PD&R Quarterly Update: Source of Income Discrimination

PD&R Quarterly Update: Source of Income Discrimination

During HUD's Quarterly Update event on July 25, 2024, panelists explored the emerging research on source of income discrimination laws and the enforcement strategies employed by municipalities in New York and Maryland. Photo credit: Jennifer E. Miller

Fifty years ago, Congress enacted the Housing Choice Voucher (HCV) program to promote housing stability, health, and economic mobility by allowing households to choose where to use their rental subsidy. Many voucher holders, however, remain in high-poverty areas because area landlords practice source of income discrimination (SOID) by refusing to accept vouchers outright. To address this behavior, states and localities began enacting SOID laws in the 1970s; however, even in areas where SOID laws are in place, landlords sometimes find indirect ways to deny housing to voucher holders. 

On July 25, 2024, HUD's Office of Policy Development and Research (PD&R) hosted a PD&R Quarterly Update featuring two panel discussions examining the implementation of these laws and the latest research on their effectiveness. Calvin Johnson, PD&R's deputy assistant secretary for research, evaluation, and monitoring, moderated the first panel, which featured experts from housing research and policy institutions that included Martha Galvez, executive director of the Housing Solutions Lab at New York University's Furman Center for Real Estate and Urban Policy; Philip Tegeler, executive director of the Poverty & Race Research Action Council (PRRAC); and Dan Teles, principal research associate at the Urban Institute's Metropolitan Housing and Communities Policy Center. Participants in the second panel discussion, moderated by Chang Chiu, chief of staff for the Office of Fair Housing and Equal Opportunity at HUD, included Adria Crutchfield, executive director of the Baltimore Regional Housing Partnership (BRHP); Sandra Park, chief of the Civil Rights Bureau in the New York State Office of the Attorney General; and Manon Vergerio, cofounder and head of data and advocacy at Unlock NYC.

Prevalence, Evolution, and Effectiveness of SOID Protections

The first panel discussion began with each speaker reviewing the latest data relating to their SOID research focus. PD&R analyst Veronica Helms Garrison framed the discussion by presenting maps illustrating the prevalence of antidiscrimination laws. As of February 2024, HUD's Office of Public and Indian Housing reports that 17 states, 21 counties, and more than 85 cities have passed laws addressing SOID. Tegeler expanded on these data with PRRAC research illustrating the growth and evolution of SOID laws. According to PRRAC data, the number of state and local SOID laws has more than doubled over the past 10 years. Alongside the rise in SOID laws, the National Fair Housing Alliance reports a corresponding increase in complaints that local fair housing organizations have filed concerning landlord offenses. Lawyers previously needed to challenge laws that did not explicitly include federal housing assistance as a protected source of income (SOI) or address minimum income requirements and landlord objections to inspections. Policymakers have refined the language of recent ordinances to more effectively address SOID issues, eliminating outdated defenses and enhancing enforcement. At the same time, institutions are prioritizing making information about SOID laws more accessible. Earlier this year, HUD's Office of Public and Indian Housing launched a website detailing various types of SOID laws. In addition, PRRAC maintains and regularly updates a compilation of state, local, and federal laws prohibiting SOID.

To understand the effect of SOID laws on voucher utilization and movement to low-poverty neighborhoods, Teles and his coauthor, Yipeng Su, conducted an Urban Institute study that analyzed 43 SOID laws passed between 2001 and 2017. He noted that before these laws were enacted, only one in four families with vouchers lived in low-poverty neighborhoods, and the concentration of voucher holders in high-poverty areas was growing. After SOID laws were passed, said Teles, access to lower-poverty neighborhoods improved, although "with a 3- to 4-year lag" for laws to take into effect.

Despite the rise in SOID laws enacted nationwide and the positive mobility outcomes for voucher holders they have supported, Galvez asserted that "too few households reach low-poverty, high-opportunity neighborhoods, and too many households are unable to find housing with their vouchers." Galvez pointed to a paired-testing study HUD conducted in partnership with the Urban Institute between 2016 and 2017 that revealed the pervasiveness of landlord discrimination as an explanation for what she described as the "stubborn and persistent challenges" that families with housing choice vouchers face.

Lessons From State and Local Implementation of SOID

The second panel discussion presented insights from practitioners in Baltimore and New York. The panelists discussed the specifics of SOID laws in their respective jurisdictions, enforcement mechanisms, and strategies for engaging landlords to enhance housing access. Park shared that since 2019, New York state law has protected SOI under human rights legislation and prohibited discrimination against legal sources of income in housing advertisements. The law covers numerous SOI categories, including various forms of public assistance, and incorporates provisions for individuals to pursue legal action through state courts or the Division of Human Rights. Crutchfield explained that Maryland's 2020 Housing Opportunities Made Equal Act, which extended SOI protections statewide, addressed harmful provisions in earlier city-level SOI laws. For example, in Baltimore, the act curtailed the practice of allowing landlords with a certain percentage of HCV tenants to reject future voucher applicants.

Despite these advances, both Park and Crutchfield noted that landlords' efforts to evade enforcement present ongoing challenges for HCV holders. Crutchfield shared anecdotes from clients of BRHP's housing counseling team that revealed discriminatory screening practices and neighborhood resistance. For example, tenants have reported that some landlords impose stringent credit score requirements or income multipliers, and homeowners associations sometimes amend their bylaws to introduce additional screening criteria related to criminal records. Vergerio stated that this type of landlord behavior mirrors that seen in New York City. She also noted that New York City landlords engage in tactics that include placing voucher holders on "imaginary waitlists that people are never going to come off of" or "charging exorbitant application fees that are illegal and very much out of reach for voucher holders."

In response to these discriminatory practices, Unlock NYC launched the Rights Recorder mobile app in 2021 to track discriminatory practices. The free app allows housing voucher households in New York City to document and report SOID. Vergerio explained that voucher holders can submit complaints directly to legal partners such as the New York City Commission on Human Rights. Unlock NYC also collaborates with the Attorney General's Civil Rights Bureau, which investigates complaints. Park stated that the settlements to these complaints often include staff training on SOID laws, compliance testing, and restitution for affected individuals. Park also emphasized a unique settlement remedy that helps address the underrepresentation of voucher holders in the investigated units and identified communities. This provision requires landlords and management companies to create tenancies for voucher holders over the course of the settlement. In cases involving brokers, says Parks, the bureau seeks placement incentives for affected tenants, such as a fee waiver.

Incentivizing Landlord Participation in Antidiscrimination

Speakers on both panels agreed that strategies to incentivize landlord participation can make SOID protection more effective. Tegeler leaned into financial incentives that include holding fees to cover the time it takes for public housing agencies to complete the lease approval process, signing bonuses for first-time voucher landlords, grants for apartment improvements, and risk mitigation funds to cover damages not included in security deposits. Crutchfield described BRHP's proactive marketing to landlords, including social media campaigns to promote the benefits of renting to voucher holders. The organization also produces webinars to educate landlords about the legal requirements involved.

Still, said Galvez, these efforts are just the beginning. "There's more work to be done around educating landlords, and there's more work to be done around understanding what might change landlord behavior, but this is an encouraging time to [be gaining] more evidence about the value that these laws bring to voucher holders and their outcomes." In this vein, Park's office is currently partnering with a behavioral insights team to understand and address landlords' awareness and perceptions of SOID.