The question this case posed for the First District Court of Appeal was whether the Federal Employment and Housing Act preempts a San Francisco ordinance to the extent the local ordinance outlaws discrimination based on a tenant’s participation in the Section 8 housing program. The trial court found no preemption, and the Court of Appeal agreed. [City and County of San Francisco v. Post, ___Cal.App.5th___, Case No. A149136 (1st Dist. Apr. 11, 2018).]

Background

This case involves the question of whether the Fair Employment and Housing Act (FEHA) preempts a housing discrimination ordinance (Ordinance) adopted by the City of San Francisco (City). The City and County of San Francisco and the State of California filed the action against a landlord when it advertised studio apartment units for rent but stated in the advertisement that Section 8 vouchers would not be accepted. Section 8 vouchers are funded by the federal government to subsidize eligible low-income renters in paying for housing in the private rental market.

The City’s Ordinance prevents landlords from discriminating on the basis of a tenant’s “source of income,” which is broadly defined to mean “all lawful sources of income or rental assistance from any federal, State, local, or nonprofit-administered benefit or subsidy program.” FEHA also outlaws discrimination based on “source of income,” among other things. However, FEHA defines “source of income” more narrowly than the City. Under FEHA’s definition of the term, a landlord is not prevented from discriminating against or excluding Section 8 tenants.

Here, the landlord argued that the Ordinance’s source of income housing discrimination provision was preempted by FEHA. On the other hand, the City, County and State argued that FEHA’s field of exclusivity reaches no further than the forms of discrimination that FEHA itself covers.

The Court of Appeal’s Decision

The First District Court of Appeal began with the following legal principle—when local government regulates in an area over which it traditional has exercised control, such as land use legislation, California courts will presume, absent a clear indication of preemptive intent from the California Legislature, that such regulation is no preempted by state statute. Conversely, if the subject matter is one of general or statewide concern, the Legislature has paramount authority, and a rebuttable presumption arises that state statutes preempt local legislation covering the same matter.

Here the court emphasized that:

• Of central importance to this case, FEHA has a provision that expressly addresses preemption of local ordinances. It states: ‘While it is the intention of the Legislature to occupy the field of regulation of discrimination in employment and housing encompassed by the provisions of this part, exclusive of all other laws banning discrimination in employment and housing by any city, city and county, county, or other political subdivision of the state, nothing contained in this part shall be construed, in any manner or way, to limit or restrict the application of Section 51 of the Civil Code.’ (Gov. Code, § 12993, subd. (c).)

With these legal principles in mind, the court concluded that the Ordinance is valid and enforceable to the extent that it prohibits landlords from discriminating against Section 8 tenants.

Equally important was the court’s recognition of local land use authority. The court noted that under the California Constitution:

• . . .a municipality has broad authority, under its general police power, to regulate the development and use of real property within its jurisdiction to promote the public welfare.

Here, as an ordinance prohibiting discrimination against Section 8 program participants, the City’s Ordinance fell within the sphere of land use regulation in which local ordinances are presumptively valid.

The Court of Appeal also determined that the Ordinances subject matter did not improperly overlap with FEHA’s narrow field of exclusivity. Although the Ordinance is broad in scope and may overlap with FEHA in other areas, the Ordinance’s prohibition on discrimination against participants in a Section 8 program does not overlap with FEHA. Since FEHA does not reach the discriminatory practice of a landlord refusing to rent to a participant in the Section 8 program, the City’s Ordinance has a different purpose than FEHA. Therefore, the court found that, to the extent the City’s Ordinance prohibits landlord from opting out of the Section 8 program, FEHA does not expressly preempt it:

• San Francisco drafted its ordinance to include Section 8 payments in the definition of “source of income.” If San Francisco had instead defined “source of income” as FEHA does, and then added a separate provision outlawing discrimination against Section 8 tenants, FEHA would not preempt the Section 8 provision, according to this middle- ground argument, because participation in the Section 8 program is not one of FEHA’s 14 enumerated categories. But it cannot be that San Francisco’s drafting choice—to call discrimination against Section 8 participants “source of income” discrimination— somehow expands FEHA’s field of exclusion. FEHA defines its own field of exclusivity, which comprises housing discrimination based on “source of income” as FEHA, itself, defines that term.

Conclusion and Implications

This decision touches on the important separation between local and state authority when it comes to land use. The Court’s analysis reinforces the broad authority granted to local governments, under their police power, to regulate real property—even if it means getting involved in the private housing market. The court’s decision is available online here: http://www.courts.ca.gov/opinions/documents/A149136.PDF

(Nedda Mahrou)