January 2003
House
Passed Amended Bankruptcy Bill/Senate Did Not Act Insurance
Task Force Meets with Consumer and Insurance Industry Representatives Meetings with these organizations
were necessary in order to examine the current difficult insurance market
and possible solutions. While recommendations from the Task Force are pending,
the group will be carefully considering the feasibility of NAR-provided
alternative insurance products, the creation of resources to assist state
associations with state insurance regulatory efforts and to participate
in proposed federal initiatives impacting the insurance industry and consumers.
The Task Force is scheduled to meet in January 2003 in order to finalize
any recommendations. Alan Huffman, CPM, serves on the NAR Insurance Task
Force. In addition,
NAR has launched a website designed to provide the detailed information
necessary for dealing with the practice and policy-related aspects of the
insurance availability situation. The Government Affairs Property Casualty
Insurance website delves into the specifics and details which are necessary
to understand current market conditions, educate and advise clients about
insurance scores and insurance claims databases, and deal with state insurance
regulators and legislators. Among the topics covered: The Problem Causes,
Impacts and NAR Concerns, The Insurance Industry Perspective on Insurance
Scoring, Consumers' Federal Rights When Insurers Make Use of Credit and
Claims Databases, How Consumers Can Obtain Their Insurance Scores, How to
Access CLUE Reports, How State Regulators and Legislators Are Addressing
the Use of Insurance Scores, a Glossary of Common Insurance Terms and What
NAR is Doing to Address the Availability Problem. To access the site, please
click
here. Senate
Overwhelmingly Approves Terrorism Bill HR 3210 HR 3210 becoming law is a major
victory for both Commercial and Residential Realtors. They both will benefit
by the additional reinsurance capacity that the bill will bring to the marketplace.
Commercial lending liquidity should be substantially improved as well. It
culminates a year of coordinated effort by CCIM Institute, NAR, the Institute
of Real Estate Management (IREM) and the Coalition to Insure Against Terrorism
(CIAT). The new bill will be in force
for three years through December 31, 2005. It mandates that property and
casualty insurance policies in all 50 states must offer traditional terrorism
insurance coverage. It voids all existing property and casualty insurance
policy exclusions for traditional terrorism coverage. The new bill will establish a
Federal backstop for commercial property and casualty insurers arising from
terrorism. Treasury will pay directly to insurers 90 percent of claims after
insured losses exceed $10 billion in year 1, $12.5 billion in year 2, and
$15 billion in year 3. Treasury will pay until insured losses exceed $100
billion. The new bill will not have a
Federal standard for the awarding of punitive damages in terror-related
suits brought against property owners. As a result state laws on punitive
damages will prevail. It does consolidate terror-related lawsuits in Federal
court at both the pre-trial and trial phases. Temporary
Halt in Flood Insurance Availability National
Energy Reform Toxic
Mold The bill, in effect, would have
created a national toxic mold hazard insurance program much like the federal
flood insurance program in order to address the burgeoning number of claims
against policies for costs related to mold clean-up and health hazards. Careful analysis of the bill’s
language revealed several areas of concern. In particular, Sections 201
through 206 addressing inspection requirements for residential properties,
building code requirements and construction requirements. H.R. 5040 did prescribe tax credits
for toxic mold inspection and remediation; a component that IREM will monitor
to ensure its inclusion in any legislation introduced in the new year. Also, in toxic mold news, medical
opinion continues to weigh in on the lack of credible scientific data regarding
adverse health effects from mold. The American College of Occupational and
Environmental Medicine (ACOEM) stated these conclusions in an evidence-based
statement on "Adverse Human Health Effects Associated With Molds in
the Indoor Environment". A team led by Bryan D. Hardin, a former deputy
director of NIOSH and Assistant Surgeon General, developed the peer-reviewed
statement. While recognizing both the allergic and infectious effects of
mold under certain conditions, the statement concludes: "Current scientific
evidence does not support the proposition that human health has been adversely
impacted by inhaled mycotoxins in home, school, or office environments." Community
Choice in Real Estate Act Reintroduced Homeland
Security and Real Estate Postal
Service Reviewing Changes to Mailbox Standards New
Law Indexes FHA Multifamily Loan Limits No
Housing Legislation in 107th, outlook for 108th REAC
Changes Inspection Thresholds for Enforcement HUD
Receives Comments on their Strategic Plan HUD
Clarifies Screening and Eviction Procedures Telecommunications
State Activity The Utah Public Service Commission
has received a petition in December, 2002, to expand what network elements
are covered by the state's essential facility rules. Specifically, the Commission
has been asked to expand the definition of an essential facility to include
internal building ducts, wires and closest. The significance of having something
designated an essential facility is that all carriers would have access
to such a facility. IREM, through the Real Access Alliance, is addressing
the petition. Ohio
Supreme Court Case On Submetering In the decision, the Ohio Supreme
Court noted:
About SNJ 1 Chapter Information Schedule of Activities
Legislative Updates
In 2002, the House failed to pass H.R. 333, the Bankruptcy Reform Act conference
report, and instead passed an amended version of the bill. The bankruptcy
bill contained pro-commercial real estate provisions such as providing for
protections for shopping center owners and eliminating a loophole which
allowed for residential rental tenant abuse of the code. The amended version
of the bill passed by the House removed a controversial provision on abortion
clinic violence that was agreed to in the conference report of the bill.
The Senate was unwilling to consider the bill without the provision related
to abortion therefore the legislation died with the 107th Congressional
Session. As in years past, IREM, along with the National Association of
REALTORS® (NAR) and other commercial real estate organizations, will
work to get these provisions introduced again in the next Congress.
In the last two months of 2002, the National Association of REALTOR’S®
Insurance Task Force met with representatives from the following organizations:
On Tuesday November 26, President Bush signed HR 3210 The Terrorism Risk
Insurance Act of 2002. HR 3210 was approved by the House and Senate on November
19 with 86 yeas and 11 nays in the Senate during a late evening session.
The U.S. House adjourned for the year without reauthorizing the National
Flood Insurance Program, which expired December 31, 2002. The earliest the
program can be reauthorized is Jan. 7, 2003, when the 108th Congress convenes.
This lapse in authority for the insurance program will impact REALTORS®
in one major way: If the purchase of a new flood insurance policy for a
property is required, coverage will not be issued until Congress acts to
extend the program in January. Without access to federal flood insurance
policies, some property owners may see a delay in their financing approval.
The Federal Emergency Management Agency has indicated that existing policies
will still be effective and new policies will be issued if applications
and premium payments are received on or before Dec. 31, 2002. NAR has brought
together a coalition of interested stakeholders to ensure that Congress
reauthorizes NFIP as quickly as possible.
National energy reform stalled in conference committee in the Fall 2002
where it expired along with the 107th Congressional session. Republicans,
emboldened by hitting the trifecta of control over the House, Senate and
White House, will undoubtedly pursue reintroducing energy reform legislation;
however, it remains to be seen what components of the 2002 legislation will
be incorporated into a rejuvenated package. IREM remains committed to ensuring
that any package introduced include tax credits for energy efficient properties.
During the 107th Congressional Session, Rep. John Conyers, (D-Michigan),
introduced H.R. 5040 the “United States Toxic Mold Safety and Protection
Act of 2002”, a far-reaching bill prescribing research, inspection
and remediation standards to address the myriad of issues stemming from
toxic mold. H.R. 5040 represented Congress’ first crack at federal
mold legislation and it will likely be introduced in the 108th Congressional
Session.
The Federal Reserve and Treasury have yet to act on their proposed rule
(published January 2001) to allow national banks and financial holding companies
to engage in real estate brokerage and property management. NAR and IREM
have strongly opposed this proposal, and had legislation introduced in 2002
to prevent such a mixing of banking and commerce. The legislation had more
than 240 co-sponsors in the House and 15 in the Senate. With the same strong
bipartisan support, the legislation was reintroduced on January 7, 2003
for the new 108th Congressional Session. Lead co-sponsors in the House are
Representative Ken Calvert (R-Calif) and Paul E. Kanjorski (D-Penn) and
the lead co-sponsors in the Senate are Senators Richard Shelby (R-Ala),
Wayne Allard (R-Colo) and Hillary Rodham Clinton (D-N.Y.).
IREM continues to meet with the National Infrastructure Protection Center
(NIPC). This department of the FBI is the national focal point for gathering
information on threats to critical infrastructures. It is the principal
means of facilitating and coordinating the federal government's response
to an incident, mitigating attacks, investigating threats, and monitoring
reconstitution efforts. This organization has developed a number of private
sector Information Sharing and Analysis Centers (ISAC). To date, ISACs have
been set up with a number of important industries including the electric
power industry, telecommunications industry, banking and financial services
industry, water supply industry, and the chemicals industry. IREM is working
in coalition with the other real estate groups to see if this kind of structure
would be appropriate for our industry.
The U.S. Postal Service provides standards governing mail receptacles in
apartments. Apartments and other multiple-family dwellings must install
and maintain mail receptacles that are approved by the USPS in the interest
of promoting USPS efficiency, safety, and mail security. In addition to
standards for construction of apartment mailboxes, installation of mailboxes
is also regulated. USPS is now considering revising these standards, in
order to reflect recent changes in the amount and nature of mail it handles,
changes in the mailing environment, developments in technology and ergonomics,
and added concerns over mail security, as well as to assure the highest
level of customer service. The USPS has chosen to convene a consensus committee
of the affected industry to develop a proposed rule. IREM is represented
on this Committee, which will begin meeting in February.
This consensus process is expected to be completed within the year.
In the final days of the 107th Congress, legislators passed a bill to index
the FHA multifamily loan limits. Last year Congress increased the loan limits
for the first time in ten years. With the new law, which was signed by the
President, the limits will now increase with inflation, rather than having
to pass legislation.
Although a number of housing bills were introduced in the 107th Congress,
no major legislation became law. This January, a number of bills will be
reintroduced. These include reforms of the Section 8 voucher program, tax
credits for developers who build affordable housing and mortgage subsidy
bond reforms. A number of groups are also working on legislation to create
a rental housing production program, but funding will be difficult with
homeland security and the threat of war taking a large part of the budget.
Section 8 Voucher Funds Threatened
Before adjourning for the year, the House Appropriations Committee proposed
legislation that would reduce funding for Section 8 vouchers and change
the allocation formula used to determine the annual voucher funding levels
that local housing agencies receive. It is believed the change will reduce
the number of families that can be served by vouchers by nearly 125,000
and would provide insufficient funds to renew all of the vouchers currently
authorized and funded. IREM and NAR, in coalition with other real estate
groups, sent a letter to the Appropriations Committees in the House and
Senate urging them to reject this proposal when they reconvene in January.
Recently HUD sent an internal memo to its field offices instructing them
as of November 1, 2002 to refer any property that receives a REAC score
below 60 to enforcement. HUD existing regulations require only those properties
that score below 30 to be sent to the Departmental Enforcement Center. Not
only does this new guidance conflict with the regulations, the revised guidance
will allow owners and agents of any property scoring below 60 to be flagged
as part of the 2530 previous participation certification review process.
A flag could occur immediately, before any appeals of the score are made,
or prior to an opportunity to cure any physical deficiencies. IREM and NAR,
in coalition with 12 real estate groups, sent a strong letter to HUD, demanding
they rescind the new policy, pending a new rulemaking procedure.
This fall, HUD published their five-year Strategic Plan for public comment.
IREM submitted comments in conjunction with NAR in early December. Our comments
focused on several points related to federally-assisted housing. First,
we urged the Department to ensure that expiring Section 8 contracts are
renewed at a level that will continue to make them viable assets. Second,
we supported the Department’s plan to review the process used to determine
Fair Market Rents. We urged the Department to expand the survey of comparable
rents, and to ensure that these “comparable” properties meet
HUD’s physical condition standards. HUD has undertaken a “Rental
Housing Integrity Improvement Project”, to better determine rental
payment standards for residents. While the industry was involved at the
start of the project, no industry input has been accepted in the last 18
months. We urged the Department to further involve industry in this process,
as it evolves. Lastly, we urged the Department support changes to the Section
8 voucher program that would incentivize landlord participation in that
program.
On October 29, 2002, HUD published Notice H 2002-22, providing clarification
and guidance for Multifamily Housing Programs on the requirements mandated
by the Screening and Eviction for Drug Abuse and Other Criminal Activity
Final Rule, which was effective in June of 2001. The Notice includes information
about how and when to conduct background checks, information on sex offenders
and provisions for termination of tenancy. The full Notice is available
here.
The Massachusetts Supreme Judicial Court ruled and announced on December
2. 2002, that Telecommunications providers will not be given access to office
and apartment buildings without landlord approval. The decision voids a
2000 State Department of Telecommunications and Energy regulation that was
never imposed due to legal pitfalls. The regulation would have classified
landlords who own commercial buildings or apartment complexes of five or
more units as "utilities" and allowed telecom service providers
access to those spaces to serve customers. The court ruled that the department's
plans "are not statutorily authorized."
The Ohio Supreme Court issued its decision in FirstEnergy’s sub-metering
appeal in October, 2002. In its decision, the Court adopted the position
that was supported by IREM, ruled against FirstEnergy and upheld the right
of landlords to sub-meter electricity to their tenants.
At the end of 1999, FirstEnergy filed with the Public Utility Commission
(PUCO) for authority to restrict the right of landlords to sub-meter or
otherwise provide electricity to their tenants. Objections were filed with
the PUCO objecting to this proposal of FirstEnergy. The PUCO agreed and
ruled against FirstEnergy. FirstEnergy next filed an appeal with the Ohio
Supreme Court.
… the commission’s decision simply affirmed the right of landlords
and tenants to enter into lease agreements that appoint the landlord to
secure, resell and redistribute electric service to its tenants. Under such
leases, agreed to by tenants, the tenants exercise choice by appointing
their landlord to make decisions and arrangements concerning electric utility
service.
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