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Source of Income: When Voluntary Becomes Mandatory

Source of Income

On September 11, 2019, the California Legislature approved Senate Bill 329, which adds Section 8 Housing Choice Voucher (HCV) holders and Veteran Affairs Supportive Housing (VASH) participants to the state’s existing “source of income” protections under the California Fair Employment and Housing Act. This measure is now awaiting Governor Gavin Newsom’s signature and, if signed, will require property owners to accept voucher holders if all other screening criteria is met.

Prior to the law’s passage, California was one of 15 states where “source of income” was a protected characteristic under the state’s fair housing law. However, the definition of “source of income” in California alone was narrowly defined to apply only to “lawful, verifiable income paid directly to a tenant or paid to a representative of a tenant.” This meant that government subsidies, such as Section 8 HCV funds paid directly to a housing provider, were excluded. In recent years, California cities saw a trend to remove that exemption and apply local source of income protections to HCV recipients.

As source of income legislation continues to flourish, it is crucial for policymakers to understand why property owners choose to not participate in the Section 8 HCV program. Legitimate business reasons prevent housing providers from accepting vouchers; it may not be cost-effective or feasible to adhere to the program’s requirements to accept a single voucher holder. It’s also important to note that, even under source of income laws, housing providers can still deny applications from voucher holders if the applicant did not meet the company’s screening criteria.

Many affordable housing providers dedicate their entire business to managing the multi-level process that is required to participate in the HCV Program. It can be (and often is) a full-time job to coordinate with the public housing authority (PHA) that administers the program locally. In simpler terms, it is the strings — not the source — that has caused owner participation rates to flatline. 

Source of income will remain a hot topic for NAA in the upcoming years, as more states consider solutions to housing affordability and seek ways to find safe and affordable housing for the low-to-middle income population. To better assist our affiliates, NAA has a plethora of information that can be found on the Source of Income policy page.

If you are aware of any new source of income proposals or have questions about the issue, please contact Jodie Applewhite, Manager of Public Policy.