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Apartment Owners Sue Santa Monica Over New Housing Discrimination Law

Santa Monica Real Estate Company, Roque and Mark

Pacific Park, Santa Monica Pier

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

By Hector Gonzalez
Staff Writer

June 15, 2015 -- A landlords’ association and apartment owners are suing the City of Santa Monica, claiming a new local law aimed at banning income-based housing discrimination is unconstitutional.

Apartment Association of Greater Los Angeles (AAGLA) and three landlords of apartment buildings in Santa Monica filed the lawsuit Wednesday in Los Angeles Superior Court, claiming the new ordinance preempts a state law defining a renter’s source of income and “constitutes an invalid exercise of the City’s power.”

Adopted by the Santa Monica City Council on May 12 in response to increasing reports of landlords allegedly shutting out Section 8 renters, the new ordinance adds income source to a list of traditional housing discrimination protections such as age, race and gender.

Although state law already prohibits source of income discrimination, the new local ordinance closed a loophole in state law by making it clear that the federal rental assistance vouchers qualify as a person’s income, City officials said last month. (“Santa Monica Seeks to Codify Ban on Income Discrimination,” May 5, 2015)

But Craig Mordoh, one of two attorneys for the plaintiffs, said Santa Monica’s ordinance conflicts with California’s Government Code, which defines a “source of income” as income paid “directly to a tenant or a representative of the tenant.”

The state law’s provisions are “intended to ‘occupy the field’ of the regulation of housing discrimination and to preempt local regulation,” according to the lawsuit.

“The state basically has told local cities they have to butt out,” said Mordoh. “The statute is clear that state law over-rides local city ordinances.”

By changing the definition of income source to include federal housing assistance -- and backing it with fines that could go as high as $10,000 for serious discrimination cases -- Santa Monica’s ordinance forces landlords to accept Section 8 vouchers or face possible legal actions from the City, the lawsuit alleges.

City officials have said the new ordinance is aimed at preventing landlords from not renting to Section 8 tenants, but it does not force owners to enter into Section 8 contracts or any other particular type of rental contract.

Participation in the Section 8 voucher program has traditionally been low in Santa Monica, Housing Authority officials told City Council members at a recent meeting.

Faced with a very competitive local rental market, recruiting and retaining landlords for the voucher program has been difficult, officials said.

For a one-bedroom apartment, for example, the program provides a $1,300 maximum rent subsidy, far less than the local going rental rate for a one-bedroom unit, officials said.

By entering into a Section 8 contract, landlords give up their right to terminate the rental agreement and are subject to financial audits and property inspections by the local housing authority, said Murdoh.

“Forcing rental property owners to accept Section 8 voucher entails more than simply accepting money from a third party,” the suit by AAGLA says.

“Participation in the Section 8 voucher program requires the property owner to make physical repairs and other improvements that go well beyond what the cities require,” said Mordoh, adding that voucher payments to landlords are often slow or delayed by housing authority red tape.

“Many housing authorities are now even requiring owners to provide access to their private bank accounts,” he said.

Murdoh said the lawsuit is seeking an immediate court injunction to halt Santa Monica’s ordinance.

“We believe that requiring an owner to enter into a contract with a third party who is not the victim of discrimination and who imposes onerous and unreasonable conditions in the contract, which cannot be terminated by the owner, is an unconstitutional use of the City's policing powers,” said Murdoh.

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