Nonprofit alleges widespread Section 8 discrimination in California

Oct. 8, 2024 3 AM PT

A national investigative nonprofit on Monday lodged discrimination complaints against more than 200 California landlords and their representatives — including major real estate brokerages — alleging they illegally refused to rent to Section 8 voucher holders.

The Housing Rights Initiative filed the complaints, based upon an undercover investigation, with the California Civil Rights Department.

The nonprofit organization is asking the agency to look into penalties against the 203 companies and individuals, saying they violated a state law that makes it illegal to deny tenants solely because they’d pay with a voucher. It’s also lobbying for more state funding to adequately enforce the law, which the group and other advocates contend hasn’t been done since the rules took effect in 2020.

“There’s nothing more tragic than when a family gets ... an opportunity to get a home and they can’t because real estate isn’t following the law,” said Aaron Carr, executive director of the Housing Rights Initiative. “It’s time for California to get tough.”

The Section 8 program, named after a section of the federal Housing Act, is one of the U.S. government’s most powerful tools to keep rental housing affordable and to fight overcrowding and homelessness.

Generally, tenants pay the equivalent of about 30% of their income on rent with the voucher covering the rest. Unlike public housing, the subsidy can move with tenants so that they can find housing with private landlords. But that’s easier said than done.

Households can spend years on waiting lists just to receive a voucher. When they get one, advocates say, landlords often refuse to rent to them under the disproven belief they’re more likely to be bad tenants, which can reflect negative stereotypes of poor people, as well as people of color, who make up a majority of Section 8 participants.

Amid a long-running housing crisis, California tried to stop those denials when it joined a handful of other states and passed a “source-of-income” law that makes it illegal to discriminate against tenants who pay with Section 8 and other subsidies. Types of discrimination include refusing to rent to such tenants at all or treating them differently in other ways, such as charging them higher security deposits.

State authorities, however, have faced criticism over lack of enforcement since 2020. It took three years for the Civil Rights Department to file its first lawsuit against landlords for allegedly violating the law, and the Housing Rights Initiative’s investigation suggests discrimination remains rampant.

To conduct its inquiry, the organization said it used undercover testers who posed as prospective tenants. The testers, through texts, responded to online listings and asked whether the unit was still available. They then asked whether the landlord would accept Section 8.

The nonprofit said that in the San Francisco area, testers were explicitly told 44% of the time that Section 8 wasn’t accepted. Denials rose from there, reaching 53% in the Oakland area, 58% in the San Jose area and 70% in the Los Angeles area.

The group said the complaints it filed based on the investigation appeared to amount to the “largest housing discrimination case in California’s history.”

David Smith, director of litigation with Inner City Law Center, said discrimination against Section 8 tenants is likely more widespread because those percentages reflect only people who put violations of law in a text. More savvy individuals might say they accept the vouchers at first, then stop responding or say the apartment is no longer available.

“If people who receive Section 8 ... can’t get legitimate rental units, then they’re going to be unhoused,” said Smith, whose organization, along with the law firms Cohen Milstein and Handley Farah & Anderson, is representing the Housing Rights Initiative in its state filings.

The people who told testers Section 8 wasn’t accepted include landlords, property managers, and real estate agents working for property owners, according to screenshots provided by the Housing Rights Initiative.

Some were affiliated with the biggest brokerages in the country, including Coldwell Banker Realty and Sotheby’s International Realty.

In January, a tester inquired about a $2,700-a-month, two-bedroom condo for rent in Koreatown.

According to screenshots of text messages, a Coldwell Banker Realty agent confirmed the unit was available and answered the tester’s questions about parking, utilities and offered to show the condo.

But when the tester later asked whether they could use Section 8, a screenshot shows, the agent responded, “No, sorry that won’t work.”

The agent did not respond to requests for comment. Andrea Gillespie, a spokesperson with Coldwell Banker Realty, said the brokerage offers training and other measures to “promote equitable access to housing for all” and is reviewing the discrimination claims.

Screenshots also show an agent with Sotheby’s International Realty said Section 8 wasn’t accepted. The agent and Sotheby’s did not respond to a requests for comment.

It wasn’t only agents.

In Los Angeles, screenshots show the owner of a fourplex in Silver Lake told a tester that Section 8 wasn’t a possibility. As did the property manager of a two-bedroom listing in Palms, which boasted of being in a quiet residential neighborhood near Trader Joe’s and downtown Culver City.

In an interview, Jill Kearney, the Palms apartment manager, said she didn’t recall telling anyone Section 8 wasn’t accepted, nor ever receiving an inquiry from someone with Section 8. She said she assumes the owner would follow the law if a Section 8 tenant applied.

The owner could not be reached for comment.

Landlord organizations say some property owners shy away from accepting Section 8 tenants because government red tape can force them to endure long waits for required inspections and paperwork — a time when their unit is vacant and not collecting rent.

Daniel Yukelson, executive director of the Apartment Assn. of Greater Los Angeles, said that’s not an excuse to break the law, but he said authorities should hand out warnings to first-time violators and better publicize the rules.

He said many property owners are still unaware they can’t refuse to consider Section 8 applications.

“There is a lack of education coming out of the state and local jurisdictions that impose these requirements,” Yukelson said.

For his part, Carr wants his organization’s filings with the Civil Rights Department — a state agency tasked with enforcing California civil rights law — to cause a monitor to be established to ensure the 203 companies and individuals at question follow the law. Landlords in violation should also be require to reserve units for voucher holders, he said.

On a broader scale, Carr said additionally funding is needed for the Civil Rights Department, because at the moment it can’t properly enforce the source-of-income law.

“Anything that we can do, the state, with enough resources, can do better,” Carr said.

Rishi Khalsa, a Civil Rights Department spokesperson, said the agency in recent years has reached more than 200 settlements related to source-of-income discrimination and is “deeply committed to using the tools at its disposal to combat discrimination in housing.”

More funding might be tough given the state’s budget situation, but Carr contended that boosting spending isn’t only morally correct, but also financially prudent.

“Homelessness increases law enforcement costs, hospital costs, shelter costs — all costs,” Carr said. “Housing discrimination screws everyone.”