Washington Update - 05/25/2007 (Plain Text Version)

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Builders Focus on Worker Amendments to Immigration Bill

The Senate this week debated a flurry of amendments to an immigration bill that NAHB believes is deeply flawed and in need of major changes. Of note to home builders were two amendments dealing with the number of eligible workers allowed under the future legal immigration program proposed by the bill and the length of time they would be allowed to remain in the country. NAHB opposed an amendment offered by Sen. Jeff Bingaman (D-N.M.) that would slash the number of workers eligible to participate in the program from 400,000 to 200,000 annually. The proposal passed by a vote of 74-24.

Because of its importance to the housing community, NAHB designated a second amendment by Sen. Byron Dorgan (D-N.D.) as a “key vote.” The Dorgan amendment would eliminate the future flow immigrant program in its entirety at the end of five years, leaving no legal program in place for needed workers to the enter the United States. In response, NAHB said that “a workable future flow immigrant program is essential to comprehensive immigration reform because without it, it is likely to lead to a situation that will encourage more illegal immigration in the future.” The Dorgan amendment was narrowly defeated by a 48 to 49 vote.

While NAHB supports legislation that would achieve comprehensive immigration reform, the association remains opposed to the Senate bill in its current form because it would hurt America’s small businesses. The housing community’s objections to the legislation were laid out in a letter to the editor by Jerry Howard, NAHB executive vice president and CEO, to the Wall Street Journal.

“Specifically, the nation’s home builders view the bill as counterproductive because it contains onerous provisions regarding employer liability and responsibility for subcontractors; the law could be used to unfairly prosecute an employer who unknowingly hires an illegal alien; general contractors could be held responsible for the legal status of employees hired by subcontractors; the program to provide a future flow of immigrant workers for the construction industry is unworkable; the new, mandated electronic verification system is untested; and the new record-keeping requirements are unduly burdensome, especially for small businesses,” Howard’s letter said. “These are just a few of the reasons why we believe this bill can’t be fixed without making major revisions,” he said.

The Senate is in recess next week for the Memorial Day holiday and is scheduled to continue debate on the legislation during the week of June 4, when lawmakers are expected to focus on areas of key concern to NAHB, including issues dealing with employment verification provisions, whether contractors will be responsible for the legal status of their subcontractors’ employees and inadequate safe harbor protections. To read the legislation, click here and enter S. 1348 in the box at the center of the page. For more information, e-mail Jenna Hamilton or call her at 800-368-5242 x8470.

House Approves Sound GSE Bill

The U.S. House of Representatives on May 22 passed NAHB-supported legislation that would establish a strong regulatory framework for the housing government-sponsored enterprises (GSEs) — Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Because of the importance of this issue to the housing community, NAHB designated passage of H.R. 1427, the Federal Housing Finance Reform Act, as a “key vote” and sent a letter to every representative urging them to support the bill. The measure was approved by a solid bipartisan margin of 313 to 104.

In another key vote for NAHB, lawmakers by a margin of 383 to 36 overwhelmingly approved a pro-housing amendment offered by Reps. Randy Neugebauer (R-Texas), Melissa Bean (D-Ill.), Dennis Moore (D-Kan.) and Gary Miller (R-Calif.) clarifying that the new regulatory entity created by the legislation must base its evaluation of the risk of Fannie Mae’s and Freddie Mac’s portfolio holdings solely on the mission of those institutions and safety and soundness considerations, and not on broader concerns, such as systemic risk. This amendment would prevent the new regulator from making an overly broad interpretation of risk that might unnecessarily constrain portfolio activities of Fannie Mae and Freddie Mac, disrupting the mortgage markets and impeding the enterprises in their pursuit of their housing mission.

In other votes designated by NAHB as “key,” three anti-housing amendments that would have restricted GSE portfolios, eliminated the affordable housing fund and prevented conforming loan limits from being raised in high-cost areas were defeated handily or withdrawn. Attention now turns to the Senate, where Senate Banking Committee Chairman Chris Dodd (D-Conn.) has said that he would like to "address this important issue in a bipartisan, timely and thoughtful way." For more information, contact Scott Meyer at 800-368-5242, x8144. [return to top]

Tax Credit Reforms Needed to Spur Affordable Rental Housing

NAHB on May 24 called on Congress to enact several reforms to the Low Income Housing Tax Credit (LIHTC) program to enable more builders to invest in affordable rental housing.Testifying on behalf of NAHB before the House Ways and Means Subcommittee on Select Revenue Measures, Steve Lawson, a home builder from Virginia Beach, Va., said that the LIHTC has facilitated the construction or preservation of nearly 1.4 million homes in the past 20 years, making it the foremost tool for the production and rehabilitation of affordable housing. “However, the need for affordable housing greatly outpaces even this significant level of production and the existing supply of units,” Lawson told lawmakers.

To further stimulate private investment in the LIHTC program and spur increased construction of housing targeted to low- and moderate-income families, Lawson urged Congress to adopt legislation that would:

Index LIHTC rents to a reasonable inflation factor, such as the Consumer Price Index, in order to create more consistency for owners and tenants.
Allow state Housing Finance Agencies to convert utility allowances into a percentage of maximum gross rent at the time of underwriting. "This would allow an owner to better gauge their cash flow over the life of their project, which would improve their ability to cover unanticipated spikes in operating costs and attract private equity into the project," he said.
Repeal the Internal Revenue Code Section 42(d) 10-year rule requirement on existing properties, which inhibits investments in these properties.
Establish a level-playing field for allocations of LIHTC to tax-exempt and taxpaying sponsors.
Exempt low-income housing tax credits from the Alternative Minimum Tax and study the impact of eliminating the individual AMT on the LIHTC.
Allow separate ownership of housing credit units and market-rate units in mixed-income properties.

In related developments, NAHB was joined by 13 industry organizations in sending letter to the House Ways and Means Committee and the Financial Services Committee highlighting the need for lawmakers to implement an appropriate legislative solution to the LIHTC rents issue. Also, NAHB on May 23 issued a press release announcing a new study detailing how rising operating costs are putting in financial jeopardy hundreds of affordable apartment communities across the country that were built using LIHTCs.

For more information on the NAHB testimony, see NAHB's press release or contact Greg Brown at 800-368-5242, x8421. [return to top]

Tax Breaks, Katrina Provisions in Iraq Spending Bill

This week the Congress passed a new bill to fund the military and the war in Iraq. A previous version of the legislation was vetoed by the President because of language setting deadlines for the U.S. withdrawal from Iraq. That language was taken out of this version and is now on its way to the President for his expected signature. The bill will also increase the minimum wage from $5.15 to $7.25 an hour over the next two years and contains $4.8 billion in corresponding business tax breaks. Of special importance to home builders, the measure will increase the amount of investment that may be immediately and fully deducted (Section 179 expensing) by small businesses from $100,000 to $125,000 and the investment-based phase-out threshold from $400,000 to $500,000.

Also, the legislation includes key provisions for the repair and reconstruction of affordable housing in the GO Zone, Gulf Coast areas that were hit particularly hard by Hurricanes Katrina, Rita and Wilma. Specifically, the legislation does the following:

Extends until Dec. 31, 2010 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.
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.

For more information contact Greg Brown at 800-368-5242, x8421. [return to top]

Lawmakers Move Ahead on Energy, Climate Change Measures

The House Natural Resources Committee, chaired by Rep. Nick Rahall (D-W. Va.), convened on May 23 to hear testimony on H.R. 2337, the Energy Policy Reform and Revitalization Act. The bill is intended to be bundled with additional legislation coming from the House Energy and Commerce and House Science and Technology Committees into a climate change bill that is bound for the House floor later this summer. H.R. 2337 contains language to repeal a number of Energy Policy Act of 2005 provisions for oil and gas exploration on federal lands, to set preferences for federal buildings to be LEED-Silver certified, and to address the impact of climate change on wildlife. The Bush Administration and a number of Republican representatives are opposed to the bill. NAHB is monitoring the situation closely.

On May 24, the House Energy and Air Quality Subcommittee, chaired by Rep. Rick Boucher (D-Va.), held its second hearing on energy efficiency standards for home appliances as a follow up to recently-released draft legislation. The draft legislation contains provisions to allow the Department of Energy (DOE) to set regional appliance standards for heating and air conditioning equipment and to push DOE to get more involved in the building code process. The draft seeks to push states to adopt the 2006 IECC or the ASHRAE 90.1 (2004) building standards and then promptly ratchet up compliance thresholds. NAHB is concerned that a potential patchwork of compliance with various state standards for HVAC equipment could be problematic and costly, and also difficult to enforce. NAHB is also concerned about attempts to subvert the building code development process with DOE. NAHB will be working with the full Energy and Commerce Committee to express these concerns.

Also, the Senate Subcommittee on Energy, Natural Resources, and Infrastructure met on May 24 to discuss tax incentives for energy efficiency, including energy tax credits for new home construction. NAHB continues to push for longer extensions of the tax credits that passed as part of EPACT 2005 for builders to receive a $2,000 tax credit for homes that exceed the 2003 IECC (including supplements) by 50 percent. NAHB is working with the Senate Finance Committee to extend and expand the tax credit. NAHB is also working with DOE on improving regulatory barriers that prevent the credit from being utilized by builders on a broader scale. For more information, contact Elizabeth Odina at 800-368-5242, x8570. [return to top]

New Law Suspends HUD Investor Approval Process

The Senate this week approved H.R. 1675, the Preservation Approval Process Improvement Act of 2007. The measure, which passed the House last month and is expected to be signed into law shortly by the President, 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.

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. To read the bill, 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]

House Panel Approves NAHB-Supported Section 8 Voucher Bill

After considering amendments for two days, the House Financial Services Committee passed an NAHB-supported Section 8 housing voucher reform bill this week. H.R. 1851, the Section 8 Voucher Reform Act of 2007 (SEVRA), was approved by a strong bipartisan vote of 52-9. The legislation would stabilize the voucher program with a permanent funding policy, while simplifying the rules about how to calculate tenant rents and streamlining the housing inspection process. As a result, the voucher program will run more efficiently and there will be less unnecessary paperwork for all parties involved.

In addition to the underlying Section 8 reforms, NAHB has been actively working with the Committee Chairman Barney Frank (D-Mass.), along with several industry and advocate groups, on language that will likely be added to SEVRA to require the U.S. Department of Housing and Urban Development (HUD) to translate official HUD documents and other papers commonly used by property managers that are considered “vital," and to set up a hot line for oral interpretations under the newly launched Limited English Proficiency (LEP) Guidance. The guidance, which went into effect on March 7, requires apartment owners whose properties are financed in whole or in part by HOME funds, or who receive project-based Section 8 assistance, to translate a broad array of documents in multiple languages and to provide oral translations for persons with limited English proficiency. Over the past several months, NAHB has been actively working to move the responsibility of the new LEP guidance translation requirement from the property owner to HUD. NAHB believes that it will be more cost-effective and efficient for HUD to take on this new responsibility. NAHB is pleased that the Chairman Frank has signaled his intention to add such language to H.R. 1851 as it heads to the House floor in the coming months. For more information, contact Scott Meyer at 800-368-5242, x8144. [return to top]

Oberstar Introduces Onerous Clean Water Bill

NAHB has been working as a member of the Waters Advocacy Coalition (WAC) to educate Capitol Hill staff and members of Congress that broadening the scope of the Clean Water Act -- as proposed in the last Congress by Rep. James Oberstar (D-Minn.) in the House and Sen. Russ Feingold (D-Wisc.) -- would harm local communities and small businesses. On May 22, Rep. Oberstar introduced H.R. 2421, the Clean Water Authority Restoration Act. Although the bill is not identical to the version unveiled in the 109th Congress, the changes made do not address any of NAHB’s concerns. The legislation would provide virtually limitless federal Clean Water Act jurisdiction over all waters and wet areas within the United States. This expansion would increase the number of federal permits required, and exacerbate the current permit backlog that is already approximately 20,000 permits deep with a three-year waiting period. NAHB will continue to reach out to staff on Capitol Hill to highlight the problems with this legislation and the effect it will have on the home building industry. For more information, contact Annie Raymond at 800-368-5242, x8307. [return to top]

House Panel Approves Anti-Arbitration Measure

The House Agriculture Subcommittee on Livestock, Dairy, and Poultry on May 24 adopted an amendment to the 2007 Farm Bill that would prohibit the use of pre-dispute binding arbitration agreements in livestock or poultry contracts. The amendment, offered by Rep. Leonard Boswell (D-Iowa), passed by a party-line vote of 8 to 6. A similar free-standing bill passed the Senate Judiciary Committee last week. Like the Senate bill, this amendment would not impact the use of arbitration in settling residential construction disputes, but it does indicate that arbitration generally will continue to be a target this Congress. For more information, contact J.P. Delmore at 800-368-5242, x8412. [return to top]

Legislation Conference Issues Available Online

Builders who care about policies in Washington that affect their business and bottom line and who want to make a difference in the legislative process are encouraged to attend the Spring Legislative Conference on Wednesday, June 6 in the nation's capital. Our most important grassroots lobbying event of the year kicks off NAHB's Spring Board of Directors meeting and provides an ideal opportunity for association members like you to share their concerns on housing-related issues with lawmakers on Capitol Hill. 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! To view NAHB's Legislative Conference issues, click here. For more information and to register online, contact Jessica Boyce at 800-368-5242, 8334. [return to top]

NAHB Grassroots Program to Launch at Spring Board

Be on the lookout for BuilderLink, NAHB's updated grassroots program. BuilderLink, which is replacing the Congressional Contact program, is set to be launched on Wednesday, June 6 at the 2007 Legislative Conference in Washington, D.C. BuilderLink will provide opportunities for NAHB members to connect more frequently with their members of Congress. For more information, contact Molly Murray at 800-368-5242 x8470.

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