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New law opens rental markets for convicted felons

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Rep. Warren Petersen, R-Gilbert, is the sponsor of a bill that critics say jeopardizes the safety and security of hundreds of communities across the state. (Source: CBS 5 News) Rep. Warren Petersen, R-Gilbert, is the sponsor of a bill that critics say jeopardizes the safety and security of hundreds of communities across the state. (Source: CBS 5 News)
Dave Russell, the community manager for Circle Tree Condominiums in Mesa, says SB 1454 allows sex offenders, drug dealers and felons to move into any rental community they want. (Source: CBS 5 News) Dave Russell, the community manager for Circle Tree Condominiums in Mesa, says SB 1454 allows sex offenders, drug dealers and felons to move into any rental community they want. (Source: CBS 5 News)
A registered sex offender just moved into a designated crime-free property in Mesa. (Source: CBS 5 News) A registered sex offender just moved into a designated crime-free property in Mesa. (Source: CBS 5 News)
PHOENIX (CBS5) -

A man in Mesa believes a new law jeopardizes the safety and security of hundreds of communities across the state.

"This is a catastrophic disaster for (homeowners' associations)," said Dave Russell, the community manager for Circle Tree Condominiums in Mesa.

Senate Bill 1454 passed last month is considered a big win for homeowners against overbearing associations.

However, others like Russell claim special interest groups have slipped in something that steals a homeowner's right to know who's living next door. He's blown away by the new law.

"They've taken away the safety and the security of every HOA in the state of Arizona," Russell said.

Many homeowners' associations belong to crime-free programs, which partner with local law enforcement to ban convicted felons, sex offenders and drug dealers from renting in their communities.

Russell said Senate Bill 1454 throws that safety measure for families, who thought they were moving into a safe community, out the window.

"They won't know who's living next to them. Now they do. After this, they won't. That's the scary part," Russell said.

HOAs will no longer be able to ask homeowners to conduct background checks on their renters and hand over personal information.

Associations will only be given the renter's name and their license plate number.

"Basically any property manager, investor, private or other, can simply move in anybody to our community despite our rules and regulations that prohibit sex offenders, drug dealers, felons," Russell said.

Rep. Warren Petersen, R-Gilbert, is the bill's sponsor.

"You as a property owner have that right to rent your property out, and nobody can stop you," Petersen said.

The lawmaker said HOAs have gotten out of control. He said his bill stops discrimination toward property owners.

"Homeowners' associations were literally prohibiting people from being able to rent out their property because they didn't like their tenant," Petersen said.

When asked if he knew those restrictions were keeping out a specific type of tenant, the freshman lawmaker struggled to answer. He said he was unaware convicted felons were the ones being turned away.

When confronted with that information, Petersen said, "I think you're using an extreme hypothetical here."  

While Petersen called it hypothetical, CBS found it is happening.

The law doesn't take effect until September, but homeowners have already started breaking the crime-free agreements and renting to those previously not allowed, like Daniel Thresher, a registered sex offender who just moved into a designated crime-free property in Mesa.

"When I moved here and was flyered, the homeowners' association threatened to kick me out," Thresher said.

Now under SB 1454, they can't.

According to the language of the law, the association can no longer impose a requirement on a rental property any differently than an owner-occupied one.

Since those with a criminal past aren't prohibited from buying a property in an HOA, they can't be shut out from renting.

Petersen didn't seem to understand the potential fallout from his bill.

"The legislation doesn't say anything about sex offenders," he laughed.

When told he might not see the full ramifications of the bill he sponsored, Petersen only saw the positives.

"I saw this as a great bill to protect property rights," he said.

He was silent when it was pointed out the legislation opens up a whole new rental market for convicted felons, those previously shut out of certain communities.

The Arizona Association of Realtors has been working on the same issue for awhile.

Last year, House Bill 2513 contained similar HOA restrictions and was authored by then-Rep. Steve Urie, a real-estate agent.

It was vetoed by Gov. Jan Brewer.

However, the language in that bill kept popping up.

The AAR asked Petersen to revive the legislation this year in HB 2337. When that didn't work, they tried again with HB 2371, and when that didn't pass, it showed up in HB 2518, where it also failed.

The HOA language ultimately slipped through on the last day of session in a hodgepodge of amendments to SB 1454.  

Every one of the sponsoring lawmakers happens to be a real-estate agent.

"I think that they are doing what's in the best interest for their groups and organizations and definitely what's not in the best interest for the citizens of Arizona who live in homeowner's associations," Russell said.

Russell said he believes the real-estate industry pressured lawmakers because of large investors who bought up thousands of homes and now need to rent them, regardless of the impact to the community.

He said he knows what happens to a property when tenants aren't screened.

In 2007, 19-year-old Amanda McElroy was seven months pregnant when she was shot and killed at the Circle Tree Condominiums. Police suspect her boyfriend was the target in a suspected drug deal gone wrong.

Since then, the association cleaned up the property and worked with police to turn things around.

"We did everything right. We did exactly what they told us to: Have a crime prevention program. Tighten up your rules. Be diligent," Russell said.

But to Petersen, that's not necessarily a good thing.

"That's clearly a discriminatory practice that they were engaged in, but this legislation completely pre-empts that from happening in the future," Petersen said.

HOAs and community managers have asked Brewer to seek a declaratory judgment from the courts, declaring the HOA amendments as invalid and unlawful.

That's because Senate Bill 1454 is a campaign finance bill.

The HOA provisions have nothing to do with the title of the bill, which makes them unconstitutional under Arizona state law.

UPDATE: Attorney Tim Hogan with the Arizona Center for Law in the Public Interest filed the lawsuit on behalf of two homeowners. Most of the HOA provisions in SB 1454 were deemed unconstitutional by the Arizona Attorney General and subsequently thrown out.

Copyright 2013 CBS 5 (KPHO Broadcasting Corporation). All rights reserved.

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