Occupancy By Whose Standard - Part 1 of 2

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February 11, 2014
Jo Becker
Education/Outreach Specialist
Fair Housing Council of Oregon

I recently read an article on screening by a representative of a NW property management firm. In it was included the company’s screening requirements, as well as what was apparently their stock occupancy standard for all units: “Maximum occupancy of no more than two (2) persons per bedroom.”

There is a growing body of case law across the country in which housing providers – both landlords and condo / homeowners’ associations – have lost cases in which they’ve had two-people-per-bedroom policies. At this point, we have not seen a housing provider loose a case with a two-plus-one policy1, so long as it takes into account other factors such as the overall size of the unit. The recommendation we’re seeing come out of these cases is that housing providers ought to thoughtfully consider a separate occupancy standard for each, individual floor plan, based on several factors.

The Fair Housing Council has put out more than one article on occupancy standards and related fair housing implications (available at www.FHCO.org/occupancy.htm) but this is a topic that continues to come up in classroom sessions and Hotline questions. Having also just read a couple stunning reports detailing the legal and historical context for occupancy standards, I thought I’d dive back into the subject anew to reiterate fair housing cautions and share some very illuminating information.

What follows is the first in a two-part series detailing research and commentary by two occupancy policy experts and fair housing advocates. In this article, we’ll look at the work of Tim Iglesias of the University of San Francisco School of Law as he explores the legal implications and disparate impact of overly restrictive occupancy policies, including two people per bedroom. In the next article, the work of Ellen Pader, an anthropologist and Associate Director of the Housing Research Center at the University of Massachusetts Amherst provides revealing historical and cultural perspectives behind our country’s occupancy policies.

THE PROBLEM
Tim Iglesias states clearly that “overly restrictive private ROS [residential occupancy standards]… substantially reduce the housing choices... Demographic trends and the prolonged economic recovery which prompts more doubling-up promise this issue will only grow in importance.” What’s more, there are profound societal fair housing implications, regardless of individual intentions.

Iglesias proffered some suggestions to the Dept. of Housing and Urban Development (HUD) in a document entitled Recommendations to HUD Regarding Application of the FHAA2 to Residential Occupancy Standards. In it he states that, “the two-person-per-bedroom standard discriminates against families. New empirical evidence demonstrates that this finding applies to substantial proportions of studios and one-bedroom apartments...” He sites a study that “found that families with children run afoul of the standard more than ten times as often as other households. Ten percent of families with children live in one-bedroom units, and nearly three-quarters of those families exceed the two-person-per-bedroom standard.

In addition, regardless of the type of unit to which it is applied, the two-person-per-bedroom standard has a disparate impact across racial lines. National studies show that the proportion of African Americans excluded by this occupancy standard is statistically significantly higher than for whites; the proportion of Asians excluded is higher than the proportion of blacks; and the proportion of Hispanics excluded is the highest of all. Indeed, more than one-third of all Hispanic children living in one-, two-, or three-bedroom apartments in the United States in 2007-2009 would have been displaced by rigorous application of the two-person-per-bedroom standard. Overall, the study found that when applied the two-person-per-bedroom standard substantially limits the housing choices of many thousands of families, especially Latinos, Asians and extended families.”

Iglesias asserts in a 2011 Memo to Fair Housing Advocates that, “[t]his problem is particularly acute in nicer housing in neighborhoods with attractive amenities (e.g., good schools, access to shopping, jobs and medical care).”

He also explains that two-person-per-bedroom, “has a dubious origin:
1. There is no objective evidence that the two-people-per-bedroom standard was calibrated in any way to be a standard which presumptively avoided discrimination.
2. and, the two-people-per-bedroom standard predates the 1988 FHAA, which was intended to be remedial legislation to address previous discriminatory practices against families.
3. …research examining the historical origins of the two-person-per-bedroom standard has found that it was neither scientific nor otherwise objectively grounded, but merely the product of classist and ethnocentric paternalism.

According to Iglesias, “there is no objective evidence that the two-people-per-bedroom standard is necessary – much less uniquely suited – to protect landlords’ reasonable interests.
1. Rather, [it] is merely the housing industry’s traditional standard.
2. It’s really a prophylactic policy that errs widely on the side of protecting landlords’ interests and is not designed to avoid discrimination.
3. Moreover, in jurisdictions where FHAPs [Fair Housing Assistance Programs] employ a “two-persons-per-bedroom-plus-one” enforcement guideline, there is no objective evidence that landlords using this more generous standard have suffered any so-called “overcrowding effects.”

“Arguments that the two-person-per-bedroom standard has legal force are weak. Even if the Keating Memo3 has some legal force, it would be the whole memo, not the [two-person-per-bedroom] standard standing alone.” The memorandum “provides that a two-person-per-bedroom standard is “presumably reasonable” (ambiguous but apparently meaning presumptively compliant with FHAA), but that all private residential occupancy standards are subject to a multi-factor analysis to determine whether or it violates the FHAA.”

THE HARM
The problems with overly restrictive occupancy policies are numerous, leaving a multitude of households with few options. Many are harmed as they are forced to “reconfigure their household composition,” as Iglesias puts it, “[and] split up and deprive its members of their desired living situation. Splitting up the family can conflict with deeply held cultural preferences / norms to live closely as a way of life and to keep together the intergenerational family, the extended family, or both.”
If unwilling to “reconfigure its composition,” then the family must either:
• secure more housing than desired which imposes additional costs,
• accept inferior quality housing, such housing often poses health risks to residents or
• accept an inferior location, “…typically in an area with worse schools, more crime, and decreased access to jobs, transportation, shopping, and other amenities. Cumulatively, movement to these inferior locations increases economic and racial segregation.”

“Finally, the denial of housing choice by the application of a restrictive residential occupancy standard may also constitute illegal discrimination.” Iglesias goes on to site a multitude of cases that reference the discriminatory harms incurred by ROS3.

THE JUSTIFICATION
Why do landlords impose ROS? Iglesias asks then answers the question:
1. “They do this for a variety of reasons. Some are legitimate some of the time, but they are often overstated. And landlords have a hard time documenting a clear and direct linkage between a legitimate business reason and a particular ROS.
2. Landlords’ traditional arguments for imposing a ROS are summarized by the phrase “overcrowding” and include:
a. preventing a variety of economic costs caused by so-called “overcrowding,” including concerns about future property value and profits, increases in “wear and tear” costs…, extra expenses for utilities and garbage, increased (risk of) damage to the property, increased insurance costs, and increased management costs;
b. preventing nuisance-type harms to other tenants and neighbors from “overcrowding,” including noise and increased demands for parking;
c. to promote often paternalistic concerns about the habitability / quality of life of tenants, including the safety and appropriateness of facilities for children and purported psychological harm to tenants from living in “overcrowded” spaces, and
d. to avoid overtaxing the carrying capacity of one or more systems of the housing unit (e.g., water or sewage).”

THE PROBLEMS WITH THE KEATING MEMO
Iglesias argues that HUD’s enforcement practices have enabled the two-person-per-bedroom standard to become de facto law, but that new empirical evidence demonstrates this standard is often discriminatory. Part of HUD’s implicit involvement includes what was issued as an internal document from a HUD staff, Mr. Keating, but which has come to be seen as an endorsement of two-people-per-bedroom policies. (You can view the Keating Memo and subsequent guidance from HUD at www.FHCO.org/occupancy.htm.)

As Iglesias notes, “[s]ometimes defendants seek to use HUD’s Keating Memorandum as a “defense” of two-person-per-bedroom standards because the Keating Memo states that this standard is “presumptively reasonable.” While many courts have made reference to the Keating Memo and the two-person-per-bedroom standard, no court has ever properly analyzed whether it owes any deference to the Keating Memo. Even if the Keating Memo is due some deference, such deference would be to the whole memo including its factors analysis…”

The Keating Memo is problematic for many reasons, including its use of the two-person-per-bedroom standard as “presumptively reasonable” and its lack of clarity in how to apply the factors it advices housing providers to consider, such as the size of bedrooms and the unit, the configuration of unit, other physical limitations of the housing, state or local law, and other relevant factors.

Iglesias notes that, “any private residential occupancy standard – including two-persons-per-bedroom – is subject to review using the factors stated in the [Keating] memo… [T]he misunderstanding among many that the Keating Memorandum provides a “safe harbor” for landlords who impose a two-person-per-bedroom standard” has caught a growing number of housing providers by surprise.

Among other things, Iglesias urges HUD to “adopt a regulation to define the appropriate liability standard and defenses and to establish a true safe harbor for landlords. The Keating Memorandum provides a useful form for this standard, but specifics need to be worked out.” He goes on to theorize that “[i]f studies were conducted, they are likely to show that 2.5 people per bedroom or 3 people per bedroom is a more appropriate safe harbor, at least for studio and one-bedroom units. The Keating factors must be further specified, e.g. setting the square footage of a regular-size bedroom and defining when additional habitable space requires allowing additional occupants.”

Check back here for the next in this two-part series. Don’t forget to go back and take a look at FHCO’s earlier articles on occupancy policies posted at www.FHCO.org/occupancy.htm for additional information in the meantime. Of course, you can find information about familial status and race, color, and national origin and other protected classes at the Council’s site as well.

This article brought to you by the Fair Housing Council; a nonprofit serving the state of Oregon and SW Washington. All rights reserved © 2014. Write jbecker@FHCO.org to reprint articles or inquire about ongoing content for your own publication.

At the Fair Housing Council (FHCO), we have long recommended a policy of two individuals per bedroom plus one more individual for the unit. For example, a housing provider might limit a two bedroom-home to five individuals. This "two plus one" formula can help insulate the housing provider from fair housing violations based on occupancy in most situations. That being said, additional factors should always be considered in developing individual policies.
2 The federal Fair Housing Act (FHA) of 1968 coupled with the Fair Housing Amendments Act (FHAA) of 1988 protected the following classes in a housing: race, color, national origin, religion, sex, familial status (children), and disability. Oregon law also protects marital status, source of income, sexual orientation, and domestic violence survivors. Washington law covers martial status, sexual orientation, and domestic violence survivors, and honorably discharged veterans / military status. Additional protected classes have been added in particular geographic areas; visit FHCO.org/mission.htm and read the section entitled “View Local Protected Classes” for more information.
3 U.S. v. Lepore, 816 F.Supp. 1011, 1013-1014 (D.C. Pa 1991)(reciting facts of effects of threatened eviction); U.S. v. Hover, 1995 WL 55379, 2-3 (N.D. Cal. 1995)(resiting facts of denial); Sams v. HUD, 76 F.3d 375 (Table)(1996); HUD v. Patricia Trucksess, FHEO Nos. 03-10-0065-8, 03-10-0068-8, 5-6 (alleging injuries from the discrimination, including loss of connections to siblings living in same/nearby apartment house)

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