It's Election Season Again

By Cindy Chetti, National Multi Housing Council

When Congress reconvened in January for the second session of the 112th Congress, lawmakers returned to a Capitol no less gridlocked than they left it in December. By following the scrambles to avoid a government shutdown and extend a critical payroll tax cut, it remains clear that Congress is unable to compromise.

Further snarling progress for 2012 is the fact that President Obama, the entire House and one-third of the Senate are up for reelection in November. An election year comes bearing debates, hearings and plenty of political posturing that likely will keep resolution on critical issues sidelined through the year.

But even as legislative action stalls in 2012, state and federal agencies will continue to develop and implement regulation with serious repercussions for the apartment industry. As NMHC/NAA look into 2012, we will continue to educate lawmakers and regulators on the key issues affecting our industry, with particular emphasis on tax reform, the future of the GSEs and the spate of new regulations that only serve to significantly increase the cost of providing rental housing.

The Tax Man cometh

With Congress focused on reducing the nation’s deficit and debt levels, both Democrats and Republicans aim to overhaul the nation’s complex tax code as a means of spurring both economic growth and new revenue. In addition, major pieces of the tax code have, or are set to, expire, including a so-called patch to protect taxpayers from the onerous alternative minimum tax (AMT) and the Bush-era tax cuts.

Although the 2012 election and disagreements over which tax credits and deductions to keep are likely to prevent tax reform from becoming a reality before 2013, Congress  will still have to address the Bush-era tax cuts late next year.

Secondary (market) to none

Housing finance reform and the future of the GSEs will remain prominent on the congressional agenda in 2012. While no one expects Congress to complete action on fundamental housing finance reform in an election year, the legislative foundation is being laid in the interim.

A number of bills already have been introduced. These proposals seek to restart a private securitization market and eliminate both the GSEs and the federal government guarantee. NMHC/NAA continue to work closely with members of Congress to ensure that they understand unique needs of the multifamily industry and take steps to avoid creating a capital shortage for rental housing.

Race for the red tape

Despite the legislative gridlock expected in Washington in 2012, agencies and regulators continue to promulgate a multitude of regulatory and administrative proposals that affect nearly every aspect of the apartment business and may ultimately make housing less affordable.

Much regulatory activity these days is specifically directed at issues related to energy efficiency. For example, new proposals focused on controlling building energy performance through aggressive mandates would require all structures to exceed existing energy code measures. This blanket approach fails to consider the distinct characteristics of the multifamily sector and puts extreme pressure on apartment firms to invest in very expensive upgrades—costs that have to be passed on to residents.

Moreover, lawmakers and regulators are pushing to require commercial property owners to disclose their assets’ performance ratings. However, such mandates may be premature at this time. Requiring energy labeling on apartments prior to the creation of a fully vetted and robust system could create confusion among residents and stakeholders and ultimately divert investment in the sector.

Nearly every major piece of legislation on the table today has the capacity to impact the apartment industry. While we are keenly focused on 2012 developments, we are already preparing for potential post-election reshuffling on a few key committees—the Ways and Means and Financial Services committees in the House and the Banking, Housing and Urban Affairs and Finance committees in the Senate. In particular, the end of the year will result in the completion of Rep. Spencer Bachus’ (R-AL) tenure as chair of the House Financial Services Committee, as well as the retirement of Ranking Member Barney Frank (D-MA), leaving new leaders at the head of that panel, which is charged with advancing housing finance reform.

No matter how the elections shake out, NMHC/NAA remain confident that we have the right relationships to protect the apartment industry’s interests through gridlock and beyond.

Cindy Chetti is the senior vice president of government affairs for the National Multi Housing Council.