Denver's New "Source of Income" Ordinance

Posted By: Deborah Wilson Industry News , Legal Issues ,

As of January 1, 2019, if a Section 8 voucher holder is a good candidate, most Denver Landlords will be required to accept the voucher and cooperate with the Denver Housing Authority (DHA) rules, HUD regulations, inspections and policies.

Many Landlords do not accept Section 8 voucher holders, as participation in the federal section 8 program has historically been voluntary. Landlords with tax credit units, however, must accept section 8 vouchers. 

Many Section 8 Housing Choice Voucher holders find it difficult to obtain a suitable rental home or submit an application to see if they qualify.  In an effort to fight homelessness, governments have begun passing laws which require Landlords to accept all sources of income (SOI), including Section 8 vouchers.

Landlords assert that participation in government programs like Section 8 subjects Landlords to onerous regulations, administrative burden, delays in rental payments, and increased expenses. They say renting to Section 8 tenants reduces their ability to recover damages, as such tenants are often “judgment proof” (low income or disabled). Some Landlords have had extremely bad experiences with Section 8 tenants (often with unauthorized occupants, criminal behavior and drug use).

Colorado state law does not currently prohibit local cities from passing legislation for SOI mandates. Therefore, the City of Boulder and the City and County of Denver recently passed ordinances requiring local Landlords to accept all legal sources of income, including Section 8 vouchers.

Denver’s SOI ordinance took effect January 1, 2019. On August 6, 2018, over much opposition, the Denver City Council passed the ordinance requiring Landlords with rental units in the County of Denver to consider Section 8 vouchers and other non-traditional sources of income. Non-traditional income may include vouchers and subsidies from Section 8, Colorado Coalition for the Homeless (CCH), VASH, CAP, student loans, disability, social security, pension benefits, etc.

There is an exclusion for a Denver Landlord with only one rental, and for duplexes where the owner lives in one of the units. Accordingly, most Denver Landlords can no longer say “We don’t accept Section 8 vouchers.” The new ordinance requires Landlords to consider the applicant. However, if the applicant does NOT qualify under a Landlord’s normal screening criteria (credit score below a certain level, negative rental history, history of bad credit, certain criminal behavior, or eviction), a Landlord can still deny an applicant. 

As of January 1, 2019, if a Section 8 voucher holder is a good candidate, most Denver Landlords will be required to accept the voucher and cooperate with the Denver Housing Authority (DHA) rules, HUD regulations, inspections
and policies. Landlords may want to consider hiring a company to navigate
the complexities of government
subsidy programs. 

Landlords may continue their normal screening criteria, as long as policies are fair, nondiscriminatory and consistently enforced. For example:

  • If a Landlord requires a credit score above 620, the Landlord may deny candidate who do not meet this threshold. 
  • If a Landlord does not rent to anyone with a possession judgment (eviction order) within the last three years, the Landlord may deny candidates who have a recent possession judgment on record. 
  • If a Landlord does not rent to anyone with a violent or
    sex-related felony conviction in the past five years, the Landlord may deny candidates who do not meet this threshold. 
  • If a Landlord does not rent to anyone who is a lifetime registered sex offender, the Landlord may deny candidates who are lifetime registered sex offenders. 
  • If a Landlord does not rent to anyone with negative rental history in the past three years,
    the Landlord may deny candidates who do not meet this minimum threshold.
  • A Landlord may deny candidates who do not qualify to live in a unit at the Landlord’s price point. 
  • If a Landlord requires all approved applicants to pay the deposit in full, before the unit is taken off the market, the Landlord may require this of its Section 8 applicants
    as well.

There is a split opinion on whether Landlords may continue to require three times monthly income for Section 8 voucher holders. Most experts recommend that Landlords require an applicant to make three times “the tenant’s portion” of the monthly rent. 

Damages after move out

The Colorado Coalition for the Homeless (“CCH”) has a program whereby a Landlord may apply for reimbursement of damages after a CCH tenant moves. Many other housing authorities offered these reimbursement programs in the past, but many have been discontinued for budgetary reasons. The Denver Council is currently considering a Reserve Fund for Landlords who have been harmed by Section 8 tenants or DHA delays.

 

For more information, please attend AAMD's new "Source of Income Ordinance" class, held by Deborah on February 5.Click Here to Register