A Craigslist ad offers a two-bedroom rental house with a "fireplace and a bar for entertaining" in a "quiet safe neighborhood" in Minneapolis. But the ad says tenants with federal rental-assistance vouchers need not apply: "No Section 8."

It was posted online May 1, the same day a city law went into effect prohibiting landlords from discriminating against Section 8 holders.

The increasing scarcity of rental properties available to Section 8 holders prompted the City Council last March to adopt the ordinance, which threatens landlords with fines and other penalties if they refuse to accept Section 8 vouchers or even post ads saying that.

More than 50 landlords have already fought back, filing a lawsuit against the city that argues that the city has no authority to impose this requirement.

Since May 1, the city hasn't received any complaints from tenants saying they were turned away because they had Section 8 vouchers, according to a city spokeswoman. But Craigslist ads across the metro show the preference of many landlords to avoid those renters.

"It's a real issue around fair housing, and it contributes to segregation in the city" because it concentrates Section 8 tenants in certain neighborhoods, said Eric Hauge, executive director of the tenant advocacy group Home Line.

The Section 8 voucher is a federally funded program intended to help low-income individuals, the elderly and the disabled rent private apartments. Section 8 tenants pay about 30 percent of their income toward rent and utilities, and the voucher covers the balance.

The Minneapolis Public Housing Authority currently administers about 5,000 vouchers covering more than 15,000 people. More than 1,000 families are on a subsidized housing wait list, which hasn't been opened to new applicants since 2008.

But even some of those lucky enough to get vouchers never get to use them, because they can't find a landlord willing to accept them. Section 8 holders get 180 days to find a rental property, although they can get an extension if they can prove they're still looking. In 2017, 7 percent of the 363 vouchers were forfeited, according to Jeff Horwich, a housing authority spokesman.

Hauge said some landlords have misconceptions about Section 8 tenants, such as that voucher holders will damage their property.

"Those fears are really unfounded," he said. "People have waited for a decade on the list to get a Section 8 voucher. It's like winning a lottery ticket that you do not want to lose."

Council Member Lisa Goodman, who co-authored the ordinance with Council Member Abdi Warsame and former Council Member Elizabeth Glidden, said having a Section 8 voucher should not be a reason to discriminate against tenants, even if it's expensive to comply with federal rules.

"Like the dozens of other cities who have anti-discrimination ordinances with their Section 8 programs, we needed to have that ordinance to prevent intentional discrimination against people who use Section 8 as their method of payment for housing," Goodman said in an interview Tuesday.

Three months after the ordinance was passed by the City Council, a group of Minneapolis landlords who control more than 3,200 units sued the city.

"Our clients are very willing to work with folks that need public assistance to rent property," said Peter Coyle, an attorney for the landlords. "The issue that we are objecting to is being mandated to comply with a federal program that by law is designated as a voluntary program."

Coyle said landlords would need additional staff to manage the city's request, and they would have to take more time to have their properties held open for inspections by the city. Overall, it will increase the cost of renting, he said.

While the city is tightening the regulations on landlords, it's also trying to lure them into accepting vouchers with financial incentives.

In conjunction with the housing authority, the city has created the "Incentive Fund" program that provides financial support to landlords, such as a one-time $250 signing bonus for landlords who participate in the voucher program and covering the costs of property-damage claims.

"We have never believed that the ordinance itself is going to solve many of the challenges that families with vouchers face," Horwich said. "But combined with packages of improvement that we have been working on internally in our department, we hope that will make the process easier and families will be able to find suitable housing more quickly."

Two landlords who advertised "No Section 8" properties on Craigslist hung up when contacted by a reporter Tuesday.

Mukhtar M. Ibrahim • 612-673-4689 Twitter: @mukhtaryare