City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: April 14, 2025
Report #:2403-2796
TITLE
FIRST READING: Adoption of an Ordinance Adding New Chapter 9.75 (Fair Chance in Housing) to Title 9 (Public Peace, Morals, and Safety) of the Palo Alto Municipal Code to Limit the Use of Criminal History Information in Rental Housing Decisions. CEQA Status - Exempt Under CEQA Guidelines Section 15061(b)(3).
RECOMMENDATION
1. Staff recommends that the City Council hold a public hearing to discuss and adopt an ordinance to add Chapter 9.75 (Fair Chance in Housing) to the Palo Alto Municipal Code to limit the use of criminal history information in rental housing decisions.
EXECUTIVE SUMMARY
Fair Chance Housing policies are intended to address issues related to fair housing, anti- discrimination, and renter’s rights by clarifying how may be used in rental housing decisions.
Local governments in California and elsewhere in the US employ Fair Chance Housing Ordinances to offer some local protections from housing discrimination to renters with criminal history. Fair Chance Housing policies could also benefit other renters that might have inaccurate information in commercial criminal history databases.
On November 29, 2021, City Council directed staff to study or implement a package of rental protection policies to add more certainty, stability, and fairness in the Palo Alto rental market for both renters and landlords.1 This included the evaluation of a potential Fair Chance Housing Ordinance including any consequences, both intended and unintended.
In response to the City Council’s November 29, 2021 request, staff received policy approach feedback from the Human Relations Commission (HRC) and prepared a draft Fair Chance Housing Ordinance (Attachment A) that specifies how and when criminal history information 1 City Council Meeting Minutes, November 29, 2021:
https://portal.laserfiche.com/Portal/DocView.aspx?id=2611&repo=r-704298fc.
City Council City Manager Report ID # 13786, November 29, 2021:
https://portal.laserfiche.com/Portal/DocView.aspx?id=61794&repo=r-704298fc&searchid=61cd872e-2c1d-47e7- b74b-16cf4a51c7bf.
may be used in rental housing decisions. This report also includes the Council requested analysis of potential implementation consequences, with identification of potential modifications for discussion.
Staff has included an ordinance to enable the Council to act on fair chance housing policy options at the subject meeting. However, staff also notes it has been several years since the City Council as a legislative body has weighed in on the topic and there may be a need for further policy refinement or direction to staff. In this case, decision on the ordinance could be deferred.
BACKGROUND
Palo Alto has held discussions on Fair Chance Housing policy as part of renter protections discussions since 2021, with the HRC continuing to advocate for its consideration in 20232, 3 The City’s 2023-2031 Housing Element and City Council's 2024 priorities also emphasized the timeliness of this work.4 In August 2024, the City Council Housing Ad Hoc Committee members discussed topics such as policy approach options, the establishment of lookback periods for convictions that could be considered as directly related to housing, and underscored Fair Chance Housing as a City Council topic of priority to review.5 The Housing Ad Hoc Committee recommended that the HRC consider Fair Chance Housing policy approaches prior to Council consideration.
HRC Recommendation
The HRC held a public hearing on Fair Chance Housing policy on October 10, 2024.6 The staff report presented the legal context for Fair Chance Housing policy and debuted two policy approach options. The report and ensuing discussion also covered local information, basic challenges with existing commercially available background check databases, information from 2 See past meetings, staff reports, and minutes on the City’s Renter Protection Policy Development Webpage:
https://www.cityofpaloalto.org/Departments/Planning-Development-Services/Housing-Policies-Projects/Renter- Protection-Policy-Development.
3 HRC Meeting Video, February 9, 2023:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=11159. 4 City of Palo Alto City Council Priorities 2024: https://www.cityofpaloalto.org/files/assets/public/v/1/2024- council-priorities-objectives-4-30_final.pdf.
City of Palo alto City Council Priorities Webpage: https://www.cityofpaloalto.org/Departments/City-Clerk/City- Council/City-Council-Priorities#:~:text=(show%20below)- ,2024%20Council%20Priorities,Economic%20Development%20%26%20Transition. 5 Although the original City Council motion called for reviewing the draft Fair Chance Housing Ordinance with the Policy & Services Committee, the City later formed the Housing Ad Hoc Committee for housing policy matters. As a result, staff brought the policy to the Ad Hoc Committee before returning to the Human Relations Commission. 6 HRC Meeting Minutes, October 10, 2024: https://portal.laserfiche.com/Portal/DocView.aspx?id=123819&repo=r- 704298fc&searchid=00626116-3c9a-413a-967b-e9ff2978fc29. social science research, and other policy initiatives that could inform how Palo Alto might design a local Fair Chance Housing Ordinance.7
Members of the public and the HRC provided policy feedback for staff consideration. The HRC supported City Council consideration of Fair Chance Housing polices and limiting the use of criminal history information in Palo Alto rental housing decisions, coupled with providing renters with procedural protections, as outlined in the October 10, 2024 HRC staff report. HRC also considered, but did not recommend, an alternate approach of implementing a blanket prohibition on using criminal history in housing decisions except where required by law. Neither HRC nor staff recommend this approach, for the reasons identified in the HRC staff report, including that it leaves landlords without the option to consider even the most relevant or serious offenses and would be more difficult to enforce than the recommended approach.
HRC’s policy recommendations include the following provisions:
• Consistency with State law that already prohibits landlords from considering criminal history other than “directly related convictions;”
• Limitations on the criminal history information that may be considered, including establishment of a two (2) year “lookback period,” which would allow landlords to consider only offenses for which the renter was sentenced within the last two years; and
• Specific procedural steps that a landlord must implement before taking an adverse action against a renter based on their reviewable criminal history, including:
oGiving an otherwise qualified renter a conditional housing offer before checking the renter’s criminal history;
oAllowing a renter to present evidence of inaccuracy, rehabilitation, or other mitigating factors regarding their criminal history;
oProviding the renter with a copy of their background check and written statement of the reasons for taking adverse action, such as denial of their rental application, based on the renter’s criminal history; and
oOther landlord notice and recordkeeping protocols.
Legal Context
Federal and State fair housing laws prohibit discrimination in housing decisions based on various protected characteristics, such as race, national origin, and disability.8 While having a history of one or more criminal convictions is not a protected characteristic under State or Federal law, landlords may not adopt criminal conviction history review practices that have a 7 HRC staff report, October 10, 2024: https://www.cityofpaloalto.org/files/assets/public/v/1/community- services/human-relations-commission/agendas/2024/10-10-24/10-10-24-hrc-agenda-item-2-attachment.pdf.
HRC Meeting Packet, October 10, 2024: https://portal.laserfiche.com/Portal/DocView.aspx?id=111874&repo=r- 704298fc&searchid=331353b5-6475-4934-a435-046817314f5b. 8 See, e.g., Fair Housing Act, 42 U.S.C. §§ 3601 et seq.; Unruh Civil Rights Act, Cal. Civ. Code § 51; California Fair Employment and Housing Act, Cal. Gov. Code §§ 12900 et seq. discriminatory effect on members of a protected class unless the practice is necessary to achieve a substantial, legitimate, nondiscriminatory purpose, the practice effectively carries out the identified purpose, and there is no feasible equally effective alternative practice that would have a less discriminatory effect.9
Existing State regulations implementing California’s Fair Employment and Housing Act (FEHA) provide requirements for the use of criminal history information in housing decisions to avoid unlawful discrimination.10 Most notably, a landlord may only consider a “directly related conviction,” meaning a criminal conviction that has a direct and specific negative bearing on a substantial, legitimate, and nondiscriminatory purpose of the landlord, such as the safety of other residents, the housing provider’s employees, or the property.11 For example, a misdemeanor conviction for a driving offense would not likely be directly related to an identified interest of the landlord. In contrast, a recent criminal conviction for residential arson could be directly related to the risk that an individual may injure other residents or property.
Further, landlords may not consider other criminal history information, like arrests that did not lead to a conviction, or convictions that have been sealed, dismissed, or expunged.12 However, State law provides that in order to protect persons at risk, a landlord may consider whether a potential renter is listed on the State Registry of Lifetime Sex Offenders operated by the California Department of Justice.13 A local Fair Chance Ordinance would not alter this provision.
State law also encourages (but does not require) landlords who consider criminal history information to adopt certain procedural protections for renters, including:
• Providing written notice of the policy and an opportunity for the renter to present mitigating information;
• Considering the factual accuracy of the criminal history information; and • Delaying seeking out criminal history information until after an individual’s other qualifications are verified.14
Local jurisdictions may adopt Fair Chance Housing policies that are more protective of the rights of renters than existing State requirements, as long as these local regulations do not conflict with State or Federal law.15
Since Palo Alto began discussing a Fair Chance Ordinance, the U.S. Court of Appeals for the Ninth Circuit has held that a Fair Chance Housing Ordinance that banned all inquiry into a 9 2 CCR § 12266. In addition to prohibiting actions with a discriminatory effect without a legally sufficient justification, state law prohibits intentional discrimination and other types of discriminatory statements and actions. 2 CCR § 12265.
10 2 CCR §§ 12264-12271.
11 2 CCR § 12266.
12 2 CCR § 12269.
13 Cal. Penal Code § 290.46(j)(1).
14 2 CCR § 12266.
15 See 2 CCR § 12271.
prospective renter’s criminal history was an unconstitutional restriction of landlords’ right to free speech under the First Amendment.16 The court reasoned that Seattle’s ordinance, which included a blanket ban on inquiring about a renter’s criminal history information except where required by law, was not “narrowly drawn” to serve the City’s stated interests. Though it did not rule on the constitutionality of any other local ordinance, the court cited with approval local ordinances from around the country that allow landlords to consider some criminal history information under some circumstances.
Commercially Available Criminal History Databases and AI Renter Screening Technology There are some data accuracy challenges with commercially available criminal history databases, as discussed in the October 10, 2024 HRC staff report.17 In summary, commercially available criminal history databases used for renter screening often include inaccurate or incomplete information.18 Further, the HRC meeting discussion also referenced how State criminal codes vary in how they classify crimes; this results in the potential for similar facts and circumstances being classified and recorded differently in criminal history records.19 Staff subsequently identified research indicating that it is becoming more common in general for landlords to use artificial intelligence (AI) in renter screening, including potentially exacerbating the effects of inaccuracies in criminal history background check databases.20
ANALYSIS
Fair Chance Housing Policy Considerations and Purpose
Persons with a criminal history face barriers to securing stable housing. Persons with criminal history are significantly more likely to be unhoused than the general public.21 22 23 According to 16 Yim v. City of Seattle, 63 F.4th 783 (9th Cir. 2023), cert. denied sub nom. Yim v. City of Seattle, Washington, 144 S. Ct. 693 (2024).
17 HRC staff report, October 10, 2024: https://www.cityofpaloalto.org/files/assets/public/v/1/community- services/human-relations-commission/agendas/2024/10-10-24/10-10-24-hrc-agenda-item-2-attachment.pdf. 18 Sarah Lageson and Robert Stewart, Criminology, The Problem with Criminal Records: Discrepancies between State Reports and Private-Sector Background Checks, February 11, 2024, Accessed March 18, 2025:
https://onlinelibrary.wiley.com/doi/10.1111/1745-9125.12359; https://nij.ojp.gov/library/publications/problemcriminal-records-discrepancies-between-state-reports-and-private.
Funding was provided by the U.S. Department of Justice, Office of Justice Programs, National Institute of Justice, under Award 2017-IJ-CX-0036.
19 Bergman, NOLO Press, Felonies, Misdemeanors, and Infractions: Classifying Crimes, February 28, 2024, Accessed March 18, 2025: https://www.nolo.com/legal-encyclopedia/crimes-felonies-misdemeanors-infractions- classification-33814.html.
20 TechEquity & Wonyoung So, Screened out of Housing, July 2024, Accessed March 11, 2025:
https://techequity.us/wp-content/uploads/2025/03/Screened-out-of-housing-paper-2025-updates.pdf. 21 Center for American Progress, Strengthening Access to Housing for People With Criminal Records Is Key to Successful Reentry, April 17, 2023, Accessed March 12, 2025:
https://www.americanprogress.org/article/strengthening-access-to-housing-for-people-with-criminal-records-is- key-to-successful-reentry/.
22 California Health Policy Strategies, LLC, Criminal Justice System Involvement and Mental Illness among Unsheltered Homeless in California, November 2018, Accessed March 12, 2025: https://calhps.com/wp- content/uploads/2023/03/policy-brief-unsheltered-homelessness-11.20.2018.pdf. 23 Prison Policy Initiative, Nowhere to Go: Homelessness among formerly incarcerated people; August 2018, Accessed March 12, 2025: https://www.prisonpolicy.org/reports/housing.html. the last published Santa Clara County Point in Time Count from 2023, 9,903 persons were unhoused in Santa Clara County, including 206 people in Palo Alto.24 Results from the 2024 Santa Clara County Point in Time Count are not yet published as of the date of release of this report. An estimated eight million Californians, or nearly one in five, are living with a past criminal conviction.25, 26
Research has shown that the risk of recidivism tends to decline over time.27 A recent analysis of Californians released from prison in fiscal year 2018-19 showed that a majority of the cohort had no convictions within three years of their release from prison, and that most convictions occurred during the first and second year of the three-year follow-up period.28 In a recent proposed rule, the Federal Department of Housing and Urban Development (HUD) noted that recidivism rates drop significantly after three years for all types of offenses.29 24 Santa Clara County 2023 PIT Report, Accessed March 18, 2025:
https://public.tableau.com/views/PIT2023v2/Exec?:showVizHome=no&embed=true&. 25 Californians for Safety and Justice, Repairing the Road to Redemption in California, May 2018, Accessed March 17, 2025: https://safeandjust.org/interactivereport/repairing-the-road-to-redemption-in- california/#:~:text=1%20in%205%20Californians%20(an,with%20an%20old%20criminal%20conviction; https://safeandjust.org/wp-content/uploads/CSJ_SecondChances-ONLINE-May14.pdf. 26 Skog, Castellanos, Lacoe, and Pickard, California Policy Lab, Who Benefits from Automatic Record Relief in California?, October 2024, Accessed March 12, 2025: https://cdn.prod.website- files.com/6706c50505f0ff8dbeaf5682/67ca5375a6982860d5f1e809_Automatic-Record-Relief-in-California.pdf. 27 See Federal Register, Reducing Barriers to HUD-Assisted Housing A Proposed Rule by the Housing and Urban Development Department, April 10, 2024, Accessed March 11, 2025:
https://www.federalregister.gov/documents/2024/04/10/2024-06218/reducing-barriers-to-hud-assisted-housing. 28 California Department of Corrections and Rehabilitation, Division of Correctional Policy Research and Internal Oversight, Office of Research, Recidivism Report for Individuals Released from the California Department of Corrections and Rehabilitation in Fiscal Year 2018-19, February 2024, Accessed March 10, 2025:
https://www.cdcr.ca.gov/research/wp-content/uploads/sites/174/2024/02/Statewide-Recidivism-Report-for- Individuals-Released-in-Fiscal-Year-2018-19.pdf.
29 Federal Register, Reducing Barriers to HUD-Assisted Housing A Proposed Rule by the Housing and Urban Development Department, supra, citing Bureau of Justice Statistics. “Recidivism and Reentry ” available at https://bjs.ojp.gov/topics/recidivism-and-reentry. On January 16, 2025, HUD published [Docket No. FR–6362–N– 02] in the Federal Register, noting that HUD had determined not to pursue the proposed rule. However, this report continues to reference the significant research and analysis done in preparing the proposed rule.
Studies of participants in supportive housing programs suggest that criminal history is not predictive of problematic tenancy.30, 31 Conversely, housing stability is associated with a reduced risk of recidivism for persons with criminal history.32, 33 Research has also found that patterns in crime, policing, and sentencing correlate with persons of some demographic groups being overrepresented in the criminal justice system.34,35,36,37,38,39 As discussed with the HRC, the purpose of a Fair Chance Housing Ordinance limitation on the use of criminal history information in renter selection is to give previously incarcerated persons or other persons with a criminal conviction history a fair opportunity to compete for rental housing, which may support reintegration into the community and improve access to employment, housing stability and services for some individuals.40 The purpose is also to seek 30 Ehman and Reosti, "Tenant Screening in an Era of Mass Incarceration: A Criminal Record is No Crystal Ball", N. Y.
U. Journal of Legislation and Public Policy Quorum, 19, March 2015, Accessed March 19, 2025:
https://nyujlpp.org/wp-content/uploads/2013/03/Ehman-Reosti-2015-nyujlpp-quorum-1.pdf. 31 Malone, Psychiatric Services, Assessing Criminal History as a Predictor of Future Housing Success for Homeless Adults With Behavioral Health Disorders, 2009 Feb;60(2):224-30. doi: 10.1176/ps.2009.60.2.224, Accessed March 19, 2025:
https://psychiatryonline.org/doi/epdf/10.1176/ps.2009.60.2.224. 32 Jacobs LA, Gottlieb A. THE EFFECT OF HOUSING CIRCUMSTANCES ON RECIDIVISM: Evidence From a Sample of People on Probation in San Francisco. Crim Justice Behav. 2020 Sep;47(9):1097-1115. doi:
10.1177/0093854820942285. Epub 2020 Aug 6. PMID: 34629568; PMCID: PMC8496894.Published Online August 6, 2020, Accessed March 12, 2025: https://pmc.ncbi.nlm.nih.gov/articles/PMC8496894/. 33 Ehman and Reosti, "Tenant Screening in an Era of Mass Incarceration: A Criminal Record is No Crystal Ball", N. Y.
U. Journal of Legislation and Public Policy Quorum, March 2015, Accessed March 19, 2025:
https://roominate.com/blogg/fair_chance_housing/crystal_ball.pdf. .
34 Ghandnoosh and Barry, The Sentencing Project, November 2, 2023, Accessed March 18, 2025:
https://www.sentencingproject.org/reports/one-in-five-disparities-in-crime-and-policing/. 35 Lofstrom, Hayes, Martin, Premkumar, and Gumbs, Public Policy Institute of California (PPIC), Racial Disparities in Law Enforcement Stops, October 2021, Accessed March 18, 2025: https://www.ppic.org/publication/racial- disparities-in-law-enforcement-stops/.
36 Lofstrom, Martin, and Raphael, Public Policy Institute of California (PPIC), Proposition 47’s Impact on Racial Disparity in Criminal Justice Outcomes, June 2020, Accessed March 18, 2025:
https://www.ppic.org/publication/proposition-47s-impact-on-racial-disparity-in-criminal-justice-outcomes/. 37 Starr and Rehavi, Racial Disparity in Federal Criminal Sentences, Journal of Political Economy. 122, no. 6 (2014):
1320-54. Accessed March 18, 2025 via the Michigan Law Scholarship Repository:
https://repository.law.umich.edu/articles/1414.
38 Judicial Council of California, Criminal Cases According to the Race and Ethnicity of the Defendant, 2018 Report to the California Legislature as Required by Penal Code Section 1170.45, February 14, 2019, Accessed March 18, 2025: https://courts.ca.gov/sites/default/files/courts/default/2024-12/lr-2019-jc-disposition-of-criminal-cases- race-ethnicity-pc1170_45.pdf.
39 Judicial Council of California, Criminal Cases According to the Race and Ethnicity of the Defendant, 2024 Report to the California Legislature as Required by Penal Code Section 1170.45, November 15,2024, Accessed March 18, 2025: https://courts.ca.gov/system/files/file/lr-2024-criminal-dispositions-race-ethnicity-117045.pdf. 40 Center for American Progress, Strengthening Access to Housing for People With Criminal Records Is Key to Successful Reentry, April 17, 2023, Accessed March 12, 2025:
https://www.americanprogress.org/article/strengthening-access-to-housing-for-people-with-criminal-records-is- key-to-successful-reentry/.
to reduce the incidence of homelessness for persons with a criminal history and reduce the risk of recidivism through housing stability.41,42, 43
Fair Chance Housing Ordinance Components
The HRC recommended policy approach, as outlined in the Background section of this report, is incorporated into a draft Fair Chance Housing Ordinance (Attachment A) for public input and City Council consideration. The draft Ordinance contains several standard components — Definitions, Applicability and Exemptions, Exceptions, Remedies, and Waiver — as discussed in the October 10, 2024 HRC staff report.44 As a helpful reference, Table 1 demonstrates how the HRC recommended policy approach and other components in the draft Ordinance relates to existing State law.
Table 1: Comparison of State Law with Draft Fair Chance Housing Ordinance State Law Proposed Fair Chance Ordinance
Regulates use of criminal history as a proxy
for discrimination based on protected
characteristics (e.g., race)
Regulates discrimination based on criminal
history as its own harm
Landlords may only consider only “directly
related convictions”
Landlords may consider only “directly related
convictions”
Does not prescribe a lookback period Prohibits consideration of convictions that occurred outside a designated lookback
period
Procedural protections for renters (e.g.,
conditional offer pre-background check,
opportunity to present mitigating
information) are encouraged, but not
required
Procedural protections for renters are
required and outlined in the ordinance
During the October 10, 2024, HRC meeting discussion, additional topics in Table 2 were mentioned for staff and Council consideration.
Table 2: Human Relation Commission Mentioned Additional Topics for Consideration 41 California Health Policy Strategies, LLC, Criminal Justice System Involvement and Mental Illness among Unsheltered Homeless in California, November 2018, Accessed March 12, 2025: https://calhps.com/wp- content/uploads/2023/03/policy-brief-unsheltered-homelessness-11.20.2018.pdf. 42 Prison Policy Initiative, Nowhere to Go: Homelessness among formerly incarcerated people; August 2018, Accessed March 12, 2025: https://www.prisonpolicy.org/reports/housing.html. 43 Jacobs LA, Gottlieb A. THE EFFECT OF HOUSING CIRCUMSTANCES ON RECIDIVISM: Evidence From a Sample of People on Probation in San Francisco. Crim Justice Behav. 2020 Sep;47(9):1097-1115. doi:
10.1177/0093854820942285. Epub 2020 Aug 6. PMID: 34629568; PMCID: PMC8496894.Published Online August 6, 2020, Accessed March 12, 2025: https://pmc.ncbi.nlm.nih.gov/articles/PMC8496894/. 44 HRC staff report, October 10, 2024: https://www.cityofpaloalto.org/files/assets/public/v/1/community- services/human-relations-commission/agendas/2024/10-10-24/10-10-24-hrc-agenda-item-2-attachment.pdf.
Topic Notes
Ways to make it easier for renters to identify
if they are an aggrieved party under Fair
Chance Housing policies.
Staff proposes to include examples of what
could be considered an “aggrieved party”
and “adverse actions” in the draft Ordinance.
Potential explicit addition of drug and other
offense categories with a history of
discriminatory enforcement to the list of
convictions that cannot be considered in
housing decisions.
Staff does not recommend that the
Ordinance call out specific offenses due to
the infeasibility of determining at a local level
which offenses have a history of
discriminatory enforcement.
Inclusion of enforcement provisions or
remedies beyond the proposed enforcement
by a private right of action; or ways to reduce
the burden or lower the barrier for renters to
pursue remedies.
Staff proposes including the remedy of a
private right of action in the draft Ordinance.
Each of the procedural steps recommended
by the HRC in the draft Ordinance is designed
to establish a clear, written communication
trail, helping preserve a record that could
support a potential lawsuit. Introducing an
additional enforcement or remedy
mechanism, such as a local administrative
grievance procedure, would require
additional resources from the City. These
resources could involve staffing and other
support necessary to develop, administer,
and sustain an ongoing enforcement and
remedy program, or to manage a program
contract. Note that when State law is
violated, renters may also pursue all available
remedies under State law, in addition to
those provided by the local ordinance.
Penalties, such as fines, if it was found that
landlords violated the code repeatedly.
Staff does not recommend specifying
damages under a remedies section because
remedies would be decided by a court.
Lookback Periods
Staff supports the HRC recommendation that allows landlords to consider “directly related convictions” for both misdemeanors and felonies for which the renter was sentenced within the last two years when making housing decisions. This HRC-recommended two-year lookback period is consistent with staff research that more recent Clean Slate and Fair Chance Housing policy efforts recommend use of shorter lookback periods than the lookback periods that might have been implemented previously, such as a seven-year lookback period. HUD issued a Proposed Rule in 2024 that would require HUD-assisted housing providers to establish lookback periods, noting that proposing a longer than three-year lookback period would be presumptively unreasonable.45 For reference, Attachment B provides a list of recent Fair Chance Housing-related lookback periods by jurisdiction with citations. Note that the October 10, 2024 HRC staff report presented the topic of lookback periods, including mention of an example of utilizing records of misdemeanors or felonies no older than three years for a lookback period. However, HRC specifically included the two year lookback period within their motion.
Analysis of Potential Fair Chance Housing Policy Consequences City Council requested an analysis of potential Fair Chance Housing implementation consequences, both intended and unintended. A detailed analysis is presented in Attachment C and presents how the draft Ordinance (Attachment A) responds.
As outlined in Attachment C and throughout this report, the draft Fair Chance Housing Ordinance aims to provide individuals with criminal histories a fair opportunity to compete for rental housing, while reducing the potential for discrimination by permitting criminal history checks only after a conditional offer has been made. The Ordinance seeks to promote fairness and address the challenges posed by criminal history databases. However, it could also lead to some unintended consequences. For instance, public perceptions of safety may shift, even in the absence of data to support these concerns. Additionally, staff have identified potential issues, including landlord concerns over reduced autonomy in making housing decisions, possible delays in filling vacancies if landlords are not currently following similar procedures, and increased complexity due to the overlap of state and local regulations. In response, the City plans to provide educational resources, clear notifications, and ongoing support through programs like those offered by Project Sentinel. Staff has prepared a draft ordinance based on HRC recommendations and prior direction for City Council consideration. Ultimately, staff recommends adoption of a draft Fair Chance Housing Ordinance based on HRC’s recommended policy approach, staff recommendations, public input, and City Council feedback.
Fair Chance Housing Policy Alternative Policy Considerations City Council might want to consider providing further direction on the following topics.
Criminal History Lookback Period Length
Consistent with the HRC recommendation, the draft Ordinance (Attachment A) proposes a two- year lookback period from the date of application for “directly related convictions” (which includes convictions of both misdemeanors and felonies). This two-year lookback period strikes a balance by allowing criminal history to be considered and providing landlords the opportunity to determine and explain in writing how a “directly related conviction” pertains to a specific renter’s application for housing or renewal while also addressing concerns regarding the accuracy of commercially available criminal history databases, such as through creation of a process by which renters can present mitigating information if needed or applicable to address any information in a criminal history check. While staff supports the HRC recommendation, it 45 Federal Register, Reducing Barriers to HUD-Assisted Housing A Proposed Rule by the Housing and Urban Development Department, April 10, 2024, Accessed March 11, 2025:
https://www.federalregister.gov/documents/2024/04/10/2024-06218/reducing-barriers-to-hud-assisted-housing. may be that after review of this report (including research cited on recidivism rates over time), Attachment B regarding lookback periods, public input, and discussion, the City Council might arrive at a different lookback period length, such as three years. Council should adopt a lookback period that does not burden landlords’ rights significantly more than is necessary to accomplish its goals.
Property Applicability and Exemptions
City Council might choose to adjust the following applicability exemptions in the draft Ordinance (Attachment A):
▪For renters looking for a roommate;
▪For properties with three (3) or fewer units (including dwellings with accessory dwelling units) only when one or more units is occupied by the owner or property manager.
Implementation
The draft Ordinance (Attachment A) includes an implementation requirement for the City Manager to publish a notice of the Fair Chance Housing requirements and procedures, which landlords would need to make available to renters, such as in application and/or leasing materials. City Council might choose to modify or add more implementation requirements.
Remedies
Consistent with existing rental policies in the Palo Alto Municipal Code (PAMC), the draft Ordinance (Attachment A) would be enforceable through a private right of action, meaning that a person aggrieved by a violation of the Ordinance may sue the alleged violator in civil court.
Currently there are insufficient resources for staff to take on enforcement, but City Council might still suggest the addition of other remedy or enforcement provisions.
ALTERNATIVES
There are actions that City Council could take alternative to those recommended by staff. These alternatives include:
1. City Council could continue the discussion to a future City Council meeting with specific direction; or
2. City Council could vote to not adopt a Fair Chance Housing Ordinance.
TIMELINE
One of City Council’s stated 2024 objectives was to discuss a possible Fair Chance Housing Ordinance. Following staff analysis and engagement with the HRC, the matter is agendized for policy discussion and possible action. If the ordinance is adopted on first reading on April 14, 2025, a second reading could be scheduled for May 2025 with the ordinance becoming effective 30 days after the second reading.
If policy feedback is received that requires additional staff analysis, staff anticipates conducting this analysis mid-2025.
FISCAL/RESOURCE IMPACT
The policy recommendation in this report does not have a significant fiscal or budgetary impact.
If the City Council takes an alternative action other than the recommended action, staff would need to evaluate the potential fiscal and resources impacts.
POLICY IMPLICATIONS
The City of Palo Alto is making significant efforts to address homelessness and promote fair access to housing. Pursuing renter protection policy work is consistent with the goals in the City’s 2030 Comprehensive Plan to provide adequate housing for all. Fair Chance Housing policy and other rental policy topics are considered a means to affirmatively further fair housing within Palo Alto, as well as a means by which to promote certainty, stability, and fairness in the rental market. Fair Chance Housing policy work is consistent with Program 6.6: Fair Housing in the Council adopted 2023-2031 Housing Element.46
As part of the implementation of Housing Element Program 3.2: Monitor Constraints to Housing, the City is required to prepare an analysis in staff reports for initiatives proposing new regulations. This analysis should detail how the regulations may impact housing production, if at all, and recommend solutions to address any adverse impacts.
A Fair Chance Housing Ordinance does not contain any land use regulatory constraints that would influence the cost of construction, reduce housing opportunity sites, or introduce any new development standards or other parameters that could negatively influence the production of housing in the City. Instead, a Fair Chance Housing Ordinance would be applicable to the operational side of rental housing in order to reduce the potential for housing discrimination.
The establishment of rental housing policies may lead to concerns from some apartment home builders regarding regulatory complexity and management flexibility. However, rental housing operational policies and renter protections are commonly discussed or adopted in other jurisdictions within the region. The adoption of similar policies in Palo Alto would align with 46 Program 6.6 Fair Housing outlines Palo Alto’s commitment to providing equitable opportunities to all residents in Palo Alto in order to expand access to housing and increase housing mobility. Program 6.6 commits the City to take actions to overcome patterns of segregation, address disparities in housing needs and access to opportunity, facilitate environmental health place based revitalization of neighborhoods, and foster inclusive communities. The action items in Program 6.6 assist the City in reducing barriers to housing, including but not limited to racial inequities, high housing costs, and public awareness of existing resources. Program 6.6 directs pursuit of affirmatively furthering fair housing in Palo Alto and pursuit of renter protections to prevent anti-displacement, including a proposed Fair Chance Housing Ordinance. City of Palo Alto 2023-2031 Housing Element, Accessed March 18, 2025: https://paloaltohousingelement.com/wp-content/uploads/2024/08/Palo-Alto-Housing- Element.pdf.
regional practices and may not materially impact how developers assess the city's competitiveness in the housing market.
STAKEHOLDER ENGAGEMENT
While preparing this report, staff sent email notifications to identified stakeholders informing them of Council’s scheduled April 14, 2025 Fair Chance Housing policy discussion and encouraged participation. Staff placed an ad in the Daily Post newspaper on April 4, 2025, 10 days in advance of the hearing.
Public comments were received at the October 10, 2024 HRC meeting. Staff also conducted interviews with Project Sentinel, PAForward, SV@HOME, and the California Apartment Association (CAA). Thus far, feedback from stakeholders and community members has focused on the themes and points listed in Attachment D. Staff anticipates significant public comment at the April 14, 2025 City Council meeting and agendized this meeting to solicit additional feedback and points of view.
ENVIRONMENTAL REVIEW
Policy discussion and adoption of a Fair Chance Housing Ordinance is exempt from CEQA pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that adopting an ordinance limiting landlords’ consideration of criminal history will have a significant effect on the environment.
ATTACHMENTS
Attachment A: Draft Fair Chance Housing Ordinance
Attachment B: Comparison of Example Criminal History Lookback Periods Attachment C: Analysis of Potential Fair Chance Policy Consequences Attachment D: Initial Fair Chance Housing Policy Stakeholder and Community Member Feedback Themes
APPROVED BY:
Jonathan Lait, Planning and Development Services Director