The Washington Report

Government Affairs Week In Review
April 16, 2001
Prepared under the direction of
Lee L. Verstandig, Senior Vice President of Government Affairs

** Federal Reserve Board/Treasury Department Scorecard **
New bipartisan (Isakson/Cramer) letter seeking Congressional signatures; House Financial Services Committee staff briefing on Thursday, April 19; Expected banking witnesses include a Nebraska bank that owns a real estate brokerage, representing the American Bankers Association (ABA), and Bank of America, representing the Financial Services Roundtable.

38,513 E-Mails to Members of Congress; 10,279 Letters to Members of Congress; 41,095 Letters and E-Mails Received and Recorded by Federal Reserve; 28,175 E-Mails Sent to Federal Reserve Through NAR Online System; 15,200 E-Mails Sent to Treasury Department Through NAR Online System; 51 In-District Meetings Held Between REALTORS® and Members of Congress; 197 Total Fly-In Meetings Held Between REALTORS® and Members of Congress.

Housing -- NAR Examines Bush Budget Proposal on Housing Initiatives.

Taxes -- Bush Proposes Further Tax Incentives.

Conventional Residential Lending -- NAR Meets with White House Economic Policy Committee.

Smart Growth -- NAR Meets with DOE to Discuss School Quality and Funding; NAR Speaks to Senate Smart Growth Task Force.

Political Activity -- California Congressional Special Election.

Bush Releases HUD Budget, Proposes $30.4 Billion
Last week, the Bush Administration released its budget for the U.S. Department of Housing and Urban Development (HUD), proposing a 6.8 percent increase in the Fiscal Year 2002 budget. The $30.4 billion budget includes several initiatives favorable to housing and homeownership that are of interest to NAR. Chief among the provisions are a proposal to increase the FHA multifamily loan limits by 25 percent and a proposal to allow FHA to offer hybrid adjustable-rate mortgages. Additionally, the HUD budget proposes to create a homeownership tax credit program, "Renewing the Dream," to encourage investors to develop housing for low-income families. The initiative would help build 100,000 new homes in low-income areas over the next 5 years.

The FY 2002 HUD budget also seeks to provide assistance targeted to homeownership, proposing an "American Dream Down Payment Fund" to help low-income people accumulate downpayment savings to purchase a home. In addition, the budget announces that HUD will soon issue regulations permitting Section 8 holders to use their vouchers for the downpayment on a home.

Of concern to NAR is the Department's plan to make programmatic reforms to important homeownership and rehabilitation programs. Specifically, the budget proposes to increase the premiums under the FHA condominium and 203(k) rehabilitation loan programs to generate revenue to address losses in the General Insurance and Special Risk Insurance Funds. At a budget briefing, HUD officials indicated plans to increase the premiums by .30 basis points.

CONTACTS: Gary Weaver 202/383-1038, Megan Booth 202/383-1222, Jim Freeman 202/383-1226

Bush Proposes Additional Tax Incentives
The Bush Administration Fiscal Year 2002 Budget contains a number of tax proposals not currently included in the tax plan Congress is considering, including the following proposals: (1) make the deduction for brownfields cleanup expenses permanent (it is presently scheduled to expire after 2003); (2) permit state and local governments to issue tax-exempt private activity bonds so that private entities could build new schools or rehabilitate existing structures (each state could issue bonds in amounts equal to the greater of $10 per state resident or $5 million); (3) expand current law for conservation easements so that taxpayers who sold property to a conservation organization or government agency could exclude 50% of any capital gain associated with the sale from taxation (presently, only property donated to these organizations qualifies for tax benefits); and (4) initiate a tax credit to increase the stock of affordable single-family houses (the credit would be provided to developers or groups of investors who build housing for sale to individuals who are at 80% of area median income).

CONTACTS: Linda Goold 202/383-1083, Jamie Gregory 202/383-1027

NAR Meets with White House National Economic Policy Committee
Last week, Government Affairs Senior Vice President Lee L. Verstandig met with Mark Summerlin, Deputy Director of White House National Economic Policy Committee, to discuss NAR's position on President Bush's tax proposal. While the White House was looking for NAR to support its tax efforts on Capitol Hill, Verstandig emphasized the link between NAR's support for the tax package and the White House's help in defeating the proposed Federal Reserve Board and Treasury Department rule that would allow banks to engage in real estate brokerage and management activities. Following the meeting, Verstandig sent Summerlin the appropriate documentation outlining NAR's position on the proposed rule and describing the negative effect that rule, if adopted, would have on consumers and the economy.

CONTACTS: Brad Gruehn 202/383-1174

NAR Meets with U.S. Department of Education
Last week, NAR conducted a meeting with Beth Ann Bryan, Senior Advisor to the U.S. Secretary of Education Rodney Paige. NAR was represented by Senior Vice President of Government Affairs Lee L. Verstandig and Smart Growth Policy Representative Joe Molinaro. Verstandig and Molinaro discussed the importance of education and school quality to REALTORS® and stressed the association's willingness to work with the U.S. Department of Education (DOE) to support their efforts. NAR also mentioned that in fast-growing areas, one of the major challenges of growth is keeping up with school construction needs, while in order to attract people back to central cities, the need to improve school facilities is vital. NAR expressed interest in the federal government providing assistance in the form of loans or grants to localities for school repair and construction.

NAR Speaks to Senate Smart Growth Task Force
At the invitation of Senator Jim Jeffords (R-VT), Smart Growth Policy Representative Joe Molinaro spoke at a briefing to the Senate Smart Growth Task Force on the topic of housing and smart growth. NAR stressed that one of the major elements of Smart Growth, in the opinion of NAR, is to increase housing opportunity and choice. NAR also mentioned its support for S. 350, the "Brownfields Revitalization and Environmental Restoration Act;" H.R. 5165, the "Community Character Act;" and several items in the FY 2002 budget, including increasing the FHA Multifamily Loan Limits, establishing an FHA Hybrid Adjustable Rate Mortgage Program, and creating the "Renewing the Dream" Homeownership Tax Credit.

CONTACTS: Joe Molinaro 202/383-1175

California Congressional Special Election
The Special Election to fill former U.S. Representative Julian Dixon's (D-CA) seat in California's 32nd Congressional District was held last Tuesday, April 10. Several weeks ago, the RPAC Trustees approved, at the recommendation of the California Association of REALTORS® (CAR) a $5,000 RPAC contribution and a modified Level 2 Opportunity race to support State Senator Kevin Murray in this Special Election.

Murray is a member of CAR and has been a good friend of the REALTORS® in the California legislature. The RPAC/NAR funds really made a difference. Although Murray did not win (Diane Watson won with 33% of the vote), he closed the gap considerably in the last week and placed a strong second with 26% (by comparison, the third place finisher, Nate Holden, had just 17% of the vote in the 11 person field).

Under California's blanket primary law, since no candidate received more than 50% of the vote, a run-off will be held June 5 among the top vote-getters from each party. That would pit Watson against Republican Noel Irwin Hentschel, Green Party candidate Donna J. Warren, and Reform Party candidate Ezola Foster. Thus, it is almost a forgone conclusion that Watson will win the special run-off in this strongly Democratic district. Fortunately for California REALTORS®, Murray did not have to give up his state Senate seat to run for Congress.

CONTACTS: Greg Knopp 202/383-1207, Jerry Giovaniello 202/383-1115
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Last Updated: 10/22/2001 D-Laurence DEV-Sopala

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