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August 3, 2018

FLOOD INSURANCE
National Flood Insurance Program Extended through Nov. 30

HOMELAND SECURITY
Congress Passes Defense Legislation Addressing Foreign Investment Risk; Includes Language Addressing Real Estate

WORKFORCE & LOW-INCOME HOUSING
Bipartisan Legislation Introduced to Create Task Force on Affordable Housing Policy


FLOOD INSURANCE

National Flood Insurance Program Extended through Nov. 30  

A five-month extension of the National Flood Insurance Program (NFIP) was passed by Congress hours before its scheduled July 31 expiration and signed by President Trump later that day.  The NFIP extension gives the House and Senate additional time to work towards long-term reauthorization.

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If the National Flood Insurance Program had lapsed, the Federal Emergency Management Agency would not have been able to issue new policies, and its borrowing authority would have been reduced to $1 billion from $30.4 billion. This would have had major effects on the real estate markets in coastal areas, where a flood insurance policy is mandatory for obtaining a new mortgage

  • If the program had lapsed, the Federal Emergency Management Agency (FEMA) would not have been able to issue new policies, and its borrowing authority would have been reduced to $1 billion from $30.4 billion. This would have had major effects on the real estate markets in coastal areas, where a flood insurance policy is mandatory for obtaining a new mortgage. (BGov, July 31) 

  • On July 25 the House voted 366-52 to pass the National Flood Insurance Program Extension Act of 2018 (S.1182), as amended, and on July 31 the Senate followed suit with a vote of 86-12. The measure reauthorizes FEMA to enter into new contracts for flood insurance and borrow from the Treasury up to specified amounts through Nov. 30, 2018 - the ­official end of the Atlantic hurricane season.   

  • The bill received pushback from Senate and House Republicans who wanted reforms to make the NFIP financially sustainable - after more than a decade of historic storms put the program deeply into debt. (CQ, July 25) 

  • A White House statement last week supported efforts to keep the flood insurance program from expiring, but noted Congress needs to enact long-term changes to ensure the program's long-term viability. (The White House, July 25) 

  • In November 2017, the House passed long term legislation - the 21st Century Flood Reform Act (H.R. 2874) - that would reform and reauthorize NFIP for five years. The bill included: funding for flood mitigation assistance; lower flood insurance rates, support for  the private flood insurance market, modernization of flood zone mapping; and flood mitigation practices for homebuilders and land developers.  However, the measure was not been taken up in committee in the Senate. (Roundtable Weekly, Nov. 17, 2017) 

The Roundtable will continue to work with lawmakers and our coalition partners to assist with NFIP reforms and a long-term reauthorization, that would help protect the nation's commercial and multifamily business-owners, their properties, and residents.

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HOMELAND SECURITY

Congress Passes Defense Legislation Addressing Foreign Investment Risk; Includes Language Addressing Real Estate   

The Senate on August 1 approved the National Defense Authorization Act for Fiscal Year 2019 (NDAA) – a compromise $717 billion defense policy bill aimed at building up the military and blunting Chinese foreign investment – which includes language that may affect some foreign purchases and leases of real estate near military and other strategic facilities.

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The final version of the NDAA – including FIRRMA –  would expand the list of covered transactions to include some foreign purchases and leases of real estate near military and other strategic facilities. It is anticipated that President Trump will sign the legislation in August.

  • The NDAA bill also includes the Foreign Investment Risk Review Modernization Act of 2018 (FIRMMA), which reforms the Committee on Foreign Investment in the United States (CFIUS) – a U.S. interagency committee that conducts national security reviews of foreign investment. 

  • FIRMMA expands the review authority of CFIUS to review national security implications of transactions that could result in control of a U.S. business by a foreign person and to block transactions or impose measures to mitigate any threats to U.S. security.

  • FIRRMA also expands the list of covered transactions to include some foreign purchases and leases of real estate near military and other strategic facilities.  Responding to concerns raised by The Roundtable and other industry groups, language is also included that exempts real estate located in 'urbanized areas' from the criteria of a covered transaction.  The Census defines an urbanized area as one comprising more than 50,000 people.  See pages 820-826 of the final congressional conference report.

A congressional conference committee reconciled House and Senate versions of the NDAA last month. The final version of the NDAA – including FIRRMA – passed the House on July 26 and the Senate on Wednesday. It is anticipated that President Trump will sign the legislation in August.

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WORKFORCE & LOW-INCOME HOUSING

Bipartisan Legislation Introduced to Create Task Force on Affordable Housing Policy  

With millions of workforce and low-income Americans facing a lack of affordable housing, a group of nine bipartisan Senators recently introduced legislation that would create a task force focused on policy recommendations to address the nation's housing scarcity problem.  (Sen. Heller News Release, July 18)

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With millions of workforce and low-income Americans facing a lack of affordable housing, a group of nine bipartisan Senators recently introduced legislation that would create a task force focused on policy recommendations to address the nation's housing scarcity problem.  (Sen. Heller News Release, July 18) 

  • The Task Force on the Impact of the Affordable Housing Crisis Act – introduced by Senators Dean Heller (R-NV), Todd Young (R-IN), Maria Cantwell (D-WA), Angus King (I-ME), Tim Kaine (D-VA), Doug Jones (D-AL), Cory Gardner (R-CO), Marco Rubio (R-FL), and Chris Coons (D-DE) – would create an 18-member Task Force with two co-chairs.  The affordable housing task force would evaluate and quantify the impact of housing costs on other government programs and provide recommendations to Congress on how to increase affordable housing.  (One-page Task Force Overview)  

  • Sen. Heller commented, "While we welcome (an) explosion of growth and the jobs and economic opportunities that come with it, there is a lack of affordable housing because the demand for it is outpacing the supply. We need to develop solutions." 

  • Sen. Cantwell noted, "This year we were able to boost the Low Income Housing Tax Credit, which has built 90 percent of affordable housing in our country.  More needs to be done to get to the root causes of the affordable housing crisis and show that the LIHTC is cost-effective and creates jobs." 

  • Sen. Cantwell discussed the shortage of housing for workforce and low-income Americans with Roundtable President and CEO Jeffrey DeBoer last year during a Senate Finance Committee hearing on business tax reform. (Hearing Video Clip, Sept. 19, 2017) 
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    Roundtable President and CEO Jeffrey DeBoer testified before the Senate Finance Committee: "And we need to focus on ways to incentivize affordable housing, not just low-income housing, which is obviously needed, but workforce housing as well ... it is certainly a growing and troubling problem. And as we go forward, that part of our nation has to be included in whatever is done in economic growth." (Hearing Video Clip, Sept. 19, 2017) 


  • In response to a question from Sen. Cantwell, DeBoer said, "Most businesspeople that operate certainly in urban areas recognize that there's a tremendous and growing shortage of what we would call workforce housing. And so people that are middle-American citizens, firemen, teachers, what have you, combined incomes, working very, very hard, are being priced out of our nation's cities."  

  • DeBoer continued, "And we need to focus on ways to incentivize affordable housing, not just low-income housing, which is obviously needed, but workforce housing as well ... it is certainly a growing and troubling problem. And as we go forward, that part of our nation has to be included in whatever is done in economic growth." (Hearing Video Clip, Sept. 19, 2017) 

  • Housing in the nation's economically distressed communities could also benefit from the new federal "Opportunity Zones" program, which seeks to encourage investment, economic development, and job creation in low-income areas.  Opportunity Zones are the focus of a July 16 GlobeSt.com  interview with Real Estate Roundtable President & CEO Jeffrey DeBoer and Roundtable SVP and Counsel Ryan McCormick.  With implementation guidance about the program expected soon from the U.S. Department of the Treasury, the article highlights major tax considerations and regulatory questions, which are also discussed in greater detail in a Roundtable June 28 Opportunity Zone comment letter.  (Roundtable Weekly, July 20).  Treasury rules are expected to confirm that Opportunity Zone tax benefits extend to the construction and rehabilitation of affordable housing.  

The Roundtable's 2018 Policy Agenda, released in February, recognizes the affordable housing challenge – "As many of our nation's urban areas become more expensive, our industry continues to recognize and support housing not only for lower income residents, but also for the nation's middle income workforce. A stable, healthy commercial and residential real estate economy facilitated by sensible federal policies can continue to improve our national standard of living."  (Introduction, 2018 Roundtable Policy Agenda)

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For questions about Roundtable Weekly, please contact The Roundtable's Scott Sherwood at rweekly@rer.org or (202) 639-8400.

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