San Diego agency might be approving illegal rent increases while taxpayers foot the bill

Each year, the San Diego Housing Commission doles out about $300 million in federal money to help low-income tenants afford rents on the private market. When landlords want to increase the rent on those tenants, the Housing Commission must first approve — and it does so nine times out of 10. 

In the last year alone, the agency fielded more than 10,000 applications to raise the rent on tenants in the federal Section 8 housing program, which serves about 16,000 San Diego families.

There’s one major problem. 

A monthslong inewsource investigation found the Housing Commission has no idea how many of those rent hikes are illegal, because officials aren’t checking if they exceed the state’s cap on increases. That means the agency is likely approving unlawful increases and using taxpayer money to pay for it.

It comes down to a lack of oversight.

The agency relies on the landlord’s word — reduced to a checkbox on a form — that they’re following all laws when increasing the rent for tenants with a Section 8 housing voucher. Those laws include the California Tenant Protection Act, which caps rent increases for many properties at 10% in San Diego. 

inewsource set out earlier this year to understand how often the Housing Commission approves increases above 10% and, through the Public Records Act, obtained one week of applications submitted by landlords and approved last December. 

Out of 107 approved rent increases, more than a fifth exceeded the state’s cap. Some applications showed increases as high as 53%. 

It’s just a small sample, a snapshot in time, and there’s no way for the public to know whether the rent increases are legal without more data and oversight. 

Meanwhile, Section 8 housing vouchers — one of the most significant safety nets for low-income residents anywhere in the U.S. — are mostly unavailable for new tenants in San Diego: Those who qualify for assistance face up to 15 years on a waitlist. 

That reality endures against a worsening housing and homelessness crisis. Less than 1% of the city’s rental housing stock is vacant, driving up rents 15% in a single year. And officials have seen record numbers of unhoused people living in public spaces across San Diego, which just earned the title of the most expensive place to live in the country. 

Despite these challenges, Housing Commission officials say they don’t have the tools or the policies to check whether rent increases go beyond the state’s cap. 

Critics, including the state attorney general, point to federal guidelines that say housing agencies are obligated to ensure rent increases comply with the law. Not doing so means taxpayers are likely subsidizing excessive — and possibly illegal — rent increases, leaving fewer dollars to help others as housing costs soar and more people lose their homes.

Attorneys for tenants point to individuals and families they say have been forced to pay unlawful increases. 

“The whole point of Section 8 is to ensure that low-income families and extremely low-income families have access to safe and stable housing,” said Parisa Ijadi-Maghsoodi, a poverty and civil rights attorney who has brought several lawsuits against the Housing Commission. 

Last week, she filed a suit on behalf of a San Diego-based advocacy group, Black Men and Women United San Diego, that aims to stop this.

The 20-page complaint offers a detailed account of one unnamed San Diego voucher holder who claims her rent was increased illegally, one of multiple examples attorneys say they are aware of. The lawsuit asks a judge to end the Housing Commission’s “practice of approving and subsidizing illegal rent increases,” and to compel the agency to recover all public funds illegally paid to private landlords. 

“These are illegal expenditures,” the lawsuit says. The Housing Commission’s “practice serves as a financial incentive for private landlords to violate tenant protection laws.”

On Tuesday, in a statement responding to inewsource’s investigation, a Housing Commission spokesperson said the agency has been trying to figure out how to implement the state’s rent cap, which took effect in January 2020. 

Staff sought guidance from other housing agencies, as well as the U.S. Department of Housing and Urban Development, which pays for the Section 8 program. 

“However,” spokesperson Scott Marshall said, “HUD has not provided any guidance to date, and recent information indicates that no guidance from HUD is imminent or forthcoming.” 

Marshall said the Housing Commission recently made the decision to “continue to move forward with developing and finalizing its own plans to implement the rent increase terms of the California Tenant Protection Act.”

Marshall did not comment on the lawsuit and, as of late Wednesday, had not answered questions about when the Housing Commission will start denying illegal requests that exceed 10%.

This lack of oversight isn’t unique to San Diego.

Some housing agencies across the state take the position that tenants with Section 8 vouchers are not protected under the rent cap, said Madeline Howard, a senior attorney with Western Center on Law and Poverty, where she works for tenants rights and people experiencing homelessness. She said she hopes to see the attorney general or the state’s Civil Rights Department start enforcing the law. 

“We are still seeing housing authorities that sort of say, ‘It’s not really our job to find out if the landlord’s violating the law,’ and that’s not really correct,” Howard said.

It’s causing harm to communities across the state, she added, because housing authorities are spending the money on a smaller number of tenants.

“We have fewer people benefiting from the voucher program, more people experiencing rent hardship and more people becoming homeless. So, it’s a huge problem.” 

Analyzing the approvals

Housing agencies were supposed to start considering the state’s rent cap when processing rent increase requests nearly four years ago, when the Tenant Protection Act took effect.

But officials with the Housing Commission told inewsource, through emails and one meeting, they can’t provide data showing how much rents have gone up on voucher holders. And without going back and reviewing every single case, which they don’t do, they don’t know how many times they’ve approved increases that exceed 10%. Marshall said if an increase was approved, it was deemed “reasonable” — a reference to a federal requirement for agencies to compare the requested increase against comparable units in the area. 

inewsource attempted to check the agency’s compliance by obtaining nearly 150 rent increases approved during one week last December. Only 107 applications showed the original rent and the request, both of which are needed to calculate the increase, and about 22% of those exceeded the state’s cap.

Certain properties are exempt from the law, such as mobile homes, new developments and some single-family homes. It’s possible some of the increases discovered in the analysis went to tenants who weren’t protected under the law, but the full scope is unknown.

The issue has drawn attention from California’s top law enforcement officer.

In June, Attorney General Rob Bonta sent a letter to all housing authorities in the state, saying Section 8 tenants are covered under the Tenant Protection Act. Bonta also urged officials to scrutinize rent increases before approving them for families who can least afford it.

“Unfortunately, my office has learned that some local housing authorities have approved rent increases that violate the Tenant Protection Act, leading landlords to believe, wrongly, that they are in compliance with state law,” Bonta wrote.

“In addition to monitoring future increases, I encourage all local housing authorities to take similar steps to make clear to landlords that participating in the Section 8 program does not give them a free pass to ignore state laws,” he added.

Until Bonta’s letter, there wasn’t much consensus among housing providers on this issue at all, said Molly Kirkland, director of public affairs with the Southern California Rental Housing Association. 

Even so, the association has been erring on the side of caution, advising property owners and housing providers that they should not increase rents above what the law allows. Kirkland said she was surprised to learn that the Housing Commission wasn’t even checking compliance, possibly approving illegal increases.

“The legislation was intended to prevent rent gouging,” Kirkland said. “Certainly Section 8 wouldn’t have been exempted from that, given the population that it’s trying to serve.”

‘Wasted’ and ‘squandered’

A massive federally funded program, Section 8 helps low-income individuals and families afford safe and sanitary housing on the private market.  

Vouchers guarantee tenants and landlords a set amount of rent money determined by various factors, including the tenant’s income, family size and ZIP code. 

Sometimes increases have no effect on a tenant. That’s because the new rent falls below the maximum amount for the voucher.

But that also means taxpayers are picking up the full tab of the increase.

Housing and Urban Development, which pays for the Section 8 program, offers guidance to local housing agencies and explains the importance of scrutinizing rent increase requests.

“If a (public housing agency) approves rents that are too high, government funds are wasted and limited housing subsidies are squandered,” the federal guidebook says.

Failing to ensure rent increases are legal could push tenants who rely on Section 8 vouchers out of housing, attorneys and other critics say. As the rent goes up, so too could the tenant’s portion when the voucher doesn’t cover the difference.

“An illegal rent increase may lead to you not being able to pay rent and then lead to an eviction,” said Gil Vera, a senior attorney with the Legal Aid Society of San Diego.

Intervention from his nonprofit, which provides free legal aid to eligible clients, could help keep families in their homes. 

But the demand is high. Hundreds of calls pour into Legal Aid each day from tenants asking for help, causing the organization to increase staffing and prioritize rent increases.

Vera said housing agencies throughout San Diego County are failing to hold landlords accountable for state laws limiting rent increases.

And rather than enforcing the state’s rent cap, they’re telling low-income tenants to settle the issue in court, Vera said.

“It makes it hard to reach out to a landlord and tell them that it’s illegal,” he added, “because then they will say, ‘Well, why would a government agency approve something that’s not legal?’ ”

This reporting was supported in part by a grant from the Fund for Investigative Journalism.