BLOGS: Multifamily Focus

2008-03-27, 14:56

Bright Spot for Housing Investors?

By: Multifamily Real Estate Industry Team
A recent article in the New York Times highlights how the recent economic woes could actually benefit multifamily rentals. “People had been painting residential with a broad brush, and that’s what held back the stocks in 2007,” Mr. Anderson said. Many skittish investors seem to have eschewed all companies in the housing market, even those involved in rentals. “Now they may be looking for ways to play the residential market,” he said, “and one way to do that is to take a look at the rental business, which is once removed from the broader housing turmoil going on.”

Apartment REIT's are up 15.6% this year through Thursday.

The full article can be found at:

(This entry published by Melissa M. Morgan)

FCC Further Extends Exclusivity Rules—Releases Order Banning Exclusive Contracts Between Telecommunications Providers and Residential Building Owners

By: Multifamily Real Estate Industry Team
On March 21, 2008, the Federal Communications Commission released the full text of a Report and Order adopted on March 19, 2008 which summarily prohibits telecommunications providers from entering into exclusive contracts to provide service in Multitenant Environments (“MTEs”). Previously, the Commission had only banned such exclusive deals for service in commercial, or predominantly commercial MTEs.

The Order piggybacks a similar order adopted by the Commission on November 13, 2007, which banned such deals between multichannel video programming distributors and owners of Multiple Dwelling Units. Both orders take the unprecedented action of voiding existing exclusive contracts between providers and owners of MTEs as the order applies retrospectively to existing contracts as well as any future agreements. The highlights of the Order are as follows:

The Order bans exclusive contract provisions in agreements between telecommunications providers and MTEs which serve exclusively or predominantly residential customers. Thus, any conceivable type of MTE is now addressed by the Commission’s rules.

The Order applies retrospectively, and prohibits the use and enforcement of existing exclusive contracts, declaring such contracts null and void 60 days after publication of the Report and Order in the Federal Register.

The Order discusses both the policy basis and legal authority to prohibit such exclusive agreements. Specifically, the Commission found such practices “unreasonable” under Section 201 of the Communications Act of 1934, as amended, and noted that the D.C. Circuit has held the Commission to have the authority to regulate in this manner.

Interestingly, the Commission also utilized one paragraph of its Order to entertain a Fifth Amendment analysis that its action did not constitute an unconstitutional regulatory taking. Similar to the actions taken in the November 13, 2007 order, the FCC relied on its “ancillary jurisdiction” to take sweeping regulatory action. However, its limited analysis may not be sufficient to withstand challenge by telecommunications providers and MTE owners.

This Report and Order, along with the November 13, 2007 Order mark a dramatic shift in Commission policy as the Commission concluded that the harms of exclusive contracts between MTE owners and providers outweighed any potential benefits to consumers and that the new rules will increase choice and competition for consumers residing in MTEs and other real estate developments. The Report and Order similarly rejected the potential benefits of exclusivity clauses as insignificant.

(This entry published by Danielle M. Benoit and Mark Palchick, members of Womble Carlyle's Telecommunications group)

This memorandum should not be construed as legal advice.

2008-03-26, 10:47

Latest Regulatory Guidance Regarding Accomodations to Individuals with Disabilities

By: Multifamily Real Estate Industry Team
The attached link contains the latest regulatory guidance regarding accommodations to individuals with disabilities which are required in multi-family rental housing units governed by the Fair Housing Act Amendments, as well as those accommodations which are required of public accommodations under the Americans With Disabilities Act. We caution you that the recitation of legal requirements found in the HUD/Justice interpretations goes well beyond the actual language of the federal statutes upon which they rely; however, not all judges seem to be impressed with that distinction.

As a further cautionary note, many state and local building codes attempt to impose similar requirements on multi-family properties which are constructed primarily or exclusively for private ownership, such as condominiums. Not all of the state and local requirements have a sound foundation in enforceable legislation, but proceed on the theory that multi-family occupance by owners renders the properties "commercial" for regulatory purposes. Given the potential for properties to "revert" to rental status, as well as the potential for owners' renting their units, this regulatory attitude may have at least some basis in fact rather than simply representing an unwarranted expansion of power.

Nonetheless, vast discretion is given to the regulators in the interpretation and enforcement of the law, and special interest groups are likely to raise legal challenges even in situations in which governmental intervention is not forthcoming. When the expense of litigation is considered, it may be prudent to consider compliance with these broad interpretations rather than attempting a narrow approach since, based on a cost-benefit analysis, it can be more effective to avoid doing battle with those who have no concern for economic issues.

(This entry published by Charlie Edwards, a member of Womble Carlyle's Labor and Employment group)

2008-03-25, 14:39

More on Fair Housing Accessibility and the Statute of Limitations Issue

By: Multifamily Real Estate Industry Team
Today's Ninth Circuit en banc hearing on the Fair Housing statute of limitations for design and construction (see earlier blog) is being closely followed by litigants in other Fair Housing cases in which the statute of limitations for design and construction complaints also is an issue. For example, mega-developer A.G. Spanos is a defendant in a Fair Housing accessibility case filed in June, 2007 (amended complaint filed October 12, 2007) in federal district court for the Northern District of California. The complaint alleges violations of the accessibility requirements of the FHA and the ADA in more than 10,000 individual dwelling units in apartment properties located in numerous states.

Spanos and the other defendants filed motions to dismiss based in part on the bar of FHA's 2-year statute of limitations, and citing the Ninth Circuit's earlier panel decision that the running of the statute of limitations cannot be avoided by invoking the "continuing violation" doctrine. Spanos' brief quoted the Ninth Circuit's observation that a non-compliant building is "more akin to a continuing effect than a continuing violation under the FHA" and that "if Congress wanted to leave developers on the hook years after they cease having any association with a building, it could have phrased the statute to say so explicitly." (Memorandum of Points and Authorities in Support of Defendants' Motion to Dismiss Plantiffs' First Amended Complaint (Case NO. C07-03255-SBA)).

At least one defendant's motions to dismiss was heard on March 11, 2008 and among the proposed orders submitted to the judge was an order staying the lawsuit as to that defendant pending the Ninth Circuit's en banc decision on today's hearing.

(This entry published by Karen Estelle Carey, a member of the Real Estate Development group)

2008-03-24, 12:25

National Green Building Standard Almost Ready

By: Multifamily Real Estate Industry Team
In a previous posting we discussed the new green building standard being developed jointly by the National Association of Home Builders (NAHB), the International Code Council (ICC) and the NAHB Research Center. The new standard is intended to be seamlessly incorporated into existing building codes, thereby providing a code-based standard for jurisdictions considering mandatory green building requirements. In contrast to currently existing green building rating systems (e.g., LEED), the proposed standard specifically addresses multi-family development and construction.

The NAHB, ICC and NAHB Research Center have developed the National Green Building Standard with the goal of obtaining ANSI approval, so that the standard would be available for adoption by local building departments. The ANSI public comment period on the proposed draft closed on February 8, 2008, and the standard is currently anticipated to be released later this spring.

For more information on the National Green Building Standard, and a copy of the current draft, go to

(This entry published by Karen Estelle Carey, a member of the Real Estate Development group)

2008-03-17, 09:24

Full Ninth Circuit Court of Appeals to Hear Fair Housing Accessibility Case on March 25, 2008

By: Multifamily Real Estate Industry Team
Full Ninth Circuit Court of Appeals to Hear Fair Housing Accessibility Case on March 25, 2008
Some time ago, we reported on the Garcia v. Brockway case (503 F.3d 1092 (9th Cir.2007), an important fair housing accessibility lawsuit. At issue is when the two-year statute of limitations for actions alleging defective design and/or construction under the Fair Housing Act begins to run --- when construction is completed, or when the alleged violation is discovered. The plaintiffs appealed a decision from a panel of the Ninth Circuit affirming two lower court rulings that the statute begins to run when construction is completed (when the last certificate of occupancy is issued).

The plaintiffs argued the "continuing violation" theory, that there is no statute of limitations on these claims as long as a unit is allegedly out of compliance with the accessibility requirements of the Fair Housing Act. On January 7, 2008, the court ordered a full 15-judge panel to rehear the case. The "en banc" rehearing is set for March 25, 2008.

The National Multi-Family Housing Council and the National Apartment Association filed a friend of the court brief, arguing that application of the continuing violation theory would render the statute of limitations contained in the Act meaningless. To read NMHC/NAA's amicus brief, go to

(This entry published by Karen Estelle Carey, A member of the Real Estate Development group.)
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