fractional licensing nor requires full-work licensing.” Judge Stanton’ s ruling counters DOJ’ s recent announcement that full-work licensing is required under the decree. Full-work licensing means that a PRO may only grant rights to a musical work with multiple rights owners when each owner agrees. The PROs argue that the decree allows licensing of the portion of a musical work they represent.
Technically, the judge’ s ruling applies only to BMI because it was issued by the court presiding over BMI’ s rates. ASCAP’ s decree is supervised by a separate court. The consent decrees intend to promote a competitive market and protect against antitrust violations while fairly compensating songwriters and providing efficiency for businesses who use music. DOJ is expected to file an appeal.
DOJ Decision on ASCAP and BMI
The full-work licensing issue was part of an in-depth DOJ analysis culminating in DOJ’ s decision to keep the overall structure for music licensing already in place for ASCAP and BMI. Specifically, DOJ will retain the long-standing antitrust consent decrees that set rates for ASCAP and BMI. Importantly, DOJ upheld the consent decree requirement that licensing fees do not discriminate against similarly situated industries or other consumers who use music.
Subject to certain exceptions and individual circumstances, copyright law may require a license for the right to“ perform” or play copyright-protected music in public places, which can include lobbies and other common areas in apartment communities. Together, ASCAP and BMI handle public performance licensing for more than 90 percent of music in the U. S. SESAC, a third PRO, covers about 10 percent of the market.
ASCAP has announced record earnings for general licensing, which includes performance rights for the use of music in businesses like restaurants, bars, hotels and fitness facilities. BMI says it added 15,000 new businesses that pay for public performance rights.
NMHC / NAA members-only guidance provides detailed information and strategies for identifying potential licensing obligations for apartment companies that may use music. We continue to monitor the debate on federal copyright policy as the music industry continues to change.
HUD Makes No Changes to Methodology for Calculating Fair Market Rents
On August 26, HUD announced the FY 2017 Fair Market Rents( FMRs), noting that no changes will be made from the current FY 2016 methodology for calculating them. FMRs are used by HUD to establish maximum allowable rents the government will pay to a private apartment owner who rents to a family with a Section 8 Housing Choice Voucher.
Although HUD is not making changes to its methodology for calculating FMRs, NAA / NMHC ask that members look at the FMRs for the areas where they operate. And, if there are any potential issues, that they please contact NMHC’ s Caitlin Walter or Lisa Blackwell.
FMRs are not a cap on the rent a private apartment owner can charge, but a cap on the amount HUD will pay. Most families with a Section 8 voucher pay 30 percent of their monthly adjusted income as their portion of the rent. Then, the government pays the difference between this amount and the FMR.
“ The Housing Opportunities through Modernization Act of 2016” was signed by President Obama in July and revises the procedure by which HUD publishes its annual FMRs by announcing them through www. huduser. gov. The newly announced FY 2017 FMRs will take effect October 1 unless interested parties request a review by September 26.
Importantly, NAA / NMHC provided detailed feedback to HUD in August on a proposal that would change how Section 8 Housing Choice Voucher( HCV) FMRs are set in many areas nationwide. The proposal calls for certain areas to set FMRs by ZIP code – what HUD calls Small Area Fair Market Rents( SAFMRs) – instead of the current metropolitan area-wide standard with an adjustment for high-cost areas.
This rule has not gone into effect and, as of September 30, all areas currently subject to SAFMRs( except the Dallas metro area) will begin using FMRs unless the PHA requests a waiver.
House Bill Raises Concerns about Future of EB-5 Investor Visa Program
Reps. Robert Goodlatte( R-Va.) and John Conyers( D-Mich.) introduced EB-5 legislation on Sept. 12 that focuses on EB-5 Investor Visa Program reforms, including measures that would raise investment minimums, help prevent fraud and extend the program another five years. Importantly, the program is set to expire on Sept. 30 if Congress cannot agree on reforms. The EB-5 program allows a foreign investor and his or her family to obtain a U. S. green card by making an investment in a capital project that results in the creation of jobs. The program continues to be an important source of investor capital for the multifamily industry.
As anticipated, the bill would raise the minimum amount that would need to be invested in order to get a green card. But another provision has raised concerns in the real estate industry because it would require current investors to retroactively invest additional amounts, potentially resulting in investors pulling their financing out of U. S. real estate projects and compromising existing development as a result.
The EB-5 program has long been a topic of debate in both the House and Senate. On the Senate side, Judiciary Committee Chairman and Ranking Member Chuck Grassley( R-Iowa) and Pat Leahy( D-Vt.) are pushing for reforms to stop what they consider rampant fraud and abuse plaguing the program. Senate leadership went as far as to threaten to let the program expire if meaningful changes are not made.
NAA / NMHC continue to support the EB-5 program as a vital source of capital for multifamily developers. We are encouraging lawmakers to approve a permanent extension of the program and address potential abuses, as well as improve the efficiency of the investment process without compromising the ability of this important program to attract foreign investment to American real estate.
The legislation was scheduled to be marked up by a House committee on Sept. 14, but it was canceled and postponed for a later date. Ultimately, negotiations between the House and Senate are expected to go right up until the Sept. 30 funding deadline. www. aamdhq. org OCTOBER 2016 • TRENDS | 31