Apartment Industry Colleagues,
And so the August Congressional Recess…I mean “work period”…has arrived. Like kids exiting the classroom for their hard-won summer break, members of Congress flee the Capitol for friendlier climes (they hope) in their home states. The five-week recess will be occupied with town hall meetings, campaign events, fundraising and fact-finding trips to places around the world (Norway’s portion of the Arctic Circle for climate change issues, for example). And, yes, members will also take time to reconnect with family, take time out for vacations, weddings, etc.
Sometimes this time of year can be harrowing for members of Congress, depending on the dominant issue of the day. Recall the summer of 2009 when debate over the health care reform law took center stage and Democrats were pummeled during town hall meetings by outraged voters (many of whom would later become charter members of the tea party movement). Republicans faced similar public ire in 2005 when then- President George W. Bush proposed privatizing the Social Security system.
Fear not! Members of Congress will not go into the breach unprepared. GOP and Democratic party committees sent their members forth into the wilderness of constituent interaction this month armed with message strategy ideas, issue talking points, press releases and much more. According to media reports, the Republican message is “Fighting Washington for You,” meaning out-of-control federal spending and government. As well, GOP members will be talking about the Affordable Care Act (ACA - aka Obamacare) as well as the need to move carefully on immigration reform. Democrats, meanwhile, are being asked to strongly advocate for immigration reform using a variety of methods, including holding bilingual town hall meetings and Google “hangout” media events. It will be interesting to see how successful either side is on its messaging efforts.
Closer to the apartment industry, forward progress towards reform of the Government-Sponsored Enterprises (GSEs) was made prior to the recess, albeit not in the exact form we would like. In rapid-fire succession, the House Financial Services Committee held a hearing and then full Committee markup of the Protecting American Taxpayers and Homeowners Act or PATH Act. The legislation, which passed the full Committee on a party-line vote, would radically alter the housing finance system as we know it. Among other things it would wind down Fannie Mae and Freddie Mac within five years and implement occupancy and rent restrictions on Federal Housing Administration (FHA) loans with affordability requirements. This latter item would mark the first time FHA programs have ever had such restrictions.
Our more overriding concern is that the bill fails to acknowledge and account for critical distinctions between single-family and multifamily finance, leaving the well-functioning multifamily mortgage market vulnerable. In other words, multifamily is included with single family in all proposed changes to the GSEs and FHA. Despite this overriding focus on single family, the apartment industry continues to weigh in heavily with the Committee and members of Congress generally. The next stop for the PATH Act is the House floor where there is potential for changes to the legislation. Meanwhile, on the Senate side, the Banking Committee appears to be going in a much different direction than the House Financial Services Committee, which could make for a very interesting Conference Committee negotiating process should we get that far this year.
Among the many important issues that await returning members of Congress next month is funding the federal government. For the past several years, this has been an exercise either in (a) passing appropriations bills for some federal departments with a continuing resolution for the rest, (b) passing all appropriations bills as part of one bill (also called an “omnibus”) or passing no appropriations bills and simply continuing government funding by extending the funding at the previous year’s levels (called a “continuing resolution”). Well, this year recently got a lot more interesting as the funding process for the federal government is tied up with the future of the ACA.
In July, a number of conservative Senators and House members put forward a plan to prevent any funding for the federal government from passing unless the legislation also de-funds the ACA. They essentially are telling their leadership to shut down the government if funding for Obamacare is not eliminated. The reaction to this proposal has been predictably negative from the White House and Congressional Democrats. What was not expected was the reaction from other Republicans on both sides of Capitol Hill, nearly all of whom support repeal of Obamacare but are not convinced that this approach would accomplish that goal. Moreover, many of them remember the political fallout suffered by Republicans following the last government shutdown in 1995.
Between the federal budget fight and looming debt limit increase, it will be an interesting fall in the nation’s capitol.
That’s all for now. Remember that you should be meeting with members of Congress this month to discuss immigration reform. Please go to the NAA Advocacy webpage for all of the information on Congressional visits and the issue of immigration reform. As always, send me an email if you have comments, questions or concerns in regards to anything in this month's column or on any legislative or regulatory issue.
Talk to you next month.