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HomeMy WebLinkAboutCM Rental Discrimination Ordinance____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: 12/3/2018 Disposition: Passed Ordinance No. 1966 to print Agenda Item No: 6.a Meeting Date: December 3, 2018 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: City Manager’s Office Prepared by: Andrew Hening, Director of Homeless Planning & Outreach City Manager Approval: __ _________ TOPIC: RENTAL DISCRIMINATION ORDINANCE SUBJECT: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL AMENDING THE SAN RAFAEL MUNICIPAL CODE BY ADDING NEW CHAPTER 10.98 CONCERNING “SOURCE OF INCOME” DISCRIMINATION IN RENTAL HOUSING RECOMMENDATION: Conduct a public hearing regarding a proposed ordinance to add Chapter 10.98, entitled “Rental Housing Source of Income Discrimination”, to the San Rafael Municipal Code concerning source of income discrimination in rental housing and pass the ordinance to print. BACKGROUND: In November of 2016, the Marin County Board of Supervisors adopted a Source of Income Fair Housing Ordinance intended to eliminate limitations in the provision of rental housing merely because a family, Veteran, or other renter receives third party rental assistance, such as a Housing Choice Voucher (Section 8), a Veterans Affairs Supportive Housing (VASH) Voucher, a Housing for People with AIDS Voucher, or the Shelter Plus Care Voucher. The County has asked that individual cities consider the adoption of a similar ordinance to create consistent rental opportunities throughout Marin, regardless of a renter’s source of income. ANALYSIS: When someone pays rent for a room, apartment, or house, there are a variety of ways in which they might source the revenue for that expense. They could use income from a job, a pension, disability or social security payments, money from a friend or parent, child support payments, or alimony payments. They may also receive rental assistance from the government or some other third party resource. In 1968, Congress passed the Fair Housing Act which was intended to protect buyers and renters from seller or landlord discrimination. Its primary prohibition makes it unlawful to refuse to sell to, rent to, or negotiate with any person because of that person's inclusion in a protected class. In 1974, Congress passed the Community Development Act, which created the Housing Choice Voucher (Section 8). Housing vouchers are not free housing. Voucher recipients are required to pay 30% of their income towards their housing expenses, and the voucher covers the rest. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 The goal of the voucher program was two-fold. First, it was an opportunity to move away from the public housing model, wherein the government built and managed housing units. Chronically underfunded, these facilities often fell into disrepair and resulted in concentrations of poverty and crime. Second, the Fair Housing Act was passed in response to extensive and pervasive discrimination in the housing market. Redlining, for example, was a government-endorsed policy that allowed financial lenders to deny home loans and insurance to people because they lived in “financially risk y areas.” The Federal Housing Administration (FHA) set the industry standards for what type of mortgages the federal government would insure. Without ever showing proof, the FHA claimed that integrated neighborhoods would reduce home values, which would in turn increase mortgage. As a result, the FHA deemed neighborhoods with racially restrictive covenants as safer investments, effectively blocking people of color from moving to more affluent communities, even if they had the resources to do so (Source: Color of Law). Housing vouchers were seen as a way to affirmatively further fair housing because rental assistance would give people the opportunity to move out of public housing and/or neighborhoods that had been subject to redlining. This vision for using vouchers to reverse the impacts of past housing discrimination only works if people with vouchers actually have a meaningful choice in a community’s overall rental market. 50 years after the passage of the Fair Housing Act, housing discrimination persists in our community. To substantiate the need for source of income protections, the Marin Housing Authority reported to the Marin County Board of Supervisors that between January 1, 2014 and August 31, 2016 a total of 2,194 Housing Choice rental subsidy vouchers were issued to low-income Marin households. Nearly half were unable to find landlords in the county willing to accept their vouchers and, as a result, lost their vouchers. Rental listings advertising “no Section 8” were found to be common in Marin. As of September 2018, this practice still persists in San Rafael. Current state law prohibits housing discrimination based on a person’s source of income (California Government Code Section 12921), but case law has established that California’s source of income discrimination law does not protect individuals or families with third party rental subsidies because rental payments do not qualify as a source of income when they are paid directly to the landlord (i.e. the third party provider pays the landlord directly, rather than the payment going to the tenant and then the tenant paying the landlord). State law, however, does not preempt municipalities from adopting a distinct Fair Housing Ordinance that recognizes third-party housing subsidies or vouchers as a source of income. Such ordinances have been demonstrated to reduce voucher rejections by as much as 50 percent. The County of Marin, the Town of Fairfax, and the City of Novato have all passed such “source of income” ordinances to protect renters from potential discrimination. The proposed ordinance, modeled after these other communities, would prohibit the following activities by landlords related to source of income: A.To interrupt, terminate, or refuse to initiate any transaction in real property because of a tenant’s source of income. B.To include in the terms or conditions of a transaction in real property any discriminating clause, condition or restriction due to the tenant’s source of income. C.To refuse or restrict facilities, services, repairs or improvements because of the tenant’s source of income. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 D.To make, print, publish, advertise, or disseminate any notice, statement or advertisement with respect to a transaction in real property that indicates preference, limitation or discrimination based on source of income. Importantly, the proposed ordinance would not prevent or hinder property owners and landlords from screening renters and retaining freedom of choice based on other factors such as total income, credit scores, rental history, references, etc. However, the source of income ordinance also establishes that an income requirement can only be applied to the tenant’s portion of the rent if they receive a third- party subsidy. For programs like Section 8, the federal government establishes market-rate payment standards for vouchers (see Exhibit 1 for the Marin Housing Authority’s current payment standards). The voucher holder contributes 30% of their income, and the voucher covers the rest up to the payment standard. Exhibit 1 – Marin Housing Authority’s Current Payment Standards Enforcement is expected to occur primarily through civil injunctive action; however, local ordinances have included a criminal penalty as well. If a tenant believes the ordinance has been violated, they may seek redress through the courts. Additionally, local civil rights advocacy agencies such as Legal Aid of Marin and Fair Housing Advocates of Northern California have committed to monitor and contact housing providers that are inconsistent with the ordinance based on complaints received. Policy Details for the Final Ordinance Based on feedback from the City Council at the October 1, 2018 City Council meeting, staff has made the following changes to the final Ordinance: 1.10.98.010 – Purpose. Staff had asked Council whether or not we should explicitly say we are prohibiting all discrimination based on any source of income in general (e.g. child support, disability payments), or if we should more narrowly say we are prohibiting “discrimination on the basis of tenants’ participation in third party rental assistance programs.” Based on Council feedback and the fact that the County of Marin and the City of Novato both adopted the broader language, the Final Ordinance includes the broader language. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4 2.10.98.050 – Exceptions. Staff had asked Council whether or not we wanted this ordinance to apply to all rental housing in San Rafael, or if we wanted to create an exception for certain types of units, for example, an owner-occupied single-family residence that rents out a room. The initial draft ordinance included an exemption for “any housing unit in which the owner or any member of his/her family occupies one of the living units and it is necessary for the owner to use either a bathroom or kitchen facility common with the prospective tenant(s).” The County of Marin ultimately removed this exclusion for two reasons. First, “the elimination of this exception is intended to simplify the process for understanding and determining Ordinance applicability.” Additionally, “in Marin, accessory dwelling units, junior accessory dwelling units, and room rentals are a principal form of new housing stock that is likely to be affordable to low- and moderate-income households.” At the October 1st City Council meeting, in the spirit of affirmatively furthering fair housing, Council expressed support for eliminating any exceptions to the applicability of the Ordinance. However, Council also expressed interest in the potential impact this Ordinance could have on the creation of new Accessory Dwelling Units / Junior Second Units. As an important emerging housing type in San Rafael, there was concern as to whether or not the Source of Income Ordinance could jeopardize this nascent sector by deterring people from wanting to create units. Over the past four years, 77 households have initiated the process to create accessory dwelling units / junior accessory dwelling units in San Rafael. Staff was able to contact 26 of these households. Among other questions designed to help us improve our internal process, staff explicitly asked, “The City of San Rafael is currently considering adopting a fair housing ordinance. This ordinance would help to protect people who have third party housing vouchers (e.g. a Veterans Supportive Housing Voucher, Section 8) from rental discrimination by restricting landlords from saying they will not accept vouchers when advertising openings. If such an ordinance had been in place when you created your unit, would it have impacted your decision to pursue the creation of your unit?” 77% of respondents indicated that a source of income ordinance would have been unlikely or would have had no impact one way or another on their decisions to create an accessory dwelling unit (Exhibit 2 – Survey Response). Moreover, the surveys revealed that 100% of respondents were Caucasian, and units have been developed fairly equitably throughout the entire city (Exhibit 3 – A Map of Units Created as of October 2018). For all of these reasons, in an effort to affirmatively further fair housing, the Final Ordinance does not include any type of exclusion. Exhibit 2 – Survey Responses to Whether or not a Fair Housing Ordinance Would Impact a Household’s Decision to Create an Accessory Dwelling Unit SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5 Exhibit 3 – A Map of Accessory Dwelling Units Created as October 2018 3.Finally, there was a question about the criminal penalties outlined in the draft ordinance. The draft language read, “Any person who violates any provision of this chapter shall be deemed guilty of a misdemeanor and upon conviction thereof shall be punished by a fine of not more than one thousand dollars ($1,000.00) or by imprisonment in the county jail for a period not exceeding six months, or both.” Upon further review, the City cannot levy a fine in excess of $500.00. That change has been made to the final Ordinance. Importantly, in Marin there have been zero criminal prosecutions under this ordinance. Instead, the standard recourse has been for Legal Aid of Marin or Fair Housing Advocates of Northern California to contact individuals in violation of the ordinance and to counsel them on how to remedy or change the situation. PUBLIC OUTREACH: A notice of public hearing was published in the Marin IJ ten days prior to this public hearing. Additionally, a public hearing notice was sent to the following organizations: Marin Rental Property Association, Marin County Community Development Agency, the Marin County Housing Authority, the League of W omen Voters, EDEN Housing, Marin Environmental Housing Collaborative, Sustainable Marin, Sustainable San Rafael, Fair Housing of Marin, Marin Builders SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6 Association, Public Advocates, Inc., Legal Aid of Marin, Marin Association of Realtors, Community Action Marin, Canal Alliance, the San Rafael Chamber of Commerce, the Downtown San Rafael Business Improvement District, Marin Continuum of Housing, the Housing Crisis Action Group, Aging Action Initiative, the Homeless Policy Steering Committee, Ritter Center, St. Vincent’s, Homeward Bound, Buckelew Programs, the Marin Center for Independent Living, the Marin Organizing Committee, and the Federation of San Rafael Neighborhoods. FISCAL IMPACT: There is no fiscal impact associated with this item. RECOMMENDED ACTION: Conduct a public hearing regarding a proposed ordinance to add Chapter 10.98, entitled “Rental Housing Source of Income Discrimination”, to the San Rafael Municipal Code concerning source of income discrimination in rental housing and pass the ordinance to print. ATTACHMENTS: 1.Ordinance 2.Public Hearing Notice CITY OF SAN RAFAEL NOTICE OF PUBLIC HEARING DATE/TIME: Monday, December 3, 2018 at 7:00 p.m. LOCATION: City Council Chambers, 1400 Fifth Avenue, San Rafael, CA PURPOSE: The San Rafael City Council will hold a public hearing to consider an ordinance that would add a new Chapter 10.98 to the San Rafael Municipal Code concerning “source of income” discrimination in rental housing. State law prohibits housing discrimination based on a person’s source of income but does not protect individuals or families who rely on rental subsidies paid by a third party directly to the landlord rather than to the tenant for payment to the landlord. Examples of such subsidies include Housing Choice Vouchers (Section 8) and Veterans Affairs Supportive Housing (VASH) Vouchers. The proposed ordinance, similar to those recently adopted by Fairfax, Novato, and the County of Marin, is intended to eliminate this limitation in State law by recognizing these third-party housing subsidies as a source of income and prohibiting rental discrimination against persons relying on them. The ordinance would not however prevent landlords from screening renters and retaining freedom of choice based on other factors such as total income, credit scores, rental history, references, etc. The City has determined that adoption of the ordinance is exempt from review under the California Environmental Quality Act (CEQA) as it does not have the potential to cause a significant, physical environmental effect on the environment. You may comment on the proposed ordinance in person at the public hearing or submit written comments, which must be received by the City prior to the hearing. IF YOU CANNOT ATTEND: Written comments should be sent to Lindsay Lara, City Clerk, City of San Rafael, P.O. Box 151560, San Rafael, CA 94915-1560, City of San Rafael, 1400 Fifth Avenue, Room 209, San Rafael, CA 94901. FOR MORE INFORMATION: Contact the City of San Rafael’s Director of Homeless Planning and Outreach Andrew Hening at telephone (415) 485-3055. SAN RAFAEL CITY COUNCIL ___________________________ LINDSAY LARA CITY CLERK, CITY OF SAN RAFAEL