10/06/08

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Landlords call new Section 8 law costly

Mark Engel, who owns 102 West 79th Street, said smaller landlords can't handle the law's paperwork.

City landlords say a new law that makes it illegal for them to turn away tenants who use Section 8 vouchers to pay their rent is going to cost them both time and money.

"I have two people who work full time in my office whose sole responsibility is to deal with tracking money owed by Section 8," said Mark Engel, who owns 8,500 units, about 1,500 of which are rented to tenants using the voucher system.

"It places an unfair burden on property owners," said Engel, whose apartments are in four boroughs of New York City and in lower Westchester. "We're a large company, and we can handle it. A smaller owner can't carry the arrears or keep up with the paperwork."

The law passed the City Council in late March and was implemented immediately. Mayor Michael Bloomberg, who vetoed the law before the council overrode him, said that while he supports the expansion of the Section 8 subsidy program, this approach unfairly turns a voluntary federal program into a mandatory one.

The vouchers, issued by the Department of Housing and Urban Development and administered by local agencies, pay landlords up to 30 percent of a tenant's monthly adjusted gross income for rent and utilities. To qualify in the city, the current income threshold is around $38,000 a year for a family of four. The tenant makes up the difference in the rent of the market-rate unit.

While housing advocates have applauded the move as a groundbreaking measure that will give lower-income tenants more options, the landlord community is looking into the possibility of a legal challenge. New York City currently has roughly 85,000 Section 8 residents and expects to add another 22,000 to the system.

"We think there are grounds for legal action, but we haven't determined if we will proceed," said Frank Ricci, director of government affairs at the Rent Stabilization Association, which represents landlords.

The chances of overturning the law seem unlikely. Several other cities (including Washington, D.C., and Chicago), along with the state of New Jersey, mandate that landlords accept Section 8 vouchers. Court rulings have upheld state and local laws.

Engel said he knows of several Section 8 horror stories, like the tenant who refused to allow access to an apartment even though it needed significant repairs. While the tenant held out, the voucher payments ceased, and the landlord lost six months of rent.

Engel also said some annual lease renewals aren't processed for two or three years, and the voucher payments don't reflect the increases. He noted the new law, which allows tenants who believe they have been victims of discrimination to file a claim before the city's Commission on Human Rights, has negative implications for all landlords.

"I'm concerned about if I turn down tenants for bad credit or for not paying rent, and before we get to housing court, they take me to the commission and blame it on Section 8 — and not the real reason why they've had housing problems," Engel said.