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2019 State of Play: NAA’s Take on Policy Issue Trends

 

Housing affordability challenges will be the driving force behind legislative and regulatory activity affecting the apartment industry, at all levels of government. Particularly in the nation’s cities, policymakers are looking for quick fixes to provide relief for low to moderate-income renters while putting increased pressure on apartment owners to shoulder the resulting financial and operational impacts. There are several areas of concern that may catch fire as they relate to housing affordability concerns. Also included are some trending issues that have implications from an operational perspective.

Eviction

Eviction policy has come under intense media scrutiny as housing affordability becomes a more pressing issue in cities and states across the country. While the eviction process has long since been a focus of tenants’ rights activists and state and local policymakers, it has witnessed renewed fervor in light of the popularity of Matthew Desmond’s book Evicted and his subsequent research at Princeton, as part of the Eviction Lab project.

Federal, state and local policymakers are focused on resident protections that seal eviction court records, otherwise remove barriers to securing housing or keep renters in place by making the eviction process more difficult. Whether it be restrictions on eviction screening or implementing just cause eviction protections, these policies have significant consequences for the industry.

Last year 411 eviction-related bills were introduced in 42 states, with 72 bills becoming law. A similar bill volume is expected in 2019.

Inclusionary Zoning

Adopted by over 500 localities across the country, inclusionary zoning policies typically fall into two categories: voluntary measures that encourage the development of affordable housing, or mandatory programs that stipulate a percentage of units be set aside and fixed with below market rents as a condition of approval for new development. Increasingly, the latter is being used by state and local governments to increase affordable housing in communities experiencing high rates of growth. While well-intentioned, these policies result in the opposite outcome of their intended aim. Inclusionary zoning is a form of rent control that stymies development and leads to overall price increases. These mandates act as a tax on housing construction, which increases building costs and reduces housing supply.

41 inclusionary zoning bills were introduced by 16 states in 2018. While Tennessee successfully adopted a state preemption law to prevent localities from mandating inclusionary zoning, Louisiana’s governor vetoed similar legislation last year. In 2019, NAA expects a similar or increased activity at the state and local level in 2019.

Rent Control

Rent control policies are government-enforced price controls that place limitations on the rent an apartment owner may charge in market rate rental housing. Rent control laws also typically result in a host of additional regulatory burdens on apartment owners and operators, including restrictions on rent increases, required approval for special assessments to cover repairs or major capital improvements, limits on vacancy decontrol and just cause eviction measures. They distort the housing market by acting as a deterrent and disincentive to develop rental housing, and rent control measures discourage owners from re-investing in their properties through maintenance and rehabilitation.

Last year 117 rent control bills were introduced in states and localities. 17 of those became law. On a related note, while the apartment industry saw a significant win in the defeat of California’s ballot measure to repeal the Costa Hawkins Rental Housing Act, NAA anticipates interest in rent control policy to keep pace as housing affordability remains a priority concern across the nation.

Resident Screening

Resident screening continues to be an issue of concern, as more states and localities consider legislation that restricts housing providers from evaluating the criminal and eviction records of applicants in the screening process. One of the most oppressive examples is Seattle’s Fair Chance Housing law which prevents property owners from evaluating applicants’ criminal history at all, except in very limited circumstances, such as sex offenses. Screening mandates interfere with owners and operators’ ability to protect their residents and staffs, and increase their risk for legal liability, either through tort or fair housing litigation.

Last year, 51 bills related to criminal screening were introduced at the state level, while 14 bills related to eviction screening were considered. In 2019, there are already 15 resident screening bills in total being considered. Additionally, NAA anticipates a steady stream of action at the local level in particular, given the level of interest in 2018.

Source of Income (Fair Housing)

In a self-defeating effort to combat affordability challenges, federal, state and local policymakers are proposing legislation that would make “source of income” a protected class under fair housing laws. These proposals essentially make it illegal for a private owner to refuse to rent to a Section 8 voucher holder. When source of income legislation is considered, proponents ignore the significant challenges that apartment owners and operators face in participating in the Section 8 Housing Choice Voucher Program. The program is constrained by inefficiencies and duplicative requirements, which may be prohibitive or discourage owners and operators in the private market from participating.

Last year, states considered 53 source of income bills, in addition to numerous localities. Of note, Washington state, Boulder and Denver, Co., and San Diego and several localities near Marin, Calif. adopted source of income protections in their fair housing laws.  Given the number of laws enacted last year alone, NAA anticipates similar or increased growth in interest in 2019.

Related to SOI, it’s worth noting that last year HUD released two studies that focused on a handful of cities across the country and suggested that many apartment owners refuse to take Section 8 vouchers. You should be aware that these studies may have an effect on interest in legislation locally. In 2018, HUD also engaged in landlord listening sessions all around the country to better understand owners’ concerns about the program that interfere with participation. Given the interest in this issue at all levels of government, NAA established a Section 8 Working Group, to come to a consensus on concerns and reform suggestions. NAA is vetting these suggestions through the association’s governance process and look forward to sharing our findings with all of you.  

Emotional Support Animals

There are now 30 states that criminalize misrepresenting oneself as requiring a service animal or misrepresenting a person’s pet as a service animal. Some of these state laws are applicable to the broader category of assistance animals (which would include emotional support animals). Both approaches have been used to deter applicants or residents from requesting reasonable accommodations for animals under false pretenses.

Also to curtail abuse, some of these laws create criminal penalties for providers who make documentation available for purchase under false pretenses and/or make the requirements at the state level more stringent to request a reasonable accommodation for an animal. It’s worth noting that 1/3 of the state laws now on the books were enacted in 2018. NAA anticipates similar interest in legislation in 2019. 14 bills have been introduced in state legislatures this year as of this writing.

Marijuana

Marijuana remained a hot issue in 2018. Three states voted favorably for the legalization of marijuana, either medically or recreationally on the November 2018 ballot. Michigan voted to legalize recreational marijuana, while Utah and Missouri voted to legalize marijuana for medical purposes. These laws have consequences for apartment owners as housing providers develop and revise their policies relating marijuana use by residents and employees on community property. Laws that allow home cultivation for medical marijuana users are a point of contention. These laws also create challenges for apartment owners and operators that participate in HUD programs or receive federal funding as marijuana remains illegal at the federal level.

NAA continues to monitor this issue because it could be an issue of concern this year. Regardless, it is highly likely that more states will consider marijuana ballot measures in the 2020 election cycle. 

NAA Policy Shop

NAA stands ready to support affiliates and members if any of these issues arise locally. To assist the affiliate network and members in their efforts on the ground, NAA offers a variety of advocacy tools and resources.

We are pleased to announce that NAA staff has developed packets of information on 40 priority policy issues affecting the industry. These packets, also known as Grab ‘n Go’s, include a fact sheet containing background information on an issue, talking points and a 50-state statutory chart.

A wealth of information, including the Grab ‘n Go packets, can be found now in the Policy Issues Section of the NAA website. This section, which was newly optimized in 2018, contains public-facing issue pages that share basic information to educate the public, policymakers and the media about the industry’s position on each issue. Each page also includes a password-protected section of affiliate and members resources with NAA materials along with any related comment letters, talking points or other materials submitted by NAA affiliates that may provide additional guidance.

In addition to the prepared materials, NAA offers policy issue research to affiliates and members ad hoc as a member benefit. In fact, NAA fulfilled almost 200 affiliate and member requests in 2018. For more information on these products and services, please contact Nicole Upano, NAA’s Director of Public Policy.