8-KRegulation FD

AVALONBAY COMMUNITIES INC 8-K Report, Regulation FD Disclosure (Oct 20, 2010)

Filed October 20, 2010For Securities:AVB

Summary

AvalonBay Communities, Inc. (AVB) filed an 8-K on October 20, 2010, to disclose the settlement of its New York City litigation with the U.S. Department of Justice. The lawsuit, filed in August 2008, alleged that the Avalon Chrystie Place community was not designed and constructed in compliance with the accessibility requirements of the federal Fair Housing Act. The company has entered into a consent decree, approved on October 15, 2010, without admitting or denying liability. This settlement involves making agreed-upon modifications to apartment homes and common areas at Avalon Chrystie Place, as well as inspecting and potentially modifying six other New York City communities. While these retrofits are expected to be capitalized as real estate improvements, AVB stated that the settlement and fulfillment of its terms are not expected to have a material impact on its financial condition or results of operations. The decree also includes a civil penalty and the establishment of an aggrieved persons fund, with potential reversion of remaining funds to the company. AVB has an agreement with the architect to share certain costs associated with the settlement.

Key Highlights

  • 1Settlement reached with the U.S. Department of Justice regarding a Fair Housing Act lawsuit.
  • 2Lawsuit pertained to accessibility non-compliance allegations at Avalon Chrystie Place in New York City.
  • 3Consent decree approved on October 15, 2010; AVB neither admits nor denies liability.
  • 4Required modifications at Avalon Chrystie Place and inspections/potential modifications at six other NYC communities.
  • 5Retrofits will be capitalized as real estate improvements.
  • 6Company expects no material impact on financial condition or results of operations from the settlement.
  • 7Settlement includes a civil penalty and an aggrieved persons fund, with potential reversion of funds to AVB.

Frequently Asked Questions

The lawsuit, filed by the U.S. Department of Justice, alleged that AvalonBay's Avalon Chrystie Place community in New York City was not designed and constructed in compliance with the accessibility requirements of the federal Fair Housing Act. The company believed its design met New York City's Local Law 58, which it viewed as compliant with federal standards.

AvalonBay entered into a consent decree without admitting or denying liability. The settlement requires the company to make modifications to the apartment homes and common areas at Avalon Chrystie Place, and to inspect and potentially modify six other New York City communities. It also includes a civil penalty and the establishment of an aggrieved persons fund to compensate individuals who may have been damaged.

AvalonBay Communities stated that it does not expect the settlement and its fulfillment of its terms to have a material impact on its financial condition or results of operations. The costs of retrofits are expected to be capitalized as real estate improvements.

Yes, any amounts remaining in the aggrieved persons fund after its administration period will revert to AvalonBay. Additionally, AvalonBay has an agreement with the architect to share some of the costs for the civil penalty and the aggrieved persons fund.