Tuesday, January 31, 2006
C.A. Rejects Los Angeles Ordinance Designed to Help Low-Income Tenants Remain in Subsidized Housing
By KENNETH OFGANG, Staff Writer/Appellate Courts
A Los Angeles ordinance designed to prevent landlords from pulling out of the federal government’s Section 8 housing program in order to re-let units free of rent control is preempted by state law, the Court of Appeal for this district ruled yesterday.
The court’s Div. Three affirmed a 2004 ruling by Los Angeles Superior Court Judge Judith Chirlin. By granting Section 8 tenants an unending reprieve from eviction, Presiding Justice Joan Dempsey Klein wrote, the city’s law conflicts with the Costa-Hawkins Rental Housing Act, a 1995 state law limiting such relief to 90 days.
The Section 8 program allows a limited number of senor citizens, disabled or handicapped persons, and persons with very low incomes to receive federal vouchers that pay a portion of their housing costs. Participating landlords must agree to abide by rules established by the Department of Housing and Urban Development.
When a Section 8 tenant selects an apartment, the landlord contracts with the federal government through an administering local agency, which in Los Angeles is the Housing Authority. The tenant is required to pay 30 percent of his or her income toward rent, and the remainder of the rent is paid by the government.
The ordinance rejected by the Court of Appeal was enacted in April 2002, for the express purpose of stemming a trend toward removal of units from the Section 8 program. The council found that because the city’s rent stabilization ordinance does not apply to “voluntary” vacancies, landlords were puling out of Section 8, thus forcing the impoverished tenants to leave, and then setting new rents based on the market.
To prevent this, the ordinance mandated that landlords continue to rent housing removed from Section 8 to the existing tenants at a rate no greater than the tenant’s share under the expired or terminated contract for as long as the tenant remained in the unit and continued to pay rent.
In challenging the ordinance, landlords cited Civil Code Sec. 1954.535, a provision of the Costa-Hawkins Act requiring an owner to provide a 90-day notice to a tenant of a termination or failure to renew a government contract, and prohibiting the landlord from charging more than the Section 8 tenant’s share of rent during that period.
The landlords also charged that the city’s enactment constituted a taking of property without just compensation and denied them a reasonable return on their investments, issues not reached by the trial and appellate courts.
Chirlin agreed with the landlords, rejecting the city’s argument that the ordinance, while more favorable to tenants than the state statute, served the same purpose and therefore was not in conflict with it.
While localities have considerable latitude in controlling rents, the judge said, she found it unlikely “that the Legislature could have intended for the specific time limitation it imposed to be directly contradicted by local law.”
Klein, writing for the Court of Appeal, agreed, citing the legislative history of the statutory provision
She noted that Costa-Hawkins established vacancy decontrol of rents as the general rule, subject only to exceptions as set forth in the statute. While the bill was being considered, Klein explained, landlords were already being advised that while Section 8 was often a favorable alternative to renting units under local rent control ordinances, vacancy decontrol provided an opportunity to bring rents up to market values by withdrawing from the federal program.
The Legislature’s response, Klein said, was to balance the landlords’ right to set market-based rents and the needs of tenants by setting the 90-day period, which a Senate committee analysis found would “not impose an undue burden on the property owner.”
The jurist cited a 1988 Court of Appeal case involving the Ellis Act, an earlier state law that, among other things, established the right of a landlord to withdraw property from the rental market. The court held that a Santa Monica ordinance requiring a permit to remove rent-controlled housing from the market was preempted.
“The instant 2002 Ordinance is similarly flawed,” Klein wrote. “Despite a landlord’s recognized right to terminate or to refuse to renew a Section 8 contract, [the ordinance] imposes a prohibitive burden on the exercise of that right by making it unlawful for the landlord, following termination or nonrenewal of the contract, to demand the tenant pay rent in excess of the tenant’s portion of the rent under the former contract, without any limitation as to time.”
Attorneys on appeal included Assistant City Attorney Claudia McGee Henry and Deputy City Attorney Gerald M. Sato for the city and Trevor A. Grimm and Craig Mordoh of the California Apartment Law Information Foundation for the plaintiffs.
The Neighborhood Legal Services of Los Angeles County, National Housing Law Project, Legal Aid Foundation of Los†Angeles, Los Angeles Housing Law Project and Bet Tzedek Legal Services filed an amicus brief supporting the city.
The case is Apartment Association of Los Angeles County, Inc. v. City of Los Angeles, B179133.
Copyright 2006, Metropolitan News Company