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Landlord Alert!

C.A.R. OPPOSES SB 329 (Mitchell) because it effectively forces ALL residential rental property owners to participate in the voluntary Section 8 housing program by entering into a legally binding contract with a government agency – the provisions of which may be extremely difficult to fulfill. Proponents are framing this as an anti-discrimination bill. SB 329 will be voted on as soon as Monday, July 1st on the Assembly Floor.

Issue Background Under current law, participation by a rental property owner in the Department of Housing and Urban Development’s Housing Choice Voucher program, more widely known as Section 8, is VOLUNTARY. Under SB 329, which redefines “source of income” to include Section 8, EVERY residential rental property owner will be effectively forced to enter into a contract with the local housing authority upon receiving an application from a tenant who uses Section 8 housing vouchers to pay a portion of their rent. Because housing authorities already lack the resources to process applications and inspect properties quickly, units may sit unoccupied for many weeks until all the administrative requirements are met.

Why C.A.R. is OPPOSING SB 329

Governor Brown vetoed a bill similar to SB 329 last year. Governor Brown vetoed SB 1427 last year. SB 1427 only included Section 8 “HUD-VASH” vouchers while SB 329 is far more expansive in that it includes ALL Section 8 vouchers. In his veto message for SB 1427, Governor Brown stated: "... this bill goes too far. Specifically, it forces landlords and property owners to take part in what has always been a voluntary federal program with numerous requirements. These include registration with a local housing authority, participation in training, property inspections and modification of leases to conform with federal standards. I don’t believe a mandate to comply with all these requirements is warranted.”

SB 329 isn’t about discrimination and it doesn’t solve the problem. Proponents of SB 329 claim the bill is about ending discrimination against those using Section 8 vouchers. The reality is that the term “discrimination” has been co-opted to achieve a different goal – to effectively force ALL property owners, big and small, to accept Section 8, no matter how onerous the requirements. And the real kicker – SB 329 doesn’t even achieve the goal of making more units available for those with Section 8 vouchers. Instead it creates a muddy new world where, according to the proponents, landlords can continue to refuse to accept Section 8, but would be susceptible to claims of discrimination if they don’t. In the end small property owners will take their units off the market rather than be forced to contract with a local housing authority.

SB 329 effectively forces landlords into binding contracts. Amending the definition of "source of income" to include Section 8 vouchers means that you are effectively forcing a landlord to contract with the local housing authority when they get a Section 8 applicant. What if a landlord does not like the terms of the contract or has great difficulty fulfilling them? Too bad according to SB 329. SB 329 would seemingly be the only instance in state law where a private party is effectively forced to enter into a contract with a government agency.

An analogy that helps illustrate this point would be a person walking into a restaurant that doesn't offer alcohol and asking for a cocktail. Under SB 329, the fact that they are asking for a cocktail would effectively force the restaurant owner to obtain the necessary permits from the county to sell alcoholic beverages, which would subject them to additional costs, inspections, and other requirements.

SB 329 doesn’t fix the underlying problems with Section 8. Because housing authorities are understaffed, it can take as long as 60 days before all applications are submitted, inspections are made, and contracts are signed. During that time, the unit sits vacant at a substantial loss to the property owner. Instead of fixing Section 8 by remedying this and other problems to attract more landlords to voluntarily participate in the program, SB 329 creates new mandates. C.A.R. encourages the Legislature to consider alternative proposals, such as SB 521 (Portantino), which would establish a tax credit to incentivize more landlords to voluntarily participate in Section 8.

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