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Note: This case is not published in an official reporter and may not be cited as authority. Consult with counsel before relying on this case.
In 1996 a Federal district court in California enforced a Ninth Circuit holding that the City discriminated on the basis of familial status when it lowered rental rates after a landlord removed a minimum-age restriction in compliance with the Fair Housing Act Amendments of 1988. The district court enjoined the City from further interference and ordered the City to pay over $90,000 in compensatory damages.
Borello & Sons (Borello) operated a mobile park which, until 1989, did not allow minors as occupants. In 1988, Congress amended the Fair Housing Act to prohibit discrimination against families with children and created an exclusion for "housing for older persons." Borello considered making the park a senior housing facility, but concluded that the park would not meet the exemption, and ended the park's adults-only policy.
The park's tenants filed a petition with the City of Hayward (City), claiming that the removal of the age restriction constituted a reduction in services which, in turn, required lower rental rates. An arbitrator, under the City’s rent control ordinance, granted the petition and reduced rates. In response, Borello filed complaints with state and federal officials and eventually, the U.S. Attorney General brought suit against the City, claiming a violation of section 3617 of the Fair Housing Act, which prohibits interference with the exercise of rights under the Act. The district court granted summary judgment for the U.S. and enjoined the City from reducing rents, but did not award Borello damages. The City appealed and the Ninth Circuit affirmed the liability portion, but remanded for a consideration of compensatory damages.
On appeal, the Ninth Circuit observed that section 3617 makes it unlawful to interfere with the exercise or enjoyment of any rights granted under sections 3603-3606 of the Act. The court stated that interference has included racially-motivated firebombings, exclusionary zoning, and insurance redlining. The City argued that its rent reduction did not constitute interference, but was simply a reflection of the reduced value of services. The arbitrator found that by changing the adults-only policy, tenants would no longer be assured stability and predictability of their environment. The Ninth Circuit stated that if the difference in the rental rates was solely attributable to the termination of a discriminatory practice, that change was not legitimate. The court found that Borello's only act was to terminate the policy; therefore, the reduction in value of services was caused solely by that termination. The court further found that in response to terminating a discriminatory practice, the City penalized Borello by reducing rents, which was enough to constitute interference.
The City claimed that the mobile park met the "housing for older persons" exemption. The Ninth Circuit found that to meet this exemption, one must show: (1) existence of significant facilities and services designed to meet the physical or social needs of older persons; (2) at least 80% of units occupied by at least one person 55 or older; and (3) publication, and adherence to, a policy to provide housing for persons 55 or older. The court found that element (2) was satisfied, but element (1) was not met, as the only services designed for older persons were occasional visits by health officials, which was insufficient to give "housing for older persons" status, and element (3) also failed because prior policy was to provide housing for people 18 or older, not 55 or older.
Subsequent History: In October 1995, the United States Supreme Court denied the City's petition to review the Ninth Circuit's decision (see 116 S. Ct. 65 (1995)). In February 1996, the district court entered a Consent Order, under which the City was enjoined from discriminating on the basis of family status, or from interpreting or enforcing its rent control ordinance in any manner that prevented or discouraged the admission of families with children into any mobile home park. Additionally, the City was ordered to pay Borello $94,200 in compensatory damages in return for Borello's release of the City from further liability on the matter.
U.S. v. City of Hayward, CA, 1996 WL 61114 (N.D. Cal 1996). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]