Jan 10

Attorney Heiner Giese on behalf of the Apartment Association filed an Amicus brief with the WI Supreme Court supporting the City of Milwaukee Housing Authority in their case against Cobbs. This case was heard by the Supreme Court yesterday.

Basically the case revolves around the federal “one strike and you’re out” rule for Section 8 housing and the state of WI’s notice requirements for lease violations.  The tenant advocates did a good job in selecting a sympathetic case to proceed on.

As most of you know*, in WI you must give a tenant under a lease for a term a five day notice with right to cure for the first lease violation within the term of that lease.  This is fine if perhaps they are a bit noisy one time.  However it fails when there is a criminal act.  Justice Gableman asked the Legal Action attorney to explain how 1st Degree murder be cured as long as the tenant doesn’t do it again.

A link to the oral arguments in front of the Supreme Court is at:

http://www.wiseye.org/Programming/VideoArchive/EventDetail.aspx?evhdid=9392

WI’s laws on lease violations are generally goofy.  You have to give a tenant the right to cure for lease violations including criminal acts under a lease for a term, but you are not permitted to use a 5 Day Breach with right to cure for a month to month tenant even for minor lease violations.  So when your month to month tenant has the radio too loud you have to either ignore it or give them a 14 Day without a right to cure.

One of our Association’s legislative initiatives for 2015 is to change the law to permit a 5 Day with right to cure for month to month tenants as well as allowing for a notice with no right to cure for criminal acts regardless of the length of the rental agreement.

Jan 06

Attorney John Shoemaker sends us:

http://www.scotusblog.com/2015/01/symposium-the-case-for-disparate-impact-under-the-fair-housing-act/

Update on Disparate Impact fight set for oral argument 1/21/2015 before the US Supreme Court in Texas Department of Housing and Community Affairs v. Inclusive Communities Project.

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1/6/2015

Symposium: The case for disparate impact under the Fair Housing Act

Joe Rich and Thomas Silverstein are attorneys at the Lawyers’ Committee for Civil Rights Under the Law, which filed an amicus brief in support of the respondent, Inclusive Communities Project.

A decision from the Supreme Court upholding the use of the disparate impact standard to enforce the Act will preserve long-settled expectations and avoid upending decades of settled case law, an untenable outcome that would absolve actors who have known for decades that they are liable under the Act for actions with significant, unjustified disparate impact.

“The text of the FHA is likely to be the primary focus of the Court. On its face, the statutory language strongly supports the conclusion, uniformly accepted in the lower courts for nearly four decades, that the Act authorizes disparate impact claims.

[Will Justice Scalia give deference to HUD’s interpretation of the Fair Housing Act?]

“Even if the Court concludes that the text of the Act does not conclusively support recognition of disparate impact claims, the language is, at a minimum, ambiguous. Indeed, in the wake of decades of consistent judicial interpretation supporting the disparate impact standard, it is hard to imagine how the Court could conclude that the language of the Act is unambiguously limited to disparate treatment claims.  The Court made clear in Chevron, U.S.A., Inc. v. NRDC, Inc., that when a statute “is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” The agency has the power to “fill any gap left, implicitly or explicitly by Congress.” Under Chevron, the Court ordinarily defers to an administering agency’s reasonable statutory interpretation, and Justice Antonin Scalia gave such deference to the EEOC’s interpretation of the ADEA in his concurring opinion in Smith.

“Texas agrees — it argued in the Fifth Circuit in this case that HUD’s interpretation of the FHA should be afforded Chevron deference, and it prevailed when that court adopted HUD’s three-part burden-shifting approach for disparate impact claims under the Act. It is more than a bit ironic that Texas, which was victorious in the Fifth Circuit and yet sought Supreme Court review, now abandons this position.

Dec 02

Let’s assume the “broken windows” theory is correct.  It makes sense – order begets order, chaos and disarray breeds more chaos.  It makes sense logically, whether or not you can quantify the results I’ll leave to those much smarter than I.

However,  Milwaukee attempts to repurpose the theory as an argument for greater rental housing code enforcement and nuisance enforcement aimed primarily at rental housing.  In doing so our city has undermined the true message, which is: For the broken windows theory to produce results an entire neighborhood must be held to a standard.  The researchers use “neighborhood order” to describe the goal.

The article is primarily about police and neighbor intervention into petty crime creates order that reduces other petty crime and larger problems.  The words landlord, rent, code enforcement, building inspection do not appear anywhere in the article. Yet, to hear Milwaukee officials speak of the broken window theory, they frame it as a landlord’s responsibly.

A walk down 5th Place, the original target for the expansion of the RIP (rental inspection program), will show a far greater number of owner occupied housing in serious disrepair* than rental houses.  Milwaukee senior assessor Mary Hennen stated under oath a couple of years ago similarly that owner occupied housing in these neighborhoods are often in worse condition than rentals.

As an apparent precursor to the RIP proposal , on September 3rd and 4th,2014 DNS sent a squadron of five inspectors down Fifth Place for a block sweep.  Although the inspectors were able to see and write up some fairly minor problems on rental homes, amazingly when it came to the owner occupied houses on this street these five inspectors missed a dozen failed roofs, half a dozen failed porches, a couple of chimneys that looked about to fall and one house that is failing structurally.  Sixteen owner occupied properties in total that were as bad or worse than the seventeen rentals on the street that received orders. They also missed the two abandoned structures that should have been sent to raze, properties with actual broken windows.  My first two trips down the block had city lots strewn with trash.  I’ll guess that they were afraid someone would point that out in a RIP hearing.  They were clean on my third and forth trip.

Of the two properties that I saw blatant drug dealing coming from on three of my trips down the block this fall, one was owner occupied and the other owned by a guy who lives in the district on 15th and Cleveland. Far from the stereotypical absentee landlord.

If the RIP as well as other code initiatives are truly about stabilizing the neighborhoods, then plans must be in place to address the owner occupied and city owned properties that also drag down the neighborhood.

Tim Ballering

Tim@ApartmentsMilwaukee.com

*I consider serious disrepair as failed roofs, dangerous porches, crumbling chimneys and structural failure.

On Nov 30, 2014, on the ApartmentAssoc Yahoo Group  Bill Lauer wrote:

The previous article entitled “Broken Windows” really isn’t about broken windows.  It is about a theory that first showed up in the early 1980s [Link] and influences many of today’s social policies that impact our businesses every day.  Researchers in New York parked a car with no license plates on it, on a busy street. In a very short period of time, everything of value was stripped from it. Likewise, if a window in a building is broken and is left unrepaired, all the rest of the windows will soon be broken. They concluded that somehow the disrepair brought more disrepair.  Likewise, if crimes like jaywalking and panhandling are allowed, then more felonious crimes will follow.

The recent public hearings on the expansion of the Rental Inspection Program indicate several inner-city alders believe that because certain neighborhoods are run down, that crime is attracted to those neighborhoods.  But if memory serves me correctly, these same neighborhoods had huge crime problems before the neighborhoods were runned down.  Could it be that something else attracted the criminal element? Could it be true that because criminals do not maintain property very well that over time, neighborhoods end up in disrepair? They see the disrepair as the fault of greedy landlords, instead of seeing the landlords as the victims of the criminals.

One Alder literally said that the RIP was a tool to break up these “hot spots” of criminal activity. This strategy scatters criminal activity into surrounding neighborhoods rather than deal with the problem where it is. The mayor’s budget hires more building inspectors and reduces the number of armed police, which is contrary to the original research which says that police presence was needed to make positive change.

For the last 20 years, as “hot spots” break up and houses get bulldozed, and criminals need housing, they move into unsuspecting neighborhoods. That is why we are seeing crime increase (again) in Bay View, West Allis, Sherman Park, St, Joe’s area, just to name a few. The strategy employed in the RIP has not worked. But a new generation of politicians refuse to learn the lessons of the past and want to try this stuff again with a new name. They continue to make the buildings the problem rather than the people who live there.

The article is a long read but makes very interesting points that are useful in our discussions with our politicians.  It gives some insight into the crazy policies that are coming from city hall. But most importantly it points to the need for landlords to organize and become vocal about our experience working in Milwaukee.

 Bill Lauer

Oct 23

John Shoemaker is one of the nation’s leading attorneys in the defense of the rights of rental property owners , and subsequently the rights of low income residents who live in rented housing.  He specifically addresses Milwaukee and its HUD Grant application in this letter.  I share this with letter with his permission.  It’s long, but if you intend to be part of low to moderate income housing you need to read this. — Tim Ballering

October 22, 2014

Tim:

I am following up to my recent emails to you about the legal challenges private low-income housing providers have made in Federal District Court in the Twin Cities since 2004.

We are in our 10th year of federal litigation against Twin Cities’ municipalities, with six federal (Minnesota District) lawsuits still active (four lawsuits vs. the City of St. Paul – 14 total housing providers as plaintiffs: the three Gallagher vs. Magner consolidated cases that were before the U.S. Supreme Court in 2011-12, now awaiting trial; and the McRath vs. St. Paul case in discovery; and two lawsuits recently filed vs. Minneapolis – two providers as plaintiffs: Folger vs Minneapolis, Court File 13-cv-3489; and Ellis vs. HUD and Minneapolis, Court File 14-cv-3045).  Recently, the federal court allowed housing provider Folger’s Fair Housing disparate impact lawsuit against Minneapolis to move past a motion to dismiss and that case is now in discovery. There are approximately 200 properties directly involved in these matters but the outcome of the litigation will impact hundreds if not thousands of other low-income properties.

Outside of these federal lawsuits, we have rarely seen much organized opposition from private real estate investors in response to oppressive public sector housing policies and actions.  This is so even though the local government policies negatively impact the return on investment and incentives to continue providing affordable housing offered by the private market, and negatively impact the availability of such housing at rental rates that are affordable at under 30% of area median income.

Municipalities benefit from this lack of organization among private low-income housing market participants by focusing police power and public resources against each investor one at a time, picking off good, honest, hard-working Americans through ever-increasingly high regulatory standards, confiscatory fees, assessments and fines, targeted enforcement actions, other regulatory burdens and outright illegal policies and conduct.  Low-income citizens who seek safe, decent and sanitary housing in the inner-city communities from private providers, suffer as the public sector actions cause displacement and keep housing units offline for longer periods of time than would be the case if the private market was allowed to operate within traditional legal boundaries, without oppressive local government regulation and illegal policies and conduct.

Challenging these illegal public policies and actions through litigation is not the best option in many situations as the heavy burden of court costs, attorney’s fees and expert fees is barrier to most owners of low-income housing pursuing redress of injuries against local governments.  Owners usually experience an extended period of forced reduction in rental income and related dramatic increase in expenses directly from oppressive, targeted government actions against them. In a marketplace where profit margins are thin, local governments tend to drain private investor’s resources through heavy every day regulatory costs, so by the time litigation may be an option to preserve the portfolio and lifetime of investment, financial resources to carry the battle to court may be few. Many owners have drained available financial resources by the time they decide they need assistance in their fight.  Many owners simply choose to walk away from their investment as they have no remaining resources to fight for extended periods and are unable to retain legal counsel to preserve their rights and fight for change.  Nevertheless, in certain instances, litigation would be the best option where fighting back to save a rental portfolio is deemed necessary, especially if damages are significant or the threat of losing everything is very real and present.

 What if private housing providers organized on a national, regional and/or state level and pooled their resources and joined the cause?  That might move the process of change forward, albeit slowly over an extended period of time.  One strategy might be to pool resources of time, talent and money for not just litigation but also lobbying at the local and state levels to publicly voice opposition to harmful public housing and related policies and advocate for reasoned approaches that preserve property rights, liberties, affordable housing and investments.  We might consider creating a national or regional group of interested and experienced leaders and counsel to roundtable on these issues, including litigation strategies and to examine possible formation of citizen-investor groups to focus on selected municipalities where the fight is particularly advantageous to our cause.

There are other options for real estate investors in the low-income housing market outside the Court process and normal city council hearing process to address these legitimate concerns.

Private housing providers are eligible to file Complaints with the United States Department of Housing and Urban Development (“HUD”).  We have filed three Housing Discrimination Complaints for a total of 16 housing providers and other interested parties with HUD since November 2012. HUD has not been cooperative and has taken every opportunity to delay having to accept complaints and to investigate complaints by private housing providers against local municipalities.   This obstructive behavior by HUD arises I believe from the political animal HUD truly is, especially where the local government leaders are of the same political party as those in the Administration in Washington.

We have started the process this year of bringing HUD into the federal litigation as an interested party under the theory that federal law requires HUD to monitor and take actions to curtail violations of federal law by local governments and their officials.  HUD has a federal statutory duty to honestly monitor and hold accountable local governments that receive federal grant funds where complaints are presented to HUD of wrongdoing by those jurisdictions. Courts have held HUD liable for damages and injunctive relief where HUD has continued to fund local entities with knowledge of discriminatory policies at the local level.  Minneapolis and HUD have notified us that they will be seeking dismissal of the most recent lawsuit in January 2015.

While it might not be a cure-all, I believe the private housing providers must speak up at the local government level during the federal grant funding process.

Milwaukee is a yearly recipient of federal grants, including a number of grants administered by HUD.  Milwaukee is recognized as an “Entitlement Jurisdiction” for federal HUD funding purposes which means the City applies to and obtains the grants from HUD directly, versus through the State of Wisconsin.  One major grant program is called the Community Development Block Grant program, “CDBG”. As a federal grant funded Entitlement Jurisdiction, Milwaukee must conduct an “analysis of impediments to fair housing choice” (“AI”), every 3-5 years, although HUD strongly recommends each City receiving CDBG funds review the “AI” every year. The official definition of an “AI” is found in HUD’s Fair Housing Planning Guide (“FHPG”), see attached and see http://www.hud.gov/offices/fheo/images/fhpg.pdf

The “AI” is a review of impediments to fair housing choice in the public and private sector. The AI involves:

  • A comprehensive review of a State or Entitlement jurisdiction’s laws, regulations, and administrative policies, procedures, and practices
  • An assessment of how those laws, etc. affect the location, availability, and accessibility of housing
  • An assessment of conditions, both public and private, affecting fair housing choice for all protected classes
  • An assessment of the availability of affordable, accessible housing in a range of unit sizes.
  • The FHPG (Sections 2-16 to 2-17), provides: “Impediments to fair housing choice are defined as:
  • Any actions, omissions, or decisions taken because of race, color, religion, sex, disability, familial status, or national origin that restrict housing choices or the availability of housing choice
  • Any actions, omissions, or decisions that have this effect.  (Note: This means, “Disparate impact”).
  • Policies, practices, or procedures that appear neutral on their face, but which operate to deny or adversely affect the availability of housing to persons because of race, ethnicity, disability, and families with children may constitute such impediments. (“Disparate impact”).
  • Have the effect of restricting housing opportunities on the basis of race, color, religion, sex, disability, familial status, or national origin.  (“Disparate impact”).
  • HUD’s FHPG provides that Milwaukee must analyze the following subjects of City laws, policies and actions on how those laws, policies or actions affect housing choice for low income and protected class members:

4.3       AI SUBJECT AREAS

Public Sector

  1. Local building, occupancy, and health and safety codes that may affect the availability of housing for minorities, families with children, and persons with disabilities, such information should be available through a review of local laws and ordinances relating to these subjects.
  2. Public Sector – other actions -
  • Building codes
  • Local zoning laws and policies (e.g., minimum lot size requirements, dispersal requirements for housing facilities for persons with disabilities in single-family zones, and restrictions on the number of unrelated persons in dwellings based on size of unit or number of bedrooms)
  • Demolition and displacement decisions pertaining to assisted housing and the removal of slums and blight (e.g., relocation policies and practices affecting persons displaced by urban renewal, revitalization, and/or private commercialization or gentrification in low-income neighborhoods)

Federal grant funding to Milwaukee, that includes CDBG, is processed under a Consolidated Planning process whereby: (1) every 5 years, a Consolidated Plan is prepared by Milwaukee with citizen participation and submitted to HUD showing the five year plan; and (2) every year during the five year period the City must provide HUD with an Action Plan and a CAPER (Consolidated Annual Performance and Evaluation Report). By providing detailed financial and beneficiary information in the CAPER, the City explains to HUD and the community how the City is carrying out its housing and community development strategies, projects, and activities.

Milwaukee is now near the end in the process of preparing its five year Consolidated Plan submission for 2015-2019 to HUD.  Part of the required Con Plan process is Citizen Participation [footnote 1], where the City must hold hearings and provide access to Plan information and documentation for community members to review and submit oral and written comments about the City’s plans for using federal grant funds during the next 5 year period. See http://city.milwaukee.gov/NeighborhoodStabilizationProgramNSP/NSP-Meetings—Con-Plan.htm#.VEhAXBYzISg

It seems that most of the meetings/hearings on NSP occurred in March 2014.  But, some meetings and or hearings on the 2015-19 Con Plan may still be on-going.  https://www.facebook.com/events/468204259974633/

Meeting occurred in March 2014.  See http://urbanmilwaukee.com/pressrelease/public-invited-to-offer-feedback-on-spending-plan-for-federal-funds/

states period to comment would end July 2014.

However, HUD says that Complaints about how the City’s housing policies and actions have negatively impacted low-income housing providers and their customers (tenants), impacting the availability of affordable housing and the incentives to continue to provide such housing, can be submitted to the City and/or to HUD at any time.   http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/complaint-process

I have attached a copy of the draft HUD Consolidate Plan submission for Milwaukee for 2015-2019.

While there are many interesting bits of information in the Plan, see page 8 – City’s proposed code enforcement efforts in next 5 years.

Barriers to affordable housing, see page 103.

See also pages 139 (City goals summary including code enforcement, lead based paint abatement, demo), page 142-43, 146 (homeowner vs rental production- but most blacks need rental).

Also note that Milwaukee is planning on acquiring more vacant homes including foreclosure properties.

 We have discovered here in the Twin Cities, that Cities acquire claimed distressed properties (including those that the City acquired after targeting them) and then hold those properties off market for 3-5 or more years – until they have the money to develop them from federal or other sources and so as they claim, stabilize the real estate market in the inner city.  Through use of a land bank concept, the properties are off-limits to the private market much like the “First Look” program whereby bank REO properties in the inner-city are offered first off-the-books to local governments and NGOs, thereby prohibiting private market acquisition. We learned of this policies through the Cities’ applications for federal Neighborhood Stabilization Program grants (NSP) funding from 2009 and thereafter.

You will be able to learn more about Milwaukee’s use of NSP grants and the issues I have raised herein by looking at the City’s website on NSP funding – see the following link: http://city.milwaukee.gov/NeighborhoodStabilizationProgramNSP.htm#.VEg2DRYzISg

Here in the Twin Cities, we have local government policies that interfere with the normal “ups and downs” of the real estate market and exacerbate the affordable housing crisis.  These local government policies prohibit transfer of ownership of vacant homes without local government approval and require massive investment into claimed distressed homes before re-occupancy. These policies have directly led to an extended period of blight in the inner-city as the normal 300-400 annual vacant homes in St. Paul has continued for eight years at 4-8 times those levels, including above 2,000-2,400 for a number of years.   These local government policies extend the high number of vacant homes for longer periods thereby allowing local governments to control the disposition, ownership and use of these homes.

The continuation of these policies year after year has negatively impacted property (sales) values of homes including older rental properties; however, the tax assessments are continuing at high valuation levels.

Combined City efforts of heavy, targeted code enforcement and high rates of demolitions with associated demo assessments, along with the high number of foreclosures and vacant homes, has led to a golden opportunity for local governments to acquire these claimed distressed properties.  City acquisition of large numbers of claimed distressed properties and the policy of holding those properties offline from sale and redevelopment, along with the lack of production of significant numbers of new affordable rental units for those at under 30% AMI, has exacerbated the unavailability of affordable older housing to meet the high demand for rental housing.

Here, local government documents demonstrate that City officials are seeking to keep private investors from acquiring distressed properties; are placing deed restrictions on renovated homes prohibiting rentals; city policies are de-converting multi-unit rental buildings and homes to smaller number of allowed units – duplexes de-converted to single family homes, and 4-plexes to duplexes.  There are thousands of vacant homes that could be quickly and economically repaired to reasonable housing standards and let out to those in need of rental housing. Instead local governments are requiring massive renovation investment to City-approved standards (including Green Energy) in order to re-occupy these homes.

Federal, state and foundational funding is insufficient to renovate the inner-city older housing stock yet the City will allocate federal funds to each project at levels many times above the amount the private market would or could justify.  Government funding for the expensive renovation and subsidies for new owners, is actually wasted while claiming to develop and preserve affordable housing.  A small portion of the overall Millions in grant and other government funds currently being committed yearly to the government and NGO renovation projects producing a small number of housing units, could be provided to the private market for repairs and commonsense renovations.

With the high demand for affordable rental housing units by poor, minority families, a reasoned argument can be made that available government funds should be spent first on policies that ensure there are enough affordable housing units for most of those in need with ability to pay.  The private market has the time-tested solutions for issues related to timely production of safe, decent and sanitary rental units including renovated units to reasonable standards.  Instead, local government policies are focused on prohibiting the private market solutions and producing expensive renovations to a limited number of homes in the large pool of vacant homes. Government policies like this in the short term only produce minimal numbers of available units and most of them for home-owners only.  It also keeps thousands of low-income and minority families on the waiting lists for affordable housing.

Again, thank you for your interest in our fight for justice here in the Twin Cities.

I look forward to discussing these issues with you.

John

John R. Shoemaker

Attorney at Law

SHOEMAKER & SHOEMAKER, PLLC

Highland Bank Building

5270 West 84th Street

Suite 410

Bloomington, MN 55437

(952) 224-4610

P.S:  In July 2013, HUD proposed a federal regulatory rule called, “Affirmatively Furthering Fair Housing” that has long been a federal funding requirement of all Entitlement Jurisdictions, including Milwaukee. Section 808(e)(5) of the Fair Housing Act (42 U.S.C. 3608(e)(5)) requires that HUD programs and activities be administered [including by grant recipients) in a manner affirmatively to further the policies of the Fair Housing Act.

The new AFFH rule replaces the “AI” process with a Fair Housing Assessment.

To review the new AFFH rule, see https://www.federalregister.gov/articles/2013/07/19/2013-16751/affirmatively-furthering-fair-housing

Final action by HUD on the new AFFH rule is expected in December 2014.

HUD says the AFFH rule is designed to lower the number of lawsuits against local government units.

 HUD Fair Housing Planning Guide

Milwaukee_ConPlandraft-June182014 copy

Oct 10

Milwaukee is preparing to expand its mandatory Residential Rental Inspection Program, i.e. landlord licensing.

If you own rental properties in Milwaukee, it is imperative that you listen to this to make future investment decisions and to prepare for the future in general.

The Apartment Association was represented at yesterday’s hearing by Attorney Heiner Giese.

Link to hearing video

Click on item 15 or scroll to 2:03:40 if you want to listen to the background and stats from Commissioner Dahlberg.

The AASEW testimony begins at 2:30 into the hearing.

Link to AASEW written comments

Link to DNS PowerPoint (as PDF)

Listening to the hearing you get a good feel for which Aldermen appreciate our work and financial investment, and those who don’t.  Aldermen Perez and Donovan clearly understand the difficulty of our industry. Alderman Donovan’s email asking the proposal be held.

I urge you to speak to the Aldermen that represent the area where your properties are located.  Explain to them the challenges and hard work that you face on an ongoing basis. Also point out how DNS does not evenly enforce codes, but holds rental properties to a different standard.

If you are a Southside landlord, I am setting up meetings with both Donovan and Perez.  If you have properties in either District please email me with your concerns, whether you are interested in attending the meetings and which District your properties are located in.

Finally, if you are not a member of the Apartment Association, you should consider joining.  For $99 a year you not only will learn a lot about how to be a more effective and profitable landlord, but a portion of your dues goes to fight things like this.  More information on the Association  or join online

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