Overcrowding and Occupancy Standards

by Martin S. Snitow

In 1997, 57 deaf Mexican illegal immigrants were found living in two apartments in New York City. (“7 Arrested in Abuse of Deaf Immigrants,” New York Times, July 21, 1997.) Most of the immigrants lived in a first floor four-bedroom apartment crammed with bunk beds and mattresses, according to an account in Revolutionary Worker (“Mexican immigrants enslaved in New York”August 10, 1997). While 57 people living in two apartments seems extreme, the Times reported a New York City building inspector had visited one of the apartments and found nothing wrong.

How could this be? Section 503(b) of the Uniform Housing Code requires that a dwelling unit have at least one room with at least 120 square feet and all other habitable rooms except kitchens have at least 70 square feet. The size of a room used for sleeping more than two people must be increased above these minimums by 50 square feet for each occupant in excess of two. See City of Edmonds v. Oxford House, Inc., 514 U.S. 725, 736 (1995). Depending on the size and configuration of the units, it is possible that 57 people could lawfully inhabit two large apartments.

Maximum or Minimum Limit?

Section 503(b) establishes maximum occupancy limits. A property owner cannot rent to more people than this section allows to occupy the unit. This maximum is not very restrictive. I jokingly call it the “two battalions per bedroom” standard. Some tenant groups claim an owner may not legally reject a family or group of tenants smaller than the Section 503(b) limit. This argument would turn Section 503(b) into a minimum as well as a maximum limit. Legislation was proposed but not passed in California in 1992 to turn Section 503(b) into a minimum. A.B. 3825.

How could anyone say that an owner must allow so many people? Both federal and California fair housing laws prohibit discrimination based on familial status. Familial status simply means that one or more children under age 18 live with one or more adults. If any reasonable limit on the number of occupants of a rental unit has more of an impact on families with children than on other tenants, that would be illegal regardless of the owner’s intent or expectations unless the owner could justify the limit. This legal theory is called “disparate impact” and is borrowed from cases on employment discrimination.

Lies, Damned Lies and Statistics

Raising an inference of a disparate impact on a protected class like families is not enough to prove discrimination without intent. Valid statistical evidence must be used to prove the discriminatory impact. In the leading case on occupancy limits, the Ninth Circuit found it astonishing that the property owner’s attorney had stipulated that a limit of four persons in a two bedroom unit disproportionately impacted families with children. Pfaff v. U.S. Dep’t of Housing and Urban Development 88 F.3d 739, 746 (9 Cir. 1996). Statistical proof of disparate impact usually receives intense examination and searching challenge by experts.

To make out a prima facie case of discrimination under the disparate impact theory the plaintiff must show: “(1) the occurrence of certain outwardly neutral . . . practices, and (2) a significantly adverse or disproportionate impact on persons of a particular [age] produced by the [defendant's] facially neutral acts or practices.” Pfaff, 88 F.3d at 745. Here the outwardly neutral practice is the limit on the number of occupants.

Isn’t it obvious that limiting the number of people who occupy an apartment has a greater impact on families with children? Pfaff ruled that raising an inference of discrimination is not enough. Id. at 746. Valid statistics or other proof must show the discriminatory impact on families with children. While more apartments might be available for families if occupancy limits were loosened, those apartments would also be available for large groups of adults. A higher limit on occupancy might or might not lead to significantly more rentals for families in any particular complex.

The DFEH 2 Per Bedroom Plus 1 Guideline

To avoid the need for a professional statistical analysis of every complaint filed against a landlord’s occupancy limits, both the federal government and California adopted internal procedures for these complaints. California’s “intake guideline,” as reported by Donni Grotte, then Tri-County’s Director of Government Relations, in an article on “Occupancy Limitation Policies” published in June 1988, stated that California’s Department of Fair Employment and Housing (“DFEH”) would accept complaints for investigation for the potential of an “adverse impact” where the occupancy limitations per unit are more restrictive than two persons per bedroom plus one, or 5 persons in a two bedroom unit. This guideline had two results. First, DFEH would save its resources for significant cases by not investigating occupancy limit cases where the landlord’s policy was to allow at least two persons per bedroom plus one additional person. Second, many California landlords soon adopted this standard to protect themselves from DFEH investigations.

The California intake guideline was not adopted by legislation nor by a formal State regulation. This policy was completely informal and addressed how DFEH processed complaints, not to what landlords legally could do. The federal Fair Housing Act, 42 U.S.C. §3607(b)(1), provides:

Nothing in this title limits the applicability of any reasonable local, State, or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling.

Had California adopted the two per bedroom plus one standard by law or regulation, property owners who complied would be absolutely protected both under federal and California law. But because the guideline was merely an internal guideline, landlords still had some risk they would be found to be violating the law.

In California, local governments cannot protect property owners despite the reference in the federal law to “reasonable local ... restrictions.” The occupancy rules in Section 503(b) preempt any local legislation to establish occupancy standards. Briseno v. City of Santa Ana 6 C.A.4th 1378 (1992).

The End of DFEH’s Intake Guideline

Instead of adopting or approving the DFEH intake guideline, the California Legislature did exactly the opposite. California Government Code § 12981.1, enacted in 1993, provides:

The department shall not dismiss a complaint or an accusation unless the complainant withdraws the complaint or the department determines after a thorough investigation that, based on the facts, no reasonable cause exists to believe that an unlawful housing practice, as prohibited by this part, has occurred or is about to occur.

This law essentially prohibits “intake guidelines” and requires DFEH to investigate all complaints unless the complainant withdraws it or “after a thorough investigation” DFEH determines the case lacks merit on the facts. Without a law or a regulation or even an intake guideline to support it, the “two per bedroom plus one” standard lacks any legal support now.

The Keating Memo

The federal government took a similar approach. On March 20, 1991 HUD’s general counsel, Frank Keating, issued a memorandum which discussed fair housing enforcement policy in occupancy cases. This memorandum did not establish an occupancy policy which would be considered reasonable. Like the California intake guidelines, the Keating Memorandum provided internal guidance to HUD on evaluating familial status cases involving a housing provider’s occupancy policy:

... the Department believes that an occupancy policy of two persons in a bedroom, as a general rule, is reasonable under the Fair Housing Act. ... However the reasonableness of any occupancy policy is rebuttable...

The Keating Memorandum noted that other relevant factors might include the size of the bedrooms and of the unit, the age of the children who would occupy the unit, the configuration of the unit, other physical limitations on the housing (such as sewer capacity), state and local laws governing occupancy requirements and whether the housing provider used an occupancy standard as a pretext to discriminate against families with children. So the Memorandum’s “general rule” that two persons per bedroom is a reasonable policy is subject to potential exceptions.

On July 12, 1995 a new HUD General Counsel, Nelson A. Diaz, rescinded the Keating Memorandum and adopted a new “interim” guidance. Fair Housing — Fair Lending Law Rptr. ¶5375. Based on the Building Officials and Code Administrators (“BOCA”) code, which some States use instead of the Uniform Housing Code, the interim guidance required a minimum gross floor area of 150 square feet for the first occupant and 100 square feet for each additional occupant. It also required a minimum of 70 square feet for rooms occupied for sleeping and 50 square feet for each additional person sleeping in the same room.

These interim guidelines were short-lived. On September 9, 1995, another HUD official, Elizabeth K. Julian, sent email messages to HUD fair housing officials. Fair Housing — Fair Lending Law Rptr. ¶5377. These messages instructed HUD fair housing offices not to use Mr. Diaz’s July 12, 1995 memorandum and to continue with prior practice. This effectively reinstated the Keating Memorandum and its presumption that two persons per bedroom is reasonable.

Two Bedrooms and a Den

In the Pfaff case, the rental single-family home had only two bedrooms but it also had a living room, dining room and a den which could be used as a sleeping area. The owner had a limit of four persons and refused to rent to a family of five. While the Keating Memorandum specifically mentioned the presence of a den as a factor suggesting that a two persons per bedroom standard could be unreasonable, the Ninth Circuit noted that this policy was (then) unpublished. Denouncing HUD’s reluctance to provide guidance to property owners, the Ninth Circuit declared:

HUD should spare a thought for the law-abiding property owner, because the familial status amendment presents particularly difficult questions of compliance. Accepting arguendo that larger households tend disproportionately to include families with children, it would seem that any facially neutral, numerical occupancy restriction above a certain threshold number will exclude large families in significant degree. Where may landlords like the Pfaffs safely draw the line?

Is That Your Final Answer?

Perhaps responding to this criticism of HUD, Congress enacted section 589 of the Quality Housing and Work Responsibility Act of 1998 requiring HUD to adopt the Keating Memorandum as its official policy. Act of Oct. 21, 1998, P.L. 105-276, Title V, Subtitle G, §589, 112 Stat. 2651. HUD published the Keating Memorandum standards in the Federal Register on December 19, 1998, vol. 63, no. 243, as required by this law. Two persons per bedroom is presumed to be a reasonable occupancy standard under federal law, subject to rebuttal by the facts of the case and the specific configuration of the rental unit. Since the California Legislature repudiated DFEH’s “intake guideline” of two persons per bedroom plus one, the only official or semi-official policy on occupancy standards is the Keating Memorandum as now published by HUD.

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