Court: Higher water charge for public housing is not discriminatory

The Maricopa Domestic Water Improvement District can charge a higher deposit to residents of public housing – even though it falls disproportionately on minority customers – because if cannot collect overdue water bills from Pinal County as it can from private landlords, a federal court ruled. Photo by Tim Evanson | Flickr/CC BY-SA 2.0

WASHINGTON – A federal appeals court said Friday that an Arizona water district can charge more in upfront fees to public housing residents, even though the policy disproportionately affects minority customers and single mothers.

A three-judge panel of the 9th U.S. Circuit Court of Appeals acknowledged that the policy by the Maricopa Domestic Water Improvement District does have a discriminatory effect. But the court said the policy is not “impermissibly discriminatory” because there is a legitimate business reason for it – covering unpaid bills that Pinal County, which owns the Edwards Circle public housing, has refused to pay.

Jeffrey Matura, the water district’s attorney, welcomed the court’s decision because it “affirms what we always believed to be true.”

“This policy was never intended to discriminate against anyone who lived in the public housing units, but rather as a way to protect the district’s financial stability,” said Matura, who argued the case before the court.

An attorney for the Southwest Fair Housing Council and the two tenants who brought the suit said she was disappointed with the ruling in what she called a “tough case.”

“This was a tough case and Southwest Fair Housing Council and the two individual plaintiffs … did their best over the past four years to get the policy changed for all the public housing residents in the District,” attorney Elizabeth Brancart said in an email Friday. “Unfortunately the case did not resolve in our favor.”

The case stems from the district’s decision in 2015 to charge new tenants at Edwards Circle a refundable service deposit of $180 to get water service – more than three times the $55 connection fee charged to all other customers of the district, which serves about 300 households.

That policy was the result of years of frustration at trying to get Pinal County to pay for the delinquent water bills of the Edwards Circle tenants. Since 2000, the district has required landlords to pay the outstanding bills of former tenants that were in excess of the security deposit.

The court said the county originally agreed to the landlord stipulation, but that, “Unfortunately for the District, it would not be so easy to get Pinal County to comply with that admission.”

The county told the district in 2001 to just cut off water to delinquent customers, but soon reversed course. The district raised the deposit for Edwards Circle residents in 2002 to $100.

But from 2011 to 2013, the district sent repeated delinquency notices to the county, which the county repeatedly refused to pay, according to the ruling. It also rebuffed the district’s threat to impose a lien on the property, arguing that the county was immune to such an action.

After repeated meetings on the matter with no resolution, the district imposed the $180 fee for Edwards Circle tenants as of Jan. 1, 2015.

When Tavita Peña and Jennifer Peters, both single moms, moved in to Edwards Circle in 2016, they had difficulty making the payment. Although they eventually were able to pay with help from family and nonprofit groups, they sued, claiming the deposit policy violated the Fair Housing Act, which prohibits discrimination by housing providers.

The district’s overall customer base is 45% white, 49.7% Hispanic, 2.9% Black and 2.2% Native American, the ruling said, and 34.3% of those tenants are single moms. By comparison, Edwards Circle customers in 2017 were 11.1% white, 33.3% Hispanic, 38.9 % Black and 16.7% Native American. Single moms made up 89% of the tenants.

“We argued that it was unfair to new public housing tenants to charge them such a large deposit regardless of their own payment histories or credit,” Brancart said. The tenants argued that the security deposit policy had a “discriminatory animus.”

But the circuit court said the tenants “failed to demonstrate robust causation” between the policy and its discriminatory effect. And it said it was “undisputed” that there was a “legitimate business interest” driving the policy.

“The record demonstrates that residents at Edwards Circle had previously left delinquent accounts in excess of their security deposit, which the district could not recover from Pinal County,” said the opinion by Judge Carlos T. Bea. “It is self-evident that a business has a legitimate interest to be paid in full for services it has already provided pursuant to a valid contract.”

Matura said blame for the policy lies with Pinal County.

“All the district has ever asked was for Pinal County to pay for its own property and the services provided to its property,” he said. “If they had paid, we never would have had this issue.”

“We’re not sure how the county went sideways with this issue, but we hope that we can reach some common sense solution with them to make sure this doesn’t happen again in the future,” Matura said.

A Pinal County spokesperson declined comment on the ruling Friday.

***CORRECTION: An earlier version of this story misquoted a passage from the opinion and inadvertently omitted the word “not.”

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