Disparate Impact - Where do we draw the line?

As a professional in the property management industry with more than 24 years of experience and as a licensed Real Estate Broker in Florida and North Carolina, not to mention being a proud US Citizen of Hispanic descent, I am very concerned with discrimination. I admire the way we try to include everybody in our great Country, The United States of America and I am an advocate to eliminate any possible discrimination in our communities. Living in South Florida, a true melting pot, shows people how people of different ethnic and cultural background can live together in harmony. Of course we still have to solve some discrimination issues in our Country but I do not see any place in the world where people are treated so equally as in our Country.

Not only as President of my company, Florida Property Management Services Inc but as the current President of the South East Florida National Association of Residential Property Managers Chapter (in formation) as a Past Vice-President and Director of the local Chapter of the Institute of Real Estate Management, Past Director of the Florida Association of Realtors and Past President of the Florida Chapter of the CCIM Institute (www.ccim.com), I have always been working towards equality, inclusion and the promotion of non discriminatory practices in all organizations. Furthermore I have participated in several Committees and Advisory Boards concerning professional development of minorities. In summary I am totally in favor of the Civil Rights Act, that all men are created equal and that discrimination practices of any kind cannot be tolerated. What I do not understand is taking such an important issue and try to create problems instead of solutions. Trying to distance more groups of Citizens than bringing them together, worrying more for the things that separate us than for the things that unite us. Recently I heard for the first time the concept of Disparate Impact. 

Here is some background on Disparate Impact:

The U.S. Supreme Court was set to hear arguments in early December regarding the case, Mt. Holly Gardens Citizens in Action v. Mt. Holly which involved the disparate impact housing theory. The case focused on the question of whether or not the Fair Housing Act would permit the government to establish discrimination using statistical analysis instead of if the discrimination was intentional.

Earlier this year a final rule was published by the Department of Housing and Urban Development (HUD) which established a national standard for determining whether a particular housing practice violates the Fair Housing Act (“Act”).

The rule implemented a burden shifting test that requires the charging party to first prove that a practice results in, or would predictably result in, a discriminatory effect on the basis of a protected class. If the charging party is successful proving their case, the burden then shifts to the defendant. The defendant must then prove that the practice taken into question is indeed necessary to achieve one or more of its substantial, legitimate, nondiscriminatory interests.

A major concern with this rule is that the method of proving one’s case is inconsistent with traditional judicial processes in the United States. Historically, the charging party has the burden of proving their lawsuit. It should not be different in this situation.

An additional concern with the final rule is that a legitimate business practice, such as imposing a minimum economic standard or requiring a criminal background check on prospective tenants, may fall into the category of creating an unintended disparate impact on a group of citizens. This may significantly alter typical business activities for property managers if they cannot set standards for tenants pertaining to the ability to pay rent and the safety of other tenants.

So where do we draw the line? This means that if in my daily business I require to check criminal background on all applicants because our policy is not to rent to people with criminal background but if as a result of that policy I am not approving prospects from a protective class under the Fair Housing Act, then I am in violation of the Act. really? Are you kidding me? If I request as a policy that tenants meet the criteria of proving monthly income of 3.25 times the monthly rent and as a result of applying this policy to all applicants regardless of race, ethnic background, etc., one specific group is left out because of applying this policy then I am in violation of the Fair Housing Act. Really? Are you kidding me? 

One thing is to exclude a protective class another thing is applying policies in our businesses that make economic and financial sense for our business to perform to the maximum possible. Isn't this what capitalism is all about? If I want to require 3.25 the rent in income from applicants that is a business decision. the market will tell me and the forces of supply and demand will make me lower it for my business to perform but why do i have to change my business financial policies due to this interpretation.

The rule is out there and of curse we will comply with the rule and all aspects of any law as we usually do BUT,

WHERE DO WE DRAW THE LINE?