Criminal History and Occupancy Policy - The Impact of Disparate Impact

Criminal History and Occupancy Policy – The Impact of Disparate Impact

Episode 3 Fair Housing Education

Episode 3 of our complimentary Fair Housing educational sessions. In this session, we cover the following key topics.

  • HUD’s has proposed new regulations in an effort to relieve housing providers from their anxiety about disparate impact. Should you be relieved?
  • A two persons per bedroom occupancy policy may not withstand a disparate impact analysis. If not, what type of policy will?
  • Four recommendations for developing a criminal history policy that will avoid a fair housing challenge.

Jonathan: Okay. Good afternoon, everyone. We want to thank everyone for being here for episode three of Criminal History and Occupancy Policy: The Impact of Disparate Impact. So, we are grateful for all of you who are attending today and listening in on this call. Just some housekeeping items to keep in mind. There will be a recorded version available at some point in the near future. You’ll be able to get that on our website, and you’ll be notified via email of when it is ready. So, make sure any emails you receive from the Fair Housing Institute that they go to your main inbox. Sometimes, they can wind up in an updates folder or something else. So, keep that item in mind. There is going to be an opportunity for questions and answers. So, if you do have questions, they may be covered through this presentation today that Kathy’s going to provide for us shortly, but there will be an opportunity, and if something isn’t covered, we’re going to go through them if we have a few minutes and cover those together.

Jonathan: So, we look forward to your thoughts and your feedback. Any feedback whatsoever, please feel free to share it via email or on our social sites. We welcome any feedback. There will be a three-question survey at the end of the webinar today, end of our episode, and we’d love your feedback on how we’re doing and future episodes that we’re working on for 2020, if there’s any topics that you’d like to hear about, please share those with us on that survey. So, the Fair Housing Institute, many of you are clients. We appreciate your business very much. We’re happy to announce that we’ve just launched a new course, Fair Housing and Seniors: What You Need to Know, and there are many more to come. So, if you haven’t taken a look at our Fair Housing catalog, be sure to do that on our website,, and reach out to us if you have any more questions at all. So, let’s get into our session for today. But first of all, let’s warmly welcome Kathelene Williams. She’s a partner of the law firm, Williams and Edelstein, and is the president of the Fair Housing Institute.

Jonathan: And the Fair Housing Institute is a full-service training and consulting firm that will assist you with training either online or in-person on fair housing topics and education. Kathy represents the housing industry clients throughout the country on fair housing and other civil rights matters. So, Kathy, I want to welcome you today.

Kathelene W.: Thank you, Jonathan. Delighted to be here.

Jonathan: Awesome. So, here’s what we’re going to be talking about today, some very specific topics. HUD’s new regulations, what do they mean? Are they going to provide relief or anxiety? What should you expect? So, Kathy’s got some updates on what’s on the horizon for us. Occupancy policies and criminal history policies, what do those look like? We’re going to have a couple of polls. We’d love your feedback. What can you do to make sure that you’re in compliance, and you can protect yourself as an organization from any potential fair housing litigation. Now, keep in mind, we mention this in every one of our episodes, this is an educational session. There is no certificate of completion, and even more important, this is not legal advice. If there’s any need for changes, you need to consult legal counsel. So, just notice that final sentence. Do not change process or policy without proper authority and change in all policies, such as policy manuals, leases, and et cetera. So, just to keep those particular points in mind. So, let’s get into our first part of our session today, and that’s, “What’s on the horizon?” So, Kathy, I’ll turn it over to you.

HUD’s New Regulations – What Do They Mean?

Kathelene W.: Thanks, Jonathan, and welcome to everybody. The session that we’re going to be covering today is somewhat legalistic, and I apologize for that, but there’s just not getting around that when we talk about this topic, which is disparate impact. Let’s begin by explaining what we mean by disparate impact. Under the Fair Housing Act, there are two ways to prove a case of housing discrimination that a plaintiff can use, and by the way, the plaintiffs in our environment are usually the residents, sometimes the applicants, and other times, maybe an advocacy organization that might sue you based on what they think is a fair housing violation.

A defendant is usually a resident, an applicant, and … I’m sorry. The plaintiff is a resident, an applicant, and the defendant is, of course, your property … your management company, your owner. So, that’s what we’re talking about when we are going to be talking about who makes a claim under disparate impact. The most common type of allegations of housing discrimination are made under the first method of proving a case, and that’s called disparate treatment. That’s the one you’re very familiar with.

Kathelene W.: The idea is person A is treated inconsistently to person B, and the allegation is that the different treatment was based on that person’s race or national origin or other protected category. Then, we also have this second way that we’re focusing on today, and that’s disparate impact. Disparate impact is a very different case. It is a claim that you have developed and are enforcing a policy, and the policy’s facially neutral.

The plaintiff has the burden of getting the case started…

The policy does not, on its face, attempt to discriminate against anybody. In fact, there doesn’t even need to be an intent to discriminate, but when the policy is implemented, it does have, or at least the allegation is, it has a negative or unfair impact or effect against an applicant or a resident. So, that’s the difference in the way these cases are proved, and we’re talking today about disparate impact. These cases are very complicated, and there’s just no way … There’s no getting around that, but I thought I’d, very briefly, try to explain how the burden of proof swings back and forth when this kind of allegation is made.

Kathelene W.: So, we begin with the plaintiff. The plaintiff has the burden of getting the case started, and to do that, the plaintiff has to identify a specific policy that your property has, and then, the plaintiff has to show that that policy is going to have a disparate effect on Black applicants versus another population. To show the disparate impact, the plaintiff will need to plead five elements;

  1. that the policy is arbitrary, artificial, and unnecessary to achieve a valid interest of the housing provider;
  2. that the policy is an important cause for lack of, as an example, Blacks being selected as residents;
  3. that the disparity is the cause for the plaintiff’s inability to be housed;
  4. that the disparity is significant; and
  5. that a direct link exists between the statistically negative impact and the reason the plaintiff was rejected.

Be Sure To Check Out – HUD’s Proposed Disparate Impact Revisions and Housing Providers

These are very expensive and very technical cases to prove. So, if the plaintiff is able to do that, that kicks off the case. They haven’t won yet, but they’ve certainly got a strong beginning. Now, the burden shifts to the defendant. In our case, the burden of the housing provider is to show that whatever that challenged policy is is absolutely necessary to achieve a substantial, legitimate and nondiscriminatory interest of the property.

So, this is where the defendant has to prove why this policy is so important to how they operate. That they have to keep this policy as a part of their business practice. If the defendant does that, then under the shifting burdens of proof, we shift back to the plaintiff. And if the plaintiff then moves forward by showing that, okay, we’ll accept that this is an important policy, but we can show a number of alternative policies where the defendant could have accomplished your purpose without eliminating so many people.

If the plaintiff is successful on that third rung or third shifting burden, then the plaintiff will win the case. If the plaintiff is unable to show a different policy that would still accomplish the purpose, then, in that case, the defendant will win. So, that’s how, as we talk about the topics coming up now, we’re going to be thinking about why it’s important that you be able to justify the policy that your property or your company uses.

Jonathan: Okay. Very good. Hey, Kathy, we’ve had just a couple glitches with audio on your end. Kind of was cutting in and out a little bit. So, I don’t know if there’s something you can see from over there. So, everyone who you lost audio for a bit, there will be a transcript of today’s session, too. So, fear not. If you’ve missed a couple of points, you will have access to the full transcript of today’s session, okay? Apologize for that. You’ve got to love technology. Sometimes, it’s a beautiful thing, and once in a while, it can be a little bit of a pain. So, anyway, that’s awesome, Kathy. Thank you. All right. So, I guess you’re going to cover, now, some particular items that may be on the horizon for us?
Jonathan: (silence)
Jonathan: Kathy?
Kathelene W.: Am I being heard?
Jonathan: There we go. Now I can hear you.

Kathelene W.: Okay. I’m sorry. I’m not quite sure what that could be, but I will turn up myself louder, and forgive me if it sounds like I’m shouting at you.
Jonathan: Nope. It’s okay.

Supreme Court – Inclusive Communities

Kathelene W.: So, I was just saying that HUD has recently announced that it was revising the federal regulations that it set forth in 2013 about this idea of disparate impact. The reality is HUD’s original regulations came before the Supreme Court case on this topic that came out in 2015. That court case, by the way, is often referred to as Inclusive Communities. That very long, detailed decision got to be pretty famous in the area of fair housing because, for the first time, the Supreme Court acknowledged that disparate impact is a legitimate method of proving housing discrimination. And then, it went on to, in some details, to explain the limitations of the use of disparate impact, and what would be necessary for the plaintiff to prove and what would be necessary for a defendant to defend itself. When HUD announced that it was going to revise its regulations, there was a lot of discussion and publication about the new regulation that came out from the housing associations and these got a lot of questions stirred up.

Kathelene W.: So, I thought the first thing I would do is just address the proposed regulations, at least what they look like now. At this point, we do not know if there will be additional or different revisions to these proposed regulations on disparate impact. What the proposed regs accomplish is to clarify what burden the plaintiff has to make a case, and it is a strong burden. It is not going to be easy for any plaintiff to make a case against you based on disparate impact. The regulations also do a good job in clearly explaining what role the defense has to be able to rebut an allegation of disparate impact. So, in that way, these proposed regulations are much clearer, and much better for the housing industry, just because they will make it clear that we can defend ourselves if challenged. And they also will make it clear to the plaintiffs that if they want to file one of these cases, they have a pretty big proof hurdle to make their case.

Jonathan: So, how does that affect, I guess, data, in maintaining data, retaining data? Any comments on requirements along those lines, Kathy?

Kathelene W.: Well, these regs do make it clear that nobody has to maintain racial data or data on any of the protected categories to be able to defend itself. Now, if you get a case against you, you’re going to want to go out and obtain that kind of information, but you don’t have to keep it. You don’t have to maintain it on a regular basis, and for most of you who operate in the multifamily world, of course in private market housing, you don’t keep track of ethnic or racial data on your residents. Now, in the world of federally funded housing, those management agents have to keep that data and provide it to the government when they’re requested. One limitation on any regs that HUD ends up adopting is that it really can’t … HUD does not have the authority to change the law as it was set forth in Inclusive Communities. So, I think these regulations do what they can and don’t get carried away with trying to actually make a change in what the legal requirements are.

Jonathan: Awesome. So, lots of things. Again, sorry friends for the little audio issues. We will have some … You’ll be able to get the transcript here. A lot of things on the horizon. So, great summary, Kathy, and that kind of leads us into our next topic, which is Criminal History Screening. Now, this is one of those items that are a lot more of a sensitive topic, especially when we look in the news today, and everything is very heated when it comes to anything related to race or ethnic background. And so, in the housing industry, we know we have to maintain equality no matter what. So, what an important topic on what we do and how we set policy when it comes to criminal history screening. So, what are you seeing, Kathy, and what can all of us on the call today think about and institute as best practices?

Criminal History Screening – Best Practices

Kathelene W.: Well, criminal history screening is one of several topics that are being challenged under this concept of disparate impact, and that’s why I wanted to focus on this and occupancy today. To begin to understand why criminal history screening policies are the focus of disparate impact claims, we need to look at where we get criminal history screening data. We go to our screening companies, usually, and they look at county and state and federal criminal justice data, and then, we make our decisions accordingly.

The facts show, indeed, that, historically, minorities in this country, and in particular, African Americans, have been arrested, prosecuted, tried, and sentenced at a much higher rate for a much longer time than whites, and indeed, I think the statistics, when you look at the studies … And there have been studies done that confirm that our criminal history data and criminal history process in this country has not been inconsistent and has not been fair.

Kathelene W.: So, any policy that a housing provider has that relies on that data can be challenged as having a negative or a discriminatory impact on African Americans and probably Hispanics, but predominantly, I think, African Americans. Therefore, the policy is automatically, whatever it is, however it’s written, it’s probably going to have a discriminatory impact, and that’s why we have to talk about justifying those policies.

Jonathan: Awesome. Awesome. Okay. All right. So, I think that brings us to our first poll. So, let’s put that up on the screen for everyone. Okay. Can everybody see that poll? All right. Thanks for getting the answers coming in now, Kathy. And then, we’ll put the results up on the screen for you. So, what is the criminal history policy for your property? Choose all that apply. Thank you for your votes. It’s going to be interesting to see what the final tally are. So, far, at the moment, every one of the questions is neck-and-neck overall. Okay. We’ll give everyone about 10 more seconds, and then, we’re going to put the results up on the screen here. Okay. So, let’s share the results. Everybody should be able to see that now. All right, Kathy, any comments on the results, what you see there?

Kathelene W.: Yes. Those are interesting, and I think it’s good that we can all see that we have all kinds of policies out there. The one that has the … I guess that was the most common in the responses was the fourth one, and that is probably a very, very safe policy to have and justify. The one at the top, any felonies will cause rejection, and I’m about to explain why that is going to be almost impossible to defend if it ever gets challenged.

Jonathan: Got it. Got it. Okay. Very good. Well, thank you, everyone, for participating in that poll. All right. What’s next, Kathy, on the list here?

Kathelene W.: All right. So, the idea of your criminal history policy, to be able to justify it, since, as I said, it probably could be shown to have a disparate impact. So, now, we have to … If you remember, the housing provider has to show that this is absolutely an essential policy that they need to be able to do a good job operating their business, and we can do that, I think, by showing that the idea of criminal history screenings is to try to avoid applicants who then become residents and could, in the reasonable belief system, turn out to be maybe a dangerous resident or a problem resident. And so, the policy has to be written with that overall purpose in mind, and it cannot be just really simplistic that says, “If anyone’s had any contact with the criminal justice system, they can’t live here. If they’ve ever had a conviction, they can’t live here,” because, when you think about it, is a very broad statement to make about applicants.

Reviewing Your Criminal History Policy

Kathelene W.: So, here on the next couple of sides, gives some general ideas of what to think about when you look at and review your own criminal history policy. First of all, the more simple, the more blanket they are, probably, the riskier they are to fall victim to a claim of disparate impact discrimination. The policy should try to achieve its basic purpose without being overall restrictive, and “if you’ve ever been convicted, you can’t live here” is very, very restrictive. It’s just going to automatically eliminate a very large number of people. And so, to show that the policy is thoughtful, that it was crafted to be the least restrictive, the way to do that is to break out crimes based on their seriousness or their violent nature and then attach various lookback periods to those crimes. And a lookback period is the time between the conviction date and the application date. That is what we talk about when we talk about lookback periods.

A lookback period is the time between the conviction date and the application date.

Lookback Periods

Kathelene W.: So, the first rule is you should not be denying housing to someone based only on an arrest record. So, even though sometimes we’re concerned that if someone’s been arrested multiple times, even if they have not been convicted at all, we might consider that that person is dangerous or not the kind of resident you want at your property. But that kind of rule is impossible to defend because, an arrest isn’t a conviction. An arrest doesn’t prove anything. So, if you have arrests listed in your policy, you might want to consider removing them. Now, if someone has been arrested fairly recently, when you get their application, and it shows up on their record, and they’ve been indicted or charged with that crime, and if convicted, that conviction would make them ineligible for their property. One way to deal with this is to put their application on hold. Do not reject it, but don’t finalize it until that outstanding issue has been resolved one way or the other. By the way, if your property is HUD-funded, HUD does have a couple of requirements that you have to follow along the lines of criminal screening.

Kathelene W.: For instance, you cannot house anybody that’s listed on a state lifetime sex offender registry, and if you do public housing, you can’t house anybody that’s ever been convicted of manufacturing methamphetamine. So, those types of requirements should continue and are not affected by anything we’re talking about today.

Jonathan: Okay. Awesome. Yeah. Somebody was asking about some HUD items, and yes, for everyone who’s asking questions, we’re going to be getting into policies, I think, coming up in the next couple of slides, right, Kathy?

Kathelene W.: Yes. So, we’re going to be talking … I’m going to give you a couple of suggestions for consideration in your policy. First of all, regardless of what your policy is, I think it’s made much stronger, much easier to defend if you attach an appeal process to it. Meaning that if an applicant is rejected because of criminal history, you give that applicant the right to make an appeal back to your company or your property wherein the applicant can try to explain mitigating circumstances that may change your mind about whether they are a potentially dangerous resident or not. Be aware that if you do that, that is favored by the law, not disfavored.

Sometimes, I’ve had clients who have come back to me and say, “But if we do that, aren’t we treating people differently? Is that not inconsistent that I would let this guy in and keep that guy out for maybe the same crime?” And what I can say to you is while consistency absolutely is important in fair housing, there are several areas where you are being almost required to at least consider taking individual situations into account when you make decisions, certainly reasonable accommodations, as you all know, is one of those.

Kathelene W.: And now, what we are saying is criminal history is another where they may be mitigating circumstances that may change your mind, and as a result, you do admit someone. That doesn’t mean you have to after hearing an appeal. That just means you would give it a good faith consideration. Another area that I think you all need to be aware of is, regardless of what your policy says, if you are relying on a third party screening company to tell you whether an applicant’s criminal history either violates or satisfies your policy, you need to make sure that your criminal history screening company is applying your policy correctly.

Lookback Periods – Review by State

Because the housing provider is going to be liable for any mistakes made by your screening company in this regard. I have a good friend, Linda Richer, who works with AmRent, a top screening company, and she has come to be my go-to authority on the various limitations that screening companies have by state law. And for example, I think there are maybe four states that limit a lookback period for criminal history purposes to seven years. Now, I am always forgetting which states those are, but Linda, if you are out there today, I’d love it if you would share those with us, maybe as a chat, so that we can just remind our audience that in those states, you’re going to be very limited to the criminal background you can get on people.

Jonathan: Yeah. She did. Thank you, Linda, for doing that. So, Linda’s comment, Kathy, was, “The states of California, New Mexico, and New York. Conviction is limited to display for seven years. Colorado is five years for most convictions.” So, yeah, thank you for that info, Linda. That will be part of the show notes, too, everyone, is a white paper from AmRent regarding that particular topic. So, look forward to that after the … on the recorded version of today’s episode, okay?

Kathelene W.: Yes. Thanks, Linda, and I really appreciate learning from you about all these various state laws because I think property management companies need to be better educated about what their limitations are when they do screenings.

Jonathan: Yeah. Thank you, Linda. All right. So, comments on how to model policy. What do you think, Kathy?

Kathelene W.: Well, first of all, I begin by separating felonies from misdemeanors. I don’t think you need to cover all felonies, and I don’t think you need to cover all misdemeanors, but at least, at the very least, your lookback period should be longer for a felony than a misdemeanor. And again, remember, the lookback period is from the date of the conviction to the date of application. There may be, and Doug, I saw your question as I just glanced out there.

There may be times when you may also be interested in how long its been since this applicant has been out of prison. You can have your screening company get that information, and they’ll have to tell you whether they can get it or not, but you can include that in your policy. For instance, I have quite a few clients who, as a part of their criminal screening policy, have that the applicant must have been out, released from prison, for at least one year.

Other companies use two years, with the idea that if they’ve been able to interact in society appropriately and without further crimes since their release, then that gives you a little bit of time to have the ability to judge how they’re doing since they were released.

Kathelene W.: So, that’s something you can include in your policy. Focus primarily on the crimes that could indicate that applicant could pose a danger. Now, some policies that I’ve seen that could be used in what I would call an outright ban. In other words, if you’ve ever been convicted of these crimes, you can’t live here no matter when it was that you were convicted. If you’re going to use that, and I don’t know that I, and again, I’m not giving you legal advice, but I think any of those crimes that you list as a ban does slightly raise your risk if challenged to justify the policy. So, I would keep those to the bare minimum of the most, what we think of as, heinous crimes, felony convictions.

Did you know that we have several online Fair Housing classes available?

Also, don’t forget in your policy to address multiple felony convictions. So, what I’m talking about with this is multiple different crimes, different instances, different dates of crimes. It’s possible to be convicted of a crime, and within that crime, you have four different felony counts. So, that’s not what I’m talking about. I’m talking about a crime committed this year, an entirely different crime committed a year from now, and if the pattern of a number multiple crimes appears that you just can’t keep yourself out of trouble, then that is the very type of applicant you are probably wanting to keep out of your property with your criminal history policy.

Jonathan: Absolutely.

Criminal History Policy – Different Types of Crimes

Kathelene W.: When we talk about the various kinds of crimes, there are so many crimes, and different states have different definitions of crimes. So, you have to take that into account, too. So, I would not try to cover every crime possible. I would cover the important ones, the ones that give you the most pause, certainly sex offenses, and there are a variety of sex offenses. There’s rape. There’s sexual assault. There’s sex offenses against children. There’s so many different types of sex offenses.

So, you want to make sure that however your policy addresses those, it is broad and general enough to not eliminate some that you intended to include. Again, sometimes using more narrow language in this area might not be a good thing because you might want to cover all sex offenses against adults and children or just against children or however you address it. And of course, you want to address violent felonies.

Kathelene W.: There are, in most states, four different counts of homicide. They are all very different. First-degree homicide is seen as maybe the worst, and third and fourth-degree homicide, it’s usually … One of those is usually a homicide, a murder or a killing, that occurred in a traffic accident. I don’t know that you want to use that or address as long a lookback period for something like that then you would maybe first or second-degree murder.

So, that’s another thing you’ve got to both consider in your policy and make sure that your screening company can identify what count of homicide or murder was involved in a conviction. Robberies and burglary, burglary in particularly is a serious, potentially violent crime because it’s usually done with a weapon. So, that’s something you probably need to address. And then, when we talk about lookback periods, I’ll just mention that seven years is probably the gold standard as far as, again, we’re talking defense here, being able to defend yourself.

Ex-offender Criminal History Policy

Kathelene W.: And that’s because there have been criminal justice studies that show that after seven years, statistically, an ex-offender who has gone beyond seven years after release is no more likely to commit another crime than anyone, including people who have never had a conviction. So, seven years is golden. I think it’s easy to push that up to 10 and still be fairly safe in your criminal history policy. Going beyond that is not impossible. I’m just saying that it raises your risk if challenged in a disparate impact lawsuit.

So, after you cover the major, most concerning felonies, you may want to include other felonies. There are felonies for bad check writing and felonies for just about any activity you can think of, computer violations and stalking. So, you have to kind of take a look at that and decide whether your policy should include other felonies, and it can, but then, I would have a much less lookback period for those, three years, five years, something like that.

Kathelene W.: And don’t forget there are violent misdemeanors. You should definitely address those in your policy. Less than the felonies, but violent misdemeanors are still a violent action. So, it could be even five years for instance. And again, I’m just throwing these years out. There is no bright line, right or wrong. Well, there are wrong ways to do it. I just can’t say there’s one right way to do it.

Jonathan: Yes. Right, right.

Multiple Felonies and Domestic Abuse

Kathelene W.: And then, multiple misdemeanors, don’t forget those, just like the multiple felonies, and you need to address domestic abuse because, certainly, that is something that, as housing providers, we are all getting much more sensitive about. That leads us to drugs, and by the way, I wouldn’t waste your time covering all misdemeanors. I just don’t think they’re that important for your applicants or your properties. Drugs are a matter, a concern, obviously.

The Fair Housing Act gives pretty broad leeway to housing providers to determine whatever policies they choose on drugs. I think it makes sense to divide cases between people who have had convictions, either felonies or misdemeanors, for manufacture or distribution. They were making it, and they were selling it. And in a way, that is a more serious crime, maybe, depends on how you look at it than use or possession. So, you might want to divide them out like that.

Drug Offenses

Kathelene W.: Some screening companies use drug offense one, two, three, four, to do that. And then, finally, all drug offenses do not have to be treated the same, and there’s an argument today for maybe why they shouldn’t be. So, if your screening company can tell you that that offense was for use of marijuana, you could certainly have a much lower lookback period for that than the use of methamphetamines or crack cocaine or one of the other more serious drugs.

Jonathan: Right. So, you and I were talking about this, Kathy, earlier today. Would you recommend that … especially since on the topic of marijuana. A lot of things are changing, potentially on a state level, on a local level. Is that something that property management companies would have to maybe make an adjusted policy perhaps by location? What is your comment on that?

Kathelene W.: Yeah. I would certainly think that’s something to take into consideration. If your state, for instance, says that recreational marijuana use is not illegal, I think your criminal history policy should reflect that. So, yeah, I think, definitely, you would take that into consideration when creating your policy.

Disparate Impact and Occupancy Policies

Jonathan: Okay. Awesome. All right. So, we’re about 45 minutes into our program, and that brings us to our concluding topic, and that has to do with occupancy policies. So, and by the way, great coverage on criminal screening, and I’m sure everyone on the call today, you’re riveted because there’s a lot of notes, more than likely, you have to take and some intriguing items that you have to pay attention to and take back to your team. So, moving into occupancy policies, what are some items, Kathy, that we need to pay attention to? What do we need to implement to make sure that we’re in compliance with Fair Housing laws?

Kathelene W.: Well, this is the second topic that is commonly used in disparate impact cases to challenge housing providers’ neutral policy. This ones a little different, obviously, because the protected categories that maybe have a negative impact on with your occupancy on is families with children. It is families with children that usually live together in a group, and the household may be made up of two, three, four, five, six or more people, and again, most of the time, that is a family with children.

So, an occupancy policy is almost always going to restrict, at a higher rate, families with children than maybe the opposite, which is what– single people who live alone. So, that’s why sometimes we see these cases being filed. Again, while a statistical imbalance is not a slam dunk with families with children and occupancy policies, the way it is with criminal screenings and racial imbalance, there’s still a concern that it might be possible to show statistics to show a disparity. So, just like with criminal screening, it’s important your occupancy policy be protected, be defended as something that is a significant, legitimate, and nondiscriminatory policy to achieve your business interests.

… just like with criminal screening, it’s important your occupancy policy be protected …

Jonathan: Okay. I think that leads us into our next poll, and thank you for the tech support on the chat. Someone mentioned about pop-up blockers and things along that line. Some of you weren’t able to see the poll. So, I’m putting it up now. I’m going to read it out to everyone. I’ll leave it up for about a minute or so. So, the question is, “What do your occupancy policies include? Choose all that apply.” We’ve got a few selections: no occupancy limits, two persons per bedroom, two heartbeats per bedroom, two plus one, policy does not count infants, policy expands number if unit has den or loft or den, and another column. So, we’ll give everyone another 30 seconds or so, and thanks again for all the chat, everyone. Everyone’s sharing some nice thoughts, some articles, and some tips. A lot of the questions, it seems from the questions and answers, are being … I think, Kathy, you’ve covered already. So, we’ll see when we get towards the end what we need to still cover in that area.

Kathelene W.: Okay. And while we’re waiting for the poll answers, let me just mention. When I was talking about criminal history screening and the topic of marijuana, that was not, in any way, suggesting whether you should permit marijuana use on your property or not. That’s a different topic for a different day.

Jonathan: Very good. Yeah. I saw a few questions pop up in the discussion there. So, thank you for clarifying that. Okay. So, we’re going to end the poll and going to share the results.

So, it looks like 6% say no occupancy. 47%, two persons per bedroom, 15% two heartbeats per bedroom, 19%, two plus one, 14%, policy does not count infants, 13%, policy expands number if unit has den or loft, and 18% is other. Wow, all over the board there, except for the two persons per bedroom. That one seemed to be the most popular one.

Kathelene W.: Yeah. That’s very interesting. I think it’s good for everyone to know that companies handle occupancy in all kinds of ways, and the fact that you use a two person per bedroom policy is not necessarily safe, but it shows you that using the industry standard. That certainly is the most common one, but there are lots of other options, too, that I’ll talk about in just a minute.

Jonathan: Yeah. Thank you, everyone, for participating in that poll. So, let me take it off the screen here. Oops, sorry, Kathy. Went too far ahead. There we go. Okay. Take it away.

Occupancy Policy – Research State and Local Codes

Kathelene W.: Okay. So, first of all, I want to mention that anybody, any property, any company that has an occupancy policy needs to take the time to research what the applicable state and local codes are that include an occupancy provision. Now, that doesn’t mean you have to adopt it. I’m just saying you need to know what it is, and you need to know how it’s stated because if your occupancy plan is challenged, that is the first thing the advocacy groups will go to. So, you need to know what’s out there and not be surprised by that. And just like with criminal history screening, you need to be able to justify the policy that you have, that you use, as being important to your business and not unnecessarily restricting occupants from your property. So, you have to think through how to do that.

Jonathan: Okay. So, what are some thoughts then, Kathy, on how do you implement that? Any suggestions on what would be some best practices along that line?

Kathelene W.: Yeah. So, first of all, let me mention this heartbeat per bedroom. That’s the reason we asked that on the poll. You do not want to have any occupancy policy that talks about heartbeats, and all I can say to that is if you have a pregnant woman with triplets, how many heartbeats is that in the unit. You do not want to get into that kind of detail. You just want to talk about people, okay? How many people in your unit, and forget the heartbeats.

…if you have a pregnant woman with triplets, how many heartbeats is that in the unit…

The most common occupancy policy is two persons per bedroom. Historically, that’s what the industry has used. I think in this day and age with how common disparate impact cases have become that in private market housing, a two per bedroom standard is somewhat risky, and so, I would just throw out there for your consideration ways that you can perhaps expand that policy, make it a little more open to families with children. For instance, some properties have adopted, and we showed that on the poll, two persons per bedroom plus one, and what that means is two persons per bedroom plus one additional person per unit.

Kathelene W.: Those policies would result in a one-bedroom would permit three people, a two-bedroom would permit five people, and so on. That, just in and of itself, and you can run the numbers on your unit, may not result in an excessively overcrowded situation and may show that you are being more expansive and less restrictive when it comes to families with children. Another idea that could be adopted with a two plus one or with a two per bedroom is not counting infants, and you need to exactly say what an infant is. Most policies say either 12 months or under or 24 months or under with the idea that, for instance, in a one bedroom, a child of that age could live in the parents’ bedroom and comfortably without creating additional problems with overcrowding. So, that is another way of expanding your policy. I would note that in HUD-funded housing, I would be very careful about adopting any policy except two per bedroom, and that’s because HUD views a three person in a one-bedroom household as overcrowding that unit.

Occupancy Policies and HUD Considerations

Kathelene W.: So, unless HUD changes its rules in its handbook, I would be very cautious about expanding your policy. And also, as you’re thinking about the various policies you could have, remember that this is really about families with children. So, if you want to have a separate policy for a roommates, if you’re in a college area, for instance, and you do not want, for instance, three people in a one bedroom, if they’re roommates, you can do that. You can have a standard that applies to an all adult household and a different standard that applies to a household with children as long as the household with children standard is more expansive, is less restrictive than the policy you have for adult households. A lot of people try to justify their two per bedroom standard based on a very old memorandum that came out of HUD in the early ’90s. That memorandum did say that in many circumstances, a two per bedroom policy will be deemed, considered as reasonable under the Fair Housing Act.

Kathelene W.: Nowadays, things have changed, and HUD is not assuming a two per person standard is reasonable. Instead, it is looking at the special considerations that are listed in that memo, and those considerations were the size and layout of a unit, the extra rooms that might exist in some, especially in private market units that may have lofts and dens and libraries, things like that, and also the age of children. And the way they look at this is usually, “Do you permit,” for instance, “an infant to not be counted as a person when you are tallying up the number of people in a household?” Again, as you’re looking at all of this, take a look at those local and state codes that apply. Some of them will apply. Some of them won’t, and then, be able to justify how your policy fits in with those codes. Those codes are made on, as I mentioned, a square-foot basis, and so, they may not exactly be identical to your occupancy policy, and that’s okay. You just need to know how to compare and contrast those.

Jonathan: Okay. Awesome.

Overcrowding Evaluations

Kathelene W.: You might get some relief from your state laws. For instance, Indiana has passed a law about what’s deemed reasonable for occupancy in the state of Indiana, and there are other states, by the way, like that. So, don’t forget to look at state law to see if that’s the case in your state. Your apartment association ought to be able to tell you whether you get any assistance or support for your policy. And when you are justifying an occupancy policy, we really have to put some numbers to the paper.

Although, I guess nobody uses paper nowadays, but what you need to do is look at what are the costs of overcrowding? What are the costs to your parking lot having too many cars? Your sewer, water, and other utilities, and the demand on those from overcrowding? And of course, things like when you turn over units, how often do you have to replace the carpet and do painting, and does it make a difference if there are two people or six people in that unit to make those decisions and then the burden of an extra 500 other people living on your property and using your amenities?

So, there are ways of evaluating the cost of overcrowding, and that is about the best defense you can have when you’re supporting your occupancy policy, and you don’t want your one or two-bedroom units to look like this. That would be my final thought of the day.

Jonathan: Classic move. Classic, classic move. Thank you so much, Kathy. That was incredible, a lot of information. We want to thank everyone for being here today. Kathy, did you have a concluding statement to kind of wrap up the webinar, or did you want me to go into what’s going to be available after the conclusion of the webinar today?

Kathelene W.: Yeah, I think my overall suggestion would be to take a look at these policies with disparate impact in mind, and see if you want to keep the same policy or see if it maybe needs to be revised, and then, get about doing so just in case.

Thank you for being here today.

The Fair Housing Institute

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