Industry News

Seattle source of income discrimination legislation raises issue of “What’s in a name?”

Thu, 14 Jul 2016 08:13:00 -0900

Source of income legislation has slowly worked its way through the legislative process in the city of Seattle, with revised legislation scheduled for a special July 22nd committee meeting.

Among other issues recently legislated in Seattle, this may be the most confusing as it has quickly morphed from “source of income protections” to including regulation of tenant screening practices.

The process was borne out of Mayor Murray’s Housing Affordability and Livability Agenda (HALA) stakeholder committee last year which found general support for a number of strategies recommended for relieving housing affordability issues in Seattle.

Final HALA recommendations framed the source of income discrimination problem, and directed a specific solution to this issue.

“Renters who receive a verifiable source of ongoing legal income, such as Social Security, child support, Supplemental Security Income (SSI) and Housing Choice vouchers (or any other governmental or nonprofit subsidy) deserve a rental environment that treats these types of income fairly. Currently, it is illegal under the City’s Fair Housing law to discriminate against a tenant based on the use of a Housing Choice voucher. The City should expand protection to include other verifiable sources of income. Representatives of the City of Seattle, tenant advocates, and local landlords should collaborate in determining which additional sources of income should be protected.”

Setting aside ongoing concerns about short-term rental vouchers and a lack of a floor on minimum income required to ensure an applicant can pay for life necessities, original legislation presented on source of income discrimination was narrowly tailored to ensuring all legal sources of income were considered by rental owners when reviewing an applicant’s ability to pay rent.

Now, after subsequent stakeholder meetings, Councilmember Lisa Herbold has expanded the legislation to outright regulation of the tenant screening process. The new draft – which accommodates zero RHAWA concerns, but addresses many raised by tenant and low-income advocates - has moved the source of income legislation to a point of confusion.

The legislation now seeks to address “first in time” – the concept of first come, first serve when screening applicants, as well as situations where a screening reveals insufficient or concerning information on the applicant.

Practically speaking, “first in time” was considered best practice for an owner to exercise when determining how to run their tenant screening practice, and is not a new concept to the industry. The first applicant or group of applicants to complete the required rental application(s) and pay the screening fee(s) are first in line to be screened and qualified for the rental unit.

The newly amended legislation, however, overly complicates an owners’ ability to make tenant screening decisions without fear of liability or reprisal by an applicant. Concerns within the draft legislation are numerous, many details of which are unknown to an owner during the screening process, such as:

***A requirement to tell applicants of the time available for them to apply, and where they would fall in line with other applicants.

***A requirement that an owner disclose what additional criteria an applicant may have to satisfy if unknown scenarios were to arise in the screening process.

***A requirement which would allow applications sent by mail to be placed in the order of screening from the date which it was stamped as mailed by the post office – without consideration that another applicant may have applied in-person that same date and already have been approved and signed an agreement prior to receiving any applications in the mail.

Additional requirements for situations involving adverse action where an applicant needs to provide additional information to an owner, or an owner would approve an applicant pending the receipt of additional securities, force owners to give the applicant at least seven days to satisfy either of those issues. That’s seven days of uncollected rent and lost opportunities to rent to another tenant who is qualified and prepared to sign a lease.

A mandate for owners to allow the applicant seven additional days to comply with providing additional information or securities also appears likely to incentivize owners to simply deny an applicant without opportunity for additional consideration under adverse action – a detriment to the very individuals the legislation is intended to assist in finding housing.