FAIR HOUSING: WHAT THE EXPERTS HAVE TO SAY.

The U.S. Fair Housing Law, Title VIII of The Civil Rights Act of 1968, created a national policy of fair housing without regard to race, color, religion, national origin, and gender. The Fair Housing Amendments Act of 1988 added familial status and handicap to the list of protected classes. But in actual practice, how does the multifamily housing industry cope with ambiguous guidelines and the ever-growing threat of investigations, lawsuits, and fines? Units takes a look at the hottest fair homing issues facing industry professionals: accessibility, advertising, claims and investigations, and occupant. Come along and see what the experts say ...

ACCESSIBILITY By Theresa L. Kitay

The U.S. Department of Housing and Urban Development (HUD) has devoted millions of dollars of its budget to fair housing for the current fiscal year. Of all the millions of federal dollars allocated to fair housing, however, only a quarter of the money is spent on education activities. The remaining funds are used for enforcement activities, meaning fair housing complaints and lawsuits. By all accounts, a large portion of that money is in the form of Fair Housing Initiative Program Grants to private fair housing advocacy groups, and is specifically earmarked for activities related to the Fair Housing Act's design and construction requirements for accessibility of new multifamily housing.

Advocacy groups are taking the bait; enforcement activities initiated by private groups are taking place all over the country, including such diverse locations as Colorado, Idaho, Nevada, Missouri, North Carolina, Georgia, Washington D.C., Florida, Montana, Illinois, and Utah. In fact, virtually all the enforcement efforts of the accessibility provisions of the Fair Housing Act are the result of testing efforts by private advocacy groups, rather than complaints from people with disabilities actually seeking housing.

Of course, the fact that these complaints may originate with testing activities does not mean they should be taken lightly. So far, many of these complaints have been settled, often with significant monetary payments for retrofitting, advertising the availability of accessible units, or damages to the fair housing groups that brought the complaint.

Any regular reader of Units knows that the Fair Housing Act requires multifamily housing built for first occupancy since March 13, 1991, to meet seven basic elements of accessibility. To review, these seven requirements are:

* An accessible building entrance on an accessible route;

* Accessible and usable public and common use areas;

* Usable doors;

* An accessible route into and through the unit;

* Light switches, electrical outlets, thermostats, and other environmental controls in accessible locations;

* Reinforced walls for the later installation of grab bars; and

* Usable kitchens and bathrooms.

Obviously, these requirements are rather vague, and builders, developers, architects, and engineers are slowly learning about the tremendous responsibility these accessibility requirements place on them. The learning curve has been slow, in part because, unlike the Americans with Disabilities Act (ADA), no definitive regulatory standards for compliance with the Fair Housing Act have ever been published, and the Act's accessibility requirements are not yet part of any building code. To date, no federal court has ruled on the specific parameters of the seven requirements (for example, what, exactly is a "usable" kitchen?"), although there are currently a few cases working their way through the system that may ultimately decide these issues.

In the meantime, in the absence of anything definitive, HUD and other enforcement agencies are judging compliance with the Fair Housing Act by measuring a property against what was originally intended only to be suggested guidance. HUD published its "Fair Housing Act Accessibility Guidelines" in March 1991, but with specific language that these were "guidelines" only, not mandatory requirements. In 1996, HUD published its "Fair Housing Act Design Manual," with a disclaimer that compliance with this manual would not insulate anyone from enforcement activity. While the manual has since been republished without the disclaimer, recent industry studies have indicated there are substantial inconsistencies between the manual's explanations and the actual accessibility requirements of the statute. Despite these problems, developers, builders, architects, and engineers are routinely receiving letters claiming that their properties violate certain provisions of the "Fair Housing Act Design Manual."

So what's anyone who's involved in the design or construction of new multifamily community supposed to do?

First, make sure your properties are in compliance with the Fair Housing Act's requirements at the design stage. Prevention is definitely the best medicine here; ask your architects and engineers if they're familiar with the Fair Housing Act's requirements (and be suspicious if they tell you they "know all about the ADA"). The ADA is a separate law with completely different requirements of accessibility from those in the Fair Housing Act.

Second, pay close attention to what's happening in the field during construction. Your superintendent may know that thermostats are supposed to be mounted no higher than 48 inches, but unless they're subject to frequent checks, the line construction workers may not pay attention to this kind of detail. This is particularly true because many of the Fair Housing Act requirements involve variations from the way many construction workers have always done their work in the past.

Third, be careful about purchases of multifamily housing with single-story units built after 1990. Be sure you're fully aware of the property's level of compliance with the Fair Housing Act's accessibility requirements. HUD has taken the position in enforcement actions that accessibility problems are "continuing" violations of the Act, meaning the statute of limitations never expires as long as the building is still used for housing.

Fourth, while you should take inquiries or complaints from private fair housing groups seriously, don't assume the allegations made in a complaint by an advocacy group are correct. There are varying levels of knowledge and experience about Fair Housing Act accessibility on the advocacy side as well. In many cases, a complaining group has cited a certain feature as being in violation of the Act when in reality, that feature did comply.

Finally, designate someone who understands the accessibility requirements to respond to any contacts from the government or a private group questioning your property's compliance with the law, regardless of whether that contact is actually a formal complaint. Allegations concerning the design and construction requirements for accessibility under the Fair Housing Act involve technical issues that may justify earlier intervention of legal or other expert advice than in a traditional fair housing complaint.

Kitay is president of the Fair Housing Institute, Norcross, Georgia.

ADVERTISING By Nadeen Green

The basic premise of fair housing law is that it is unlawful to discriminate based on a prospect's or resident's race, color, religion, national origin, or sex, or because they may be pregnant, have children under the age of 18, or have a disability.

One way the industry has indicated its preferences and limitations is through its advertising and the use of words and pictures which overtly, with subtlety, or by mistake make certain groups of people feel unwelcome. The wise advertiser will consider the impact of what s being said and shown in advertising, because to do otherwise can be costly. Settlements and verdicts have ranged into the millions of dollars.

Federal regulations as well as HUD memos offer help as to what we can't say, what we may say, and where we need to be cautious. At first the focus was on overt discrimination, and the regulations stated the obvious: when advertising, we can't say things such as "white private home" or "Hispanic residence" or "adult building." While we stopped seeing much of such blatant discrimination, subtle or unintentional discrimination continued. Thus, advocates of fair housing took this to an extreme that caused confusion and consternation, with potential liability for advertisements extending to an unreasonable level. We started to hear that references could not be made to "master bedroom" (implying both racism and sexism); describing a community as "within walking distance" of schools or transportation was alleged to discriminate against those unable to walk. Even a reference to a "walk-in closet" was creating threats from aggressive, but misguided, advocates. Fortunately, HUD issued a memo with guidelines clarifying some of those extreme positions.

The following alerts you to some words that are dangerous (and costly!), and assures you that some of the taboos that you have heard are not valid. The list is not inclusive, as there are many other things that should not be said (or that in fact can be said!).

Some potentially dangerous words to use may be:

Traditional. Given the diversity in today's America, there is no one "traditional lifestyle" or way of "traditional living" that applies to all; limit use of this word to physical attributes of the community ("traditional Williamsburg architecture" for example).

Exclusive. If you mean posh, or elegant, then say so; but avoid this word because the history of "exclusive housing" is about real estate covenants against African American and Jewish people.

Mature; empty nesters. People with children under the age of 18 are protected and cannot be restricted unless the community meets the federal standards of "housing for older persons;" $43,333 was paid by an advertiser in one case for misuse of these words.

Religious references. Avoid references to particular churches, synagogues, mosques, or temples that may be in the neighborhood (refer instead to "places of worship").

Active. Avoid promoting an "active lifestyle" or targeting "active people" or "active seniors," as this may be construed as discrimination against the disabled; as one fair housing specialist said, it is time to focus on describing what we have to offer, rather than trying to describe the people to whom we are advertising.

But it isn't just about what we can't say, because we really do have so many options to say what needs to be said. Just look ...

Master bedroom, mother-in-law suite, family room. These terms, commonly used as physical descriptions, do not violate the Fair Housing Act.

Great view, walk-in closets, jogging trails, walking distance to ... These references describe the property or amenities and do not violate the Act.

Wheelchair ramp, accessible floor plan, wide doorways. Advertisements with descriptions of accessibility features are lawful.

"Merry Christmas," Happy Easter," "Happy Valentine's Day." These secularized terms relating to religious holidays do not constitute a violation of the Act.

Using models (human, that is, not the furnished ones!) can be an effective advertising tool, inviting renters to come and see what you have to offer. But human models in your advertising have the potential not only to help you rent, but also to get you into trouble.

Unfortunately, the industry continues to use an effective--and unlawful--way to indicate preferences or limitations of certain people through the use of"white only advertising" (indicating a target market preference) which fails to include other groups (indicating a limitation). Let's look at what the law says, and then explore what it means. "Human models in photographs, drawings, or other graphic techniques may not be used to indicate exclusiveness because of race, color, religion, sex, handicap, familial status, or national origin. If models are used in display advertising campaigns, the models should be clearly identifiable as reasonably representing the majority and minority groups in the metropolitan area, both sexes, and when appropriate, children. Models, if used, should portray persons in an equal social setting and indicate to the general public that the housing is open to all without regard to race, color, religion, sex, handicap, familial status, or national origin, and is not for the exclusive use of one such group." Let's explore this further:

"... If models are used ..." You do not have to use models, but when you do, follow the rules (and contrary to what you may have heard, there are no rules prohibiting the use of human models).

"... Advertising campaigns ..." It is not clear just what constitutes an "advertising campaign," so consider two options: either make sure each piece of advertising (print ad, billboard, television spot, etc.) is in compliance with the law or have a written plan detailing how the various pieces of advertising as a whole meet the requirements.

"... Reasonably representing ..." Who gets to decide what is "reasonable?" If your advertising is ever the subject of a complaint or lawsuit, "reasonable" will be determined not by you, your advertising agency, or your media account rep, but rather by the administrative officer, judge, or jury making the decisions in your case.

"... Majority and minority groups in the metropolitan area ..." This does not mean the neighborhood, subdivision, or area of town in which your community is located; it means the entire metropolitan area.

"... Both sexes ..." Males and females--not too difficult a concept.

"... When appropriate, children ..." Unless your community meets the federal qualifications as "housing for older persons," you should include children in your advertising.

"... Equal social setting ..." The various and diverse groups should all be engaging in similar activities; don't have all the white models enjoying the amenities with the minority model performing services such as roof repair (and yes, this really happened, and the jury found the defendant to be liable to the tune of $2 million!); and don't put the white model(s) in the foreground with the minority model(s) in the background.

"... Models ... should ... indicate to the general public that the housing is open to all ..." Be sure that your model homes, if furnished, do not have framed photographs depicting the "hypothetical family" that lives there, because those photographs (usually of white people) could be considered a form of advertising.

The law is really not that complicated. Whether you like or agree with this law is not the point. But if you choose not to follow the law, you risk following in the footsteps of those who have gone before you, paying $262,5000 or $325,000 or $850,000 or $2 million for "white only" advertising. Is it worth it?

Lawful advertising can serve you well. When a complaining party belongs to a group excluded from the advertising, this can make matters much worse. But if your advertising is in compliance, it can help diffuse an unwarranted complaint or lawsuit because you can show that the complaining party is in a group that is properly depicted in your ads ... it's like a form of insurance.

Use your advertising to invite all groups to see what you have to offer ... it's right, it's smart, it's about Equal Housing Opportunity.

Green is senior counsel with For Rent Magazine, Norcross, Georgia. The information contained in this article is not to be considered legal advice, and the author and For Rent strongly recommend that you consult with your own counsel as to any fair housing questions or problems you may have.

DEFENDING CLAIMS & INVESTIGATIONS By Robert (Robin) Hein

If you work in multifamily housing, your company or someone you know is likely to encounter a fair housing claim. HUD's 1999 budget provides $11.5 million in grants to private fair housing advocacy groups in 42 cities. These funds will be used in a variety of ways, including testing and litigation designed to prevent discrimination in rental housing and real estate lending. HUD's goal is to double the number of fair housing enforcement actions by the year 2001.

This article assumes that your best efforts to prevent a claim have failed. Despite education and training, good operational procedures, and attempts to design and construct disability-accessible housing, you may still have to deal with either an administrative claim (investigation) or a lawsuit. A harsh reality of apartment management is that fair housing claims are the number-one retaliatory tool of unhappy visitors, applicants, and residents who feel they were treated unfairly by management.

Filing of an Administrative Complaint

In most instances, the investigative process starts with the filing of a complaint with HUD or a state enforcement agency (such as the Georgia Commission on Equal Opportunity) not later than one year after the alleged "discriminatory housing practice." This kind of filing is referred to as an "administrative complaint," to distinguish it from a private civil lawsuit (which is also called a "complaint").

Alternatively, the prospect or resident claiming discrimination (a "complainant") can bypass filing an administrative complaint with HUD or the state agency. The complainant may hire his own attorney and file a private "civil action" in either a state or federal court. Such private lawsuits must be filed within two years after the alleged discrimination; however, the two-year period will be extended during the time an administrative complaint was pending. Note: Fair housing complaints are different from Title VII employment discrimination claims, which must first be filed with the Equal Employment Opportunity Commission before obtaining the right to file a private civil action. In a fair housing case, the "aggrieved person" (the resident or prospect) may file a private lawsuit regardless of whether he or she ever filed an administrative complaint.

The administrative complaint is a one- or two-page form which lists the names of the persons and apartments or owners alleged to have violated the law; the type of discrimination claimed (race, color, religion, etc.); and a short summary statement of the facts, dates involved, and description of the supposedly discriminatory practice. For example, the claim may state: "Complainant, who is disabled, requested reasonable modifications to the interior of her apartment such that her wheelchair could maneuver about the space. Complainant requested the modifications at the time of applying for occupancy on June 20, 1998, and agreed to pay the reasonable costs of making such changes. The Respondent (owner or management company) refused to permit the changes in violation of the Fair Housing Amendments Act of 1988."

Processing of the Complaint

Next, within 10 days after filing, the HUD administrative complaint is mailed to the apartment community; corporate office, or management employee by certified mail. The owner, manager, or employee may file an answer with HUD or the state agency within 10 days after receiving the complaint. Our firm recommends that you immediately forward a copy of the complaint to your company's insurance or risk manager for evaluation and submission to any insurance carriers. We also recommend that you retain legal counsel experienced with fair housing claims for filing a response.

HUD and state enforcement agencies are supposed to complete their investigations within 100 days of the date the complaint was filed. The time can be (and usually is) extended as needed. Both HUD and the state agencies -will try to minimize disruption of management business while conducting the investigation; however, it is inevitable that you will need to spend time assembling and reviewing documents, making time to meet with legal counsel, and providing witness interviews.

The Investigation

Federal and state fair housing laws encourage voluntary cooperation by the owner and management in producing documents and records, providing interviews with management employees, and allowing on-site property inspections. Although owners and managers have Fourth Amendment and due process protection against unreasonable searches and seizures, HUD, state enforcement agencies, and the Department of Justice (DOJ) can subpoena records and management employees if the investigators are unable to obtain the information necessary to carry out their investigation. The kinds of documents and information requested will vary depending on the nature of the alleged violation.

Informal requests for information and documents usually accompany a copy of the administrative complaint or may be sent soon thereafter. In addition to interviewing the on-site staff, the investigators or compliance officers might interview prospects, applicants, and other residents in the community to take written or recorded statements and verify whether discrimination may have occurred.

The investigator may request documents or records which you as an owner or manager think are "irrelevant." However, HUD and state agencies have very broad investigative powers to obtain information and documents "which are reasonably calculated to lead to the discovery of admissible evidence." This means that the documents requested might point to other information which is admissible in evidence at trial. Sometimes the requests from enforcement agencies are overly broad. If so, a decision to withhold or produce those documents should be carefully considered with the assistance of legal counsel familiar with fair housing cases and investigations.

Completion of the Investigation

Once the investigation is complete, the assistant secretary of HUD or the state enforcement agency will issue a final investigative report. The report will contain a summary of the dates of correspondence, records, witness statements, and answers to interrogatories. General counsel for HUD will decide from all the circumstances whether "reasonable cause exists to believe that a discriminatory housing practice has occurred." HUD's general counsel will also determine whether the facts are sufficient to begin a civil action in federal court. A similar decision is made in state agency investigations.

The filing of a fair homing complaint with HUD or a state enforcement agency only starts an investigation process. The end result of the investigation is to determine whether there is sufficient evidence to believe that housing discrimination may have occurred. HUD or the state agency will issue a "final investigative report" which summarizes the facts and makes a recommendation to issue a "charge" or to dismiss the case.

Issuance of a Charge or Dismissal

If there is reason to believe that a discriminatory housing practice occurred, a "charge" is issued. This is sometimes referred to as a "cause finding." If there is no reasonable cause to believe there was a violation, then the complaint will be dismissed. The dismissal does not completely end the matter. The complaining party can still file a private civil action. Remember: Issuance of a charge is not a conclusive finding of discrimination. The owner or manager is not "guilty" simply because a charge was issued. You will still have an opportunity to present your side of the case to a judge, jury, panel, or hearing officer at an administrative hearing or trial.

If a charge is issued, the apartment owner and manager or the complaining party may elect to have the claims decided in a civil action. The U.S. attorney general will represent the complaining party at a civil trial in federal district court. A similar procedure is available in state claims. The election must be made within 30 days for federal claims and a similar time for state cases. If neither party elects to have a civil action, an "administrative hearing" will be scheduled before an administrative law judge for federal cases or before a judge, panel, or hearing officer for state cases.

The charge will be served on the apartment owner and manager who must then file an answer within the time required (30 days for federal cases and a similar time for state claims).

Fair housing training is necessary and effective in reducing claims of housing discrimination. Implementation of good operational procedures is also important. However, even the best training and procedures will not eliminate all claims. But they can certainly increase the odds that you and your company will survive and defeat a fair housing complaint. Understanding what happens once a claim is filed will help to ensure a successful resolution and defense of the complaint.

Hein is an Atlanta attorney whose practice focuses on representing owners and managers of multifamily housing. He also serves on the board of directors for the Atlanta and Georgia apartment associations.

OCCUPANCY By Kathelene Coughlin

Congress has ordered HUD to adopt the so-called "Keating Memorandum" as its official policy when investigating and if necessary enforcing complaints about occupancy standards used by private housing providers. The Keating Memo, actually an internal HUD policy directive from then General Counsel Frank Keating (now Governor of Oklahoma) which dates back to March 20, 1991, is perhaps best known for its "two person per bedroom" safe harbor. In December of last year, HUD published the Keating Memo in the Federal Register pursuant to the "Quality Housing and Work Responsibility Act of 1998," putting an end to years of ambiguous agency policy and inconsistent enforcement actions in this area under the present administration.

While HUD routinely distributed copies of the Keating Memo to anyone who asked for it, the memorandum had never been officially adopted as HUD policy until Congress ordered it. In fact, HUD's seemingly hot and cold attitude about prosecuting occupancy cases under the federal Fair Housing Act may be traced to a stinging rebuke the agency received from the Federal Court of Appeals for the Ninth Circuit. In 1995, HUD brought suit against a Bellingham, Washington, couple who refused to rent their small home to a five-person family even though the couple had consistently rented to families in the past. The Court of Appeals ruled that HUD's conduct in prosecuting the case had been "heavy handed" and even "reprehensible," particularly because HUD had made "inconsistent and misleading representation[s]" regarding housing providers' responsibilities to establish occupancy standards consistent with the Fair Housing Act. The Ninth Circuit specifically scolded HUD for having "done so little to enlighten the public as to what [it] expects of them." Although HUD had "won" its case before a federal Administrative Law Judge, its case against the housing providers was ultimately dismissed.

By publishing the Keating Memo, albeit at the direction of Congress, HUD has reaffirmed that it "believes that an occupancy policy of two persons in a bedroom, as a general rule, is reasonable under the Fair Housing Act." However, the Keating Memo also indicates that HUD will investigate familial status cases based on occupancy limits on a case-by-case basis, examining in particular any "special circumstances" of the case. Those special circumstances mentioned in the Keating Memo include size and number of bedrooms, size of the apartment as a whole, age of the children, "extra" rooms (such as a den or study which could easily be considered a sleeping area), or other physical limitations of the housing (such as the septic, sewer, or other building systems). HUD will also consider the impact of any state or local laws concerning occupancy.

New Occupancy Affirmation

In a separate action, a bill was introduced to the House of Representatives in January that, if passed, would be called the "State Occupancy Standards Affirmation Act of 1999." Under this bill, HUD would be forced to consider any state-established occupancy standard as "reasonable" for purposes of determining whether familial status discrimination under the Fair Housing Act Occurred. If a state fails to adopt an occupancy standard, a standard of two persons per bedroom plus infants would be considered reasonable. "Infant" is defined in this bill as a child less than six months old and sleeping in the same bedroom as the parent or guardian.

How safe is the "two persons per bedroom" safe harbor now? Given the reluctance of HUD to initiate enforcement actions in this area since the Ninth Circuit decision, it's still too early to tell. Housing providers should continue to have a written occupancy policy that is consistently followed and justified by the specific characteristics of the property in question in case the policy must be explained in court.

Coughlin is the chief executive officer of the Fair Housing Institute, Norcross, Georgia.