By Mark Zinman | Zona Law
In September 2022, the City of Tucson passed Source of Income (SOI) as a protected class. Former Attorney General 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 the new Attorney General to review the opinion.
In the interim, Phoenix passed SOI and said it was subject to the AG coming out with a new opinion. Since then, the AG has published a new opinion finding that Tucson had the legal right to pass SOI. Therefore, Phoenix has the same right and it will just be a matter of time before the SOI law in Phoenix will become effective. As of the writing of this article, it is not yet effective.
Therefore, property owners in the city of Phoenix should assume that the Source of Income is a protected class and that they must now rent to Section 8 residents. We expect that there will be testers – this means people will simply robo-dial landlords, asking if they accept Section 8 residents. If they say no, they will file a fair housing complaint. If you own property in the city of Phoenix, then you must state that you accept Section 8. Property owners would be wise to go to the Zona Law podcast on YouTube and watch the attorneys analyze SOI as it applies in Tucson, as the same analysis applies to Phoenix.
While Section 8 and similar programs serve an important purpose, mandating that owners participate will entirely change the landlord-tenant relationship as a two-party contract. Leases will now be a contract between the landlord, the tenant, and the government.
Here are a couple of preliminary points for owners to follow:
- 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.
- Can a landlord opt out of these programs or participation in rental assistance? As SOI is now a protected class, a landlord cannot opt out of such programs and must accept the applicant if they otherwise qualify.
- 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.
- 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.”
- 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 of the rent? When qualifying someone using a voucher or other subsidy, you would require they make 3x the monthly rent for their portion of the 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 a $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.
- Housing assistance is offering us $2,000 for the unit, but our market rent is $2,500, do we have to lower our rent?
- 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 the subsidized amount). You can charge the same as you would to any other tenant, just not anything additional.
Overall, it is important to note that this only applies to Tucson and Phoenix (not surrounding cities or suburbs).