City aims to curb housing discrimination

In any free market system, scarcity creates power, and power leads to abuse. Seattle is experiencing that now with the rental housing market, and City Hall is taking steps to stop the worst of those abuses by limiting housing discrimination.

Yesterday the Civil Rights, Utilities, Economic Development and Arts Committee began considering a new ordinance that would prohibit landlords from discriminating against renters who are using various forms of alternative income to help pay their rent. Currently the Fair Housing Act already prohibits discrimination against renters using so-called “Section 8” vouchers, but the new ordinance would extend that protection to social security, supplemental security, and child support payments.

The ordinance also updates the formula used by landlords to screen tenants as to whether they have sufficient income to pay rent on an ongoing basis. The standard rule is that renters are expected to show income that is three times the rent. But housing subsidies have been included on the “income” side of the equation, requiring renters to show a substantially higher amount of income. The new rule deducts the housing subsidies from the rent side of the equation, dramatically reducing the barrier.

Here’s a quick example: suppose a renter is looking at an apartment that goes for $1000/month, and has a $500 housing subsidy.  Under the old system, he would need to prove he has three times the rent or $3000/month of income — $2500/month plus the subsidy.  Under the new system, the subsidy is deducted first so that the matching requirement only applies to the rent that he is responsible for paying: $500/month. In that case the renter only needs to show $1500/month of income instead of $2500/month.

Council member O’Brien pointed out that the formula gets pretty silly at the extreme end: if the rent subsidy covers all but $20/month, then the renter only need show $60/month of income which is clearly not enough to cover the rest of someone’s living expenses. Patricia Lawley, Director of the Office of Civil Rights, pointed out that this is an outlier and not the general case, and that the voucher is not a fixed amount: it fluctuates monthly based upon the amount the renter can pay. Renters generally pay 1/3 of their income, and the voucher covers the rest.

It was also discussed that landlords are now demanding that renters have sufficient “garnishable wages” so they have a legal means to go after unpaid rent, but Council member Herbold pointed out that such a demand is already illegal because it discriminates against people using Section 8 vouchers.

Herbold liked what was in the ordinance but doesn’t think it goes far enough. She would like to see two additional provisions:

A “first in line” policy under which a landlord would be required to rent to the first eligible tenant; this would prevent landlords from collecting a pile of applications and cherry-picking tenants.

A means to address “preferred employer programs” to ensure that they don’t create a disparate impact against underserved groups: women, minorities, low-income residents, etc. She argued that incentive programs that are directed at employees of preferred employers aren’t necessarily illegal so long as the demographics of the employee base aren’t skewed. So a preferred program for teachers, soldiers, etc. would likely be fine but a program for Amazon employees would not. Part of the problem today though is that the burden of proof is on the tenant to prove the disparate impact of these programs; Herbold would like to see that burden shifted to the landlord through a rule saying that the landlord must engage with the city (getting data from the employer first) to essentially get the program pre-approved.

The Council will be reviewing options over the next couple of weeks, so expect further hearings in June.