Forced Access.

In another major victory for residents and apartment owners, the U.S. Court of Appeals for the Ninth Circuit upheld a lower court decision that the Cable Communications Policy Act (CCPA) of 1984 does not grant a cable company access to individual apartment units in a private apartment property through easements granted to other cable providers. (Cable Arizona Corp. v. Coxcom, Inc., No. 99-17406 9th Circuit, Aug. 17, 2001). In their push for forced access regulations, some telecom firms have claimed that private easements should be treated as public easements such that by admitting one telecom firm, owners have consented to the occupation of their property by other firms. The CCPA gives cable franchisees the right to construct a cable system over public rights-of-way, and through easements, which have been dedicated for compatible uses. The court rejected the plaintiff's argument that the phrase easements dedicated for compatible uses refers to both private and public easements. The National Apartment Association (NAA) and the National Multi Housing Council (NMHC) will continue to monitor the forced access issue at the state and federal level.

Bankruptcy

Bankruptcy reform, a top priority for the NAA/NMHC, appears to be back on track. The U.S. House of Representatives passed its bill (H.R. 333) on March 1 with NAA/NMHC-sought language to reform the Code's automatic stay provision and prevent residents from abusing the Bankruptcy Code in order to live rent free. The Senate bill (S. 420) passed on March 15, but with a version of the automatic stay language that is unacceptable to the apartment industry. Congressional efforts to reconcile the two bills have been stalled, however, because of partisan disagreement over the ratio of Democrats and Republicans on the conference committee. The impass was resolved in August, after the House named 12 Republicans and seven Democrats to join 13 Senate conferees named last week. Staff negotiations may begin during the August Congressional recess, but the conference committee is not expected to meet until September. NAA/NMHC are urging the conferees to adopt the House version of Section 311--the rental property automatic stay reform B in final negotiations.

Millennial Housing Commission 

NAA/NMHC have submitted final written comments to the Congressionally-chartered Millennial Housing Commission (MHC). The Commission was formed by Congress and has been charged with developing recommendations for a national housing policy. NAA/NMHC staff has participated in Commission meetings and has met with Commissioners and their staff on numerous occasions to ensure that the interests of the nation's rental housing units are considered in the group's final report.

Our, comments were developed by an NAA/NMHC Millennial Housing Commission Task Force that included leading multifamily owners, managers, developers and lenders of market-rate and publicly assisted properties as well as representatives of several state and local apartment associations.

The August 16 document addresses the following issues: the need for a more balanced housing policy and ways attractive density can help achieve the objectives of smart growth; reforms necessary to make the Section 8 housing voucher program more palatable to private owners; ways to expand the capital available to produce and preserve rental housing; and tax law provisions that discourage investor interest in owning, preserving and producing affordable rental housing.

HUD/FHA Appropriations

The FY2002 U.S. Department of Housing and Urban Development (HUD) Appropriations Bill (H.R. 2620) is working its way through Congress. At press time, the bill had passed the U.S. House of Representatives and the U.S. Senate's Appropriations Subcommittee. Both versions fully fund Section 8 renewals at $15.5 billion. The Home provided funding for 34,000 new vouchers, while the Senate bill cut that to 17,000. Both homes call on HUD to improve voucher utilization rates. NAA/NMHC have long advocated programmatic reforms to the voucher program to make it more market-friendly and to increase private owner participation. In the area of fair homing, the House provides $19.4 million for the Fair Housing Initiatives Program (FHIP) and $26.5 million for the Fair Housing Assistance Program (FHAP), compared to the Senate's $24 million for FHIP and $21.9 million for FHAP. The programs currently receive $23 million each.

On July 20, a House-Senate conference committee removed $40 million in credit subsidy funding for the Federal Housing Administration's (FHA) multifamily program from a supplemental appropriations bill (P.L. 107-20) signed into law July 24, 2001. The elimination surprised housing advocates since the Bush Administration supported the funding, and both the original Senate and House included the full $40 million. This action effectively ends any hope of funding for new or pending FHA multifamily loans until the new fiscal year begins on October 1, 2001. NAA/NMHC will continue to work with legislators and HUD to secure adequate FHA funding for FY2002; an increase in FHA multifamily loan limits; and the elimination of HUD's recent premium increase for the program. Relatedly, the House rejected an amendment to the HUD Appropriations Bill, by a 212-212-tie vote, that would have limited FHA Section 221(d)(4) multifamily mortgage insurance premiums to the cost of the program. HUD says it is analyzing the formula used to calculate the credit subsidy and will lower the premium if it determines 80 basis points is too high.

Housing Legislation

Representative Bernie Sanders (D-VT) has introduced legislation (H.R. 2349) that would create a national affordable housing trust fund for new and rehabilitated housing. It would be funded from excess reserves in the FHA Mutual Mortgage Insurance Fund and Ginnie Mae surplus funds, and it hopes to create 1.5 million affordable housing units over the next 10 years. Similar legislation (S. 1248) has been introduced in the Senate. The likelihood of passage this year is unknown. HUD Secretary Mel Martinez says he wants to wait for the Millennial Homing Commission's report due out next year before supporting major housing legislation. Meanwhile, the Senate version of the FY2002 HUD Appropriations bill calls on HUD to seek new approaches to developing affordable housing, including new multifamily housing insurance products. Relatedly, Representative Eliot Engel (D-NY) has introduced a bill (H.R. 2338) that would allow a refundable credit against the income tax for the amount paid in rent in excess of 30 percent of income. The bill has 20 co-sponsors and was referred to the House Committee or Ways and Means.

Meanwhile, the U.S. Senate is considering a bill that would create a single-family homeownership tax credit modeled after the low-income housing tax credit (LIHTC). Although the Bush Administration supports a homeownership tax credit, prospects for any tax legislation this year are slim amid expectations for a lower 2001 budget surplus. The proposed credit would be taken over 10 years, with the first five designated as a compliance period. It would have a present value of 70 percent of the qualified basis of new construction and 30 percent for rehabilitated properties. Homing advocates are concerned that such a tax credit would draw investors away from the LIHTC and further exacerbate the rental homing shortage.

Affordable Housing

The U.S. General Accounting Office (GAO) has issued a report examining the total per-unit costs of various homing assistance programs (GAO-01-901R Costs and Characteristics of Federal Housing Assistance). GAO notes that in FY1999, 5.2 million renter households received federal homing assistance at a cost of approximately $28.7 billion. Nine million very-low-income renter households qualified for, but did not receive, assistance. The report finds that production programs are more expensive than vouchers, but notes that in many markets production programs are the only source of new affordable rental units. In others, they are an integral part of revitalizing distressed communities. Therefore, GAO does not recommend replacing production programs with vouchers. The complete report is available online at www.gao.gov.

Sprinkler Recall

On July 19, Central Sprinkler Co. announced a voluntary recall of 35 million sprinklers with O-ring seals, including certain O-ring models sold by Gem Sprinkler Co. and Star Sprinkler Inc. Degradation over time can cause the sprinkler heads not to activate during a fire. This is the second major recall for Central Sprinkler. In 1998, the firm recalled 8.4 million Omega sprinklers. Central has agreed to pay all costs of the recall, including labor, which building owners had to bear in the prior recall. The Consumer Product Safety Commission and Underwriters Laboratories Inc. are reviewing other models using O-rings and may issue additional alerts if more problems are discovered. Apartment owners are urged to check their fire sprinklers immediately to determine if they are part of the recall. Information on the affected models is posted at www.SprinklerReplacement.com. Due to the number of sprinklers involved, the recall will be phased in, with priority for older sprinklers and sprinklers showing signs of corrosion.

NIMBYism (Not in My Back Yard)

In a win for apartment developers, the Connecticut Supreme Court has stopped a town from blocking a proposed apartment property by hastily developing a plan to create an industrial park on the site. (AvalonBay Communities Inc. v. Town of Orange, No. 16352, 2001 WL 739994.) The town of Orange, Conn., rejected an application to build new apartments on a land parcel zoned for residential use. It then quickly drafted plans to create an industrial park in the area and use its powers of eminent domain to take the apartment firm's parcel for the project. The court permanently enjoined the industrial park project, saying the plan was adopted in bad faith to prevent the development of affordable housing. In what could be a model for other states, the Connecticut statute allows developers who provide a specified number of affordable units to shift the burden of proof at local zoning boards in their favor. The apartment firm also claimed the city violated fair housing laws prohibiting discrimination based on familial status when they rejected the proposed apartments. While the court concluded that the fair housing claims were not necessary to enjoin the industrial park, this case is one of many where developers are asserting fair housing violations to secure approval of new apartments. The NMHC Lawyers' Forum will discuss this topic on September 10.

Wetlands

On August 9, the U.S. Army Corps of Engineers proposed changes to its wetlands permitting system that would give regulators more flexibility to grant streamlined approvals for certain wetlands development projects (66 FR 42070). The most notable change is that the Corps would no longer require the more time consuming individual permits for any activity affecting more than 300 feet of a linear streambed. Instead, developers would have to notify the Corps of such activities, and the Corps could authorize filling in more than 300 linear feet of streambed if the activity complies with the terms and conditions of the more streamlined nationwide permit (NWP), and if the adverse environmental effects are minimal. The Corps districts would also be allowed to mitigate wetlands losses on a case-by-case basis depending on area needs; the current regulation's references to compensory mitigation would be eliminated. NAA/NMHC will submit comments on the proposal by the September 24 deadline.

Information compiled by NAA/NMHC Joint Legislative Staff. Senior Vice President Clarine Nardi Riddle; Vice President of Tax Jim Arbury; Vice President of Finance and Technology 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.