In the waning days of 2017, many policy issues affecting the apartment industry have been front and center for Congress and the administration.
Debate over top issues like tax reform, housing finance reform, the reauthorization of the National Flood Insurance Program (NFIP), and regulatory reform are moving forward, but it's still too early to predict what legislative measures will ultimately make it over the finish line by year's end.
Tax Reform Leaps Forward
Republicans, in control of both houses of Congress and the White House for the first time in years, are determined to enact tax reform by the close of 2017. For the past year, the NMHC has been focused on preventing a redo of the mistakes from 1986, when Congress last took on comprehensive tax reform, making poor policy decisions that devastated the commercial real estate industry.
The tax reform debate is changing daily, but the NMHC’s policy experts have been cautiously optimistic on several fronts. Both the House and the Senate tax packages largely left many critical provisions for the multifamily industry intact, including those impacting interest deductibility, like-kind exchanges, and depreciation; however, they would make more dramatic changes to both the individual and business sides of the tax code.
Reauthorization of the Flood Insurance Program Stalls
The NFIP, critical to ensuring that multifamily owners, operators, and developers can secure the necessary flood coverage to protect and finance their projects, is set to expire in December.
In mid-November, the House of Representatives took a big step toward a reauthorization by passing the NMHC-supported 21st Century Flood Reform Act, which would not only reauthorize the program for another five years but also implement a number of important reforms, including requiring FEMA to provide NFIP premium reductions for alternative methods of mitigation; removing the mandatory flood-insurance purchase requirement for multifamily rental properties with federally involved commercial loans; and raising the coverage limit.
The Senate won't consider the House-passed flood bill but instead will craft its own version. Given that the program is set to expire on Dec. 8, the program will need to be extended. And given that short-term extensions create uncertainty in the marketplace, the NMHC is urging lawmakers in Congress to enact at least a one-year extension to provide stability and time for Congress to reach agreement on a comprehensive long-term reform package.
Housing Finance Reform Heats Up Again
Retiring chairman of the House Financial Services Committee Jeb Hensarling (R-Texas) and Senate Banking chairman Mike Crapo (R-Idaho) have both announced that they intend to make progress on housing finance reform by the end of 2017 or the first quarter of 2018, at the latest.
Chairman Hensarling has already held a series of hearings. NMHC Chairman Bob DeWitt recently participated in one, using his testimony to outline the core multifamily housing finance principles—including an explicit, paid-for federal guarantee for multifamily-backed mortgage securities—that would need to be part of any reform effort. The NMHC is working closely with key administration officials, committee members, and congressional staff to ensure that housing finance reform addresses multifamily’s unique business needs.