By Cindy Chetti
Cindy is Senior Vice President for Government Affairs, with responsibility for implementing strategy for all legislative and regulatory issues of interest to NMHC and the broader apartment industry.
Congress is back from recess, and the clock is ticking on passage of key pieces of legislation before the upcoming November elections. There are just over 15 in-session weeks before the potential post-election shakeup of power. And with so much at stake, lawmakers are scrambling to push through various pieces of legislation—both large and small in scale. Before the end of the year, Congress must pass legislation to fund the government beyond its current September 30 deadline, but there are a number of other legislative initiatives in play.
Members of Congress aren’t the only ones with an ambitious agenda. As the Administration settles into its second year of office, they’re laser focused on climate, equity and pocketbook issues. Further, they are pushing a robust regulatory agenda that could have significant implications for the multifamily industry.
The Administration continues to promote additional funding for Ukraine and COVID relief, and a slimmed-down version of the Build Back Better package. And there are even some bipartisan efforts in play that have potential for passage including the U.S. Innovation and Competition Act which includes funding for semiconductors and the Ocean Shipping Reform act that would address container shipping issues. While it’s too early to know how much will get done, NMHC is watching each package closely as there are several potential provisions that could impact our industry.
Read on for a breakdown of what lawmakers might take on in the coming months and what that means for our industry.
Tax changes that could impact the multifamily industry continue to be the subject of significant discussion as the Administration and Democratic lawmakers look to enact major parts of their legislative agenda. To that end, the Administration included provisions targeting ordinary income tax rates, capital gains tax rates, the taxation of unrealized capital gains at death, like-kind exchanges and carried interest as part of the recently introduced Biden budget proposal.
For nearly two years, NMHC has worked to educate members of Congress on the potentially harmful impacts of these tax proposals that would reduce real estate investment and inhibit the capital flows that are so critical to the development and preservation of critically needed housing.
With the fate of the Build Back Better (BBB) proposal uncertain, NMHC continues to make the case that any bill including revenue offsets, whether it be a slimmed-down version of BBB or an unrelated piece of legislation, must be mindful of these concerns.
A version of the President’s Build Back Better proposal continues to be a priority for the Administration and the Democratic caucus. As many will recall, Congress approved the Bipartisan Infrastructure Act last year that called for a historic investment in roads, bridges, broadband and more. However, its enactment meant that many other “human infrastructure” provisions included as part of the President’s original proposal were left on the cutting room floor, including the aforementioned tax proposals, various climate fixes and a handful of social spending dollars, and housing specific funding aimed to address the nation’s housing affordability and homelessness crisis.
Democrats continue to debate what should be included in a pared down version of BBB, and how to pay for the package.
Addressing this nation’s housing affordability shortage and infrastructure challenges continue to be key NMHC priorities. As communities struggle with inadequate transportation, poor drinking water quality, sewage and other public systems, they are increasingly looking for ways to pass these costs to developers by making project approvals contingent on infrastructure investments. This translates into higher rents for households and does nothing to address the underlying shortage of affordable housing. Moreover, enacting revenue-raising proposals that would undermine housing production and preservation will only undermine the goal of addressing the nation’s housing affordability crisis.
It's too early to know whether a version of the Build Back Better package will come together ahead of the election, if at all, but NMHC continues to remain focused on those negotiations for possible spending and tax proposals that could impact the industry.
Although the Bipartisan Infrastructure Act included a number of climate-related provisions – such as funding to support grid resiliency, clean water and electric vehicle charging – many of the big-ticket climate fixes are in limbo due to a lack of consensus on the legislative vehicle that could carry these provisions. And because this issue is a top priority for the President, several arms of the Administration have also taken action on the regulatory front in recent weeks.
These actions have been wide sweeping, and there are a few specific proposals that will have particular impact on the multifamily industry—including a March SEC vote to require publicly traded companies to make certain climate-related disclosures and a move by the EPA in February to refine elements related to the waters subject to federal jurisdiction as it existed prior to 2015. NMHC will be commenting on these proposals in coming weeks to ensure they do not unduly impact the multifamily industry.
As we move into the latter half of the year, we don’t anticipate the Administration slowing down, particularly if climate provisions are stalled alongside BBB. The apartment industry has long been committed to developing robust tools to help the apartment sector improve environmental performance and resiliency. The industry actively promotes the use of numerous green building programs and standards, participates in national code and standard committees and conducts industry-specific education and outreach. In addition, we have been long-term proponents of the goals set forth in the Clean Water Act and believe we must all work to preserve and protect our nation’s waters.
While NMHC supports the role that smart regulation has in ensuring the health and well-being of the American public, we remain concerned about the cost of unnecessary and onerous regulation. In fact, a NMHC study found that on average regulations comprised 32 percent of total development costs. It is vital that the Administration keep this in mind as they work towards our shared climate goals.
Although Congress and the Administration are largely transitioning out of pandemic “emergency mode,” additional COVID relief funding remains a key priority for the Administration. Although the White House requested more than $20 billion in relief funding, Congressional Republicans and Democrats in late April struck an agreement on an approximately $10 billion package. Funding for testing, vaccines and state and local support are included within this measure that is currently awaiting final floor action in both congressional chambers.
A related effort directly impacting the apartment sector is legislation being pushed by a number of advocacy groups: The “Eviction Crisis Act” that would create a permanent $3 billion per year Emergency Rental Assistance program.
While the current draft of the COVID relief package does not include specific provisions impacting the industry, we will continue to monitor negotiations to ensure that provisions that could negatively impact the industry are not included.
Having both passed their versions of the U.S. Innovation and Competition Act, the House and Senate will shortly convene a conference to finalize legislation funding the research and development of new technologies that support U.S. innovation and global competitiveness.
Importantly, passage of this legislation would provide funding to increase the production of semiconductors. Given the global shortage of semiconductor chips and our industry’s reliance on chips for smart home and security tech within apartment communities, this legislation is critical.
This issue has garnered bipartisan support and is seemingly a priority for both chambers, so some version of the legislation is expected to pass ahead of the election.
- Fannie Mae Chair Sheila Bair and CEO Hugh Frater Stepping Down
- Fannie Mae Announces Expanded Housing Choice Initiative
- ACTION Coalition Letter to Treasury Regarding Community Development Tax Incentives
- Department of Labor Proposes Update to Davis-Bacon that Could Hinder Development
- Real Estate Coalition Letter To House Supporting Section 8 Bill