MBA Policy Update
The House and Senate lasat week passed a long-term transportation funding bill, sending the legislation to President Obama’s desk for his expected signature.
The transportation bill includes provisions on the preservation of low-income housing units. Congress will next focus on completing an omnibus appropriations bill to fund the federal government. That legislation, which is expected to pass in the coming two weeks, may also include financial regulatory reform proposals.
Federal Government Funding Status
Before leaving for Thanksgiving recess, the Senate Appropriations Committee released a revised Transportation, Housing and Urban Development funding bill for 2016. Although the Senate had planned to vote on the measure before departing for Thanksgiving, that vote didn’t happen due to a dispute over an amendment regarding Syrian refugees.
MBA expects that the increased funding levels contained in the revised HUD appropriations bill will ultimately ease its passage through Congress- most likely as part of an omnibus appropriations bill later this month. Under the current Continuing Resolution, federal funding runs out on December 11.
For more information, please contact Len Wolfson at lwolfson@mba.org.
Congress Passes Highway Bill Including Affordable Housing Amendment
Last week Congress passed a five-year highway bill, sending it to President Obama’s desk for his signature. Included in the bill is the text of H.R.2482, the Preservation, Enhancement and Savings Opportunity Act.
This legislation, which MBA has endorsed, provides technical changes to the Low Income Housing Preservation and Resident Homeownership Act of 1990 while ensuring long-term preservation of affordable multifamily housing properties. When LIHPRHA was enacted, property owners were provided incentives to maintain the affordability of the properties for low- and moderate-income renters for the remaining useful life of the properties in exchange for relinquishing the right to prepay the mortgage after 20 years.
As part of the process, the owners’ equity contributions in the property were redefined but a contractual limitation on property income distributions remained, even though all surplus funds belong to the ownership entity. Such a limitation was workable 20 years ago, but as the mortgages mature, the annual distribution becomes insufficient to address increasing tax liabilities.
H.R. 2482 would remove the limitation on distributions and provide the ownership entity/sponsor access to its own funds to address tax liabilities or other expenses while ensuring continued preservation and adherence to the properties’ use agreements. Such action provides additional incentives for future investors to recapitalize these multifamily properties, therefore extending their useful life and the continuation of a scarce housing resource for years to come.
For more information, please contact Len Wolfson at lwolfson@mba.org.
MBA Joins Coalition to Raise Concerns About Structured Securities Trading Book Proposal
On November 12, MBA joined six other trade associations to express strong concerns regarding the Basel Committee on Banking Supervision’s Fundamental Review of the Trading Book rules that would negatively impact securitized products in the United States.
The FRTB proposal would dramatically increase capital requirements for bank trading book activities for structured securities, including CMBS. Some industry analysis indicates that the FRTB proposal would make secondary trading in securitized products unprofitable for broker-dealers. The coalition letter strongly recommends that substantial modifications be made to the FTRB proposal in advance of the U.S. regulatory agency consideration of these rules in order to avoid negative impacts on the U.S. market.
A copy of the letter can be found here.
For more information, please contact George Green at ggreen@mba.org.
MBA Files Letter on SEC/FINRA Proposed Margin Rule; Regulators Issue Extension
On November 6, MBA met with senior SEC staff on the multifamily implications of the Financial Industry Regulatory Authority’s proposed margin requirements.
MBA subsequently filed a comment letter on the proposal and spearheaded a coalition letter with 14 other national trade associations. In response to MBA and member feedback, FINRA sent a request to the SEC late on November 10 to extend the time period for SEC action on the proposed rule to January 15, 2016. This, in our view, will provide a more deliberative review of the detrimental impacts of the proposal on the multifamily market.
Please contact Eileen Grey at egrey@mba.org for more information.
MBA Launches New Advocacy Action Center
On Tuesday, December 1, MBA launched the new Advocacy Action Center. The new Action Center will make it much easier for Mortgage Action Alliance members to respond to Calls to Action as well as expand the ways that MAA members can contact their elected officials.
From time to time, MBA will now issue Calls to Action that will encourage MAA members to call or tweet their Members of Congress. Additionally, visitors can keep up to date on legislation that MBA is tracking and research more in depth information regarding policymakers.
For more information, please contact Peter Shapiro at pshapiro@mba.org for more information.
Election Update
Jim Ellis of the PRIsm Information Network reports on recent developments:
Early Primary Races The early presidential calendar brings March congressional primaries to seven states. Instead of doubling the election cost with a stand-alone presidential primary followed by a commensurate state nomination event later in the year, several legislatures decided to move their entire cycle to an unusually early calendar slot. The March primary states, aside from Texas and Illinois that normally hold their nomination voting then, are: Alabama, Arkansas, Mississippi, North Carolina, and Ohio.
March 1 Alabama: Sen. Richard Shelby faces Republican primary opposition from four opponents, one of which, businessman Jonathan McConnell, who could self-fund a campaign should he choose to do so. This is a good example of where the short time frame hurts potential challengers. Sen. Shelby should have little problem disposing of his competition to win re-nomination for a sixth term. Should Shelby fall below 50%, a run-off election would be held on April 12th. All seven House members are seeking re-election. Rep. Bradley Byrne (R-AL-1), Martha Roby (R-AL-2), Mike Rogers (R-AL-3), and Robert Aderholt (R-AL-4) all face Republican opposition. All are favored to win without a run-off. Rep. Byrne faces real estate developer Dean Young who scored 47% in the original 2013 special election that elected the Congressman. This appears to be the most competitive of the primary challenges. Arkansas: Sen. John Boozman (R) faces perennial candidate Curtis Coleman in the GOP primary and will easily win re-nomination. All four House incumbents are seeking another term, and each is heavily favored. The only member facing a primary is freshman Rep. French Hill (R-AR-2) who must dispose of businessman Brock Olree on March 1st. He should have little problem in doing so. The March 22nd run-off election will not be a factor in the congressional nomination process. Texas: With no Senate race, the congressional campaigns will be the only point of interest in the state primary. Two seats are open, those of Reps. Ruben Hinojosa (D-TX-15) and Randy Neugebauer (R-TX-19) both of who are retiring. The South Texas 15th and the West Texas 19th will remain in Democratic and Republican hands, respectively. With crowded primary candidate fields, both districts will go to run-off elections on May 24th. Fourteen members from both parties face primary opposition, but no incumbent appears seriously threatened.
March 8 Mississippi: No Senate race is scheduled here this election cycle. Candidate filing ends January 8th, but so far none of the four congressional incumbents has primary opposition. There was speculation that former US Senate candidate Chris McDaniel (R), who won re-election to his state Senate post in 2015, would challenge Rep. Steven Palazzo (R-Biloxi) but so far such a contest has not yet materialized. If it does, this will become a serious political match-up.
March 15 Illinois: The big race is the Senate Democratic primary, where three candidates fight for the right to challenge Sen. Mark Kirk (R) in November. There is no run-off in Illinois, so we will see a nominee emerge on March 15th. The heavy favorite is Rep. Tammy Duckworth (D-Hoffman Estates), but she faces state Sen. Napoleon Harris and Chicago Urban League President Andrea Zopp. Splitting the African American Chicago vote between Harris and Zopp will virtually guarantee Rep. Duckworth’s nomination. The Congresswoman is the only incumbent of the 18-member delegation to not seek re-election, due to her statewide bid. Her 8th District will be hotly contested in the Democratic primary, the winner of which will almost assuredly win the November general election. Former Deputy state Treasurer and congressional candidate Raja Krishnamoorthi and state Sen. Mike Noland appear to be the top contenders in the field of three. Krishnamoorthi has a huge resource advantage, but Noland is leading in early polling. Six incumbents will field primary challenges, the most serious of which is from state Sen. Kyle McCarter who is opposing veteran GOP Rep. John Shimkus (R-Collinsville/Southern Illinois). All contested races will go the incumbents’ way. North Carolina: Sen. Richard Burr (R) is drawing only minimal Democratic opposition. With three minor candidates in the statewide race going to a May 24th Democratic run-off is a likelihood, which will be one more plus for Burr. All 13 House members are seeking re-election, with five facing primary opposition. In at least two instances, the challenges have the potential of becoming serious. Rep. Renee Ellmers (R-Dunn/Cary), who only scored a 56% win in the 2014 Republican primary, has the potential of being forced into a dangerous run-off. Several controversies have dogged the Congresswoman since the last election. She faces three opponents, which ironically could help her secure the 40% needed to claim the outright nomination. The second seriously contested primary comes against Rep. Walter Jones (R-Farmville/Outer Banks) who again faces former George W. Bush Administration official Taylor Griffin. In 2014, Griffin held the Congressman to a 51-45% re-nomination victory margin. Ohio: Democrats will find a nominee to challenge Sen. Rob Portman (R), and that will almost assuredly be former Gov. Ted Strickland. The ex-state chief executive faces Cincinnati City Councilman P.G. Sittenfeld in the March 15th Democratic primary. Mr. Strickland is a strong favorite to advance into the general election. One open seat will be decided in a special election process that begins March 15th. Voters in former Speaker John Boehner’s (R) 8th District will nominate a Republican and a Democrat on March 15th. The winner of the crowded GOP field will become the Congressman in the special general on June 7th. Just two members face primary challenges, one potentially serious. Rep. David Joyce (R-Northeast Ohio) will again oppose former state Rep. Matt Lynch in the GOP primary. When Lynch was still in the legislature and challenged Rep. Joyce in 2014, he drew 45% in the 14th Congressional District primary. Therefore, Joyce should be in better position to face him again now that Lynch no longer holds office and has less of a fundraising base.
