Relating to assistance animals in residential rental housing, including damage reimbursement, refundable income tax credits, and a landlord insurance risk pool, and providing penalties and effective date provisions

Upon satisfactory verification, the department of revenue must notify the tenant and provide an opportunity to dispute the claim.65 (setoff procedures) to pay the landlord the amount owed. A landlord may not seek a setoff for damages that are reimbursed through the tax credit or insurance risk pool established in the bill. The department of revenue is required to adopt rules to administer these procedures. Second, the landlord may claim a refundable income tax credit for unreimbursed damage under the bill, to the extent the landlord has not received reimbursement for the same damage through the setoff process or the insurance risk pool. The credit equals the amount of verifiable damage above normal wear and tear to a dwelling unit caused by a tenant’s assistance animal, emotional support animal, service animal, or therapy animal, to the extent the damage is not compensated by a damage deposit, setoff, or reimbursement from the risk pool. Taxpayers claiming the credit must provide evidence of the damage to the satisfaction of the department of revenue. The credit may be claimed by individuals and by pass-through entity owners based on the individual’s pro rata share of earnings. Any excess credit may be refunded or applied to the following tax year. The director of revenue is required to adopt rules to implement the tax credit. Third, the bill authorizes the director of the department of administrative services to establish and procure group insurance plans to create a voluntary state risk pool to reimburse landlords for damage caused by such animals. The risk pool is funded solely by contributions from participating landlords, who must elect to participate in writing and pay assessments determined by the director. The director may contract with authorized insurers and must adopt rules to administer the program. The bill provides that, unless prohibited by state or federal law, a landlord may require a reasonable, refundable damage deposit for an emotional support animal or therapy animal. The deposit may be used only for damage beyond ordinary wear and tear. A landlord may not require a damage deposit for a service animal. The bill provides that, unless required by federal law, a landlord is not required to allow a tenant to keep an emotional support animal or therapy animal that is not a dog as a housing accommodation. Current law provides that a person who intentionally misrepresents an animal as a service animal or a service-animal-in-training for the purpose of obtaining rights or privileges under state or federal law is guilty of a simple misdemeanor. The bill creates a new criminal offense, punishable as a simple misdemeanor, when a person intentionally misrepresents an animal as an assistance animal, therapy animal, or emotional support animal for the purpose of obtaining rights or privileges under state or federal law. The bill takes effect July 1, 2027.