City of Pittsburgh’s “Source of Income” Ordinance Invalidated

The Commonwealth Court on March 12, 2020 in Apt. Assn. of Metro. Pittsburgh, Inc. v. City of Pittsburgh invalidated and declared unenforceable Pittsburgh Ordinance 2015-2062, which had attempted to create a protected class in the City of Pittsburgh by shielding renters from discrimination based on the “source of income” they use to pay rent. The City Ordinance prohibited rental housing providers from denying housing based on an applicant’s income status, which included the applicant being part of the Section 8 Housing Program. As a result, the Ordinance mandated that all residential rental owners participate in the Section 8 Program, a program that was traditionally designed by Congress for voluntary participation by landlords. For those unfamiliar with Section 8, the requirements for housing providers are numerous and often burdensome. The Commonwealth Court ruled that: (1) the general police powers provision of Second-Class City Code did not expressly authorize the City enact the Ordinance, and (2) the Pennsylvania Human Rights Act (PHRA) did not authorize the City to require landlords to participate in Section 8 Housing Voucher Program. See Apt. Assn. of Metro. Pittsburgh, Inc. v. City of Pittsburgh, 528 C.D. 2018, 2020 WL 1173660 (Pa. Cmmw. Mar. 12, 2020).

Shortly after Pittsburgh’s “source of income” Ordinance was passed, the Apartment Association of Metropolitan Pittsburgh brought action against the City of Pittsburgh seeking injunctive relief and declaratory judgment, claiming that the City did not have the authority to enact the Ordinance. The City’s Ordinance generally prohibited denial of access to housing based on a tenant’s source of income, which specifically included Section 8 voucher holders. The Court of Common Pleas of Allegheny County granted the Association’s motion and declared the Ordinance invalid and unenforceable under the Home Rule Charter. The City appealed, but the Commonwealth Court, en banc, 205 A.3d 418, affirmed the district court. The Supreme Court of Pennsylvania allowed the City to appeal the Commonwealth Court’s findings, and in doing so, the Pennsylvania Supreme Court vacated the Commonwealth Court’s order to strike the Ordinance and remanded with instructions to reconsider its decision in light of the Court’s holding in Pennsylvania Restaurant and Lodging Ass’n v. City of Pittsburgh, 211 A.3d 810 (Pa. 2019). The question presented before the Court on appeal was whether, under the Pennsylvania Supreme Court’s analysis in Pennsylvania Restaurant, the City had the express authority to enact an ordinance prohibiting housing discrimination against City residents based on their sources of income. Apartment Association, 2020 WL 1173660, at 1. Specifically, the City contended on appeal that the Second-Class City Code (SCCC) and Pennsylvania Human Rights Act (PHRA) provided express statutory authorization for its enactment of the Ordinance. Id. at 4.

In Pennsylvania Restaurant, the Pennsylvania Supreme Court examined other Pittsburgh ordinances under the Home Rule Charter. Enacted in 1996, the Home Rule Charter and Optional Plans Law (HRC) incorporated and enforced municipalities’ traditional police powers, which encompasses enacting laws to “promote the health, safety and general welfare of the people.” Pennsylvania Restaurant, 211 A.3d at 817. The HRC limits this broad power vested in the municipalities through its Business Exclusion provision. The Business Exclusion precludes home-rule municipalities from determining “duties, responsibilities or requirements placed upon” businesses and employers unless authority to do so is “expressly provided” by statute which are “applicable in every part of [the] Commonwealth or which are applicable to all municipalities or to a class or classes of municipalities.” Id. Further, the Court held there must be a sufficient nexus between (1) enactment of the a City ordinance’s requirements and restrictions placed on businesses; and (2) express authority from a preexisting statue of common applicability as described in the Business Exclusion exception. Id.

Analysis- Applying the Business Exclusion Exception:
Here, in Apartment Association, the Commonwealth Court held that both the Second-Class City Code (SCCC) and the PHRA do not provide express statutory authorization for enactment of the City’s Ordinance under the HRC. Id. at 14. The Court reasoned that an Ordinance aimed at preventing discrimination based on “source of income” broadly encompasses all property owners who operate residential rental businesses in the City. Because the Ordinance specifically includes Section 8 Program voucher holders as protected, the Ordinance overreaches its intended objective of protecting against housing discrimination by making a fully “voluntary federal program mandatory for all residential landlords in the City.” Using Pennsylvania Restaurant and the HRC Business Exclusion exception as guidance, the Court found that “no statutory provision cited by the City [neither in the SCCC or PHRA] comes close to authorizing such requirements. While the City’s enactment of the Ordinance was undoubtedly well intended, we find that the Ordinance places more than mere ‘incidental or de minimis’ burdens on private businesses in violation of the Business Exclusion.” Id.

Keep and Eye Out:
On May 11, 2020, the City of Pittsburgh filed asking the Pennsylvania Supreme Court to review the Commonwealth Court’s March 12, 2020 decision. If review is denied, the Commonwealth Court’s ruling will be final, allowing City of Pittsburgh landlords to deny access to rental housing based on the “source of income” tenants use to pay rent.

Written By:
Andrew Goodermote and Matthew Beam.