Clock Is Ticking for Congressional Action
Only a handful of weeks remain before the Senate and House leave town for a longer than usual summer recess from mid-July to early September. There is a ton of work left to complete before the 114th Congress adjourns -- and much of it could directly impact and shape the future of our industry.
Appropriations Process: Critical to Industry Priorities
Each year, Congress must enact legislation to keep the government running. That process requires that lawmakers first pass a budget resolution and then 12 appropriations bills funding government agencies and their programs. NAA/NMHC pay particular attention to the appropriations process because funding and administrative decisions are made through this process on multifamily-specific policies and programs such as FHA, fair housing, the Americans with Disabilities Act, Section 8, energy efficiency and building codes.
The appropriations process can also be used to mitigate harmful, burdensome rules and regulations that impact the apartment housing industry like Waters of the U.S. (WOTUS), Affirmatively Furthering Fair Housing, disparate impact, lead-based paint, criminal background screening and the recently finalized labor overtime rule.
Tax Reform Negotiations: Fundamental to Multifamily Business
No one expects real progress this year on tax reform, but House and Senate tax writers are crafting tax reform proposals. In a letter to the Senate Finance Committee on April 26, NAA/NMHC outlined the apartment housing industry's key priorities for tax reform. Owners, operators and developers of apartment housing have a considerable stake in the outcome of how to reform and simplify the nations tax code. Industry participants pay federal tax at each stage of an apartments lifecycle, when properties are built, operated, sold or transferred to heirs.
Both Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) have signaled that they are working on reform proposals. Chairman Hatch is seeking to tax income earned by U.S. C corporations a single time while Wyden has offered proposals to overhaul cost recovery rules and the taxation of derivatives. On the House side, Speaker Paul Ryan (R-Wis.) has signaled that he plans to release a roadmap on tax reform prior to the Republican convention. NAA/NMHC have been meeting with key members of the tax writing committees to stress the importance of retaining the deductibility of business interest, 1031 Exchanges, the 27.5-year depreciation period of multifamily properties, and carried interest to the real estate industry.
NAA/NMHC also continue to push for legislation to expand the Low-Income Housing Tax Credit Program (LIHTC). On May 19, Senators Maria Cantwell (D-Wash.) and Orrin Hatch (R-Utah) introduced legislation we support to expand the LIHTC's allocation authority by 50 percent, enable income averaging, and set a minimum 4 percent credit for acquisitions and bond-financed development.
Lastly, as Congress considers how the tax code could be used to facilitate national priorities in the energy sector, NAA/NMHC are pushing for permanent extensions to the Energy Efficient Commercial Buildings Tax Deduction (Sec. 179D of the Internal Revenue Code) and the New Energy Efficient Home Credit (Section 45L of the Internal Revenue Code). These incentives help to achieve improved environmental quality, reinforce our national security, create jobs in the construction and manufacturing sector, and increase housing affordability by decreasing utility expenses for millions of Americans who live in apartment homes.
EB-5 Program: Alternative Capital Source for Multifamily
NAA/NMHC continue to support the EB-5 program as an additional source of capital for apartment housing developers. Currently, the EB-5 program is operating on a one-year authorization after Congress failed to reach a longer-term deal at the end of last year.
On the House side, Judiciary Committee Chairman Bob Goodlatte (R-Va.) has indicated that he would like to see the program reauthorized, but said that specific reforms must be made before he will sign off. On the Senate side, Judiciary Committee Chairman and Ranking Member Chuck Grassley (R-Iowa) and Pat Leahy (D-Vt.) have expressed similar concerns, with Senator Leahy flatly threatening to eliminate the program if meaningful changes are not made. Negotiations between the two camps will likely go right up to the Sept. 30 deadline, but indications are currently positive for reauthorization of the program.
NAA/NMHC are continuing to encourage lawmakers to approve a permanent extension of the program, while addressing abuses and improving the efficiency of the investment process
Energy Efficiency Bill Important to Apartment Housing Industry
Work on energy efficiency legislation has been a multi-year focus for NAA/NMHC and with the appointment of House conferees in May on an energy bill, we moved a step closer to passing an energy efficiently bill this year. The Senate planned to announce its conferees after the Memorial Day recess and then the House and Senate conferees will begin work trying to reconcile the two chambers energy bills.
The Senate-passed bill improves upon previous versions by including an important transparency provision that requires the Department of Energy (DOE) to solicit stakeholder input through a rulemaking process before establishing any energy efficiency building targets for local and state building codes. The bill also requires the DOE to develop voluntary, cost-sensitive residential and commercial building efficiency targets; and includes a direction for appraisers and lenders to consider the value of energy efficient design and operation when establishing property valuation. The bill includes best practices used by utilities to provide critical data to property owners for bench-marking building performance. And finally, it addresses the pending efficiency standard for residential gas-fired furnaces.
Included in the House energy efficiency bill is NAA/NMHC-supported language that requires any DOE-sponsored amendments to the current building energy code meet the test of a 10-year payback in terms of energy savings. This provision has drawn fire from environmental groups and a veto threat from the Obama Administration.
NAA/NMHC will continue to advocate for the economically practical, technologically feasible code standard that the House adopted as conferees begin their deliberations.
Reforming Section 8, ADA and NFIP
NAA/NMHC are working to push three bills over the finish line before Congress adjourns for the year. The individual bills would: streamline the Section 8 program, including the contract term, property inspections, tenant screening and funding stream; reform the National Flood Insurance Program (NFIP) and ensure that rates continue to be affordable for apartment owners; and provide business owners with the opportunity to cure an alleged Americans with Disabilities Act (ADA) deficiencies prior to the initiation of a lawsuit.
Both the Section 8 and NFIP bills have navigated an important first hurdle receiving strong bipartisan votes in the House. NAA/NMHC have now turned our focus on securing consideration and passage of these bills in the Senate.
On May 19, the House held a hearing on the bipartisan "ADA Education and Reform Act of 2015," which represents an important first step in moving the measure forward in this Congress. NAA/NMHC will continue to push for expedited enactment of this legislation prior to Congress's adjournment.
House Speaker Paul Ryan (R-Wis.) is seeking to address poverty in America through a series of working groups, and housing policy is likely to be discussed when Ryan begins rolling out his policy proposals this month. Issues such as telecommunications, cybersecurity and fair housing are additional potential topics of discussion for Congress and opportunities for oversight with federal regulators.
Other apartment-related issues likely to draw attention from Capitol Hill in the short remaining time for this session include criminal justice reform and Federal Aviation Administration reauthorization.
Conventions and Election Day
The Republican National Convention will be held July 18-21 in Cleveland, Ohio, while the Democratic National Convention will take place July 25-28 in Philadelphia, Pa. Both will provide party leaders with an opportunity to communicate their priorities to the electorate as they enter the Election Day home stretch.
NAA/NMHC will have a presence at the conventions, continuing to educate policymakers in both parties about the importance of the apartment housing industry.
Provided by NMHC as part of the NAA/NMHC Joint Legislative Program