AMA will focus on two policy priorities for 2019 as legislators return to work
By Jake Hinman
With the Arizona Legislature back in session, the AMA will focus its lobbying efforts on two proactive bills in 2019. Both bills will amend the Arizona Landlord and Tenant Act to clarify certain areas of the law.
The Arizona Landlord and Tenant Act (A.R.S. §§ 33-1301 through 33-1381, the “Act”) governs the rental of dwelling units and the rights and obligations of landlords and tenants. The Act was codified by the legislature to simplify, clarify, modernize and revise the law and to encourage landlords and tenants to maintain and improve the quality of housing.
Arizona’s Act was modeled upon the Uniform Residential Landlord and Tenant Act (“URLTA”) created in 1972 by the National Conference of Commissioners on Uniform State Laws. Most states have adopted all or part of URLTA with Arizona being the first state to adopt the model Act. The purpose of the URLTA was to eliminate all elements of outmoded common law from the landlord-tenant relationship and base all phases of the rental agreement on contract law.
Recent court decision changes the rules after 45 years
The Act specifies a landlord’s obligations as it relates to accepting a partial payment of rent from the tenant and asserts that landlords are not required to accept a partial payment of rent. However, if the landlord accepts the partial payment of rent, in the absence of a contemporaneous agreement in writing wherein the tenant and landlord agree to the terms of the tenant’s continued tenancy and the remaining balance owed, then the landlord waives the right to terminate the rental agreement for the (non-payment of rent) breach.
The Act defines “rent” as payments to be made to the landlord in full consideration for the rented premises. Many landlords in Arizona accept Housing Assistance Payments (“HAP”) from Public Housing Agencies (“PHA”) as provided under a federal program administered by the federal department of Housing and Urban Development known as the “Housing Choice Voucher Program” (also known as “Section 8”). These payments are used to subsidize a tenant’s monthly rent.
Historically, Arizona Justice Courts have never considered a Housing Assistance Payment by a PHA to be rent. Instead, the courts have traditionally recognized that the HAP contract is between the landlord and the PHA (not the landlord and tenant), and most importantly, the tenant is not responsible for payment of the portion of rent to the landlord covered by the HAP contract. Since the tenant has no personal liability to the landlord for the portion of the total monthly rent paid by the PHA, the landlord’s acceptance of that portion does not trigger the partial payment of rent waiver found in A.R.S. § 33-1371(B). Or at least that was the general rule for the past 45 years.
Recently, however, a Superior Court ruling upended this traditional understanding of the relationship between the landlord, tenant and the third party. The court determined that when a landlord accepts any portion of rent due on a tenant’s account (even if the source is from third party provider) then the landlord has waived the right to sue on that breach. The court noted that the statute is silent as to the source of the payments.
So, what is the effect of the court’s ruling? Simply stated, the court’s ruling puts the future of the Housing Choice Voucher Program in serious jeopardy, ultimately making access to housing less attainable for families.
If landlords’ rights are limited and they are no longer able to terminate a rental agreement due to non-payment of rent or for health and safety violations, then landlords will very likely withdraw from the various government sponsored rental assistance programs. Unfortunately, the court’s decision put landlords and tenants alike in a precarious position and leaves those whom rely on these rental assistance programs without adequate housing options.
Proposed legislation will cure adverse court ruling
The AMA’s proposed bill will fix this unfortunate ruling by the courts. The proposed bill will clearly define a “Housing Assistance Payment” as any payment made to the landlord, whether in full or partial satisfaction of amounts owed in consideration for the rented premises, paid by a government agency or any third party. The definition is important as it will capture both government and non-profit housing providers. The bill then clearly exempts any landlord that receives a housing assistance payment from the partial payment waiver in A.R.S. § 33-1371.
ALTA is the law of the land
The AMA’s second proactive bill is focused on a larger policy question on whether or not local jurisdictions should have the ability to create separate landlord and tenant regulations apart from the state. Arguably having separate patchwork regulations spread out across the state creates confusion for both landlords and tenants alike.
The AMA’s bill will clarify that the regulation of the rights, obligations, and remedies of landlords and tenants is a matter of statewide concern and the provisions are not subject to further regulation by a county, city, town, municipality or other political subdivision of this state.
Jake Hinman is the Director of Government Affairs for Capitol Consulting. He can be reached at 602-712-1121.
AMA bill on abandoned property signed into law
By Courtney Levinus & Jake Hinman
As far as excitement goes, the 2018 Legislative Session has not been a disappointment. At the time of our last update we knew about the State’s plans for investing in K-12 education, combatting the opioid crisis, and reducing prison recidivism rates. What we did not know was that Yuma Representative Don Shooter would be expelled from the House, Debbie Lesko would win the Republican Congressional Primary, and the Legislature would find itself in a tizzy over how to use increased state revenues.
As for AMA, we began the 2018 session with two primary policy goals: protecting the multi-housing industry from harmful regulations and preserving key development incentives for the industry. We believe that we are well on our way to achieving those goals.
This year we placed the majority our focus on two policy areas: The Landlord Tenant Act and Government Property Lease Excise Tax (GPLET).
S.B. 1376: Landlord Tenant Act; Personal Property
We are pleased to report that the AMA’s proactive bill, SB1376, related to abadoned property, has been signed into law by Governor Doug Ducey and will become effective 90 days after the end of the session. Be on the lookout for a member guidance memo.
The bill modifies the Landlord Tenant Act in several ways:
The Government Property Lease Excise Tax (GPLET) is a tax incentive agreement negotiated between a private party and a local government. It was established by the State of Arizona in 1996 as a way to stimulate development in commercial districts by temporarily replacing a building’s property tax with an excise tax. GPLET is levied on property that is owned by a city, town, county or stadium district and leased to a private entity. The tenant, or prime lessee, pays an excise tax based on size and use instead of property tax based on value.
The session kicked off with the introduction of three House bills that would have had a detrimental effect on GPLET. These bills triggered months of tough negotiations between Representative Vince Leach, the AMA, various other development stakeholders and the cities and towns.
After all of the long meetings and difficult phone calls we are happy to say that two bills are dead and an agreement has been reached on H.B.2126. Our amendment to H.B. 2126 will allow the bill reform GPLET while preserving it as the primary development incentive for the State of Arizona.
The bill has passed the full House and is now awaiting committee consideration in the Senate.
The AMA is also monitoring many other bills that have a direct or indirect impact on the apartment industry.
H2263: LANDLORD TENANT; SECURITY DEPOSITS
Summary: If a tenant does not dispute the deductions from a security deposit or the amount due and payable to the tenant within 45 days after termination of the tenancy, the amount due the tenant is final and any further claims are waived.
H2454: SEXUAL ASSAULT; RENTAL AGREEMENT TERMINATION
Summary: A tenant is permitted to terminate a rental agreement if the tenant provides to the landlord written notice that the tenant was the victim, in the tenant’s dwelling, of sexual assault.
HB2568: AFFORDABLE HOUSING TAX CREDIT
Summary: Establishes a credit against individual and corporate income taxes and insurance premium taxes for projects that qualify for the federal low-income housing tax credit and that are placed in service from and after June 30, 2019. The credit is equal to the amount of the federal low-income housing credit for the qualified project. To claim the credit, a taxpayer is required to apply to the Arizona Department of Housing and receive an eligibility statement. If the amount of the credit exceeds taxes due, the taxpayer may carry the unused amount forward for up to five consecutive taxable years.
HB2126: GOVERNMENT PROPERTY; ABATEMENT; SLUM; BLIGHT
Summary: For the purpose of statute allowing municipalities to abate taxes for government property improvements in a single central business district, the definition of “central business district” is modified to require the geographical area to be not larger than the greater of 2.1 percent of the total land area within the exterior boundaries of the municipality or 960 acres, instead of not larger than the greater of 5 percent of the total land area or 640 acres. Modifies the requirements for leases between a prime lessee and a government lessor to require the government lessor to determine that a public benefit to the state and the county or municipality in which the improvement is located will occur because one or more of a list of specified slum or blight-related circumstances exist.
Courtney LeVinus is a principal, and Jake Hinman leads legislative affairs, for Capitol Consulting. They can be reached at 602-712-1121.
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