by Erik Taylor
Political Insider
The following three state and local policy issues have potential to greatly impact the apartment industry as a whole and are likely to be addressed by lawmakers in several states and localities in 2011.
Budgets. Balancing budgets will be the top agenda item for state and local lawmakers nationwide in 2011. Already, 35 states predict cumulative budget shortfalls of more than $80 billion for the 2012 fiscal year, which, for most, begins July 1.
Pressure on state and local government finances will force lawmakers to explore all options for balancing budgets, including the expansion of taxes to additional goods and services and the creation of new fees. Courtney LeVinus, Chief Lobbyist for the Arizona Multihousing Association, says that with state and local governments looking everywhere for scarce dollars, fee increases for all public services are on the table.
While 14 incoming governors have signed pledges not to raise taxes, 36 have not. Despite the fiscally conservative tendencies of many incoming state lawmakers and governors, budget negotiations are always a zero-sum game. Tax overhaul proposals and those aimed at raising “new revenue” should be carefully scrutinized to ensure that rental housing providers’ ability to continue delivering high-quality, reasonably priced housing is not jeopardized.
David Mintz, Director of Government Affairs for the Texas Apartment Association, cautions apartment industry stakeholders to “watch the budget processes carefully,” as policy decisions regarding taxes, spending and revenue generation directly impact the industry’s financial bottom line.
Bed Bugs. In March, Maine became the first state in the nation to enact a law that clearly defines the rights and responsibilities of landlords and tenants in regard to addressing bed bug infestations. That measure was first presented to the Maine legislature and lobbied on by NAA’s affiliate in the state, the Maine Apartment Association.
Five months later, New York Gov. David Paterson (D) signed the Bed Bug Disclosure Act—a law requiring owners of apartments in New York City to disclose to potential residents the property’s bed bug infestation history for the previous year. Under the law, apartment owners are required to disclose this information regardless of whether previous infestations have been verifiably eradicated.
Also in 2010, the governor of Illinois signed legislation requiring a task force to recommend to state lawmakers best practices for preventing, managing and controlling bed bug infestations. The Chicagoland Apartment Association serves as a member of that task force.
The New Jersey Apartment Association (NJAA) has worked with state lawmakers since 2008 to craft legislation that addresses bed bug infestations in a manner least harmful to the apartment industry. Conor Fennessy, Vice President of Government Affairs for NJAA, says legislation passed by the state Assembly “emphasizes cooperation among the property owner, renter and professional exterminator.” While that measure, according to Fennessy, has the best chance for passage, it is unclear whether there exists among lawmakers the necessary support to move the bill through the Senate in 2011.
Believing in the inevitability that bed bug infestations will ultimately be addressed legislatively, apartment industry stakeholders in Arizona and Alabama worked to proactively address the issue through the introduction of state legislation in 2010. Arizona’s bill was intentionally prevented from advancing beyond the Senate. “We felt additional time and effort was needed to fine-tune the bill,” LeVinus says. She expects a new bill to be introduced in 2011 but acknowledges that getting it passed will be “an uphill battle” given likely opposition from tenant groups.
Bed bug legislation currently pending in Pennsylvania “presents a positive opportunity for apartment industry stakeholders to work with lawmakers to address this serious problem,” says Christine Young-Gertz, Vice President of Government Affairs for the Apartment Association of Greater Philadelphia.
“We plan to talk to the bill’s sponsor and hopefully have real input on what issues are covered, what is realistic to the problem and how to address it,” Young-Gertz says.
Nationwide media coverage of bed bugs’ resurgence coupled with the proliferation of bed bug-related legislation is likely to spur the introduction of similar bills in 2011 in states where such measures have not before been considered.
Source of Income. In 2010, lawmakers in at least four states and Miami-Dade County, Fla., introduced legislation aimed at prohibiting apartment owners from refusing to enter into lease agreements with persons based solely upon their status as a Section 8 beneficiary.
New York lawmakers successfully passed such a measure through both of the state’s legislative chambers. Despite strong bipartisan support for the bill, Gov. Paterson vetoed the measure in August, citing a litany of “onerous” administrative and financial hardships apartment owners endure when providing housing to Section 8 beneficiaries. The bill’s implementation, according to Paterson, would deter individuals from investing in affordable housing.
Similar legislation was considered for the second time in as many years by the Miami-Dade County, Fla., Board of County Commissioners in 2010. NAA worked in conjunction with the Southeast Florida Apartment Association and the Florida Apartment Association’s then Director of Government Affairs, Jeff Rogo, to defeat the measure, which was withdrawn from consideration by its sponsor in June.
“From the perspective of the apartment industry,” says Rogo, who now serves as Government Affairs Director for the Bay Area Apartment Association, “the best argument against mandatory Section 8 participation is the burden placed on the landlord to comply with the U.S. Department of Housing and Urban Development (HUD) regulations.” Requiring landlords to accept and utilize the HUD lease “takes away the free market choices of the apartment manager,” he says.
As fallout from the “great recession” lingers, state and local lawmakers will direct much of their attention toward providing relief to constituents struggling through an economic downturn that shows little indication of near-term recovery. As such, NAA anticipates that the prevalence of proposals aimed at extending fair housing protections to Section 8 beneficiaries will remain high in coming years.
NAA Public Affairs Manager Carole Roper contributed to this report. E-mail erik@naahq.org or carole@naahq.org.
