EPA proposes lead-safe regulations.

The U.S. Environmental Protection Agency (EPA) published a proposed rule (70 FR 1587) on Jan. 10 that would impose new requirements on anyone engaged in renovation, repair and painting activities, including apartment maintenance workers, that disturb lead-based paint in housing built before 1978. Specifically, EPA is proposing that contractors must be trained in the use of lead-safe work practices; renovators and firms be certified; providers of renovation training be accredited; and renovators follow protective work practice standards.

These work practices include posting warning signs, restricting occupants from work areas, arranging work areas to prevent dust and debris from spreading, conducting a thorough cleanup and verifying that cleanup was effective. EPA intends for the states to perform these certifications.

The proposed rules are the most recent in a series of federal regulations aimed at eliminating lead-based paint hazards, with this rule coming 10 years after Congress called on EPA to promulgate it. In 2005, EPA's failure to publish a proposed rule became an issue during confirmation hearings of agency officials. The rules would go into effect two years after they are finalized for rental housing built before 1960. One year later, they would apply to rental housing constructed between 1960 and 1978.

The rule exempts minor repair and maintenance activities that disrupt two square feet or less of painted surface per component and renovations where specified methods have been used to determine that the areas affected by the renovation are free of lead-based paint.

NAA/NMHC will submit comments on the regulations by the April 10 due date. The proposed rule and additional EPA information on it are posted at www.epa.gov/lead/pubs/ renovation.htm.

NAA/NMHC Testify at New Orleans Hearing

A House of Representatives subcommittee held field hearings on Jan. 13 in New Orleans to see first-hand what is happening on the ground. During the hearing, a FEMA representative testified that the agency currently is looking into renting entire apartment communities in New Orleans for eligible applicants, adding, "The cold, hard fact is that people may not be able to move back to their communities for months or years because the housing stock does not exist."

NAA/NMHC were invited to testify at the New Orleans hearing, where Larry Schedler, President of Larry G. Schedler & Associates in Metairie, La., testified on the industry's behalf and urged Congress to expand federal efforts with regard to housing options. He gave lawmakers an overview of the New Orleans market, in which approximately 35 percent of the area's 50,000 apartments were critically affected. Schedler said that federal incentives and a streamlined redevelopment process are necessary to meet the area's housing needs. The testimony is available at www.naahq.org/ govern_affairs/.

HUD Launches Fair Housing Campaign

The U.S. Department of Housing and Urban Development (HUD) launched a national campaign with the Ad Council on Jan. 19 designed to increase recognition of fair housing rights and reporting of housing discrimination by making hurricane evacuees aware of housing laws. The campaign consists of television, radio, newspaper and magazine advertisements that remind hurricane survivors that housing discrimination is illegal and tell them how to report violations.

The campaign comes on the heels of a recent HUD notice cautioning the industry to be mindful of fair housing obligations when working with hurricane evacuees and a report by the National Fair Housing Alliance documenting a significant number of housing discrimination occurrences against minorities displaced by Hurricane Katrina. For information, visit www.hud.gov/news/release.cfm? content=pr06-006.cfm.

Real Estate Loan Concentrations Under Scrutiny

On Feb. 2, the Federal Reserve Board joined a growing number of regulators who want banks with high concentrations of commercial real estate loans to pay more attention to them. In a speech to a banking conference, Federal Reserve Board Governor Susan Bies noted that the commercial real estate sector (CRE) "played a central role in the banking problems of the late 1980s and early 1990s and has historically been a highly volatile asset class."

She went on to warn that CRE loan concentrations have risen well beyond levels that helped trigger those prior problems. During that period, the ratio of CRE loans to capital was two to one. For banks with $1 billion to $10 billion in assets, the ratio now averages three to one. According to Bies, "We are getting concerned, as regulators, about what is happening."

Bies' remarks followed proposed guidance issued by federal bank and thrift regulators on Jan. 10 seeking to reinforce existing guidelines for real estate lending and safety and soundness. The guidance, issued jointly by the Office of the Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation and Office of Thrift Supervision, also provides criteria for identifying institutions with CRE loan concentrations that may be subject to greater supervisory scrutiny.

According to the proposal, such institutions should have in place "robust" risk management practices and capital levels appropriate to the risk associated with these concentrations. Specifically, the guidance calls for capital levels "higher than regulatory minimums." Loans to real estate investment trusts (REIT) and unsecured loans to developers that closely correlate to the inherent risk in CRE markets are among the types of loans covered by the proposal.

IRS issues LIHTC Waiver for Hurricane Rita Evacuees

The IRS published guidance (Notice 2006-11) on Feb. 1 suspending certain requirements for Low-Income Housing Tax Credit (LIHTC) projects so property owners throughout the country can offer temporary housing in vacant units to evacuees from Hurricane Rita without losing their tax credits. The relief is similar to Notice 2005-69, which temporarily suspended certain LIHTC requirements for areas affected by Hurricane Katrina. The guidance expires no later than Sept. 30, 2006 (to be determined by state housing credit agencies).

HUD Announces New Katrina/Rita Voucher Program

The U.S. Department of Housing and Urban Development (HUD) issued a notice (PIH 2006-12) on Feb. 3 describing a new temporary housing voucher program, the Disaster Voucher Program (DVP), for people displaced by Hurricanes Katrina and Rita.

DVP replaces the Katrina Disaster Housing Assistance Program (KDHAP), which expired on Jan. 31. Like its predecessor; DVP is funded by FEMA, operated by HUD and applies only to evacuees who at the time of the storms lived in public housing, had a voucher or were homeless.

There are no income eligibility or resident contribution requirements for DVP's rental vouchers, which can last for 18 months. A family's KDHAP will be converted to DVP by amending its existing KDHAP rent subsidy contract and lease. HUD has established Referral Call Centers (866/373-9509) to help families. PIH 2006-12 is available online at www.hud.gov/offices/pih/ publications/notices/index.cfm.

EPA Touts Higher-Density Development

A new report from the U.S. Environmental Protection Agency (EPA) found that higher density development may be America's best bet for protecting--or even enhancing--the country's water resources as we accommodate a rapidly growing population. In a side-by-side study of the effects of low- and high-density development on water resources, the EPA found that: (1) higher-density development generates less stormwater runoff per home; (2) higher-density development minimizes impervious ground cover; and (3) lower density development impacts more of the regional watershed for a given amount of growth.

This report provides land developers with a tool to illustrate the benefits of density development and evidence to combat local efforts to limit density because of concerns over natural resources. Protecting Water Resources with Higher-Density Development is available at www.epa.gov/smartgrowth/ water_density.htm.

Information compiled by NAA/NMHC Joint Legislative Staff: Senior Vice President for Government affairs Jim Arbury; Lisa Blackwell, Vice President of Housing Policy; Vice President of Capital Markets and Technology David Cardwell; Vice President of Property Management Jeanne Delgado; Vice President of Communications Kim Duty; Vice President of Environment Eileen Lee; Tax Advisor Howard Menell; Vice President of Building Codes Ron Nickson; Chief Economist Mark Obrinsky; and Director of Property Operations Betsy Feigin Befus.