Balanced Housing Policy.

As part of NAA/ NMHC's ongoing call for a smarter, more balanced housing policy, we recently completed a direct mail campaign to more than 14,000 mayors, city managers and state legislators. Our letter points out that as long as policy makers and citizens continue to view apartments as housing of the last resort, they will ultimately fail in their efforts to build more liveable communities. We note that apartments conserve land and preserve green space. They use municipal infrastructure more efficiently and provide the critical mass necessary for public transportation systems. They can reinvigorate our urban centers, help meet our affordable housing needs and aid in housing our ageing parents. And they are increasingly sought after by empty nesters and young professionals for lifestyle and financial reasons. We urge the policy makers to challenge their old ways of thinking and to craft new housing policies that ensure everyone has access to decent and affordable housing--regardless of whether they own or rent.

As a result of the mailing, we are already hearing from many of the recipients, including one city administrator who rents because a busy schedule does not allow time for yard chores. The city official also suggested giving renters some type of tax break. NAA/NMHC will continue to spread the word about the benefits of apartments. If you would like copies of the Toward a More Balanced Housing Policy brochure to share with your state or local officials, call 202/974-2354.

Rent Control Blocked in Kansas

On April 19, 2001, Kansas Gov. Bill Graves (R) signed into law S.B. 146, which includes NAA/NMHC's model rent control pre-emption. The new law, which takes effect upon publication in the statute book later this year, prohibits cities and counties from enacting, maintaining or enforcing an ordinance or resolution that controls the amount of rent charged for leasing private commercial or residential property. Working with Kansas housing providers and apartment associations, NAA/NMHC retained legislative counsel and oversaw the strategy for the statute. Kansas becomes the 35th state to preempt the imposition of rent control by local jurisdictions.

NAA/NMHC File Lead-based Paint Lawsuit

On April 5, 2001, NAA/ NMHC and the National Leased Housing Association (NLHA) filed a petition with the U.S. Court of Appeals for the District of Columbia to be allowed to challenge regulations (66 FR 1206) recently issued by the U.S. Environmental Protection Agency (EPA) that hold apartment owners liable for all lead on their properties regardless of the source of that lead (No. 01-1159, DC Circuit).

The regulations stem from the Residential Lead-Based Paint Hazard Reduction Act of 1992 (known as Title X) and set limits for lead in paint, dust and soil in residential properties. If lead levels reach those limits, apartment owners are required to disclose that information to residents and/or buyers. If the property receives any federal assistance, owners could be required to abate the lead. Further, EPA states that it expects third parties, such as mortgage and insurance underwriters, to compel cleanup actions in accordance with the standards.

Our petition contends that EPA exceeded its statutory authority when it issued these rules. We believe when Congress drafted Title X it only intended to regulate lead hazards from lead-based paint and not "any lead regardless of the source" as the EPA rules do. The EPA rule effectively makes property owners responsible for disclosing and/or cleaning up lead that blows onto the property from other sources. Tons of lead exists in our environment as a result of our past use of leaded gasoline and ongoing lead emissions from incinerators and industrial sources. In 1998 alone (the most recent data) more than 800,000 pounds of lead were released into the environment. NAA/NMHC/NLHA had previously sought to have the U.S. Appeals Court review this matter when EPA issued guidance that owners were required to disclose the presence of lead if the lead-stabilizer in miniblinds broke down and allowed lead to become dust in the house (No. 97-1372, DC Circuit). At that time, the court ruled that the matter was not ripe for review until such time as EPA promulgated a final rule defining lead hazards.

At the state level, a Rhode Island Superior Court has ruled that the attorney general's case against the lead industry could proceed to trial (No. 99-5226). The decision paves the way for the court to consider the merits in the state's argument that the lead-based paint manufacturers should be held responsible for the costs associated with removing the paint from public buildings and private homes that are accessible to children. The court dismissed other claims including the recovery of costs associated with special education services provided to children damaged by lead poisoning and damages to individuals resulting from industry negligence or manufacture of a defective product. This lawsuit is modelled on the mega-lawsuits that were filed against tobacco manufacturers. In a related manner, a Maryland court is expected to issue a decision concerning the certification of a class in a case against the lead industry. Wisconsin is also expected to file suit against two paint manufacturers seeking to recover the costs of abating the paint that poses a threat to children.

Banks As Real Estate Managers and Brokers Regulatory Regulation

The U.S. Department of Treasury and Federal Reserve Board should move cautiously in considering a proposal under Regulation Y that would permit national banks and financial holding companies (FHCs) to act as real estate brokers and managers, according to an April 30, 2001, comment letter by NAA/ NMHC. Reflecting feedback from NAA/NMHC task force members who believe that the proposal could promote competition that would benefit owners and could increase the value of existing brokers/managers by expanding the universe of potential acquirers, NAA/NMHC did not oppose the rule. Like other real estate organizations, we did, however, urge the agencies not to recharacterize all real estate activities as financial in nature and not to redefine real estate as a financial asset for bank regulation purposes. We also suggested that the agencies review existing bank merger and conflict of interest regulations to ensure there are adequate safeguards to promote fair competition and we noted that any privacy restrictions created by the new rule should be minimally invasive. The Regulation Y proposal was released under the provisions of the 1999 Gramm-Leach-Bliley Act, which gave the Federal Reserve and the Department of Treasury broad authority to remove longstanding restrictions on bank activities. A U.S. House of Representatives subcommittee held a hearing May 2, 2001, to consider whether to restrict that authority.

HUD Budget

The Bush Administration released its proposed FY 2002 budget for the U.S. Department of Housing and Urban Development (HUD) on April 9, 2001. While the budget rhetoric largely emphasizes homeownership, the substance contains several apartment-related items. Overall, the budget takes some very solid first steps at addressing the nation's "broken" housing policy. In response to lobbying efforts by NAA/NMHC and other real estate organizations, the budget increases FHA loan limits 25 percent. It does not, however, index the limits for inflation. It requests funding for 34,000 new housing vouchers, although that number is down from the 79,000 new vouchers authorized last year. It also funds all the expiring project-based Section 8 contracts. HUD says it intends to take an active role in the smart growth movement by facilitating a national conversation on growth management and by developing tools local communities can use to better manage their growth. Relatedly, the Department is seeking $25 million for its brownfields redevelopment program.

The proposal would increase funding for private and state-run fair housing organizations by $7.5 million. It also requests a 10 percent increase for the Office of Lead Hazard despite concerns that after four consecutive years of funding increases in this area, HUD still has not pursued basic research on low cost, low tech lead dust testing methods. The increase also comes on the heels of a new report from the Centers for Disease Control and Prevention showing a continued and significant decline in lead exposure. The budget now goes to Congressional appropriators for action. NAA/NMHC will continue to monitor its progress to protect the rental housing industry's interests. HUD's budget blueprint is available online at www.hud.gov.

Information compiled by NAA/ NMHC Joint Legislative Staff. Senior Vice President Clarine Nardi Riddle; Vice President of Tax Jim Arbury; Vice President of Housing and Finance David Cardwell; Vice President of Communications Kim Duty; Vice President of Property Management Jay Harris; Vice President of Environment Eileen Lee; Vice President of Building Codes Ron Nickson; and Mark Obrinsky, Chief Economist and Vice President of Research.