Editor’s Note: The RISMedia series, Legislative Round-Up looks at pending and passed federal and state-level legislation that impacts real estate professionals.
Supreme Court rules in favor of Consumer Financial Protection Bureau
On Thursday May 16, 2024, the U.S. Supreme Court overruled a challenge to the constitutionality of the Consumer Financial Protection Bureau (CFPB).
The Consumer Financial Protection Bureau, first proposed by Senator Elizabeth Warren (D-MA), was created in 2011 as a response to the 2008 financial crisis. The CFPB has broad jurisdiction over financial firms (including mortgage lenders) and, true to its name, is designed to protect consumers/debtors from malfeasance.
The CFPB has a unique funding structure; it is not funded by Congressional appropriations, but via the Federal Reserve system. This is designed to increase the CFPB’s independence and ability to operate regardless of which party controls Congress. The Community Financial Services Association of America (a trade group for payday lenders) filed a suit against the CFPB, citing its funding system as unconstitutional.
However, the SCOTUS ruled 7-2 to uphold the CFPB’s funding system. In the majority opinion, Justice Clarence Thomas wrote that the structure is consistent with the Constitution’s Appropriations Clause: “Specifying the source and purpose [of public money withdrawn from the treasury] is all the control the Appropriations Clause requires.”
Homeownership proposals, shake-up at HUD
Looking back to the State of the Union Address this past March, President Joe Biden namechecked many proposals for expanding homeownership in America, including:
- A $10,000 credit for first-time homebuyers.
- A $10,000 credit for people who sell starter homes.
- The elimination of title insurance on federally-backed mortgages.
Biden’s proposals earned praise from National Association of REALTORS® President Kevin Sears, who commended a “commitment to an all-of-government approach to solve this problem.”
Housing remains a legislative priority for the Biden administration even as the United States Department of Housing and Urban Development (HUD) faces a shake-up after HUD Secretary Marcia Fudge announced her resignation, which took effect on March 22.
California assemblymember aims to create public housing
In February 2024, California Assemblymember Alex Lee introduced the social housing bill AB 2881. The bill, if enacted, would create a California Housing Authority charged with producing social housing units to end the housing crisis. Lee cites the public housing model of Singapore, where nearly 80% of the population live across 1.2 million government-built apartment units built since 1960 (however, the units are owned by the tenants themselves, with the Singapore government leasing out the land on which the buildings sit for 99 years to the tenants).
Assemblymember Lee also introduced another bill aimed at curbing the housing crisis, AB 2584—prohibiting business entities from owning more than 1,000 single-family units in the state of California. Institutional investors have been a growing presence in the single-family home market for the past decade and have been accused of driving up prices or withholding inventory from individual buyers.
Connecticut’s first-time homebuyers could receive tax break
The Connecticut General Assembly is considering Bill 5167, which would allow municipalities to give property tax breaks of up to $500 per year (for five years) to first-time homebuyers who obtain mortgages through the Connecticut Finance Housing Authority.
The bill, which has bipartisan co-sponsors, won approval in the assembly’s Planning and Development Committee and will be receiving a floor vote in the near future.
Just cause evictions in Connecticut
SB 143, under consideration by the Connecticut General Assembly, would establish stronger tenant protections (“tenants” defined as those who live in five or more unit buildings).
Under the bill, tenants can only be evicted under a “just cause,” such as failure to pay rent, refusal to hear “fair and equitable” increase in monthly rent or adversely affecting the health of fellow tenants.
The bill, supported by tenant and veteran advocacy groups, was reported out of committee and has been tabled (meaning scheduled) for a vote in the Connecticut Senate.
Boston encourages commercial renovations with tax breaks
Boston Mayor Michelle Wu has partnered with developers to bring more residential inventory to her city—not with construction, but with renovation of pre-existing commercial stock.
Announced in July 2023 and officially launched in October of that year, the “Downtown Office to Residential Conversion Pilot Program” is overseen by the Boston Planning and Development Agency.
The pilot program offers commercial building owners tax advantages if they convert their property to a residential building. First, the buildings would be taxed at a lower residential rate (about $10.74 for every $1,000 of assessed value) rather than the commercial tax rate ($24.68 for every $1,000). The buildings would continue to be eligible for a tax discount of up to 75% for 29 years afterward.
Applicants must agree to acquire the necessary permits (with these and zoning requirements fast-tracked as part of the program) and begin construction by October 31, 2025. As of December 2023, four applications (which could produce more than 150 units overall) have been received.
Pilot program for cash assistance to homeless youth
In February 2024, Representative Rashida Tlaib (D-MI) introduced H.R. 7451: Youth Homelessness Guaranteed Income Pilot Program Act. The bill would establish a pilot program offering direct cash assistance for the “estimated 4,200,000 youth and young adults (experiencing) homelessness in the United States,” with provisions included so the effects of the program can be studied should it be implemented.
“By providing direct cash assistance, we can address our housing crisis while respecting the autonomy and dignity of the folks receiving assistance,” said Congresswoman Tlaib in a press release.
Local-level programs offering cash aid to those facing homelessness, such as one in California’s Santa Clara County, have generally proven successful in their goals of mitigating homelessness.
H.R. 7451 has eight co-sponsors and has been referred to the House Committee on Financial Services.
Interested in coverage of other bills and policy affecting real estate professionals? Email Associate Editor Devin Meenan at dmeenan@rismedia.com.
