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Council considers new law: Some landlords upset by income source rule

A proposal before the Rochester City Council has upset some local landlords, but the same law has been in effect in Buffalo for 10 years without causing many problems, housing officials there said.

Rochester South District Councilman Adam McFadden, along with Mayor Lovely Warren, are proposing to expand on existing laws against housing discrimination by adding a provision that prohibits discrimination by source of income.

That means landlords no longer would be allowed to advertise that they do not rent to people with Section 8 housing vouchers or other types of government assistance, and landlords would be unable to turn prospective tenants away for that reason alone.

“A landlord still may refuse to lease to an applicant whose income is insufficient to meet the rent,” Warren and McFadden wrote in a letter to the council that accompanied the proposed changes to the city’s municipal code. Other reasons landlords could reject a tenant include if the applicant had income from an illegal source or failed to pay rent on time within the past 18 months.

It is a law that has been adopted in several communities in New York, including Buffalo, and operates as state law in other parts of the country.

McFadden said he is concerned about discrimination against people who are responsible tenants but happen to receive public assistance. Currently, Section 8 renters end up clustered in certain neighborhoods because some landlords assume they are irresponsible tenants, he said.

 “They make a determination about a person before they even see them,” he argued during a finance committee discussion of the proposal.

Some landlords did complain at an Aug. 9 public comment session, in advance of the latest city council meeting, about tenants receiving public assistance. They accused them of taking no pride in the apartments, trashing them and moving on.

But other landlords who spoke said their problem was not with the prospective tenants but with the public programs that subsidized rent, particularly Section 8, or what is now called Housing Choice Vouchers. Section 8, a federal program, typically asks tenants to pay 30 to 40 percent of their income on rent and utilities each month, with the balance of the rent paid by the local agency administering the federal program.

“The system is broken. You can’t fix the system by mandating we do business with the system,” said Marve Maye, a local landlord and developer, at the comment session.

“This is not about discrimination. It’s about broken programs,” said Herman Colon, who owns Heritage Park Properties, a group of three companies with 113 residential units. He said he has rented to both Section 8 recipients and those receiving assistance from the county Department of Human Services.

Among other problems, a renter’s income can change abruptly if they get cut off assistance or lose a job, he said. Suddenly landlords have tenants unable to pay rent. Meanwhile the social services agencies who are supposed to help them are slow to respond, he said, leaving the landlord on the hook.

Some landlords also complained the inspections are onerous since both the Rochester Housing Authority and Section 8 require apartments to meet certain safety guidelines before an approved recipient can move in. Time is money, and the inspection delays getting a paying tenant into a unit, they said.

The Rochester Housing Authority, which administers just over 9,000 Section 8 vouchers as well as operating other housing programs, said it has taken action to streamline the process and aims to conduct inspections within 10 days. Landlords then have 60 days to fix any problems. And if the unit had been inspected and approved for a tenant receiving assistance from RHA, landlords can request a waiver from the almost identical Section 8 inspection.

McFadden and others argue this process is not burdensome unless landlords want to avoid fixing up their apartments to meet basic health and safety standards.

Mary D’Alessandro, a landlord and head of the N.Y. State Coalition of Property Owners and Businesses Inc., said if landlords are not allowed to advertise that they do not accept Section 8 or other rental assistance, they will find other reasons to reject prospective tenants. Prospective renters will travel to look at apartments, wasting time and money, when a landlord is going to reject them, she said.

This approach, however, could be problematic because, while rare, landlords have been fined for failing to follow the law in Buffalo and New York City. Two Buffalo landlords were caught up in a sweep in 2014 when the state attorney general sent out undercover investigators to try to rent apartments in the city. The undercover agents said they were told Section 8 vouchers would not be accepted. Following the investigation, certain landlords were fined $5,000 to $18,000 and required to provide periodic reports as well as train employees in the anti-discrimination law.

If Rochester does adopt this provision, the city will be relying on the state attorney general’s office to enforce it. That is one reason for the delay in voting on the proposal, which remains in committee. McFadden said the council was working to set up a meeting with the attorney general’s office and would consider that office’s input before calling for a vote on the law’s adoption, likely next month.

Buffalo’s experience
So how has the law worked in Buffalo? Scott Gehl of the nonprofit Housing Opportunities Made Equal Inc. in Buffalo, said landlords there also protested strongly before the legislation passed in 2006. He said it took Buffalo five legislative campaigns over 38 years to pass a fair housing law and that the anti-discrimination rule on source of income was a major sticking point.

Landlords had said the new rule would lead property owners to abandon the city, drastically reducing available rental housing.

“Surprisingly, that hasn’t happened,” he said with a touch of humor.

Instead, “I think it has had a positive impact in that most housing providers are respectful of the law,” he said.

Gehl said he does believe it has expanded opportunities for low-income renters who receive public assistance. But it is not a cure-all, since what Section 8 accepts as a fair market rent still limits access to much of the area housing stock.

Kathy O’Brien of Belmont Housing Resources for WNY Inc., which administers some 6,800 Section 8 housing vouchers in Erie and Niagara counties, has a slightly different take.

“Landlords are pretty industrious. They can find ways to skirt the regulations,” she said.

Like Rochester, Section 8 recipients still can be found in clusters in Buffalo because of a lack of other options.

But, she said, it is vastly better for tenants when landlords welcome involvement in the Section 8 program.

“The ones who aren’t professional don’t want you to know what they’re doing, and we would rather not have them in the program anyway,” she said.

The real problem, she argued, is how the federal government calculates fair market rents for the purposes of the Section 8 program. Fair market rents are set by county, which means higher rents in the suburbs are often out of reach. This does more to lock people out of certain neighborhoods than source of income discrimination, she argued.

O’Brien said HUD is experimenting with setting fair market rent by ZIP code instead of county, something that could lead to greater opportunity for renters if it gets beyond a demonstration project in some two dozen locales across the nation.

If HUD extends that option, O’Brien said her agency would be eager to participate.

Setting fair market rents by ZIP code could make Section 8 more attractive to landlords in nicer neighborhoods, she said. That, in turn, would provide new options for tenants because the agency would pay more—not because landlords were forced by law to accept Section 8.

8/19/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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