Do You Know?

Do you know that a projected 325,000 new apartments are needed in the United States every year from now until 2030 to meet the growing demand for apartments?  See “The U.S. Needs 4.6 Million new Apartments By 2030 To Keep Up with Demand,” National Multifamily Housing Council Rental Housing Journal, June 12, 20.  According to a recent article in the National Multifamily Housing Council’s (“NMHC”) Rental Housing Journal discussing a new study commissioned by the NMHC and the National Apartment Association (“NAA”) and conducted by Hoyt Advisory Services:

• Almost 39 million people live in apartments, and the apartment industry is quickly exceeding capacity;
• In the past five years, an average of one million new renter households were formed every year, which is a record amount; and,
• It will take building an average of at least 325,000 new apartments every year to meet demand; yet, on average, just 244,000 apartments were delivered from 2012 through 2016.

See id.  The article goes on to explain that the study determined that the increasing demand for new apartments is largely due to three factors: 1) delayed marriages, 2) the aging population and 3) immigration.  “We’re experiencing fundamental shifts in our housing dynamics, as more people are moving away from buying houses and choosing apartments instead.  More than 75 million people between 18 and 34 years old are entering the housing market, primarily as renters,” Dr. Norm Miller, Principle at Hoyt Advisory Services and Hahn Chair of Real Estate Finance at the University of San Diego, said in the article.  Id.  The article further explains the three growth factors in the following way:

• “Delayed house purchases. Life events such as marriage and children are the biggest drivers of home ownership.  In 1960, 44 percent of all households in the U.S. were married couples with children.  Today, it’s less than one in five (19 percent), and this trend is expected to continue.

• The aging population. People ages 65-plus will account for a large part of population growth going forward across all states.  The research shows older renters are helping to drive future apartment demand, particularly in the northeast, where renters ages 55-plus will account for more than 30 percent of rental households.  According to Dr. Miller, “renting is not just for the younger generations anymore.  Increasingly, Baby Boomers and other empty nesters are trading single-family houses for the convenience of rental apartments.  In fact, more than half of the net increase in renter households over the past decade came from the 45-plus demographic.”
• Immigration. International immigration is assumed to account for approximately half (51 percent) of all new population growth in the U.S., with higher growth expected in the nation’s border states.  This population increase will contribute to the rising demand for apartments.  Research has shown that immigrants have a higher propensity to rent and typically rent for longer periods of time.”

Id.

So, there appears to be an “Apartment Tsunami” coming and the big question is, are you up for it?  Now I am not asking this question from the standpoint of do you have your land under option or your financing in order.  Rather, I am asking from the standpoint of, in these times of increasing accessibility litigation and the influx of reasonable accommodation and modification requests, are you going to continue doing business the same way you have always done business?  Because unless you are still working under Albert Einstein’s definition of insanity– doing something over and over again and expecting a different result, then you need to make changes.

With all that said, what are you going to change?  In order to make changes, you first need to understand what you are doing wrong.  Here are what I believe are the top five Accessibility myths and where we most often go wrong:

1. My architect designed it, the funding agency approved it, and the local building inspector reviewed and approved the plans and issued my Certificate of Occupancy, therefore I must be in good shape.
2. My site is in compliance with the ADA, therefore I must be in good shape.
3. We have never had a complaint from our tenants about accessibility, therefore I must be in good shape.
4. We have never had a Tester visit our site, therefore I must be in good shape.
5. We have blue paint, those handicapped signs, and ramps all over our property, therefore I must be in good shape.

Let’s look at these myths one by one.

1. My architect designed it, the funding agency approved it, and the local building inspector reviewed and approved the plans and issued my Certificate of Occupancy, therefore I must be in good shape.   Architects are not typically trained on all three Accessibility regulations in school.  In fact, they touch on the ADA which deals with areas of Public Accommodations, but they are not trained on the Fair Housing Act or Section 504.  Nor does the fact that a funding agency approved your plans mean you are in good shape.  Government agencies, banks, mortgage companies & state housing finance agencies do not review plans for Accessibility accuracy – that responsibility is left solely in your lap.  Finally, just because the local building inspector reviewed and approved the plans and issued a Certificate of Occupancy does not mean your property is in compliance with applicable accessibility regulations.  Local building inspectors do not inspect for violations of the Fair Housing Act (FHA) or Section 504.  While a local building code may adopt ANSI building code or other accessibility requirements, that does not ensure FHA compliance.

1. My site is in compliance with the ADA, therefore I must be in good shape.   The ADA covers only areas of Public Accommodations and your tenants are NOT considered “public.”

1. We have never had a complaint from our tenants about accessibility, therefore I must be in good shape.   Just because a tenant hasn’t complained doesn’t mean no one else is looking at your property.  Indeed, there has been a significant uptick in enforcement action.

Fair housing advocacy groups and governmental agencies have made accessibility in affordable housing an enforcement priority.  If your property is not in compliance with applicable accessibility regulations, it may be subject to legal claims under: 1) the Fair Housing Act, 2) Section 504, 3) the ADA, and/or 4) the False Claims Act.

1. We have never had a Tester visit our site, therefore I must be in good shape.   Testers may be looking at your property without you even knowing it.  Drive-By Testers often inspect properties without a property manager or owner knowing it.  They are looking for “low hanging fruit” issues, such as, parking spaces, access aisles, slopes/cross slope issues, entrances issues into the office, accessible route issues, curb ramp issues and mailbox access issues.  Additionally, with rapidly evolving technology, new techniques, such as Google Earth and Google Maps, increasingly are allowing Testers to view your property without the Testers ever leaving their office.

1. We have blue paint, those handicapped signs, and ramps all over our property, therefore I must be in good shape.

Wrong.  The handicapped symbol does not automatically imply accessibility for all codes.

How do you stop the perpetuation of these myths?  Here are some action items to consider:

• Have an Accessibility Evaluation performed on your properties.
• Have your plans for new construction and rehabs reviewed by an Accessibility professional. (Remember Bob Villa’s logic – “measure twice and cut once”.)
• Engage a reliable Accessibility professional to perform Accessibility construction inspections at least three times during the property’s construction to prevent costly mistakes.
• Be Pro-Active and not Re-Active. Arrange for an Accessibility evaluation of your existing properties.

Remember, in the words of Albert Einstein, “[w]e cannot solve our problems with the same thinking we used when we created them.”

This article by E&A Team President, Mark English, appears in the July, 2017 edition of the CARH Newsletter.