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Industry, who speaks for you in Washington?

Passive losses, the credit crunch, wetlands regulations, fluorocarbon phase-out, indoor air quality, lead print removal and the Americans With Disabilities Act are some of the areas of concentration for the 12 national real estate organizations. Last fall, they issued a joint policy statement for the first time in recent memory and were granted an audience with President George Bush.

The result of this effort, one lobbyist said, was that the real estate groups were ribbed by other Capital Hill lobbyists for having so many pro-real estate measures included in the tax package that was later vetoed by the President for other reasons.

The groups are: American Resort Development Association (ARDA); Building Owners and Managers Association International (BOMA); International Council of Shopping Centers (ICSC); Manufactured Housing Institute Mortgage Bankers Association of America (MBAA), National Apartment Association (NAA); National Association for Industrial and Office Parks (NAIOP), National Association of Real Estate Investment Trusts (NAREIT), National Association of Realtors (NAR), National Multi Housing Council (NMHC), and the National Realty Committee (NRC).

The 12 are more recently -- and more efficiently -- becoming known around the Beltway as NREO (pronounced NAR EE O) and meet quarterly to discuss common issues. Cary Brazeman, a spokesperson for the National Realty Committee said the real estate groups are more unified than they ever were before.

Deborah Beck, a vice-president of the Real Estate Board of New York, said REBNY becomes involved with the Washington groups particularly when the city has already enacted a law that is under consideration in Congress and REBNY can provide an overview of the practical implications.

Brazeman said one reason real estate groups need to keep a watchful eye on the Hill is that when rules are unduly burdensome on builders or bankers, the costs are passed through to borrowers.

"We're driven by this recognition of the tense credit crisis that continues to afflict the industry and a desire to alleviate that as best we can," Brazeman said.

The "P" word is of major concern and together, the real estate groups are seeking passive loss reforms. "If you ask anyone in real estate, they will tell you they need to get some relief from the onerous provisions of the 1986 Tax Act," Beck said.

The International Council of Shopping Centers' Vice President of Government Relations Judy Black, said with over 300 co-sponsors, Congress is very supportive of the passive loss legislation and included it in the recently vetoed budget bill.

"That's the frustration," Black said. "You have a clear indication that people support it and yet it's not law."

Jay Shakford, vice president of the National Association of Home Builders, said they strongly supported the economic recovery package that included the $5,000 first time home buyer credit, the modification of the passive loss rules, and allowed removal of IRA money for down payments.

"We have hopes that if the economy weakens we could have a narrower bill which would help stimulate the economy and then the tax credit and other bills would be reconsidered," he said.

Black warned, however, that "things have gotten very partisan which is causing a lot of gridlock. The CW [conventional wisdom] is nothing will be done. We have to continue to get something done because our people need it and they need it now and can't wait until another session comes around."

Brazeman urged real estate professionals to become involved. "There are letters to write, calls to make and visits to make," he said. "Say to them, 'put your petty partisan measures aside."

Of immediate concern, Shakford said, is the Low Income Housing Tax Credit ad Mortgage, Revenue Bond Authority programs which expire at the end of June along with several other programs that need to be extended.

Stephen Driesler, vice president of government affairs at the National Associations of Realtors, with 700,000 members, believes there is a chance for passive loss rules to be added to an extender measure, as does W. Donald Campbell, vice president of government affairs at the Multi Housing Council, who would like to a passive loss provision included on "whatever vehicle they can muster."

Driesler said the Realtors are targeting the extenders for passive loss and a credit for first time home buyers. Any urban Save Our Cities package, he said, would probably include enterprise zones to help rebuild cities and would need to be watched.

Housing and Finance Legislation

Key issues, Shakford noted, are getting the economy out of recession and getting the housing to lead the way. If the government can come in and jump start with the $5,000 tax credit, Shakford said that would bring another 200,000 people into the market and stimulate construction of 200,000 homes creating 400,000 jobs. "The housing market is like a ladder and as somebody moves up it affects those below who are provided other opportunities," he said.

There is a major housing authorization bill that is receiving attention from several groups, including the Multi Housing Council and the National Association of Realtors. Campbell said the multi-housing finance system requires a fundamental overhaul and will require a long-term process.

Driesler said the Realtors would like to see FHA changes overturning a HUD-imposed 57 percent limitation on financing and increasing the FHA maximum loan limit to make housing more affordable. "The program is getting to be less and less used with higher risk," he said.

Manufactured Housing Institute's Laura McPherson said they are primarily concerned with HUD regulations including focusing on removing a "permanent chassis" rule for these mobile homes that are only moved 5 percent of the time. She is pleased that a sub-committee just increased FHA Title I loans for mobile homes and, in general, seek the removal of regulatory barriers in Federal, State and Local jurisdictions although they encourage Federal regulations to enact inclusionary land regulations. Attention is still on the first time home buyer tax credit, McPherson added, noting they are always seeking the easing of the credit crunch.

Sharon Canavan, deputy legislative counsel for the Mortgage Bankers Association, which has 2,200 lender members, said they are concentrating on a housing bill dealing with Freddie Mac and Fanny Mae as well as an amendment that would roll back certain out-of- pocket costs which FHA financing now does not cover. They are also seeking to increase the FHA mortgage limits.

Another provision would increase the safety and soundness capital requirement for Freddie Mac and Fanny Mae.

"While we actively support the safety and soundness of any federal enterprise," Canavan noted," we have been working hard to see that these requirements are reasonable and don't translate into higher costs for consumers."

Brazeman said banking agency guidelines for real estate lending were mandated by Congress and are supposed to be adopted by September of this year. "That's clearly one of the issues to work with the regulators on the adoption of those rules," he said.

"What's needed," Brazeman agreed, "are rules that ensure the safety and soundness of banking but provide the lenders with the ability to make good loans and don't take the judgment out of the lenders' hand."

The credit crunch has made it difficult for builders to obtain financing even for pre-sold units, said Shakford. "It's really impacted the construction and home building industry and we're hopeful of getting the banks back in the business of making loans to credit worthy individuals," he said.

The Multi Family Council is developing a major data base on senior housing and is working with state and federal legislation that affects seniors housing. Campbell said some of the problems stem from the applicability of the ADA ad the Fair Housing Act to senior housing.

"Whenever you try to solve a problem you may have a clear perception of what you want to do but out in the grey areas you may have bizarre issues," Campbell explained. "The bureaucrats look at it and say you have to do something that Congress never intended or thought about."

For instance, he said, service providers are prohibited from asking for certain information and yet in developing or filling housing, they need to know what kind of services to provide.

BOMA has been appealing to the Office of Management and Budget and President Bush regarding the Government Services. "They've been trying to build new buildings," James C. Dinegar, vice president of BOMA explained. "We are saying, "Why are you buildings when we have empty ones?"

Most building owners are more comfortable and are complying with the Americans with Disabilities Act, but Dinegar said owners have questions about the particulars. There is still an uneasiness over what people are supposed to do and the liability involved, he added. BOMA is concentrating efforts on clarifying issues and enforcement.

Dinegar said because tenants are not moving out in great numbers, renovation work is not triggering the ADA requirements so there is not as much of an impact as there would have been if this law had been in effect in the 70's.

Environmental Concerns

Dinegar said the EPA phase-out of fluorocarbons -- used in building air conditioning systems -- will give the asbestos issue a "run for the money." These rules come out on July 1 with a phase-out in 1995. So far, he said, no replacement for this critical substance has been approved.

The NRC is concentrating on indoor air regulations and has concerns over possible lender liability for hazardous waste.

BOMA is promoting educational seminars focusing on indoor air quality issues. Dinegar said they are hoping to give the education process time to work so they can say to Congress, "You won't need legislation."

Lead based paint removal is working its way through both the Senate and the House committee system. "We want to make sure we have provision to deal with a costly and urgent problem but deal with it in a way that we don't lose massive housing," Campbell said.

Driesler said the House is considering a test for lead paint at the time of sale for single and multi family housing. "We're working to massage that legislation," he said, adding that a Senate bill would simply require disclosure and a health warning label with any house purchase.

Driesler said other issues could come up during the Clean Water Act and the wetlands permitting process debate.

"We worked hard to come up with the Wetlands plan that the Bush administration offered last summer," Brazeman said.

The redefining of wetlands is a critical issue since real estate interests are becoming more sensitive to environmental concerns. "We don't want wetlands regulations to shut down all development completely," Black explained, "So we are trying to ensure a balanced wetlands policy coming out of Congress and that is a top priority."

REIT Targets

NAREIT focuses primarily on very specific issues and policy changes to the laws under which Real Estate Investment Trusts operate. Mark O. Decker, president of NAREIT, said two issues spotlighted for this year are a 5/50 rule change to make it easier for U.S. pension funds to invest in REITS, and to liberalize the sale of properties, so a REIT could acquire bulk Resolution Trust Corporation assets and sell them while retaining REIT status. "There is also a gross income test that we would like to see repealed," he said. The RTC cannot go forward with its plans unless the REIT laws are changed, however, Congress may limit certain changes to FDIC or RTC properties while Decker feels any distressed institutional or lender property should qualify.

Stalking the Votes

Several of the groups track legislators and politicians. "When there is a vote on one of your issues, you keep the vote tally," Black explained. "You always have to know who is supporting you to continue discussion, and know who voted against you to answer any questions they have which caused them to vote the way they did."

Driesler said the Realtors have submitted testimony to the presidential conventions platforms for some housing "planks." That process is gearing up now, he said. The Home Builders have also submitted testimony, Shakford said.

Black said the ICSC will be represented at both presidential conventions. "You've got to continue explain what's going on in your industry when ever there's an opportunity to make those kinds of points," she said, "and the platforms committees are those kinds of places."
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Title Annotation:lobbyists for real estate industry in Washington D.C.
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Jun 10, 1992
Words:2049
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