‘Capital Insights’ with Jack Kern: The Department of Justice is Anti-Multifamily

“Government has laid its hand on the health, housing, farming, commerce and education industries, and to an ever increasing degree interferes with the people’s right to know. Government tends to grow; government programs take on weight and momentum as public servants say, always with the best of intentions. But the truth is that outside of its legitimate function, government does nothing as well or economically as the private sector of the economy.”
 
President Ronald Reagan, 40th President of the U.S. (1981 to 1989)

The housing markets are a mess. The massive fraud, perpetrated while the regulators were sitting on their fat policies and gorging on donuts and coffee, desperately needs to be investigated and cleaned up. Priorities have to be given to ferreting out the fraudsters and putting into place policies that make sense.

So what’s that Department of Justice up to now? (Remember, this is the new Department of Justice, promised by Obama to be more open, more honest and more reasonable. We have Eric “I’m not related to Capone” Holder to thank for this piece of Federal Racketeering.)

They’re taking aim at JPI and six affiliated JPI companies. Here’s the story:

According to the complaint, “certain JPI complexes designed and constructed by the defendants have inaccessible steps and curbs leading to units, steeply sloped routes leading to units, and no accessible routes to site amenities, including inaccessible trash facilities, barbeque grills and cookout tables. In addition, certain housing units have narrow doors and hallways; kitchens that lack accessible clear floor space at the sinks, ranges and refrigerators; bathrooms that lack accessible clear floor space at the toilets and tubs; and thermostats that are mounted too high to be accessible to a person using a wheelchair. The lawsuit seeks a court order requiring the defendants to modify the complexes to bring them into compliance with federal laws and prohibiting future discrimination by the defendants. The lawsuit also seeks monetary damages to compensate victims and a civil penalty to be paid to the government.”

It is becoming increasingly obvious that with Federal policies so overtly slanted against multifamily we’re going to see a return to homeownership preferences at any cost after the foreclosure crisis is resolved. This continuous level of attacks on professionally managed apartment buildings is a policy sham. Does anyone at the Department of Justice know how to read? Have they seen that all construction plans go through rigorous entitlement and review processes, not to mention excessive and burdensome inspections during construction? Did some moron on Holder’s staff all of a sudden become an expert in what is a reasonable accommodation for someone with disabilities? And lastly, and I’ve been doing this a long time, where the hell are the disabled people living? I’ve not only never seen anyone come into any community I’ve worked with, but have only heard of an occasional disabled renter. And in that instance, I know for a fact that the rental office staff worked diligently and well beyond the call of what we’d expect to accommodate the needs of the disabled individual.

Multifamily construction is down by volume, permits and every other measure. We can only presume that when the economy turns and capital markets permit the development pipelines to move forward once again will larger owners and developers become targets of the Department of Justice. It’s time for the Congress to repeal the ADA (Americans with Disabilities Act) and rewrite the law to permit a rational discussion of what constitutes accessibility. Requiring every unit to be accessible is burdensome, unreasonable and economically unviable for the industry. Let Obama stand up and resolve this issue, instead of hiding behind continuous campaign platitudes about working together. We get it, now tell Holder and his clowns to back off.

(Jack Kern is the managing director of Kern Investment Research and can be reached at [email protected].)