BILL ANALYSIS                                                                                                                                                                                                    





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular  Session


          SB 1053 (Leno)
          Version: February 16, 2016
          Hearing Date: March 29, 2016
          Fiscal: Yes
          Urgency: No
          TH   


                                        SUBJECT
                                           
                        Housing Discrimination: Applications

                                      DESCRIPTION  

          The Fair Employment and Housing Act makes it unlawful for the  
          owner of any housing accommodation to discriminate against or  
          harass any person because of the race, color, religion, sex,  
          gender, gender identity, gender expression, sexual orientation,  
          marital status, national origin, ancestry, familial status,  
          source of income, disability, or genetic information of that  
          person.

          This bill would expand the definition of "source of income" to  
          include lawful, verifiable income paid to a housing owner or  
          landlord on behalf of a tenant, including federal, state, or  
          local public assistance and federal, state, or local housing  
          subsidies, including, but not limited to, federal housing  
          assistance vouchers under Section 8 of the United States Housing  
          Act of 1937, as specified.

                                      BACKGROUND  

          The Fair Employment and Housing Act (FEHA) was created in 1980  
          when two prior statutes, the California Fair Employment  
          Practices Act and the Rumford Fair Housing Act, were combined  
          and recast in AB 3165 (Fenton, Ch. 992, Stats. 1980) with the  
          codification of Governor Brown's Reorganization Plan No. 1.   
          Broadly speaking, FEHA prohibits employment and housing  
          discrimination based upon such characteristics as race, color,  
          religion, sex, sexual orientation, marital status, national  








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          origin, ancestry, familial status, or disability, and provides  
          that it is a civil right to be able to pursue and maintain  
          housing or employment without facing discrimination.

          In recent years the Legislature has expanded the protective  
          scope of FEHA to prohibit housing discrimination based on a  
          person's source of income, at first for a limited period of time  
          with SB 1098 (Burton, Ch. 590, Stats. 1999), and then  
          permanently with SB 1145 (Burton, Ch. 568, Stats 2004).  Beyond  
          the general prohibition against discriminating on the basis of  
          one's source of income, FEHA also declares it unlawful to use a  
          financial or income standard in the rental of housing that fail  
          to account for the aggregate income of co-tenants on the same  
          basis as is given married persons, or to use a financial or  
          income standard in assessing eligibility for the rental of  
          housing that is not based on the portion of the rent paid by a  
          tenant when the tenant is the recipient of a government rental  
          subsidy.  The Legislature has limited FEHA's source of income  
          protection to include only that "lawful, verifiable income paid  
          directly to a tenant or paid to a representative of a tenant,"  
          and has stated that "a landlord is not considered a  
          representative of a tenant" for the purpose of this provision.   
          (Gov. Code Sec. 12955 (p).)

          This bill would expand FEHA's source of income protection to  
          include income paid to a housing owner or landlord on behalf of  
          a tenant, including federal, state, or local public assistance  
          and federal, state, or local housing subsidies, such as federal  
          housing assistance vouchers issued under Section 8 of the United  
          States Housing Act of 1937.

                                CHANGES TO EXISTING LAW
           
           Existing law  , the Fair Employment and Housing Act, declares it  
          to be against public policy to discriminate on the basis of  
          race, color, religion, sex, gender, gender identity, gender  
          expression, sexual orientation, marital status, national origin,  
          ancestry, familial status, source of income, disability, or  
          genetic information in housing accommodations.  (Gov. Code Sec.  
          12920.)

           Existing law  declares that the opportunity to seek, obtain, and  
          hold housing without discrimination because of race, color,  
          religion, sex, gender, gender identity, gender expression,  
          sexual orientation, marital status, national origin, ancestry,  







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          familial status, source of income, disability, genetic  
          information, or any other specified basis is a civil right.  
          (Gov. Code Sec. 12921.)

           Existing law  declares it unlawful for the owner of any housing  
          accommodation to discriminate against or harass any person  
          because of the race, color, religion, sex, gender, gender  
          identity, gender expression, sexual orientation, marital status,  
          national origin, ancestry, familial status, source of income,  
          disability, or genetic information of that person.  (Gov. Code  
          Sec. 12955.)

           Existing law  specifies certain acts that constitute unlawful  
          discrimination, including either of the following:
           using a financial or income standard in the rental of housing  
            that fails to account for the aggregate income of persons  
            residing together or proposing to reside together on the same  
            basis as the aggregate income of married persons residing  
            together or proposing to reside together; or
           in instances where there is a government rent subsidy, using a  
            financial or income standard in assessing eligibility for the  
            rental of housing that is not based on the portion of the rent  
            to be paid by the tenant.  (Gov. Code Sec. 12955 (n), (o).)
           Existing law  specifies that it shall not constitute  
          discrimination based on source of income to make a written or  
          oral inquiry concerning the level or source of income.  (Gov.  
          Code Sec. 12955 (p).)

           Existing law  provides that a person intends to unlawfully  
          discriminate if one of the protected classes played a motivating  
          factor in committing a discriminatory housing practice, as  
          specified.  A violation can be found when the act has the effect  
          of unlawfully discriminating, regardless of the intent, as  
          specified.  (Gov. Code Sec. 12955.8.)

           Existing law  defines "source of income" to mean lawful,  
          verifiable income paid directly to a tenant or paid to a  
          representative of a tenant, but specifies that a landlord is not  
          considered a representative of a tenant.  (Gov. Code Sec. 12927,  
          12955 (p).)

           This bill  defines "source of income" to mean lawful, verifiable  
          income paid directly to a tenant or paid to a representative of  
          a tenant, or paid to a housing owner or landlord on behalf of a  
          tenant, including federal, state, or local public assistance and  







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          federal, state, or local housing subsidies, including, but not  
          limited to, federal housing assistance vouchers under Section 8  
          of the United States Housing Act of 1937.

                                        COMMENT
           
           1.Stated need for the bill  

          The author writes:

            California is experiencing a rental crisis of historic  
            proportions.  The shortage of affordable housing contributes  
            to the state's severe homelessness problem, one that  
            particularly impacts homeless veterans.  High housing costs  
            also crowd out family spending on basic necessities, such as  
            food and health care, particularly for Californians who are  
            poor.  According to the Legislative Analyst's Office, the  
            poorest 25 [percent] of California households spend on average  
            67 [percent] of their income for housing.

            By far the largest federal housing assistance program in  
            California, Housing Choice Vouchers, provides significant  
            rental subsidies to low income Americans.  Over 300,000  
            families in California -- most of which include children,  
            people with disabilities, and/or senior citizens -- receive a  
            Housing Choice Voucher to help make rent affordable.  Families  
            with vouchers find housing in the private market and pay 30  
            [percent] of their income in rent.  The federal government  
            pays the rest.  The federal Department of Housing and Urban  
            Development (HUD) oversees the program, and vouchers are  
            administered locally by public housing authorities.

            Source of income discrimination is illegal under the Fair  
            Employment and Housing Act, but the law has been interpreted  
            to exclude vouchers.  Landlords' blanket refusal to consider  
            voucher holders frustrates the central aim of the Housing  
            Choice Voucher program and increases the harm and severity of  
            California's rental housing crisis.  The inability of families  
            and veterans to use their housing vouchers perpetuates a cycle  
            of poverty and segregation.  It also means that California may  
            be leaving unused federal funding on the table.

            SB 1053 adds housing subsidy vouchers to the sources of income  
            protected by
            California's Fair Employment and Housing Act.  This bill would  







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            amend the definition of "source of income" to also include  
            federal, state, or local housing assistance or subsidies paid  
            either to the tenant or directly to the landlord on behalf of  
            the tenant.  In so doing, the bill will provide low income  
            families, homeless veterans, and others with a Housing Choice  
            Voucher the same opportunity to apply for housing as other  
            Californians, tearing down unnecessary barriers that are often  
            based on misguided stereotypes.  This bill ensures that  
            landlords cannot deny low-income families and veterans the  
            opportunity to apply for rentals or evict them based solely on  
            the fact that they receive a voucher.  Landlords will still be  
            able to screen prospective tenants for credit, criminal  
            history, and other tenant suitability criteria.

           2.Federal housing assistance programs
          
          The U.S. Housing Act of 1937 authorizes housing assistance  
          payments "[f]or the purpose of aiding low-income families in  
          obtaining a decent place to live and of promoting economically  
          mixed housing."  (42 U.S.C. Sec. 1437f(a).)  The Housing Choice  
          Voucher program -- popularly known as "Section 8" -- offered  
          pursuant to the Housing Act is the federal government's "major  
          program for assisting very low-income families, the elderly, and  
          the disabled to afford decent, safe, and sanitary housing in the  
          private market."  (See U.S. Department of Housing and Urban  
          Development, Housing Choice Vouchers Fact Sheet  
           [as of March 23,  
          2016].)  Administered by the U.S. Department of Housing and  
          Urban Development in partnership with local public housing  
          agencies, this program allows individuals and families to  
          receive federal housing assistance in the form of a voucher that  
          can be used to acquire housing on the private market.

          In order to use a voucher under the program, a participant must  
          find a suitable housing unit that meets certain minimum health  
          and safety standards and that is offered by a landlord willing  
          to participate in the program.  Once initiated, the voucher  
          program's housing subsidy is paid directly to the landlord  
          through a local public housing agency, and the program  
          participant pays the difference between the rent charged by the  
          landlord and the amount subsidized by the housing agency.   
          Eligibility requirements to participate in the program are  
          generally set by local housing agencies, though certain federal  
          requirements govern program eligibility as well.  In general, a  







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          participant's income may not exceed 50 percent of the median  
          income for the county or metropolitan area in which the  
          participant lives.  The program requires participants to pay 30  
          percent of their monthly income toward rent and utilities, and  
          although it does not limit the amount of rent a landlord may  
          charge, it does limit how much participants can pay as a  
          percentage of their monthly income in certain circumstances.

           3.Discrimination against housing assistance recipients
           
          Despite the availability of housing assistance programs like the  
          federal Housing Choice Voucher program, some program  
          participants struggle to find landlords willing to accept  
          housing assistance payments in their communities and end up not  
          being able to take advantage of the benefits these programs  
          offer.  Legal Aid of Marin, writing in support of SB 1053,  
          notes:

            The Marin Housing Authority reported that it issued 274  
            housing vouchers in 2014, but 209 of these recipients -- most  
            of whom waited years to get a chance for decent and safe  
            housing -- lost vouchers because they expired before the  
            family could obtain housing.

          Several groups in support of this bill argue that housing  
          assistance benefits go unclaimed because large numbers of  
          landlords choose not to participate in housing assistance  
          programs.  The East Bay Community Law Center, for example,  
          writes:

            In our experience, many tenants in the Bay Area are routinely  
            discriminated against and out-right refused housing by  
            landlords who refuse to accept housing subsidies.
            . . .
            Unfortunately, because such [subsidies] are not considered a  
            protected source of income under FEHA, landlords are free to  
            refuse to consider voucher holders as tenants.  Such blanket  
            refusals, often based on misguided stereotypes, [frustrate]  
            the central aim of rental assistance programs and increases  
            the harm and severity of California's housing crisis.

          This bill would prohibit landlords from refusing to provide  
          housing accommodations to recipients of federal, state, or local  
          public assistance and federal, state, or local housing subsidies  
          on the basis of their participation in such programs.  Under  







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          this bill, landlords would remain free to reject tenancy  
          applications from program participants, provided they do so on  
          otherwise lawful grounds that are not based on a participant's  
          receipt of a housing subsidy.  Landlords would also remain free  
          to charge rents as allowed under law, and would not be required  
          to reduce rents even if chosen rent levels would make a unit too  
          expensive for a voucher holder to afford.  Further, landlords  
          would continue to be able to use appropriate financial and  
          income standards in making rental decisions, like verifying  
          income levels or checking creditworthiness.  However, landlords  
          would no longer have the option to forgo participation in  
          housing subsidy programs, and would likely be required to  
          undertake certain administrative actions -- like submitting  
          units for health and safety inspections -- when providing  
          housing to a recipient of housing assistance.

           4.Opposition concerns
            
           A coalition of business and property associations oppose this  
          bill chiefly due to concerns over administrative and financial  
          burdens that property owners may have to endure.  The California  
          Chamber of Commerce, for example, argues that SB 1053 would  
          significantly increase the administrative burden placed on both  
          rental property owners and housing agency staff should this bill  
          result in higher usage rates of housing assistance programs like  
          the federal Housing Choice Voucher program.  The California  
          Chamber of Commerce also asserts that this bill would increase  
          the costs associated with renting residential property due to,  
          among other reasons, delays in having housing authorities  
          inspect rental units and assess rental rates before a tenant  
          using housing assistance can move in, higher insurance costs for  
          landlords who accept housing assistance tenants, and delays or  
          denials by housing authorities to landlord requests to raise  
          rental rates.  In sum, the California Chamber of Commerce  
          writes:

            Under current law, the Section 8 program is voluntary.  We  
            agree that Section 8 vouchers play an important role in  
            helping low-income Californians find housing, and many of our  
            members participate in the program.  However, because of the  
            significant number of challenges associated with the program,  
            a statewide mandate is not feasible for property owners or for  
            housing authorities.

          In addition to concerns over increased fiscal and administrative  







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          burdens, several apartment associations argue that this bill  
          would interfere with property owners' freedom to contract and  
          would unreasonably interfere with private property rights.     
          The Apartment Association of Orange County, for example, asserts  
          that this bill would:

            [deprive] property owners of use of their property, and may  
            constitute an unconstitutional taking.  It requires an owner  
            to contract with the federal government [via a Housing  
            Assistance Payment Contract], become subject to federal laws  
            and regulations to which the owner would not otherwise be  
            subject, accept government-mandated lease terms, and  
            participate in burdensome regulatory compliance obligations.

          Staff notes that while these concerns are not without merit,  
          several states have enacted source of income protections similar  
          to those proposed in SB 1053 apparently without suffering the  
          adverse effects articulated by opposition stakeholders.  On this  
          point, the Housing Rights Center states:

            While not yet protected under federal law, discrimination  
            against Section 8 voucher holders is prohibited by civil  
            rights laws in more than 13 states (as of 2013) and in many  
            local jurisdictions.  As a matter of fact, in the District of  
            Columbia, housing discrimination based on a person's "source  
            of income" including Housing Choice Vouchers, has been  
            prohibited under the D.C. Human Rights Act (D.C. Code  
            2-1401.02 (29)) since 1977.

          The Committee may wish to further enquire whether experience in  
          other jurisdictions with existing source of income protections  
          has yielded adverse consequences along the lines suggested by  
          opposition stakeholders.
           
            5.Pending litigation
           
          According to the author, the City of Santa Monica is currently  
          involved in litigation with the Apartment Association of Los  
          Angeles County and several named individuals concerning a city  
          ordinance that prohibits housing discrimination on the basis of  
          source of income, including rental assistance from federal,  
          state, local, or non-profit administered benefit or subsidy  
          programs.  Among the issues being litigated by the parties is  
          whether the Fair Employment and Housing Act (FEHA) preempts this  
          type of local ordinance.







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          In the past, this Committee has raised concerns about bills that  
          interfere with pending litigation.  Any such interference could  
          result in a direct financial windfall to a private party,  
          prevent a court from deciding an action based upon the laws in  
          place at the time the cause of action accrued, or create a  
          situation where the legislative branch is used to circumvent the  
          discretion and independence of the judicial branch.  This bill,  
          however, does not raise the concerns normally associated with  
          measures that could impact pending litigation.  First, this bill  
          does not make any changes to FEHA regarding its preemptive  
          character.  Under the California Constitution, "[a] county or  
          city may make and enforce within its limits all local, police,  
          sanitary, and other ordinances and regulations not in conflict  
          with general laws."  (Cal. Const., art. XI, Sec. 7.)  In  
          general, a conflict exists when a local ordinance (1) duplicates  
          a state statute, (2) contradicts a statute, or (3) enters an  
          area fully occupied by general law.  (See Kirby v. County of  
          Fresno (2015) 242 Cal.App.4th 940, 954.)  While this bill --  
          like many other bills passed by the Legislature -- might  
          ultimately duplicate or contradict a local ordinance, there is  
          no indication that the author seeks to alter the preemptive  
          character of FEHA generally, or its prohibition on source of  
          income discrimination specifically, through SB 1053.  Second,  
          this bill is not intended to be retroactive and would not  
          compromise the independence of the judicial branch nor  
          circumvent its discretion to expound and interpret California  
          law in pending litigation concerning the City of Santa Monica's  
          ordinance.

           6.Technical amendment
           
          Among other things, SB 1252 (Corbett, Ch. 524, Stats. 2010) made  
          technical revisions to certain provisions of the Fair Employment  
          and Housing Act (FEHA) that declare source of income to be a  
          characteristic protected from housing discrimination.  One of  
          the technical changes adopted in SB 1252 at the suggestion of  
          this Committee was to add a definition of the term "source of  
          income" to FEHA's general definitions provision, which appears  
          in Government Code Section 12927.  SB 1053 would modify the  
          definition of "source of income" as it appears in the section of  
          FEHA specific to housing discrimination, but would leave  
          undisturbed the parallel definition that appears in FEHA's  
          general definitions provision.  In order to maintain consistency  
          between these two definitions, the Committee may wish to  







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          consider amending the definition of "source of income" in  
          Government Code Section 12927 as follows.

             Suggested amendment
           
            Amend subdivision (i) in Government Code Section 12927 to  
            read: (i) "Source of income" means lawful, verifiable income  
            paid directly to a tenant or paid to a representative of a  
            tenant, or paid to a housing owner or landlord on behalf of a  
            tenant, including federal, state, or local public assistance  
            and federal, state, or local housing subsidies, including, but  
            not limited to, federal housing assistance vouchers under  
            Section 8 of the United States Housing Act of 1937 (42 U.S.C.  
            Sec. 1437f).


           Support  :  Aids Legal Referral Panel; American Legion-Department  
          of California; AMVETS-Department of California; The Arc,  
          California; Association of Regional Center Agencies; Bet Tzedek  
          Legal Services; California Alliance for Retired Americans;  
          California Association of County Veteran Service Officers;  
          California Church IMPACT; California Public Interest Research  
          Group; California Rural Legal Assistance, Inc.; California State  
          Commanders Veterans Council; Central California Legal Services,  
          Inc.; Centro Legal de la Raza; City of Long Beach; Community  
          Housing Opportunities; Community Legal Services in East Palo  
          Alto; County Welfare Directors Association of California; East  
          Bay Community Law Center; EveryOne Home; Faith in Action Bay  
          Area; Housing California; Housing Equality Law Project; Housing  
          Leadership Council of San Mateo County; Housing Rights Center;  
                     Inner City Law Center; Law Foundation of Silicon Valley; Legal  
          Aid Foundation of Los Angeles; Legal Aid of Marin; Legal  
          Services of Northern California; Mental Health Advocacy  
          Services, Inc.; Military Officers Association of America,  
          California Council of Chapters; National Association of Social  
          Workers, California Chapter; Neighborhood Legal Services of Los  
          Angeles County; Public Advocates; Public Counsel; Public  
          Interest Law Project; Public Law Center; Santa Monicans for  
          Renters' Rights; Sonoma County Community Development Commission;  
          United Cerebral Palsy California Collaboration; Urban Habitat;  
          VFW-Department of California; Villa Del Monte Senior Citizens'  
          Housing Community; Working Partnerships, USA; six individuals.

           Opposition  :  Apartment Association, California Southern Cities;  
          Apartment Association of Orange County; Apartment Association of  







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          Greater Los Angeles; California Apartment Association;  
          California Association of Realtors; California Building Industry  
          Association; California Business Properties Association;  
          California Chamber of Commerce; East Bay Rental Housing  
          Association; San Diego County Apartment Association; Santa  
          Barbara Rental Property Association; North Valley Property  
          Owners Association; Western Manufactured Housing Communities  
          Association

                                        HISTORY
           
          Source  :  Non-Profit Housing Association of Northern California;  
          Western Center on Law and Poverty

           Related Pending Legislation  :  None Known

           Prior Legislation  :

          AB 447 (Maienschein, Ch. 432, Stats. 2015) prohibited real  
          property insurers from, among other things, failing or refusing  
          to accept an application, issue, or cancel a policy based on the  
          level or source of income of individuals residing or intending  
          to reside on the real property, or based on the receipt of  
          assistance, intended for housing, from the federal or state  
          government, or from a local public entity, by an individual or  
          group of individuals residing or intending to reside upon the  
          property, as specified.  This bill also prohibited real property  
          insurers from requiring this information on an application for  
          insurance, as specified.

          SB 1252 (Corbett, Ch. 524, Stats. 2010) made technical revisions  
          to several provisions of the Fair Employment and Housing Act,  
          including consistently listing "source of income" as a  
          characteristic that is protected from housing discrimination in  
          various sections of the act.

          SB 1145 (Burton, Ch. 568, Stats. 2004), among other things,  
          removed the sunset date and thereby extended indefinitely a  
          provision adopted in SB 1098 (Burton, Ch. 590, Stats. 1999),  
          which prohibited discrimination under the Fair Employment and  
          Housing Act on the basis of a person's source of income, as  
          specified.

          SB 1098 (Burton, Ch. 590, Stats. 1999) prohibited, until January  
          1, 2005, discrimination under the Fair Employment and Housing  







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          Act on the basis of a person's source of income, the failure to  
          account for the aggregate income of co-residents, or the failure  
          to exclude a government rent subsidy from that portion of the  
          rent to be paid by the tenant in assessing his or her  
          eligibility for rental housing.

          AB 3165 (Fenton, Ch. 992, Stats. 1980) See Background.

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