Zona Law Group, Pat Hune, Broker 1st Southwest Realty and Various Sources, March 2023

Landlords Can No Longer Reject Section 8 Housing Vouchers: 
Based on this update from Zona Law Group the answer is no.  Landlords can no longer reject housing assistance programs like Section 8, Home Inc, or other similar rental assistance voucher programs. The reasoning is rejecting Housing Vouchers is a violation of fair housing.  Fair Housing came about as part of the Civil Rights Act of 1968.   It says landlords cannot discriminate on the basis of race, color, religion, sex (gender) or national origin. Over the years the protections have been extended to include disabilities, familial status, sexual orientation, gender identity and criminal convictions.  Now the source of income is being added by some cities and states including Phoenix and Tucson, AZ.  (For more information see the Zona Law Podcast at the end of this article.)

What is the Housing Choice Voucher (HCV) program?
These programs are funded by the U.S. Department of Housing and Urban Development and are available for low-income individuals and families to provide safe and decent affordable housing. Program participants pay at least 30 percent of their monthly income toward their rent to a private landlord of their choice and the program will pay the landlord the remaining balance of the rent.

Section 8 Started in 1937
The worst economic period in history was the Great Depression which started in 1929 and ended in 1939.  Federal housing assistance programs started in 1937 with the passage of the Housing Act of 1937 (42 U.S.C. § 1437f), often called Section 8. It authorized the payment of rental housing assistance to private landlords on behalf of low-income households in the United States. Approximately 68% of total rental assistance in the United States goes to seniors, children, and those with disabilities. The U.S. Department of Housing and Urban Development manages Section 8 programs and cities process the applications.  Voucher amounts are based on Fair Market Rents (FMRs) calculated in the area by the Department of Housing and Urban Development (HUD).

Source of Income is Now a Protected Class
Not even a week after Phoenix voted to make the source of income (“SOI”) a protected class, the Arizona Attorney General (“AG”) came out and said that the SOI ordinance in Tucson is not preempted and it may be enforced in Tucson.

Quick summary
Tucson passed the SOI ordinance in September. Former AG Brnovich published an opinion in December, finding the ordinance was preempted by state law and unenforceable. Tucson put a hold on their law and asked that the new Attorney General review the opinion. In the interim, Phoenix passed SOI and said it was subject to the AG opinion.

On March 8, 2023, AG Kris Mayes published an opinion that the Tucson ordinance is NOT preempted and may be enforced. (Effectively, the new AG said that the former AG was wrong). The AG said that state law prohibited cities from enacting new fair housing ordinances after 1995. However, the AG opined that such language does not prohibit cities from amending their ordinances if they had timely enacted them before 1995. Therefore, from her legal perspective, any city that had properly enacted a fair housing ordinance before 1995 can now amend it and add protected classes. Not only is this significant for SOI, but it allows those qualifying cities to add any additional protected classes that they see fit. This is very concerning because a piecemeal approach to fair housing, where residents have different rights in different cities, creates numerous operational problems.

Breakdown by City:

TUCSON: As Zona Law Group has been directing, Tucson members should continue to accept Section 8 vouchers as set forth below. The ordinance is now in effect in the city of Tucson.

PHOENIX: The Phoenix ordinance said that it would only be effective after the AG reviewed the law AND that afterward, the City Council “would take appropriate action”. Therefore, Zona Law expects it will be enforced in Phoenix shortly. The client should start to honor SOI and accept Section 8 vouchers as set forth below.

There may be legal or other challenges to the ruling for numerous legal reasons. However, clients need to comply with the Tucson ordinance immediately and with the Phoenix one very shortly, if not immediately.

What is “Source of Income Discrimination”?
When Tucson passed its SOI ordinance, Zona Law Group immediately published a podcast (see link at the end of this article) analyzing the new law. It is directly relevant and guiding at this time. Zona Law developed the Q&A, to help clients understand the nuances of Tucson’s SOI. Given that the statutes are analogous, it is helpful for people in Phoenix now.

Questions and Answers
1.   What is included/considered SOI? Housing vouchers, rental subsidy (including but not limited to Section 8, HUD, Home Inc., etc.), Supplemental Security Income, Veteran’s benefits, rental assistance, salary, or other legal sources of income. You must accept payment of rent from such sources, even if it requires you to participate in a program such as Section 8.

2.   Can a landlord opt-out of these programs or rental assistance? NO. As SOI is now a protected class, a landlord cannot opt out of such programs and must accept the applicant if they otherwise qualify.

3.   What qualifications must a person with a voucher meet? All applicants must meet all of your qualifications, including credit and criminal background, except any requirement relating to income that would automatically bar them without the voucher.

4.   What is the appropriate response to an applicant who asks if we accept Section 8 vouchers? “Yes we do. Please apply and we accept anyone who qualifies.”

5.   Our rental standard requires that an applicant must make 3 times (3x) the rent to qualify for an apartment. Can I reject an applicant using a Section 8 voucher as they won’t make 3x the rent? No. When qualifying someone using a voucher or other subsidy, you would require they make 3x the monthly rent for their portion of rent, not the full rent which includes the subsidy. For example, if the rent on an apartment is $2,000 per month, usually you would require the applicant to have $6,000.00 income in a month. With a housing voucher, you would only require they have 3x the tenant portion of the rent. If the rent is $2,000.00 but the subsidy covers $1,500 per month, then the tenant’s portion is only $500.00 and they would only need to show 3x the $500.00 per month.

6.   Housing assistance is offering us $2,000 for the unit, but our market rent is $2,500, do we have to lower our rent? No.

7.   Can I charge the regular deposit or do I have to reduce this? You can charge up to 1.5 times the full monthly rent (including subsidized amount). You can charge the same as you would to any other tenant, just not anything additional.

Source of Income Podcast