A court of appeal found that a tenant of a privately owned low income, government-subsidized housing was deprived of a protected property interest when the property manager evicted a tenant at the conclusion of her lease without cause. (Anchor Pacifica Management Company v. Green (--- Cal.Rptr.3d ----, Cal.App. 2 Dist., April 23, 2012). In this case the government involvement in the privately owned development was so great that the owner was found to be subject to due process requirements placed on government housing programs. It is unclear, however, whether this holding will apply to other affordable housing projects with less direct public involvement in the operation of the housing.
In 1990, Andover Glendora Associates (“Andover”), a private developer, and the City of Glendora Community Redevelopment Agency (“City”) entered into an agreement to build a senior housing complex, Heritage Oaks Apartments, on a parcel donated to the City for that purpose. Andover agreed to lease the land from the City and develop the land per the City’s specifications, to maintain the complex with City oversight, and to pay the City a percentage of the net proceeds of the development. Ownership will revert to the City at the expiration of the 55 year lease.
The agreement required Andover to reserve 30 percent of the units for low and very low income tenants and to set rent for those tenants at affordable levels. The City determines the eligibility of prospective tenants for the affordable units and provides a list of potential tenants to Andover. The City reserved the right to provide housing assistance to any Andover tenant. The City was not obligated to fund housing subsidies, but once it provided assistance to a particular tenant, the City promised it would not withdraw assistance for five years. Andover agreed to accept the subsidies and tenants referred by the City, subject to a background and credit report, and to submit quarterly reports to the City to certify compliance with the agreement’s affordable housing requirements.
The City certified Sharon Green as an eligible tenant, and she moved into Heritage Oaks Apartments on a one-year lease in October 2007. She paid only a portion of her monthly rent and the City paid the balance to Anchor Pacifica, the property manager. Green signed new one-year leases in December 2008 and January 2009.
In October 2009 Anchor Pacifica served Green with a 90-day eviction notice, terminating Green’s tenancy at the conclusion of her lease. No reason was provided for the termination. In response to an unlawful detainer action filed by Anchor Pacifica, Green asserted that the attempt to evict her without good cause violated her right to due process under federal and state law. The trial court held that Anchor Pacifica was not required to provide good cause for terminating Green’s tenancy.
The court of appeal held that “a management company operating a senior complex developed with assistance from a local redevelopment agency and subject to agency oversight [must] identify good cause when it evicts a tenant participating in the agency’s housing assistance program upon expiration of the tenant’s lease.” The court held Anchor Pacifica’s eviction of Green from government-subsidized low income housing without good cause constituted state action that deprived her of a protected property interest.
The Fourteenth Amendment to the United States Constitution provides that a state may not deprive a person of a protected property interest without procedural due process safeguards. Governmental action may only terminate a property interest for cause. The California Constitution provides similar due process guarantees. Even if an action is taken by a private entity, a due process claim may stand if “the state has been sufficiently involved with the private entity’s conduct to hold that entity to the standards imposed on governmental actions that deprive a person of a protected property interest.” Prior California and federal case law held that tenants who receive government housing subsidies may not be evicted by governmental action without notice and proof of good cause.
The question in the case was whether there was sufficient state action involved in Anchor Pacifica’s eviction of Green sufficient to trigger her right to due process. The court found that there was, based upon such factors as the apartment complex land being donated to the City for the purpose of building senior housing, the transfer of the land to the City’s redevelopment agency, the agreement between the City and Andover for the development of the senior housing complex and the restriction of the rents, the reversion of the apartments to the City after the end of the lease, the City’s role in selecting and certifying tenants for subsidized units, the City oversight of rent levels and maintenance at the apartment complex, and the City’s provision of rent subsidies for some tenants and administration of federal subsidies for others. Based on these facts, the court concluded that “the inception and regulation of the low income housing program at the complex was infused by the City’s power” such that there was a sufficiently close nexus between the City and the eviction.
The court held that a low income tenant who receives subsidized housing benefits has a property interest in her continued tenancy, and that good cause must be shown to evict a subsidized tenant even when a tenancy is terminated at the end of the lease. The court found that through its policies and practices, the City “fostered Green’s expectation she had an entitlement to a continued subsidized tenancy at Heritage Oaks Apartments that could be terminated only upon a showing of good cause.” It held that Green established that “she had a legitimate entitlement to the renewal of her lease, as well as the accompanying rent subsidies, based upon ‘a governmentally conferred benefit that is rooted in a legal obligation.’”
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