even among local ordinances within a state, makes uniformity in landlord-tenant law a difficult goal.  NAA’s involvement is meant to communicate these facts and provide “real world” implications for proposed changes.

For more information or to obtain a copy of NAA’s letter to the Uniform Law Commission, please contact Nicole Upano at 703-797-0646.

Share: LinkedIn Facebook Twitter
Return to Headlines

 

NAA/NMHC Joint Legislative Program
National Apartment Association | 4300 Wilson Blvd., Suite 400 | Arlington, VA 22203
phone: 703-518-6141 | fax: 703-248-9440 | Feedback

You have received this e-mail as a benefit of your membership with the National Apartment Association.
Opt-out from this newesletter or
unsubscribe here if you do not wish to receive further e-mails from the NAA.

 

 

Informz for iMIS

 

 

Event Highlights

A Career with Growth & Opportunity

Career Growth and Opportunity  

Learn about the perks and benefits of working in residential property management and some of the reasons the industry provides career growth, stability and endless opportunities.