Protecting tenants from housing discrimination turns out to be tricky

Filed under “adventures in legal sausage-making…”

The Civil Rights, Utilities, Economic Development and Arts Committee began deliberation on an ordinance that would modify the city’s housing code to provide additional protections for tenants against discrimination by landlords, and especially based on the source(s) of income being used to pay the rent. But it quickly turned into a messy — and possibly intractable — endeavor.

The legislation under consideration tries to accomplish two things:

• prevent landlords from refusing to rent a property to someone using housing subsidies to at least partially pay, either explicitly or through subtler means such as screening criteria or dragging their feet on required paperwork for the tenant to receive the subsidy;
• prohibit so-called “preferred employer programs” that give favorable financial terms to the employees of certain companies if those companies’ employees don’t match the demographics of the city’s overall population (e.g. making it more attractive and affordable for rich, white Amazon employees than people of color who work elsewhere).

It is already illegal to discriminate against people using HUD “Section 8” vouchers, but this new bill adds several other forms of “verifiable sources of income” to the list, including child support payments, Social Security, Supplemental Security Income, veterans’ benefits, unemployment insurance, and short-term rental assistance. But that only goes so far, getting someone into the queue of people interested in renting a particular unit. If a landlord then has the ability to cherry-pick a tenant from among all the prospective tenants who apply, the person using alternative sources of income will almost always lose the competition — a subtler form of discrimination. In response, the Council is looking at adding a provision requiring landlords to offer the property to the first qualified tenant who applies.

That’s a great idea in theory; in practice, “first in time” is very tricky to get right — and to keep it out of the way of all the other special rules in place. First-in-time can’t be allowed to override specific set-asides of units already in place, for example for low-income renters through the Multi-Family Tax Exemption. And you need to exempt those properties that take referrals from social-service agencies for supportive housing programs or for the homeless. You also need to figure out what kind of screening by landlords is still allowed, e.g. smoking or pets, and how that works when verification of screening criteria takes time — or can’t be verified, or when someone certifies that they don’t smoke but shows up reeking of cigarette smoke and with a pack in his shirt pocket. And finally, first-in-line might favor people who currently live close to the property, so you would need to require some sort of online acceptance of applications (but then you need some form of electronic payment for the first month’s rent and security deposit as well). Taking away the landlord’s ability to choose tenants turns into a lot of work, both for the people devising the new system, and in the end for the landlord who must conform to all the new requirements.

They also discussed a desire to extend the non-discrimination protection to assistance programs that aren’t “direct contract” — meaning the program contracts directly with the landlord to pay their promised share of the rent. But as Council member Herbold asked today, that raises the question as to how the landlord verifies the assistance program’s commitment.  The city staff also suggested requiring landlords to accept “community pledges,” for instance from a tenant’s church, and particularly in the case of a tenant who is already in place but is having trouble paying rent. It’s a nice idea, but fraught with issues: again, how does the landlord verify the pledge? How does it play with the existing “just cause eviction” ordinance if the eviction process is already underway when the pledge is made? What is the allowable time period between when a pledge is made and when that turns into an actual cash payment — and what happens if the cash never materializes?

Another suggestion for the new ordinance is to require landlords to complete their part of a tenant’s rental subsidy applications in a timely manner. That led to an interesting and complicated discussion of the counterpart to the applications: the inspection to ensure that the property meets the requirements of the Section 8 subsidy program. It was suggested that some landlords allow their property to intentionally fail Section 8 inspections as a loophole to avoid renting to tenants receiving subsidies; the Office of Civil Rights considers that to be a prohibited discriminatory practice, and the inspection standard hews close to the standard building code so at least in theory a property that fails a Section 8 inspection would probably also fail a regular building inspection and would be unrentable to any tenant, but there’s a lot of wiggle room in there.

And that brings us to the second intent of the legislation: reining in discriminatory “preferred employer” programs. Apparently there is a belief in some quarters that some programs are already illegal under existing law (the Open Housing Ordinance), but that has not been tested in court. The Office for Civil Rights has even issued guidance on how it plans to evaluate those programs for illegal discriminatory impacts. Nevertheless, there is a desire to tighten up the rules. There are two important questions guiding the decision on what approach to take:

1. Should a program be evaluated and approved before it takes effect (triggered by a landlord’s request to review it), or afterward driven by either a tenant complain or the Office of Civil Rights self-directed investigation?
2. Who should the burden of proof (and work) be placed upon: the tenant, the landlord, or the Office Civil Rights?

And these two, of course,  interplay: you could have a system where a landlord who wants to have a preferred employer system would be required to get demographic data from the employer and submit it to the OCR to prove that the employee demographics are broadly representative of the city’s population; or you could require a tenant to file a complaint and submit data that shows the disparate impact. One also must think about how many reviews and investigations the OCR will be required to do, and how expensive and time-consuming that will be.

You also have to think about whether there are ANY preferred employer programs that would be acceptable: suppose a good-hearted landlord wanted to offer a deal to Seattle School District teachers, or to nurses. Would that be ok? Those are both job categories that skew heavily towards women (and women are generally disadvantaged in housing), but as was pointed out today there are sixteen separate protected classes recognized by the city, and a program could be considered discriminatory if it has a disparate impact on any of them. In reality, the only legal preferred employer program would be one where the demographics of the eligible employees perfectly match the city’s demographics — and it’s not clear that there are any employers for whom that is true.  It would be far simpler for everyone just to prohibit preferred employer plans entirely, because the bar will never be met.

Council member O’Brien (who rightly disclosed in the meeting today that he is a landlord) asked a good question in advance of another committee meeting tomorrow: would short-term rentals, a la AirBnB, be subject to the same rules?  The OCR staff believe that such short-term rentals are subject to the “public accommodations” ordinances, like hotels, rather than the housing ordinances.

Herbold went into the discussion today hoping to vote on some of the proposed amendments, but by the end had resigned to the fact that the issues are still plenty and deep. We can expect many follow-up conversations between Council members and city staff over the next few weeks as they try to sort through them all, and it wouldn’t be surprising to see them come back with a far less ambitious proposal that avoids the worst of the legislation’s problems. There’s clearly good work to be done here to protect tenants from discrimination, but getting there will be difficult.