May 13, 2008

Re: Federal Update For Period Ending May 9, 2008

Dear Mayor:

Here is the latest bi-weekly update on activity in our Nation’s Capital from the federal relations staff of the National League of Cities (NLC).

House Passes “Landmark, Comprehensive” Housing Stabilization Measure
Early last week, the House passed H.R. 5818, The Neighborhood Stabilization Act, and H.R. 3221, The American Housing Rescue and Foreclosure Prevention Act, both of which are top legislative priorities for NLC.

_ H.R. 5818, The Neighborhood Stabilization Act, authorizes a one-year $15 billion grant and loan program to help ease the growing burden of vacant housing on cities and states. Funding could be used to purchase qualified houses made vacant by foreclosure; to rehabilitate the houses to restore compliance with local codes and general habitability, including energy-efficiency improvements, and to resell or rent the houses to income-targeted families. The bill makes cities, states, and urban counties with high rates of foreclosure eligible for funding from HUD directly.
_ H.R. 3221, The American Housing Rescue and Foreclosure Prevention Act, is a combination of several bills packaged together under the leadership of House Financial Services Committee Chair Barney Frank (D-MA). Among other things, the legislation:

1. allows the Federal Housing Administration (FHA) to provide up to $300 billion in new mortgage loan guarantees to help refinance borrowers at risk of foreclosure into lower-interest, fixed-rate federally insured mortgages;
2. allows state housing finance agencies to sell an additional $10 billion in tax-exempt mortgage bonds to raise funds for refinancing subprime mortgage loans of borrowers at risk of default;
3. allows the Federal Home Loan Banks to guarantee tax-exempt municipal bonds, allowing them to expand their financing capacity into broader community and economic development activities, including infrastructure improvement programs; and
4. provides an additional standard deduction for state and local property taxes of up to $350 for individuals and $700 for couples.

Although the bills passed with strong bipartisan support, the measures did not gain veto-proof majorities. As a result, the Senate may choose to scale the bill back to levels more in line with President Bush, who has threatened to veto the House-passed legislation.

Impasse Over Highway Funds Stalls Airport Reauthorization Bill
A long term reauthorization of the federal airport programs and the taxes that support them reached an impasse in the Senate last week and will be put on indefinite hold. Senators will instead introduce another short term extension through 2009. Attempts to limit debate on the reauthorization bill, H.R. 2881, failed as Republicans and the White House voiced strenuous objections to a provision that imposed new oil spill fees that would fund a shortfall in the Highway Trust Fund. The House passed its version of the FAA reauthorization bill last summer, and the program, which expired in September 2007, has been running on short term extensions; the current extension expires at the end of June. For local governments, the program funds the Airport Improvement Program for metropolitan airport programs, sets the Passenger Facility Charge imposed by individual airports, and extends the Essential Air Services program for smaller airports that might not otherwise receive commercial air service.

NLC Urges Congress to Restore Byrne Justice Assistance Grant Funding
In a letter to the Chairs and Ranking Members of the House and Senate Appropriations Committees, NLC, along with other state and local government groups, urged the Committees to restore funding for the Byrne Justice Assistance Grant (Byrne JAG) program in an FY ’08 emergency supplemental appropriations bill. In last year’s budget, funding for the program was cut by two-thirds from FY ’07, endangering the continuance of a large number of public safety programs across the United States. Although 218 Representatives and 56 Senators also have signed letters urging congressional leadership and appropriators to restore funding for this program, the outlook remains unclear.

Senators Propose Research Program for Water Utilities
Senate Majority Leader Harry Reid (D-NV) and Sen. Dianne Feinstein (DCA) recently introduced a bill that would enhance the ability of drinking water utilities to develop and implement climate change adaptation programs and policies. The Climate Change Drinking Water Adaptation Research Act (S. 2970) would direct U.S. EPA and the Commerce, Energy and Interior departments to establish a comprehensive research program exploring the effects of global warming on water quality, erosion, watershed changes, and the increasing range of pathogens, algae and other organisms. The legislation calls for a $25 million annual authorization from 2009 through 2019. The bill is supported by the American Water Works Association Research Foundation, a nonprofit organization made up of more than 900 water utilities worldwide. NLC is researching the bill to determine its potential affect on municipal water systems.

Join Building America's Future Coalition
In a speech before the Economic Policy Institute in Washington, D.C. earlier this month, Pennsylvania Governor and former Philadelphia Mayor Ed Rendell warned that the infrastructure of “our major American cities are a few years away from totally crumbling” and called for local leaders to join a national effort to “create an environment where infrastructure is treated as a national priority.” This effort, Building America's Future, was founded by Rendell, California Governor Arnold Schwarzenegger, and New York City Mayor Michael Bloomberg. "Local government officials know better than anyone how important infrastructure is in our communities and to this country," wrote Rendell, Schwarzenegger and Bloomberg recently in a letter to local government leaders. "Infrastructure is a federal challenge. It requires a federal commitment of resources." Officials can go to www.InvestInInfrastructure.org to join and learn more about the coalition. Joining Rendell in his assessment of the critical impact of the deteriorating infrastructure on metropolitan areas was the Urban Land Institute (ULI), which released a report showing that the U.S. lags far behind other nations in infrastructure investment. ULI became the latest group this year to highlight the daunting challenges of deteriorating infrastructure and the need for a new national commitment to fixing the nations roads, bridges and highways.

Participate in a Survey on the Future Surface Transportation Program
Beginning this fall, Congress will turn to legislation authorizing federal surface transportation programs, which expire on September 30, 2009. The current legislation, SAFETEA-LU provides $244.1 billion in funding for highways, highway safety, and public transportation and represents the largest surface transportation investment in our Nation's history. Local governments own and operate 77 percent of the roadways, half of the nation’s bridges and 94 percent of the nation’s transit systems. State and local organizations have joined together to gather the opinions of elected officials on the next surface transportation program; we will share these results with Congress as the debate on the future of surface transportation gets underway. If you have not already done so, you are encouraged to add your voice to this debate by filling out the online survey at http://www.zoomerang.com/survey.zgi?p=WEB22789B58MCQ  before June 2, 2008.

If you have any questions about any of these issues, or our federal relations work in general, please call Jon Moran at 609-695-3481, ext. 121.

Very truly yours,

William G. Dressel, Jr.
Executive Director