Industry Scores Victories, But More Work Remains

At long last, we are inside 2016; the year where major change is guaranteed in at least one of our branches of government and where there is potential for change in one of the others. The Obama Administration comes to end at the close of this year. Whether the new occupant at 1600 Pennsylvania Avenue is of the same or opposite party, there will be a new voice at the bully pulpit, a new approach to leading the nation and, indeed, the world. In the Congress, the House of Representatives will stay in the same party’s hands – barring something crazy happening elsewhere in the political machine – while the Senate is once again up for grabs. Senate Republicans will struggle and strive to maintain their slim majority while House Republicans will attempt to preserve the scale of theirs. Of course, that is 10 months from now and we have miles to go before we sleep (or pass out from campaign fatigue)

At the close of 2015, Congress and the President had knocked out a number of big policy items for the near term thereby smoothing out some potential bumps in the road this year. The federal debt limit has been lifted until March 2017 (no game of chicken over the full faith and credit of the U.S.). The federal budget levels for 2016 and 2017 have been set (much less chance of government shutdown). Several perennial annual tax extenders were made permanent while several others were extended for multiple years (much diminished chase for another year of life for temporary tax provisions). Finally, the highway trust fund was replenished for five years (road crews of the world rejoice!). 

This bevy of work the Congress completed before leaving for the holidays included victories for the apartment indus¬try, especially in the tax arena where all of our priorities in the tax extenders package were either extended or made permanent. These include bonus depreciation, small business expensing, energy efficiency and affordable housing development. See the Dec. 28 edition of the Apartment Advocate for details on these victories. Not all was shiny for us, however, in the final legislative package that is now law. Proposed language to prevent funding for the Environmental Protection Agency being used to enforce the Waters of the United States or "WOTUS" rule was dropped in the final negotiations. This rule is widely opposed by industries, state governments and others and would negatively impact not only new development of apartment homes but also existing communities. A federal court has stayed the rule for now, but that is not a permanent solution so look for more advo¬cacy on this in 2016. 

In what feels like a rare event, we did score a nice victory in the rules from the Internal Revenue Service (IRS) regard¬ing treatment of expenses to acquire, maintain and improve tangible property, including apartment buildings. NAA and the National Multifamily Housing Council had vigorously advocated for a healthy amount of deduction available to taxpayers without an applicable financial statement or "AFS" in the year of pur¬chase of an item versus having to depre¬ciate that item over several years. The initial amount in the IRS rule was $500 which in our view was far too low. At the end of November, this deduction amount was increased to $2,500 for those taxpay¬ers without an AFS. For more details, see the Dec. 21 edition of the Apartment Advocate. This is a substantial victory and an excellent example of apartment industry advocacy in action. 

Despite the victories I’ve noted already, there is much more work to do in the coming year. The Department of Housing and Urban Development has issued sev¬eral rules recently in the area of fair hous¬ing on which we will be focusing. There is legislation to improve and enhance the Section 8 Housing Choice Voucher program which has strong bipartisan sup¬port but a potentially bumpy path before becoming law. Data security, employee criminal background checks and patent reform are all still in the mix for some kind of action in the second session of the 114th Congress. All have implications for your business and we will be at the table for the deliberations.