What Is Section 8 and How Does the Housing Choice Act of 2013 Affect It?

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1 What Is Section 8 and How Does the Housing Choice Act of 2013 Affect It? How does the Section 8 voucher program work? The primary purpose of the program is to help low-income people find decent, safe, and affordable housing, by relying on their own initiative to find the best housing for their own living situation. Another purpose is to avoid concentrations of poverty sometimes associated with larger housing projects. And finally the program supports existing housing mostly owned by private landlords. Low-income Oregonians apply to their local public housing authority or agency (PHA) for a Section 8 voucher. Demand for vouchers is much greater than the supply, so there is usually a long waiting list, and in some communities the wait is so long that the PHA doesn t keep the list open all the time. PHAs screen applicants for past criminal conduct; only people who pass that screening test will qualify for a voucher. Eligibility is limited to very low-income individuals or families; most must have incomes below 30 percent of the area median income; almost 80 percent of voucher holders in Oregon make less than $15,500/year for a family of four. Voucher holders may be families with children, seniors (18 percent), individuals with disabilities (44 percent), or veterans. There are about 33,600 households with vouchers in Oregon, housed by 12,800 Oregon landlords. When an individual gets a Section 8 voucher, he or she must attend an orientation by the PHA about how to use it. The individual then has a specific amount of time usually 60 days, with a possible extension to a total of 120 days under some circumstances to find a rental unit that meets certain requirements of the program. These requirements include that the unit rents for an amount within the allowed level (the PHA Payment Standard), that passes a PHA inspection and meets the HUD Housing Quality Standards, and that the landlord is willing to rent to the individual. The landlord and tenant enter a written rental agreement, and the landlord enters a contract with the PHA. The tenant pays approximately 30 percent (with some exceptions) of his/her income toward rent; the PHA pays the landlord the balance (although there are some exceptions to how much the PHA pays). The PHA gets the rent assistance subsidy from the federal Housing and Urban Development Department (HUD), which is funded by Congress. Some Section 8 voucher program rules are in statutes adopted by Congress; some are in administrative rules adopted by HUD. Unless noted otherwise, normal Oregon residential landlord/tenant law applies wherever it does not conflict with federal law or administrative rules. What does the name Section 8 refer to? The section of the federal law which created the Section 8 or Housing Choice Voucher program is Section 8 of the Housing Act of 1937, 42 United States Code Sec. 1437f. What happens at first? When an applicant with a Section 8 voucher contacts a landlord about a unit for rent, the applicant will have already been determined by the PHA to be eligible to use the voucher, and will have been given information about allowable rent amounts. As with any rental application, the landlord should give the applicant an application and describe the screening criteria. The landlord should screen the tenant as with any other applicant. The applicant gives the landlord the forms required by the PHA for the Section 1

2 8 voucher program. If the applicant meets the landlord s criteria, the landlord signs the forms and returns them to the PHA, either electronically, by FAX, or via the tenant/applicant. The PHA will contact the landlord to schedule an inspection. Once the papers are signed and the unit passes inspection (see below), the tenancy begins and both the tenant and the PHA pay the landlord. Is the PHA a party to the rental agreement between the landlord and the tenant? No, but there is a required contract between the landlord and the PHA, called the Housing Assistance Payment Contract (the HAP Contract), which lists the landlord s rights and responsibilities. Part of the HAP Contract, called the Tenancy Addendum, becomes a part of the rental agreement between the Section 8 voucher tenant and the landlord. What are Public Housing Authorities or Agencies? PHAs are public bodies created under Oregon law, found in ORS chapter 456. Any city or county may create one. Currently there are 22 PHAs serving the 36 Oregon counties. The federal Housing Act of 1937 called for the creation of local housing authorities, and most states immediately adopted laws authorizing them. Initially PHAs built and operated, with federal money, public housing projects in which the housing subsidy is attached to the unit, not to the tenant. Some PHAs also have built and now own rental properties pursuant to modern subsidized housing programs. Today all of the Oregon PHAs administer Section 8 voucher programs, in which the subsidy goes with the tenant. As public bodies, PHAs have boards and meet in public. The boards often consist of the local county commission plus, under HUD rules and with some exceptions, at least one Section 8 voucher or public housing tenant. Some PHAs also operate community service programs, such as weatherization and energy assistance. What is the PHA relationship to HUD? PHAs are public corporations created under state law; they are not part of the federal government. Among other things, PHAs administer federal housing programs, such as the Section 8 voucher program, under contract with HUD, and are paid a fee by HUD to do so. HUD, through a Congressional appropriation, pays the Section 8 voucher rent assistance subsidy to the PHA, which passes it along to the landlord. Are all PHAs the same? Most PHAs operate under the same HUD rules, but some, like Portland s Home Forward, have been designated a Moving to Work PHA, which gives them more flexibility regarding some HUD rules. In addition, while all PHAs generally follow the same HUD rules, each PHA writes its own Section 8 Administrative Plan, describing how it will carry out its responsibilities, specific to its own community. What is the PHA s responsibility to the landlord under the lease and the Housing Assistance Payment (HAP) contract? Does the PHA guarantee the tenant's performance? The PHA s obligation is to pay the subsidized portion of the rent, the rent assistance. The PHA does not guarantee the tenant s performance. (But see the discussion below about the Landlord Guarantee Program.) The PHA will not have screened the applicant for his or her suitability as a tenant; that s the landlord s responsibility. However, a Section 8 voucher tenant s failure to pay his or her portion of the rent or to comply with rules regarding maintenance of the property can lead to termination of the tenant from the Section 8 voucher program. 2

3 What happens if the PHA terminates the tenant from the Section 8 voucher program? If the PHA terminates the tenant from the Section 8 voucher program, the rental agreement between the landlord and the tenant also terminates, as does the HAP Contract, both as provided in the HAP Contract. The landlord and tenant may choose to continue the tenancy at the market rent, without the rent assistance subsidy, or the landlord can require the tenant to vacate the rental unit. The PHA will stop paying its share of the rent, after giving the landlord advance written notice, generally of at least 30 days; it will continue to pay its share of the rent during the notice period. The tenant may contest the termination from the Section 8 voucher program in an administrative procedure with the PHA. If that happens, the PHA also will continue to pay its share of the rent to the landlord until the administrative procedure is completed. If the tenant prevails in the administrative procedure, everything continues as before; if the tenant loses, the tenant becomes responsible for the full rent, without the rent assistance subsidy. What is the new Oregon law (the Housing Choice Act of 2013) regarding Section 8 vouchers and source of income protection? Oregon law has long prohibited discrimination in rental or for-sale housing (including advertising the sale or rental of housing) on the basis of protected class status, including race, religion, national origin, sex, marital or familial status, and source of income. Prior to passage of House Bill (HB) 2639 in 2013, the source of income category explicitly excluded federal rent assistance, which primarily refers to the Section 8 Housing Choice Voucher program; this exclusion meant that Oregon landlords could refuse to rent to applicants, or even to consider them, just because they had a Section 8 voucher. HB 2639, passed under the leadership of House of Representatives Speaker Tina Kotek, removes that exception and explicitly states that Section 8 or any other local, state, or federal housing assistance is included in the source of income protection. Oregon Revised Statute 659A.421 (1) (d). What does this mean for landlords and tenants? Landlords cannot refuse to rent to an applicant, or treat an applicant or tenant differently, because the applicant is using a Section 8 voucher or other local, state, or federal rental housing assistance. Nor can landlords advertise no Section 8. Landlords can still screen and reject any applicant, including those with a Section 8 voucher, for past conduct and ability to pay rent. Background: What Led to the Housing Choice Act of 2013? The language of The Housing Choice Act (HB 2639) was negotiated by stakeholders over months of regular meetings, beginning in September The Housing Choice Act was passed by the 2013 Oregon Legislature and became law on July 1, The Housing Choice Act was introduced by Oregon Representative Tina Kotek, the Speaker of the House for the 2013 Legislature. It was the only bill she introduced that legislative session. Why did Speaker Kotek believe this act was necessary? Gentrification of urban areas led to (among other things) a concentration of low-income individuals and families renting only in certain neighborhoods. Speaker Kotek s home district is in Portland, and she saw this first-hand. 3

4 Speaker Kotek s position was that, if landlords in all neighborhoods could not discriminate against Section 8 voucher holders, low income renters would improve their chances of qualifying to rent in all neighborhoods. The Section 8 program was not meeting its goals of housing choice for voucher holders. Too many voucher holders had to return their vouchers to the housing authority because they were unable to find rentals where their vouchers would be accepted before the vouchers expired. When vouchers are not accepted, the important public purpose of the housing assistance program is undermined, and the stability of low-income families is threatened. From the standpoint of low income renters, the Housing Choice Act provides a socioeconomic boost up the ladder by allowing them to choose any neighborhood to live in. Greater diversification among all neighborhoods would ideally lead to greater advantages for all renters to live near good schools, have reduced commute times to their jobs, etc. Evolution of the Housing Choice Act in the Oregon Legislature: ORHA Negotiations The 2013 Legislature was actually the second time Representative Kotek introduced a similar Housing Choice Bill. The first time, the bill was defeated by a coalition of landlord advocates and housing authorities. Once Representative Kotek became Speaker of the House, however, she was in a powerful position to champion her only bill of the session. Additionally, she learned from her mistakes and, when she introduced the bill for the second time, was ready to listen to the contributions of all stakeholders, including landlord representatives and housing authorities. Although ORHA originally opposed the bill outright, it quickly became apparent that Speaker Kotek had the political muscle to pass this bill, with or without the support of landlord advocates and the ORHA. Thus, ORHA saw the political realities in Salem and quickly determined it was in the best interest of its members and all Oregon landlords to participate in the negotiation process with Speaker Kotek to ensure that the bill was as beneficial to ORHA members as possible. Originally, there was almost nothing in the bill to benefit Oregon landlords. There was nothing to support landlords when Section 8 tenants left a tenancy owing money or caused damages. There was nothing to address landlords concerns that Section 8 inspections took long, which cost landlords money in the end. Landlords were faced with fixed-term leases for the first year, even if they would normally rent a unit as a month-to-month for a non-section 8 tenant. And there was no supervision or advisory board to ensure that the bill was implemented and was working as intended. Clearly, ORHA had its work cut out for it. In ORHA s negotiations with Speaker Kotek leading up to the 2013 legislative session, we asked for a number of additions to the bill, including: A $10,000 damage mitigation fund, to compensate landlords in the event that Section 8 tenants left owing money or damaged their property, 4

5 Payments made to landlords through the mitigation fund would have to be repaid to the program by the responsible tenants, and landlords have the right to request information about whether such tenants had honored repayment arrangements, An advisory committee, which would oversee the mitigation fund and ensure the program was working as intended and issue a report to the Oregon Legislature each session, Landlords could pro-rate rent from applicant acceptance, not the date of the Section 8 inspection, Specifying that, aside from the Section 8 voucher, applicants would have to meet all screening guidelines set forth by landlords/agents, Flexibility for landlords who would like to offer month-to-month rental agreements rather than fixed-term leases, and A mechanism to reduce wait times for Section 8 inspections and the ability for landlords to selfcertify inspections. ORHA achieved success in making each of these items part of the bill and subsequent administrative rules that were passed in In fact, many amendments were made to the bill as it passed through various legislative committees, and ORHA s testimony helped influence those changes. Without the participation of ORHA, it s unlikely these items would have been included in the final bill: A $5,000 mitigation fund called the Housing Choice Landlord Guarantee Fund was included in the final bill. Although ORHA originally requested a larger amount, this was an amount which was both adequate to assist landlords. In other words, the funds available will be there to assist the greatest number of landlords. Offending tenants must repay mitigation funds paid to landlords on their behalf or risk losing their voucher. The mitigation fund program must respond to a landlord s request for repayment information in a timely manner. Landlords should check on repayment status whenever they are screening applications. A Housing Choice Advisory Committee, made up of 3 tenant advocates, 3 landlord advocates, and 3 housing authority members was created and began meeting in September, Jim Straub, ORHA Legislative Director, is a member of the committee. This Committee is tasked with reporting to the Oregon Legislature and, therefore, is an avenue for change and holds the Housing Choice Program accountable. Landlords may enact change from within through this committee if the program is not functioning as intended. Anyone with a bad experience with Section 8, the mitigation fund, or housing authorities in general may report their experienced to Jim Straub or another Advisory Committee member. Current committee members in 2014 are: Tenant advocates: Sybil Hebb, Oregon Law Center John Van Landingham, Legal Aid Amy Martin, Neighbor Impact Landlord advocates: 5

6 Deborah Imse, landlord representative from Portland Phil Owen, landlord representative from Portland Jim Straub, ORHA Housing Authority: Jill Smith, Home Forward Dale Inslee, NE Oregon Housing Authority Todd Johnson, NW Oregon Housing Authority The law requires that Section 8 voucher holders meet all of landlords other application screening requirements. Housing Authorities are charged to review internal procedures to coordinate the length of rental terms with market standards. So in markets where more landlords offer month-to-month rental agreements, housing authorities should be working with landlords to allow for month-to-month rental agreements for Section 8 voucher holders during the first year, rather than always insisting on a fixed-term lease. Consistent with federal law, local housing authorities are charged with ensuring timely inspections. Now That Landlords Cannot Refuse to Rent to Section 8 Voucher Holders Based On Their Section 8 Voucher Alone. Does Section 8 Ever Benefit Landlords? First, let s reiterate. Oregon landlords do not have to change who they rent to because of the Housing Choice Act. They are not required to change their screening criteria, including their income threshold required to rent their properties. If they would not have rented to someone who did not meet their screening criteria before this law went into effect, chances are they will not have to rent to them now. But there are benefits to landlords renting to Section 8 voucher holders. The government pays a portion (or sometimes, all) of the rent as guaranteed income. The government always pays their share in full and is never late with the rent. If the tenant doesn t pay their portion of the rent, no matter how small, you can still evict them. And, the best part, you get to keep the portion that the government paid that month. This doesn t count as a partial payment that would usually prevent you from filing an eviction. Possible increase in rent assistance if tenants have a loss of income, such as becoming unemployed or ill. Section 8 tenants usually make for longer term tenancies. They just don t have a history of moving as often. (Frankly, they often can t afford to.) Frequently, tenants vacate properties because they are moving up bought a house, got a new job, etc. Section 8 tenants tend move for these reasons less often and tend to stay longer in their rental units. Landlords have leverage over Section 8 tenants. Section 8 vouchers are valuable and difficult to obtain, often meaning lengthy waiting periods, and tenants don t want to lose them. This means that Section 8 tenants frequently want to comply with your rental agreement and your rental rules 6

7 and, when they don t, you can contact the housing authority. Their involvement is often enough to convince tenants that they don t want to do anything during their tenancy with you to jeopardize or lose their Section 8 voucher. Landlords can often contact housing authorities for information on Section 8 voucher holders during the application process. Individual housing authorities have different policies about the information they provide, but most can provide at least whether any notices were issued during the applicant s current Section 8 tenancy, the current landlord s name and telephone number, and past addresses/landlord contact information. Accurate current and prior landlord contact information can be invaluable when you re not sure if the applicant has given you a false reference. As an example, Housing and Community Services Agency of Lane County has provided us an example of the information they provide to landlords in their service area. Including Section 8 voucher holders leads to a greater pool of applicants. Section 8 inspections serve as an extra set of eyes on your property. Sometimes they catch items that need repair that you may have missed. Water intrusion is a common example of this. Many tenants don t report water leaks until damage has already been done. If the housing authority does an inspection and sees a problem with the property that could result in damage, they ll let you know. With the addition of the Housing Choice Landlord Guarantee Fund (and additional security deposits), landlords now have $5,000 per tenancy of insurance for Section 8 tenancies if tenants leave owing money or damaging property. Obviously, this is an outstanding benefit not available to non-section 8 tenancies. Social goals: Dispersing poverty, greater opportunity for safe neighborhoods near good schools and employment, diversity of income and race, helping needy families with children, seniors, and those with disabilities. The Housing Choice Act of 2013 We ll cover the two parts of the Housing Choice Act in detail the law itself and Housing Choice Landlord Guarantee Fund. The Housing Choice Act: The Housing Choice Act of 2013, otherwise known as the Section 8 Bill, went into effect on July 1, Includes federal rent subsidies and other local, state, and federal assistance under the state s source of income protections. No landlord will be forced to accept Section 8 under this law, but no landlord will be able to refuse to rent to someone solely because their income is a Section 8 voucher. In other words, a landlord may not refuse to rent to an applicant or tenant, or treat an applicant or tenant differently from others, because their source of income is a Section 8 voucher or other form of housing assistance. 7

8 Source of Income Protection: (Section 1) *BY SYBIL HEBB A landlord may not refuse to rent to an applicant or tenant, or treat an applicant or tenant differently from others, because their source of income is a Section 8 voucher or other form of housing assistance. Amends ORS 659A.421(1)(d) to include federal rent subsidy payments under 42 U.S.C 1437f, and any other local, state, or federal housing assistance, in the definition of the term source of income. o Under Oregon s current fair housing law, a landlord cannot discriminate against an applicant or a tenant based on the tenant/applicant s source of income. However, current law exempts housing assistance from the definition of the term source of income. o HB 2639 removes this exemption, effective July 1, 2014, and provides that Oregon s source of income fair housing protections apply to applicants and tenants who are voucher holders or recipients of federal, state, or local housing assistance. o Under the new law, a landlord may not refuse to rent to a person or treat a person differently from other applicants or tenants because their source of income is a Section 8 voucher or other form of housing assistance. Amends ORS 659A.421(2)(a) to specifically clarify that this new protection does NOT prohibit a landlord from refusing to rent to an applicant with a voucher based upon the applicant s past conduct or inability to pay rent, so long as the screening or denial is otherwise consistent with local, state, or federal law. o The value of the applicant s housing assistance must be considered when assessing an applicant s ability or inability to pay rent. State and Federal Strategies: (Sections 6 and 7) *BY SYBIL HEBB Stakeholders will collaborate to use a variety of strategies to track progress and implementation of the new law, and to improve the Housing Choice Voucher Program for all participants. State Strategies: Local housing authorities will: o Annually provide Oregon Housing and Community Services (OHCS) with the information they already track for HUD regarding participation in the Housing Choice Voucher Program. o Annually review internal procedures to coordinate the length of rental terms with market standards, to achieve the maximum use and benefit of the Housing Choice Voucher Program in the best interests of landlords and tenants. o Consistent with federal law, facilitate landlord participation in the Housing Choice Voucher Program by: Ensuring timely inspections and prompt processing of applications and payments; Establishing leases with terms that match market standards; Assisting with service referrals; Establishing a process that allows landlords to provide regular input to local housing authorities. The Director of OHCS will appoint a Statewide Housing Choice Advisory Committee. Membership numbers and duration of membership are at the discretion of the Director. 8

9 o Membership shall be geographically representative of the state, and shall include equal numbers of representatives of local housing authorities, landlords, and tenants. o The committee shall advise OHCS regarding the Housing Choice Voucher Program, discuss and share best practices for maximizing landlord and tenant participation, and develop strategies and outcome measures for gauging effectiveness of the program. o The committee shall report back to the legislature at the beginning of each regular session regarding participation and effectiveness of the program. Federal Strategies: OHCS and the State Housing Council will cooperate with housing authorities to obtain approval of a waiver of federal requirements, and to renew existing waivers, to increase flexibility and streamline processes, and to make the use and distribution of the Housing Choice Voucher Program as efficient and beneficial as possible. The goal is to increase the supply of decent, safe, sanitary, and affordable housing for low and very low income families in this state. Codification in Statute of Housing Choice Landlord Guarantee Fund and State and Federal Strategies: The provisions of sections 2-7 of the bill, comprising the Housing Choice Landlord Guarantee Fund and the state and federal strategies, will be codified in statute as part of ORS Chapter 456. Housing Choice Landlord Guarantee Program: (Sections 2, 3, 4, and 5) *BY SYBIL HEBB Improves upon a revolving fund currently managed by OHCS to provide financial assistance to landlords to mitigate unreimbursed damages caused by tenants as a result of occupancy under the Section 8 voucher program. Tenants must reimburse the Program for amounts paid to qualifying landlords. Definitions: Defines terms for the purposes of the Housing Choice Landlord Guarantee Program Housing Choice Voucher Program means the Section 8 voucher program Landlord means a landlord who has entered an agreement with a local housing authority to receive section 8 vouchers as full or partial payment for rent, and who has entered a rental agreement with a tenant who is a voucher recipient. Local housing authority is a housing authority with a contract with HUD to make payments to landlords under the section 8 voucher program. Tenant is a person/family eligible for a Section 8 voucher in a rental agreement with a landlord. Program Administration and Landlord Eligibility: In order to be eligible for assistance, a landlord must obtain a judgment against a tenant in either the small claims department of the circuit court, or the circuit court for the county in which the property is located. Reimbursement is allowed only for amounts related to property damage, unpaid rent, or other damages: o Caused as a result of the voucher-holder tenant s occupancy; o That exceed normal wear and tear on the property; and o That are in excess of $500 but not more than $5,000 per tenancy. 9

10 A claim for assistance must be submitted within one year of obtaining a judgment against a tenant. OHCS must adopt rules to implement the program, and may prescribe additional qualifications and requirements for participation and application. OHCS may contract with a public or private provider for administration of the program, and shall adopt rules for the purposes of inviting proposals and awarding contracts. Tenant Repayment Required: Tenant must repay the full or partial amount back to the mitigation fund. The Program must provide the tenant an opportunity to enter a reasonable repayment agreement for the full or partial amount. Upon request, the Program shall waive repayment requirements, for good cause. The Program may pursue remedies for collection of unpaid amounts due from a tenant. A tenant may contest the Program s determination that the tenant has failed to comply with, or failed to make good faith efforts to comply with, the repayment plan. The Program shall make information about a tenant s compliance, including records of repayment, available to landlords and housing authorities upon request and in a timely manner. This is information is especially valuable to landlords during the application screening process. After the Program pays a claim for assistance to an eligible landlord, the Program shall serve notice on the responsible tenant of the above requirements. OHCS shall promulgate rules to implement these provisions. Creation of the Fund: The Housing Choice Landlord Guarantee Fund is created in the State Treasury. Interest earned from the fund remains with the fund. Funded by approximately $475,000 from the current Rent Guarantee Fund. The fund may be used by OHCS to carry out the purposes of the Housing Choice Guarantee Program and the reporting requirements of Section 6 of the bill (see below). The legislature appropriated $74,855 to OHCS for purposes of implementing the program, beginning July 1, Another $74,855 was appropriated to the Emergency Board for the same purposes. If the E-Board funds are not allocated to OHCS before December 1, 2014, they may be reallocated. These amounts are in addition to the $475, 000 described above for the Landlord Guarantee Fund. The rules for the Housing Choice Landlord Guarantee Program are available on the OHCS website, at: Program resources, including a program factsheet, landlord application for program assistance, and a tenant verification request form, are available on the OHCS website at: 10

11 Frequently Asked Questions and Outstanding Issues Does HUD or the PHA limit the rent charged? What is Fair Market Rent? A landlord can charge whatever rent the landlord wishes, so long as that rent amount does not vary based on the source of the tenant s income or on another protected class in other words, so long as the landlord doesn t charge a higher rent because the tenant is using a Section 8 voucher or is a member of another protected class. Still, some rent levels will be too high for use with a Section 8 voucher. Each PHA sets a rent level or Payment Standard for its community, which is based on the HUD Fair Market Rent. HUD sets a Fair Market Rent amount, varied by the number of bedrooms in the rental unit, for every county in the country, based on Census data and rent surveys. It is meant to reflect the amount, for that area, that would be needed to pay the gross rent (shelter rent plus utilities) of privately owned, decent, and safe rental housing of a modest (non-luxury) nature with suitable amenities. The Payment Standard limits how much subsidy the PHA will pay: Generally, the PHA will pay the difference between the total rent, up to the Payment Standard for that bedroom size, and 30 percent of the tenant s income, with the exception that the tenant may pay up to 40 percent of income at the beginning of a tenancy. For example, if the Payment Standard for a 3-bedroom unit is $1,000 per month and the tenant s income is $600, the tenant would pay 30 percent or $180 (known as the Total Tenant Payment or TTP) and the PHA would pay $820 of the rent. If the actual rent for a unit were less than the Payment Standard, the PHA would pay less. If it is more than the Payment Standard, the PHA won t pay more but the tenant can pay more, up to 40 percent of income, in this case, $240, which would allow the tenant to rent a unit at $1,060 (the PHA s $820 plus the tenant s $240). But if the rent is above $1,060, in this example, the unit is ineligible for use with a voucher. Obviously, this information about the Payment Standard and the TTP is complicated, and some Section 8 voucher applicants may not understand their limits. We are working to make these standards more clear. Landlords and applicants should seek clarity over allowable rent amounts and who pays what by contacting their local PHA. If a landlord knows that the rent exceeds the Payment Standard, the landlord is not required to accept an application from a Section 8 voucher holder although because of the possible exceptions mentioned above, and other complexities, a landlord would do well to not make that determination on his or her own, but to leave it to the PHA. On the other hand, a landlord who raises the rent just for the purpose of making the unit ineligible for the Section 8 voucher program would be in violation of the new law. Does the PHA or HUD regulate the amount of security deposit a landlord can charge? HUD rules provide that a PHA may prohibit a landlord from charging a deposit that is greater than the local private market practice or greater than the landlord charges non-section 8 voucher tenants. The new state law also prohibits landlords from charging a special or higher deposit just because the applicant is using a Section 8 voucher. Keep in mind that there is a landlord guarantee program which also acts like a deposit to cover significant landlord costs/damages (of up to $5,000; see more about the program below in #15). 11

12 A landlord may charge a higher-than-normal deposit because an applicant has a record of property damage or of unpaid rent, if that policy is applied to all applicants and not just to Section 8 voucher applicants. May a landlord charge a lower rent or a lower deposit amount from Section 8 voucher holders? Yes. Landlords can and do choose to lower their rents in order to make their units eligible for use with a Section 8 voucher. The same is true for deposits. But they are not required to do that. May a landlord require prepayment of a last month s rent deposit in addition to a security deposit? Yes, a landlord may require prepayment of a last month s rent deposit, if that is the practice the landlord follows with all applicants, although the landlord should only require a Section 8 tenant to pay a last month s rent deposit equal to the tenant s portion of the rent, since the PHA will be paying the balance of the rent. Lease term: Fixed term tenancy versus month to month. Must a landlord accept a Section 8 voucher applicant with a required initial one-year lease or any term greater than month to month? With exceptions described below, HUD requires that the initial lease or rental agreement term for Section 8 voucher tenancies be for one year; after that initial term, the tenancy term automatically converts to month-to-month (unless the landlord and the tenant agree to a longer term). Some landlords prefer month-to-month rental agreements because either the landlord or the tenant can terminate the tenancy with a no-cause notice. Others prefer fixed term agreements or leases because they provide stability for both the landlord and the tenant. Note that HUD rules previously required a specific cause to terminate a tenancy, even in month-to-month tenancies, but that is no longer the case. The new law requires PHAs to, consistent with federal law; facilitate landlord participation in the Section 8 voucher program by using leases with terms that are customary for the dwelling units involved. HUD rules allow PHAs to accept initial lease terms of less than one year, if they find that such leases are customary in the community and that a shorter term may improve housing opportunities for tenants. Practices vary around the state. Several Oregon PHAs currently accept less than one year leases, with some allowing 6-month leases, others month-to-month. Other PHAs are considering that change. Still others feel that one year leases are customary for their communities and better protect both landlords and tenants. The lease term policy will be set on the local level by the PHA. If a PHA s analysis, as described above, is that one year initial leases are required, landlords who reject Section 8 applicants on that basis run the risk of that rejection being treated as a violation of the law. Are landlords required to lower their standard rents to make their apartments or homes eligible for Section 8 voucher applicants? No; landlords may set their rents at whatever level they please, so long as they do not charge a higher rent for Section 8 voucher tenants than they charge for all others. But they can charge a lower rent of a voucher tenant in order to help the tenant qualify. See the discussion in # 2, above. 12

13 Can a landlord refuse a Section 8 voucher applicant because the landlord doesn't accept "split payments" -- rent payments from the tenant plus from another source, for example, the PHA? No. That would mean that no Section 8 applicant would ever be eligible for that landlord s units. Oregon law already protects landlords from a tenant raising a waiver defense in an eviction lawsuit when a landlord accepts Section 8 voucher payments from a PHA; see ORS (1). Can a landlord apply a multiplier criteria, requiring that an applicant have a certain income greater than the rent level, such as three times the rent? Yes, although there is some disagreement about what the landlord would multiply. The statute now explicitly allows a landlord to screen for an applicant s inability to pay rent. In light of this language, any criteria involving ability to pay rent must refer only to the Section 8 voucher applicant s portion of the rent. In the example described in #2 above, the applicant s share of the rent (the Total Tenant Payment) is $180; three times that rent obligation would require income of $540, while the applicant s actual income is $600, so that the applicant meets the criteria. If the multiplier is applied to the total rent amount ($1,000), not to the amount that the Section 8 voucher tenant pays, few Section 8 voucher applicants would ever qualify. In the example above, that would mean the applicant s income would have to be at least $3,000, an income which would likely make the applicant ineligible for the Section 8 voucher program. The issue becomes more complex if the applicant s income is zero, in which case the PHA will pay all of the applicant s rent. Three times zero is zero, so such an applicant would still meet the criteria. Some landlords express concern that an applicant with zero income couldn t pay for utilities or food or other necessities, making that applicant risky in terms of likelihood of paying rent; they may want to require some sort of minimum income. Tenant advocates note in response that the statute only refers to screening regarding an inability to pay the rent, which is satisfied if the voucher covers all of the rent. And one risk with requiring a minimum income is that it overlooks that applicants may have other sources of income or other forms of non-cash assistance, such as food stamps or utility allowances or assistance. These other sources should be considered in applying any multiplier. And note, again, that the Landlord Guarantee Program will cover unpaid rent (if the amount owed exceeds $500, and up to $5,000). And as with everything involving concern about fair housing and discriminatory treatment, a landlord must apply admission criteria evenly and not just to block Section 8 voucher applicants. Can a landlord raise the rent during a Section 8 voucher tenancy? Yes, but only with PHA approval. In order to increase the rent above the amount set in the HAP Contract, the landlord must submit a request for a rent increase to the PHA at least 60 days before the effective date of the increase. If the PHA determines that the increase is reasonable, the PHA will notify the tenant of the approved rent increase and of the new amount of the tenant s rent portion at least 30 days before the effective date. 13

14 Can a landlord require a tenant to pay additional rent, or accept additional rent from the tenant, beyond the amount set out in the HAP Contract? No. Extra rent payments, or side payments, above the amount in the HAP Contract are not allowed. The landlord will have to refund the money to the tenant, and risks being charged with a federal crime. The sole exception to this is charging pet rent, which increases the rent in exchange for allowing a pet to reside at the rental. This portion is paid by the renter and is permissible. What are the landlord s remedies if the tenant doesn't pay his/her share of the rent? As with any tenant, Oregon residential landlord/tenant law allows a landlord to evict a Section 8 voucher tenant who does not pay his/her portion of the rent. The procedure is the same as with non-section 8 voucher tenants. Screening: Can a landlord still screen Section 8 voucher applicants? Absolutely. The new law amends ORS 659A.421 (2) (a) to expressly authorize landlords to screen all applicants for past conduct and inability to pay rent, consistent with fair housing law. As is already the law, landlords should treat all applicants equally. Does the PHA also screen Section 8 voucher holders? Yes, but only for program eligibility, which is limited to income, criminal history, and immigration status. PHAs have some discretion regarding the types of crimes they consider for eligibility, and how long ago the crime occurred. Landlords generally use screening criteria that review more aspects of an applicant s background or history. PHAs are not responsible for the conduct of Section 8 voucher holders. Delays in signing the lease or rental agreement The PHA must approve the rental unit, both for the rent amount and for housing quality. The PHA does the latter by scheduling an inspection of the rental unit. An informal survey of Oregon PHAs in 2012 indicated that the average time to schedule and conduct an inspection ranges from 3 to 14 days. Federal laws say that PHAs cannot take more than 15 days. In some cases, the inspection delay may be because the applicant or the landlord is slow in returning the paperwork to the PHA; in others, it may be because the PHA has too few staff or too big a geographic area to cover. A PHA cannot begin paying its share of the rent until after the rental unit passes the PHA inspection and the HAP Contract is signed between the landlord and the PHA. This means that a landlord can t collect rent for that period; the longer the wait, the longer the landlord goes without rent. In markets where there are more rental vacancies, this may not be an issue, especially for shorter waits. But it is an issue in tight rental markets with lots of other qualified applicants. Advocates and PHAs are working hard to improve the timeliness of inspections and leasing up, as the new law requires, with PHAs sharing best practices among themselves and seeking permission from HUD to vary from these requirements, and some foundations considering grants to PHAs to make the process electronic. 14

15 How long must a landlord wait for a PHA inspection before rejecting the Section 8 voucher applicant? The answer is, It depends. The new law says that PHA inspections are to be timely, although it does not define what that term means. We think that the answer depends on how long the wait is, who is responsible for the delay, whether there are other eligible non-section 8 voucher applicants seeking that unit, and what the financial impact of the wait and the lost rent revenue is to that particular landlord. If that landlord has many units, the loss of some rent revenue would not be as harmful as it would be to a landlord with only one unit. Some of us think that this situation requires an individualized analysis by the landlord, considering the particular factors listed above. Others of us think that in a tight rental market where there are many eligible applicants, timely may be three to five days; in a slower market with fewer eligible applicants, timely may be six to fourteen days. Either way, a landlord cannot reject all Section 8 applicants in all cases just because of a concern that the inspection time may take too long. Can a landlord require the Section 8 voucher applicant to pay a deposit to secure a rental unit during the wait for the PHA inspection, under ORS ? Possibly, but that statute requires the landlord to approve the applicant first, which poses some risk to the landlord if done before the PHA approves the rental unit. And the landlord and applicant would have to enter a special written agreement regarding the deposit. As discussed in regard to other issues, a landlord would have to do this with all applicants who require any delay in approval. And it is not clear what happens to the deposit if the PHA does not approve the unit. What if the PHA s initial/move-in inspection results in a requirement that the landlord make some repairs before the unit can be approved? The PHA inspection is for HUD s Housing Quality Standards (HQS), as required by HUD regulation at 24 Code of Federal Regulations Part 982. Here s a link to a HUD FAQ about the HQS: The 13 areas covered by the HQS are very similar to Oregon s habitability requirements for all rental housing. See ORS In most cases, an HQS violation would also be a violation of ORS As a result, landlords cannot reject a Section 8 voucher applicant because the PHA inspection finds an HQS violation, unless it is for something which is not also covered by ORS and which would be a significant burden on the landlord to fix. An example of an HQS violation which is not also covered by ORS and which could be expensive to correct is peeling lead paint on the dwelling unit, a situation which would allow a landlord to reject a Section 8 voucher applicant and move on to the next applicant although any landlord of a rental unit with peeling lead paint risks liability if he or she rents to an applicant with young children, Section 8 voucher or not. What about other inspections? The PHA must conduct HQS inspections during the tenancy. These inspections benefit the landlord by alerting the landlord to physical problems with the unit. If the PHA finds a problem during an inspection, there is a process (written notice to both landlord and tenant) and reasonable timeline for correcting an HQS violation. If the tenant caused the violation, the PHA will require the tenant to make the correction or else the PHA will terminate the voucher. If the landlord is responsible and doesn t make the correction, after a reasonable period, the PHA may abate the rent subsidy or even terminate the HAP Contract. The PHA has some discretion with regard to these actions. Of course, a landlord has a duty under Oregon law to maintain a rental unit in a habitable condition, a duty that is independent of PHA inspections. 15

16 Can a landlord require a Section 8 voucher applicant to obtain renter s insurance? Possibly, but usually not. Renter s insurance is authorized and regulated by ORS Landlords are not allowed to require renter s insurance of tenants who live in subsidized housing, such as apartments financed with federal tax credits. That prohibition does not apply to Section 8 voucher tenants renting non-subsidized housing; compare ORS (9) (a) and (9) (b). But the statute prohibits landlords from requiring renter s insurance if the tenant s household income is equal to or less than 50 percent of the area median income, a figure set for each area of the state by the Oregon Housing & Community Services Department and HUD. ORS (8). Many Section 8 voucher tenants will have income lower than 50 percent AMI, so that their landlords cannot require renter s insurance. I would generally say that if the tenant qualifies for Section 8, don t require renters insurance. Are there types of rental units that are not eligible for occupancy by someone with a Section 8 voucher? Yes, but very few. Rental units that are not eligible under the Section 8 voucher program include college dorms, nursing homes, generally units owned by a close relative to the Section 8 voucher holder, and units occupied by the unit s owner or by a person with an ownership interest. Section 8 voucher holders can use their vouchers with single room occupancy units, congregate care and group homes, cooperatives, shared housing, and manufactured homes where the tenant rents both the manufactured home and the space for the home. And, with PHA approval, Section 8 vouchers can even be used by individuals who own their manufactured home and rent the space. Are there types of housing projects that are not eligible? Yes, generally speaking, those where the resident is already benefitting from a significant rent subsidy which is attached to the unit and not to the tenant, such as public housing projects, HUD-subsidized projects, Rural Development (formerly Farmer s Home) projects, and project-based Section 8 projects. See 24 CFR Section 8 vouchers may be used with projects financed under the federal Low Income Housing Tax Credit Program. What happens if a landlord violates the new law? How is it enforced? As a result of the new law, discrimination on the basis of source of income against an applicant or tenant because he or she has a Section 8 voucher or other rental housing assistance is now treated under Oregon law the same as discrimination against any other protected class of people. Individuals who think that a landlord has violated the law has several options. They may sue the landlord in an Oregon court within two years of the violation. They may file an administrative complaint with the Oregon Bureau of Labor and Industries (BOLI), which is the state agency that enforces fair housing laws in Oregon. Another resource is the Fair Housing Council of Oregon, which can and does help investigate an alleged violation, advocate for the victim of the violation, or possibly help file an administrative complaint with BOLI. Here s a link to an explanation of BOLI s complaint process: By law, BOLI may assess a penalty of up to $11,000 for a first violation of fair housing law; penalties increase for additional violations. ORS 659A