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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.

Fair Housing Testing - Understanding How it Works

            Fair housing testing was first approved by the Supreme Court in 1982. The purpose of fair housing testing is to determine the likelihood that illegal housing discrimination is occurring. How Does Testing Work?             The testing process often begins when an individual with a protected characteristic (e.g., race or national origin) files a complaint with a private fair housing advocacy organization that he or she has been treated unfairly when attempting to rent an apartment. The characteristics that are most commonly the subject of testing are race, disability, familial status, and national origin. The Importance of the "Comparable Category" Element in Fair Housing Testing             In order to determine if discrimination played a part in an applicant s rejection or in the treatment the individual received, the advocacy group, many of which are funded by HUD, will send a "comparable" person to inquire about renting a unit at the same complex.             Being "comparable" means that the fair housing testers are, to the extent possible, matched with the complainant on their background, employment, rental and even educational characteristics, differing only in the characteristics that may have been the basis for the discrimination (e.g., race). To accomplish this, fair housing testers may have to lie about these characteristics on the rental application and during in-person meetings with agents. Almost 40 years ago the U.S. Supreme Court justified lying in this context as a powerful means of uncovering housing discrimination. This is a classic example of a court sanctioned "end justifying the means."             By using standardized forms that report what transpired during a test, such as the nature of the assistance given, the number, type and location of units shown, the terms and conditions offered, etc., federal and state investigative and enforcement agencies, such as HUD and the Department of Justice (DOJ), can make a determination as to whether or not discrimination occurred. The "No-Comparable" Category             By isolating a particular characteristic as the only "non-comparable" category, a test may provide persuasive evidence that the reason a tester was offered a unit that the person with the protected characteristic was denied, or given better treatment during the application process, was due to the particular characteristic of the complainant.             Testing for disability discrimination has become especially common and often is not complaint-driven. Instead, private fair housing organizations may send testers to apartment communities to assess their compliance with federal and state design and construction requirements before anyone has actually filed a complaint about the design features of a particular complex. How Fair Housing Testing Evidence is Used             For complainants (the testing organization) an important question has always been how much information HUD will require before proceeding with the investigation of a complaint. For respondents (the accused) an important question is how and when they can get copies of the testing reports and any other information related to the tests and the testers themselves.             Because of confidentiality issues regarding the identity of fair housing testers - HUD recognized that if a tester s name became public, his or her ability to participate in future tests would be jeopardized - HUD will keep the identity of individual fair housing testers secret unless and until a case proceeds to litigation. As a result, any information that could assist in identifying a tester will not be given to respondents prior to litigation. Testers will be interviewed by HUD investigators, but the testers will be considered anonymous witnesses." HUD Requirements             When a testing organization files a complaint, HUD will request - at a minimum - the following information: (1) date(s) of test; (2) time(s) of test; (3) name of site tested; (4) address of site tested; (5) name of agent(s) contacted; (6) tester(s) characteristics (e.g., protected class); (7) a description of what transpired during the test; and (8) information regarding whether the Respondent is covered by the Act.             Once a case clears the initial stage the complainant will be asked to provide HUD with: (1) tester profiles; (2) test reports; (3) test coordinator logs; (4) debriefing forms; (5) test narratives; (6) any materials a tester received from the tested housing providers; (7) testing methodology; and (8) other documents related to the tests. All of this material, with the exception of the organization s "testing methodology," will be kept in the evidentiary section of the investigative file and will be available to respondents once the case is closed. Information about the testing methodology itself, such as site and respondent selection criteria, choice of type of test(s) to be conducted, tester training materials, and tester procedures, are to be placed in the deliberative section of the file, and thus not subject to disclosure - at least while the case is with HUD.             One of the most favorable (from the respondent s standpoint) change in recent years is that testing organizations are no longer able to "hide" tests that turn out to be favorable to a respondent. HUD is now on record that organizations will be required to produce material pertaining to all other tests that relate to the complaint, regardless of the results of those tests. What Can Respondents Get and When Can They Get It?             Upon completion of the investigation, HUD must give a copy of its Final Investigative Report and any other factual information on the file to a complainant and respondent who request it. So, if you are required to answer to a complaint, when the investigation ends, always request a copy of the Final Investigative Report from HUD. It is highly unlikely that HUD will release any information relating to an organization s testing methodology. Nor will HUD release any other material it deems a "trade secret" or confidential commerce or financial information. This is due to the requirements of the Freedom of Information Act (FOIA) and HUD s own Fair Housing Initiatives Program, both of which allow non-disclosure of such information.             Information from the files of "open" cases - meaning those that have not been conciliated, withdrawn, dismissed or "no caused" - will not be released, except to the party who submitted it. The FOIA exempts from public disclosure information pertaining to "law enforcement activities," such as open administrative investigations.             Ultimately, testing by "pretend" apartment-seekers in order to produce evidence of discrimination will continue to be an important tool for government agencies seeking to root out discrimination in all its forms.             Owners of multifamily properties may avoid testing problems by remembering the basic rules relating to ensuring fair housing compliance at your property: (1) Advertise the property and not the type of people you want to live there; (2) do not discuss your residents with anyone - including other residents; and (3) make every housing decision relating to an individual based on four criteria: Is the person eligible for your property;Will they pay the rent;Will they take care of the property; andWill they be respectful of their neighbors? If the answer to each of these four questions is "yes," the housing services should be provided - no other factors should come into play.

Independent Landlords Suffered Under the Shutdown

IThe National Association of Independent Landlords (NAIL) has published a report showing that landlords who worked with government employees who were unable to pay their rent during the recent government shutdown have placed their own credit ratings at risk. Without rent payments, thousands of landlords have been unable to cover mortgages, repairs, utility bills, insurance, and in some cases, their own living expenses. Many landlords are small operators who own one or two properties and have mortgages that have to be paid every month. Housing represents the largest expense for most families. The 800,000 furloughed federal workers owed $189 million in rent and $249 million in mortgages during the month they were not able to work. Landlords who missed mortgage payments during the shutdown generally do not face foreclosure since banks usually allow up to four missed payments before a loan goes into default. However, even one late payment can impact a credit rating for up to seven years. In addition, although laid off workers who were unable to pay rent were unlikely to be evicted, their credit could also suffer if they didn t keep landlords informed of their financial situations and set up payment plans. Like so many others who were hurt during the pointless shutdown, small landlords took losses that will take some time to recover from. Hopefully, there will not be a repeat of this shameful episode in the future.

Opportunity Zones - How Tax Breaks for the Wealthy May Benefit the Less Well-Off

         "Doing well while doing good" has long been a mantra of the wealthy looking for ways to preserve their wealth while doing something worthwhile for the less fortunate. The newest investment opportunity giving them a chance to do so is the "Opportunity Zone" program, or "OZs."          OZs were created as part of the 2017 tax cut package with the intention of directing money to poor areas by offering potentially very large tax breaks to the rich. It has attracted hedge funds, investment banks and money managers who are in the process of raising billions of dollars to get in on the opportunity. Some of America s richest families and biggest investors are setting up opportunity funds.          Since January 2018, more than 80 funds have been created. Managers of these funds are trying to raise huge amounts of money by selling investors on a combination of massive returns an altruism.          While optimism is high, so is skepticism. The Congressional supporters of the program, including its primary sponsor, Senator Tim Scott, Republican of South Carolina, believe the money will help distressed towns and neighborhoods that have been left out of the recent economic expansion. However, skeptics worry that the funds will mostly target real estate and other projects that would probably attract investment without the tax break, and that the returns being promised may not be realized. The essence of the program is that it reduces capital gains taxes - potentially substantially - for investors who finance projects in about 8,200 OZs in the 50 states, DC and Puerto Rico.          Another concerning issue is that while the IRS has released some preliminary guidance, there are a lot of questions remaining. It is still not clear as to exactly what type of projects will qualify or what information fund managers must provide to investors and the government.          To date, most funds have focused on real estate development investments. Many of the Wall Street funds are investing in major metropolitan areas on the coasts, especially New York City. Critics of the program claim that these are areas that already receive substantial investment and would do so without OZs.          There is one category of investor that is targeting their activities in secondary markets such as the southeast and Midwest; these are the "impact investors." Several of these investors are working with social activists in establishing accountability standards for the funds since the federal government has not yet done so. These standards will address issues like the quality of jobs created in poor areas. The goal for impact investors is to steer opportunity funds to small businesses and other development that communities actually need, and not just to finance development that provide wealthy investors with high returns - like high-end hotels and condos. When it comes to housing in OZs, the impact investors will look to the Low-Income Housing Tax Credit (LIHTC) as a primary source rather than the more high-end gentrification housing developments. Efforts are now underway by this category of investor to develop a set of principles for the OZ program.          The first segment of the investor market to lay out some guiding principles will shape the market and determine its future direction - i.e., will OZ be just another vehicle for wealthy investors to expand their fortunes - or will it be a legitimate program for enhancing the futures of needy areas?          It is too early to know which way the program will go. Wall Street is intrigued by the OZ concept and it is being embraced by some big technology investors seeking ways to capitalize on stock market gains while avoiding large tax bills.          The law permits an investor to roll over capital gains - e.g., proceeds from the sale of stocks or real estate - into an OZ fund. The fund then invests in a qualified OZ with investments in projects such as condos or affordable housing. If the investor leaves the money in the fund for at least ten years, they may exclude 15 percent of the original capital gain from federal taxation. And - even more attractive - the investor will owe no tax on any gains that accrue as the result of an increase in value of the investment.          The largest opportunity fund so far is a $5 billion fund by CIM Group, a large real estate investment firm and property manager. According to the National Council for State Housing Finance Agencies (NCHFA), not including the CIM Fund, money managers and non-profits have raised or are seeking $18 billion for OZ funds.          In early February 2019, the real estate company Cushman & Wakefield began seeking investors for two apartment complexes planned for OZs in Puerto Rico. The company is projecting a Rate of Return of 29-37% over five years and reportedly has received interest from over 100 investors.          While coastal investments are getting the most interest, some investors are looking inland. McNally Capital, a Chicago investment firm, is considering financing housing developments in the south and Midwest.          The OZ program is also attracting non-philanthropic investors whose only goal is a substantial profit. Skybridge Capital an example of this type of investor. This is the investment firm of Anthony Scaramucci (famous as the shortest serving Presidential Communications Director in history). This firm is looking for $3 billion in investments and the initial marketing document advertises the prospect of "meaningful social benefits" from investment in Opportunity Zones, including job creation and reduced poverty. It also shows how a "hypothetical" investor could earn a ten-year return that is triple what could be expected from a non-OZ fund.          The Opportunity Zone program is in its infancy and the jury is still out on how successful it will be in terms of meeting its goal of assisting communities in need to share in the growing economy. Whether the program contributes to the long-term well-being of these communities or becomes another tax-payer funded program for the super-rich will depend to a great extent on how quickly the impact investors can take the lead in establishing the character and direction of the program.