1. Chicago Disparate Impact Housing Issues Jeffrey Ross Seyfarth Shaw LLP July 25, 2013 15893213v1

2. City of Chicago The Chicago Fair Housing Ordinance generally prohibits housing discrimination on similar bases as federal and state law. It also prohibits discrimination on additional bases, such as “source of income”, defined as “the lawful manner by which an individual supports himself and his or her dependents.” Chicago Muni. Code § 2-160-020(n). ©2013 Seyfarth Shaw LLP 2 |

3. Cook County The Cook County Human Rights Ordinance contains the same prohibition against source of income discrimination as the City of Chicago Ordinance. ©2013 Seyfarth Shaw LLP 3 |

4. Housing Voucher Programs The Chicago Housing Authority (CHA) administers two rent subsidy programs for low income persons: the Housing Choice Voucher Program (aka “§8”) the Mobility Program (§8 on steroids) ©2013 Seyfarth Shaw LLP 4 |

5. Housing Voucher = Source of Income The Chicago Commission on Human Rights (CCHR), with court approval: has found housing vouchers to be a protected “source of income,” and as a result, required landlords to participate in government sponsored housing voucher programs. See e.g. Godinez v. City of Chicago Comn’n on Human Relations, 352 Ill. App. 3d 87 (Ill. App. Ct. 2004). ©2013 Seyfarth Shaw LLP 5 |

6. Disparate Impact Claims The CCHR has held that a disparate impact claim is viable under the Chicago Fair Housing Ordinance. See Campbell v. Brown and Dearborn Parkway Realty, CCHR No. 92-FHO-18-5630 (Dec. 12, 1992). Question: Is the CCHR required to follow the new HUD disparate impact regulations? ©2013 Seyfarth Shaw LLP 6 |

7. Income to Rent Screens The CCHR has held that a neutrally applied income-to- rent screen, where the only identified income was Social Security benefits, does not constitute source of income discrimination. Jackson v. Wilmette Realty and “Mike,” CCHR No. 99-H-32 (Sep. 27, 1999). ©2013 Seyfarth Shaw LLP 7 |

8. Income to Rent Screens The CCHR has not addressed income to rent screens with respect to housing voucher holders. But multiple pending CCHR complaints against multiple Chicago landlords allege that income-to-rent screens have an unlawful disparate impact on voucher holders. ©2013 Seyfarth Shaw LLP 8 |

9. Step 1 - Disparate Impact? Does an income test disproportionately screen out voucher holder applicants? ©2013 Seyfarth Shaw LLP 9 |

10. Step 2 - Business Need? Can the landlord show a legitimate business need for the income screen? ©2013 Seyfarth Shaw LLP 10 |

11. Step 3 - Equally Effective Alternative? Is there another income test, or other screen, that would satisfy the landlord’s legitimate business needs but with lesser adverse impact on voucher holder applicants? ©2013 Seyfarth Shaw LLP 11 |

12. Size of Voucher Does the income screen analysis change if the voucher covers: Part of the rent? All of the rent but not all of the additional rental costs? All of the rent and all of the additional rental costs? ©2013 Seyfarth Shaw LLP 12 |

13. Credit Checks What about credit checks for voucher holder applicants? ©2013 Seyfarth Shaw LLP 13 |

14. Other Policies What about a policy that requires an approved applicant to sign a lease within 72 hours? What about other “neutral” policies? ©2013 Seyfarth Shaw LLP 14 |