Why this matters
Oversight and accountability for federal housing programs, such as the Section 8 Housing Choice Voucher program, is key to stretch limited funding to those who need it most.
The illegal rent increase saga that has for years dogged San Diego’s largest housing agency is nearing an end.
The San Diego Housing Commission, which hands out more than $300 million every year in Section 8 vouchers to help low-income tenants pay rent, agreed to settle the latest of two lawsuits related to approving rent increases that exceed the cap set by state law. Under the agreement obtained by inewsource, the agency is set to pay nearly $6,000 in litigation costs and provide records that would show whether rent increases previously approved by the agency were lawful.
Housing attorneys and advocates across the state are hailing the outcome as a boon to Section 8 participants, who rely on vouchers to pay rent, and taxpayers, who fund the program. The Housing Commission declined to comment, citing ongoing hearings.
The settlement marks the latest development in a yearslong controversy that drew in the California Attorney General and the U.S. Department of Housing and Urban Development, while taxpayers and Section 8 voucher holders bore the costs of rent increases that went unchecked.
For perspective
An individual who lives alone and earns $97,950 or less per year is considered low-income in San Diego. Waitlists for qualifying residents have been closed due to high demand and funding challenges.
Along the way, the Housing Commission reversed course and several other housing agencies followed its lead, extending to more than 30,000 households across the region the same protections against excessive rent increases afforded to other renters on the private market.
Officials with the commission, who for years approved rent increases without ensuring they were lawful, have long denied breaking state law. They continue to point to a dated opinion from the state’s nonpartisan legislative agency that says the cap on rent increases does not apply to the federal Section 8 program.
Voucher holders are among the most vulnerable residents in any community.
Enforcing state law on a federal program
The San Diego Housing Commission and five other housing agencies throughout the county receive federal funding to manage the Section 8 program, which aims to reduce homelessness, build stability and pull families out of high-poverty neighborhoods.
When a landlord wants to raise the rent on a Section 8 voucher holder, the public housing agency must first approve. That’s because the increase will have to be covered one of two ways — by the agency charged with managing a limited pot of taxpayer money, or by voucher holders who are least able to afford an increase.
On top of that, the California legislature passed the state’s Tenant Protection Act, which took effect in 2020 and, among other things, caps rent increases at 10%, or 5% plus the percentage change in the cost of living, whichever is lower.
Conflicting interpretations of law in state government
Since the California Tenant Protection Act took effect, differing opinions on whether the law applies to Section 8 tenants have emerged. Attorneys for the state Legislature said the law’s protections from excessive rent hikes did not apply to Section 8 voucher holders. The attorneys argued the law exempts “affordable housing” that is already subject to rent limits through deeds or other government agreements. But critics, including the state attorney general – the chief law enforcement officer for California – say that’s a misinterpretation. Section 8 voucher holders are renting units on the private market available to anyone at any income level, which isn’t considered affordable housing. Attorneys say it’s an important and overlooked distinction.
In an attempt to settle the debate in the summer of 2023, California Attorney General Rob Bonta sent a letter to every public housing agency in the state. He said the law clearly protects voucher holders and warned officials to stop approving unlawful rent increases on low-income families the federal program was intended to protect.
In late 2023, an inewsource investigation first revealed the Housing Commission was approving rent increases without checking if they exceed the state cap, despite the recommendation from the state Attorney General. inewsource obtained one week’s worth of rent increase requests submitted by property owners — out of 107 approved rent increases, more than a fifth exceeded the state’s cap. Some applications showed increases as high as 53%.
The first lawsuit, filed by Black Men and Women United San Diego, aimed to force compliance. Months later, in January 2024, the Housing Commission changed course, capping rent increases for voucher holders at levels already set by state law.
Within weeks, the federal agency that oversees the Section 8 program finally weighed in, saying all public housing agencies have a duty to ensure rent hikes are lawful. Agencies across the county and state began changing policies to check whether increases exceed the state cap.
A spokesperson for the Housing Commission maintains the agency has never approved rent increases that violate state law, saying no California court has ruled that the commission’s actions were illegal or improper.
The Housing Commission “has not approved any ‘illegal rent increases,’” spokesperson Scott Marshall said in a recent email. “We would never want any of our participants to pay any more for their rent than the law allows.”
However, inewsource reporters found multiple examples of rent increases approved by the commission that appear to violate state law, including one tenant who received a rent increase more than three times what was allowed.
In addition, records show the commission previously sought approval from the federal government to establish an appeal process if landlords believed a rent cap created a hardship for them. No such appeal for hardship exists in state law. Staff ultimately never implemented that request.
The first lawsuit settled earlier this year, with the commission agreeing to pay $95,000 in attorney fees. The Housing Commission admitted no fault and the judge never determined anything illegal or improper.
The second lawsuit involved a public records request that sought records within a specific time frame, showing whether the Housing Commission was approving rent increases that exceeded the cap. The settlement agreement in that case was signed late July, although the case is still pending.
“This is a hard-won battle for our community after spending years fighting for the San Diego Housing Commission to put tenants above the profits of landlords it does business with,” said community organizer Francine Maxwell, a plaintiff in both cases. “While we’re thrilled with these wins, it should not take litigation to force the Commission to follow state laws put in place to protect tenants.”
4 p.m. Sept. 8: This story was updated to clarify that under the settlement the Housing Commission agreed to pay litigation costs, not attorney fees.
