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City of San Diego Adopts Source of Income Law; Several Amendments

The following comes to us from the San Diego County Apartment Association. It speaks to a growing trend around the country concerning source of income and public policy. Denver, Boulder and Los Angeles are considering similar measures to San Diego’s, and the National Apartment Association (NAA) is closely monitoring those processes. This form of legislation should be regarded with caution, and every effort should be taken to participate in the drafting and negotiation of similar ordinances by your local apartment association.

On Tuesday, July 31, the San Diego City Council voted to adopt an ordinance aimed at providing Section 8 voucher holders more housing options in the city. Called the Source of Income Discrimination Ordinance, the measure passed with six Yes votes (one No vote from Councilmember Mark Kersey). Councilmembers Chris Cate and Scott Sherman were not present.

SDCAA opposed the ordinance when it came to the Smart Growth & Land Use Committee in June and again yesterday at Council. SDCAA also met with council offices leading up to yesterday’s meeting to express concerns with the ordinance and the potential impacts to property owners.

Before the full council hearing, two of the items of concern for SDCAA were addressed: 1) A one-year grace period was added to provide plenty of time for education and outreach to the rental housing industry. To file a source of income complaint, the alleged violation must occur on or after August 1, 2019. SDCAA was very concerned that owners or managers would not have time to get up to speed on the law and would receive complaints, or worse, have lawsuits filed against them right away. 2) The San Diego Housing Commission will form a Stakeholder Advisory Committee for owners and managers to provide feedback on program improvements. SDCAA believes the open line of communication can lead to program improvements that will ultimately benefit owners and managers, as well as residents and the Housing Commission. Click here to read the staff report.

Still on SDCAA’s ask list before yesterday’s hearing was a shift in the use of the proposed contingency fund to provide some sort of upfront payment to offset what are often delays of weeks, and in some cases months, for initial rent payments. Several councilmembers expressed concerns of the impact on “mom and pop” property owners. Councilmember Kersey asked Councilmember Georgette Gomez to exempt some small property owners (one and two units), however she refused to take the amendment. The Housing Commission, via the stakeholder meetings, will consider other ways to use the funds. SDCAA also suggested an annual report on activity related to the ordinance, and to the extent that they can, track the reasons why property owners enter the program (voluntarily versus the mandate).

At the hearing, the Mayor’s Office suggested a set of amendments that were accepted by Councilmember Gomez. The ordinance as presented by staff was approved along with direction for the Housing Commission to report back to the Smart Growth & Land Use Committee in 9 months on the status of implementation, including:

  • Summary of the education and outreach efforts.
  • Number of education and outreach meetings held.
  • The stakeholders engaged.
  • Number of complaints brought to the hotline to be managed by a third party.
  • Summary of additional process improvements made to the Section 8 program as a result of this policy and outreach efforts.
  • Update to the payments standard qualification page (voucher size and payment form).
  • Requirement for civil mediation and landlord education to be the first line of enforcement; Return to Smart Growth & Land Use Committee by May 2019 with a legal analysis on the ability for the City to require such mediation, and possible Municipal Code amendment for adoption and implementation by August 1, 2019.
  • Ensure the “lost rent” allowance in the Contingency Fund cover up to one month of lost rent due to any Housing Commission processing or inspection delays.

SDCAA will be working to get a legal analysis of the ordinance, create a white paper on the law and will consider holding classes on Section 8 in early 2019.

As always, NAA and its affiliated apartment associations stand ready as a resource for you in the policy arena. If we can answer any questions or provide assistance regarding source of income ordinances, please do not hesitate to contact Nicole Upano on the government affairs team.