Washington Update - 04/27/2007 (Plain Text Version)

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Tax Provision Would Increase Small Business Expensing Limits

This week the House and Senate tax-writing committees came to agreement on a $4.8 billion small business tax package meant to offset the impacts of an increase in the federal minimum wage. Of special importance to home builders is an increase in Section 179 expensing limits to $125,000 and the phase-out to $500,000 and extending the provision through 2008 for Gulf Opportunity Zone (GO Zone) businesses. Also, tax-writers included key provisions for the repair and reconstruction of affordable housing in the GO Zone.

Specifically, the legislation does the following:

Extends the placed-in-service deadlines for properties that received an allocation of Low Income Housing Tax Credits (housing credits) within the GO Zone, Rita and Wilma GO Zones in 2006, 2007 or 2008 to Dec. 31, 2010.
Extends the difficult-to-develop-area designations in this same area until Dec. 31, 2010.
Allows properties in this area that are placed-in-service by Dec. 31, 2010 to use 9 percent housing credits with “disaster relief” Community Development Block Grant funds loaned at below-market rates.
Waives the Mortgage Revenue Bond program’s 20-year and existing walls rules for qualified rehabilitation in the GO Zone, Rita and Wilma GO Zones for owner-financing provided after enactment and before Jan. 1, 2011.
Requires the Government Accountability Office to study the practices employed by state and local governments in allocating and utilizing tax incentives provided as part of the GO Zone Act of 2005 and to report to Congress on its findings within one year of enactment.

The small-business tax package was included as part of Supplemental Appropriations legislation intended to provide funding for the military and the war in Iraq. That legislation is expected to be vetoed by the President because of language calling for a date certain for U.S. forces to withdraw from Iraq. Following that veto, a smaller bill will be crafted and sent back to the President for his signature. At this point, it appears the tax package and the GO Zone provisions within it will be included in this second, smaller bill sent to the White House. If not, tax-writers have committed to moving the package separately. For more information, e-mail Greg Brown or call him at 800-368-5242, x8421.

Exit Tax Legislation Introduced

Senators Charles Schumer (D-N.Y.), Gordon Smith (R-Ore.), Christopher “Kit” Bond (R-Mo.), Patty Murray (D-Wash.), Jack Reed (D-R.I.), Ben Cardin (D-Md.) and Olympia Snowe (R-Maine) this week introduced legislation providing for exit tax relief for affordable housing. The legislation, which is still unnumbered, is identical to a bill introduced in the last Congress by Sens. Schumer and Smith. The bill is similar, but not identical to H.R. 1491, introduced in the House last month by Reps. Artur Davis (D-Ala.) and Jim Ramstad (R-Minn.). The key difference between the House and Senate bills is that Low Income Housing Tax Credit properties are not eligible for exit tax relief under the Senate bill. NAHB is working with our coalition partners to build co-sponsorship for the House and Senate bills. For more information, contact Greg Brown at 800-368-5242, x8421. [return to top]

Lawmakers Hold Energy and Climate Hearings

Senator Jeff Bingaman (D-N.M.), chairman of the Senate Energy and Natural Resources Committee, held a hearing this week on S. 1115, the Energy Efficiency Promotion Act, in hopes of moving the bill forward so Senate Majority Leader Harry Reid (D-Nev.) can attach it to various tax incentives to promote greater energy efficiency. The legislation contains measures to expedite lagging Department of Energy (DOE) rulemakings on a number of home appliance standards and allows states to preempt the DOE on product standards if DOE fails to issue them. The bill also sets up a block grant program, modeled after the Community Development Block Grant (CDBG), for states to implement energy efficiency programs for the building and transportation sectors. It also mandates sustainable design standards for all federal buildings in order to achieve carbon neutrality by 2030. Certain provisions in the bill are also being carefully analyzed for their potential impact on energy code requirements for single-family and multifamily FHA and HUD housing. NAHB is working with the committee on this measure and the bill is expected to be marked up very soon.

On April 24, Environmental Protection Agency (EPA) Administrator Stephen Johnson appeared before the Senate Environment and Public Works Committee, chaired by Senator Barbara Boxer (D-Calif.), to answer questions about EPA’s plan for regulating carbon emissions from automobiles in the wake of the Massachusetts v. EPA Supreme Court decision. The court found that EPA does have the authority to regulate carbon dioxide emissions and Sen. Boxer and others on the committee attempted to force the issue by demanding timelines for when EPA will come up with a regulatory plan. Johnson sidestepped many questions and said he would act “expeditiously but responsibly.” The Bush Administration has officially accepted the findings of the two reports from the Intergovernmental Panel on Climate Change (IPCC) stating that climate change is occurring and is a result of human activity. The Administration has not, however, accepted a policy of capping carbon emissions. If EPA fails to act, Congress could force the agency to regulate carbon emissions, which could mean regulations for construction equipment in addition to automobiles. For more information, contact Elizabeth Odina at 800-368-5242, x8570. [return to top]

Senate Committee Studies Disaster Housing Program

On April 24, the Senate Homeland Security and Government Affairs Committee’s Subcommittee on Disaster Recovery held a hearing entitled, “Beyond Trailers, Part I: Creating a More Flexible, Efficient, and Cost-Effective Federal Disaster Housing Program.” Witnesses at the hearing included several officials from the Federal Emergency Management Agency (FEMA) and the Department of Homeland Security (DHS), as well as other state and local officials involved in coordinating housing efforts following the hurricanes. The panel of witnesses also included experts working to develop alternatives to FEMA’s current system of disaster housing as part of the congressionally-mandated Alternative Housing Pilot Program (AHPP).

The purpose of the hearing was to explore from a state and federal perspective the problems FEMA had setting up disaster housing for a significant number of people following the disasters; to ensure that FEMA is expeditiously working on finding permanent housing for those families who have been displaced since 2005; and to update the committee on what progress has been made through the AHPP. Much of the hearing was focused on the fact that while so many people are still displaced from their homes in the Gulf Coast region, there is a severe lack of permanent housing for them to move to. David Garrett, the Acting Director of Recovery Efforts at FEMA, noted that his agency was working closely with the Department of Housing and Urban Development (HUD) to distribute Section 8 vouchers to families still in need of permanent housing, but that the vouchers were worthless because families are unable to find homes to move into. Both he and Senator Mary Landrieu (D-La.) noted the significant need for commercial and public housing to be built in the Gulf Coast region. NAHB will continue to monitor the issue as Congress and federal agencies seek more effective plans for future disaster housing. For more information, contact Scott Meyer at 800-368-5242, x8144. [return to top]

House Small Business Panel Studies "Tax Gap" Issue

On April 27, the House Small Business Committee held a hearing entitled, “Closing the Tax Gap Without Creating Burdens for Small Businesses.” Witnesses included the Commissioner of the Internal Revenue Service (IRS) and several small-business owners who would be affected by proposals to increase income tax compliance and to close the estimated $345 billion “tax gap.”

NAHB submitted a statement to the Small Business Committee outlining how many of the tax gap measures proposed would place a significant burden on our small business members. Some of the methods proposed would require increased reporting of real estate tax payments and on payments to corporations that exceed $600. If enacted, these measures would increase the administrative burden for small businesses without any guaranteed revenue for the federal government. The NAHB statement also included several ways the federal government could reduce the burden on small businesses while at the same time increasing income tax compliance. Those proposals included simplifying the Internal Revenue Code (IRC), expanding the use of the cash accounting method, simplifying the “home office” deduction for owners that work out of their homes, and increasing the permanency of the tax code to allow businesses to better plan for their tax obligations from year-to-year.

IRS Commissioner Mark Everson noted that the IRS has requested $74 million in its Fiscal Year 2008 budget to study ways to increase tax compliance from small businesses. NAHB will continue to work closely with the House and Senate Small Business Committees to ensure that any tax gap proposals considered have the best interests of both the federal government and the small business community in mind. For more information, contact Greg Brown at 800-368-5242, x8421.
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House, Senate Introduce Identical OSHA Enforcement Bills

In conjunction with Worker Memorial Day, a day to commemorate workers who have been killed on the job and to recommit to making workplaces safer, Congress this week held two hearings dealing with Occupational Safety and Health Administration (OSHA) matters. It is expected that these are the first of many OSHA-related hearings to come. In addition, lawmakers introduced identical bills in the House and Senate. Reps. Lynn Woolsey (D-Calif.) and Phil Hare (D-Ill.) introduced H.R. 2049, the Protecting America’s Workers Act. In the Senate, Sens. Edward Kennedy (D-Mass.) and Patty Murray (D-Wash.) unveiled companion bill S. 1244.

The Protecting America's Workers Act would expand the scope of the Occupational Safety and Health Act, impacting the building community with burdensome penalties and personal protective equipment requirements. Specifically, the legislation would:

Increase penalties against employers for repeated and willful violations of the law, including making felony charges available when an employer's repeated and willful violation of the law leads to a worker's death.
Make clear that employers must provide the necessary safety equipment to their workers, such as goggles, gloves, respirators or other personal protective equipment or serious injury.
Protect workers who blow the whistle on unsafe workplace condition.
Enhance the public's right to know about safety violations.
Apply federal safety standards to workers who are not currently covered, including federal, state, and local employees, and some private sector employees.

For more information, contact Erin Tario at 800-368-5242, x8413. [return to top]

Bill Addresses HUD Role on Clearing Program Participants

The House this week approved H.R. 1675, the Preservation Approval Process Improvement Act of 2007. The legislation is designed to make it easier to invest in affordable housing by easing overly burdensome filing requirements to participate in U.S. Department of Housing and Urban Development programs. To ensure that they are reputable and will honor their legal, financial and contractual obligations, participants in HUD programs, including FHA mortgage insurance, are required to submit information on their previous business with the department through an electronic reporting system.

Introduced by Rep. Melissa Bean (D-Ill.), H.R. 1675 would suspend this mandatory process until HUD makes changes to draft regulations it has proposed for the filing requirements. HUD’s proposal contains onerous filing requirements for passive investor participants and establishes additional conditions under which participants can be prevented from taking part in its programs.
H.R. 1675 now heads to the Senate, where Senate Banking, Housing and Urban Affairs Committee Chairman Christopher Dodd (D-Conn.) is expected to consider it in committee in the near future.

NAHB advocacy staff members will continue to support the legislation and work with HUD to improve the proposed participation clearance process. To read the legislation, click here and enter H.R. 1675 in the box at the center of the page. For more information, e-mail Claudia Kedda or Scott Meyer at NAHB, or call them at 800-368-5242 x8352 and x8144. [return to top]

BUILD-PAC Week in Review: Race for the White House

Thursday’s Democratic Presidential debate in South Carolina did not allow for heated discussions to take place or for the eight candidates to address each other. The Democratic front runners did not make attempts to stand out or makes waves during the debate; but instead enabled the "second tier" candidates-- Sen. Joe Biden (D-Del.), Sen. Chris Dodd (D-Conn.) and New Mexico Gov. Bill Richardson to make their presence known. The debate covered a wide range of issues, including the war in Iraq, health care, gun control and global climate change.

While the Democratic presidential candidates did little to hurt or help themselves in South Carolina, the Republican candidates hopped on the campaign trail working to set themselves apart from their rivals. GOP Presidential contender and former Massachusetts Gov. Mitt Romney pointed out this week that two of his primary rivals -- Arizona Sen. John McCain and former New York City Mayor Rudy Giuliani -- have flip flopped positions on many important issues over the years. Romney was in New Hampshire this week focusing on homeland security issues with local law enforcement officials. McCain called the Iraq war “a great tragedy” on Thursday, but doesn’t agree with the Senate timetable to pull troops out of Iraq this fall. McCain was in South Carolina campaigning this week and missed the Senate vote on the bill containing the withdrawal timetable. While top Republican candidates got into issues this week, former Virginia Gov. Jim Gilmore launched his campaign for the White House. He called himself a “true Reagan conservative." [return to top]

June 6 is NAHB's Legislative Conference

Our most important grassroots lobbying event of the year is the Spring Legislative Conference on Wednesday, June 6, and it's worth your while to be there. This annual event provides an ideal opportunity for association members like you to share their concerns on housing-related issues with lawmakers on Capitol Hill and to urge the politicians who represent you to support policies that will keep the economy moving forward and get housing back on track. The timing of this year's legislative conference is particularly significant considering the current shakeout in the subprime mortgage sector and its potential repercussions in the housing market. Especially in these challenging times, your participation can make a huge difference as various interest groups compete to push their agendas in Washington. A strong builder turnout on June 6 will certainly send a powerful message to members of Congress that housing MUST remain a top national priority! You can get more information and register online, or contact Jessica Boyce at 800-368-5242, x8334. [return to top]