News

HUD Conciliation Agreement for Discrimination Based on Sex with Regard to Domestic Violence Victim - March 2019

            On March 12, 2019, HUD entered into a Conciliation Agreement with a domestic violence victim and Essex Property Trust, Inc (and others). This is an important case because it indicates that victims of domestic violence may have a fair housing claim when landlords do not take reasonable steps to protect the victim. Facts of the Case On August 13, 2018, the complainant filed a complaint with HUD against Essex Property Trust and others (including the individual property manager, assistant community manager and regional portfolio manager associated with the property the complainant lived at (Lawrence Station Apartments in Sunnyvale, CA).The complaint alleged that the respondents discriminated against the resident on the basis of her sex when they declined to respond to her multiple requests to have the locks changed and to have her then husband s name removed from the lease.The respondents denied all allegations but agreed to resolve the claims by entering into a voluntary conciliation agreement. Terms of the Agreement Essex Property Trust will pay the complainant $20,000;Management personnel involved in the decision-making relating to the requests will attend fair housing training;The owners will implement at all properties they own or manage a policy regarding how to address the safety and housing needs of tenants who have experienced or are experiencing domestic violence; andAll employees or agents of the company will be given a copy of the Domestic Violence Policy and will be given guidance on the implementation of the policy. Summary             This is an important case because, while it did not go to trial, it makes clear that HUD will pursue cases of owners and managers not taking reasonable steps to protect residents in cases of domestic violence. Also, since it was brought on the basis of sex discrimination, it indicates that since the overwhelming majority of domestic violence cases occur against women, HUD may consider such actions to have a disparate impact based on sex. Lesson             Owners and managers of housing properties - including those not required to comply with the requirements of the Violence Against Women Act (VAWA)- should implement policies regarding how to deal with domestic violence situations. At a minimum, such policies should include provisions requiring that at the request of domestic violence victims, owners will consider the steps that may be taken to reasonably protect such victims.

GAO Recommends Improvements to REAC - March 2019

            At the end of March 2019, the Government Accountability Office (GAO) issued a report titled, "REAL ESTATE ASSESSMENT CENTER - HUD Should Improve Physical Inspection Process and Oversight of Inspectors."             The 2017 Consolidated Appropriations Act, Joint Explanatory Statement, included a requirement that the GAO conduct a review of REAC s policies and processes; this study has been issued in response to that requirement.             The report discusses, among other things, (1) REAC s process for identifying physical deficiencies and (2) REAC s selection, training, and monitoring of contract inspectors and its own qualify assurance inspectors.             GAO has made 14 recommendations to HUD to improve REAC s physical inspection process and its selection, training, and monitoring of contract and quality assurance inspectors, among other things. What GAO Found             The primary overall finding is that the REAC standardized procedures to identify physical deficiencies at HUD multifamily and public housing properties has a number of weaknesses. For example, REAC has not conducted a comprehensive review of its inspection processes since 2001. Also, REAC does not track its progress toward meeting its inspection schedule for certain properties.             REAC uses contractors to inspect properties; these contract inspectors are trained and supervised by quality assurance inspectors hired directly by REAC. However, REAC s processes to select, train, and monitor both contract inspectors and quality assurance inspectors have weaknesses. Selection: REAC does not verify the qualifications of contract inspector candidates before they are selected to begin training to become certified inspectors.Training: REAC lacks formal mechanisms to assess the effectiveness of its training program for contract and quality assurance inspectors, and there are not continuing education requirements for inspectors.Monitoring: REAC has not met management targets for the number and timeliness of its inspection oversight reviews of contract inspectors. REAC has not met its target of conducting three quality assurance reviews of poor-performing contractors per quarter. In addition, REAC s performance standards for its quality assurance inspectors have not been updated to reflect their broader job duties, such as conducting inspector oversight reviews and coaching and mentoring contract inspectors. Background             HUD created REAC in 1997 to obtain consistent information on, among other things, the physical condition of its public and multifamily properties. REAC generally inspects properties every one to three years, using a risk-based schedule. REAC developed a standardized protocol to inspect properties, referred to as the Uniform Physical Condition Standards (UPCS). REAC s data system automatically generates an overall inspection score for the property from 0 to 100 based on the information an inspector records.             REAC primarily uses contractors - who are trained and certified in REAC s UPCS protocol - to conduct inspections of multifamily and public housing properties.             To procure inspections of HUD-assisted properties, REAC primarily uses an auction process to award contracts either to eligible contract inspectors or to companies that employ contract inspectors. REAC Roles & Responsibilities             REAC is situated within the Public & Indian Housing (PIH) branch of HUD. Several departments within REAC are involved in facilitating the physical inspection process: Physical Assessment Subsystem (PASS): The PASS Physical Inspection Operations division coordinates the procurement of inspections. The PASS Quality Assurance division evaluates and monitors REAC s inspection program to ensure reliable, replicable, and reasonable inspections. The PASS Inspector Administration division monitors the performance of inspectors.Research & Development: This division produces data analysis and statistical reports on REAC s information products.PIH: This office helps low-income families by providing rental assistance through three programs. The GAO review focused on physical inspections of the public housing program.Multifamily Housing: This office manages HUD s portfolio of multifamily properties and provides rental assistance through several programs, including Section 8 project-based rental assistance, in which HUD contract with private property owners to rent housing units to eligible low-income tenants for an income-based rent.Department Enforcement Center: This division is located within HUD s Office of General Counsel and works to ensure that program funds are used according to federal regulations. The 91-page report identified a number of REAC weaknesses. REAC s inspection process has some weaknesses that may hinder its ability to identify physical deficiencies;REAC has not conducted a comprehensive review of its inspection process since 2001;REAC may not be identifying all properties in need of more frequent inspections or enforcement actions;REAC lacks comprehensive or organized documentation of sampling methodology;REAC does not always meet its schedule for inspecting multifamily properties or track progress toward meeting scheduling requirements;While REAC is piloting a process for hard-to-staff inspections, it has no plans to evaluate the success of the pilot project;HUD has made only limited progress in implementing recommendations from an internal HUD review of REAC;REAC s procedures for selecting, training, and developing inspectors have weaknesses;REAC sets but does not verify qualification requirements for contract inspector candidates;Training for contract inspectors is not consistent with key attributes of effective training and development programs;Quality assurance inspector training requirements may not cover all job duties and are not documented;REAC does not require continuing education for contract and quality assurance inspectors;REAC has not met management targets for reviews of contract inspectors;REAC s Quality Control Group has not yet implemented procedures for inspector oversight;Performance standards for Quality Assurance Inspectors do not fully align with job duties; andHUD s threshold for issuing notices for property owners in inconsistent with requirements of Congressional legislation. Conclusions The GAO study found areas for improvement in the REAC inspection process and made the following 14 recommendations to HUD: Conduct a comprehensive review of the physical inspection process;Calculate sampling errors associated with the physical inspection score for each property;Develop comprehensive and organized documentation of REAC s sampling methodology;Track on a routine basis whether REAC is conducting inspections of multifamily housing properties in accordance with federal guidelines for scheduling;Design and implement an evaluation plan to assess the effectiveness of the Indefinite Delivery/Indefinite Quality pilot program to ensure timely and quality inspections for properties in hard-to-staff geographic areas;Expedite implementation of the recommendation from the Rapid Response and Resolution Team;Follow through on REAC s plan to create a process to verify candidate qualifications for contract inspectors;Develop a process to evaluate the effectiveness of REAC s training program;Revise training for quality assurance inspectors to better reflect their job duties;Develop continuing education requirements for contract and quality assurance inspectors;Develop and implement a plan for meeting REAC s management targets for the timeliness and frequency of quality control reviews;Ensure that quality control s policies and procedures for overseeing quality assurance inspectors are implemented;Review quality assurance inspector performance standards and revise them to better reflect the skills and supporting behaviors that such inspectors need; andReport to Congress on why the Agency has not complied with the 2017 and 2018 legislative requirements to issue notices to properties when the REAC score is 60 or below. As with most GAO reports, actual implementation of the recommendations may take some time. However, as with the recent REAC change to a 14-day inspection notification, owners and managers of HUD multifamily properties should be proactive in managing properties in a way that will not create a negative outcome when (not if) these recommendations ultimately go into effect.

HUD Charges Facebook with Fair Housing Violations

On March 27, 2019, the Department of Housing & Urban Development (HUD) formally charged Facebook with violating the Fair Housing Act by encouraging, enabling, and causing housing discrimination through the company s advertising platform. The action follows HUD s investigation of complaints against Facebook that began in August 2018. HUD alleges that Facebook unlawfully discriminates based on race, color, national origin, religion, familial status, sex, and disability by restricting who can view housing-related ads on Facebook s platform and across the Internet. Further, HUD claims that Facebook mines extensive data about its users and then uses that data to determine which of its users can view housing related ads based, in part, on the protected characteristics. According to HUD s charge, Facebook enables advertisers to exclude people that Facebook classified as parents; non-American- born; non-Christian; interested in accessibility; interested in Hispanic culture; or a wide variety of other interests that closely align with the protected classes of the Fair Housing Act (FHA). HUD is also charging that Facebook enabled advertisers to exclude people based on where they live by drawing a red line around those neighborhoods on a map and to show ads to only men or only to women. The charge further asserts that Facebook also uses the protected characteristics of people to determine who will view ads regardless of whether an advertiser wants to reach a broad or narrow audience. HUD claims Facebook combines data it collects about user attributes and behavior with data it obtains about user behavior on other websites and in the non-digital world. Facebook then uses machine learning and other prediction techniques to classify and group users to project each user s likely response to a given ad, and in doing so, may recreate groupings defined by their protected characteristics. The Charge concludes that by grouping users who have similar attributes and behaviors (unrelated to housing) and presuming a shared interest or disinterest in housing-related advertisements, Facebook s mechanisms function just like an advertiser who intentionally targets or excludes users based on their characteristics. HUD s charge will be heard by an Administrative Law Judge unless any party to the charge elects to have the case heard in federal court. This is an important case and may well impact how other Internet platforms such as Google and Twitter operate in the future.

Firearms - Can They be Banned in Apartment Communities?

      In my role as a consultant, I have been asked a number of times whether or not guns can be banned at apartment communities. The answer may well depend on the state in which the community is located, but the discussion usually begins with a reference to the Second Amendment to the United States Constitution. The Second Amendment states, "A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed."       The most recent Second Amendment case decided by the Supreme Court was District of Columbia v. Heller. This case examined the question of whether an individual has the right to keep and bear arms apart from or unconnected to militia service. On a 5-4 vote, the Court held that an individual has the right to possess firearms for lawful use - such as self-defense - in their homes. The Court struck down the part of the D.C. law requiring that lawfully owned guns in a home be locked, unloaded, and disassembled. However, the Court ruled that some gun control laws are permitted. For example, (1) prohibition of concealed weapons; (2) gun possession by felons or the mentally ill; (3) guns in certain areas, such as schools or government buildings; (4) requirements for the sale of guns; (5) the banning of dangerous or unusual weapons; and (6) the regulating of storage to prevent accidents.       Even though they receive federal funds, most HUD-assisted properties are privately owned. Privately owned properties have control over their own property without restriction (as long as federal law - such as fair housing law - is not violated). This includes owners who accept Housing Choice Vouchers. However, there have been cases where residents of Public Housing Agency owned properties have successfully sued for the right to own and keep a gun in their apartments. In the 2014 case, Doe v. The Wilmington Housing Authority, Delaware s Supreme Court ruled in favor of a resident s right to possess a gun in his unit but upheld a ban in the public areas of the site. Essentially, the Court held that common areas are distinct from apartments and can be regulated by the PHA.       Individual landlords should consider a number of issues before deciding whether to ban guns at an apartment community. Check State Gun Laws: In many states, the law provides that private entities are permitted to ban guns on their sites. If your state has an open carry policy and you decide to ban guns from your property, you may be required to post a sign for residents and visitors stating that guns are prohibited on the property. Whether required to post such signage or not, if you want to ban guns, it is recommended that such signage be posted. In order for messaging on the sign to be considered enforceable, the signage must follow the requirements specific to your state laws, if applicable, regarding the language, font size, duration of display, etc.Modify Leases & House Rules: Language should be added to leases and house rules that spells out weapons restrictions, and for existing residents, post notices for at least 30-days. After that, incorporate the policy into the house rules. For sites that allow gun ownership in the unit, include language that requires gun owners to comply with federal and state laws, prohibits weapons in common areas, and stipulates that weapons and ammunition must be in a locked case when being transported. If you want a total ban on guns, consider adapting the following language:Tenant agrees not to display, use, or possess, or allow members of Tenant s household or guests to display, use, or possess any firearms (operable or inoperable), or other offensive weapons as defined by Federal Law and the laws and courts of the State of _______________ anywhere in the unit or elsewhere on the property.Talk to your insurance broker: If you deny an individual the right to keep a gun and then the person is harmed and did not have the ability to protect him or herself, you could be sued. Similarly, you could also be sued if a person has a gun and its accidentally discharged, or if another tenant s gun causes harm to a neighbor. While such suits generally are not successful, these issues should be discussed with your insurance agent.Include employees in your policy: If you have an employee who legally either has a gun or wants to carry a gun onsite for the protection of the community, he or she must be trained and insured, and specific rules must be in place. I strongly recommend that employees be bound by the same gun policy as residents and visitors but check with your attorney regarding state laws - some of which allow individuals to keep their guns locked in their car.Enforce the policy: Whatever policy you ultimately adopt - apply it consistently and to not make exceptions, unless required to do so by law (e.g., you will almost certainly be required to permit law enforcement officers to keep their weapons on site).

Proposed HCV Mobility Demonstration Act - March 2019

The Housing Choice Voucher Mobility Demonstration Act was introduced in the House of Representatives on February 8, 2019 as H.R. 1122 by Rep. Emanuel Cleaver (D - MO) and in the Senate on January 31, 2019 as S.291 by Sen. Todd Young (R-IN). Background The Housing Choice Voucher (HCV) program was created in 1974 and was originally known as the Section 8 Certificate Program. A person or family receiving the voucher chooses their own residence (as long as it meets the program s requirements), and a housing subsidy is paid to the landlord on behalf of the tenant. The tenant generally pays 30% of adjusted income in rent. A 2015 Harvard study found that voucher recipients who move to higher opportunity neighborhoods receive better educations and earn more money over the years. However, a House Financial Services Committee found that the program has not been as effective as it could be. Lower-income families receiving the voucher usually do not move out of lower-income neighborhoods. What the Bill Does This demonstration program would establish a pilot program to award housing vouchers in such a way as to encourage recipients to move to communities with less poverty. The Department of Housing & Urban Development (HUD) would administer the program for up to five years, at the conclusion of which it would submit a report to Congress - and, if successful, the program could expand nationwide. Supporters argue that the bill will help those who need a leg up, by better targeting an existing government assistance program to help people move out of poverty. It would provide expanded opportunities to quality education and employment. There is opposition to the proposal - mainly that it simply tweaks an existing government program and that it will ultimately add costs without significant benefits. Primary opposition is coming from Freedom Caucus or Liberty Caucus affiliated Republicans. However, during floor debate, no member of Congress publicly spoke out against the bill. Chance of Passage The bill passed the House on March 11 by an overwhelming 382 to 22 vote. Every voting Democrat was in favor, 210-0. Republicans largely supported as well, though with some dissenting votes, 168-22. It now goes to the Senate but could face the same fate as last year. A previous version passed the House, then under Republican control, by a similar 368-19 vote - but never received a vote in the Senate. The current Senate version has five bipartisan cosponsors: three Democrats and two Republicans. It awaits a potential vote in the Senate Banking, Housing, & Urban Affairs Committee. I ll keep track and provide updates on its fate.

Quiet Enjoyment - A Lease Concept that Managers Must Understand

Landlords are required to ensure that all residents have "quiet use and enjoyment" of their apartment. For this reason, owners must deal with any resident who disrupts the "livability" of the property. Owners can ensure that this responsibility is met by taking certain steps: House Rules - both the lease and house rules or policies should address the safety, comfort and convenience of residents. The lease should also state that a violation of property policies is a lease violation. Property policies should ban abusive or harassing behavior at the property, including occupants, guests, management, employees, and contractors.Sample House Rule or Policy:Residents are expected to conduct themselves in a manner that does not disturb other residents. Resident agrees not to create or allow to be created by members of Resident s household, relatives, guests, invitees, or agents any disruptive, noisy, or otherwise offensive use of the premises. Residents will be held responsible for any disruptive conduct by their guests. A violation of this rule is a violation of the lease.Talk to the Resident - if a household creates problems at the site, talk to the household. In many cases, an informal approach may work. Let the household know that disruptive behavior will not be tolerated. If the problem was created by a guest, let the resident know and make it clear that the behavior will not be tolerated. Ask the resident for the name of the guest and document the discussion.Send a Polite Letter - if the problem continues, send a polite - but firm - warning letter to the resident. The letter should: Tell the resident that the behavior has continued;Specify the date of the most recent disruptive incident; andRemind the resident that they are responsible for all activity in a unit.Send Strong Letter to get Action - the letter should:State that the troublemaking conduct of the resident or guest is a violation of the property rules;Specify the lease clause and house rule that was violated;List the date of the oral warning and the first warning letter; State the dates and details of all the incidents, including those that occurred after the warning letter. Also note any police calls or arrests;Specify the lease paragraph and house rule that was violated; andThreaten eviction if the problems continue.Seek Eviction - if the problem continues, eviction may be required. If there is a danger to the property, residents, or staff, more immediate action than eviction may be required.E.g., "No Trespassing" - this sign should be posted at all sites so that problem guests can be banned from a property. If the guest can be contacted, send a "no trespassing" notice by mail. Otherwise, if you see the offender at the property, hand deliver the notice (unless it is dangerous to do so). The trespassing notice should state that the individual is not allowed on the property and that if he/she comes back, a trespassing complaint will be filed, and you will prosecute. Give a copy of the notice to the resident. Ultimately, owners and managers must understand that every resident has the right to "quiet use and enjoyment" of their home without undue disturbance by other residents.

Court Rules that Owner Can Evict Resident for Marijuana-Related Lease Violations in State That Permits Medical Marijuana Use

            In Sherwood Associates, LP v. Jackson, January 2019, the Maine Supreme Court ruled that an owner could evict a resident for marijuana use that violated the terms of the lease - even though the use of medically prescribed marijuana is legal in Maine. Facts of the Case In December 2016, the owner issued the resident (Jackson) an eviction notice stating that his use and possession of marijuana violated the terms of the lease that prohibited unlawful activity in the unit because "medical marijuana is illegal under federal law even if it is permitted under state law."The resident submitted a request to the owner for a reasonable accommodation to use marijuana for medical purposes in accordance with the Maine Human Rights Act.The eviction was delayed while the owner reviewed the request.In April 2017, the owner denied the request, stating "Under federal law marijuana is a controlled substance and possession or manufacture of marijuana is a violation of federal law. Fairfield Family Housing is an affordable housing complex that receives federal funds and is subject to oversight and frequent audits by the federal government. In the Landlord s view, a request for accommodation that results in a violation of federal law is per se unreasonable and exposes the Landlord to potential liability and/or noncompliance with federal regulations."The owner issued a 30-day notice that it was terminating the resident s lease since the unit had been used for unlawful purposes and activities. The notice stated that the resident had also refused access to the bedroom that was used as a marijuana grow room; installed a lock on the bedroom without permission; threatened physical harm to staff seeking to inspect the bedroom; smoked marijuana in his unit in violation of a no-smoking policy; and grew and possessed marijuana in violation of a zero-tolerance drug policy. Finding The lower court granted possession of the unit to the landlord - the resident appealed.The Maine Supreme Court ruled for the owner and affirmed the lower court s decision Reasoning The Court found that the resident violated the lease in three ways that were independent of the marijuana use: (1) He denied access to the unit in violation of the lease; (2) he installed a lock on the bedroom (grow room) in violation of the lease; and (3) he intimidated and threatened staff in violation of the lease. While this case does indicate that owners in states that allow the use of medically prescribed marijuana may be able to deny a reasonable accommodation request for the use of marijuana and prevail in state court, key elements in the court decision had nothing to do with the actual use of the marijuana. Other lease violations appear to have played a key role in the court s final decision. Based on this, it is recommended that prior to rejecting requests for reasonable accommodations relative to the use of marijuana in states that permit it, owners consult with local counsel who are familiar with the state law and how it may be interpreted in court vis a vis the federal drug laws. This remains an evolving area of law and care should be taken when refusing reasonable accommodation requests in this area.

Rules for Electronic Waiting Lists at HUD Projects

In most cases, HUD projects are required to maintain waiting lists. A waiting list is a formal record of applicants for housing that identifies the applicant s name, date and time of application, selection preferences claimed, income category, and the need for an accessible unit. The waiting list may be kept in either a bound journal or a computer program. While many of the HUD waiting list rules apply to both the manual and electronic waiting lists, some are unique to the electronic lists. Setting Up the List             There are two main issues to consider when establishing an electronic waiting list: 1) How to maintain the list - you can use a spreadsheet or specially designed software. If special software is used, there are some highly recommended features:             (a) Tracking History: all changes made to the waiting list must be tracked; (b) Handbook Rules Should be Built into the System: this alerts the user when a change is being made to the list that violates HUD rules. (c) List Filtering: allows the list to be sorted by various categories including unit size, applicant age, and income categories;             (d) Integration: allows applicant information to be keyed into the system only once;             (e) Reports: e.g., comparing information like precertified applicants and yearly turnovers;             (f) Usability; and             (g) User Control: limits password access to selected staff users. 2) How to Convert a Manual to an Electronic Waiting List - ensure that no applicant names are lost or misspelled, and the list s order is not changed. Once the manual list is transcribed to the electronic list, the manual list should be retained for at least 36-months. Meeting HUD Requirements - Primary HUD Rules: 1) Include required information - Name of head of household;Date and time application was submitted;Applicant s preference status;Applicant s annual income level for income targeting purposes (e.g., ELI, VLI, or LI);Whether the applicant needs an accessible unit, including the need for accessible features; Unit size needed. Note - the applicant s race/ethnicity, gender, or family size should not be included on the waiting list. It is recommended that the applicant phone number, address (regular and email), and dates of contact also be on the list. 2) Explain all changes - this includes why applicants were selected, withdrawn, rejected, or had family status changed. Any list should include a comment section. 3) Document all Changes - the following three methods for documenting changes should be used: Use a "data backup function" that records the time and date that changes are made to the list;Print a record of the list at least monthly to show each applicant s place on and selection from the list. A copy should be made each time an applicant is added to or selected from the list. The copy should include the time and date of the printing. Keep a copy in the applicant file and central waiting list file. If there has been no change to the list, keep a copy in the waiting list file.Re-sort and print the list after making changes in an applicant s status, such as changes in family composition and unit size Both before and after an applicant is removed from the list, the list should be printed and preserved. If the list is printed monthly to document the changes, you should also file a copy of the monthly rejection letters with the printouts. 4) Implement Safeguards - the following safeguards are not required, but are recommended: Limit password access to only staff members who maintain the waiting list;The system should track the time and date each change is made to the list and should identify the staff member who made the change;Store hard copies in a secure location;Back-up the list every time it is modified;Store back-ups both on and offsite; andTake steps to avoid staff manipulation.Print out the list periodically and compare it to the previous print-out to detect any inappropriate changes. This should be done at least every few months.