From left: David Brogan, executive director of the New Jersey Apartment Association; Greg Brown, vice president of government affairs with the National Apartment Association; Cindy Chetti, senior vice president for government affairs with the National Multi Housing Council; and James Hughes, dean emeritus at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy, spoke during the NJAA’s annual conference and expo in May. — Photo by Larry Falkow/Courtesy: NJAA
By Joshua Burd
When it came to the recent federal tax reform, the impact on housing was plain to see.
“It’s leveled the housing playing field,” said James Hughes, the noted Rutgers University economist and demographer, later adding: “Home ownership is less attractive, financially, relative to rental housing. And that’s particularly the case for the baby boomers.”
But that type of certainty is a rarity these days for the multifamily housing industry — at least when it comes to the federal government. That was one key message from experts who gathered recently during the New Jersey Apartment Association’s annual conference and expo, which drew a registered crowd of more than 1,600 to the Atlantic City Convention Center.
Hughes was among the panelists who tackled everything from affordable housing to managing apartments in states that have legalized marijuana. But navigating those issues has been difficult in a time of political turmoil and unpredictability, industry advocates said, especially when it comes to the Donald Trump administration.
“Things can change very quickly depending on what his priority is on a day-to-day basis sometimes,” said Greg Brown, senior vice president of government affairs with the National Apartment Association. “That forces us to change quickly. We have to respond and be ready to move to the next issue very quickly as he moves from one issue to the next.”
Cindy Chetti, senior vice president for government affairs with the National Multi Housing Council, said the industry is focused on “getting to know the people that are in positions with this administration and also understanding what their priorities are.” That is typical during a change in administration, she said, but the current climate in Washington, D.C., has caused the federal government to take even longer to fill thousands of agency positions.
That has complicated the apartment industry’s effort to lobby on issues such as overtime rules, emotional support animals and flood insurance requirements, Chetti said.
“I would say the biggest change is our relationship with this administration,” she said. “On Capitol Hill, it hasn’t changed that much, except that the agenda these last two years has been tax reform.”
NJAA Executive Director David Brogan moderated the May 22 panel discussion, which weighed the consequences of President Trump’s Tax Cuts and Jobs Act. Brown said the law is “a 180-degree difference” from the 1986 Tax Reform Act, which “took out the industry for a decade.”
To be sure, the new law benefited the multifamily sector by watering down the tax benefits of home ownership, while also cutting taxes for so-called pass through businesses, which are commonly associated with apartment developers and landlords.
But the panel also noted that cutting the corporate tax rate hurt the market for federal Low-Income Housing Tax Credits, which developers often sell to investors in order to generate equity for affordable housing projects. Brown said the most dramatic drop-off came early last year, well before the passage of the December law, but that the price has “been bouncing around ever since.”
“What you hear from the syndication community is that it’s going to be that way for a while until everybody sort of adjusts to the new reality,” Brown said. “Maybe those prices come back up, but in the meantime people have to make alternative plans. They have to be ready to find other sources of capital for tax credit deals and things like that.”
That will be among several issues that affect affordable housing going forward, which Chetti said “is one of the biggest issues that this industry is going to face.” The apartment sector is seeing the issue “manifest itself in any number of ways,” she said, including policy debates about rent control, inclusionary zoning and mandatory affordable housing requirements.
But she said the underlying concern is that those policies do nothing to address the lack of supply.
“We’ve got to work together with our policymakers,” Chetti said. “They are looking for quick fixes and we’ve got to figure out ways that we can address this issue across our country and also educate the public, the media and our policymakers on solutions that are not these quick fixes that don’t address the supply problem.”
