City of Tempe v. State of Arizona – 6/4/2015

June 12, 2015

Arizona Court of Appeals Division One holds that a municipal corporation is a “person” subject to the Arizona Fair Housing Act and that the administration of a federal housing voucher program is conduct subject to that Act.

The City of Tempe is a municipal corporation.  It administers a federal voucher program through which the U.S. Department of Housing and Urban Development provides rental subsidies.  Tempe adopted a plan to administer that program and committed to comply with applicable nondiscrimination laws. 

The Arizona Attorney General received a fair housing complaint alleging discrimination by Tempe based upon the alleged disability of an applicant in the program.  The Attorney General sent a notice of the complaint to Tempe and requested a response.  Tempe resisted the Attorney General’s investigation and pursued declaratory and special action relief in superior court. 

Tempe argued that it was not subject to the Arizona Fair Housing Act, which provides that “[a] person may not discriminate in the sale or rental or otherwise make unavailable or deny a dwelling to any buyer or renter because of a disability.”  A.R.S. § 41-1941.19(A)(1).  Tempe contended that it was not a “person” under the Act and also that it did not engage in conduct subject to regulation under the Act.  The trial court rejected Tempe’s arguments and Tempe appealed.

The Court of Appeals held that a municipal corporation is a “person” under the Arizona Fair Housing Act.  That act defines “person” to include “corporations,” which is commonly understood to include municipal corporations.  A.R.S. § 41-1491(9).  When the statute was enacted, it was well established that municipal corporations were included under the federal Fair Housing Act’s definition of person.  The Court of Appeals rejected Tempe’s argument that the term “corporations” should be read to exclude municipal corporations unless the statute specifically references municipal corporations. 

The Court of Appeals also held that Tempe engages in conduct subject to the Arizona Fair Housing Act.  Although Tempe does not directly sell or rent dwellings, its administration of the voucher program and its decisions and denials can “otherwise make unavailable or deny a dwelling” to a person.  A.R.S. § 41-1941.19(A)(1). 

Judge Jones authored the opinion; Judges Gemmill and Kessler concurred.