Court Opinion

ID: 4375917
Source: CourtListenerOpinion
Date Created: 2019-03-12 13:32:48.400915+00
Date Added: 2024-06-11T12:04:15.098164
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Apartment Association of                      :
Metropolitan Pittsburgh, Inc.                 :
                                              :
       v.                                     : No. 528 C.D. 2018
                                              : ARGUED: February 12, 2019
The City of Pittsburgh,                       :
                   Appellant                  :

BEFORE:       HONORABLE MARY HANNAH LEAVITT, President Judge
              HONORABLE ROBERT SIMPSON, Judge
              HONORABLE P. KEVIN BROBSON, Judge
              HONORABLE PATRICIA A. McCULLOUGH, Judge
              HONORABLE MICHAEL H. WOJCIK, Judge
              HONORABLE CHRISTINE FIZZANO CANNON, Judge
              HONORABLE ELLEN CEISLER, Judge

OPINION BY JUDGE CEISLER                                             FILED: March 12, 2019

       The City of Pittsburgh (City) appeals from the March 14, 2018 Order of the
Court of Common Pleas of Allegheny County (Trial Court), which granted the Motion
for Summary Judgment filed by Apartment Association of Metropolitan Pittsburgh,
Inc. (Apartment Association) and denied the City’s Motion for Judgment on the
Pleadings. For the reasons that follow, we affirm the Trial Court’s Order.
                                           Background
       The City is a home rule municipality governed by the Home Rule Charter and
Optional Plans Law (Home Rule Law), 53 Pa. C.S. §§ 2901-2984.1 Apartment
       1
         The City is also a city of the second class under the Second Class City Code, Act of March
7, 1901, P.L. 20, as amended, 53 P.S. §§ 23101-23175. Our Court has explained:
       The adoption of a home rule charter acts to remove a municipality from the operation
       of the code provisions enumerating the powers of that particular class of municipality.
       Once a municipality adopts a home rule charter, “it is no longer a city of the second
       class, a county of the third class, a borough or a township of the first or second class,
       but a ‘home rule municipality’ and its ‘code’ is the [Home Rule Law].”
Association is a non-profit corporation whose members are property owners, managers,
and landlords in the business of renting residential properties in the City. Apartment
Association’s 200-plus members own and/or manage approximately 30,000 residential
rental units in the City.
       Housing is provided to many low-income tenants in the City through housing
subsidies, the most well-known of which is the federal Section 8 Housing Choice
Voucher Program (Section 8 Program).2 According to the Housing Authority of the
City of Pittsburgh (Housing Authority), 41% of City residents with housing vouchers
return them unused, due in part to their landlords’ refusal to accept the vouchers.
       In December 2015, the City enacted Ordinance 2015-2062 (Ordinance). The
Ordinance amended certain provisions of the City’s Code of Ordinances by adding a
new protected class based on the source of income used to pay rent. The purpose of
the Ordinance was to prevent residential property owners, real estate brokers, and
others from denying a person access to housing based on his or her source of income.
       Section 1(jj) of the Ordinance provides the following definition of “source of
income”:

       All lawful sources of income or rental assistance program [sic], including,
       but not limited to, earned income, child support, alimony, insurance and
       pension proceeds, and all forms of public assistance including federal,

Ziegler v. City of Reading, 142 A.3d 119, 131 (Pa. Cmwlth. 2016) (internal citations omitted).
Nonetheless, “[a]lthough a home rule municipality is not restrained by its former municipal code, it
is not prohibited from exercising powers provided thereunder.” Id.

       2
        Housing is subsidized by the federal government pursuant to Section 8 of the United States
Housing Act, as amended, 42 U.S.C. § 1437f. The Section 8 Program is administered by the United
States Department of Housing and Urban Development (HUD). On the local level, the Section 8
Program is administered by the public housing authority.

                                                 2
      state and local housing assistance programs. This includes the Section 8
      Housing Choice Voucher Program.

Ordinance § 1(jj) (emphasis added).3 Section 2 of the Ordinance states that the
following acts shall be unlawful housing practices:

      (a) For any owner, real estate broker or any other person to refuse to sell,
      lease, sublease, rent, assign or otherwise transfer, or to refuse to negotiate
      for the sale, lease, sublease, rental, assignment or other transfer of, the
      title, leasehold or other interest in any dwelling to any person, or to
      represent that any dwelling is not available for inspection, sale, lease,
      sublease, rental, assignment or other transfer when in fact it is so available,
      or otherwise to deny or withhold any dwelling from any person because
      of . . . source of income . . . or to discriminate against, segregate or assign
      quotas to any person or group of persons in connection with the sale, lease,
      sublease, rental, assignment or other transfer of the title, leasehold, or
      other interest in any dwelling or dwellings.

      (b) For any person, including any owner or real estate broker, to include
      in the terms, conditions or privileges of any sale, lease, sublease, rental,
      assignment or other transfer of any dwelling any clause, condition or
      restriction discriminating against or requiring any other person to
      discriminate against, any person in the use or occupancy of such dwelling
      because of . . . source of income . . . of the user.

      (c) For any person, including any owner or real estate broker, to
      discriminate in the furnishing of any facilities or services for any dwelling
      because of . . . source of income . . . of the user.

      ...

      (f) For any real estate broker or real estate salesperson or agent, or any
      other person for business or economic purposes, to induce, directly or
      indirectly, or to attempt to induce directly or indirectly, the sale or rental
      or the listing for sale or rental, of any dwelling by representing that a
      change has occurred or will or may occur regarding the entry or
      prospective entry into the neighborhood of a person or persons of a
      particular . . . source of income . . . .

      3
          See Stipulations of Fact, 10/13/17, Ex. A.

                                                   3
Ordinance § 2 (a)-(c), (f) (emphasis added).
      On January 15, 2016, Apartment Association filed a Complaint for Equitable
Relief and Request for Declaratory Judgment against the City. In its Complaint,
Apartment Association alleged that the Ordinance violated both the Home Rule Law
and the Pennsylvania Constitution. It also sought a preliminary injunction to stay the
enforcement of the Ordinance. On February 9, 2016, the Trial Court issued an Order
staying the implementation and enforcement of the Ordinance until further order of the
Trial Court.
      On June 29, 2017, the City filed an Answer and New Matter, to which Apartment
Association replied on July 10, 2017.        On October 13, 2017, the parties filed
Stipulations of Fact with the Trial Court.
      On November 17, 2017, the City filed a Motion for Judgment on the Pleadings,
and Apartment Association filed a Motion for Summary Judgment. The Trial Court
heard argument on the Motions on January 25, 2018. Thereafter, on March 14, 2018,
the Trial Court granted Apartment Association’s Motion, denied the City’s Motion,
and declared the Ordinance invalid and unenforceable. The Trial Court concluded:

      The City’s Ordinance makes participation in the Section 8 [P]rogram
      mandatory. Landlords will be forced to comply with the numerous and
      often burdensome requirements of the Section 8 [P]rogram. For example,
      they will have to use the Housing Authority’s model lease and/or submit
      a preferred lease to the Housing Authority for pre[-]approval. That lease
      must include word[-]for[-]word provisions of the HUD Tenancy
      Addendum. They will be prohibited from including notice of termination
      waivers in leases and must accept a mandatory “cure period” of five days
      in advance of issuing a Notice to Quit. Landlords will be required to
      accept “reasonable rent” obligations as established by the Housing
      Authority and provide at least 60 days’ notice of any change in rent
      amounts. They will have to obtain approval from the Housing Authority
      to raise a tenant’s rent. Finally, landlords will be forced to agree to month-
      to-month leases subsequent to an initial one[-]year lease term. Neither
      Pennsylvania common law nor [The] Landlord and Tenant Act of 1951[,

                                             4
       Act of April 6, 1951, P.L. 69, as amended, 68 P.S. §§ 250.101-250.602,]
       contain[s] such requirements.

             There is no genuine issue of material fact as to whether the . . .
       Ordinance places affirmative duties and requirements on residential
       property owners, landlords and others in violation of the [Home Rule
       Law]. Pennsylvania [c]ourts have consistently held that home rule
       municipalities must comply with the limitations of Section 2962(f) of the
       [Home Rule Law, 53 Pa. C.S. § 2962(f)].[4]

Trial Ct. Op., 3/14/18, at 4-5 (unpaginated). The City now appeals to this Court.5
                                               Issue
       Did the City have authority to enact the Ordinance to protect its residents from
being denied access to rental housing based on their sources of income?
                                Parties’ Arguments on Appeal
                                           1. The City
       The City asserts that it was well within its authority in enacting the Ordinance to
combat discrimination against low-income City residents.                    As a home rule
municipality, the City determined that discrimination in rental housing based on a
person’s source of income has become a proxy for discrimination on the basis of race,
national origin, and familial status. The City created the Ordinance to protect its

       4
           Section 2962(f) of the Home Rule Law states:

       A municipality which adopts a home rule charter shall not determine duties,
       responsibilities or requirements placed upon businesses, occupations and employers,
       including the duty to withhold, remit or report taxes or penalties levied or imposed
       upon them or upon persons in their employment, except as expressly provided by
       statutes which are applicable in every part of this Commonwealth or which are
       applicable to all municipalities or to a class or classes of municipalities. This
       subsection shall not be construed as a limitation in fixing rates of taxation on
       permissible subjects of taxation.

53 Pa. C.S. § 2962(f) (emphasis added).
       5
         Our standard of review on appeal is whether the Trial Court committed an error of law or
abused its discretion. Hartman v. City of Allentown, 880 A.2d 737, 741 (Pa. Cmwlth. 2005).

                                                 5
residents from discrimination and to ensure the availability of affordable, safe housing
for all residents. The Pennsylvania Constitution establishes its authority to enact the
Ordinance, as it expressly provides that “[a] municipality which has a home rule charter
may exercise any power or perform any function not denied by this Constitution, by its
home rule charter or by the General Assembly at any time.” Pa. Const. art. IX, § 2
(emphasis added).
      The City also contends that the Trial Court erroneously relied on the exception
in Section 2962(f) of the Home Rule Law. This Court has held that Section 2962(f) of
the Home Rule Law prohibits the placement of “affirmative duties” on businesses.
Hartman v. City of Allentown, 880 A.2d 737, 746 (Pa. Cmwlth. 2005). Here, the
Ordinance simply prohibits discrimination based on a potential tenant’s source of
income; it does not place any affirmative duties on businesses.
      Moreover, the City contends that Section 2962(f) of the Home Rule Law does
not bar a municipality’s regulation of businesses where such regulation is within its
generally applicable police powers; anti-discrimination laws are clearly within those
police powers. The City asserts that without the ability to carry out its police powers,
a home rule municipality would have substantially less power than its non-home rule
counterparts, which contravenes the purpose of home rule.
                             2. Apartment Association
      Apartment Association argues that the City exceeded its authority under the
Home Rule Law. Section 2962(f) of the Home Rule Law expressly limits the City’s
authority to regulate businesses, prohibiting a municipality from placing “duties,
responsibilities or requirements . . . upon businesses, occupations and employers.” 53
Pa. C.S. § 2962(f). The Ordinance in this case prohibits residential landlords from
denying a person access to housing based on his or her source of income. As defined
in the Ordinance, “source of income” specifically includes housing subsidies under the

                                           6
Section 8 Program. Apartment Association asserts that before enactment of the
Ordinance, residential landlords in the City were not required to participate in the
Section 8 Program. Now, their participation in the Section 8 Program is mandatory.
To comply with the Ordinance, City landlords must comply with the numerous
requirements and federal regulations governing the Section 8 Program. According to
Apartment Association, Pennsylvania courts have consistently invoked Section 2962(f)
of the Home Rule Law to invalidate ordinances where a municipality has attempted to
place duties and obligations on private businesses.
                                       Analysis
      Under the Home Rule Law, “[a] municipality which has adopted a home rule
charter may exercise any powers and perform any function not denied by the
Constitution of Pennsylvania, by statute or by its home rule charter.” 53 Pa. C.S. §
2961. As the City points out, this provision must be liberally construed in the
municipality’s favor. See 53 Pa. C.S. § 2961 (“All grants of municipal power to
municipalities governed by a home rule charter under this subchapter, whether in the
form of specific enumeration or general terms, shall be liberally construed in favor of
the municipality.”) (emphasis added). Our Court has recognized that “[t]he essential
principle underlying home rule is the transfer of authority to control certain municipal
affairs from the state to the local level. . . . This transference results in home rule
municipalities having broader powers of self[-]government than non-home rule
municipalities.” Hartman, 880 A.2d at 742.
      Notwithstanding a home rule municipality’s broad powers, the Home Rule Law
imposes a statutory limitation on its authority to enact certain types of legislation.
Specifically, Section 2962(f) of the Home Rule Law prohibits a home rule municipality
from “determin[ing] duties, responsibilities or requirements placed upon businesses,
occupations and employers.” 53 Pa. C.S. § 2962(f).

                                           7
      Pennsylvania appellate courts have consistently struck down municipal
ordinances that violate this prohibition against the regulation of private businesses. For
example, in Building Owners & Managers Association v. City of Pittsburgh, 985 A.2d
711, 712 (Pa. 2009), the City passed an ordinance requiring employers with new service
contracts to retain the employees of prior contractors for at least 180 days. On appeal,
the Pennsylvania Supreme Court concluded that the ordinance was invalid because it
directly regulated the contractors in violation of the Home Rule Law. Id. at 716. The
Supreme Court determined that “the [o]rdinance exemplifies the very essence of the
invasive regulations that Section 2962(f) [of the Home Rule Law] is designed to
prevent and, indeed, strictly prohibits.” Id. at 715-16. Therefore, the Supreme Court
held that “[b]ecause the [o]rdinance imposes an affirmative duty upon contractors by
requiring them to keep employees of prior contractors for a transitional period, the
[o]rdinance reaches beyond the powers granted to the City . . . as a home rule
municipality in direct violation of Section 2962(f).” Id. at 716.
      Similarly, in Smaller Manufacturers Council v. Council of City of Pittsburgh,
485 A.2d 73, 74 (Pa. Cmwlth. 1984), the City passed an ordinance requiring
manufacturing plant owners to notify the City’s Bureau of Business Security of any
plans to close, relocate, or reduce operations if such actions would affect more than
15% of their employees. Although the purpose of the ordinance – i.e., to reduce the
economic disruption caused by plant closings – was an important public policy
concern, this Court nonetheless invalidated the ordinance because it unlawfully
determined the duties, responsibilities, and requirements of businesses in violation of
Section 2962(f) of the Home Rule Law. Id. at 77. We concluded that the ordinance’s
requirement that businesses notify a City-created Bureau if a business decision was

                                            8
made went directly to the heart of business management and “fl[ew] in the face of the
express language” of the Home Rule Law. Id.6
       The City attempts to distinguish Building Owners and Smaller and instead relies
on Hartman to support its position on appeal. The City asserts that, like the anti-
discrimination ordinance at issue in Hartman, the instant Ordinance “does not require
or mandate anything on businesses” but “simply prohibits discrimination.” City’s Br.
at 15 (emphasis omitted); City’s Reply Br. at 1. We disagree.
       In Hartman, the City of Allentown adopted an ordinance that added sexual
orientation and gender identity to a list of prohibited bases of discrimination in
employment, housing, and public accommodations. 880 A.2d at 740. A group of
landlords challenged the ordinance, claiming that it violated Section 2962(f) of the
Home Rule Law as an improper regulation of private businesses. Id. The trial court
found that the ordinance violated Section 2962(f) because it placed duties and
responsibilities on businesses.        Id. at 741.     The trial court also found that no
Pennsylvania statute expressly authorized municipal legislation prohibiting
discrimination on the basis of sexual orientation or gender identity. Id.
       On appeal, this Court reversed the trial court and upheld the ordinance. We
began by analyzing “how broadly [Section 2962(f)’s] limitation on home rule authority
should be interpreted.” Id. at 742. We examined the use of the phrase “regulation of
business” in other, similar statutes regulating non-home rule municipalities and found
that those “statutes are quite specific and focus on or limit the affirmative duties that
non-home rule municipalities can place on businesses and employers.” Id. at 745.
Thus, we concluded that “the phrase ‘regulation of business’ [in Section 2962(f) of the

       6
          The Smaller Court applied a prior provision of the Home Rule Law, which was substantially
similar to Section 2962(f) of the present Home Rule Law.

                                                9
Home Rule Law] means affirmative duties being placed on businesses.” Id. at 746
(emphasis added).
      Next, we considered the interplay between the City of Allentown’s broad
authority under the Home Rule Law and “its police power, which is its fundamental
authority to protect the health, safety and welfare of its citizens.” Id. at 742-43. We
noted that a municipality “with subordinate powers to the state may ‘make such
additional regulations in aid and furtherance of the purpose of the general law as may
seem appropriate to the necessities of the particular locality and which are not in
themselves unreasonable.’” Id. at 744 (citation omitted). We determined that “the City
of Allentown duly enacted a regulation under its police powers to protect its citizens.”
Id.
      Further, this Court distinguished the City of Allentown’s anti-discrimination
ordinance from the ordinance at issue in Smaller, as follows:

             We agree with Allentown that the ordinance in Smaller was
      designed and intended to place affirmative duties of business management
      on businesses in Pittsburgh; that is far different from the [o]rdinance at
      issue here. The requirements in the Smaller ordinance, that employers or
      businesses notify a City-created Bureau if a “business decision” was made
      (in order for the Bureau to decide if an employer could close, leave the
      city limits, or reduce its work force), go to the heart of business
      management and usurp the role of management. However, in this case,
      there is no evidence that Allentown designed or intended to impose
      affirmative duties of business management on businesses; rather, the
      [o]rdinance is intended to protect Allentown’s citizens from
      discrimination.

Id. at 746-47 (internal footnote omitted) (emphasis added). Therefore, we held that the
ordinance was a valid exercise of the City of Allentown’s police powers and did not
violate Section 2962(f) of the Home Rule Law. Id. at 747.

                                          10
      We conclude that the Ordinance at issue here is more akin to the Smaller
ordinance than the Hartman ordinance. While it is true that anti-discrimination
ordinances are a valid exercise of a municipality’s police powers, the Ordinance here,
unlike the Hartman ordinance, does more than just ban discrimination against certain
protected classes of people. See Building Owners, 985 A.2d at 715 (noting that the
Hartman ordinance “simply disallowed discrimination based upon sexual orientation
and gender identity generally”). By defining “source of income” to include Section 8
Program subsidies, the Ordinance in this case necessarily mandates that all residential
landlords in the City comply with the federal Section 8 Program requirements, when
previously their participation in the Section 8 Program was voluntary. That is clearly
an affirmative obligation and more invasive to the operation of a rental business than
the type of general anti-discrimination ordinance at issue in Hartman. Like the
ordinances in Building Owners and Smaller, the requirements of the City’s Ordinance
“go to the heart of business management and usurp the role of management.” Hartman,
880 A.2d at 746. This result is expressly prohibited by Section 2962(f) of the Home
Rule Law.
                                     Conclusion
      We recognize that the City’s enactment of the Ordinance was well-intended.
However, implementation of the Ordinance will require all residential landlords to
significantly alter their business practices in order to accommodate Section 8 Program
participants. Contrary to the City’s contention, the Ordinance does, in fact, place
affirmative “duties, responsibilities or requirements” on private businesses and
employers. See Trial Ct. Op., 3/14/18, at 4-5 (outlining a potential lessor’s Section 8
Program requirements). Therefore, we agree with the Trial Court that the City violated
Section 2962(f) of the Home Rule Law in enacting the Ordinance.

                                          11
Accordingly, we affirm the Trial Court’s Order.

                               __________________________________
                               ELLEN CEISLER, Judge

                                  12
           IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Apartment Association of           :
Metropolitan Pittsburgh, Inc.      :
                                   :
      v.                           : No. 528 C.D. 2018
                                   :
The City of Pittsburgh,            :
                   Appellant       :

                                 ORDER

      AND NOW, this 12th day of March, 2019, the Order of the Court of Common
Pleas of Allegheny County, entered on March 14, 2018, is hereby AFFIRMED.

                                   __________________________________
                                   ELLEN CEISLER, Judge