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No Crystal Ball: Disparate Impact Is Not Crystal Clear

 

The National Apartment Association recently provided an excellent webinar titled “Fair Housing Disparate Impact:  Learn How the Supreme Court’s Decision Affects You”.  The two attorneys who presented (Harry Kelly from Nixon Peabody LLP and Mike Skojec from Ballard Spahr LLP) wrestled well with the topic of this relevant decision (that disparate impact is a facet of fair housing law) while at the same time making it clear that what this means and how it will impact our multifamily housing industry is not clear at all.  The webinar covered weighty topics that I will not even begin to try and explain (such as the dilemma of revitalization/ affordable housing – damned if you do, damned if you don’t; pending decisions that will interpret the Supreme Court decision; shifting burdens of proof; whether the HUD Rule on disparate impact is consistent with the ruling).  It is clear to me that these issues are way above my pay scale.

 

Where I found the webinar to be particularly helpful was in identifying where some real world issues may arise and how to prepare for them.  While no one professes to have a crystal ball, I will (with great appreciation to these to lawyers for their insight) share what I learned. 

 

Examples of anticipated future kinds of challenges:

 

    • Drug/crime screening policies

    • Rental decisions based on source or type of income/income multipliers (such as requiring income that is 2 times or 3 times the rent)

    • Credit Screening

    • “House rules”  (such as those affecting families)

      I suspect that many if not most of you have at least one of these policies in place.  And you may have sound, non-discriminatory reasons for them.  Nonetheless, those policies may disproportionately harm people in fair housing protected classes (even when that is clearly not your intent!) and that is what disparate impact is all about.

      So what would be best practices now, given that we are clearly in the disparate impact environment? 

 

  • Review both new/existing policies or practices (not so much typical business decisions such as why you choose your cable provider) but rather those such as rental requirements and community rules              

  • For those existing policies and practices, ask “why do we have this; what are we trying to accomplish; are certain protected groups, such as those with children, negatively impacted more than others by this?”.  If certain groups are more negatively impacted, explore and consider alternatives to accomplish your purpose.

  • If you are creating new policies and practices, ask “why do we think we need to have this; what are we trying to accomplish; will certain protected groups be negatively impacted more than others by this?”.  If certain groups are more negatively impacted, explore and consider alternatives to accomplish your purpose.

  • Whatever your decisions may be as you complete the analysis,  document your policy choices and be clear in that documentation as to the rationale that leads you to believe that a policy is necessary (“We need to do this because….” and “there is no other way to accomplish that purpose”).

 

What is clear is that where disparate impact in fair housing will take us is not clear at all.  But that is clearly not a reason to ignore the potential ramifications for our industry and at individual communities.

 

 
This comment was minimized by the moderator on the site

Very well put Nadeen. I like your list of questions to ask in order to determine what policies are truly essential. We have been watching the disparate impact argument for nearly 5 years with employment screening, and have been preparing for it to spill into multifamily. Our stance has always been a reliance on factual data to make decisions. Incorporating additional questions about policies to determine whether they are truly essential, or will just 'weed out' applicants unfairly is a great way to proceed. So long as a policy is legal, written clearly and applied to all applicants consistently then it should continue protecting properties from liability without discriminating against applicants.

  Ryan Green
This comment was minimized by the moderator on the site

Thanks for contributing to the discussion, Ryan (whom I will point out is no relation!). The one point you made that I want to clarify is that even if a policy is "legal, written clearly and applied to all applicants consistently" it can still affect some applicants more negatively than others. And there you have the potential for someone to make a DI claim. I do agree that it is time our industry looks at policies and assesses whether those policies, as you state, are truly essential. Time will tell.

  Nadeen

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