Sparks Flares Over City's SOI Ordinance

Section 8 voucher holder Gloria Middleton (l), who testified about her struggle to find housing, and Dimple Smith wait outside Judge Sam Sparks' courtroom. (Photo by Mary Tuma)

A city ordinance that would protect low-income renters from housing discrimination remains on hold while a federal judge – who criticized the ordinance as "troublesome" – decides its fate after nearly a full day of hearings.

The "source of income" rule, enacted by City Council in December and scheduled to take effect this month, would prohibit landlords from rejecting renters who pay with non-traditional income sources, such as government-subsidized rental assistance (Section 8 Housing Choice Vouchers, for example). It met quick reaction from the Austin Apart­ment Association, which filed suit 24 hours after passage. The city requested the transfer from Travis County court to federal court; the two sides met during a Monday morning preliminary injunction hearing before U.S. Dis­trict Judge Sam Sparks. The city portrayed the housing code amendment as a nondiscrimination ordinance, while AAA framed it as an unconstitutional forced contract.

AAA's attorney Craig Enoch argued the ordinance imposes costly and time-consuming bureaucratic hurdles on landlords and forces them into agreements with the federal government (U.S. Dept. of Housing and Urban Development), with potential legal liabilities. David Mintz of the Texas Apart­ment Association called the Section 8 program "valuable," but said it should remain voluntary. "There is a very real concern about the program causing delays in getting residents moved in while other residents could come into the unit immediately. The threat of having funding cut off from HUD is also a concern," said Mintz. The AAA witnesses described fear of "onerous" compliance rules; the city called witnesses who said renting to Section 8 tenants in fact provided reliable and steady sources of rent.

The city pointed to an Austin Tenants' Council map showing that Section 8 renters – mostly minorities and many disabled – generally live in "low-opportunity" areas with concentrated poverty, higher crime rates, and fewer chances for upward mobility. The group's 2012 survey reflected that the overwhelming majority of landlords do not accept Section 8 renters, and since that time, even fewer property owners are accepting the vouchers: 19 of the 49 Austin landlords who previously took vouchers are no longer accepting them, said Morgan Morrison, a fair-housing specialist with the Tenants' Coun­cil. On an annual basis, 11% of voucher holders are unable to secure residence due to either previous rental history, high rents, or being denied a lease, said Lisa Garcia, vice president of assisted housing at the Housing Authority of the City of Austin.

The ordinance, they argued, would increase housing choice in higher-opportunity areas for people who need affordable homes, help the effectiveness of the program, and protect a class open to potential discrimination – along the same lines as race and gender protections. Further, they noted, landlords would still be able to screen tenants for criminal and rental background checks. "This isn't about forcing rents to be lower or making sure everyone can live in a beautiful condo Downtown," said Assistant City Attorney Meitra Farhadi. "It's about ensuring the landlord cannot discriminate against a renter just because they have a voucher."

Sparks appeared irritated at times by the city's arguments, and sympathetic to the AAA's case. At one point the judge described the city's presentation as a "dog and pony show," and said it seemed like the city is "bullying" everyone who owns rental property. Sparks also noted that HUD doesn't enforce source-of-income rules (which calls into question the city's authority), and appeared to agree that the ordinance forces a contractual agreement that could incur expense and liability for landlords.

Sparks also claimed the city was, in part, looking to solve a problem it had created. "The city, through their taxing power, expensed [East Austin/low-income] residents out. Now they are trying to remedy that by forcing anybody in the city that owns land to participate in this."

Sparks expects to issue a ruling within the next two weeks. "This job is never boring," he concluded. "And the good thing is, I've got a circuit court to tell me when I'm wrong."