Preventing Source of Income Discrimination

Protection + Preservation

“As soon as a landlord knows I’m on Section 8, they turn me away.”

“How can we ensure Richmond residents don’t have to take their vouchers to other cities?”

An ordinance to protect residents from source of income discrimination is a city law that would prevent landlords from explicitly refusing to rent to Housing Choice Voucher (HCV) holders (formerly Section 8 program). California State law prohibits discriminating against a tenant applicant based on some sources of income (for example, Social Security, pensions, CalWorks, or the type of job one holds). The state law does not define HCV or other rental assistance programs as income, so the state law does not protect Section 8 clients. 

Understanding the Policy

According to the most recent HUD estimates, HCV holders nationwide were successful in finding housing only 69 percent of the time, with that number falling to 61 percent in tighter housing markets, revealing possible discrimination against HCV tenants.94 Interviews with Richmond HCV holders revealed that landlords often justified not renting to them out of discriminatory perceptions of Section 8 tenants (e.g. they are loud, damage the apartment, irresponsible) or the challenges of the bureaucratic process, both of which are factors that are reflected nationally.95 

Landlord refusal of HCV tenants tightens the housing market for low-income renters and means a loss of income for the Richmond Housing Authority, which collects administrative fees for utilized HCVs (the Richmond Housing Authority reports 300 HCVs out of 1,851 are not being utilized).96 There are also a number of people who have vouchers from the Richmond Housing Authority but cannot find a landlord who will accept them in Richmond (data unavailable from RHA after multiple requests). In Berkeley and Oakland, the percentage of HCV holders successful in finding a unit in their home city are 15 percent97 and 18.9 percent,98 respectively. Source of income is sometimes used as a proxy for race or familial status, and is thus a pretext for discrimination. At a minimum, source of income discrimination has a disparate racial impact.

Several cities and counties in California have passed laws to address this issue by prohibiting landlords from refusing a tenant applicant based on being an HCV holder. These municipalities include San Francisco, Berkeley, Los Angeles, and East Palo Alto, among others. A legal challenge by landlords to Santa Monica’s ordinance was unsuccessful in 2017, creating a precedent for additional laws across the state. A similar challenge to San Francisco’s ordinance is ongoing.
Building on existing city goals, the ordinance supports numerous programs of the Housing Element of the General Plan, including H-4: Equal Housing Access for All, a maximization of the HCV program through H-4.1.1, and support for mixed-income neighborhoods through H2.7: Balanced Neighborhoods (research shows that HCV discrimination can lead to increased concentration of low-income tenants).99 

Effects? In late-2017, there were 844 people on the RHA waitlist for an HCV100 and around 1,500 vouchers being used. A local law would prohibit Richmond landlords from refusing tenant applicants because they are an HCV holder. The law would address issues of displacement and homelessness that arise from Section 8 holders being refused housing in Richmond as well as increase the successful use of HCVs in Richmond. Similar ordinances in municipalities nationwide have led to a 12 percent increase in acceptance of HCV holders.101 The law could be written to include all housing, as in Berkeley, or include exceptions, as in Corte Madera which exempts properties with 10 or less units (a similar exemption in Richmond would exempt over 60 percent of the city’s units). 

Limitations? Like most laws that address discrimination, the SOI ordinance is difficult to enforce. While a landlord cannot explicitly refuse a tenant because they have an HCV, in a high-demand market it is not difficult to choose non-HCV tenants through other justifications. Additionally, the SOI law cannot be written like the Fair Chance Housing ordinance, which would prevent a landlord from asking about income source on the application, as landlords who have HCV tenants have to go through an administrative process with the RHA before officially signing a lease.

Designing the Policy 

Well aware of discrimination against them, HCV holders have developed strategies for navigating rental applications and their fees. Some wait to tell a landlord they are an HCV holder until after they have built a rapport and demonstrated their “character,” while others ask up front so as not to waste their time and money on application fees. Either way, in the current environment, HCV holders have the option of knowing where the landlord stands. This knowledge allows the applicant to not spend money on applications that will be quietly discarded. Because this ordinance would ban explicit discrimination and therefore disrupt these strategies, it is important to pair this ordinance with the reusable screening report ordinance. With a reusable screening report, HCV holders would not have to worry about paying fees to multiple landlords who may quietly deny them because of their source of income.    

Another ordinance (not discussed in this report) that would strengthen the local SOI ordinance is a “first-in-time” ordinance, which requires landlords to offer tenancy to the first qualified applicant who provides a completed application (see for example Seattle’s law).102 This is perhaps the strongest pairing for enforcing the SOI ordinance, as HCV tenants would be able to provide their background report immediately when applying for housing.

Advocates may expect some resistance to an SOI ordinance, but the passage of such ordinances in multiple California municipalities is encouraging. Local SOI ordinances have been subject to legal challenges by landlords who do not want to rent to HCV tenants. A challenge to an SOI law in Santa Monica was thrown out by the Los Angeles Superior Court,103 while another is pending in San Francisco. While these cases could produce important precedents, a legal challenge in Richmond would also be possible. According to experts involved with the San Francisco case, focusing new SOI laws on how they address housing needs and the housing crisis through preventing discrimination is a stronger approach than coupling the ordinance with existing discrimination ordinances. In addition to refusing tenants due to prejudice against HCV holders, landlords will have new legal obligations once they begin participating in the voucher program. The landlord will have to sign a contract called a Housing Assistance Payment (HAP) contract with the Richmond Housing Authority, as well as a lease with the tenants. Under federal law, their unit is also subject to certain inspection requirements.

Finally, drafters will need to consider the reasons for exceptions, if any, that would be considered for the law. Nearly 60 percent of the city’s rental properties are between one and four units.104 Excluding these properties would significantly weaken the intended effects of the law and narrow further the available housing to HCV holders.

Putting the Policy in Place 

  • Host meetings with HCV holders to identify the need for the ordinance and address unintended consequences.

  • Host meetings with landlords who currently rent to HCV tenants so as to understand their incentives, clarify the process for other landlords including identifying needs from the RHA, and build support for the ordinance among sympathetic landlords.

  • Work with the RHA to clarify and simplify the process of renting to HCV tenants.

  • Work with city staff and officials to identify how the ordinance supports and aligns with the General Plan.

  • Work with tenants, landlords, organizations, and city staff to draft the legislation for Richmond. Introduce the policy via a supportive sponsor on the city council.

Resources 

  • Berkeley Housing Authority, 510-981-5470

  • San Francisco City Attorney’s Office, Sara Eisenberg

  • Centro Legal de La Raza - Tenant’s Rights Program, Leah Simon-Weisberg, Managing Attorney 

  • Marin County - Marin Community Development Agency, Leelee Thomas, Planning Manager, Housing & Federal Grants Division County of Marin Community Development Agency

  • Poverty & Race Research Action Council (PRRAC) compendium of state, local, and federal laws barring source of income discrimination, http://nlihc.org/article/prrac-updates-source-income-compendium