Section 8 Lawsuit Accuses Philadelphia Landlord of ‘Modern-Day Redlining’

The case alleges that ProManaged Inc., a large property management company, refused to rent to prospective tenants with federal housing vouchers.

Philadelphia row houses Shutterstock_1221506932 A Philadelphia landlord refused to rent to tenants with federal housing vouchers in its properties in majority-white neighborhoods, while posting listings that encouraged voucher users to apply for its other units in majority-Black parts of the city, according to lawsuits filed against the company in both local and federal court.

The nonprofit Housing Equality Center of Pennsylvania, the nation’s oldest fair housing council, brought the suit against ProManaged Inc., which owns and operates 77 properties across the city, after the nonprofit conducted an investigation into the landlord’s practices. Between May and December 2021, testers for the Housing Equality Center — fair housing agents who pose as prospective renters — made inquiries about listings at ProManaged buildings. According to the suit, these qualified prospective tenants were told repeatedly that management would not accept federal housing choice vouchers, better known as Section 8 vouchers.

More than half of Pro-Managed properties are in neighborhoods in northeast Philadelphia that are more than 70% white. By turning away tenants with vouchers from these properties, the company has allegedly violated a local ordinance barring discrimination based on a tenant’s source of income. The complaint filed in federal court on Dec. 8 claims that the company only welcomed tenants with vouchers at its more limited portfolio of properties in predominantly Black areas in southwest Philadelphia, a practice that plaintiffs say violates the Fair Housing Act.

“What you have is a landlord property manager limiting a majority-Black group of renters to housing in majority-Black neighborhoods,” says Sari Bernstein, staff attorney for the Public Interest Law Center, who filed the suits on behalf of the plaintiff. “That starts to look a lot like modern-day redlining.”

Representatives for ProManaged did not return a request for comment.

Some 84% of households that rely on housing vouchers in Philadelphia are Black, while only 9% are white. Put another way, roughly one in eight Black renters in Philadelphia uses a housing choice voucher, compared with one in 59 white renters. This dynamic means that housing practices that discriminate against tenants for their class will also adversely impact tenants based on their race. The Fair Housing Act, passed as part of of the Civil Rights Act of 1968, forbids lending and leasing practices that have a disparate impact on people who belong to a protected category.

According to the complaint, the ProManaged site only advertises “Section 8 accepted” for listings in the 19142 ZIP code. That’s a part of the city with half the median income of the broader Philadelphia-Camden-Wilmington metro area, three times its poverty rate and four times its share of Black residents, according to census data.

Paired with an outreach effort to educate landlords, housing vouchers can help families move from places of concentrated poverty to neighborhoods with greater opportunity. But discrimination against people who receive housing assistance is common, and federal law doesn’t prohibit property owners from refusing to rent to people with Section 8 vouchers. Philadelphia is one of a growing number of cities — including Atlanta, Los Angeles and Minneapolis — that have passed local laws aimed at preventing this practice, known as source of income discrimination. Philly’s law dates back to 1980, making it one of the older SOI ordinances on the books.

Fair housing advocates have pursued new policies and tactics to combat discrimination and facilitate vouchers. The attorney general for the District of Columbia recently announced a $10 million settlement with a landlord accused of discriminating against Section 8 voucher holders, the largest civil penalty ever levied in such a case. A legal battle over a Dallas homeowners association banning owners from renting their homes to tenants with Section 8 could see a federal court decide whether source of income discrimination more broadly violates the Fair Housing Act.

But in Philadelphia, many landlords have blatantly ignored the city’s source of income ordinance, and the law remains poorly enforced, according to the plaintiff’s attorneys. Using testers is the most effective way to enforce fair housing laws, but it requires both funding and diligence. A 2018 study from the Urban Institute found that 67% of local landlords refused to accept vouchers.

With this lawsuit, the Housing Equality Center aims to turn up the heat.

“Philadelphia has adopted some really important tenant protections in the last number of years,” Bernstein says. “We feel strongly that robust enforcement and education about this really vital tenant protection is key to the city’s ability to increase its number of affordable housing units.”