National & State: Governmental Affairs

Governmental Affairs, November 2022

Here are some key takeaways from NAA for the month of October.  This month I have chosen to highlight a few issues that should look familiar. The issues we currently face on a local level are becoming the common experience of many local governments.  

So Many Inspections:

Laws that mandate inspections for apartment housing exist in a variety of forms in thousands of towns, cities and counties throughout the country. These programs are intended to ensure public health and safety, mitigate blight, and abate nuisance and overcrowding through enforcement of building and health codes. Mandatory inspection programs are composed of four essential components: registration, fees or taxes, business licensing and inspections by code enforcement officials. Property owners are commonly required to register all units with the municipality and assessed a per unit fee or tax that is levied to cover the costs of the inspection program. These fees typically range from $10 to $100 per unit. Once these requirements have been met, the provider is granted a business license to legally rent within the jurisdiction and is subject to annual inspections, re-inspections and inspections at random. Fee-funded inspection ordinances undermine housing affordability by unnecessarily increasing operating costs for housing providers. These expenditures are often passed on to residents thereby increasing consumer costs. Providers are also subjected to administrative delays which could affect their ability to operate if violations are found.

We share the viewpoint of NAA.  Rental housing inspection laws place an unnecessary financial hardship on owners, infringe on personal privacy rights, and single out apartment housing while excluding other property types. NAA encourages policymakers to consider other proven approaches that target chronic code violations, such as complaint-driven property inspection programs. 

Waste Management:

Local governments have long been perceived as responsible for providing waste collection and disposal as an essential public service. However, waste management services have increasingly become the target of privatization efforts by local officials seeking to reduce or eliminate costly obligations from budget line items. Reductions in revenue sharing by states have forced some localities to drastically pare back spending and turn to administrative fees to raise revenue.  NAA opposes legislation that limits trash collection at apartment communities or requires additional fees from rental housing providers for service. As members of their community, apartment developers, operators, and their residents fund municipal waste management and therefore are entitled to the same access and quality of services provided to owners of single-family homes.

Water and Billing:

In the face of rising water costs, housing providers have increasingly moved to directly bill residents for water through either installing submeters or using Ratio Utility Billing Systems (RUBS). Utility regulators in some states and localities have attempted to curb the ability of apartment owners to engage in this practice, alleging it amounts to a resource's sale or resale. States and localities should take care to exempt property owners when considering utility-related legislation or regulatory code changes that require or encourage direct water billing practices. Lawmakers should allow property owners to decide what type of direct water billing system works for them.

State and local agencies have attempted to limit the ability of apartment providers to directly bill residents for water, arguing the practice amounts to the resource's sale or resale. Regulators frequently take issue with fees related to such billing programs, implying that property owners and third-party billing companies are unfairly profiting from the billing process.  However, any limitations on the two types of direct water billing would force owners to estimate water costs and include them in the cost of rent, leaving owners on the hook for increased use above that estimate. 

Consumer Privacy:

Consumer data breaches leave the apartment industry just as vulnerable as common consumer sectors. Apartment firms increasingly operate across multiple states and must comply with a patchwork of 48 different state laws governing data security and privacy. This regulatory framework drives up costs, which ultimately impacts housing affordability. Given the ever-expanding cyber-threat landscape, rental housing owners and operators have made defense against these vulnerabilities a top priority.  NAA is working with congress to create legislation that will create a single national data security and breach notification standard that is reasonable, flexible and scalable. 

Governmental Affairs, March 2022 

National Updates:

FCC Broadband Changes and Time Frames

In December the FCC announced “proposals” to regulations aimed at refreshing the record on broadband competition and choice in the multifamily and commercial real estate sectors. Less than one month later, those proposals became a reality. Under the revised rules, broadband providers are:

  • Blocked from entering into exclusive and graduated revenue sharing agreements;
  • Required to disclose the presence of an exclusive marketing arrangement in material distributed to residents or prospective residents; and
  • Reminded that sale-and-leaseback arrangements are prohibited under federal code. Read more

Renovation, Repair and Painting Rule

Changes have now been implemented with respect to requirements regarding lead-based paint activities on pre-1978 properties. The EPA is withdrawing its FAQ pertaining to Property Management Companies effective March 21, 2022. The FAQ exempts Property Management Companies from certification and recordkeeping requirements if they hired certified firms to perform covered activities and did not themselves employ workers who engaged in covered tasks.  Read more

Congress Passes Bill Making Predispute Arbitration Agreements Unenforceable for Sexual Assault Harassment Disputes

On March 3, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, which amends the Federal Arbitration Act (FAA) to provide that, at the election of an individual (or their representative) who is alleging sexual harassment or assault, a predispute arbitration agreement or waiver will be invalid and unenforceable with respect to a case filed under federal, tribal, or state law. The Act applies to any dispute or claim arising or accruing on or after its enactment.  Read more

Congressional Priorities:

  • Support credible and proven policies to address the housing affordability crisis while opposing approaches that undermine the effective operation and financial health of rental housing.
  • Revitalize Section 8 Housing Choice Vouchers to enable greater participation by private housing providers and expand affordable options for low and moderate-income Americans.
  • Establish federal incentives for local governments to remove barriers to housing development and rehabilitation and support funding for unmet infrastructure needs that directly impact housing.
  • Reauthorize and reform the National Flood Insurance Program and support more effective coverage for the industry. Ensure attainable coverage options for other operational risks such as cyber, liability and pandemics. Read more

Local News:

“Safer+Simpler St. Louis County Coalition”

The “Safer+Simpler” Coalition is an alliance of organizations committed to the vision, goals and objectives as they relate to pursing a consistent set of codes pertaining to unifying building codes, inspections, and permitting in St. Louis County through the collective work of stakeholders, governmental officials, and associated organizations. The result of these efforts are anticipated to reduce complexities inherent in updating and enforcing complex building codes. Simplifying these codes should help promote growth in the St. Louis area as studies reveal many avoid our market due to the complexities and inefficiencies of our current processes (which differ amongst the numerous municipalities). 

This is anticipated to be a two-year long project which we hope results in a ballot initiative allowing St. Louis County voters a chance to simplify the insanity that is numerous in the varying municipal codes. SLAA will be asking for your help to not only promote the initiative, but also to provide input for a collection of “best practices”. This gives us an opportunity to have a seat at the drafting table and say in how this should work.  

Governmental Affairs, November 2021

As the eviction moratorium ends, the fact that we are still very much, facing an affordable housing crisis is becoming even more apparent. The federal eviction moratoriums did nothing to address the underlying financial distress of renters and could have long-term implications for the stability of the housing industry. This coupled with the push back the labor force is feeling from decades of low and stagnant wages; it seems almost certain that significant changes are coming to the multifamily housing industry. 

Congress is now being asked to make these issues a priority and it’s the belief of some, that we need to strike while the iron is hot. The fact that our industry was the only one completely “held hostage”, might give us leverage we need to push back. 

Congressional Priorities: Read more

National Updates, FEMA

The Biden administration announced on November 9 that FEMA will continue to cover the full costs of COVID-19 response activities eligible under FEMA’s Public Assistance (PA) program through April 1, 2022. The 100% cost reimbursement includes costs associated with non-congregate sheltering for individuals experiencing homelessness. In an executive order issued in January 2021, President Biden directed FEMA to cover 100% of approved costs. He extended the guidance through the end of the year. Read more

State News:

More than 2,800 evictions have been filed in Jackson County so far in 2021. Legal aid attorneys expect those numbers to increase now that the federal eviction moratorium efforts have ended. Across Missouri, 94,000 households were behind on rent as of early August. Read more

From the New York Times: 

By Glenn Thrush and Conor Dougherty

Published Sept. 10, 2021 and Updated Oct. 18, 2021

“For once, Washington seemed to get in front of a crisis"

Read more

Governmental Affairs, June 2021
National Level 
2020 and now 2021 present as unprecedented years in general, but multifamily housing was stricken with sweeping eviction moratoriums that stripped landlords of their ability to enforce rental contracts. Although NAA has been unsuccessful in attempts to have such orders repealed, they were successful in garnering attention for the need of rent relief which came in the form of Biden’s American Rescue Plan. This plan includes $46 billion in rental assistance. 
Today, June 24, 2021 the Biden Administration did extend the moratorium in order to “buy more time to distribute emergency housing aid…” The stated purpose of this extension is to prevent the “tsunami” of evictions anticipated at the lapse of the CDC Order. There does exist, however, some pushback to the extension as any continuation of the Order would allow more time for the Supreme Court to rule against the CDC on this and other COVID related issues. Such a ruling would affect executive actions during future crises by way of legal precedent. 
As it relates to the various pending suits regarding the CDC Order, we do not anticipate a decision in the DC District Court case (ALABAMA ASSOCIATION OF REALTORS et al v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES et al) before June 30. We remain hopeful that the Supreme Court will rule on lifting the stay on Judge Friedrich’s order as it is a strategic play; will the Supreme Court make a decision before June 30, or wait to see if the CDC moves to extend and respond by lifting the stay on July 1. This would allow evictions for nonpayment that are protected by the CDC order to be processed. 
NAA is launching several grassroots campaigns centered around housing affordability issues currently being debated in Congress. As an Advocate, we are supporting the following issues and urge Congress to pass these bills:
  • Section 8 Reform Alert - Reforming Section 8 has been a long-sought-after legislative priority of the NAA. The Choice in Affordable Housing Act incentivizes the participation of the private rental housing industry in Section 8 HCV program by enacting critical reforms to the program.
  • Housing Affordability Alert - Congress is also considering two other pieces of legislation, the Yes In My Backyard (YIMBY) Act, and the Housing Supply and Affordability Act. These bills will mitigate the housing affordability crisis by helping to remove barriers to local development of housing.
The $1.2 trillion package purports to offer relief of the country’s declining condition of roads, bridges, waterways, and the like. There are assurance being made by the White House that a second infrastructure bill will move in tandem with this current, hard-infrastructure package. The second package is set to include over $200 billion in spending for housing. 
The issue that has drawn our attention is the possibility of elimination or curtailing 1031 or “like-kind” exchanges, changing the treatment of capital gains, treating a carried interest as ordinary income or radically altering present law tax treatment of estates at time of inheritance. The Administration has shown interest in all of these ideas, however, the tax writers in the House and Senate have yet to release any concrete plans and they are asserting their authority in this area, despite what the White House might want to do. NAA is part of several coalition efforts on these tax proposals. One of the more significant is in research to show the value and impact of 1031’s and why damaging this important tool would be disastrous for housing economies large and small around the country.
State Update
In Missouri, House Bill 16 has passed and been signed by Governor Parsons. It includes $410 million in federal funds for rental assistance. St. Louis City, St. Louis County, and Jefferson County have their own pots of money that properties should look to first. St. Charles County did not apply for direct funding and will be included in the statewide program. Funds at the local level must be spent by September 30, 2021, and if not spent by that time, the State can reallocate so the funds can be spent by December 31, 2021.
A total of 2,264 bills were filed this year. Only 70 passed, including the budget bills. That's a passage rate of just 3%. In a normal year, about 9% of the filed bills pass.
Worth noting, of the 70 bills passed, two bills have ancillary connection to our industry. House Bill 271 includes language prohibiting long-term business lockdowns in the event of another pandemic and Senate Bill 51 provides businesses with some immunity to lawsuits over COVID-19 exposure.
Other State Activity: 
Currently pending at the state level, is Senate Bill 12. This bill is of interest to our members on several levels but of particular interest is the provision regarding tax credits when their city or county imposes any city-wide or county-wide ordinance or order prohibiting or otherwise restricting the use of such taxpayer's real property. This would include, in part, occupancy restrictions wherein these business owners would receive a credit on property taxes owed on such affected real property.
Local Update:
In St. Louis County and St. Louis City, the presiding judges have issued orders that prevent people from being physically removed from their homes during the pandemic. These orders do not require a declaration form as with the CDC moratorium, but make an exception for drug or criminal activity. Despite the moratorium extension, Landlords have been successful in some evictions that include criminal activity or proper challenges to CDC / COVID affidavits that falsely purport a tenant’s impact from COVID without the ability to substantiate any such claims. 
The extension does not prevent the filing of eviction proceedings. Judgements are still being handed down and continue to await execution by local sheriffs’ office.
Moving Forward:
The focus of SLAA’s Governmental Affairs Committee this Summer will be to work with local leaders regarding the impact of the eviction moratorium, open discussions for crime prevention and reporting between properties and local law enforcement agencies and continue our support of NAA and their efforts to end the moratorium and pass a beneficial infrastructure package that helps to bring affordable and safe housing to our communities.