GOVERNMENT AFFAIRS — NATIONALWASHINGTON REPORT |
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OTHER ISSUES FCC Bans Exclusive Social Security Numbers and Illegal Immigrants Exclusive Communication Contracts
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By Joe Washington FCC Bans Exclusive Telephone Contracts, Too
n March, the Federal Communications Commission (FCC) voted unanimously to prohibit apartment owners and telephone companies from entering into exclusive contracts. The prohibition applies to existing and new contracts for telephone services provided at apartment properties.
Although the FCC announced the ban on exclusive contracts following a vote at its meeting, the actual "Order" implementing the ban has not been released. Once it is released, there will be additional information and guidance for compliance.
This follows the FCC's vote last year to prohibit exclusive contracts between apartment owners and cable providers.
The National Multi Housing Council, which is a national association representing the interests of AAGLA as well as larger, major apartment firms in the country, has opposed these bans on exclusive contracts as inappropriate uses of power and ill-advised endeavors by the government to produce competition by regulating the industry rather than compelling companies to compete for business.
The FCC banned exclusive contracts between commercial property owners and telephone companies in 2001, but apartment properties were exempted because the FCC agreed that the ability to enter into exclusive contracts would further competition in the apartment industry.
Reasonable Modification Rules for Disabled Renters Clarified
Also in March, the U.S. Department of Housing and Urban Development (HUD) and the Department of Justice jointly issued written guidance to clarify the "reasonable modification" provisions of the Fair Housing Act. Housing providers must allow disabled residents to make structural changes at the residents' expense under the Act, provided the changes are necessary to allow residents to completely have the benefit and use of the property.
The jointly issued guidance generally covers who is entitled to ask for a modification, what kind of information a property owner can ask for before granting permission to make it, situations where the property owner may either refuse to allow the modification or suggest an alternative, what types of modifications residents are financially responsible for removing when they terminate their tenancies, and in which situations can property owners require residents to pay in advance for removal of modifications and restoration.
The document also tries to define the difference between a reasonable modification, which is a structural change to the property, and a reasonable accommodation, which is a change, exception, or an adjustment to a rule, policy, practice, or service.
The guidance clarifies that residents are responsible for the cost of reasonable modifications. Generally, apartment owners are responsible for costs associated with reasonable accommodations, unless they present undue financial and administrative burdens. However, if the property receives federal funds, the property owner must pay for the cost under the Rehabilitation Act of 1973.
FMLA Expanded and Telecommunications Update
n late January, for the first time since it was enacted in 1993, the Family and Medical Leave Act (FMLA), was expanded significantly when President Bush signed into law changes affecting leave provided under FMLA. The change in the legislation provides FMLA protected unpaid leave for up to six months for employees covered by the act who care for a United States service member wounded while they are on active duty.
Another change permits up to 12 weeks additional unpaid leave to a family member of an active service member if a qualifying exigency occurs. Before the FMLA was amended, it typically permitted those eligible to take up to 1 2 weeks of unpaid leave so they could care for themselves or an immediate family member in the event of a serious health condition, or the birth or adoption of a child.
An individual must be employed by a covered employer for at least 12 months to be eligible for FMLA leave. A covered employer is commonly one with more than 50 employees.
In February, the U.S. Department of Labor (DOL) proposed a set of rules to implement the changes in the FMLA.
Exclusive Access Update: More Restrictions?
The Federal Communications Commission (FCC) has asked for comments on additional restrictions related to its order to ban exclusive access contracts between apartment owners and telecommunications providers.
The FCC also wants to ban bulk-billing and exclusive-marketing agreements. Comments from apartment industry groups, such as the National Multi Housing Council (NMHC), argue that not only has the FCC has reached the wrong factual, legal and policy conclusions in its order to ban exclusive contracts, it should not compound that error by adopting additional regulations that have no foundation in fact.
The NMHC further argued that exclusive marketing agreements and bulk-service agreements benefit residents, apartment owners and telecommunications providers. These agreements can actually lower the cost of video services to residents by nearly 60%, plus, they help foot the bill for the cost to install the infrastructure needed for telecommunications systems. The argument is that without these agreements and cost savings, property owners would have to pass through any costs to residents.
NMHC/NAA File Suit to Excommunicate New FCC
he National Multi Housing Council (NMHC) and National Apartment Association (NAA) filed a lawsuit asking the court to strike down a regulation recently issued by the Federal Communications Commission (FCC) that prohibits exclusive‑access contracts between apartment owners and cable and telecommunications providers.
Prior to the FCC regulation banning the exclusive-access agreements, which is retroactive, the position of the NMHC and NAA is that owners of apartment buildings were able to make use of the exclusive-access contracts as a negotiating tool to bargain for reduced rates, an increase in the range of products available, and for improved service for building residents.
NMHC and NAA also believe the exclusive-access contracts promote competition between cable and telecommunications providers, and allow smaller companies more time to recover the costs of wiring and installing equipment, thus allowing them to compete with larger companies.
In its lawsuit, the NMHC and NAA contend that there is no legal authority for the FCC to control agreements entered into between owners of private property and cable and telecommunications providers, and that the FCC rules banning exclusive access agreements were established using flawed and untested claims about the condition of the market place for those products.
Allowing the FCC's prohibition on exclusive access to stand without challenge would set a risky standard that may encourage the FCC to further interfere with private business discussions and decisions between private property owners and cable and telecommunications providers, according to the NMHC and NAA.
"These misguided regulations reveal a total lack of understanding on the FCC's part about how the multifamily video market actually works," stated Jim Arbury, Senior Vice President for Government Affairs for the NMHC and NAA. "Exclusive access contracts were the primary means through which apartment owners could force the large cable firms to: lower their prices and improve their service offerings. By taking this bargaining tool away from owners, the FCC has essentially removed a key incentive the cable firms had to negotiate," Arbury added.
We will watch and wait to see what results from this litigation as it works its way through the judicial process. Stay tuned.
Section 8 Reforms Fall Victim to Full Agenda
eform of the Section 8 voucher program fell victim to a full 2007 congressional legislative agenda. Last July, the U.S. House of Representatives approved the most comprehensive reform of the voucher program in nearly 10 years.
The reforms in the bill revamped the program's repeated and onerous inspection standards, and repaired its imperfect method of determining how to fund renewals. Regrettably, the U.S. Senate was not able to take the bill up. Thus, the outcome of the bill in 2008 is not known at this time.
Also negotiated and secured in the Section 8 reform bill, was a provision that will require the U.S. Department of Housing and Urban Development (HUD), which administers the Section 8 program, to provide the translated documents mandated under the Limited English Proficiency (LEP) Translation Requirements.
This will, hopefully, lessen the effect of the LEP translation guidelines issued by HUD last year. Those guidelines made the property owner responsible for translating a broad range of necessary and essential documents if they receive HOME, CBDG or project‑based Section 8 assistance.
Along with the changes to the LEP requirements in the bill approved by the House, the Senate is considering separate legislation that requires HUD to provide the translated documents.
National apartment industry groups have been successful in getting Congress to secure funding for HUD to provide the translated documents, and have also filed suit in federal court requesting the HUD LEP guidelines be struck down as they are illegal and exceed HUD's authority.
At the end of 2007, the House passed an Omnibus Appropriations Act for the President's signature that increased funding for HUD by more than $2 billion over the Bush Administration's proposal of $37.6 billion.
The funding approved for the Section 8 voucher and Section 8 project‑based rental assistance programs was also a little higher than the administration's proposal. FCC Bans Most Exclusive Access Agreements
he Federal Communications Commission (FCC) announced it is retroactively banning the enforcement of exclusive building access agreements between apartment owners and most video service providers.
In general, an exclusive agreement is a contract between the owner of the apartment building and a cable provider, or any other operator of video services, where the agreement gives that operator some exclusive rights on the property.
The FCC's order bans the enforcement of any contract provision between an apartment owner and a cable operator if that agreement gives the cable operator the exclusive right to make video services available on a property.
In 2000, the FCC first looked at exclusive agreements, and banned exclusive access contracts between telephone companies and commercial property owners, though it made an exception for apartment owners who were exempt from the order.
Perhaps due to the entry of telephone companies into the video market, the FCC seems to have changed its thinking on exclusive agreements. Particularly with the advent of what is referred to as the triple play, a combination of video, internet and telephone service, that telecommunications companies bundle together to provide consumers with a complete package from one service provider.
The order applies to current and upcoming exclusivity provisions in contracts. However, the order does not void any existing contracts, it merely voids their exclusivity provisions, leaving legally-binding contracts while banning the exclusive right to provide service at properties.
The FCC order does not control apartment owners or force any mandatory access on properties. Apartment owners may continue to limit access by service providers, however, they may not give them exclusive access to properties. On the other hand, some states, and the District of Columbia, require mandatory access.
That said, in those areas the apartment owner is generally not prohibited from managing entry to the property, demanding indemnification, seeking recovery of any costs, and even charging a fee.
However, the order only applies to video providers. It does not apply to telephone or internet service providers. If a property owner has an exclusive contract with a service provided for the triple play, the order only bans exclusivity of the video service.
Private cable operators are not covered under the order. The ban on exclusive contracts for video service applies only to franchised cable operators, telecommunications common carriers that also provide video service, and open video system operators.
Although Direct Broadcast Satellite (DBS) and private cable providers are not covered under the order, the FCC has indicated it will consider whether they, and multi-channel video programming distributors, should be subject to the ban.
Finally, the ban does not have an affect on inside wiring, exclusive market agreements or bulk billing arrangements. Although, the FCC may also take a look to see if it should apply to them as well.
Preliminary Injunction Issued in SSA/DHS Dispute
federal judge has issued a preliminary injunction, ruling that the government cannot use mismatched social security numbers to identify possible illegal immigrants, stating that this type of enforcement action would do "irreparable harm to innocent workers and employers." The ruling stops the implementation of new immigration enforcement rules regarding "nomatch" letters issued by the Social Security Administration (SSA) and the Department of Homeland Security (DHS). The "no‑match" letters result from an employer submitting an employee's W‑2 wage report to the government where the social security number (SSN) does not match the one in the federal database. Administration officials, some members of Congress, and groups opposing illegal immigration were critical of the ruling. Homeland Security Secretary Michael Chertoff said he would consider challenging the ruling or modifying the regulation to address the judge's concerns. "This is only one arrow in a whole quiver full of strategies that we are undertaking to continue to increase enforcement efforts directed at employers who hire illegals."
Business groups hailed the decision, contending the regulations were designed to punish companies that do not clear up discrepancies between their worker's names and social security numbers, possibly forcing employers to chose between compliance or going out of business. "It's a signal to the government that they can't do anything they want simply by calling it enforcement," said a spokesperson for the U.S. Chamber of Commerce. "The Department of Homeland Security overstepped its bounds on this one."
Prior to the adoption of the new regulations, the SSA took the position that the "no-match" letters it issued were for informational purposes only and that the employer had no obligation to respond.
However, under the new immigration enforcement regulations, the DHS's position is that "no-match" letters may be used as evidence that the employer has knowledge that the employee is using a bogus SSN or is otherwise in violation of work authorization regulations.
Because of the DHS's position, those "no‑match" letters will include a warning from them pointing out the increased liability the employer faces under federal immigration laws.
Under the new regulations that the judge halted from being enforced, an employer would have 30 days after receipt of a "no-match" letter to confirm the mismatched SSN was not the result of the employer making a recordkeeping error in logging and reporting the SSN.
If the employer is unable to do that, he or she is required to request that the employee verify the accurateness of the employment records and settle any discrepancies about those records that the SSA may have.
If employers cannot resolve the problem within 90 days, they have three days to submit new 19 forms and the employees are required to present photographs in order to establish their identity. If this is not done, the employer may be held civilly and criminally liable for possible violations of immigration laws.
The judge's ruling in the matter was in response to litigation filed by various labor unions and immigrant rights groups, and the preliminary injunction issued by the judge's ruling halts the SSA from issuing letters that contain the DHS warning notice to employers.
The injunction will remain in effect until it is overturned on appeal or the judge makes a final ruling after a trial, which could be several months away. Apartment industry groups have also weighed in and have asked for an extension for employers to comply with the immigration and employment regulations. 
The West is the Best for Rent Increases: A cross the nation, vacancy rates during the second quarter of 2007, April, May and June, for apartment buildings with five or more units demonstrated no clear trend.
According the United States Census Bureau, the vacancy rate for all rental units decreased from 10.7% in the first quarter of 2007 to 10.1% in the second quarter of 2007.
By comparison, a private research company's survey of investment grade apartment properties showed a vacancy rate of 4.9% for the second quarter of 2007, a slight increase over the vacancy rate of 4.8% in the first quarter.
The slight increase in the vacancy rate was entirely due to an increase in the vacancy rate in the South. Vacancy rates in all other regions of the country decreased from the first quarter. The vacancy rate in the South increased to 5.9% in the second quarter of 2007 from 5.6% in the first quarter, the highest vacancy rate in the South in over two years.
In the Northeast, the vacancy rate was 3.5% in the second quarter of 2007, down from 4.0% in the first quarter. And in the Midwest, the vacancy rate fell from 5.5% in the first quarter, to 4.8% in the second quarter. The West showed a similar vacancy rate decrease, going from 4.8% in the first quarter of 2007 to 4.2% in the second quarter.
Rents for apartments rose according to both public and private studies. According to a study prepared by a private research company, rents across the nation rose an average of 2.9% from one year ago.
Once again, as they have for the past two years, rents increased the fastest in the West. Not surprisingly, the region with the slowest growth in rents was the South.
When you consider that the inflation rate was 2.8% over the last year, all regions except the West had negative growth in real rents.
The Consumer Price Index (CPI) rent index, which includes all types of rental housing and not solely apartments, increased in the second quarter of 2007 by 4.4% over a year ago, just less than the 4.5% increase during the first quarter of 2007 over the first quarter of 2006.
Telecommunications Company Access Rules A coalition of national apartment industry and real estate industry groups, including AAGLA, have formed an alliance to review and comment on a proposal by the Federal Communication Commissions (FCC) to issue brand new regulations on exclusive agreements between apartment owners and telecommunication services providers.
The alliance was formed to comment on a proposed rule made by the FCC in March. The rule declared that the FCC has the power to control exclusive contracts made between apartment owners and private telecommunications companies if it believes those contracts impede competition.
Comments opposing the new rules argue that the regulations are not necessary in a situation where there is no evidence that the private market has failed and that government intervention is needed.
Part of the opposition to the new rules noted that the ability to enter into exclusive contracts has been supported in the past by the FCC as it enables the expansion of broadband access by allowing telecommunications providers to recover expenses for the installation of new facilities and for upgrading existing systems.
Furthermore, the FCC previously found that exclusive contracts in residential properties actually help create competition as they help property owners provide tenants with improved services at lower costs.
Indeed, the FCC specifically excluded apartment buildings from a 2000 FCC Order that prohibited exclusive contracts between the owners of office buildings and common telecommunication carriers.
The alliance is in the process of reviewing other comments submitted in response to the proposed new rules so that it can respond to them if necessary.
The alliance also plans to meet the FCC's staff to review the need to regulate as well as offer to serve as a resource to the commission on the apartment industry.
Lead-Safe Practices Proposal Goes Over National apartment industry trade groups continue to urge the U.S.. Environmental Protection Agency (EPA) to revise a rule it is proposing that will require everyone, including apartment maintenance personnel, who is involved in renovation, repair, or painting activities that disturb lead-based paint in housing constructed prior to 1978, to undergo training in lead-safe work practices.
Those engaged in renovation, repair or painting activities, as well as the companies that employ them, would have to be certified. Those who provide training to the renovators would have to be accredited.
When the proposal was issued in May 2006, apartment industry groups submitted comments to the EPA that supported a goal of, training workers in lead-safe practices, but concluded that the EPA's proposal was unnecessarily cumbersome and expensive.
One of the comments submitted stated that two sets of data on lead-dust support the contention that apartment maintenance personnel can rely on visual inspection to assure appropriate lead-safe work practices that will result in lead-safe apartment units.
In April of this year, after the EPA requested further comments on two studies added by its rulemaking body, apartment industry, groups sent the EPA further, comments, and took the agency to task for seeming to ignore the data submitted by them last year.
Rental Aid to Hurricane Victims Extended
The U.S. Department of Housing and Urban Development (HUD) and the Federal Emergency Management Agency (FEMA) have announced that up to 30,000 victims of Hurricanes Katrina and Rita will continue to receive rental assistance until March 1, 2008.
Without this 18-month extension of rental assistance, aid was due to expire on August 30, 2007.
FEMA is in the process of developing plans for HUD to assume management of the rental housing assistance program starting this September. The plan also will require that starting March 1, 2008, those families participating in the rental assistance program will have to pay a portion of their rent.
HUD Reports 12% Increase in Discrimination Complaints
In what should be considered a wake-up call for apartment owners and managers across the nation, the U.S. Department of Housing and Urban Development (HUD) is reporting that housing discrimination complaints have increased by 12% during fiscal year 2006.
HUD reports that the 10,328 complaints it received are the highest number ever, according to its Annual Report on Fair Housing.
Disability and race were the most common sources of complaints. Respectively they made up 39% and 40% of the discrimination complaints received by the agency.
HUD reported that disabled persons encountered discrimination in half of their encounters with hearing‑impaired persons using telephone‑operator relays to search for rental housing. Wheelchair‑bound persons inquiring about housing in person encountered discrimination about one-third of the time.
Federal officials and non-profit fair housing groups continue to make enforcement of the federal accessibility requirements a top priority, particularly with the increase in complaints. Many of the lawsuits filed against large apartment firms have been filed by the same Washington D.C.-based non‑profit civil rights group.
Congress Considers Overhauling Section 8 Inspection Process
Congress is considering several pieces of legislation to reform the Section 8 housing voucher program, including modifying the burdensome inspection process that is being advocated by national apartment industry groups, including the National Multi Housing Council of which AAGLA is a member.
When the groups testified before Congress, they emphasized the need to overhaul the program's onerous and repetitious inspection standards, and to streamline the process for calculating income and rent and implementing changes that would make the program more consistent with the Low‑Income‑Housing Tax Credit program so the two can be used together more effectively.
The House is considering a bill that would reform the program and streamline the inspection process. While the measure is expected to pass the full House, Senate action in the near term is not expected.
Bothersome Bed Bugs Are Back
Properties from apartments to single-family homes to luxury hotels are experiencing a resurgence of dealing with an age‑old nemesis — bed bugs. For decades this insect has rarely been seen in the United States.
However, with the abolition of various pesticides and the increase in world travel, the pest is back and troubling residents, hotel guests and property managers.
Efforts to wipe out the pest are proving difficult because of its ability to endure in unfavorable circumstances for long periods of time.
The advice is to act immediately if the pest is suspected. Professional exterminators are best suited to develop a program to treat the infested areas. But be prepared for several treatments over the course of several months on the infested areas and even the areas adjacent to where the infestation has occurred.
Replacing Small Mailboxes Is Causing Big Problems National apartment industry groups are still grappling with the United States Postal Service (USPS) over its mail delivery policies, urging the USPS to implement reasonable regulations that affect apartment owners throughout the country.
For example, this past December, the USPS directed an apartment complex in the Houston area to give the local postmaster a list with the names of each resident of the complex and their mailbox numbers or the USPS would suspend mail delivery to the apartment complex.
Facing opposition from national apartment industry groups, the USPS eventually withdrew its demand.
Furthermore, the USPS has agreed to review a long‑standing regulation that authorized local postmasters, under certain circumstances, to request that information on residents from the owners and operators of apartment buildings. This regulation is now under review by attorneys with the USPS.
Also, last December a Los Angeles area apartment complex was ordered to replace all its mailboxes or the USPS would suspend delivery of mail. This garden-style apartment community had no room to install the larger mailboxes that the USPS insisted be installed.
Apartment industry groups entered into discussions with the USPS about its demand that larger mailboxes be installed at the complex, which resulted in the order being withdrawn by the USPS.
Local Immigration Ordinances Challenged On the immigration front, the City of Escondido announced in December it was withdrawing a controversial ordinance that would make it illegal to rent to illegal immigrants. The withdrawal settles a lawsuit filed by groups opposing the measure.
The Escondido law that was rescinded would have required apartment owners to file documentation with the city to establish a tenant was a legal resident if a complaint was filed with the city. The city would have then taken the documentation to the federal government to verify the residence status of the resident.
If it was determined a resident was not legal, the owner would have to evict him within 10 days or the apartment owner's business license would be suspended.
And in late December, three apartment owners in the Dallas suburb of Farmers Branch, Texas, filed suit to block enforcement of a similar ordinance. A coalition of civil rights groups filed a separate lawsuit to block the implementation of the ordinance. Local Immigration Ordinance Goes to Court A federal judge extended his temporary restraining order blocking the City of Hazleton, Pennsylvania, from implementing and enforcing two ordinances targeting illegal immigrants. The extension was given so that both sides in the litigation over the ordinances could prepare for trial. One of the ordinances, which was approved by the City Council in June, imposes fines of $1,000 on apartment owners for each undocumented person renting an apartment, along with an additional fine of $100 per day per person for continued occupancy without a city permit.
Under the ordinance, both current and future renters have to apply and pay $10 for permits from the city proving that they are legal residents before they can legally occupy apartments.
Apartment owners in the city would be required to request the permit from existing and prospective tenants. Every occupant of an apartment would have to obtain an individual permit. The other ordinance denies business permits to businesses that hire illegal immigrants.
ACLU and Hispanic organizations filed suit against the city, arguing the law violates the Constitution because the ordinances trample on the federal government's sole authority to control immigration.
The Mayor of the city contends that illegal immigrants have produced an increase in drugs, crime and gangs to the city, claiming there has been a 10% increase of crime from 2004 to 2005.
In his order, the judge wrote that apartment owners, tenants and businesses would face the prospect of irreparable harm from the enforcement of the ordinances. "We find it in the public interest to protect residents' access to homes, education, jobs and businesses," the judge wrote in his opinion.
The judge said his order would give both sides time to prepare for a motion for a temporary injunction sought by the ACLU. The Mayor of the city said he was confident the city would prevail and that the courts would uphold the laws.
Other cities across the country have passed similar laws, claiming the federal government has been lax in enforcing illegal immigration. ICE to Crack Down on Illegal Immigrant Employers It appears that the Immigration and Customs Enforcement (ICE) agency, formerly known as the Immigration and Naturalization Service, is developing employer enforcement units as an element of an assertive new strategy to mount workplace searches and criminal investigations of suspected immigration law violations. While the agency has not historically targeted the apartment industry for immigration enforcement, compliance efforts by employers in the apartment industry should be reviewed based upon the agency's policy.
Raids will be focused mainly on criminal prosecution in an effort to deport illegal immigrants, and to deter others from entering the country illegally. The agency also wants to imprison employers who violate the law.
The agency said one of its strategies will be to employ and pay subcontractors to inform on employers or contractors using illegal immigrants.
It would appear that the agency is no longer providing employers or contractors with the same level of protection it has in the past in complying with immigration procedures, but is shifting to reliance on the "reckless disregard" provision of the Immigration and Nationality Act.
The Act requires an employer who detects what appears to be foreign workers hired by a subcontractor arriving at a job site to make an inquiry of the subcontractor as to the workers' status.
House Passes Eminent Domain Act/Senate Fails To Act Before Congress began its six-week recess on September 30, the House passed the Private Property Rights Implementation Act to expand the jurisdiction of the federal courts over state-based eminent domain claims. It was among the bills introduced in response to the U.S. Supreme Court's Kelo decision last year.
Opponents of the bill included the U.S. Conference of Mayors, which was concerned that local land-use matters are being wrested away from local control to the federal level.
However, there is no Senate measure to go along with the House bill at this time. Another bill passed in the House to limit the use of eminent domain has been sitting in the Senate since November 2005. Smoking complaints Spark No Smoking Rules at Apartments and Hotels Apartment management and ownership groups across the country are beginning to move toward banning smoking at their properties. This past September 1, Centrum Management LLC, a management company based in Virginia, banned age smoking at all of its 49 apartment communities. Previously, the company had only banned smoking in the common areas of their properties. It is a move that followed a decision earlier this past summer by Marriott International, the country's largest hotel chain, banning smoking on its properties. The Marriott company said that the demand for smoking rooms has gradually waned while the complaints about smoking have increased.
Another hotel chain, Westin, banned smoking at its properties last year and has reported an increase in revenue since the policy was implemented.
While a growing number of small apartment management companies have implemented prohibitions on smoking, according to the Legal Resource Center for Tobacco Regulation, Litigation and Advocacy, the Centrum company is the first regional company to ban smoking in its units. Centrum, which caters to residents over the age of 55, stated that its policy to ban smoking was adopted in reply to complaints from its residents about smoke. The new policy will be applied to new rental agreements only.
Although Centrum has not been the subject of lawsuits, other apartment management companies and owners have been sued by residents claiming their health has been damaged by exposure to second‑hand smoke. Apartment industry groups recommend that any ownership or management company considering a smoking ban at their properties should be aware that smokers are not a protected class and no federal law grants residents of rental housing an unfettered right to smoke. Apartment managers and owners should be able to restrict smoking by new residents in their properties much like they restrict pets and nuisances as terms of the rental contract.
Local Immigration Reforms Target Apartment Owners Some state and local governments are unwilling to wait for Congress to take up immigration reform, so they are taking on this contentious issue themselves, in some cases targeting owners of rental housing. In July, the City Council in Hazelton, Pennsylvania, adopted a law that prohibits apartment owners from knowingly renting to un-documented persons, with fines of $1,000 per undocumented person renting an apartment, plus an additional $100 per day per person for continued occupancy without a permit.
Hazelton's Mayor announced that he expects the City Council to adopt an ordinance that would require current and prospective renters to apply for and pay $10 to acquire permits from the city proving they are legal residents in the city prior to being able to legally live in apartments.
Apartment owners in Hazelton would be required to request such permits from both current and prospective tenants. Occupants of apartments would have to obtain their own individual permits, and the permits would have to be removed if the tenants moved to a different apartment.
A landlord advocacy group, the Hazleton Area Landlords Organization, helped craft the proposed permit ordinance, and will be pressing the city to remove the burden of proof off of the property owner and on to the tenant.
The proposal calls for some exemptions, including multi-family units owned by "public authorities," and buildings where more than 75% of the residents are over age 65.
Advocacy groups for illegal immigrants said they may challenge the law in court.
In San Bernardino, an initiative by citizens that would crack down on illegal immigrants fell short of the number of signatures required to place the measure on the ballot.
The initiative, which was condemned by the city's Mayor and City Council, would have provided for severe penalties for apartment owners who rent to illegal immigrants.
A council member in Escondido, apparently motivated by the Hazleton and San Bernardino proposals, asked the city's manager to prepare a draft ordinance that would prohibit apartment owners from renting to undocumented persons.
The proposal, which has some support from other council members, would provide fines for apartment owners of $1,000 per undocumented person, and would impose criminal penalties for unpaid fines. Escondido's city manager apparently has expressed doubts about the legality of the ordinance and the city's ability to enforce it.
A Florida city also was expected to pass a similar law this summer.
At the state level, more than 500 immigration-related pieces of legislation have been introduced in state legislatures this year. Thus far, none of the 57 immigration bills enacted in 27 states target housing providers. U.S. Supreme Court Rules for Developers The United States Supreme Court ruled that the Army Corps of Engineers exceeded its authority under the Clean Water Act when it denied two Michigan developers permits to build on isolated wetlands that are only linked to larger bodies of a water through man made drainage ditches. In the 5 4 decision, the court ruled that a simple hydrological connection between a wetland and navigable water does not justify federal jurisdiction. An apartment industry group filed a friend of the court brief claiming there is no basis in science or law for extending federal jurisdiction to these isolated wetlands. The assertion is that the current regulatory system is overly broad, unevenly applied and to the time and costs involved in the permitting process. Efforts over the past decade to obtain an administrative or legislative solution to issues proved unsuccessful, forcing property owners to pursue cases through the courts. Estate Tax Reform Proposed As lawmakers abandoned efforts to repeal the estate tax, a national apartment industry organization lobbied for a compromise reform bill. This came about after the Senate was unable to get the 60 votes needed to overcome a filibuster and get a bill for full repeal of the tax to the floor. After failing to end the filibuster, Senate leaders were able to persuade the House of Representatives, which has passed legislation several times to fully repeal the estate tax, to cooperate and approve a reform bill. This concession is notable as Republican leaders realized a full repeal is not likely to pass. This compromise will hopefully lead to final action by the Congress to reform the estate tax. Apartment industry groups have opposed repeal favoring reform of the estate tax to preserve the step-up basis for property that is inherited. Without the stepped-up basis, the heirs of commercial property owners would be able to avoid the estate tax, but would be subject to substantial capital gains taxes of 55%. As part of the reform strategy, the House passed legislation that would increase the estate and gift tax exemption to $5 million per person beginning January 1, 2010, and lower the tax rate on estates valued between $5 million and $25 million to 15%, the current capital gains rate. Estates over $25 million would be taxed at twice the capital gains rate. The most significant reform, according to the apartment industry group, was to preserve the stepped up basis for inherited property by repealing the modified carryover basis rules that are scheduled to go into effect in 2010. If the reform legislation is enacted, President Bush is expected to sign it. If Congress does not act to reform the estate tax, it will be repealed in 2010, and in 2011 will revert to its pre 2001 level, which is a $1 million exemption and a 55% tax rate.
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