Gateway settles claims with U.S. Justice Department over accssiblity requirements

Washington, D.C. – February 1, 2015 – (RealEstateRama) — The Gateway Companies, based in Florence, Alabama, its owner, Allan Rappuhn, and related partnerships which own multifamily apartments today settled claims by the United States Justice Department that Gateway failed to meet the technical accessibility requirements for apartments under the Fair Housing Act and Americans with Disabilities Act. The settlement, which was formalized by a Consent Order (the “Agreement”), affects 71 separate apartment complexes in Alabama, Georgia and North Carolina. Under the Agreement Gateway will pay approximately $5000 per apartment complex to establish a settlement fund for any aggrieved persons identified by the Justice Department in the future and for a civil penalty.

The Justice Department has not yet identified any persons with disabilities who were denied housing due to these technical violations. However, the Agreement gives it one year to identify whether any person has, in fact, suffered any harm. The terms of the agreement provide that any money remaining in the Settlement Fund after expiration of this one year period is given to fair housing groups in Alabama, Georgia, and North Carolina. The Justice Department will investigate the claim and determine of the person has, in fact, suffered any harm. Any money remaining in the Settlement Fund after expiration of the 12 months, shall be distributed to “qualified organizations for the purpose of conducting enforcement or educational activities related to the Fair Housing Act in Alabama, Georgia, and North Carolina.”

Rappuhn and Gateway fully cooperated throughout the investigation and negotiation process and now look forward to addressing the elements required by the Consent Order and continue with the important work of providing decent, safe, affordable, and accessible housing to our residents. Amy Montgomery, President of Gateway Construction Corporation, reinforced Gateway’s commitment to tenants with disabilities, saying “Over more than 25 years Gateway has developed more than 3500 high quality apartment units throughout the southeast, most of which are affordable units with monthly rent of less than $500. Gateway prides itself on running a careful, diligent business in a highly regulated industry. Almost every week we meet the requests of tenants for reasonable accommodation for their disabilities. That is part of who we are.”

The Agreement also calls for the partnerships which own the apartment complexes to retrofit the alleged technical violations at the properties over a three year period. These consist of items such as installing removable cabinets to provide greater clear floor space in bathrooms, adjusting the height of light switches and outlets, and adjusting sidewalks to remove small sloping deviations. In most cases, the contemplated retrofits involve a matter of adjusting existing designs by a matter of inches. Gateway will engage an independent, qualified consultant to identify appropriate changes and certify completion of retrofits. Gateway expects substantially all of the retrofits will be funded by the partnerships from existing replacement reserves which are normally used to replace aging roofs, appliances, HVAC systems and other requirements to provide safe and decent housing.

Gateway agreed to settle the Justice Department’s claims solely to avoid the time, distraction and significant cost of litigation. Gateway denies all of the allegations made by the United States in the Complaint it filed in Federal District Court in Birmingham, Alabama on September 30, 2015. The Agreement also states that there has been no finding by the Justice Department of non-compliance with the Accessibility Design Requirements or any other federal, state, or local statute or regulation.

Many of the properties included in the Justice Department’s complaint were built decades ago including some built more than 20 years before the complaint was filed. The architectural plans for properties were provided to Gateway by licensed architects and local building inspectors certified the properties were compliant with the then prevailing design and construction standards. However, the passage of time and the reliance on architects and building inspectors is not taken into account by the Justice Department when filing a fair housing case.

According Montgomery, “While we believe that we have and continue to do a great job with respect to meeting accessibility standards, this process has been a learning experience. It is clear that much legislative work needs to be done by the housing industry to clear up ambiguity and conflicts within the different regulations, clearly establish materiality thresholds, set time limits and provide for normal building construction tolerances within the code requirements. Furthermore, focused efforts by the affordable housing and investment community are needed ensure that the consequences of innocent, good faith mistakes based on the advice of professionals are not draconian. Otherwise, providing affordable housing under some of the most successful government programs is at risk.”

Rappuhn added, “We are very proud of our efforts to provide accessible housing and will continue to uphold that very high standard in our work.” He also stressed the importance of putting this complaint to rest, saying “We are committed to doing right for our tenants, the housing finance authorities that foster affordable housing, our lenders, our investors and our employees. We believe we have done so in resolving this matter. We appreciate the support and cooperation from our investors, partners, lenders, tenants, construction professionals and state housing agencies through this process.”

Further inquiries regarding this matter may be directed to Amy F. Montgomery, President of Gateway Construction Corporation, at 256-760-9657.

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