With the apartment industry’s $1.1 trillion contribution to the U.S. economy, which supports more than 25 million jobs – it’s important for the multifamily housing industry to stay in the know about ongoing legislative matters. To help industry experts stay in the know, the National Apartment Association (NAA) and National Multifamily Housing Council (NMHC) held their annual conference March 9-12, where the regulatory priorities of 2014 were outlined.
The joint legislative program aims to provide a single, unified voice for the U.S. apartment industry and members remain engaged throughout all aspects, including ownership, development, management and finance.
“This year’s NAA conference was a tremendous success. The legislative committee’s commitment to keep the industry informed on current topics that directly affect us is a great benefit. They are a fantastic organization that remains very much engaged in the turbulent regulatory issues and their potential impacts,” said Dan Firestone, CIC’s Vice President. “The conference was a great opportunity to meet with property management industry leaders, to stay informed on issues directly impacting multifamily housing, and help educate on topics pertaining to tenant and pre-employment screening, such as disparate impact and criminal background checks.”
With more than 35 million residents and with the demand for multifamily housing continuing to surge, these legislative priorities outlined by the NAA and NMHC Joint Legislative Program help preserve the apartment industry, a major contributor to the U.S. economy.
The legislative program’s priorities for 2014 are:
Finance and Capital Markets
Housing finance reform, the Federal Housing Administration’s (FHA) multifamily transformation initiative and the FHA Small Loan Program proposal are top priorities for 2014. NAA and NMHC are working together to preserve a federal guarantee for multifamily mortgages that are readily available, consistently reliable and competitively priced.
NAA and NMHC will serve as a consultant to the Federal Housing Administration (FHA) for multifamily policies and issues including the agency’s multifamily reorganization and consolidation effort. According to the Joint Legislative Program, more than 40 office locations will be closed throughout the U.S. Additionally, NAA and NMHC are jointly encouraging the expansion of the FHA’s Risk Share pilot program, which aims to provide increased flexibility and lender participation. This would allow the program to reach more small multifamily property owners.
Throughout 2014, the legislative program will work towards eliminating unintended consequences of the Dodd-Frank regulation.
According to the NAA and NMHC Joint Legislative Program, “It is necessary to carefully monitor the regulatory process in order to protect the industry and its access to reliable and affordable credit. We are also supporting further technical changes to servicing and reporting requirements advocated by the finance industry.”
The law, requires or permits federal regulators to issue a substantial number of regulations pertaining to risk retention, end-user agreements for interest rate swaps and derivatives.
Business and Property Operations
Throughout 2014, NAA and NMHC will push for federal agencies such as the Department of Housing and Urban Development (HUD), the Environmental Protection Agency (EPA), Department of Energy (DoE), and Federal Reserve, align new regulations concerning commercial real estate with the industry’s current business and operational structure.
Regulatory implementation of the National Flood Insurance Program will be monitored and members of the program will serve in an educational capacity to keep the industry informed of any changes. This is on the heels of the five year reauthorization signed into effect by President Obama in 2012.
The legislative program cites that, “As the reforms are implemented, some policyholders are experiencing unrealistic price increases at renewal, when they transfer a property or are mapped into a riskier flood zone. Recognizing the unintended consequences associated with the program rollout, Congress is considering a number of bipartisan bills that would delay the new price increases and require a study on affordability challenges and alternatives to the rate hikes.”
NAA and NMHC are working to support efforts to protect consumer personally identifiable information (PII). The concern is that a national standard may be less than suitable for companies that have previously adopted state laws and who are concerned about increased regulations at a national level. The legislative program does not favor imposing difficult notification requirements, unless there is a legitimate threat of identity theft.
Advocating for policies pertaining to the safety, convenience and cost implications of U.S. mail delivery; working to extend the Terrorism Risk Insurance Act, which is currently set to expire in 2014; monitoring music licensing governing laws that could potentially impact apartment communities; and working towards reliable, affordable Internet, video and telephone services or apartment communities to help attract and retain tenants round out the list of business and property operations priorities for 2014.
With sequestration and budget cuts, the Department of Defense (DoD) is considering reductions in the military’s Basic Allowance for Housing (BAH). The program is urging congress to exercise caution before making the cuts.
The NAA and NMHC Joint Legislative Program states, “DoD’s proposed reductions to the Basic Allowance for Housing (BAH) to meet continued sequestration targets would also substantially reduce the revenue collected at privatized housing projects and negatively impact the rent rates and occupancy of private apartment communities serving military installations.”
The impact of HUD’s disparate impact final rule on apartment operations; including tenant screening, occupancy standards and industry practices will be evaluated throughout 2014. Property managers face concerns about business practices such as occupancy limitations, criminal background checks, and Section 8 voucher policies. According to the program, any “adverse impact” associated with these could trigger discrimination claims.
“There is a lot of confusion out there about what disparate impact is, which is driving property managers to the extremes to avoid a potential complaint. I foresee the discussion surrounding this topic continuing well beyond 2014,” said Firestone. “It’s important to remember that conducting a credit and criminal background check on a potential tenant is a critical part of the application process. It helps keep communities and their residents safe. It is absolutely crucial that property managers understand and embrace the ongoing discussion around disparate impact, remembering to treat each applicant fairly.”
Additional priorities throughout 2014 include educating members of NAA and NMHC about accessibility laws and requirements; urging lawmakers to provide full funding for rental assistance programs, such as the Section 8 program and Home Investment Partnership Program; supporting Section 8 reform; encouraging HUD to publish Fair Market Rents (FMRs) annually, while allowing a time for comments before implementation; promoting flexibility in how Low-Income Housing Tax Credit properties charge for utilities; and advising regulators to adopt policies that protect victims and target business and legal needs of housing providers in regards to the Violence Against Women Act.
Throughout 2014, tax reform will be encouraged in favor of pro-growth policies that do not pose a disadvantage to the multifamily housing industry and further support the Low-Income Housing Tax Credit.
Additionally, the legislative program supports the extension and expansion of energy efficiency tax incentives.
“We are advocating for an expansion of current commercial building energy efficiency incentive to encourage substantial investments in older properties. This will assist property owners in achieving significant, demonstrated improvements in energy performance in comparison to a building’s own performance data rather than a specific energy code,” the program noted.
Employment, Labor and Immigration
The legislative program has taken a stance to support immigration reform through interior and border enforcement, employment eligibility verification, guest-worker programs and a practical legalization process; which aims to have a positive impact on the multifamily housing industry.
NAA and NMHC remain committed throughout 2014 to make sure that the apartment industry is able to continue screening criminal histories for all employees and job applicants. The program aims to defend their ability to protect the safety and security of both residents and fellow staff members.
“Conducting a criminal background check on a job applicant is absolutely essential. This process helps keep the staff, residents and properties safe. Staying informed, knowing the criminal histories of employees you intend to hire is an important preventative measure,” said Firestone.
Energy and Environment
Energy efficiency, water quality, wetlands and stormwater management, as well as lead based paint are a top priority for the NAA and NMHC Joint Legislative Program.
The program is supporting energy policies that capitalize on the unique design of apartment communities to leverage their unique energy efficient nature, rather than through building codes and mandates. This factors in limitations of pre-existing buildings and concerns about costs. Simultaneously, they are advocating for the development of voluntary building performance labeling programs that identify utility efficient operations.
An expansion of the Clean Water Act that would subject all bodies of water to federal jurisdiction is being opposed, while the legislative program is in strong support of congressional review of EPA efforts to regulate post-construction stormwater runoff.
The NAA and NMHC are asking for Congress to re-evaluate existing regulator programs and industry practices concerning lead-based paint hazards to ensure further expansion does not create duplicate programs and policies for public and commercial buildings.
Construction and Development
In response to the DoE’s aggressive building efficiency agenda, the legislative program is asking the agency to economically justify code activity and to publically vet code proposals, as well as to collaborate with all involved stakeholders. The program believes that this would promote transparency and better define the federal role concerning building codes and standards through proposed, bipartisan energy efficiency legislation.
Given that building codes and standards have a direct impact on apartment construction and affordability, NAA and NMHC are asking for technologically feasible and cost-effective solutions.
For more information about ongoing legislative and regulatory interests of the NAA, please visit http://www.naahq.org/learn/government-affairs. For more information about policies potentially affecting the tenant and background screening industries, please contact CIC’s vice president, Dan Firestone, at 888-232-3822.