Land Use Property Rights And Environment Committee National Association of REALTORS® 2006 REALTORS® Conference & Expo Morial Convention Center Room 238-239 Friday, November 10, 2006 8:00 AM - 10:30 AMChair:John Rinehart,Rock Hall, SC Vice Chair: William Arnold, Tucson, AZ Committee Liaison: Nick D’Ambrosia, La Plata, MD Committee Executive: Russell Riggs, Mark Washko, Washington, DCI. Call To Order and Opening Remarks - John Rinehart, Chair
Ownership Disclosure And Conflict of Interest Policy Ownership Disclosure Policy1. When NAR has an ownership interest in an entity and a member has an ownership interest* in that same entity, such member must disclose the existence of his or her ownership interest prior to speaking to a decision making body on any matter involving that entity.
2. If a member has personal knowledge that NAR is considering doing business with an entity in which a member has any financial interest**, or with an entity in which the member serves in a decision-making capacity*, or wit, then such member must disclose the existence of his or her financial interest or decision making role prior to speaking to a decision making body about the entity.
3. If a member has a financial interest in, or serves in a decision-making capacity for, any entity that the member knows is offering competing products and services as those offered by NAR, then such member must disclose the existence of his or her financial interest or decision-making role prior to speaking to a decision making body about an issue involving those competing products and services.
After making the necessary disclosure, a member may participate in the discussion and vote on the matter unless that member has a conflict of interest as defined below.
Conflict of Interest Policy
A member of any of NAR’s decision making bodies will be considered to have a conflict of interest whenever that member:
1. Is a principal, partner or corporate officer of a business providing products or services to NAR or in a business being considered as a provider ofproducts or services (“Business:); or
2. Holds a seat on the board of directors of the Business unless the person’s only relationship to the Business is service on such board of directors as NAR’s representative; or
3. Holds an ownership interest of more than 1 percent of the Business.
Members with a conflict of interest must immediately disclose their interest at the outset of any discussions by a decision making body pertaining to the Business or any ofits products or services. Such members may not participate in the discussion relating to that Business other than to respond to questions asked of them by other members of the body. Furthermore, no member with a conflict of interest may vote on any matter in which the member has a conflict of interest, including votes to block or alter the actions of the body in order to benefit the Business in which they have an interest. ________________________________________ *Ownership interest is definedas the cumulative holdings of the member, the member’s spouse, children, siblings and to any trust, corporation or partnership in which any of the foregoing individuals is an officer or director, or owns, in the aggregate, at least 50% of the (a) beneficial interest (if a trust), (b) stock (if a corporation) or (c) partnership interests (if a partnership).
**Financial interest means any interest involving money, investments, credit or contractual rights.
II. Approval of Previous Meeting's Minutes John Rinehart, ChairIII. Review Committee Goals William Arnold, Vice-Chair
Committee: Land Use, Property Rights And Environment
Purpose: To monitor and recommend actions and strategies on legislative and regulatory matters affecting the development, sale, transfer and value of real estate, such as indoor air quality, hazardous substances, wetlands and coastal development, lead-based paint, flood plain management, and the availability and protection of water supplies. To monitor federal legislation and regulation pertaining to land use and property rights; to recommend federal actions and strategies on legislative and regulatory matters pertaining to land use and property rights; and to recommend appropriate Association responses for assistance of state REALTOR®associations and local boards in influencing such governmental actions.
Liaison: Nick D’Ambrosia
Staff Contact: Russell Riggs, 202/383-1259
Goal #1: National Flood Insurance Program (NFIP): Assist in the development and implementation of legislative and regulatory proposals to improve the NFIP, including: 1) reauthorizing of the NFIP; 2) upgrading the Federal Emergency Management Agency (FEMA) floodplain maps to ensure that they are accurate and updated in a timely manner; 3) ensuring that the NFIP is risk-based and actuarially sound; 4) improving the process for identifying properties located within federally-designated floodplains when the floodplain maps are unclear.
Actions to be taken by Committee to Achieve Goal:
- As appropriate, selected Committee members accompany NAR staff to federal legislative and regulatory meetings (e.g., Congress, FEMA national/regional offices) to discuss problems with the existing NFIP program and advocate NAR’s recommendations for improvement. - Committee members report developments to full Committee at two annual business meetings (e.g., positive and negative experiences with flood maps). Expected Outcome:FEMA’s National Flood Insurance Program operates in a financially sound and responsible manner and quickly and correctly identifies properties that require federal flood insurance as a condition of receiving a mortgage.Goal #2: Eminent Domain: Assist in the process of ensuring that government use of its eminent domain power is exercised in a manner that does not violate private property rights.
Actions to be taken by Committee to Achieve Goal:
- Committee develops policy as needed. - Committee members report developments to full Committee at two annual business meetings and via Committee QuickPlace (e.g., positive and negative experiences with eminent domain). - Appropriate research is conducted and distributed to members. Expected Outcome:Government exercise of its eminent domain power balances public needs and private rights.
Goal #3: Natural Disaster Insurance: Assist in the development and implementation of NAR policy that promotes the availability of adequate and affordable disaster insurance to the consumer.
Actions to be taken by Committee to Achieve Goal:- Committee develops policy as needed. - As appropriate, selected Committee members accompany NAR staff to regulatory, legislative and industry meetings (e.g., Congress, FEMA, Fannie Mae, Freddie Mac) to present the REALTOR® perspective. - Committee members report developments to full Committee at two annual business meetings (e.g., insurance availability/affordability problems).Expected Outcome:Adequate insurance coverage ofperils related to natural disasters is available and affordable nationwide.
Goal #4: Endangered Species: Assist in the development of policies and proposals that would reform the Endangered Species Act. These reforms should be market-basedand emphasize programs and policies that provide incentives to landowners to preserve species and species habitat.
Actions to be taken by Committee to Achieve Goal:
-Committee members report legal, regulatory, and legislative developments to Committee at two annual business meetings. -Committee develops policy as needed. -Selected Committee members accompany NAR staff to federal regulatory and legislative meetings (e.g., Congress,Department of Interior) to present the REALTOR® perspective.
Expected Outcome:REALTORS® and REALTOR® associations will influence the public policy debate regarding reform of the Endangered Species Act.Goal #5: Environment: Assist in the process of positioning REALTORS® and REALTOR® associations in the forefront of the legal and policy debate on environmental issues particularly affecting real estate, including but not limitedto: radon, lead-based paint, water quality and quantity, endangered species, sewage disposal and transportation.
Actions to be taken by Committee to Achieve Goal:
-Committee develops policy as needed. -Committee members report developments to full Committee at two annual business meetings and via Committee QuickPlace (e.g., positive and negative experiences with public or private sector initiatives). -As appropriate, Committee leadership/selected members accompany NAR staff to federal legislative and regulatory meetings.
Expected Outcome:Environmental laws and regulations at the federal, state and local levels maintain a reasonable balance between environmental protection and economic vitality.IV. Forum Report - Have We learned Lessons From Katrina? Sam Kain, Forum Chair
VI. Smart Growth Initiative Update David Wluka, Chairman, NAR Smart Growth Program Advisory Group and 2006 President, Massachusetts Association of REALTORS®
VII. Research Update Lloyd Dixon The Rand Corporation: "Availability of Commercial Insurance in the Gulf States: Trends, Implications and Policy Options"** ** NAR was one of the organizations involved in this report. The first phase of the report is expected to be released in December 2006.VIII. Legislative/Regulatory Update Russell Riggs, Regulatory Policy Representative - National Flood Insurance Program - Lead-Based Paint - Discussing the recent proposal from the EPA on lead paint abatement - Endangered Species Act
Mark Washko, Senior Environmental Policy Representative - National Flood Insurance Program Reform LegislationFEMA is engaged in an ambitious program to update, resurvey and digitize its floodplain maps. The 2005 disasters brought renewed attention to the National Flood Insurance Program (NFIP). The astronomical costs associated with claims from Hurricanes Katrina, Rita and Wilma have made the NFIP fiscally unsound. Claims from these hurricanes are expected to top $25 billion, exceeding the total claims paid in the history of the program. As a result, members of Congress are calling for significant reforms to the NFIP.
REALTORS® support FEMA's map modernization program and advocates full Congressional funding of FEMA's budget requests for continuation and completionof the program. Realtors® support the imposition of higher flood insurance premiums on repetitive loss properties when owners refuse government offers of mitigation. The NFIP should continue to include subsidies for second homes, vacation homes andrental properties. Non-primary residences should be given the same consideration as primary residences.
Affordable and adequate flood insurance for properties located in floodplains is critical to economic growth and development. The fiscal burden of repetitive loss properties puts pressure on FEMA to increase flood insurance premiums on properties nationwide. Similarly, when inaccurate flood maps make it difficult to determine whether a home is located in a floodplain, clarification of the situation through administrative means adds cost and delay to the home transaction process.
Through FY2007, Congress has provided FEMA with $750 million for its map modernization program, including an FY06 appropriation of $200 million. NAR is working closely with FEMA to assure the accuracy and usability of any new maps.
Congress passed three bills between September 2005 and March 2006 that increased the borrowing authority for the National Flood Insurance Program (NFIP) from $1.5 billion to $20.775 billion. This additional borrowing authority has given the NFIP sufficient funds to pay existing claims to date. However, the NFIP will need additional funding early in 2007. A number of Members of Congress have stated that they would not agree to any additional increases in borrowing authority unless significant reforms are made to the NFIP.
The House Committee on Financial Services has passed two bills to reform the NFIP, the first in November 2005 (H.R. 4320) and the second, amore comprehensive bill, on March 16, 2006 (H.R. 4973, the Flood Insurance Reform and Modernization Act). The House of Representatives passed H.R. 4973 on June 27, 2006. H.R. 4973 would reform the NFIP by:
- increasing the borrowing authorityto $25 billion; - phasing in actuarial rates for non-primary residences and non-residential properties by increasing premiums on such properties by 15% per annum until the actuarial rate is reached; - increasing the coverage limits for residential flood insurance policies from $250,000 (structure) and $100,000 (contents) to $335,000/$135,000; coverage on non-residential properties would increase from $500,000 to $670,000; - increasing the amount FEMA can raise premiums from 10% to 15%; - extending the Pilot Program for Mitigation of Severe Repetitive Loss Properties until 2011; and - requiring RESPA good faith estimates to include statements that flood insurance coverage for residential real estate is generally available under theNFIP and that the escrowing of flood insurance payments is required under many loans.
The Senate Committee on Banking, Housing and Urban Affairs passed its own flood insurance reform bill on May 25, 2006. The bill, S. 3589, was reported to theSenate on June 28 and was placed on the Senate calendar, which means that it could be brought up for a vote at any time.
The NFIP is expected to need additional funding early in 2007. Congressional staff has indicated to NAR that there is a "50-50" chance that the Senate will pass an NFIP reform bill, conference with the House to reconcile differences between the two bills, and agree on a conference report before Congress adjourns this year. NAR continues to work with House and Senate staff onthis important issue.
Congress is not expected to pass NFIP reform legislation this year, but it should be a priority issue at the beginning of the next Congress in 2007.
- Property Rights/Eminent DomainTheFifth Amendment of the U.S. Constitution provides “…nor shall private property be taken for public use, without just compensation.” Currently, property owners do not have the option of directly pursuing a Fifth Amendment "takings" claimin federal court. They first must exhaust all possible state and local administrative remedies. The existing process, which is expensive and time-consuming, has left property owners in limbo for many years.
Governments shall not arbitrarily infringe on the basic right of the individual to acquire, possess and freely transfer real property, and shall protect private property rights as referred to in the 5th and l4th Amendments of the United States Constitution. We support legislative implementation of the 5th Amendment’s guarantee of compensation when property rights are taken. Every person should have the right to acquire real property with confidence and certainty that the use or value of such property will not be wholly or substantially eliminated by governmental action at any level without just compensation or the owner's express consent. In addition, we support legislation which will provide property owners expeditious access to administrative and judicial systems at all levels - local, state and federal - to pursue Fifth Amendment takings claims or relief from other property rights violations.
We recognize the need for all levels of government to be able to exercise legitimate police powers in the regulation of private property to protect the health, safety and general welfare of its citizens. However, when government actions or regulations are not founded within legitimate police powers, the government should be required to pay compensation for the inordinate burden levied on the property owner.
Allowing property owners to take a federal takings claim to federal court and clarifying what is meant by a final decision would give property owners whose property has been "taken" or limited by a governmental entitytheir due rights under the Constitution. Moreover, this would shorten the process of resolving disputes, which could tie up land and development for many years.
The House of Representatives, on September 29, passed H.R. 4772, the Private Property Rights Implementation Act of 2006, by a vote of 231-181. The bill is sponsored by Rep. Steve Chabot (R-OH). The House of Representatives passed similar legislation in 1997 (H.R. 1534) and 2000 (H.R. 2372).
H.R. 4772 would help ensure due process for property owners when their rights have been violated and their property has been taken. The bill would clear procedural hurdles that affect property owners’ access to justice and gives them their “day in court” to protect theirrights. Currently, property owners do not have the option of directly pursuing a Fifth Amendment claim in federal court. They first must exhaust all possible state and local administrative remedies. H.R. 4772 would shorten the process by clearly defininga final agency action, thereby eliminating a cycle of potentially endless appeals. The bill applies only to claims filed in federal court by property owners seeking relief from violations of federal statutory and Constitutional law. H.R. 4772 would not give federal courts new authority on questions that are legitimately under state court purview.
The Senate Committee on the Judiciary has been working on legislation that would combine private property rights (i.e., H.R. 4772) and eminent domainissues into one bill. It is unlikely that the Senate would be able to pass such a bill before Congress adjourns this year. NAR supports property rights legislation but opposes federal legislation on eminent domain.NAR opposes all federal legislation on eminent domain, preferring that each state determine its own approach. NAR believes that eminent domain powers should only be used to acquire property for ownership by a public entity or publicly-regulated common carrier, such as a railroad. NAR policy also directs states, not the federal government, to establish their own rules and laws governing the use of eminent domain. NAR policy also calls for a broad interpretation of "just" compensation to include not only the value of the property condemned but also all other reasonable and necessary costs generated by the condemnation action.
Secure property ownership is a core value of REALTORS®. Strong property rights protection supports and encourages property ownership from which REALTORS® benefit. Still, REALTORS® can benefit by participating in redevelopment projects that rely on eminent domain.
Nine federal bills on eminent domain have been introduced since the Kelo decision. Two different House committees and one Senate committee have held hearings. NAR, in its statement for the record to the House Judiciary Constitution Subcommittee, stated: "From the Realtor perspective, matters concerning land use, economic development, blight and the like are essentially local issues better handled at the local and state level. These levels of government are closer to the issues and to the people affected. The federal government should preempt state rules rarely and only when a significant federal interest is at stake.Realtors believe it is preferable that states be given the chance to devise their individual solutions appropriate to conditions in the respective states rather than have the federal government impose a “one-size-fits-all” solution from above."
Passage of eminent domain legislation by the 109th Congress appears unlikely.
- Federal Natural Disaster LegislationThe intensity of and amount of damage caused by natural disasters in recent years has made the acquisition of adequate homeowners’ insurance very difficult in some areas. Insurers are declining to write policies, canceling existing policies and increasing premiums on existing policies. Recently, Hurricanes Katrina and Rita have refocused attention on this issue.
The goal of any federal natural disaster program should be the promotion of available and affordable homeowners' insurance in disaster-prone areas.
Homeowners’ insurance is required for obtaining a mortgage. If a potential homebuyer is unable to purchase insurance, because it is either unavailable or unaffordable, the sale will not be completed.
REALTORS® believe the time is right for Congress to seriously consider a federal natural disaster program. Although several bills have been introduced in the House of Representatives and Senate, Congress is not likely to enact natural disaster insurance legislation before it adjourns this year. REALTORS® are working to build a strong and broad-based coalition of interested parties to discuss policy approaches and build momentum toward enacting natural disaster legislation.
NAR sponsored a Federal Natural Disaster Symposium, "Identifying Appropriate Federal Policy Responses," onSeptember 18, 2006 in Washington, DC. Attendees heard from Mr. Kevin McCarty, Insurance Commissioner for Florida, and three panels of speakers. Mr. McCarty's message was clear, "Natural Catastrophes are a national problem that requires a national solution." Additional speakers included researchers, industry stakeholders, and Congressional staff, who spoke about the need for and ideas to consider as part of a federal natural disaster policy. Most of the speakers agreed that there is a need for federal action to address this issue. Attendees included representatives from NAR and other real estate organizations, the insurance and financial services industries, non-governmental organizations, construction trade associations, Congressional staff, government agencies and the legal community. In addition to this symposium, NAR hosted a roundtable meeting on March 2, 2006 with Rep. Ginny Brown-Waite (R-FL) and Rep. Clay Shaw (R-FL) that included nearly 50 stakeholders. The stakeholder group included representatives from NAR, home builders, insurance and financial services industries.
Legislation addressing the natural disaster issue has been introduced in the House of Representatives and Senate during the 109th Congress. These bills offer different approaches to the natural disaster issue including: 1) creating a federal reinsurance program (H.R. 846, H.R. 4366, H.R. 4507, and S. 3117), 2) allowing insurance companies to make tax deductible contributions to increase disaster reserves (H.R. 2668, S. 3116), 3) allowing for the creation of tax-exempt catastrophe savings accounts for homeowners (H.R. 4836, S. 3115) 4) establish a commission to examine these and other potential policies to address the issue (H.R. 5891, H.R. 5587, S. 3114).
Members of Congress have asked NAR and other stakeholders for input on natural disaster insurance legislation. NAR continues to meet with members of Congress and staff to discuss the merits of different legislative approaches that will promote available and affordable homeowner’s insurance in disaster-prone areas. NAR will continue to impress upon members of Congress the importance of this issue to NAR members.
Two subcommittees of the House Committee on Financial Services held hearings (June 28, September 13) on natural disaster and insurance-related issues. NAR submitted statements for the record at both hearings. At the September 13 hearing, Rep. Richard Baker (R-LA), Chairman of the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises of the House Committee on Financial Services, stated that he would like to bring legislation to the House floor before the next hurricane season. The Senate Committee on Banking, Housing and Urban Affairs may holda hearing later this year.
Congressional staff has indicated to NAR that they do not believe that the schedule for the remainder of the session will allow for consideration of a natural disaster bill during the remainder of the 109th Congress.Committee staff also told NAR that Congress will not act on natural disaster insurance until legislation to reform the National Flood Insurance Program has been enacted.
This issue will continue to be a priority in Congress in the 110th Congress, which begins in January 2007.IX. New Business Possible Action ItemX. Member-to-Member Information ExchangeXI. Adjourn
