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September 9, 2016
Be There: NMHC's Fall Meeting is Next Week!
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Copyright: Arthur Stock
There’s still time to register for the NMHC Fall Board of Directors and Advisory Committee Meeting. This can’t miss event will take place next week from September 13-15 at the Fairmont Hotel in Washington, DC’s historic Georgetown district. Meeting highlights include attendee-only events, insider briefings and panel discussions between key Members of Congress, leading Obama Administration officials, the nation’s foremost journalists and top industry executives at the renowned Newseum on Pennsylvania Avenue.

Please take a look at the new agenda and note that we have added another featured speaker. Specifically, events now kick off on Tuesday, September 13 at 4 p.m. as Jaja JacksonDirector of Global Multifamily Housing Partnerships at Airbnb, provides NMHC members with the latest information on their multifamily partnership program.

Online registration for the fall meeting will close on Monday evening, September 12, but you can still register on-site at the NMHC Registration Desk at the Fairmont Hotel starting at 2:30 p.m. on Tuesday.
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DOJ Won't Change the Channel on Music Licensing

Copyright: Barna Tanko
After a lengthy review, the Department of Justice (DOJ) recently announced that it will keep the music licensing rules already in place for ASCAP and BMI, the largest performing rights organizations (PROs) that administer licenses to the musical works within their respective collections. Together, ASCAP and BMI handle public performance licensing for more than 90 percent of music in the U.S.  SESAC, a third PRO, covers about 10 percent of the market.

Subject to certain exceptions and individual circumstances, copyright law may require a license for the right to “perform” or play copyright-protected music in public places, which can include lobbies and other common areas in apartment communities.
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NMHC Insider
Real Estate Indexes Come of Age to the Benefit of Multifamily Capital
A new Global Industry Classification Standard (GICS) index was announced jointly by the S & P Dow Jones Indices and MSCI Inc. in 2015, both of which provide financial indexes used by portfolio managers to benchmark and track investment portfolio performance. Created in 1999, the GICS is a 4-tiered index system comprised of 10 sectors that the S & P Dow Jones Indices and MSCI Inc. separately publish. Now, an 11th sector is being created due to the growth of real estate as a significant investment group. This additional sector could result in lower costs for raising multifamily capital in the future.
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Market Breathes Sigh of Relief as First CMBS Risk-Retention Deal is Done
The first Commercial Mortgage Backed Securities (CMBS) deal with risk-retention structured to comply with Dodd-Frank regulations was issued in August, to widespread interest from the capital markets. The $870.6 million transaction was sponsored by Wells Fargo, Bank of America and Morgan Stanley who each retained a pro-rata share of a vertical strip of the transaction. The risk-retention requirement calls for CMBS loan originators to retain at least 5 percent of the credit risk using one of several structures.
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District Court Reverses Course on Disparate Impact Case
The U.S. Supreme Court ruled last summer in favor of disparate impact theory in the landmark case Texas Department of Housing v. Inclusive Communities Project (ICP). Disparate impact liability provides legal recourse where practices are employed without intentional discrimination, yet they have a disproportionate impact on protected classes such as race and sex. Since that time, eyes have been trained on how the Texas district court that initially heard the claims of the ICP would treat those claims on remand, after the Supreme Court displayed strong skepticism about whether those claims satisfied its “robust causality requirement.” The answer came recently when the district court reversed its earlier decision and dismissed ICP’s disparate impact claims. Nixon Peabody LLP has provided an in-depth analysis of the district court’s decision and what it could mean moving forward.
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NMHC Needs Your Help: Take Our 5 Questions Only Home Sharing Survey!
The rise of the sharing economy and peer-to-peer services like home sharing has presented both challenges and opportunities to residents, multifamily operators and the communities we live in. To get a better understanding of how our industry views these platforms, potential business relationships, and how your residents use these services, NMHC is asking you to answer five short questions in our time-sensitive survey.
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IRS Estate Tax Regs Take Aim at Family-Owned Businesses
On August 2, the Treasury Department proposed regulations regarding the valuation of interests in family-owned businesses for estate and gift tax purposes. Generally, they target intra-family transfers and valuation discounts that result from certain lapsing rights and restrictions on liquidations. The regulations would restrict some of these valuation discounts – resulting in greater estate tax liability for closely held family businesses, as well as imposing new risks when it comes to the continuity of family-owned real estate businesses.
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Lead-Safe Housing Proposal Raises the Bar on Taking Action
HUD is seeking comment on a proposed amendment to the lead-safe housing rule regarding the actions owners of federally-assisted housing must take when a child under six-years-old is identified as having a high blood lead level (BLL). The proposal also includes a revision of the terms "elevated blood lead level" and "environmental intervention blood lead level" that is aligned with the Centers for Disease Control and Prevention’s (CDC) position that that there is no "safe" level of lead for children.
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Industry Urges Clinton Campaign to Preserve Like-Kind Exchanges
NMHC and NAA joined the real estate industry on September 6 in urging presidential candidate Hillary Clinton to preserve current-law like-kind exchange rules. There are concerns that policymakers may repeal the so-called 1031 rules to raise revenues to offset the cost of other tax or spending proposals. Like-kind exchange rules allow investors to defer capital gains taxes if, instead of selling their property, they exchange it for another comparable property. Ultimately, the rules play a critical role in supporting multifamily by enabling investors to shift resources to more productive properties, change geographic location, or diversify or consolidate holdings.
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Multifamily Finds "Green" Guidance Underperforms
NMHC and NAA recently joined with a coalition of commercial real estate groups in providing detailed comments to the Appraisal Practices Board (APB) on its draft guidance for green and high performance multifamily, commercial and institutional properties. Specifically, we expressed concerns that the position the guidance takes has unnecessarily limited its view of "green" to buildings. For example, it recognizes the value of properties that achieve a LEED label while overlooking other established rating systems like the ICC-700 National Green Building Standard. The paper also fails to recognize investments in high performance features in buildings that are unable to achieve an ENERGY STAR label.
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FAA Commercial Drone Regulations Cleared for Take Off
New Federal Aviation Administration (FAA) regulations governing the commercial use of drones went into effect on August 29, which cover small unmanned aircraft systems (small UAS) weighing less than 55 pounds that are being flown for commercial purposes. Drones are of increasing interest to the apartment industry and are now being used for a wide range of applications including surveying land, inspecting buildings, and the sale and marketing of apartment properties. These regulations provide apartment firms with clarity on drone use and relax previous requirements for UAS operators.
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HUD Makes No Changes to Methodology for Calculating Fair Market Rents
On August 26, HUD announced the FY 2017 Fair Market Rents (FMRs), noting that no changes will be made from the current FY 2016 methodology for calculating them. FMRs are used by HUD to establish maximum allowable rents the government will pay to a private multifamily owner who rents to a family with a Section 8 Housing Choice Voucher.
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Energy Bill Inches Closer to Finish Line
House and Senate conferees begin meeting today to reconcile long-awaited final energy legislation. Of particular interest to the multifamily industry have been provisions related to the Department of Energy's (DOE) role in the development of building energy codes, as well as resolving a rule involving high efficiency gas furnaces. NMHC and NAA have been active participants in the advancement of building energy codes since the introduction of the first modern building energy codes thirty years ago. Over that time we have consistently advocated for technically sound and cost effective code provisions that advance the comfort and safety of apartment homes.
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Upcoming Meetings
Be a Part of the Final Two Emerging Leader Speaker Series Events of the Year

Make plans to connect with other under-40 multifamily professionals this fall, NMHC’s Emerging Leaders program will hold its two final Speaker Series for 2016 in the coming months. Join us in Boston, Atlanta or both as we hear from industry innovators and leaders. The next NMHC Emerging Leaders Speaker Series is taking place in Boston on October 3. UDR's Chris Spendley will moderate a Q&A with WeWork’s General Manager for the Eastern U.S. and Canada, Dave McLaughlin, about the company’s plans. WeWork, the leading co-working company, has set its sights on the rental sector with its WeLive initiative. The final 2016 Emerging Leaders event will be held in Atlanta on November 8 and will feature a fireside chat with Wood Partners' Leonard Wood Sr. and Novare Group's Jim Borders, moderated by Collier International's Will Matthews. We hope to see you there!

The Election Day Mad Rush Begins
NMHC PAC will continue to closely monitor the campaign season as the next 60 days will represent what’s likely to be a historic scramble for control of the White House, Senate and the House of Representatives. In particular, polls in the presidential race have vaulted up and down in the past few months, from the post-convention bump Clinton and Trump received, to their now nearly level playing field before the first head-to-head presidential debate next Monday.
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Hill Watch
Senate committee hearing on "National Flood Insurance Program Recommendations" on Tues., Sept. 13 at 10:30 a.m.
House committee hearing on "IRS Puts Small Businesses through Audit Wringer," on Wed., Sept. 14 at 11 a.m.
Senate committee hearing on "Protecting Internet Freedom: Implications of Ending U.S. Oversight of the Internet," on Wed., Sept. 14 at 10 a.m.
House subcommittee hearing on "Exploring Federal Diversity Jurisdiction," on Tues., Sept. 13 at 11 a.m.
Senate committee hearing on "Oversight of the Federal Communications Commission," on Thurs., Sept. 15 at 10 a.m.
Media Roundup
House Panel to Consider Dodd-Frank Replacement
The Hill
Warren Presses for Corporate Tax Changes in Wake of Apple Ruling
The Hill
Senate Considers Making a Short Pre-Election Session Even Shorter
Washington Post
Airbnb Unveils Changes to Address Racial Discrimination
House Report: Massive OPM Breaches a "Failure" of Leadership
How Hillary Clinton and Donald Trump Are Prepping for Debates
Paperless Voting Could Fuel "Rigged" Election Claims
The Scoop
Election Day in Georgia and Louisiana May Leave Senate’s Fate Uncertain

When America wakes up on November 9, the fate of the Senate might not be decided. Two states, Georgia and Louisiana, may require additional time to determine a winner in an election cycle where the Senate is expected to be held or lost by the slimmest of margins. In Louisiana, elections are held through a process known as a “jungle primary” where all candidates are on the ballot on Election Day with a runoff triggered if no candidate receives a simple majority. As many as 24 candidates have filed to run for the Louisiana seat, with Representatives Charles Boustany (R-LA) and John Fleming (R-LA) appearing the strongest, but neither appears to have secured sufficient support to avoid a runoff at this time.

In Georgia, NMHC endorsed Senator Johnny Isakson (R-GA) is running for reelection against self-funder Jim Barksdale and Libertarian Allen Buckley. While Isakson is expected to win at this time, he must secure 50 percent of the vote in order to avoid a runoff his opponents would like to force. Runoff elections in both states would occur 4-5 weeks after November 8th, but Republican leaders will make every effort to avoid additional weeks of campaigning and uncertainty.

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