Hapco v. City of Phila.

• Decision Date: 27 August 2020
• Docket Number: CIVIL ACTION NO. 20-3300
• Citation: 482 F.Supp.3d 337
• Parties: HAPCO, Plaintiff, v. CITY OF PHILADELPHIA and the Honorable James Kenney, Defendants, and Tenant Union Representative Network and Philadelphia Unemployment Project, Defendant-Intervenors.
• Court: U.S. District Court — Eastern District of Pennsylvania

482 F.Supp.3d 337

HAPCO, Plaintiff,

v. CITY OF PHILADELPHIA and the Honorable James Kenney, Defendants,andTenant Union Representative Network and Philadelphia Unemployment Project, Defendant-Intervenors.

CIVIL ACTION NO. 20-3300

United States District Court, E.D. Pennsylvania.

Signed August 27, 2020

Filed August 28, 2020

Beth L. Weisser, Michael K. Twersky, Fox Rothschild, LLP, Philadelphia, PA, Emma M. Kline, Fox Rothschild LLP, Warrington, PA, Paul Jay Cohen, Cohen & Willwerth PC, Southampton, PA, Colin David Dougherty, Fox Rothschild LLP, Blue Bell, PA, for Plaintiff.

Rachel Garland, Osarugue Grace Osa-Edoh, George Gould, Oraneet Shikmah Orevi, Community Legal Services, Inc., Irv Ackelsberg, Langer Grogan & Diver PC, Philadelphia, PA, for Defendant-Intervenors.

Michael Wu-Kung Pfautz, Benjamin H. Field, Lydia M. Furst, Eleanor N. Ewing, City of Philadelphia Law Department, Philadelphia, PA, for Defendants.

MEMORANDUM OPINION

Rufe, District Judge

Plaintiff HAPCO, a 501(c)(4) corporation that is an association of Philadelphia residential investment and rental property owners and managers, seeks to preliminarily enjoin Defendants City of Philadelphia and the Honorable James Kenney from implementing or enforcing several temporary emergency bills passed by the Philadelphia City Council in response to the COVID-19 pandemic. After considering the parties’ briefing and after a hearing, for the following reasons, HAPCO's motion will be denied.

I. BACKGROUND

The world is in the midst of an unprecedented public health crisis. The deadliest pandemic in over a century has swept across the globe and has upended the lives of the American people in previously unimaginable ways. Over 5.7 million Americans have contracted the novel coronavirus, COVID-19, and, tragically, more than 177,000 Americans have died.¹ In Philadelphia, more than 33,000 people have tested positive for COVID-19 and the death toll has exceeded 1,700.²

Because "COVID-19 spreads mainly among people who are in close contact," and social distancing "is the best way to reduce the spread,"³ government officials have imposed severe measures to counter the disease. On March 6, 2020, Governor Wolf issued a Proclamation of Disaster Emergency.⁴ On March 13, 2020, the Governor closed schools across the Commonwealth.⁵ On March 17, 2020, recognizing that "COVID-19 is easily transmitted, especially in group settings, including by people with no symptoms or mild symptoms," Mayor James Kenney and the City of Philadelphia Commissioner of Public Health issued a joint order prohibiting the "operation of non-essential businesses in Philadelphia."⁶ On March 23, 2020, Governor Wolf issued an Order For Individuals to Stay at Home which required Philadelphians, among others, to "stay at home except as needed to access, support, or provide life sustaining business, emergency, or government services."⁷

On May 7, 2020, recognizing that "the movement and/or displacement of individuals residing in Pennsylvania from their homes or residences during the current stage of the disaster emergency constitutes a public health danger to the Commonwealth in the form of unnecessary movement that increases the risk of community spread of COVID-19," Governor Wolf imposed a 60-day moratorium on both evictions and foreclosures.⁸ As the Governor's order explained, evictions are particularly harmful during the COVID-19 pandemic. Although limited contact with others has been recognized as necessary to counter the pandemic, this is often impossible for people who are evicted. "When a person is unable to find housing to rent on their own, they often ‘double-up’ by moving in with family or friends."⁹ Dr. Michael Z. Levy, an epidemiologist at the University of Pennsylvania, modeled the effect of resuming evictions on the spread of COVID-19 and concluded that, as a result of doubling-up, "[b]y May 1^st of 2021 a median additional 1.30% of the population becomes infected in the scenario with evictions."¹⁰

The public health danger that evictions pose during the COVID-19 pandemic is particularly pronounced in Philadelphia. Even before the COVID-19 emergency began, Philadelphia was "facing an eviction crisis."¹¹ Philadelphia has a poverty rate of 24.5%,¹² and renters account for approximately 46% of all households in Philadelphia.¹³ Over 51% of Philadelphia renters pay more than 30% of their income on rent and 30.5% of renters pay more than 50% of their income on rent.¹⁴ In 2017, over 24,000 eviction filings were recorded, and illegal evictions also occur on a regular basis.¹⁵ As the Mayor's Taskforce on Eviction Prevention summarized in its 2018 report and recommendation:

Research shows that eviction is not only a symptom of poverty, but also a root cause. It disproportionately affects women of color with children, and results in great economic burdens on both landlords and tenants. It breaks up communities, hurts prospects for future employment and housing, and increases the need for homeless services. In short, eviction negatively affects everyone involved in the process.¹⁶

The pandemic has only exacerbated this crisis. The measures taken to slow the spread of the virus have disrupted the global economy and left millions of Americans jobless. In Pennsylvania alone, during the current crisis, over two million people have filed for unemployment.¹⁷

Against this backdrop, and upon finding that "[t]he number of Philadelphians struggling to pay rent has undoubtedly increased since the onset of the COVID-19 pandemic," the Philadelphia City Council considered and enacted five separate bills temporarily amending Chapter 9-800 of the Philadelphia Code, collectively known as the Emergency Housing Protection Act ("EHPA").¹⁸ The legislative findings for the EHPA also explain that "[t]he COVID-19 pandemic's negative impact on the lives and incomes of Philadelphians, and City revenues, has exacerbated the pre-existing housing crisis and created a housing emergency in the City of Philadelphia" and that the Act is "necessary to ensure residents are able to remain in their homes, and small businesses are able to stay in business."¹⁹ On July 1, 2020, Mayor Kenney signed the Act.

Bill No. 200294 authorizes Philadelphia's Fair Housing Commission to establish a "residential eviction diversion program," to run through December 31, 2020.²⁰ The program, which is not yet in effect, would require renters who have experienced a COVID-19 financial hardship to participate in a mediation process with their landlords, designed to help resolve issues before they lead to formal evictions.²¹ A housing counselor would engage with the tenant to "educate and discuss available resources" before the tenant and landlord are joined by a designated mediator in a "conciliation conference."²² Once the program is implemented, the bill provides that "no landlord shall take steps in furtherance of recovering possession of a residential property occupied by a tenant who has suffered a COVID-19 financial hardship" without participating in a conciliation conference.²³ There are a few exceptions recognized under the Act: if eviction is necessary to "cease or prevent an imminent threat of harm by the person being evicted, including physical harm or harassment," or if the landlord has provided the affected tenant with notice of their rights and attempted to schedule a conciliation conference, but the program is unable to offer a date within thirty days.²⁴

Bill No. 200295 enacts both a blanket residential eviction moratorium and an eviction moratorium for small businesses (defined as any business that employs fewer than 100 total employees) that provide their landlord with a certification of hardship.²⁵ Both moratoria expire August 31, 2020 (the end of the COVID-19 emergency period as defined in the Act) and, while they are in effect, the only legal basis for an eviction is an imminent threat of harm.²⁶

Bill No. 200302 makes it temporarily unlawful for landlords to charge or accept late fees on rent, interest on back rent, or similar charges as a result of delinquent payment of rent for residential tenants who have experienced a COVID-19 financial hardship.²⁷ Residential tenants may establish a rebuttable presumption that they have suffered a COVID-19 financial hardship by submitting a certification of hardship to their landlord. This provision is effective from March 1, 2020 (the beginning of the retroactive emergency period as defined in the Act) through May 31, 2020.²⁸ Any such fees or similar charges that have been submitted by a tenant since March 1, 2020, must be credited against future rent or any other financial obligations.²⁹

Bill No. 200305 allows renters who have suffered a COVID-19 financial hardship and who failed to timely pay rent between March 1, 2020 and August 31, 2020, to pay back rent over a nine-month period, beginning August 31, 2020, without being evicted for nonpayment.³⁰ To qualify, renters must provide a certification of hardship as well as "[d]ocumentary evidence of the loss of income or increases in expenses the tenant has incurred during the retroactive emergency period or the COVID-19 emergency period as a result of such tenant's COVID-19 financial hardship ..."³¹ These tenants are considered to be in full compliance with their payment obligations and can only be evicted if they fail to pay the amount of rent normally due after the conclusion of the COVID-19 emergency period or if they are four or more months behind on the payments owed under the hardship repayment agreement.³² The bill also requires landlords to provide advance notice to tenants of their rights before seeking to evict them.³³ If the landlord and tenant have not already entered into a hardship repayment agreement, the landlord must provide the tenant with written notice of the right to a repayment agreement at least 30 days before initiating eviction proceedings.

In sum, the EHPA provides that: 1) through August 31, 2020, landlords cannot evict residential tenants...