Change in power: with the Democrats leading the House, expect an agenda that includes affordable housing, immigration law, energy policy, GSE reform and higher taxes.

The 2006 elections dramatically changed the power structure in Congress. For the first time in 12 years, the Democratic Party will control both the House of Representatives and the Senate. This switch in the balance of power will have a significant effect on the apartment industry's legislative agenda, but its ultimate impact will be tempered by the operational differences between the House and Senate.

In the House, the majority rules. This means Democrats will have complete control over how legislation moves through that body. In the Senate, however, filibuster and unanimous consent rules give individual Senators, regardless of party affiliation, much more power and essentially require 60 votes to pass major legislation. With Democrats only holding 51 seats, individual Republican senators will still have the power to block aggressive legislation passed by the Democratic House. And President Bush may increase the use of his rarely exercised veto power.

In the short term, the most immediate repercussion of the election will be on the post-election lame duck Congressional session. The election results almost guarantee that nothing significant will happen as both parties focus on reorganizing committees for the new Congress and on funding the federal government.

Though only two of the 12 FY 2007 appropriations have been completed, Congress is expected to pass another temporary continuing funding resolution and postpone final action until next year. The only items of interest to apartment firms that were left pending when Congress adjourned for the elections are tax extender legislation and possible revisions to how the Section 8 program is funded and distributed. Both of these items might be carried over to the 110th Congress.

The Big Issues

The biggest issues facing the next Congress will be funding the Iraq war and the war on terrorism in general. The power shift also greatly increases the chance of enacting broad immigration law because the Democrats generally support the Bush-endorsed and Senate-passed bill (S 2611) that would boost immigration enforcement, create a new guestworker program and provide a path to citizenship for millions of undocumented workers. Democrats also will put their stamp on the federal budget by crafting a budget that meets their priorities. This may result in proposals to increase taxes on higher-income individuals, change Section 8 rules, revise the nation's energy priorities and a host of other issues.

Affordable housing is set to take on much more importance in the Democrat-controlled Congress. In the Senate, Sen. Christopher Dodd (D-Conn.) will likely be the new chairman of the Senate Banking Committee. Dodd is expected to focus on improving affordable housing and to expedite consideration of GSE (Fannie Mae and Freddie Mac) reform, which includes an affordable housing provision. Dodd also has a "significant interest" in extending the NAA/NMHC-supported federal terrorism risk insurance program that is set to expire in 2008. In the House, Rep. Barney Frank (D-Mass.) is expected to take over the House Financial Services Committee. Frank has indicated that affordable housing is a top priority, and he, too, is expected to urge passage of GSE reform.

On the tax front, Rep. Charles Rangel (D-N.Y.) will chair the House Ways and Means Committee, and Sen. Max Baucus (D-Mont.) will head the Senate Finance Committee. Both are strong supporters of the tax extenders package that failed to pass earlier this year. The measure includes a NAA/NMHC-supported provision that would retroactively extend and expand a tax provision allowing the immediate expensing of brownfields cleanup costs. Compromise on estate tax reform may be possible in 2007, now that the election is over and the issue has been depoliticized to some extent. There is strong bipartisan support to compromise and eliminate the uncertainty of the estate tax after 2010.

On the energy front, Rep. John Dingell (D-Mich.), who is in line to chair the House Committee on Energy and Commerce next year, has already announced his plans to exercise more oversight over President Bush's energy policy. Republicans have been criticized for focusing on energy supply issues, such as offshore drilling, instead of paying attention to demand-side management. In contrast, Dingell says he wants to move faster on developing alternative fuels and conserving energy. Being from an automobile producing state, however, Dingell has voted in the past against toughening auto fuel mileage requirements.

Information compiled by NAA/NMHC Joint Legislative Staff.

Top 7 Legislative Trends

1. Immigration Reform. The power shift greatly increases the chance of enacting broad immigration law that would boost immigration enforcement, create a new guestworker program and provide a path to citizenship for millions of undocumented workers.

2. Higher Taxes for Higher Income. Democrats will put their stamp on the federal budget with proposals to increase taxes on higher-income individuals.

3. Affordable Housing. Affordable housing and GSE reform are set to take on much more importance in the Democrat-controlled Congress.

4. Terrorism Risk Insurance. Sen. Christopher Dodd (D-Conn.), who is likely to be the new chairman of the Senate Banking Committee, has a "significant interest" in extending the NAA/NMHC-supported federal terrorism risk insurance program set to expire in 2008.

5. Tax Extenders Package, The tax extenders package that failed to pass earlier this year includes a NAA/NMHC-supported provision that would retroactively extend and expand a tax provision allowing the immediate expensing of brownfields cleanup costs.

6. Controlling the Energy Policy. Rep. John Dingell (D-Mich.), who is in line to chair the House Committee on Energy and Commerce next year, has already announced his plans to exercise more oversight over President Bush's energy policy.

7. Eminent Domain Prevails. Twelve states voted on ballot measures that would place greater limitations on the practice of eminent domain for economic development.

RELATED ARTICLE: Eminent domain prevalent on state ballots.

BY CHRIS NEAL

Though the media's focus of the past election cycle was heavily concentrated on the House and Senate races that would define the agenda of the incoming 110th Congress, a near-record year for ballot initiatives in 37 states determined the fate of myriad issues.

A total of 204 ballot measures (up from 162 in 2004) went before voters nationwide on Nov. 7, with issues ranging widely from increasing the minimum wage and defining marriage, to establishing higher thresholds for passage of constitutional amendments, and even establishing the minimum living space for pregnant pigs.

However, the ballot measure that appeared in more states (12) than any of the others this campaign season was one that would place greater limitations on the practice of eminent domain for economic development.

Following the controversial 2005 case Kelp v. New London, Conn., which more broadly defined a "public use" to include the authority of municipalities to initiate condemnation proceedings for the purpose of economic development, property rights advocates nationwide have pressed to limit the scope of public takings as well as to augment "just" compensation for property publicly seized.

Consequently, two forms of ballot initiative emerged this election cycle, which worked to address both aspects. The first of the proposed measures, and the least restrictive, was aimed solely at limiting the use of public takings for private development through a variety of means including greater procedural transparency, enhanced elected government accountability and increased compensation. The first measure was voted on in eight of the 12 states previously mentioned (Florida, Georgia, Michigan, Nevada, New Hampshire, North Dakota, Oregon and South Carolina) and won overwhelming support by a more than three to one margin on average.

The second of the two initiatives--and the more restrictive--was on the ballot in California, Idaho and Washington. The second measure was unique in that it provided compensation to property owners affected by what is referred to as a "regulatory" taking. In essence, landowners whose property value would have been affected in some fashion by land use regulations of any kind would have to be compensated at fair market value by local units of government. Although the regulatory takings component failed in those three states, one exception was in Arizona, where voters approved a hybrid measure that placed restrictions on eminent domain as well as providing for the regulatory taking component.

Other Ballot News, With constitutional amendment ballot initiatives becoming more frequent, one state this election cycle voted on a proposal to raise the threshold for passage of future amendments. The State of Florida--by a 58 percent to 42 percent margin--approved Amendment 3, which would require a 60 percent supermajority for passage of any state constitutional amendments. Real estate industry members, including the National Apartment Association and several other state and national real estate trade organizations, prominently supported the amendment.

Chris Neal is NAA's State Policy Manager. He can be reached at 703/518-6141 Ext. 117 or [e-mail].