Party Platforms Recognize Rental Housing.

Thanks to NAA/NMHC outreach, the Republican party platform specifically recognizes the importance of apartments. Earlier in the summer, NAA/NMHC start met with the platform committees of both political parties to educate them on the important contributions apartments make to livable communities and to strongly urge them to include a balanced housing policy message in their documents.

As a result, the Republican platform notes that while home-ownership is desirable, "at the same time, a balanced national housing policy must recognize that decent housing includes apartments, and addresses the needs of all citizens, including renters."

On the other side of the aisle, the Democratic party platform reaffirms that party's support of the low-income housing tax credit program (LIHTC) and its commitment to address the problem that "owning or renting an affordable home seems an impossible dream" in too many communities. The Democratic platform also stresses the importance of building more livable communities and transforming "out-of-control sprawl to well-planned smart growth." It specifically calls on the government to "encourage the renovation and construction of affordable housing closer to places of work and to mass transit."

To further reinforce our message, NAA/NMHC staff and members participated in a variety of events at both conventions. At the Republican National Convention we attended a lunch featuring George W. Bush, and we also hosted events for several influential Republican members of Congress who have a special interest in real estate and telecommunications issues. At the Democratic National Convention, we co-sponsored a dinner with the National Real Estate Organizations for key members of Congress.

Telecommunications Access Battle Heats

The battle for telecommunications access continues to heat up at the state level. In the latest development, on July 24, the Massachusetts Department of Public Utilities ordered all larger residential and commercial property owners to provide nondiscriminatory access to all telecommunications (cable, phone and Internet) service providers beginning July 1,2001. Although the ruling (DTE 98-36A) effectively prohibits exclusive contracts, it specifically exempts all tenancies of 12 months or less. The order does cite NAA/NMHC's 1999 testimony before Congress during which we explained the case for exclusive contracts in certain circumstances.

As part of the Real Access Alliance, NAA/NMHC have mounted an effort to have this order overturned before it goes into effect. We also continue to lobby against a proposal pending at the Federal Communications Commission (FCC) and two bills pending in Congress (H.R. 3487 and S. 1312) that would mandate access for some telecommunications service providers and allow them to install their equipment in private buildings at little or no cost. Our efforts focus on educating policymakers that building access costs are now freely negotiated between individual owners and telecom providers, and that the sheer number of contracts being signed every day shows that the market is working and that new, burdensome regulations are completely unwarranted and inappropriate. Additionally, such regulations would violate the constitutionally protected property rights of private owners and undermine the ability of owners to offer residents and tenants the most advanced, cost-effective, quality telecommunications services available. NAA members are urged to be vigilant on these issues in the state and local legislative arenas and at the public utility commissions.

Policymakers Focus on the Low-Income Housing Tax

The multiyear effort to increase the state volume cap for the Low-Income Housing Tax Credit (LIHTC) program moved one step closer to success on July 25 when the U.S. House of Representatives fast-tracked a community renewal bill (H.R. 4923) that includes a provision boosting the LIHTC program. The legislation, which enjoys wide bipartisan support, would increase the LIHTC per capita tax credit amount incrementally over the next six years to $1.75 per capita by 2006 and index it for inflation thereafter. President Clinton hailed the passage of the House bill, making it one of the few major tax-related bills with a chance to be enacted this year. While supportive of the House bill, housing advocates are also focusing their attention on two Senate bills (S. 2936 and S. 2779) that immediately increase the LIHTC from $1.25 to $1.75 per capita and index it for inflation.

Meanwhile, the U.S. Department of Housing and Urban Development (HUD), the U.S. Department of Treasury and the U.S. Department of Justice (DOJ) have announced a cooperative agreement and a new monitoring process to ensure that LIHTC properties are complying with the Fair Housing Act. Under the agreement, HUD and DOJ will notify the Internal Revenue Service (IRS) and state housing finance agencies of fair housing enforcement actions involving LIHTC owners. The IRS will, in turn, notify involved owners that a discrimination finding could result in the loss of tax credits. According to the notice of the new initiative, training and technical assistance will be made available to state housing finance agencies, developers and property managers. An annual meeting will also be sponsored with the private sector to discuss emerging civil rights issues and new methods to increase civil rights compliance in the tax credit program.

Section 8 Voucher Reform Urged

Backed by mounting evidence that administrative obstacles continue to impede the success of HUD's Section 8 voucher program, NAA/NMHC have asked Congress to step in and take action. Before Congress left on its summer recess, Senator Wayne Allard (R-Colo.), chairman of the Housing and Transportation Subcommittee of the U.S. Senate Banking, Housing and Urban Affairs Committee, introduced a major housing bill (S. 2968). Among other things, the bill includes provisions advocated and authored by NMHC/NAA to reform the administration of the Section 8 Housing Choice Voucher Program. Specifically, the legislation would nullify provisions of the HUD-required lease addendum that conflict with existing standard lease agreements or state and local law. It would also allow eligible properties to be certified and inspected on a property-wide basis, rather than unit by unit. Finally, it would require HUD to solicit public comment on how the voucher program could be further reformed to increase private rental housing owner participation and to provide Congress a report on recommended legislative and administrative program changes within six months of the law's enactment.

Relatedly, the National Low Income Housing Coalition (NLIHC) has issued a report on voucher use that synthesizing the literature on the topic and makes recommendations for specific reforms. The report notes that contrary to conventional wisdom, the variability of voucher program success rates between locales may not be the result of market "tightness," but rather on how effectively the program is administered in a given area. The study gives examples of inefficiencies that discourage private owner participation, including late rental payments and the use of different forms and procedures by different administrators in the same housing market. A series of recommendations are provided to improve the use of Section 8 vouchers, including setting payment standards at levels that provide voucher holders with maximum opportunity to use the voucher; harmonize administrative procedures; provide quick property inspections; speed up leasing and make rental payments prompt; increase outreach to owners; and to develop marketing materials to promote a positive image of the program. The complete report is available online at http://www.nlihc.org/ bookshelf/scarcity/index.htm.

Treasury Releases Depreciation Study

The U.S. Treasury Department has released its long-awaited and Congressionally mandated Report to Congress on Depreciation Recovery Periods and Methods. NAA/NMHC submitted detailed comments to the department on the study, which essentially summarizes the current cost recovery system and identifies the pros and cons associated with several reform proposals. On the present 27.5 year composite life for residential real estate, the study notes that while the basic structure may last longer than 27.5 years, many of the components wear out faster or need to be overhauled to extend the life of that component. It also acknowledges that the present system may be based on outmoded asset life studies conducted prior to 1962. The report fails to draw any conclusions about proposed reforms or make any legislative recommendations, however, noting that such conclusions would require detailed empirical studies and years of analysis.

NAA/NMHC Opposes HUD Rule on FHA Property Sales

NAA/NMHC filed comments with HUD on a proposed rule (65 FR 41538) that would prohibit multifamily mortgagors from bidding on properties at foreclosure sales if they had defaulted on a Federal Housing Administration (FHA) mortgage. The draft rule would provide for a discretionary waiver if HUD determines that allowing the defaulting mortgagor to bid is in HUD's best interests. Our comments note that clear guidelines for the waiver need to be established. Citing the possibility of economic catastrophe beyond a competent owner's control, we call on HUD to require a waiver of the rule if the mortgagor in default did not act in bad faith. Alternatively, we note that HUD's procedures for certifying multifamily FHA mortgagors already contain a mechanism for screening out defaulters. We suggest that the proposed rule be recrafted to allow the department to screen out bad actors rather than waive in acceptable bidders, thus removing a presumption of guilt or bad faith.

Building Codes Take Center Stage

NAA/NMHC have mounted grassroots campaigns on several fronts on the issue of building codes. First, we continue to advocate for the local adoption of the recently published International Code Council's (ICC) model codes. As the first and only set of national model codes designed specifically to work together, these codes will simplify the development process for multifamily practitioners and result in more consistent code enforcement in across locales. Thanks to several years of effort by NAA/NMHC in the ICC code development process, these codes contain many provisions favorable to the apartment industry. Furthermore, the ICC codes are the only codes designed to be compatible with all the federal accessibility regulations, including the minimum standards set by the American with Disabilities Act and the HUD Fair Housing Accessibility Guidelines. NAA/NMHC have produced a sample letter that we are encouraging all members to personalize and send to the officials responsible for building codes issues in their jurisdiction. The draft letter is available by contacting Karen Garland at 202/974-2349 or at [e-mail].

Just as the ICC codes are becoming available for local adoption, the National Fire Protection Association (NFPA) and other codes/standards groups have joined together to prod,ace their own set of model building codes to directly compete with the ICC codes. Even though we support the ICC codes over the NFPA effort, NMHC/NAA are actively involved in the NFPA process. This involvement does not in any way represent an endorsement of the NFPA process or its decision to produce its own code, but we feel it is necessary to ensure that the interests of the apartment industry are heard. NAA/NMHC staff serve on the technical committees drafting these new codes, but without additional support from the industry at large our ability to effect change in the NFPA process is severely limited.

To ultimately succeed, we need to increase our voting power by getting as many NAA/NMHC members as possible to join NFPA. As NFPA members, industry practitioners would then be eligible to attend NFPA meetings and vote on important multifamily-related proposals. Membership costs just $115 per year, and there are no special requirements or qualifications to join. Additional information and an online application are available at www.nfpa.org. Members who do join NFPA should notify NAA/NMHC's Ron Nickson (at [e-mail]) so they can be added to an e-mail distribution list briefing them on emerging issues.

Information compiled by NAA/NMHC Joint Legislative Staff: Senior Vice President Clarine Nardi Riddle; Vice President of Tax Jim Arbury; Vice President of Communications Kim Duty; Vice President of Property Management Jay Harris; Vice President of Environment Eileen Lee; Vice President of Housing and Finance Stephen Lefkovits; and Vice President of Building Codes Ron Nickson.