Hindsight is 2020: Educating the Industry on the 2020 Election
By Sam Gilboard
For the first time in more than 50 years, housing has emerged as a centerpiece issue in the U.S. presidential debate. It’s therefore incumbent on the industry and all rental housing professionals to understand how proposed housing plans and past performance will affect the future of the apartment industry.
America is unquestionably entrenched in an affordable housing crisis. Low production of new homes fails to match present demand, let alone future needs. Challenging barriers and high construction costs mean even higher rents and higher sales prices, and self-defeating housing mandates, while well-intentioned, continue to pop up at all levels of government, further exacerbating the strain felt by housing providers across the country.
One thing is clear: 2019 has been anything but quiet for the rental housing industry and all that transpired will surely define the political and housing agenda in 2020. Anticipating and understanding these issues will be critical to a housing provider’s ability to meet America’s rental housing needs.
This begins with our nation’s future chief executive. As the 2020 Presidential Election draws near, candidates will be focusing on the biggest issues from around the country. Housing providers in the United States must be cognizant of each candidates’ platform, not just as it relates to housing, but also economic growth, climate change and criminal justice. Housing is intrinsically linked to these issues.
Not only are policy platforms vital to understanding the candidates’ true impacts on the rental housing industry, but so are their backgrounds. Their experience with housing, as a public servant or private citizen, helps us better understand how current policy is shaped and where future policy may be headed.
A Deeper Dive
Senator Bernie Sanders (D-Vt.) has credited his lower-middle-class upbringing as motivation for his years of public service. He says his family lived in a rent-controlled apartment building in Brooklyn and struggled to balance expenses like rent, clothing and food. Undoubtedly, Senator Sanders has drawn from his personal experience, proposing a national rent cap of no more than 3 percent or 1.5 times the Consumer Price Index in his housing strategy. Rent control measures were prevalent in 2019, most notably the statewide legislation enacted in Oregon, California and New York. Yet, rent control continues to distort the housing market, act as a disincentive to develop new rental housing and hurts the very community it claims to help.
Senator Elizabeth Warren (D-Mass.), a staunch crusader against whom she considers “corporate landlords,” has introduced policy that targets housing executives, but has the potential to interfere with onsite staff’s ability to manage day-to-day operations. Among other measures, Sen. Warren places the impetus on states to limit the eviction powers of housing providers or risk losing valuable federal grants. This carrot and stick maneuvering can create deep divides between a municipality and the housing providers on which it depends. Nationally, both Sen. Warren and Sen. Sanders call for “just cause” eviction measures that would cripple the abilities of housing providers to manage their properties, maintain safe communities and retain rule-following residents. As a practical matter, just cause eviction laws foster an adversarial relationship between rental property owners and their residents by inhibiting owners from acting on resident complaints and delaying the removal of residents who are engaging in criminal behavior or otherwise infringing on other residents’ rights.
Eviction restrictions have been highlighted as a core component of multiple candidates’ housing plans and, in almost all cases, would have the effect of prolonging the eviction process and adding to the increased legal and administrative costs to housing providers that are passed through to other renters. Yet, they will fail to address the root cause of most evictions: Cost-burdened renters’ ongoing financial challenges. Senator Cory Booker (D-N.J.) will leverage federal funds to incentivize states to promote right-to-counsel legislation for residents facing eviction actions, a move also supported by candidates Senator Michael Bennet (D-Colo.) and Senator Amy Klobuchar (D-Minn.).
Unfortunately, some candidates continue to push a false narrative that generates friction between housing provider and resident and, ultimately, is harmful to business. Housing providersare not in the business of evicting their residents. They are an integral part of the communities in which they live and work who invest in and provide professionally managed housing of good quality to renters. Eviction actions are a last-resort measure, only taken after all other options to remedy an issue with a resident have been exhausted.
Source of income legislation, the mandatory acceptance of any lawful form of rent payment, persisted in 2019, threatening housing providers with required participation in the Section 8 Housing Choice Voucher (HCV) program. While lauded because of the housing opportunities it provides to low-income families, the voluntary program is still riddled with burdensome requirements that reduce participation by housing providers. Still, some candidates refuse to accept the inefficiencies that contribute to the overall lack of participating housing providers, instead pledging to work with Congress to require HCV acceptance. This year, the Department of Housing and Urban Development (HUD) has made renewed efforts to reform the HCV program and expand its assistance to communities that need it most. Most recently, HUD awarded over $130 million to Public Housing Authorities (PHA) as part of its Mainstream Housing Choice Voucher program, which provides housing assistance to non-elderly persons with disabilities. HUD continues to work with the housing industry to streamline the HCV program, hosting quarterly “landlord symposiums” around the country that encourage dialogue between housing providers, PHAs and HUD.
Addressing New Supply
Luckily, candidates recognize that solving the housing crisis is about more than just keeping residents in homes. It is about building enough homes, both affordably and sustainably, for residents to comfortably live. With more than 328,000 new apartment homes needed annually to meet demand (a number the industry has only managed twice since 1989), candidates are responding with proposals that will establish a construction-friendly environment for housing developers.
Mayor Peter Buttigieg of South Bend, Ind., will support federal housing grant programs like the National Housing Trust Fund and the Capital Magnet Fund and invest $430 billion to support the construction and preservation of low-income housing across the United States. Senators Warren, Booker and former Housing and Urban Development Secretary Julian Castro have also called for expanded funding to these grant programs to increase the nation’s housing stock by up to 3 million new units.
Additional solutions for mitigating the housing shortage address the local barriers to construction that impede development in cities and towns across the United States. This includes local zoning policy and regulation that increase the cost of construction, thereby affecting the subsequent affordability of the property. The National Apartment Association (NAA) is encouraged by candidates’ plans to tie federal grant money to efforts made in municipalities that reduce local hurdles that might otherwise discourage new development. President Trump established the White House Council on Eliminating Regulatory Barriers to Affordable Housing, which will identify and remedy overly prescriptive local development requirements. NAA participates in the Council, highlighting the serious consequences of barriers to housing construction and the responsible solutions needed to tackle the problem. Ultimately, new development eases the burden placed on existing housing and any efforts made that increase the supply of new housing should be applauded by the industry.
For those candidates who have not released stand-alone policy, housing has been addressed through other platforms. As the United States contemplates its energy and environmental future, candidates have announced ambitious frameworks for healthier, more sustainable buildings. Sen. Bennet says he would like to see the carbon footprint of the nation’s housing stock cut in half by 2040. Former Vice President Joe Biden wants to do it by 2035. Even Mayor Buttigieg and Sen. Sanders are preparing their supporters for a 100 percent clean energy future under their administrations.
These goals are extensive and would place great financial and regulatory burdens on the shoulders of owners of new and existing properties as they attempt to balance deep retrofits with housing affordability. Yet, the prevalence of these green strategies, coupled with similar sentiments expressed in cities and towns across the country, signals that this debate is here to stay. Therefore, candidates must ensure that compliance with these plans remains affordable and accessible to housing providers. That means increased federal funding for energy efficient retrofits, access to low-interest green loans for building upgrades and flexible exemptions from certain requirements must be in place. Candidates who can account for the investment required for such an undertaking truly understand the impact of their big campaign promises.
One campaign promise that could spell trouble for housing providers is Vice President Biden’s broad pledge of “ensuring 100 percent of formerly incarcerated individuals have housing upon reentry.” At face value, this proposal lacks nuance and will require greater definition from the Biden campaign, as well as input from the housing industry, before it is established. Not only does this policy fail to impose limits on its applicability, it completely disregards the rights of a housing provider to properly manage risk. Vice President Biden’s team is expected to release independent housing policy in the coming weeks.
Of Extreme Importance
So far, election season has highlighted an immutable truth: Housing is an inescapable topic impacted by many of the policy proposals coming from the campaigns. It is so vitally important to the health of the apartment industry that all rental housing professionals understand the ramifications of these decisions. It is even more important that the housing industry remain a clear, distinct and educated voice during this election season. NAA encourages its members, affiliates and all interested housing professionals to ask questions, attend campaign events and dialogue with the candidates. Sound policy that strengthens the apartment industry and the livelihoods of America’s 39 million renters can only be achieved when we engage.
NAA will be the industry’s primary resource for election coverage, spotlighting candidate housing plans, providing in-depth debate analysis, and advocating for the unique needs of the apartment industry. Our outreach, thus far, has prompted a housing discussion among the candidates at the November 20 Democratic Debate. NAA is well positioned to engage the campaigns as a leader in the housing industry. It is our hope that candidates will be encouraged to make informed decisions on national housing strategies, decisions that will best ensure a vote for them is a vote for housing.
Sam Gilboard is Manager, Public Policy for the National Apartment Association. He can be reached at [email protected].