NMHC

On November 1, NMHC/NAA provided a comprehensive overview of the affordable challenges facing the country for House Financial Services Committee Chairman Jeb Hensarling (R-TX) in response to his call for solutions and his recent series of hearings on affordable housing. We emphasized that demand for apartments across the nation is outstripping supply and offered numerous related recommendations.

Congress is poised to approve a federal budget this week that would include a dramatic overhaul of the way real estate partnerships are audited, including multifamily. Specifically, this two-year bipartisan budget deal approved by the White House and congressional leaders would set discretionary spending levels through 2017 and increase the nation’s debt ceiling. With this overhaul, lawmakers are trying to address the fact that large real estate partnerships are audited at much lower rates than their C corporation counterparts. They have simplified the audit process in the budget deal because they believe it will capture more tax revenues.

Apartment market conditions improved across all four indexes of the Q3 National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. The market tightness (53), sales volume (53), equity financing (52) and debt financing (54) indexes all landed above the breakeven level of 50, indicating growth over the past three months.

There was wheeling and dealing and much more during the 2015 NMHC Student Housing Conference & Exposition, as 700 of student housing's leading owners and managers; developers; lenders and brokers; and service providers gathered at the Arizona Biltmore in Phoenix for the three-day event. The event's Student Housing Emerging Leaders program, headed by Collier Companies CEO Andy Hogshead, also provided an opportunity for up-and-coming student housing stars to further their professional development with valuable industry insight and connections

Over the past few years, there’s been a lot of student housing development activity. So many of the available, truly pedestrian-to-campus locations have already been snapped up. However, despite the scarcity of opportunity sites, investor and industry preference remains for these infill locations so there is a willingness to bid more for the site, resetting land prices with every deal.

The student housing sector’s solid fundamentals and positive outlook continues to gain the attention of capital sources. Both debt and equity are widely available as traditional sources of capital mix with newly available debt and equity vehicles. More institutional players are active and a lot of foreign capital is coming in through them or directly through joint ventures with local operators. Similarly, well capitalized, large homebuilders and military housing contractors are also entering the space

The Environmental Protection Agency (EPA) reached out to NMHC on September 30 seeking assistance in contacting our member companies that use the ENERGY STAR Portfolio Manager Program. Specifically, ENERGY STAR and WaterSense are working together to develop the first 1-100 score for water efficiency for multifamily buildings. EPA is looking for industry’s feedback on usage for this rating.

A federal appeals court recently upheld a lower court ruling with implications for data security practices in the multifamily industry. In the case Federal Trade Commission v. Wyndham Worldwide Corporation, the court ruled in favor of the Federal Trade Commission’s (FTC) statutory authority to bring enforcement actions against companies for “unfair or deceptive acts or practices in or affecting commerce” under the FTC Act.

A federal court in North Dakota issued an injunction recently against the Obama Administration’s “Waters of the U.S.” final rule that went into effect on August 28. This Environmental Protection Agency (EPA) and Army Corps of Engineers’ (Corps) regulation defines the scope of water and land subject to federal jurisdiction under the Clean Water Act. The court’s decision is a blow to the Administration, which moved forward with the controversial regulation although more than 30 states wanted greater consultation in its development

In an 18-4 vote, the Senate Energy Committee approved the Energy Policy Modernization Act after three long days of debate this week. Committee Chairman Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) worked for months to achieve bipartisan agreement on underlying measures that included national security, production and efficiency.

Thirty-one attorneys general from states nationwide have united in sending a letter to the Environmental Protection Agency (EPA) and the Army Corps of Engineers (Corps). They are seeking a delay in the implementation of the controversial “Waters of the U.S.” final rule published on June 29. The rule would significantly increase the permitting requirements, and associated costs, for property owners and developers without necessarily resulting in improved water quality.

After two years of negotiations, residential green building standards are taking the next step forward. Specifically, the leading building code organizations have partnered to develop a singular green building code. This code combines elements from their various codes and standards – providing jurisdictions with a comprehensive set of green principles for legislative and regulatory approval.

The Government Accountability Office (GAO) released a report on July 23 recommending that HUD and the Internal Revenue Service (IRS) jointly oversee the Low-Income Housing Tax Credit (LIHTC) program. The recommendation came as GAO criticized the IRS’ lack of oversight of the program. This includes the fact that the IRS has only conducted seven audits of the 56 state housing finances agencies that administer the program.

Consumer demand for rental apartments remained strong while the market for apartment properties stayed relatively unchanged in the latest National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. The market tightness, sales volume and equity finance indexes all remained near or above the breakeven level of 50, while the debt-financing index fell to 35. For the survey’s special question, only 15 percent of respondents indicated that their apartment homes directly competed with single-family rentals

The U.S. Supreme Court decided to uphold disparate impact liability under the Fair Housing Act, a legal theory that prohibits neutrally-applied practices with a disproportionate impact on minority groups protected by the law, even without proving an intent to discriminate. The 5-4 decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. alsoemphasized limitations on the policy, stating that neutrally-applied practices should not fail on disparate impact grounds unless they are “artificial, arbitrary and unnecessary.”

A recent opinion article in The Wall Street Journal, “Obama Wants to Pick the Clintons’ Neighbors,” examined a new HUD initiative to effectively manufacture residential diversity in communities across the nation. The regulations mandate that roughly 1,250 affluent communities around the nation build new affordable housing that specifically targets minorities. Municipalities that buck the requirement will put federal grant money at risk.

NMHC/NAA this week joined our real estate partners in urging Congress to reduce the barriers of the Foreign Investment in Real Property Tax Act (FIRPTA) on foreigners investing in U.S. real estate as they consider extending highway funding beyond July. Specifically, because FIRPTA relief would spur billions of dollars in infrastructure spending, it would be a natural fit for legislation designed to finance a long-term reauthorization of highway spending.

Once again, NMHC is pleased to work with National Real Estate Investor (NREI) magazine as the media partner for our Student Housing Conference, scheduled this year at the Arizona Biltmore for September 28-30.

The U.S. Supreme Court is expected to hand down several major civil rights decisions this month before its current term ends. They ruled this week that Abercrombie & Fitch discriminated against a job applicant because the company didn’t offer a religious accommodation to a Muslim teenager wearing a head scarf, even though she didn’t request an accommodation. The teenager’s head scarf was a violation of the company’s “look policy.”

Statement from the National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) in response to the Obama Administration announcement of the “Waters of the U.S.” final rule