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Renter’s Choice Legislation Would Mandate Alternative to Security Deposits

Brent Warren Brent Warren Renter’s Choice Legislation Would Mandate Alternative to Security DepositsPhoto via Rental Realities.
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Columbus City Councilmember Shayla Favor sought feedback this week on a legislative package designed to assist renters at a time when many are facing severe economic uncertainty.

The package has three main components:

  • Adding source of income as a protected status under the city’s fair housing law, meaning landlords couldn’t discriminate against tenants who receive federal vouchers or other assistance to pay their rent.
  • Requiring landlords to provide a paper or electronic receipt for rent payments.
  • Passing a so-called “Renter’s Choice” law, in which landlords would be required to offer their tenants the option to buy renter’s insurance – with relatively low monthly payments – in lieu of a traditional security deposit (and if the tenant did choose to put down a security deposit, it could not be more than half of one month’s rent).

“Building more units must be a major part of our strategy – we know that we are not building enough – but we also know that’s it’s going to take more than just additional units to solve this problem,” said Favor, in introducing the proposals during the virtual hearing. “There is no silver bullet that could end our housing crisis, but there are actions that we can begin to take that will shift our system and move our community forward.”

The renter’s choice law, she explained, is an attempt to address the large upfront costs associated with moving to new rental housing. Security deposit insurance can offer protection for landlords at a lower price for tenants; sometimes for as little as a few dollars a month.

City Attorney Zack Klein offered his support for the initiative, which he called “a modern approach to today’s security deposit.”

“We’re in the middle of a global pandemic, many families are struggling,” he said. “They’ve lost income, they’ve lost wages…and having to come up with several hundred dollars, sometimes thousands of dollars for a security deposit in order to move into secure and stable housing is sometimes such a high hurdle that many families cannot do it, and they end up homeless.”

Favor brought in Jordan Stein of Rhino Insurance Group, a startup that offers the insurance, to speak about the proposed legislation. He framed it as a “vetted alternative” that would help to put “$480 million that is tied up in security deposits in Columbus alone…back into renters’ pockets and into the Columbus economy.”

A similar ordinance was recently passed in Cincinnati, and Stein list several other cities that are currently considering renter’s choice legislation, including Atlanta and Philadelphia.

After the speakers, public comment was allowed. Although most offered support for all three elements of the proposed legislative package, several argued strongly against the renter’s choice idea.

Peter Lohmann, owner of RL Property Management, said that he supports both the source of income protection and the rent receipt requirement, but has concerns about the renter’s choice proposal, which he said “will have the opposite of the intended effect.”

“These claims companies go out of business all the time,” he said, pointing out that Rhino was only founded in 2017, and that several others companies in the space have been founded and subsequently gone out of business in that same time period. “Now you’re asking landlords to navigate the paperwork and claims process for half a dozen different insurance companies, and who controls what these companies can charge tenants?”

Ali Malesick, a member of the Central Ohio Housing Action Network and the Housing Committee Chair of the Columbus chapter of the Democratic Socialists of America, also expressed concerns.

“Please do not bring this renter’s choice legislation before the full council..it’s not necessary and is potentially very harmful to low-income tenants who will face increased cost, no protection from the courts, and new ways to be evicted,” she said, adding that the online reviews for Rhino, in particular, are “atrocious…they disproportionally over-charge tenants and do not give them their money back, while simultaneously providing no customer service.”

Favor said that the legislative package is still being developed and that those interested in more information on the proposals, or in providing feedback, can contact her office.

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