2009 Land Use Property Rights And Environment Committee
National Association of REALTORS®
2009 REALTORS® Conference
San Diego Convention Center
Room 6e, Upper Level
Friday, November 13, 2009
11:00 AM - 12:30 PM

Chair: Frank Dickens, Scottsdale, AZ
Vice Chair: Linda Romer Todd, Grand Junction, CO
Committee Liaison: Lance Lacy, San Antonio, TX
Committee Executive: Russell Riggs, Austin Perez

I. Call To Order and Opening Remarks
- Frank Dickens, Chair (480-596-9799, frankdkns@msn.com)
- Linda Romer Todd, Vice-Chair (970-241-0685, linda@buygrandjunction.com)

II. Review/Approval of Previous Meeting's Minutes

Review of Conflict of Interest Statement

III. Land Use, Property Rights and Environment Forum Review
- Terry Sullivan, Chair (509-443-1890, srinc12@qwestoffice.net)
- Donna Smith, Vice-Chair (864-288-4048, sdonnao@aol.com)

IV. Political, Legislative and Regulatory Update
Issue to be Updated/Discussed Include:

A. Expansion of Clean Water Act Jurisdiction

NAR Policy:
NAR supports using appropriate scientific criteria to identify regulated areas; keeping the focus on preserving high value wetlands; requiring that local officials and affected property owners be notified about the presence of wetlands; and using wetlands mitigation banking.

NAR opposes legislation expanding the federal jurisdiction of the Clean Water Act to allow federal agencies to regulate not only "navigable waters" but virtually all "waters of the United States" including ditches, culverts and pipes.

Replacing "navigable" with "waters of the United States" will not reduce confusion over federal-state water boundaries, the subject of multiple Supreme Court cases. It could, however, prompt another round of administrative rulings that further restrict property development or make the process more cumbersome where wetlands are discovered.

The Senate Environment and Public Works Committee approved S. 787, the so-called "Clean Water Restoration Act." As passed, the legislation would:
A) Delete the limiting term "navigable" and expand the federal definition of U.S. waters to include all "intrastate waters" including "intermittent streams" and "tributaries;”
B) Codify two regulatory exclusions (i.e., prior converted cropland and waste treatment systems) which are narrower than current regulations; and
C) Overturn two Supreme Court decisions which rejected previous federal attempts to extend the Clean Water Act's reach to waters based on the presence of migratory birds or other creative legal theories.

When the full Senate will take up the committee bill is not clear at this time. A companion bill has not been introduced in the House.

B. National Flood Insurance Program

NAR and C.A.R. Policy:
The policy supports:
1) Renewing and strengthening the long-term viability of the federal flood insurance program;
2) Maintaining funding to update and improve the accuracy of flood maps, which are the cornerstone of NFIP and are used to determine which properties require flood insurance; and
3) Including comprehensive coverage for non-primary residences (e.g., rental properties and second homes) and reforms to provide "full risk" premiums for most repetitive loss structures in many states.

NAR supports renewing the National Flood Insurance Program (NFIP) before October 31, 2009, when authority for the program is set to expire.

Without the NFIP, property owners in federally designated areas across +10,000 communities nationwide could not obtain a mortgage or flood insurance to protect their properties.

In the short term, Congress has through October to renew the NFIP. For the long term, comprehensive reform of the program will include discussions on ways to improve its actuarial and financial foundations. While debate has centered on how to pay for 2005 hurricane season debt, Congress is also expected to revisit issues of expanding coverage to wind and business damage and possibly, a phase-in of "full-risk" premiums for those primary homes selling over $600,000.

Regarding flood maps, NAR has successfully advocated for maintaining funding at current levels every year since 2003. Congress recently approved an additional $220 million direct appropriation to FEMA to continue and complete the efforts to update and digitize the floodplain maps. We will continue to work with Congress to seek alternative funding sources to maintain the maps when the map modernization project is completed in 2012.

As part of the continuing resolution, NFIP has been extended through October 31. NAR will continue to work to extend the program until Congress takes up a long-term reauthorization and reform measure.

C. Building Energy Labeling Legislation/CO2 Emissions Regulations

NAR Policy:
The policy supports:
- Commercially reasonable and incentive-based approaches to reduce energy use and greenhouse gases;
- Solutions that are guided by market and smart growth principles of protecting private property rights and maintaining real estate affordability and availability; and
- Educating property owners and consumers about the benefits and importance of energy efficiency.

It opposes:
- Requirements which impose undue economic burdens on property owners or managers;
- Triggering such requirements especially at the time when residences or buildings are sold; and
- Expanded application of existing laws or regulations that are not suited to address climate change.

Pending before Congress is climate change legislation that includes energy efficiency provisions both for commercial and residential buildings. NAR policy supports reasonable approaches and incentives, but not individual building mandates particularly if they are imposed at time of sale.

At risk is REALTORS'® ability to close on buildings without having to conduct energy audits and improvements to heating and cooling systems, windows, lighting, and insulation.
The House of Representatives has approved climate legislation (H.R. 2454) that would establish national building codes and real estate energy labeling for new construction. In the Senate, several committees are working to report provisions before being combined into and voted on as one bill.

Partisan politics threaten to derail progress on a Senate climate change bill, even before the first committee markup.  Republicans on the Senate Environment and Public Works Committee say they will carry through on threats to boycott markups on the bill, which panel Chairwoman Barbara Boxer (D-CA) had wanted to begin the first week of November.
The Republicans — led by Oklahoma’s James Inhofe, the Environment panel’s ranking GOP member and the Senate’s most vocal climate change skeptic — say they will not be present at the Tuesday session.  Because two members of the minority party must attend in order for a markup to proceed, Boxer has scheduled a “committee business meeting” — an apparent procedural gambit designed to allow work without a GOP quorum.

The panel has a 12-7 Democratic majority and can easily approve a bill without any Republican support. But observers say the development of a partisan rift so early in the legislative process could threaten the bill’s prospects on the Senate floor, where it is unlikely to pass without some Republican support.

As the legislative process unfolds, NAR will continue to work with members of Congress to ensure that the real estate provisions in the climate legislation are consistent with NAR policy.

D. Property Insurance Issues Working Group

MEETING SUMMARY
PROPERTY INSURANCE AND NATURAL DISASTERS
NATIONAL ASSOCIATION OF REALTORS®
AUGUST 17 – 18, 2009

Meeting Purpose: The purpose of the meeting was to develop an action plan to inform/ educate/engage NAR members nationwide regarding the issue of available and affordable property insurance to help set the stage in Congress for legislative action.
Meeting Participants: Meeting participants included NAR Regional Vice-Presidents, state association representatives, and current NAR officers and representatives from the Leadership Team. See below for the listing of meeting participants.
Action Items:
(1) Conduct research on the current legislative approaches to resolve the issue. In addition, conduct research on how much disasters cost taxpayers.
(2) Explore more effective ways to communicate the importance of this issue.
(3) Consider holding an additional meeting, either during the 2009 Annual Meeting or before, to review the research findings and discuss next steps.

Meeting Summary: Gary Thomas and Dale Stinton opened up the meeting and discussed the nature of the issue and the rationale for the meeting. The first panel consisted of two speakers from the National Association of Insurance Commissioners, who discussed the current economic and political landscape for the insurance industry in general and for this issue in particular. They described the political dynamics of their organization and their position on this issue, including stronger building codes, incentives for property mitigation, state “catastrophe funds”, and tax-deferred catastrophe reserves for individual insurance companies. The consensus within the NAIC is that that there is a need for federal involvement due to the unpredictable nature of some insurance markets.

The second panel consisted of three congressional staffers who discussed this issue from a federal political perspective. The consensus of the discussion was this is an important issue but unlikely to be addressed in 2009. They suggested that NAR begin the groundwork for forward momentum in 2010 by educating NAR members, other congressional members and staff and developing research that helps make the case, and begin to develop coalitions with other like-minded organizations.

The third panel consisted of Frank Dickens, Gary Thomas, Paul Bishop and Jerry Giovaniello who presented, respectively, an overview of NAR policy regarding insurance matters, the results of previous insurance task forces and PAGs, previous polling and NAR’s legislative history and advocacy on this issue.

During the afternoon, Gary Thomas and Dale Stinton moderated a discussion among the meeting participants on the best way to educate NAR members on this issue. The participants reaffirmed that this is a national priority for the organization and emphasized that our policy would allow the organization to support a range of legislative proposals.

NAR staff was directed to prepare a comprehensive analysis of several legislative options, including: 1) establishing a federal “last resort” catastrophe fund, 2) exploring an “all-perils” approach to property owner’s insurance, 3) providing a tax credit for mitigation, 4) adding wind coverage to the national flood insurance program, and 5) creating a national commission to develop a natural disaster insurance policy. This analysis would include the political feasibility of accomplishing these approaches and messaging to Realtors.

In terms of messaging, some questioned whether most property owners understand that their insurance policy does not include coverage for all risks. Most observed that today, in the absence of a proactive and comprehensive national policy for natural disasters, taxpayers – not affected property owners – shoulder the financial burden of post-disaster relief and clean up. The group agreed that NAR should develop estimates of the burden to taxpayers from a range of natural disasters.

It was noted that several independent insurance companies have developed their own approaches to this issue, including the Hartford, Nationwide and Travelers. After completing the research, some suggested that the next steps would be to educate the membership on the issue and for NAR staff to meet with other organizations to explore areas of common interests.

After a meeting summary and discussion of possible next steps, Gary Thomas and Dale Stinton adjourned the meeting.

Meeting Participants:
Regional Vice-Presidents: Bonnie Guevin (NH), Region 1; Joseph Canfora (NY), Region 2; Dale Ross (MD), Region 3; Jayne Cox (KY), Region 4; Russell Grooms, Jr. (FL), Region 5; Cathy Sherman Bittrick (MI), Region 6; Stan Sieron (IL), Region 7; Scott Louser (ND), Region 8; Douglas Smith (AR), Region 9; Connie Kyle (LA), Region 10; Keith Kelley (NV), Region 11; James (Jim) Johnston (ID), Region 12; Toby Bradley (CA), Region 13.

State Association Representatives: Henry Ray, Alabama; Frank Dickens, Arizona; Health Hilgenberg, California; Amy Dorsey, Colorado; Frank Kowalski, Florida; Moe Veissi, Florida; Greg Rokeh, Florida; John Sebree, Florida; Mike McGrew, Kansas; Nick D’Ambrosia, Maryland; Jim Civille, Michigan; Jim Cormier, Minnesota; T. David Rogers, Missouri; Tom Hanel, Montana; Pat Ohmberger, Nebraska; Judy Appleby, New Jersey; Sheila Pierce, North Carolina; Doug McCloud, Ohio; Tray Bates, Texas; April Newland, Virgin Islands; Ron Wortham, Washington; Matthew Miller, Wisconsin.

NAR Officers and Staff: Gary Thomas (CA), Vice President & Liaison to Government Affairs; Steve Brown (OH), Vice President & Liaison to Committees; Dale Stinton (IL), NAR CEO; Jerry Giovaniello (DC), NAR SVP, Joe Ventrone, Gary Weaver, Paul Bishop, Russell Riggs, Austin Perez, Helen Devlin, Ian Roach, Arun Barman.

Invited Speakers: Avery Brown, Senior Policy Advisor, National Association of Insurance Commissioners; Tom Glassic, Majority Counsel, House Financial Services Committee; Eric Thompson, Minority Professional Staff, House Financial Services Committee; Charles Yi, Senior Policy Advisor and Counsel, Senate Banking Committee.
E. Public Lands Issues

Helen Devlin, (202-383-7559, hdevlin@realtors.org)
Austin Perez, (202-383-1046, aperez@realtors.org)
Russell Riggs,(202-383-1259, rriggs@realtors.org)

V. Old Business
A. Draft Public Lands Strategic Plan
Strategic Plan
B. “Cap and Trade” Analysis

In May 2009, the Land Use Committee directed NAR staff to:
1. Research and analyze the economic impact of “Cap and Trade” legislation in an international context and particularly the effects on electric utility bills; and
2. Evaluate the operation and unintended consequences of the CO2 emissions reduction market.

The Congressional Research Service (CRS) recently published a comprehensive review of seven economic analyses of the House bill (H.R. 2454) which addresses both committee charges (attached). Following is a summary of the report findings.

Economic Impact
Depending on analysis, H.R. 2454 could negatively or positively affect monthly electric bills. While the National Mining Association estimated that the average bill would increase by $2, the Natural Resources Defense Council estimated it would decrease by $6 (see Table 1). Both groups used Energy Department data or models that account for international factors. As CRS noted, “attempts to estimate household effects…are fraught with numerous difficulties that reflect more on the philosophies and assumptions of the cases reviewed than on any credible future effect” (see Summary). For more on household effects, see pp. 68-86 of the report; the section’s major points may be found on p. 86.

Table 1: Projected U.S. Average Household Cost (or Savings) of CO2 Cap & Trade Program

Market Operation

The cap-and-trade provisions of H.R. 2454 were modeled after the existing SO2 market established by the 1990 amendments to the Clean Air Act. CRS did not report SO2 market irregularities but on pp. 11-13, found the estimates debated in 1990 of program cost in 2000 “…underestimated the ingenuity and creativity of companies in responding to SO2 requirements, or mis-read the economics of the cap-and-trade process.” The lowest estimate at the time ($3 billion) was 50% higher than what the cost actually was in 2000 ($2 billion). Table 2 presents the program’s projected and actual cost.

Table 2: Projected v. Actual Cost of Existing SO2 Cap & Trade Program in the year 2000

C. Full risk flood insurance premiums economic analysis

VI. New Business
- Land use, property rights and environment landing page on realtor.org

VII. Committee Member Information Exchange/Discussion/Interaction

VII. Adjournment