A Win in D.C.

Carried Interest Provision removed from the Inflation Reduction Act.

By STEPHANIE GRAVES, HAA Legislative Chair, with BRADLEY PEPPER, Vice President of Government Affairs

LAST MONTH, CONGRESS passed the Inflation Reduction Act along party lines with the support of every elected Democrat holding office. The bill is a roughly $740 billion measure that includes a number of climate and energy spending programs and tax credits, money for the IRS to increase collection, prescription drug price negotiation and an extension of more generous health insurance subsidies.

Before heading to the President’s desk for his signature, the real points of contention had to be worked out in the Senate before the bill even made it to the House of Representatives.

While this legislation has been more than a year in the making, it was not passable legislation until Sen. Joe Manchin (D-WV) and Senate Majority Leader Chuck Schumer (D-NY) struck a deal in late July. Manchin had previously objected and held up negotiations citing increased spending concerns.

Senate Democrats were able to pass their budget reconciliation package in early August after securing the support of Sen. Kyrsten Sinema (D-AZ). Being the final obstacle, the Senator agreed to support the bill after receiving several concessions, including the elimination of a provision to change carried interest. The original bill included language that would narrow the so-called carried interest loophole.

Specific to the multifamily industry, the proposed bill would have increased the period for carried interest stemming from real estate to receive long-term capital gains tax consideration to three years instead of the current practice of one year. Any carried interest under three years would have been considered shortterm capital gains. It’s worth noting that for all other carried interests the proposed holding period was to increase to five years. Removing the proposed carried interest provisions is a significant victory for renters and housing providers – the use of carried interest is an essential tool in the development of new and the rehabilitation of existing rental housing.

FCC Broadband Competition Expiration

As we have previously reported, on March 28, 2022, the Federal Communications Commission (FCC) published official details of its recently unveiled Report and Order and Declaratory Ruling on broadband competition in multiple tenant environments (MTEs). With its release in the federal register, the FCC’s actions now have an effective date whereby compliance will be mandatory.

After April 27, 2022, no common carrier of telecommunication services were permitted to enter into any contract with an MTE that gave the premise owner compensation on an exclusive or graduated basis. Parties to existing contracts, as of April 27, will have until September 26, 2022, to cancel, replace or void terms and obligations pertaining to compensation on an exclusive or graduated basis.

The FCC’s order also requires telecommunication service providers to disclose any exclusive marketing arrangements in material distributed to a MTE’s residents. Furthermore, the FCC reaffirms that sale-and-leaseback arrangements are an unlawful practice.

Remember to Register to Vote

This November, we will elect nearly every state office from Governor to State Representative, as well as every member of our Congressional delegation. In addition, and of particular interest to us, we will vote on all County Commissioners Court Judges as well as some Commissioners, Judges and Justices of the Peace.

If you are not yet registered to vote, let your voice be heard. Registering to vote in Texas is easy. As long as you are eligible, you will be able to register to vote in your county of residence.

Texas law requires eligible voters to register by the 30th day before Election Day. The voter registration deadline for the November 8 Election is October 11. To register to vote, please go to https://vrapp.sos.state.tx.us/index.asp.

If you have a regulatory problem or question, call the HAA main line at 713-595-0300 and ask for Government Affairs. If a particular code requirement or issue concerns you, let us know by emailing Bradley at bpepper@haaonline.org.