Wednesday, October 3, 2012

The election and you!

Hello Apartment Industry Advocates!

With the election a mere five weeks away, it seems appropriate to devote this edition of the Apartment Industry Mobilization Service (AIMS) communication to our role as advocates for the apartment industry in the upcoming election.

There is no denying it – this year’s election has the capacity to impact every level of government. Not only will control of the White House and House and Senate be decided on Election Day, but 11 governors and numerous state legislatures, city councils and mayors’ races, 166 statewide initiatives in 35 states and a staggering number of local community questions will also be determined.

Although media attention may be focused on the presidential election, virtually everything federal, state and local policymakers do, or don’t do, impacts your business and your bottom line. So, no matter which side of the political aisle you’re on, your participation and vote on all these ballot items are vital to our industry.

So what can you do?

Use the days before the elections to make your case for the apartment industry.

Go to town hall meetings, political events and parades and educate Congressional candidates on the issues important to our industry. Elected officials will be making important decisions during the post-election “lame-duck” session and beyond. The number one issue on the table during that session is the expiration of the 2001 and 2003 tax cuts.

NAA and NMHC believe that Congress must extend these tax cuts. If Congress fails to act, there will be significant consequences for our members and the broader economy. The Congressional Budget Office estimates that expiration of the present-law tax rates combined with the proposed sequestration (across-the-board budget cuts) will cause the economy to contract 0.5 percent which will cause unemployment to rise to more than 9 percent by this time next year.

Looking ahead to 2013, the work only gets more challenging. We are focused on three key issues:

Tax Reform. Many apartment firms are organized as so-called “flow-through” entities (LLCs, partnerships and S Corporations). We must ensure that these businesses don’t end up double taxed as corporations or, alternatively, aren’t forced to endure a tax increase to finance a lower corporate rate.

Congress must also maintain the business interest deduction which is critical to smaller apartment firms that cannot access Wall Street or other equity sources. Likewise, the capital gains rate and carried interest are equally important to the future of the multifamily industry. Lastly, the Low Income Housing Tax Credit program must be preserved as an important tool for ensuring the availability of much needed affordable and workforce housing.

Housing Finance Reform. Policymakers of all stripes have made clear that Fannie Mae and Freddie Mac cannot survive in their present forms. Consequently, we are encouraging them to enact a housing finance reform solution respecting the unique needs of the multifamily industry. To that end, we are crafting a plan that will keep government-guaranteed capital flowing to all markets at all times.

Federal Regulatory Burden. As everyone is acutely aware, many federal regulations cost us money and are often simply not worth the price. So we are focused on making sure regulations targeting accessibility, fair housing, energy and the environment, labor policy and telecommunications, among other priorities, do not unduly impact the multifamily business and the providers of much needed apartment homes.

As you can see, this is a crucial time for our industry. Over the coming weeks prior to the election, we encourage you to talk to the candidates running in your home state and localities. Educate them about the multifamily industry and the vital role we play in communities nationwide and then ask them where they stand on the issues important to our industry.

For starters, you might want to ask them these questions:

Tax Reform. Tax reform is likely to be front-and-center on Congress’ agenda next year. Many owners, operators and developers of apartment housing organize themselves as pass-thru entities (i.e., sole proprietorships, LLCs, partnerships, and S Corporations) and pay tax as individuals. Furthermore, many in our industry borrow to finance the construction of new apartment buildings because they are too small to access equity markets. The business interest deduction is an important tool for smaller firms. Will you support preserving the ability of real estate pass-thru businesses to file taxes under the individual income tax system, and would you support retaining the current deduction in the tax code for business interest?

Housing Finance Reform. Fannie Mae and Freddie Mac (GSEs) have been an important source of capital for the apartment industry. While we recognize that the GSEs cannot survive in their current form, can you commit to working with us on crafting housing finance reform legislation that both respects the unique needs of the multifamily industry and ensures that capital is available in all markets at all times?

Federal Regulatory Burden. What is your view of the appropriate balance between government regulation and enabling private business to thrive and drive economic growth and job creation?

For additional information on the apartment industry’s priorities, please visit NAA and NMHC’s websites at www.naahq.org/governmentaffairs and www.nmhc.org.

Before we close, we want to thank all of the NAA affiliates and NAA and NMHC members who used the August Recess to reach out to Congress. Policymakers need to hear from the constituents who live, work and conduct business in their districts. That direct contact with you is fundamental to getting our message out on these critical issues to the multifamily industry.

We hope that you find this information valuable and welcome your suggestions on other topics for future communiqu├ęs. If you have questions or comments, please contact Kathleen Gamble at 703-797-0633 or Kathleen@naahq.org.


Gregory S. Brown
Vice President of Government Affairs
Apartment Association

Cindy Chetti
Senior Vice President of Government Affairs National
National Multi Housing Council


AIMS is the apartment industry's grassroots network operating under NAA and NMHC's Joint Legislative Program. AIMS represents more than 58,000 multifamily housing advocates.