4 Things Apartment Investors Need to Know Regarding Current Florida Regulatory Issues

Posted by on Sep 5, 2015 in Blog - Commercial Investment Properties, Uncategorized | 0 comments

Complete Episode and Notes: Things Multi-Family Investors Need to Know


Eric Odum: And today we have with us Courtney Barnard. Courtney is the Director of Government Affairs at the Florida Apartment Association. Courtney, welcome to the show!


Courtney Barnard: Thank you so much for having me. It’s my pleasure to be here.


Eric Odum: Tell us a little bit about Florida Apartment Association. What’s its mission?


Courtney Barnard: Well, you know, we are a federation of associations. There are 9 associations in the state of Florida. We represent and advocate the interest of multi-family industry in the state of Florida. So, we have our legislative side, you know, putting our own legislative agenda, and of course we educate our members. There are a lot of designations and as far as, you know, anything from maintenance to property management. And we try to provide some amazing networking opportunities for members plus my conference which is upcoming in October. We’re the 3rd largest apartment association in the country and we got members all across the State. So, advocate, educate and help understand.


Steve Silverman: Courtney, who typically are the members of the association?


Courtney Barnard:  We have a very diverse mix of members and we have more traditional apartments and you can go drive down the street and see every day that are managed by large corporations. We also have private lead and we have independent owners. We do not represent condominiums and other type of rental community. Strictly, we are traditional apartment, whether that’s a corporate housing or senior living. There’s a wide range but anywhere from rural to urban we kind of ran the whole game.


Eric Odum: So, you as the Director of the Government Affairs, what exactly does it entail Courtney?


Courtney Barnard:   I’m basically the one stop shop. I’m kind of the whole Government affairs department here. I service our housing advisor for the level issues, anything about volume property management. And part of the housing, building codes and tenant issues. I help advocate 15 federal levels association in our members. We also work to grow and maintain coalition. We’re the part of where the housing coalition is. So we work and communicate with other groups and elected officials.


Steve Silverman: So part of what you cover particular classes, now I understand that a particular classes to be associated with hybrid. Can local municipality place additional requirements?


Courtney Barnard: Yes. And actually, you know, I also think of the protective process, it’s really sort of the minimal protective classes. You have your 7 protective classes which are Race, Color, Nationality, Origin, Religion, Sex, Disability and Marital Status, that’s the department of children. And that’s what protective under federal government. Now, at the local level, you can add on more protection. The local areas can easily create this through city or county code. And we do see this in places all over the country. In Florida this is something we see often and in South Florida, we have extra protected classes like Source of Income and possibly gender; transgender, anything that this city or county may feel. We have something in Orlando here that helps protect from discrimination. So there’s a minimum height requirements and local can had more other discretion inside a county or city codes.


Eric Odum: Let me ask you a question. If you got an investor someone coming from California and he buys an apartment in Miami. Is there some sort of regulatory process that the purchaser would go through?  Say, he would register and het the rules in Miami or just expected that he supposed to know or she supposed to know what the laws and rules are? How does it work Courtney?


Courtney Barnard: Well, you know I really can’t speak specifically to the process in Miami Dade. But I do know that it would be my opinion that they probably do is that the intelligence will work at the county and city code and just to make them informed by decision. And there are quite a few protected classes in Miami state county and we actually been fighting some recent battles on this, especially in Miami Dade. I don’t know what it is about Miami; it seems to be that sprouting of every legislative issue. So I would recommend just from being an informed buyer to have them go ahead and do that diligently because there are so many counties inside Florida that they can go and speak to. They need to research it. But especially in a large municipality like Miami Dade, there’s probably a lot of things that property owner should be aware of.


Eric Odum: It almost seems like not really shame of flag because it really seems that if you’re coming from outside of the area and buying, maybe joining FAA Florida Apartment Association would be the way to go. Because now that they have someone who can help them do the research and not having to dig through municipalities they are not particularly familiar with.


Courtney Barnard: O well, I don’t think that the shame of flag whatsoever. I do think that, you know, it is beneficial for everyone to join because if you have this property, it’s almost like a way of having a sort of business insurance but really isn’t of any extra cost to you like a traditional insurance products. But we are looking out for you everything from the source of income or protective classes due to service enable. And we watch not only what’s going on in Miami but what’s going on all over the State. We track what the issue and we see the trend and we sort that, you know, to help fight this issues and protect your business.


Eric Odum: We wanted to talk about this briefly before the start of the show. There are really sort of 4 areas we want to focus on that we wanted people to know before the end of the year and you had mentioned Miami, which is one of them. Why don’t you tell us what’s happening in Miami with the domestic violence cases and source of income that will give sort of brief overview of what’s happening there.


Courtney Barnard: Of course, I’d be happy to. So this is going to be interesting piece of ordination came off actually in October and it’s something that we work with the county on for about 5 months to try and manage to make changes in the unit, sort of two prompt issue. So the first deal is the source of income protection. And if you’re not too familiar with that, Source Income Protection means that you have to rent to someone regardless of what your source of income is. So, that’s any type of nontraditional income like alimony, government assistance. And it’s really more than issue for apartment owners when the source of income protection is a Section 8 voucher or a Housing choice voucher. And this means if someone came to you and this is how they going to pay for the apartment, we obligated to accept it. Now, regarding the Domestic Violence aspect of this, there was an ordinance put in FAA which we filed and then he had eventually lost them unfortunately. But if the victim is perceived or actual victim of domestic violence we now have access under Source of Income protection. And on the outsight of my team, this law is very strange and it was written to protect someone who make tenement situation abusive. They have to leave suddenly so they went to a shelter or someplace where they would be receiving immediate assistance like a cash voucher. And this will allow them to get an apartment very quickly by protecting this source of income. So the intention is very positive. And this is to protect victims. While the other unit can be very difficult for apartment owners because suddenly, if they given a Section 8 voucher, you have to accept that. And we all know that Section 8 is a voluntarily federal program, you have to go through a lot of instructions, paper works and tax. It puts a very large burden on to the owners of the buildings by foresee man as part of payment deal. And the other issue is that there’s no documentation that a person needs to provide that can be validated by the apartment community for them to identify that you’re really a victim of domestic violence. In the state of New Jersey, they have the same ordinance that a person’s need to provide the apartment community with rather a proof like a police report, copy of restraining order, a statement from councilor, or some sort of proof that they experience domestic violence and they are seeking new shelter. In the state of Florida now, in Miami, they sort of live up to your leasing staff to determine whether or not they go with the copy and whether or not the person is a victim. It took a lot of liability on the leasing staff because anyone could say that they are victims. They have to provide zero proof. We hadn’t have very many, we actually never had any issues come up since it’s passed. Like I said, you know, I don’t have any awareness of Miami Dade County provides people with like, this is what you have to file on our County. Sort of that diligence and I think people living in Miami Dade who could be a victim of Domestic violence probably don’t know about this ordinance. I don’t think very many owners know about it. And we work in very large companies to help get this written in most acceptable way and they marks up to go way to actually make it done but also to protect owners. And unfortunately we have 5 months negotiation. We have pretty much deal protection.


Eric Odum:  We can see which is really open to abuse by tenants because they don’t have to build a proof.


Courtney Barnard: Exactly. It gives you a big deal of liabilities where you know boarders have no proof. You know, liability for a landlord is something that we really try to work on. We’re actually working on several designs liability studies. Running background checks, things like that just to see how we can change the law and make it friendlier to owners and companies to do business. Obviously everyone wants to have a safe place to live but it shouldn’t come to the extent of bribery to home owners.


Eric Odum: That’s one thing we need to know about. The next one is going to be very close to Steven’s heart. Steven the issue number 2.


Steve Silverman: Yeah, well I love my dog and changing the subject a little. Pets are long had been an issue for multi-family landlords. Dogs do bark and some people see they dogs as part of family and they don’t mind it barking. Maybe they even encourage it but


Eric Odum: It would really come down to, what you call it, it becomes to spouse relationship. After a while the barking dog, the owners become completely immune to it. Just like the spouse, they yapping from you know either husband or wife just become like they don’t hear it anymore. So this is an issue, right?


Courtney Barnard: Well, you know, problem properties are not only necessarily a more than disruptive issue but we do have a problem and for sure a lot of Americans like some of them will have a pet and they will say it’s a service animal and you know under Federal law, you can’t really ask someone. They were restricted from asking what if or if this is a service animal or the duties they are accentuated and rightfully so the protect them with disability. But we had a victory with regard to identifying pets versus service animal in the State of Florida. On this year, House Rule 71 passed this session in 2015 and basically what it does is now we have a way of identifying a service animal versus a pet through a single test. And now we have the power in the State of Florida, let’s say you have a pet in your property and someone said that it’s a service animal so if this animal is not house orphan and if they’re not under control of the owner and they are a threat on the community as well, and if it’s a combination of 3, anyone of those 3 things, you can actually have that pet evicted. And I think you and I both know that if its true service animal, it will be house orphan, it would be under control of the owner and it would not be a threat to residence. So this is a very simple way for owners and managers to identify a full service animal. It also increases the penalties for someone who does have a pet that they falsely identified as service animal and now it’s now being enforced in the State of Florida. So they come to your apartment and start your semester at the University of Florida and you have your additional support Chihuahua and that Chihuahua is now going to be considered as a pet. You have to pay your pet rent and it’s not gonna fall under that category of what is a service animal. If you tried to pretend it is, you can actually serve with community service.


Eric Odum: I had a condo in Tampa. There are rules against having pets in the condo association. It doesn’t have, you know, there’s a legal separation between condos and multi-family. But still their stories are still the same. All of a sudden, we went from 2 months from no dogs. There might be like 10 or 20 dogs in the apartment complex and there quite some service animals and again it comes down to owners complete become some point immune to the barking dog and they put the dog on the balcony. This is not a service dog. It’s disrupting the people on their own apartments. They heard the dog barking, barking, and barking at 2 or 3 o’clock in the morning. It’s crazy. So this is really cutting down on this false service dog in these apartments kind of sounds a good deal.


Steve Silverman:  If you’re renting an apartment. So I think Eric would like to have service dogs pass the written exams and that would settle who’s a service dog or who’s not.


Eric Odum: Yes.


Courtney Barnard:  Well, you know, just based on Eric’s story, Tampaians have the restrictions on pet but you know, you can’t really have restrictions on service animal.  And just a note if you actually do read through Florida statue, a service animal, it can actually just be a dog or a miniature horse. Those are the only service animal who are actually recognized in the state of Florida. So how many times do we actually use service animal like cat, iguana, bird, monkey, they not even recognized by our State law.


Steve Silverman: So you can take your horse to your apartment then if it’s a service animal?


Courtney Bernard:  It’s just a miniature horse to take in your apartment not the regular one.


Eric Odum: Don’t give Steven any ideas please. This guy isgoing to go out and get a horse.


Steve Silverman: It is very appealing.


Eric Odum: Tell us about what’s going on, let’s change the subject, because we have two now, two important points. Second one being the service animal and now, fire assessment fees.  What are some changes there Courtney? Talk to us about change.


Courtney Barnard: Well you know, Fire Assessment Fees is actually not a new thing in Real estate in general. But this year, we’ve seen quite pop up in the State of Florida. If you look at the budget, governor got signed in July, he got quite of money from some local municipalities. So generally, it means this areas or departments really suffer. They must have experienced a lot of budget shortfall so they are requiring fire inspections or fire assessment had really grown exponentially this year. I’ve seen it in 5 different counties in the last month. It’s all over the place where we are being charge or owners have been charging per unit fee for fire inspection to make sure that everything is up to code. We don’t normally have to do this, this is not like out of the blue but the cost is normally like $10 per unit. Some units will charge $40. We’ve seen the prices double. We had some negotiations and we are actually keeping them from inflating a $49 inspection fee. Not a per unit, it’s not per property so if you can think of it if you have 300 unit community, that $49 for each of them you are out thousands of dollars. This has been an issue that popping up a lot. We are working with local communities to lower the fee. Because it is something that does not need to be paid for, there’s a lot of studies in the State of Florida and most residential don’t occur in multi-family. They already have certain requirements for sprinklers, building materials, hydrants and a lot of excising fits. You know a single-family home doesn’t really need to have a fire extinguisher; you don’t need to have commercial sprinklers as to multi-family will have this.


Eric Odum: So the bottom line here, this is not a nominal fee anymore. It’s actually substantive that’s affecting the bottom line.


Courtney Barnard:  It is, yeah. And you know, all those costs are going to be essentially passed on to our residence.


Eric Odum: If he can because Courtney, if you say this is not the same as single-family then there’s an imbalance between Single-family and apartment. If you started saying that these are only pieces that are carried on single-family, can you really pass it on? It becomes the point wherein maybe it’s not as competitive as apartment if you got this like if you gone from $30-$100 per unit on an apartment complex for inspection. It could be substantive.


Courtney Barnard:  Yeah, you’re actually 100 percent correct. And you know, it is least unfortunate than in the cities that we’ve not been able to present this information and let them know that this is how much multi-family fires is cost the city versus residential. Usually, that 90 percent of the electric fires are in single-family properties because they don’t have extinguishers, they don’t have the extra protections in the building. So it’s a very rational argument and we have some resources available on our website for anyone who wants information in talking to those city officials about this. So we can talk more about where we can find all that, you know, as we close our interview today.


Steve Silverman: So Courtney, in the multi-family area, issues relating to residential living really normally bubble up to the local level but not always. The Supreme Court recently ruled on a case in Texas. Can you tell us about this?


Courtney Barnard: I would be happy to. So this is a case that the Texas Housing Authority versus the inclusive community project. This was a case involving desperate impact and the court usually advises to uphold this impact to liability. Basically meaning that the court decided that business owners might be intentionally creating environmental discrimination with regard to fair housing even they are not actually violating fair housing laws. So you put that in a sort of plain language, you can be following the letter of the law but your business practice could be construed as an intentionally discriminating against one of those called protected classes. And in this Texas case, basically the development communities’ were building tax credit apartments that will receive federal grant money to build and they will build them in areas that were predominantly well, low income high minority areas. And they feel that they could basically told them to by building here, you are propitiating an environment of low income high minority tenants, you should be building middle class neighborhood to have better access to transportation or education and so on. We’ve seen other cases pop up in New York State for example. In New York City Housing Authority is currently being sued for evicting several residence form apartment building that were also tax credit housing. So to give you a little background on this, in the city of New York, you know, just imagine, they have building rodent problems. So building had a lot of rodents and order to meet the house safety standards the City and State of New York, rodents have to be eliminated. So people were evicted from the building in order for the problem to be contained and to have the problem be remedied. And the city of New York was sued because the building, you know where people being evicted were typically low income high minority areas and it is being seen as the way of simply disproportionately discriminating against this people by having to evict them.


Eric Odum:  This sounds like a very dangerous ruling. I’m trying to get my hands around the first the case itself that got to  love income projects that are subsidized and you’re building it in a low income area. There’s a reason for that, the land is significantly less expensive then it is in your middle class, upper middle class, upper income areas. How do you make the numbers work? It seems to me that you’re going to significantly affect available housing because the development cost might not warrant building the project to begin with because now you’re force to move in areas that have higher values. I’m just having a tough time get my hand on this. I understand the legalities of it, sometimes do not match up with the economics of it but it seems like its really nasty problem.


Courtney Barnard:  Yeah., I read a lot of the majority opinions and Justice Kennedy will have some similar issues. Basically he talks about how different impact theory is a viable theory but at the same time it’s not something that he would really stop fully as an enterprise. And basically what the Florida Apartment Association with the National Apartment Association really started to advise our community owners to do is to, you know, when you look at your decisions, whether or not a property is already built you’re currently managing it. But to make sure that this decision you are making, that you back up your reasoning for making decisions in case they file fraud against you. We sort other cases in Texas where a community had a swimming pool that has signs you probably see it in every single swimming pool that says ‘No one under that age of 14 can use the pool without parental supervision’. It’s because they wouldn’t want someone to be drown in the pool.  But the community can end up being sued because the person living there feels that they are discriminating people with children that their children would not be able to have access to all the amenities of the property and they were basically in a way unintentionally discriminating someone with a low status which is protective class under federal law. Now this case did not make to, you know, it was ruled out of court. But I do think that we are going to see a lot more discussion across the country with this issue. I want to feel monger but you know, something that if want to run a community, you have to make note of why he make specific decision. And if you’re building a community, there are some things that are unknown when your building it. And what we will see if there’s no enough apartment across the country right now is that we will have more inclusions down there.


Eric Odum:  This is a good time I guess for you to go ahead and give us your contact information in terms of the Florida Apartment Association. If want to learn more about these things, so Courtney let us know how we can do that.


Courtney Barnard: Well I think the easiest way is to visit our website and its http://faahq.org/. All of my contact information is up there and I’ll be happy to reply to your emails or take calls if you have further issues. If you’re a member you can have access to our government affairs area where also have articles and news information for our members. For non-members I’m still be happy to help. Just email me and I can send any information you need. And once again the website is http://faahq.org/ .


Eric Odum: Terrific! Steven,


Steve Silverman:  Courtney, Thank You. That was a very informative. You know there are a lot of issues that people go. Not just the case of buying an apartment complex or developing a new one. Lot of new issues to consider so we learned a lot and thank you so much for you input today.


Eric Odum: Absolutely!


Courtney Barnard: Thank you for having me. It’s really my pleasure to be with you guys today. Our association has  your back in business so I encourage you guys to join our organization and think of it as a sort of business.


Eric Odum: Courtney, thank you so much for your time today!


Courtney Barnard: Thank you. You guys have a great day!

You can listen to the Podcast at the Invest Florida Show. www.investfloridashow.com       Episode 42


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