Washington Update - 08/03/2007 (Plain Text Version)

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Senate Hearing Focuses on Taxation of Carried Interest

This week the Senate Finance Committee held its second hearing on taxation of carried interest. Testifying for a broad coalition of real estate industry organizations was Adam Ifshin, the president of DLC Management Corporation, a shopping center developer in Tarrytown, New York. Other witnesses came from academia, as well as the private equity, venture capital and hedge fund industries. Ifshin’s central message was that changing the taxation of carried interest from the capital gains rate of 15 percent to an ordinary income rate of 35 percent would dramatically reduce incentives for development of all kinds of real estate, especially in transitional and underdeveloped communities.

Chairman Max Baucus (D-Mont.) expressed his view that carried interest earned by hedge fund and private equity general partners is more ordinary income than capital gains while Ranking Member Charles Grassley (R-Iowa) stated that he had not yet made up his mind. Senator Charles Schumer (D-N.Y.) stated uncompromisingly that he would not accept any proposal that single out hedge fund or private equity partnerships and did not include other partnerships that use carried interest, such as oil and gas, venture capital and real estate. No carried interest legislation has been introduced in the Senate; however, Chairman Baucus has stated that he would introduce a bill before the end of the year. For more information, contact Greg Brown at 1-800-368-5242, x8421.

House Panel Approves Housing Trust Fund

The House Financial Services Committee passed legislation this week that would provide grants and other assistance in support of the production, rehabilitation, and preservation of up to 1.5 million affordable housing units over the next decade. H.R. 2895, the National Affordable Housing Trust Fund Act of 2007, was approved by a 45-23 committee vote. NAHB supports the creation of a housing trust fund and has been working with members from both sides of the political aisle on ways to enhance the efficiency and effectiveness of the new fund. Of specific note from this week’s markup, the committee adopted an NAHB-supported amendment that would strengthen the emphasis on rural housing, as well as several amendments designed to address income targeting requirements to allow grantees and grant recipients to meet a wider range of critical housing needs. The bill now heads to the House floor where NAHB will continue to work with members on key enhancements. For more information, contact Scott Meyer at 1-800-368-5242, x8144. [return to top]

Senate Panel Postpones Action on FHA Reform

Senate Banking Committee Chairman Christopher Dodd (D-Conn.) postponed plans to consider a new Federal Housing Administration modernization bill in committee this week after several Republicans said that they needed more time to study the legislation. As a result, the Senate panel will not address this issue until after Congress returns from its August recess. NAHB continues to advocate for FHA reform, and is pleased that the bill introduced by Dodd addresses several of our key priorities, including: downpayment flexibility, simplified requirements for condo loans and an increase in the FHA loan limit for high-cost areas. In the House, the Financial Services Committee has already passed NAHB-supported FHA modernization legislation (H.R. 1852) that is expected to be considered by the full House sometime in the fall. For more information, contact Scott Meyer at 1-800-368-5242, x8144. [return to top]

Veterans' Housing Bill Approved by House

The House on July 30 passed H.R. 1315, legislation that would allow veterans who are temporarily living with relatives to access adaptive housing assistance. The bill would extend adaptive housing assistance to service members before their discharge, altering a current law that allows such assistance only after release from service. NAHB supports this revision to the Specially Adapted Housing (SAH) program of the U.S. Department of Veterans Affairs. The SAH provides grants to eligible veterans to help accommodate their housing needs. NAHB President Brian Catalde testified on June 7 before the Subcommittee on Economic Opportunity of the House Committee on Veterans' Affairs to highlight the association's support for this valuable program and to offer recommendations to expand or improve it to better serve the thousands of severely injured veterans whose homes must be modified to allow them to live independently. For more information, contact Scott Meyer at 1-800-368-5242, x8144. [return to top]

House Panel Extends Terrorism Risk Insurance

The House Financial Services Committee this week approved legislation extending the federal terrorism risk insurance program. H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act (TRIREA), passed by a vote of 49-20. The bill would:

Extend the program for 15 years
Provide incentives to encourage insurers to increase coverage for nuclear, biological, chemical and radiological risks
Eliminate the distinction between foreign and domestic terrorism events
Lower the event trigger, which would allow smaller insurers to participate in the program

The full House is expected to consider H.R. 2761 when it returns in September. The Senate is expected to draft its own terrorism risk insurance legislation sometime after the August recess. For more information, contact Scott Meyer at 1-800-368-5242, x8144. [return to top]

Amendment Gives Hope for Market-Based Pooling Health Care Reform

Last night, the U.S. Senate adopted a sense of the Senate bipartisan amendment calling on Congress to enact legislation this year on health insurance reform for small businesses and the self-employed. The amendment, which was unanimously agreed to, was proposed by Sen. Blanche Lincoln (D-Ark.) and co-sponsored by Sens. Olympia Snowe (R-Maine), Max Baucus (D-Mont.), Charles Grassley (R-Iowa), Ted Kennedy (D-Mass.), Michael Enzi (R-Wyo.), Ben Nelson (D-Neb.), Richard Durbin (D-Ill.), Mike Crapo (R-Idaho), Gordon Smith (R-Ore.), Orrin Hatch (R-Utah), Tom Carper (D-Del.), Johnny Isakson (R-Ga.), Mark Pryor (D-Ark.), Chris Dodd (D-Conn.) and John Kerry (D-Mass.). It encourages Congress to enact legislation that “improves access to affordable and meaningful health-insurance coverage, especially for Americans in the small group and individual health insurance markets.” For more information, contact Erin Tario at 1-800-368-5242, x8413. [return to top]

House Energy Bill Uncertain

As this issue of Washington Update went to press, the House was still debating whether to proceed with energy legislation today (Aug. 3), tomorrow or to wait until the chamber returns from its August recess. For more information, contact Elizabeth Odina at 1-800-368-5242, x8570. [return to top]

Washington Update to Return in September

Editor’s Note: The House and Senate will be out of session until September for the congressional August recess. The Washington Update will not publish during this time. [return to top]