NAA Statement on “How Housing Matters” Study

Following is a statement from Doug Culkin, CAE, President and CEO of the National Apartment Association, on the MacArthur Foundation’s 2016 “How Housing Matters” survey:

“With four of five Americans believing housing affordability continues to be a problem, this study underscores the need for political leadership and results‐driven policies to meet the demand for apartment housing.

America’s affordability problem is growing. The supply of rental apartments can’t meet the demand – between 300,000 to 400,000 apartments must be built annually to keep pace, but only an average of 208,000 were built between 2011 and 2015.

Compounding this challenge is stagnancy in incomes. Median rental household income is almost unchanged from 35 years ago on an inflation‐adjusted basis.

Finally, costly and cumbersome regulations at all levels of government create barriers to the development of new rental housing and ultimately drive rents above what many families can afford.

We commend the MacArthur Foundation for reinforcing that Americans want lawmakers to act now to address our nation’s housing affordability challenges.

Lawmakers must recognize that the most viable solution requires a strong partnership between government and the private sector. The National Apartment Association continues to work to enable our members to provide apartment homes that meet the needs of all Americans.”

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The National Apartment Association (NAA), America’s leading voice for the apartment housing industry, provides its members with the best range of strategic, educational, operational, networking and advocacy resources they need to learn, to lead and to succeed. As a federation of nearly 170 state and local affiliates, NAA encompasses over 72,000 members representing more than 8.4 million apartment homes globally. NAA’s purpose is to enable every single one of its members to fulfill his or her professional goals with great competence, speed and the highest standards of ethics. To learn more, visit http://www.naahq.org.

PTAA Goes to Washington

PTAA had several members travel to Washington on March 8-9 to participate in the National Apartment Association’s Capitol Conference. Since the House was not in session they met with the legislative staffs of Rep. Walker, Rep. Foxx, Rep. Adams and Rep. Meadows. In addition they were able to meet briefly with Senators Burr and Tillis, and then provide an in-depth briefing to their staffs on three issues of particular importance to the apartment industry:

• Section 8 Reform
• ADA Right to Cure
• National Flood Insurance Program Reform and Reauthorization

Below are some pictures from PTAA’s day on Capitol Hill.

Supreme Court Upholds Disparate Impact Liability

You’ve likely heard about the Supreme Court’s ruling in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., but in case you haven’t here’s the info we’ve received from the National Apartment Association‘s Greg Brown:

The U.S. Supreme Court today 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. also emphasized limitations on the policy, stating that neutrally-applied practices should not fail on disparate impact grounds unless they are “artificial, arbitrary and unnecessary.”

Importantly, the majority opinion highlighted limitations on disparate impact liability to allow “practical business choices and profit-related decisions that sustain the free-enterprise system.” Leeway must be given to housing providers to explain the validity of their policies. Further, a disparate impact claim is not demonstrated by statistical disparity alone. A claim must show that a challenged practice actually caused a disparate impact on a protected group, and the availability of an “alternative practice that has less disparate impact” to serve legitimate business needs.

We are currently conducting a detailed analysis of the Supreme Court’s decision and will continue to seek further clarification on disparate impact liability.

We will keep you updated as we learn more.

Update 6/30/15:

NAA has just added some excellent reference links on this issue:

Commentary: Supreme Court Affirms, Narrows Disparate Impact Liability Under Fair Housing Act

Holland & Knight: Fair Housing Act Prohibits Policies and Practices Causing a Disparate Impact

Ballard Spahr: In 5-4 Decision, U.S. Supreme Court Recognizes Disparate Impact Liability

 

 

Vegas Baby! Three More Reasons to Register for the NAA Education Conference

It’s not like you need an excuse to go to the greatest apartment show on Earth – the National Apartment Association’s Annual Education Conference – but here are three more reasons you should register now:

1. Even though NAA just raised the registration price to $825 you can get them from PTAA for $575 – that’s a $250 savings! To register simply fill out our registration form and email it to us and we’ll get you set up.
2. Most of us have never seen former Tonight Show host Jay Leno live, so now’s your chance. NAA recently announced that Leno will be the keynote speaker for the conference which should make for a GREAT general session.
3. It’s Vegas! Inexpensive airfares, inexpensive rooms and tons of convenient flights and this will be the last time NAA is in Vegas for probably ten years.

And here’s a little reminder of exactly how spectacular Vegas is at night:

The Vegas Strip at Night

Vegas at Night

Congress 101 – What Does My Member of Congress Do and Who Works There?

The National Apartment Association has partnered with the Congressional Management Foundation on a very informative video about how Congress works. Definitely worth investing seven minutes to watch it:

What About Fannie and Freddie?

This week members of PTAA were in Washington for the National Apartment Association’s Capitol Conference and on our last day there we were urged to meet with our members of Congress to discuss several issues, including housing finance reform. For the last few years NAA has urged its members to urge their members of Congress to not throw the multifamily baby out with the mortgage bathwater. Since the government had bailed out the mortgage industry when its near-collapse helped plunge the country into the Great Recession, Congress has been trying to figure out what to do with the Government-Sponsored Enterprises (Fannie Mae and Freddie Mac) and the smart people at NAA and the National Multifamily Housing Council (NMHC) had been pointing out that while housing finance reform is necessary, the multifamily sector had not had the problems that the residential home mortgage had. From the briefing papers provided at Cap Con:

The bursting of the housing bubble exposed serious flaws in our nation’s housing finance system. Yet, those shortcomings were confined to the residential home mortgage sector. The Government-Sponsored Enterprises’ (GSEs) (i.e., Fannie Mae and Freddie Mac) very successful multifamily programs were not part of the meltdown and have actually generated over $14 billion in net profits to the government since the two firms were placed into conservatorship.

More than just performing well, the GSEs’ multifamily programs serve a critical public policy role. Unfortunately, even during normal economic times, private capital cannot fully meet the industry’s financing demands. The GSEs ensure that multifamily capital is available in all markets at all times, so the apartment industry can address the broad range of America’s housing needs from coast to coast and everywhere in between. 

NMHC/NAA urge lawmakers to recognize the unique needs of the multifamily industry. We believe the goals of a reformed housing finance system should be to:

1. Maintain an explicit federal guarantee for multifamily-backed mortgage securities available in all markets at all times;
2. Ensure that the multifamily sector is treated in a way that recognizes the inherent differences of the multifamily business; and
3. Retain the successful components of the existing multifamily programs in whatever succeeds them.

Relevant to those points made during the briefing session provided by NAA/NMHC staff members before we headed to the Hill they mentioned that leaders in the Senate Banking Committee had just announced a plan that the apartment industry could get behind, but let’s just say it was a little difficult for us in the audience to grasp. Too bad we didn’t have a chance to read this Wall Street Journal article that laid out the issue pretty well:

The plan, by Senate Banking Committee leaders Tim Johnson (D., S.D) and Mike Crapo (R., Idaho), calls for replacing Fannie and Freddie with a new system of federally insured mortgage securities in which private insurers would be required to take initial losses before any government guarantee would be triggered.

The agreement, which faces a long road to approval, represents the most concrete step so far to resolve the last major piece of unfinished business from the 2008 financial collapse.

“It would be a huge step forward,” said Phillip Swagel, who was an assistant secretary for economic policy under Treasury Secretary Henry Paulson, who oversaw the government’s seizure of the firms in 2008.

Yes, this is a complicated issue but at its core it’s pretty simple:

1. There’s a lot of demand for apartments right now and not nearly enough are being constructed to keep up with it.
2. Without adequate financing there isn’t going to be enough construction to catch up with that demand, and with low inventory comes high rent.
3. It’s imperative that Congress not further constrict the housing market by instituting housing finance reform that cripples a sector, multifamily housing, that didn’t contribute to the economic problems caused by the residential housing finance sector.
4. The early signs are that the Senate Banking Committee is moving in the right direction, but there’s a LONG way to go before they get committee approval, not to mention the full Senate and then the House.

In other words we have a pretty good idea what we’ll be talking about to our members of Congress when they’re back home in their districts and this time next year when we return to the Capitol.

Working Group to Weigh In on Proposed Draft for Uniform Landlord-Tenant Laws

By next July every state my have new model landlord-tenant legislation to consider from the Uniform Law Commission (ULC) and there are several components that are of concern to the apartment industry.  In response the National Apartment Association has formed the NAA Landlord/Tenant Working Group to develop recommendations for consideration at the ULC drafting committee’s fall meeting on Nov. 15-16 of this year.  Here’s a small sample of items that might concern apartment industry members:

Security Deposit – A property owner may not require a security deposit in an amount that exceeds one month’s rent. The term “security deposit” is defined as including damage deposits, key deposits, prepaid rent and fees. Application fees and pet deposits are exempt as well as deposits that cover if a lease is for a furnished dwelling unit, or if the tenant makes alterations to the unit as permitted by the lease, the property owner may collect an additional security deposit in an amount commensurate with the additional risk of damage.

Domestic Violence – A tenant may terminate his or her lease prior to the lease term if 1) the tenant or an immediate family member is a victim of domestic violence, sexual assault, or stalking and 2) the tenant gives the landlord written notice and provides supporting documentation of the abuse. The current draft allows the tenant to use verification by an attesting third party to validate incidents of abuse. “Attesting third party” is defined as a law enforcement official, a licensed health-care professional, a victim’s advocate, or a victim-services provider that has had contact with a tenant or an immediate family member who is a victim of domestic violence, sexual assault, or stalking.

Abandoned Property – The URLTA draft addresses the responsibilities of the property owner with property that is either abandoned by the tenant or property of a deceased tenant. Both provisions impose upon the property owner responsibilities outside of their scope of business: specifically the duties of finding an executor of the deceased tenant, estimating value, protecting, transporting, and ultimately disposing of the property – all the while assuming a level of liability for each of those actions.

You can read the full URLTA draft here. If you’re interested in joining NAA’s working group please contact Nicole Upano, Manager of State and Local Government Affairs, at nicole@naahq.org or 703-797-0646.

Government Shutdown Could Disrupt Key Multifamily Programs

From the National Apartment Association’s AIMS Update:

In anticipation of the shutdown, the U.S. Department of Housing and Urban Development (HUD) recently published its Contingency Plan for Possible Lapse in Appropriations, which details the agency’s plan to manage through the crisis.  According to that plan, FHA will continue to endorse loans during the shutdown, it just can’t fund them.  Any impact then will be from a longer shutdown.

HUD’s department-wide strategy also offered guidance on other HUD programs.  The Department says that most housing programs, including the Section 8 program, will continue to make payments through October using past appropriations, although there will be few HUD personnel available to run the operations.  It is also unclear what will happen after October. 

HUD will also use advanced appropriations to make payments for project-based contracts in October.  It will not, however, process any contract renewals or waiver requests during the shutdown. 

Read the full plan here.

Economic Impact of the Apartment Industry

NAA and NMHC commissioned a report by George Mason University economist Stephen Fuller on the contribution the apartment industry makes to the US economy. From Multifamily Executive’s article about the report:

The study found that apartment industry spending contributes $1.1 trillion to the national economy and supports 25.4 million jobs.

“People underestimate the economic impact that flows from apartment buildings,” says Stephen S. Fuller, an academic researcher at George Mason University’s Center for Regional Analysis who conducted the study.

 “It’s always that first splash of new construction that gets the attention,” Fuller notes. “No one pays attention to ongoing maintenance or to the people who live in these properties. By not paying attention to them and the long-term effect they have, people underestimate the importance to the overall economy.”

Multifamily construction contributed $42.5 billion to the national economy, and construction spending spurred $12.7 billion in personal earnings, while supporting roughly 324,000 jobs, in 2011. That’s nothing to sneeze at. But it’s worth noting that resident spending on goods and services produces an economic impact nearly four times greater than construction.

Apartment resident spending drove nearly 80 percent of the apartment industry’s total contribution to the national economy and sustained nearly 90 percent of total jobs supported by the apartment industry. In 2011 alone, the country’s 35 million apartment residents contributed $885.2 billion to the national economy. Renter spending also generated $222 billion in additional personal earnings and supported 22.8 million jobs during the year.

For more information you can visit the weareapartments.org website and download the full report, look at state-by-state data or use the apartment community estimator.

What Happens When It Happens to You?

In a compelling post on the NAA blog about the impact of Superstorm Sandy on New Jersey, Mike Beirne, Executive Vice President of The Kamson Corporation, shares what it’s like to be in a disaster rather than an observer of one:

By nature, we are problem-solvers. What do you do when the problems are so ominous, and the best of us simply do not have answers? You learn, you adapt and you overcome. I have seen people become desperate. Over the past few weeks, I have seen the best of human kind and the worst. When an emergency hits your area, which side will you fall on?

Do you in your business include worst-case scenario planning? My suggestion is you should. I have been reminded of them many times over the past few years. Tornados, earthquakes, hurricanes, blizzards: the worst-case scenario does happen—and never so as starkly as in this most current event.

Where do you start? And once you start, what are some really important things you learn? How can you infuse them into your business plan? We thought we were smart and had portable generators everywhere, ready to go. But are they useful when you cannot get gas?

Folks, it’s not all about business. First and foremost, it’s about human beings. You have to adjust your decision-making to comprehend and understand that it’s for both your residents and your employees.