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Capitol Update: Outcome of Midterm Elections Critical to Apartment Industry

Elections Critical to Apartment Industry

Dear Apartment Industry Colleagues,

It’s once again that time of year when Congressional thoughts turn to the five-week August recess – vacations, Congressional Delegation (“CODEL”) trips, town hall meetings, fundraisers, parades and apartment community tours.  Typically at this time of year I bemoan the partisanship that prevented so many straightforward legislative successes from happening before Congress departed for its extended vacation. I mock the impact of the “silly season” and the focus by members of Congress on keeping their jobs. Finally, I decry the mountain of bills that will be left undone until after Election Day, thus allowing Senators and Representatives to avoid tough decisions. Thankfully, you will be spared all of that. You’re welcome.

If you read NAA’s Apartment Advocate (and I know you do), then you know that the apartment industry has a number of major issues of concern unresolved and still in play. Reauthorization of the Terrorism Risk Insurance Act (TRIA) is trapped in limbo between competing legislation in the House and Senate. The next chapter on disparate impact will be written by the Supreme Court should it decide to hear a potentially definitive fair housing case next term. We continue to rail – with growing support in Congress – against the proposal from the Environmental Protection Agency to expand the reach of the Clean Water Act. Finally, there is housing finance reform legislation pending but stalled in both houses of Congress.

All of the above notwithstanding, there are only 12 official working days left for Congress before the election. The focus is turning from the substantive to the political and the name of the game is the Senate. There are numerous scenarios under which Republicans take control or Democrats hold on to the chamber. That is well-covered territory. The implications are what are most important to the apartment industry.

Should Republicans successful take control of the Senate, it could change the tone of the so-called “lame duck” session of the 113th Congress that occurs this December. The GOP will not officially take control in the 114th Congress until January but with that on the horizon, how interested will they be in negotiating with Democrats on outstanding policy issues? By the same token, will House Republicans be similarly disinterested in negotiating with Senate Democrats knowing that a more receptive audience awaits only one month later?

Democrats in the Senate, of course, will want to move as much as possible while they still control the process. This may actually meet the needs of Republicans who, in some cases, want to dispense with controversial issues before they are in charge and will take the blame for what is ultimately passed. This cuts very differently across issues like TRIA, the Export-Import Bank, housing finance reform and others.

Looking to next year, if Republicans do control the Senate and more importantly the individual committees, the tone around some issues could be very different than it is currently. For example, under GOP control, Sen. Richard Shelby (R-Ala.) will become Chairman of the Senate Banking Committee. His view on issues like housing finance reform is very different than the current Ranking Member, Mike Crapo (R-Idaho).  It’s safe to say that Shelby’s perspective is closer to House Financial Services Committee Chairman Jeb Hensarling (R-Texas). It’s worth noting that should Democrats retain control of the Senate, Democratic Sen. Sherrod Brown (D-Ohio) will become Chairman of the Banking Committee. He also has a different perspective on housing finance reform, especially as it relates to affordable housing requirements.

The other critical actor in all of this is the President. As the likelihood that Republicans take control of the Senate has increased, much conversation has taken place around how the President may change his style with Congress.  Currently, he has taken the approach of using executive branch power to advance policy priorities. This typically means via regulatory actions. The question is, will he continue with this approach when faced with a GOP-controlled Congress or will he radically change direction? This latter tactic has been described as “pulling a Clinton.” After the 1994 takeover of Congress by the GOP, the former President shifted tactics dramatically and actually began to work with Republicans on several issues. This was also called “triangulation” where the President got credit on issues traditionally considered Republican causes. The largest example of this was welfare reform.

At least with the House of Representatives, there may never be an improved working relationship with the specter of litigation looming in the background. Before leaving for the August recess, Republicans in the House gave approval to their leadership to sue the President over what they consider to be his abuse of his executive power. The question is whether they are serious in pursuing this or really trying to keep the conversation away from impeachment. The process of impeaching former President Clinton did not yield any benefit for Republicans and could be argued to have actually damaged the GOP brand. No one in House GOP leadership wants to go down that road again.

Talk to you next month.

Greg Brown is NAA’s Senior Vice President of Government Affairs. He joined NAA in the spring of 2010 to lead the expansion of the Government Affairs Department. Greg has been a housing advocate for 15 years, with a strong emphasis in multifamily issues. Tell him what you think about his musings by emailing him.