APARTMENT INDUSTRY ASSOCIATIONS CALL FOR BETTER EDUCATION AND COORDINATION TO ACHIEVE NATIONAL ACCESSIBLE HOUSING GOALS.

In recent testimony delivered before the House Judiciary Constitution Subcommittee, the National Apartment Association (NAA), National Multi Housing Council (NMHC), and the American Seniors Housing Association (ASHA) criticized the U.S. Department of Housing and Urban Development (HUD) for its shortsighted strategy of using enforcement quotas to increase the nation's stock of handicapped accessible housing instead of directing its resources toward more productive outreach, education and coordination efforts.

Testifying on NAA/NMHC/ASHA's behalf was Theresa Kitay, a partner with the law firm of Coughlin and Kitay, P.C., and a former trial attorney in HUD's Atlanta field office with responsibility for accessible-design cases. The testimony was given at a hearing on the Justice in Fair Housing Enforcement Act (H.R. 2437), a bill introduced by Representative Walter Jones (R-NC) that would expand the current safe harbor from litigation for developers and architects of certain apartment properties that were built to comply with the local building codes in effect at the time.

In her testimony, Kitay identified some of the numerous abuses that have characterized HUD's accessible-design enforcement policy in the 1990s and offered some solutions. Specific points include:

* HUD's enforcement policy is at odds with its own design and construction guidance. Despite the fact that HUD itself has acknowledged that the guidance contained in its Fair Housing Accessibility Guidelines are non-mandatory and constitute but one way a builder/developer can comply with the federal accessibility requirements, experience indicates that HUD and its enforcement agents are requiring developers and architects to justify even small variances from the guidelines.

* HUD's emphasis on enforcement actions is misguided and counterproductive. HUD, with a stated goal of doubling fair housing enforcement activity, has defined success in its accessible-design activities largely on the number of enforcement actions brought under the Act and not on the number of accessible housing units produced. Rather than funding more enforcement action, the department should work to reduce confusion during the design phase by synchronizing its enforcement policy with state and local building codes and by providing issue-specific guidance to developers and architects.

Kitay testified that the accessibility legislation pending before Congress raised significant issues worthy of discussion that should be pursued, but noted that HUD can move in the right direction without legislation by following its stated "reasonable design" policy.

The complete testimony is available on the NMHC web site at www.nmhc.org/media/ reccon/default.html.

APARTMENT INDUSTRY TELLS FCC: FORCED ACCESS PROPOSAL IS A POLICY IN SEARCH OF A PROBLEM

NAA and NMHC, as part of the Real Access Alliance---a group of national real estate organizations--outlined in a second filing to the Federal Communications Commission (FCC) why government-mandated access to private property is unnecessary and unconstitutional.

The latest filing follows up on comments submitted on August 27 by the 11 real estate organizations opposing an FCC Notice of Proposed Rule Making (99-141: Promotion of Competitive Networks in Local Telecommunications Markets), which would force private property owners to allow telecommunications service providers to enter a property and provide service to a resident without the prior approval of the property owner.

Citing the lack of evidence submitted by the competitive local exchange carriers (CLEC) to justify forced access regulations, NAA/NMHC and the Real Access Alliance asked the FCC to end this regulation. Not only does forced access violate the Fifth Amendment to the U.S. Constitution, which prohibits the taking of private property without compensation, but even the CLECs admit that they are not being harmed or restrained by market forces; that only rarely are they denied access; and that most building owners will negotiate with them.

HUMAN RESOURCES FORUM

More than 100 apartment industry human resources (HR) professionals attended NMHC's Human Resources Forum in September in Washington, D.C., and heard presentations on topics such as innovative benefit programs; HR legal risk issues; health benefit costs; reducing employee turnover; and the role of the HR officer in corporate strategic planning. Two new research reports also were released during the Forum. Information on the first report, a new study by NMHC examining changes underway in the labor force and the impact of these changes on the multifamily housing industry, is available on page 10 of this issue of Units.

The second report, an NMHC Human Resources Survey prepared by CEL & Associates, measures compensation for apartment HR professionals; historical and projected turnover rates for property management positions; Y2K-related employee policies; and the frequency with which apartment companies use outside search firms. Survey respondents report that the median base salary for an apartment firm HR Director was $83,200. Training Directors earned a median $59,500; Compensation Specialists at $47,360; Payroll Managers at $45,500; and Benefits Coordinators at $40,000. Turnover rates for property management positions in 1998 ranged from an average 8.6 percent for senior executives; 21.4 percent for onsite managers; 38.4 percent for onsite leasing professionals; and 41.6 percent for onsite maintenance staff. The majority of respondents expect 1999 turnover rates to remain the same.

SOURCE OF INCOME

The issue of whether apartment owners can be required to participate in the federal Section 8 program continues to be debated at the state and local levels. In April, the Chicago Commission on Human Relations held that a city provision prohibiting discrimination based on a resident's source of income does obligate apartment owners and managers to accept Section 8 vouchers (Smith v. Wilmette Real Estate and Management, No. 95-H-159, April 13, 1999.) In reaching its decision, the Commission closely examined the federal legislative history of Section 8 and found that Congress did not preempt states and localities from requiring owner/manager participation in the program. On the other hand, source-of-income legislation under consideration by the California Assembly (Senate Bill 1098) would require apartment operators to consider veterans' benefits and similar payments made directly to the resident, but would not obligate the firms to participate in the Section 8 program. Finally, the Connecticut Supreme Court recently heard arguments in a case that could obligate owners to treat prospective residents' Section 8 contracts as a "lawful source of income," under state law. A lower court previously held that, while the state does have the power to obligate owners to participate in the federal housing program, the state legislature had not specifically done so.

ACCESSIBILITY REQUIREMENTS

Florida architects recently received two letters urging them to become familiar with the Fair Housing Act's accessibility requirements before designing multifamily properties. The letters were sent as part of a settlement to resolve allegations that the architects failed to comply with the Fair Housing Act. The letter's authors say they were unaware of the Act's provisions and have incurred "considerable expenses" as a result. They go on to say that, "through our efforts we hope that many in our community can avoid a similar experience." This highlights the importance for apartment developers to examine their architects' familiarity with the Fair Housing Act before proceeding with construction. A copy of the letter can be obtained by calling Karen Garland at 202/974-2349.

FAIR HOUSING

A California Superior Court has approved a $575,000 settlement, reportedly the largest class-action housing discrimination case in state court history (Gaddis v. Conference Claimants Endowment Board, No. 770791-3, August 13, 1999.) The family bringing the case alleged that the apartment owner discriminated against them because of their race and refused to rent to families with children on the second floor. Class-action status was given in recognition of the fact that others were likely subject to the same discrimination, a nd the settlement, which allocates nearly 40 percent of the amount recovered to attorneys' fees, includes provisions to notify and compensate others similarly situated.

CRIMINAL BACKGROUND CHECKS

A recently proposed U.S. Department of Housing and Urban Development (HUD) rule (64 FR 40261) clarifies resident screening and eviction rules for certain federally assisted housing and may be a useful guide for conventional apartment owners trying to keep their properties crime free. Under the rule, owners of Section 202, 221(d)(3) and project-based Section 8 properties can refuse to rent to a household in which one member has been evicted for drug crimes in other federally assisted housing or has engaged in criminal activity or a pattern of alcohol abuse that may threaten the health, safety, or peaceful enjoyment of other residents, staff, and nearby residents. Individuals engaged in criminal activity can be denied admission or evicted regardless of whether the individual has been arrested or convicted of the activity. The rule is part of President Clinton's "one strike and you're out" crime-prevention campaign.

PREMISES LIABILITY

A resident's fear of criminal activity in her apartment building did not constitute "constructive eviction" by the owner and was not grounds for nonpayment of rent, according to a recent Supreme Court of Virginia decision. (North Ridge Apartments v. Ruffin, 514 S.E.2d 759, April 16, 1999.) The court ruled that the apartment owner responded promptly to the resident's complaints and had no duty to protect the resident against crime by unknown third parties. In another action, a Georgia appeals court ruled that a resident who followed an apartment owner's safety precautions and attended a crime awareness meeting may maintain an action against the owner for negligence relating to an on-premises sexual assault.

COST SAVINGS FOR HUD

The U.S. General Accounting Office (GAO) reports that HUD could save almost $200 million a year by hiring private-sector firms to manage public housing. In Public Housing: HUD Has Several Opportunities to Promote Private Management (GAO/RCED-99-210), the GAO points out that cost cutting is not a top priority for public housing managers, nor is aggressively collecting rents, evicting problem residents, keeping the property attractive, or responding to residents needs. The report, which can be ordered from GAO by calling 202/512-6000, concludes that private-sector managers deliver higher quality services at lower costs.

BANKRUPTCY REFORM

Passage of legislation (S. 625) to reform the U.S. Bankruptcy Code appears less likely this year after the U.S. Senate failed to gather the 60 votes required to invoke cloture, which would have limited debate on the measure. The Senate's Republican leadership was unwilling to continue debate on the bill without a cloture vote, and Democrats were unwilling to vote for cloture unless amendments on minimum wage and health care were allowed. The action could doom the bill until next year. Both the pending Senate bill and a version passed in May by the House did include the NAA/NMHC-supported provision to close a loophole in the Bankruptcy Code that enables residents to file for bankruptcy to avoid eviction.

FAIR HOUSING

Congressional appropriators are moving toward rejecting the Clinton Administration's attempt to increase funding for fair housing enforcement by $7 million. The FY 2000 HUD appropriations bill that passed the Senate Appropriations Committee (S. 1596) on September 9 retains the current funding level of $40 million, while the House-passed version (H.R. 2684) cuts it to $37.5 million. Additionally, the Senate bill includes NAA/NMHC-supported language that calls on HUD to put a greater emphasis on accessible-design outreach and education; puts HUD on notice that fair housing enforcement funding does not substitute for the Department's obligations to educate and enforce the law; and asks HUD to provide, by early next year, a summary of the number and nature of certain accessible-design actions it has brought. Differences between the two bills must be reconciled before the funding bills become law.

TURKEY SEEKS ASSISTANCE

The Turkish government is seeking assistance in reconstruction efforts following the terrible earthquakes there this fall. NAA members interested in pursuing possible housing reconstruction opportunities should contact Barry Fleishman at 202/955-6604 or via e-mail at FleishmanB @dsmo.com.

Information compiled by NAA/NMHC Joint Legislative Staff: Senior Vice President Clarine Nardi Riddle; Vice President of Tax Jim Arbury; Vice President of Property Management Jay Harris; Vice President of Environment Eileen Lee; Vice President of Housing and Finance Stephen Lefkovits; and Vice President of Building Codes Ron Nickson.