NMHC Update: NMHC/NAA Question HUD’s Justification for Premium Increases
Date: May 15, 2012

Contact Name: Sarah Yaussi
Contact Phone: 202/974-2349
Contact E-mail: syaussi@nmhc.org

In This Issue: 

Advocacy  

Industry News

NMHC News

NMHC/NAA Question HUD’s Justification for Premium Increases 

NMHC/NAA, the Mortgage Bankers Association (MBA) and the National Association of Home Builders (NAHB) led a coalition of 12 rental housing and finance organizations in submitting a letter to HUD on May 9 opposing the proposed rate increases for the FHA multifamily insurance programs. 

The letter argued that the rate increases are unnecessary given both the strong performance of the FHA’s multifamily programs and the additional steps HUD already took to improve underwriting and loan standards. Rather than significantly reducing FHA’s credit risk and encouraging private multifamily lending, as HUD contended, the rate increases will drive up property owners’ costs, which ultimately get passed to the consumer in the form of higher rents. The letter also outlined the group’s concerns that HUD would leverage the premium increases to generate funds for unrelated purposes.

For more information on the mortgage insurance premium increases, as well as full details of the letter, visit www.nmhc.org/goto/56154.

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NMHC/NAA Participate in “Flood the Hill” Campaign to Extend Flood Insurance Program

In an effort to urge Senate members to reauthorize the National Flood Insurance Program (NFIP), which is set to expire on May 31, NMHC/NAA partnered with more than 20 real estate, financial institution, insurance and environmental trade associations on a week-long campaign to “Flood the Hill,” a multifaceted advocacy effort to send a message to the Senate to take action on the issue. The program has operated on a series of extensions since 2008. While the House already passed a bill (H.R. 1309) to reauthorize the program for five years, the Senate has yet to schedule its version of the bill (S. 1940) for a vote.

NMHC/NAA issued a legislative alert asking member firms to participate in the campaign by sending letters and making calls to Senate offices on May 9. In addition, NMHC/NAA met with key Senate offices to reiterate the message, placed ads in Capitol Hill publications and participated with our partners in social media efforts to raise awareness of our endeavors to Congress and the public.

NMHC/NAA anticipate that an extension until December 31 will be enacted before the May 31 expiration. For more background on the program, visit www.nmhc.org/goto/NFIP.

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House Amendment Takes Aim at EEOC’s Criminal Background Check Policy

On May 9, the House approved an amendment to a proposed appropriations bill (H.R. 5326) that would limit the Equal Employment Opportunity Commission’s (EEOC) ability to enforce its new guidance on the use of criminal arrest and conviction records for employment purposes by prohibiting it from using any of its FY2013 funding to do so.  The amendment still awaits review in the Senate. 

On April 25, EEOC updated its guidance on the issue, specifically outlining its policies for determining what uses of such information constitutes discrimination. (See the April 30 Update.) 

NMHC/NAA have urged EEOC to refrain from limiting an employer’s ability to conduct neutrally applied, job-related criminal background checks consistent with business necessity and, in an August 2011 letter, highlighted the apartment industry’s need for this information to help ensure staff and resident safety. The revised guidance and additional information are available at www.nmhc.org/goto/60769.

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New ADA Pool/Spa Accessibility Requirements Go into Effect May 21

Unless the Department of Justice (DOJ) issues another extension, the new pool and spa accessibility requirements of the 2010 Americans with Disabilities Act Standards (ADA) are scheduled to go into effect on May 21. While the new requirements have a limited impact on the apartment industry, operators that open their pools/spas to the public (i.e., sell pool passes, host swim meets) or receive some federal assistance would have to comply.

Legislation to block enforcement of the new rules has been introduced in both the House and the Senate. Most notably, on May 10, the House passed the FY2013 Commerce-Justice-Science (CJS) appropriations bill (H.R. 5326), which includes an amendment to block DOJ funding of the new pool/spa regulations for one year.  It is unclear if the Senate will take similar action.

In addition, the House Judiciary Committee held a subcommittee hearing on April 24 to discuss the DOJ’s guidance and specifically its failure to adhere to the Administrative Procedure Act (APA). NMHC/NAA weighed in with a letter of support for the proposed rule (FR 2012-6747), which would extend the compliance deadline until September 17.

The DOJ hosted a webinar to clarify how the new provisions apply to existing pools/spas at public accommodations. An archived version of the May 2 webinar will be posted at www.ada.gov.

NMHC/NAA are working with outside counsel to provide additional guidance on the accessibility requirements. Additional information is available at www.nmhc.org/goto/55406.

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Senate Removes Onerous Housing Provisions in Violence Against Women Act (VAWA) Bill

As Congress has geared up to reauthorize VAWA, early versions of the legislation included a number of housing provisions that would have required owners of federally assisted properties to take on additional responsibilities and administrative burdens when dealing with cases of domestic violence on their properties. However, NMHC/NAA worked with a trade coalition to restore important protections for housing providers that were included in the original law but then lost during the regulatory process.

Thanks to NMHC/NAA’s efforts, the Senate-passed bill (S. 1925) allows property owners and managers who receive “conflicting information” about a domestic violence incident to require third-party verification before extending benefits under the act. In the House, the Judiciary Committee also approved legislation (H.R. 4970) to reauthorize VAWA on May 8; the bill included provisions that eliminated onerous notification and emergency transfer provisions contained in the Senate-passed bill.

While both bills expand VAWA’s reach to additional housing programs—Section 8 voucher and project-based programs as well as low-income housing tax credit properties, among others—and add certain notification and emergency transfer requirements, NMHC/NAA support the housing provisions in the House bill as the legislative vehicle moving forward.

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NMHC/NAA Oppose Payroll Tax Increases for S Corporations

As part of a coalition of 37 trade associations, NMHC/NAA successfully urged the Senate to defeat legislation (S. 2343) on May 8 that would have forced certain S corporation owners providing professional services, including real estate firms offering investment advice or management, to pay payroll taxes on all their earnings instead of only on wages distributed.

Although the proposed legislation’s primary aim was to extend lower interest rates on student loans, it sought to offset the cost of the program by targeting shareholders at S corporations who met certain criteria. The student interest rate extension proposal is expected to ultimately pass both the House and Senate; however, NMHC/NAA continue to oppose permanently diverting resources from job-creating small businesses to finance the effort.

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IRS Issues Two Low-Income Housing Tax Credit Rules

The Internal Revenue Service (IRS) on May 2 issued final regulations (T.D. 9587) regarding owners’ requests to housing credit agencies to obtain qualified contracts for the purpose of acquiring a Low-Income Housing Tax Credit (LIHTC) property. Such contracts are used to transition LIHTC properties to new owners and govern how both the non-low-income portion and the low-income portion of a tax credit building should be priced. Notably, the regulations also include provisions designed to prevent the manipulation of the calculation of these amounts. T.D. 9587 makes final proposed regulations (REG-114084-04) first issued in June 2007.

Separately, the IRS on May 2 issued Revenue Procedure 2012-27 that establishes how taxpayers may notify the agency of any increase in tax resulting from a reduction in the qualified basis of an LIHTC building that occurs after the taxpayer disposes of the building. The notification is required to begin the three-year statutory period for assessing a deficiency.

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NMHC Compensation Survey − Final Deadline Extended to June 1

The 2012 NMHC Compensation Survey—the most comprehensive resource of its kind for the rental apartment industry—provides essential data benchmarks to support strategic compensation and employment planning. Companies that participate save more than $1,000 on the price of the complete report.

The survey includes more than 85 corporate/regional and on-site positions, enhanced information on salary increases, expanded sections on incentive programs, and trend analysis on recent economic conditions, employee turnover, telecommuting, wellness programs, and more.

For more information and to participate in the survey, visit www.nmhc.org/goto/2012CompSurvey.

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NMHC Student Housing Income & Expense Benchmarking Survey Due This Week – May 18

NMHC's Student Housing Income/Expense Benchmarking Survey provides the only data on operating benchmarks specific to the student housing market. The 2012 report will measure key expense line items in absolute dollar terms, on a per-bed basis and as a percent of net rental income. Final data will be presented by the bed and by the unit, as well as by property type and asset age ranges.

To make participation easy, owners need only provide the latest 12-month Profit & Loss statement for each of your properties (in whatever form available) and complete this form providing some demographic information for each property (number of beds, number of units, age of property, location, etc.).

Complete the survey by May 18 to receive an advance copy of the final report in early September.

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National Building Efficiency Contest Now Accepting Applications

The U.S. Environmental Protection Agency (EPA) is now accepting applications for the 2012 ENERGY STAR® National Building Competition, “Battle of the Buildings.” The contest challenges all commercial buildings, including multifamily properties, to track and improve their energy and water efficiency over a one-year period using the ENERGY STAR® Portfolio Manager tool. The winning building will demonstrate the greatest percentage-based savings. Any building achieving a 20% energy savings, as well as the top water savers, will also receive recognition for their efforts. Applications must be submitted by May 23. More information about the contest is available at http://1.usa.gov/JYrhqN.

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NMHC PAC Update

As of May 14, 717 employees from 77 NMHC member firms and NMHC staff have contributed $505,366 to NMHC PAC and the Smarter Living Fund. This represents a 99% increase in employee participation and a 158% jump in contributions from the same period last year. 

Employees of the following firms have contributed over $10,000 this year: ARA; AvalonBay Communities, Inc.; The Bozzuto Group; BRE Properties, Inc.; Equity Residential; Heritage Title Company of Austin, Inc.; HFF; Holland Partner Group; Moran & Company; Nevins*Adams*Lewbel*Schell; NorthMarq/Amerisphere; Post Properties, Inc.; Trammell Crow Residential; UDR, Inc.; and Waterton Associates, LLC. Currently, the top two firms for employee contributions to NMHC PAC are Equity Residential ($47,722) and BRE Properties, Inc. ($43,900). 

With primary season fully underway, NMHC PAC has contributed $374,150 this year to congressional campaigns and party committees. 

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NMHC Apartment Strategies/Finance Conference Kicks Off This Week (May 15-16)

Leading industry CEOs, CFOs, lenders, investors and senior-level staff officers will gather at NMHC’s Apartment Strategies/Finance Conference May 15-16 in Scottsdale, AZ.

Open to NMHC members and non-members, conference topics will include:

  • The Expansion Is Here, But Does It Have Legs?
  • Update on Apartments Around the Country
  • Where Are the Best Investment Opportunities: Core? Non-core? Distressed?
  • Revenue Is Up – How Much Is Included in the Rent?
  • Can CMBS Have an Impact in 2012?
  • Agency Debt – What Is Changing?
  • Is Dodd-Frank a Downer or a Speed Bump to Get Over?

For more information and last-minute registration details, go to Apartment Strategies/Finance Conference.

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Rental Reset: The NextGen Apartment Industry (May 16-17)

Join NMHC members in Scottsdale, AZ, this week (May 16-17) for provocative discussions on the future of the apartment business. There is no arguing that right now consumer preference favors renting like never before. But can the industry adapt in ways that would make this phenomenon a longer-term societal shift? Noted author and social critic Richard Florida will be on tap to talk about what the industry can change to ensure rental housing has a bright future long term. He will be followed the next morning by a CEO panel examining current trends and how our industry might best respond to them.

For more information and registration details, go to Spring Board of Directors Meeting.

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