Follow Three Dos & Don'ts on Setting House Rules Affecting Children
Like many tax credit managers, you may have considered setting house rules aimed specifically at children. Your motive may be concern for children’s safety around specific hazards like swimming pools. Or if you’ve been getting noise complaints from residents or have recently found excessive wear and tear due to children, you may want to impose house rules to rein in children and preserve peace and quiet.
But rules aimed specifically and solely at children easily run afoul of the fair housing law’s ban on familial status discrimination. This ban comes into play whenever site policies seem unfriendly to families.
We’ll discuss fair housing enforcement at tax credit sites and provide some tips on how you can set and enforce rules that protect children and protect the peace and quiet at your site without risking a fair housing complaint against you. Note that if your tax credit site qualifies as “housing for older persons” under the Fair Housing Act (FHA), it’s exempt from the ban on familial status discrimination. Check with your attorney or fair housing expert to determine whether your site qualifies.
Fair Housing Enforcement
A violation of fair housing law is reportable noncompliance for Low-Income Housing Tax Credit (LIHTC) properties. It is reported on Line 11h of IRS Form 8823, along with any other finding of noncompliance relating to a violation of the general public use rule. While the IRS has indicated that the allocating agency responsible for implementation of the LIHTC program should not report a taxpayer for a fair housing issue that the agency believes has occurred, the agency should report the issue to HUD for follow up.
HUD is responsible for enforcing the Fair Housing Act. And when a fair housing complaint is filed, HUD or a substantially equivalent state or local fair housing agency will investigate it. When an allocating agency receives notification from HUD or the Department of Justice of a violation under the FHA, the agency will immediately file a Form 8823 with the IRS (there will be no correction period given), checking the “out of compliance” box on Line 11h, and will notify the property owner in writing of the action that has been taken.
When the IRS receives the 8823, it will send a letter to the property owner stating that a finding of discrimination, including an adverse final decision by HUD or a substantially equivalent state or local fair housing agency, or an adverse judgment by a federal court, will result in a loss of low-income housing credits. Similarly, the IRS will also send a letter to owners notifying them that a judgment enforcing the terms of a settlement agreement or consent decree will result in the loss of low-income housing credits.
In order for the finding to be corrected, documentation that the owner has complied with the court order and HUD’s requirements and that the violation has been corrected is required.
Don’t Unfairly Single Out Children
Don’t write rules that bar children from doing things you really don’t want adults doing either. If the behavior would be undesirable in an adult, but your rule forbids only children from doing it, this suggests that your real purpose is just to make life difficult for families with children—which is familial status discrimination. To avoid giving this impression, avoid referring specifically to children whenever possible.
In one case, a court sided with two fathers, who accused a California site of discrimination based on familial status because of its policies governing children’s behavior in common areas. The rule, which was included in training materials distributed to all managers, established guidelines for on-site managers to respond to unsupervised children. If a manager found a “young child” of a resident unsupervised, the guidelines provided a series of responses, including talking to the parent or guardian, contacting social services or the police, and evicting the residents.
The court ruled that the site’s policy toward unsupervised young children inherently treated children differently than adults by limiting when they may use the common areas of the complex to times when they were supervised by an adult. The policy also treated the parents of young children differently by subjecting them to certain consequences if their children were found unsupervised. In contrast to households with children, adults-only households could use the entire premises without limitation and without the risk of receiving warnings or facing eviction for violating the adult supervision guidelines [Bischoff v. Brittain, April 2016].
Single Out Children If Their Health and Safety Are at Stake
If a particular situation or feature at your site presents a danger to children, set rules to protect them. Many courts have upheld rules aimed at protecting children or ensuring that they’re properly supervised in situations of special danger to them. In one case, a housing provider had a facially discriminatory gym use rule that survived the plaintiff’s motion for a preliminary injunction. The rule stated, “Children under 16 are prohibited from using gym equipment at any time and may not be present in the gym unless accompanied by an adult.” In this case, the court found that the defendant’s safety justification for not allowing children under age 16 to use gym equipment was sufficient [Landesman v. Keys Condo. Assn, October 2004].
However, if you have such safety rules directed toward children, be sure to narrowly tailor them. The goal of the rule must be furthered in the least restrictive manner possible. Think about how to narrow a rule’s effect so that it is not unduly restricting unnecessary persons. For example, pool rules that restrict or single out children can be facially discriminatory. A rule is facially discriminatory or creates “disparate treatment” if it treats children (and therefore families with children) differently than it treats adults. Examples of pool rules that courts have deemed unlawfully discriminatory include:
- Children under the age of 18 are not allowed in the pool or pool area at any time unless accompanied by their parents or legal guardian.
- Under no circumstances may a child under the age of 18 be in the pool or in the pool area without a parent.
- Children must leave the pool by 6:30 p.m. and must be supervised by a resident relative at all times when using the pool.
Once the plaintiff has made an initial showing of disparate treatment, the burden shifts to the owner to provide a legitimate justification for the rules that will establish that the rules constitute a compelling business necessity and that the owner has used the least restrictive means to achieve that end.
Owners often assert and lose with the defense that their pool rules are to ensure the safety of children. This defense fails because the rule must be the “least restrictive” means of achieving the asserted goal of safety. In one case, a court pointed out that achieving safety by requiring parental guardians for minors was ineffective because a person younger than a parent might in fact be a better swimmer than an older parent [Iniestra v. Cliff Warren Invs., July 2012]. Requiring parents to supervise children, as opposed to any competent adult, “transforms this rule from one that could be reasonably interpreted as a safety precaution to one that simply limits children and their families.”
Be sure your limits are reasonable and not pulled out of thin air. One way to prove this is by showing that others have set similar rules in similar situations. Sources for appropriate guidelines might be manufacturers’ guidelines for athletic or recreational equipment. Also, check how other sites, hotels, or gyms in your area have set restrictions—but be sure to get your attorney’s input on whether others’ policies comply with fair housing law.
Don’t Target Children for Enforcement When Rules Apply to All Residents
Don’t single out children when you enforce rules that apply to residents of any age. If you’re hit with a discrimination claim, the court will look at what you do and not just what you state in your rules.
For example, don’t use a rule against running and screaming in the hallways to clamp down on children while you ignore similar behavior during adult residents’ parties. And don’t let adults push or throw one another into the pool if you routinely enforce your rule against children who do this.