Talk about uncertain times. These days, with the volatility and uncertainty on Capitol Hill regarding tax reform and the housing finance system, it is important for the multifamily sector to have a strong voice of advocacy in Washington, D.C., and a visible presence among policymakers at all levels of government. As the saying goes, if you are not at the table, you are on the menu.
Here’s a look at three issues of critical importance to multifamily and how the National Association of Home Builders (NAHB) and its multifamily team are working to address them.
1. HOUSING FINANCE
On Capitol Hill right now, there is a major congressional discussion taking place about the future of Fannie Mae and Freddie Mac. Since the Obama administration released its white paper outlining three possible plans for the GSEs, the NAHB has been working to shape policies and ensure that the voices of all segments of the housing industry—including apartments and multifamily—are being heard.
NAHB believes that changes to the mortgage finance system must be done carefully and over a reasonable transition period for the most effective outcome. It’s important for the federal government to continue to provide a “backstop” in the housing finance system to ensure a reliable and adequate flow of affordable housing credit in all economic and financial conditions.
What’s more, the Federal Housing Administration’s (FHA’s) multifamily mortgage insurance programs, which are vital to multifamily owners and developers, have become increasingly challenging to use, due to new underwriting requirements and processes implemented by the U.S. Department of Housing and Urban Development (HUD) during the past year. To address these challenges, the NAHB has met with top officials at HUD and its Office of Multifamily Housing Programs to voice the industry’s concerns—and offer solutions—to help reduce FHA and HUD processing times.
2. FEDERAL TAX POLICY
For years, the tax code has contained housing rules and incentives that are critical to multifamily housing, such as appropriate capital gains treatment for carried interest income in development partnerships and the Low Income Housing Tax Credit (LIHTC) program. Recently, however, both of these incentives have been challenged by legislative proposals and various deficit commissions, such as the 2010 National Commission on Fiscal Responsibility and Reform.
In 2010, NAHB advocates on Capitol Hill worked to defeat a proposal that sought to treat carried interest as ordinary income, which would have raised the tax rate from 15 percent to 35 percent. As the tax reform debate unfolds, the NAHB continues its advocacy efforts to protect tax provisions that are essential to the multifamily housing market.
3. GREEN BUILDING
In 2007, NAHB and the International Code Council spearheaded the development of the National Green Building Standard, which was approved by the American National Standards Institute (ANSI) in 2009. The standard is a rating system that provides guidelines for the design, construction, and certification of all types of residential green projects, including multifamily buildings.
The standard provides a straightforward process for the multifamily developer and is, in many cases, much more cost-effective than competing programs. To date, 1,350 multifamily units and 27 multifamily buildings have been certified to the standard.
Taken altogether, these issues—and the efforts of the NAHB to address their implications for the multifamily industry—demonstrate that, despite the continuing economic uncertainty, the rights and businesses of apartment owners and developers will be well-represented and -protected on Capitol Hill. [M]
Robert F. Nielsen is chairman of the Washington, D.C.–based National Association of Home Builders and president of Shelter Properties, a rental property development firm based in Reno, Nev.