CREF Policy Update April 7, 2022

Commercial and multifamily developments and activities from MBA relevant to your business and our industry.

Last Tuesday, MBA and seven housing trades requested an extension of the comment period for responding to proposed rules to overhaul Davis-Bacon wage rates. Last Monday, U.S. Senators John Thune (R-S.D.) and Jerry Moran (R-Kan.) introduced Davis-Bacon wage rate legislation, and the Biden administration released the top-line framework for the President’s Fiscal Year 2023 budget proposal, which includes budget requests with significant increases in funding for housing-related programs. And last Wednesday the FDIC requested public comment on proposed draft principles on climate-related financial risk management for financial institutions with more than $100 billion in total consolidated assets

Sign MBA’s Home for All Pledge: Join the 200+ MBA member companies that have signed MBA’s Home for All Pledge, representing a commitment to promoting affordable rental housing; minority homeownership; and company diversity, equity, and inclusion. One senior executive (e.g., CEO, COO, President, Head of Lending, SVP) is encouraged to sign this online form on behalf of your organization. 

View Any Session You Missed from MBA CREF22: Were you one of the over 2,400 registrants that attended MBA’s Commercial/Multifamily Finance Convention & Expo? If you weren’t able to attend every session, they are available to you online for the next month. Simply access the program videos by clicking here. 

1. MBA, Industry Groups Request Extension of Comment Period on Proposed Davis-Bacon Regulations

On Tuesday, MBA and seven housing trades requested an extension of the comment period for responding to proposed rules to overhaul Davis-Bacon wage rates issued by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL). Considering the complexity of the proposed changes and its importance, the letter requests an additional 60 days to be added to the current 60-day comment period. Absent an extension, the 60-day comment period ends on May 17, 2022.

• Why it matters: Davis-Bacon wage rates apply to Federal Housing Administration-insured (FHA) new construction and substantial rehabilitation projects. Current WHD policies and practices result in unwarranted and disruptive split-wage decisions and other impediments that affect workforce and affordable housing projects.
• What’s next: MBA is working closely with FHA Committee members, the Davis-Bacon Working Group, and other trades to respond to the proposal. Please also see the next update on the introduction of Davis-Bacon wage rate legislation.

For more information, please contact Stephanie Milner at (202) 557-2747.

2. Senior Senators Introduce Davis-Bacon Wage Rate Bill 

U.S. Senators John Thune (R-S.D.) and Jerry Moran (R-Kan.) introduced legislation Monday designed to increase affordable housing units across the country by making targeted reforms to requirements under the Davis-Bacon Act. S. 3941, the “Housing Supply Expansion Act,” which reflects MBA’s feedback, would address the burdensome split-wage determinations (assigning other wage rate types to some items of construction, such as “building” or “highway”) by locking in Davis-Bacon wage rates at the time of application. A link to the senators’ press release, which includes a copy of the bill and a statement from MBA SVP of Legislative and Political Affairs Bill Killmer, can be found here.

• Why it matters: The way the Department of Labor (DOL) applies wage rates under the Davis-Bacon Act is critical to the viability of FHA financing for new construction or substantial rehabilitation of multifamily and residential healthcare properties. Split-wage determinations for residential housing projects continue to create significant administrative burden and complexity.
• What’s next: Any legislative effort related to Davis-Bacon wage rates remains a partisan exercise in Congress, making passage of S. 3941 this year challenging. Earlier this month, the DOL announced that it is proposing updated regulations implementing Davis-Bacon and related acts that would reaffirm current policy and practice on multiple wage rate (split-wage) determinations and the effective dates for wage rate revisions for projects insured by the FHA.

For more information, please contact Ethan Saxon at (202) 557-2913 or Tallman Johnson at (202) 557-2866. 

3. Biden Administration Releases FY23 Budget Request 

On Monday, the Biden administration released its fiscal year 2023 (FY23) budget proposal. Additionally, the House and Senate Budget Committees held hearings to review President Joe Biden’s FY23 request with Office of Management and Budget (OMB) Chair Shalanda Young. On housing, the budget requests significant increases in funding for housing vouchers, homelessness assistance grants, energy retrofitting for public housing, and expanded support for Community Development Financial Institutions (CDFIs). In total, the administration requests $71.9 billion for the Department of Housing and Urban Development (HUD), a 9% increase from the FY22 enacted level. The request also provided clues about housing and tax provisions the administration may push for if Democrats revive the Build Back Better Act, the House-passed reconciliation bill that stalled in the Senate at the end of last year.

• Why it matters: The president’s budget proposal is a blueprint of the administration’s priorities provided to Congress as it begins its budget and appropriations process. Senate Appropriations Committee Chairman Patrick Leahy (D-VT) and Ranking Member Richard Shelby (R-AL) have started their negotiations on top-line spending numbers, mere weeks after Congress completed its FY22 omnibus package. 
• What’s next: With the release of the administration’s proposal, the congressional budget process begins in earnest on the 13 different appropriations bills. The House of Representatives anticipates hearings throughout April and May with the goal of marking up the individual appropriations bills in June and a floor vote before the full House in July.

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

4. California Extends Eviction Moratorium until June 30

On Thursday, California lawmakers extended the state’s eviction protection until June 30, 2022, for tenants who have applied for emergency rental assistance.

• Why it matters: Lawmakers passed the measure to allow state officials an additional three months to distribute emergency rental assistance to tenants.  
• What’s next: Local eviction moratoriums also remain in place, including in the city of Los Angeles. MBA follows state and local eviction moratoriums in a weekly tracker, which can be accessed here.

For more information, please contact Kobie Pruitt at (202) 557-2870 or Grant Carlson at (202)-557-2765.

5. ESG/CLIMATE Resources

FDIC Issues RFI on Principles for Climate-Related Financial Risk Management for Large Financial Institutions

On Wednesday, the Federal Deposit Insurance Corporation (FDIC) requested public comment on proposed draft principles related to the safe and sound management of climate-related financial risk for large financial institutions with more than $100 billion in total consolidated assets. According to the FDIC, the draft principles “would provide a high-level framework for the safe and sound management of exposures to climate-related financial risks.” The FDIC framework appears similar to the Office of the Comptroller of the Currency’s (OCC) draft principles, to which MBA provided comment in February 2022.

• Why it matters: FDIC’s principles on managing climate-related financial risk for large FDIC-supervised financial institutions will also affect supervisory expectations for other institutions, and may add additional compliance costs and supervisory expectations for CREF members.

What’s next: The comment period will run for 60 days after the proposal is published in the Federal Register. MBA will analyze the proposal and coordinate with members to develop a response

MBA Releases Summary of SEC NPRM on Climate-Related Financial Disclosures

On Tuesday, MBA released a summary of the U.S. Securities and Exchange Commission’s (SEC) Notice of Proposed Rulemaking (NPRM) on mandatory climate disclosures for public filers. Released last week, the SEC’s NPRM would require domestic or foreign registrants to include certain climate-related information in their registration statements and periodic reports. The SEC’s NPRM addresses disclosure requirements across three areas: disclosures related to climate-related risks; disclosures of greenhouse gas (GHG) emissions; and the disclosures of climate-related impacts on financial reporting.

• Why it matters: MBA’s summary will provide an additional resource to CREF members as they analyze the rule’s impact on their business.
• What’s next: MBA has established a working group to respond to the NPRM and will also coordinate with other trades. The comment period on the proposal will run until at least May 20, 2022.

For more information, please contact Adrian Ballinger at (202) 557-2774.

6. OCC Revises Commercial Real Estate Lending Comptroller’s Handbook 

On Tuesday, the OCC issued version 2.0 of the “Commercial Real Estate Lending” booklet of the Comptroller’s Handbook.

• Why it matters: According to the OCC, “This booklet discusses risks and risk management practices associated with commercial real estate.”
• What’s next: The updated booklet replaces version 1.1 of the booklet of the same title issued in January 2017. Also rescinded is OCC Bulletin 2013-19, Commercial Real Estate Lending: Comptroller’s Handbook Revisions and Rescissions, which transmitted version 1.0 of the booklet of the same title issued in August 2013.

For more information, please contact Grant Carlson at (202) 557-2765.

7. Treasury Has Distributed $30 Billion in Emergency Rental Assistance  

OOn Wednesday, the U.S. Department of Treasury reported that it had obligated $30 billion in Emergency Rental Assistance (ERA).

• Why it matters: As of February 2022, $30 billion of the $46.6 billion in ERA funds have been allocated.
• What’s next: The ERA program is set to exhaust the vast majority of its ERA funding by midyear.

For more information, please contact Grant Carlson at (202) 557-2765.

8. State Trackers

• State eviction moratorium and legislative activity tracker available here.

For more information, please contact William Kooper at (202) 557-2737 or Grant Carlson at (202) 557-2765.

9. CREF Track at MBA’s Technology Solutions Conference and Expo in Las Vegas – Register Today (April 11-14, 2022) 

Register today for MBA’s Technology Solutions Conference and Expo in Las Vegas on April 11-14. This year’s conference will include the first in-person get together of the CREF Technology Officers Roundtable since the onset of the pandemic. Join us for a great set of sessions as well as ample time for discussion and networking.

• Why it matters: The CREF Track will include: emerging technologies; a view of tech from the C-suite; cybersecurity and privacy; mapping and GIS; cloud innovation; office 2.0/adaptation; documentation and automation; career development; creating a tech platform/tech adoption; and climate-risk and ESG.
• What’s next: The full schedule can be viewed here. Let us know if you have any questions, and please share the registration information with the right people on your team.

For more information, please contact Jamie Woodwell at (202) 557-2936.

10. Register Today: MBA’s National Advocacy Conference – April 26-27

Registration is open for MBA’s National Advocacy Conference to be held April 26-27 in Washington, D.C. NAC allows you to connect directly with elected officials in our nation’s capital. Your story matters – share it with key policymakers as they consider and pass legislation that affects all of us. 

• Why it matters: The last two years have been unprecedented for millions of Americans, and the real estate finance industry is no different as we navigate new terrains. NAC gives you the opportunity to share your narrative with the key staff and decision-makers while networking with your colleagues from all over the industry. When we work together and combine our voices, we can do great things.  
• What’s next: Share your experiences, your voice, and your passion for our industry April 26-27! Register today at mba.org/nac.

For more information, please contact Rachel Kelley at (202) 557-2816.

11. MBA Education Webinars on Critical Industry Issues

MBA Education continues to deliver timely programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of recent and upcoming webinars, which are complimentary to MBA members:

• Special Purpose Credit Programs: The What, the Why, and the How – April 12
• CFPB Enforcement Authority Over Student Loans and Impact on Mortgage Lending – April 21
• Introduction to Commercial Mortgage-Backed Securities – May 19

MBA members can register for any of the above events and view recent webinar recordings.

For more information, please contact David Upbin at (202) 557-2931.