July 2000 PRESIDENT SIGNS E-SIGNATURE LAW The “Electronic Signatures in Global and National Commerce Act,” was signed into law Friday, June 20, 2000 in Philadelphia, PA. This law simplifies the real estate transaction by allowing two parties to treat electronic signatures with the same legal standing as “pen and ink” versions. FCC DECISION ON FORCED ACCESS POSSIBLE BY AUGUST Last year, the FCC released a Notice of Proposed Rulemaking (NPRM), requesting information about whether or not they should move forward with mandatory access proposals. IREM joined in coalition with NAR, and many other real estate groups, to form the Real Access Alliance. The Alliance has filed numerous comments, and met dozens of times with the FCC to discuss this issue. We have also been active in Congress, persuading over 30 Member of Congress to write the FCC opposing forced access. The FCC has put the NPRM on the agenda for their August 3 meeting. SATELLITE DISH APPEAL MOVING AHEAD In 1998 IREM joined NAR and other real estate groups to file a Petition for Review before the U.S.Court of Appeals challenging the FCC’s rulemaking authority on this issue and arguing the rule constitutes a taking of private property. Opening arguments are now scheduled to begin in October. The case is expected to run well into 2001. PRIVATE PROPERTY RIGHTS MOVING SLOWLY IN THE SENATE In the spring, the House passed H.R.2372, the “Private Property Rights Implementation Act.” Currently, property owners do not have the option of directly pursuing a Fifth Amendment “takings” claim in federal court. As the summer moves on, it becomes less likely that a bill will have time to pass Congress before they adjourn in October. BANKRUPTCY BILL STALLED Despite having passed both the House and Senate, the bankruptcy reform bill is now stalled in conference. IREM supported provisions are included in both versions of the bill. This issues would: eliminate the cap on single asset bankruptcies, provide protections for shopping center owners when tenants file for bankruptcy; and eliminate a loophole in the Bankruptcy Code which allows residential rental tenants to avoid eviction. The House and Senate are still debating differences unrelated to these provisions. Advocates on the Hill are still committed to passing a bill this year. TREASURY DEPARTMENT STUDY ON DEPRECIATION EXPECTED The Department of Treasury’s report on the entire depreciation system, as directed under the “Tax and Trade Relief Extension Act of 1998”, is tentatively expected by the end of July. TENANT LEASEHOLD IMPROVEMENTS H.R. 844, sponsored by Clay Shaw, (R-FL), permits the costs of tenant improvements in non-residential buildings to be amortized over 10 years rather than the current schedule of 39 years. H.R. 844 was not included in the Ways and Means Committee’s tax bill due to the pending Treasury study on depreciation. POSSIBLE INCREASE IN IRA LIMITS The House Ways and Means Committee has approved a package of pension and retirement savings reforms. Of greatest importance to CPMs is an increase in the Individual Retirement Account (IRA) limits from $2000 to $5000, phased in over 3 years. This provision is important because it increases the amount that CPMs can save for their own retirements. NO CHANGES YET IN LEAD PAINT RULES Despite efforts by IREM, NAR, and other industry groups, there have been no changes affected to two important lead paint hazard rules. The first is EPA’s lead hazard education before renovation rule. IREM and NAR have met with EPA and Congress regarding the burdensome requirements of this rule. To date, EPA is expected to publish further guidance related to the rule, when published, it will be posted on EPA’s lead renovation website at: http://www.epa.gov/lead/leadrenf.htm. HUD’s lead paint hazard reduction in federally assisted housing rule becomes effective on September 15, 2000. The regulations require a variety of hazard assessment and reduction activities for pre-1978 housing based upon year of construction and type of federal assistance. A chart listing the requirements by property type is available on IREM’s website at: www.irem.org/forum/legis/rem-lead.htm#final. IREM has joined in coalition with a variety of housing groups, including low income housing advocates, and housing authorities, to work on mitigating the costs and burdens associated with this rule. Discussions with HUD and Congress are continuing. HUD ISSUES NEW PROCEDURES FOR RENT COMPARABILITY STUDIES Owners of expiring Section 8 contracts have experienced frustration over differing interpretations among HUD offices over what is required in a rent comparability study (RCS). The confusion has caused rejection of some completed RCS, delays in approval of comparable rents, and often, a redo of the entire RCS. In response to this frustration, a number of multifamily property groups (including IREM) contracted for a study of RCS requirements amongst a variety of HUD offices. The results of the study showed that there is little to no standardization across HUD field offices regarding what they are looking for in a comp study and what kinds of comps they accept. These results were shared with HUD, and in December 1999, IREM attended a meeting with HUD and other coalition groups to discuss changes to the current process that would facilitate a standardized format. After that meeting, HUD expanded the study, and continued to work with the appraisal and multifamily industries to address concerns with the RCS process. In late June, HUD published Notice H 00-12, outlining new procedures for preparing, submitting, and reviewing rent comparability studies (RCS). The new process may be used immediately, and it will be required by September 18, 2000. The Notice details the Office of Housing’s procedures for RCS. The Office of Multifamily Housing Assistance and Restructuring (OMHAR) has agreed to accept the new format as well. The biggest change is a new Rent Comparability Grid (92273-S8). This chart displays comparable properties more clearly, shows adjustments, and utilizes an EXCEL spreadsheet format to reduce errors. The Grid provides detailed guidance on valuing adjustments. The Notice also specifically defines the scope of the RCS, especially with respect to the selection of comparable properties. To further eliminate inconsistencies about what must be included in an RCS, the new Notice explicitly sets forth the twelve content requirements of an RCS. Training of field staff and the industry is ongoing at HUD. Contact your local HUD office, if you would like to participate in a training session. Complete copies of the notice can be found at www.hud.gov/fha/mfh/exp/rentcomp.html. UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP) Despite commentary from IREM, CIREI, NAR and other organizations requesting that language be changed and/or removed or the process extended altogether, the Appraisal Standards Board (ASB) voted to adopt the Exposure Draft of proposed changes to the 2000 USPAP. The final draft is expected to be published on the ASB’s web-site by the end of the summer. Essentially, the issue IREM is most concerned about is the possibility that state real estate commissioners will adopt this USPAP language on a state by state basis, in effect, compromising all real estate trades involved in practices that include some “component of value”. Such trades would be compromised due to the necessity of becoming licensed by the ASB in order to perform activities like market analyses, financial analyses, litigation support, acquisition and disposition analysis/due diligence, and feasibility studies. It is IREM’s intention to head this issue off “at the pass” and prevent any state legislation from being drafted that promotes any additional licensure for activities conducted by CPMs. IREM will continue to monitor this situation as it develops and will call on CPMs in the future to assist with any activity on the USPAP document. At IREM’s Mid-year Meetings 3 new and one revised statements of policy were approved by Governing Council: Americans with Disabilities Act of 1990 – revised Private Activity Bonds Private Property Rights Low Income Housing Tax Credits