Court Decision Affirms "Necessity Standard" for Reasonable Accommodations

In Carter v. Murray, 2021, WL 4192055, CIVIL ACTION NO 21-3289 (E.D. PA, September 14, 2021), the U.S. District Court for the Eastern District of Pennsylvania ruled that a tenant was not entitled to a reasonable accommodation of permanent relocation to a unit that was free of carpet fumes and tobacco smoke since the landlord had offered a temporary relocation while repairs were made to remove the offending carpet from the unit. The landlord had also promised to adopt a smoke-free policy for the apartment complex. The suit was brought by Reginald Carter, a resident at Venango House, an apartment building in Philadelphia.  Prior to moving in in August 2018, Carter discovered that the apartment was newly carpeted and painted. Because of his lung disease, he asked management to remove the carpet. He was told this could not be done but was offered an uncarpeted apartment in the building.  He accepted the apartment, but because the linoleum floors and adhesives were also releasing toxins, he did not move in until October to allow the paint to off-gas. He was also unhappy with dust and parts of an unfinished wall. On May 15, 2019, Carter wrote a letter to the manager, Donna Murray, expressing concerns about the smoking of a fellow resident who smoked and used deodorizers to mask the smell. He requested to be moved out of his unit to allow for repainting and floor replacement.  On June 4, 2019, a tenants council meeting was held to address Carter s issues. Carter s lung problems were not brought up at the meeting, but the Council did ask the manager if smoking was going to be prohibited. On December 17, 2019, Carter wrote another letter to Murray in which he stated that he would not allow a contractor to paint his door because of COPD lung disease. He asked that the painting be put on hold until such time as tenants with lung disease could seek exemptions from having their doors painted. The painting was stopped, but no one at the property was asked if they wanted an exemption from the painting of the doors. On January 28, 2020, Carter alleged that an environmental hazard was caused by the improper removal of carpet adhesive in the hallways. He alleged that he was hospitalized twice in 2020 because he "could not walk a block without getting chest, neck, and face pains." He claimed that the "stress of living at the Venango House was a major contributing factor," and that cigar and cigarette smoke from other tenants intensified his breathing problems. In January 2021, Carter emailed Murray and a representative of the management company (Winn Companies) that the smell of paint and new carpeting made his symptoms worse. He complained in February 2021 of cigar smell in his apartment and claimed that due to the racial makeup of the tenancy at Venango House and the fact that management failed to provide 24-hour security and had no central air in the hallways, what was occurring amounted to "murder and institutional racism." On February 22, 2021, Andrew Lund, the Office Manager and Regional Vice-President of the management company, contacted Carter by email about current issues. Carter replied that the smoking issues remained and that he needed permanent relocation instead of a temporary stay at a hotel while repairs were conducted. He alleged that his relocation request was ignored from May 15, 2019 to March of 2021. Carter filed a claim against Lund, Murray and others, alleging constitutional claims for violation of the First and Fourteenth Amendments, claims under the Fair Housing Act (FHA), and state law claims. He requested an order requiring the Winn Companies to relocate him to a place of his choosing at Winn s expense, to remove certain individuals from the tenant council, and to reinstate him as council president. He also sought an order directing the Winn Companies to evict a member of the tenant council with whom Carter had a dispute and to immediately disallow smoking at Venango House The Court dismissed all the constitutional claims. The court also ruled that Carter pleaded no plausible FHA claim for disability. The FHA protects against discrimination based on disability. To state a reasonable accommodation discrimination claim, the plaintiff must plead facts showing (1)accommodations are necessary to afford him equal opportunity to use and enjoy a dwelling; and (2) the defendant refused to make reasonable accommodations in rules, policies, practices, or services. In support of this, the Court cited Vorcheimer v. Philadelphia Owners Association, (a case that those who have taken my fair housing training in 2021 may be familiar with). As stated in Vorcheimer, the element of necessity "requires that an accommodation be essential, not just preferable." A plaintiff must "establish a nexus between the accommodations that he or she is requesting and their necessity for providing handicapped individuals an equal opportunity to use and enjoy housing." The court went on to explain that even if Carter s medical conditions qualified as a disability under the FHA, it did not provide facts alleging the statutory elements of a failure to accommodate claim. In fact, the claim stated that Murray and Lund attempted to resolve Carter s complaints by meeting with Carter and offering relocation to an uncarpeted apartment, and the opportunity to move into a hotel while his floors were refinished. Moreover, Murray and Lund sent Carter an email on March 5, 2021, stating that Venango House would "work toward implementing a smoke-free policy." Thus, the defendants addressed his requests and Carter provided no facts demonstrating a failure to accommodate. For this reason, the court found Carter s disability discrimination claim was not plausible and was dismissed without prejudice. This means that if Carter can address the weaknesses in his case, he may bring it forward again. This case provides another example of fair housing claims relating to reasonable accommodation requests being dismissed when landlords make legitimate offers to meet the requirements relating to the disability - even if the offers do not match the specific demands of the plaintiff.

Progress Still Lacking in Distribution of ERAP Funds

The National Low Income Housing Coalition (NLIHC) has released findings from the organization s latest survey of state use of funding from the federal Emergency Rental Assistance Program (ERAP). As of late September, of the approximately $25 billion made available by the federal government in the first tranche (ERA1) of emergency rental assistance, states have expended or obligated only $8.4 billion (33.7%). While this is still indicative of weak performance by many states, the use of the funds has picked up in recent months. Grantees spent $550 million more in August than they did in July, while from June to July the increase was only $196 million. A total of $46 billion has been provided in ERA1 and ERA2. Percent of the money spent by reporting period is as follows: January - March: 1.1%April: 1.9%May: 3.1%June: 6.1%July: 6.9%August: 9.1% 18 states spent less than 10% of their ERA1 allocations as of the end of August. Several of these did show progress in August, however, especially Florida and South Carolina. The states with the lowest allocations are - Florida: 9%Vermont: 9%Indiana: 9%Montana: 9%Iowa: 9%Rhode Island: 8%Delaware: 7%Idaho: 7%South Carolina: 7%Tennessee: 7%Georgia: 6%Alabama: 6%Arkansas: 4%Nebraska: 4%Arizona: 3%North Dakota: 3%South Dakota: 2%Wyoming: 2% The highest performing states are - New Jersey: 78%District of Columbia: 70%Virginia: 63%Texas: 56%North Carolina: 48%Illinois: 43%Alaska: 43%Massachusetts: 41% Despite noticeable improvement, the overall rate of spending remains too low. States like NJ, VA, and TX have proven that it is possible to get this money to the tenants and landlords who need it. The high performance of these and a few other states calls into question the poor performance of so many others. In some cases, the fault lies with state legislatures or local governments. Congress is also partly to blame for a faulty allocation formula, which provided some grantees with more funding than needed. In some cases, landlords are refusing to participate in the program. But the primary reason for the lack of distribution is that many program administrators are not following clear Treasury guidance and are not willing to adopt proven best practices. These poor performers often do little (if any) outreach, do not hire enough staff to process the applications, and have complex and burdensome application procedures. Very few of the slow spenders allow renters to self-attest eligibility, despite federal guidance that has urged it for months. Less than a third of programs allow assistance to go directly to tenants, despite it being permitted and critical to keeping residents housed when landlords refuse to participate. The best and fastest spending programs are doing all these things. There are signs that some weaker performing states are taking steps to improve - South Carolina and Arkansas are examples. Hopefully, others will follow suit and this important resource will further improve the desperate housing situation that many tenants and landlords are facing.

HUD Provides Fair Housing Funding to 51 Agencies

On November 3, 2021, the Department of Housing & Urban Development (HUD) awarded $13.6 million in American Rescue Plan (ARP) funding to enable 51 HUD Fair Housing Initiatives Program (FHIP) agencies to conduct a wide range of fair housing enforcement, education, and outreach activities related to the COVID-19 pandemic. Among the activities that will be conducted by the agencies is addressing discriminatory practices in underserved communities (i.e., minority neighborhoods). The funds, which were awarded under FHIP s Private Enforcement Initiative (PEI), are the first ARP competitive grants that focus directly on the unequal impact the COVID-19 pandemic has had on communities of color, low-income communities, and other vulnerable populations. Specific activities that will be carried out include responding to housing inquiries, investigating fair housing complaints, conducting fair housing testing, providing legal assistance, conducting education and outreach, and covering costs associated with providing services related to the pandemic. Another $5,757 million in ARP funding will be made available to eligible applicants that did not receive funding in this first round. Organizations in 26 states and DC received funds, ranging from $75,000 to $350,000. The types of organizations that received funding include legal aid agencies, fair housing testing agencies, and educational organizations. New York and Ohio both received six awards while California and Illinois each received four. Other states receiving grants are: AlaskaArkansasArizonaConnecticutDistrict of ColumbiaFloridaGeorgiaHawaiiIdahoIndianaMassachusettsMichiganMinnesotaMississippiMissouriNorth CarolinaNorth DakotaNew HampshireNew JerseyNevadaPennsylvaniaWashingtonWisconsin Housing operators in these states should expect increased fair housing testing and compliance actions during the upcoming 12 months as a result of these grants.

A. J. Johnson to Host Live Webinar on Interviewing Skills for Affordable Housing Managers

A. J. Johnson will be conducting a webinar on November 23, 2021, on Interviewing Skills for Affordable Housing Managers.  The Webinar will be held from 1:00 PM to 4:00 PM Eastern time. One of the most important skills any affordable housing manager can possess is the ability to interview applicants and residents and obtain the information required to determine eligibility - this is also one of the greatest weaknesses of most affordable housing managers. This training has been developed to address that weakness. This three-hour session focuses on the interview process and provides concepts and tools that will aid managers as they conduct their interviews. Techniques apply to all interview settings including initial eligibility interviews, interim certifications, and annual recertifications. The primary emphasis is on the initial eligibility interview since it is so critical to the housing process. The skills taught during this session will also assist managers in detecting fraud and in dealing with third parties when resolving discrepancies. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website ( under "Training Schedule."

A 2023 Reduction in Income Limits is Possible

The Census Bureau has announced that it will not release a one-year American Community Survey (ACS) for 2020. Without this survey, the Department of Housing & Urban Development (HUD) will almost certainly be restricted to the use of the five-year ACS data to determine income limits. Novogradac, an Accounting and Consulting firm, conducted research that indicates the change from the one-year to the five-year ACS will result in area median income limits (AMI) that average 3.5% lower than they would be under the one-year ACS. This reduction is a result of the income calculation methodology used by HUD. HUD generally uses the ACS data from three years prior to the income limit year. They then combine this with data from the Consumer Price Index (CPI) to trend ACS data for the appropriate income year. For example, the 2022 income limits will use 2019 ACS data. However, the 2020 ACS data will be used for the 2023 limits. Since HUD will not have access to 2020 ACS one-year data, the Agency will use the five-year ACS. All data collected during the five-year period will be given the same weight, so the five-year ACS data for 2020 will cover the period from 2016 - 2020. It is likely that the five-year ACS will be less than the one-year ACS. As part of their study, Novogradac examined the historical variance between the one-year and five-year ACS for all metropolitan statistical areas (MSAs) in the country for ACS years ending in 2017 - 2019 (2019 is the most recent ACS year available). On average, the one-year ACS was 3.71% higher than the five-year ACS. In 82% of areas, the one-year result was higher than the five-year. The impact of the five-year average is more striking in larger MSAs. Of the 30 largest MSAs (including all those with a population of more than 2.1 million), none had a one-year ACS that was lower than the five-year ACS. For these areas, the one-year ACS was on average 4.92% higher than the five-year ACS and was 5.44% higher in 2019. The eight areas with a population of more than five million had a one-year ACS higher than the five-year ACS in each of the three years included in the sample. Novogradac is clear in their findings that incomes will not necessarily be 3.5% lower on average than they will be in 2022. It means that limits will grow 3.5% slower than they otherwise would have. For example, if an area was projected to have a 5% increase from 2022 to 2023 based on the one-year ACS, the increase would only be 1.5%. Areas projecting less than a 3.5% increase for 2023 can expect actual reductions in income limits. This will have a substantial impact on rents and properties being underwritten for a 2023 placed-in-service date will have to take this into consideration. This is an important study and owners and agencies should carefully review potential impacts in planning for 2023.

Claiming Low-Income Housing Tax Credit on Temporary Transfer Unit

A question that clients often ask regarding moving tenants around on acquisition rehab projects is "Can we claim the credit on both units, even though the resident will only be in the temporary unit until the rehab is done on their apartment". Unfortunately, I cannot give an answer that is fully supported by any regulatory reference. Generally, transient units are not credit eligible, and clearly, the second unit is being used on a temporary (transient) basis. However, the resident is on a lease (so the resident is not transient) and they are being provided with rent-restricted housing on a continuous basis. The owner should be able to obtain a tax credit due to the benefits being provided to the resident. It does not appear to be a fair result if the owner loses credit on both units while still providing affordable housing to the resident. While units swap status in a transfer, this is not a "transfer," so I don t believe we can rely on the unit transfer rule to preserve the credits. So, what are your options? (1) Treat the temporary unit as transient and don t claim the credit on either unit. This is the safest course. (2) Claim credit on the temporary unit for the months the household is in that unit and leave the permanent unit out of the applicable fraction. While this is the more aggressive of the two options, it is the one I would choose if I was the owner. Ultimately, it is a fairness issue (but the tax code is not always fair). The only way to truly know if this would meet with IRS approval would be to request a Private Letter Ruling (PLR). While this is costly, it may be the only way to resolve the question. It must be noted that a Private Letter Ruling is not precedent and may only technically be applied to the specific case for which it is requested.  Having said that, PLRs often provide good indicators of IRS thinking on a specific issue. My recommendation in these cases is to claim the credit on both units (but not at the same time). If challenged, I would make the argument that this is not a transient unit since the resident has a lease at the property and is being housed at restricted rents. Since the resident is still under lease at the property, and they are being housed on a non-transient basis, the particular unit they are in should not impact the ability of the owner to claim full tax benefits. I realize this is a pretty aggressive position to take and since I cannot offer legal or accounting advice, owners should consult with their own counsel before deciding on a course of action.

California City Settles Claim of Discrimination Against Farmworkers

HUD has reached a Voluntary Compliance/Conciliation Agreement with the City of Santa Maria, CA, resolving allegations that the city s enactment and enforcement of restrictions on housing for certain farmworker visa-holders in residential areas of the city violated the Fair Housing Act. The City agreed to immediately halt enforcement of the ordinance that created the restrictions, repeal the ordinance within 90 days, and refrain from enacting any similar restrictions. The ordinance imposed a discretionary conditional use permit requirement on housing for employees, which was directed at housing for H-2A foreign national farmworker visa-holders, almost all of whom are Hispanic. The City has also agreed to undertake an effort to analyze and identify any other existing zoning laws that may be discriminatory. The text and legislative history of this particular ordinance make it clear that the restrictions were directed solely at housing for certain farmworker visa-holders, over 90% of whom are from Mexico. The City entered into the agreement in order to avoid litigation and a possible $400,000 fine. In addition to the repeal of the ordinance, city staff must take fair housing training, and the City must hire a designated housing resource employee and improve language accessibility in city services. This is just the latest of many attempts through the years of localities to keep out Hispanic workers. When such ordinances clearly target individuals from specific countries or geographic parts of the world, they violate the national origin protections of the Fair Housing Act.

HUD Determines That Owner's COVID-19 Visitor Policy Violated the Fair Housing Act

HUD recently signed a Conciliation Agreement/Voluntary Compliance Agreement with owners of a HUD-subsidized community in Fairhope, Alabama. The agreement resolves allegations and a HUD investigation into whether the owner s policy prohibiting visitors under the age of 12 due to COVID-19 was discriminatory. A resident, who had been providing childcare for her grandchildren, was allegedly told that she could no longer do so because it violated the owner s policy, instituted due to COVID-19, prohibiting visitors under age 12. Under the agreement, the owners will pay the resident $20,000 and rescind the policy prohibiting visitors to the property who are under the age of 12, and remove playground signage targeting anyone on the basis of age. The Fair Housing Act prohibits housing providers from making housing unavailable and imposing discriminatory terms and conditions based on a person s actual or perceived disability (including the perception that they are unsafe to associate with because of fear they may spread contagious disease (or their familial status or retaliating against a person for exercising their fair housing rights. Section 504 of the Rehabilitation Act of 1973 prohibits discrimination on the basis of disability by recipients of federal financial assistance. In addition, the Age Discrimination Act of 1975 prohibits discrimination on the basis of age in programs or activities receiving federal financial assistance. HUD views blanket bans on children s visits to be discriminatory even during the COVID-19 pandemic.  Housing providers are able to take reasonable precautions to protect residents from COVID-19 (e.g., mask mandates, social distancing, etc.), they may not impose blanket prohibitions on any visits from children no matter what precautions are taken, thus keeping residents from visiting with family and friends in their own homes. Owners and managers should keep this ruling in mind when establishing protective protocols at properties.

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