Tenant Safeguards in Jeopardy: How Ohio’s HB 430 May Preempt Local Pay-to-Stay Ordinances

by Haley Dominique, Associate Member, University of Cincinnati Law Review Vol. 91

I. Introduction

The average amount that Americans pay towards rent rose about 4.8% from 2021 to 2022.¹ Many renters are burdened with the thought that they will not be able to afford next month’s rent.² Renters across the nation, especially those still affected by the lingering ramifications of COVID-19, are looking for solutions to this growing problem that shows no sign of slowing down.³

This article explores the issue of increased rental prices, how Ohio has tried to protect tenants facing hardships, and how a new Ohio House Bill could preempt these protections. Section II discusses how several Ohio municipalities attempt to bring relief to tenants struggling to pay rent through pay-to-stay ordinances. Section II also explains Ohio House Bill 430 (“HB 430”) and home rule authority. Section III discusses the ramifications of HB 430, the impact on pay-to-stay ordinances depending on how courts interpret the statutory language, and how a broad reading of the statutory language could cause issues in a home rule authority analysis. Finally, this article concludes with a prediction of how the court will interpret the statutory language and the damaging implications it may have on renters moving forward.

II. Background

Ohio is no exception to the problem facing individuals who need affordable rental options.⁴ The State must act with urgency at all levels of government to alleviate the burdens of unaffordable and unavailable rental housing.⁵ Municipalities in Ohio have taken strides to alleviate this burden by enacting pay-to-stay ordinances.⁶ Currently, there are only about a dozen municipalities in Ohio that have pay-to-stay laws.⁷ But there may soon be zero if pay-to-stay does not survive a home rule authority analysis against Ohio Revised Code Chapter 5321 as amended by HB 430.⁸ This Section explains what pay-to-stay ordinances do, how HB 430 changes Ohio landlord-tenant law, and introduces the concept of home rule authority, which delegates certain powers to local municipal governments instead of to a state.

A. Pay-to-Stay Ordinances

Because Ohio is favorable to landlords—it is one of the few states that allows landlords to evict tenants even if they are only one day late or one dollar short—municipalities started to pass pay-to-stay ordinances.⁹ Pay-to-stay ordinances act as an affirmative defense to an eviction by giving a tenant a reasonable chance to pay back their rent when either late or not paid in full.¹⁰ It is available if the tenant can produce the full rent and expenses when eviction proceedings begin.¹¹

Pay-to-stay ordinances benefit all parties. It benefits tenants because they get a second chance and are not evicted for being one day late on rent or one dollar short. It benefits landlords because they save money by avoiding eviction costs, while still being made whole by the tenant. It even benefits the courts because this process avoids eviction proceedings, thus freeing up more time for an already back-logged docket.¹² Pay-to-stay focuses on keeping people in their homes so they are not forced to enter the rental market and become displaced, and in some cases become homeless.¹³ This is an issue that the legislatures at the statehouse should care about and try to minimize.

B. HB 430 And Preempting Rent Control and Rent Stabilization

As of September 23, 2022, Ohio is one of the thirty-one states that prevent local authorities from enacting rent control ordinances.¹⁴ Chapter 5321 of the Ohio Revised Code governs landlord-tenant law.¹⁵ Specifically, Chapter 5321 covers retaliatory action by landlord, landlord and tenant obligations, evictions, terms and conditions of rental agreements, landlord and tenant remedies, release of rent, recovering damages, terms prohibited in a rental agreement, unconscionable terms, procedures, terminations of tenancies, written rental agreements for residential premises, and effects of the chapter on political subdivision ordinances.¹⁶ The now-enacted HB 430 amends Section 5321.19 of the Ohio Revised Code by proclaiming that no political subdivision, such as a local municipality like the city of Cincinnati or a township like Jerusalem township outside of Toledo,¹⁷ may pass or enact any law that “impos[es] or require[es] rent control or rent stabilization.”¹⁸ Preventing political subdivisions from imposing rent control and rent stabilization ordinances is a major part of the amendment to Chapter 5321 and can overshadow other language embedded in the amendment.¹⁹

Before HB 430 amended Chapter 5321, there were no Ohio laws that required rent control or rent stabilization except for housing units owned by political subdivisions that regulate low-income housing programs.²⁰ Because of this fact, at first glance, it seems HB 430 only affects future attempts to enact rent control and rent stabilization at the state or local level. However, as discussed below, this will affect not only those future attempts, but could also affect pay-to-stay ordinances depending on how the courts interpret the statutory language.

C. Home Rule Authority in the Ohio Constitution

Home rule authority is a power granted in the Ohio Constitution.²¹ The exact language states: “Municipalities shall have authority to exercise all powers of local self-government²² and to adopt and enforce within their limits such local police,²³ sanitary and other similar regulations, as are not in conflict with general laws.”²⁴ Because this power is granted to municipalities in the Constitution, laws passed by the General Assembly may be invalid²⁵ when applied to municipalities.²⁶

The Ohio Supreme Court has set forth a three-step framework to determine whether a city ordinance must yield to a state statute:

Courts first ask if the ordinance is an exercise of police power, rather than local self-government.²⁷ If it is an act of local self-government, the analysis ends in favor of local municipality. If it is a police power, the analysis moves to prong two.
Courts will then ask if the state statute is a general law consistent with the four-part framework set out in Canton v. State.²⁸ If it is a general law, the courts move to prong three. If it is not a general law, the analysis ends in favor of the local ordinance.
Courts will finally ask if the ordinance conflicts with the state statute.²⁹ If the answer is “yes,” the local ordinance is unconstitutional. If the answer is “no,” the local ordinance is constitutional.

When running a local ordinance and state law through the home rule authority framework, it is important to keep in mind that it is ultimately a matter of judicial discretion, and historically cases regarding home rule authority generally favor state law over local law.³⁰ This framework is one of general guidance to see how a judge may rule, rather than how a judge will rule.³¹

III. The Framework: How Court’s Interpretation of HB 430 May Impact Pay-to-Stay

The clearest change HB 430 makes to Chapter 5321 is the addition of the language that prevents political subdivisions from imposing rent control and rent stabilization ordinances. This does not seem like it would raise a home rule authority issue regarding pay-to-stay ordinances. However, because of the language placed strategically at the end of Section 5321.20, this could raise a home rule authority issue.³² The language “reiterates” the Legislature’s intention to “preempt political subdivisions from regulating the rights and obligations of” landlords and tenants who enter rental agreements.³³ And depending on how it is interpreted by courts—either broadly or narrowly—pay-to-stay ordinances could be made illegal.³⁴

A. Is a pay-to-stay ordinance an exercise of local self-government or local police power?

The Ohio State Supreme Court made it clear that proper exercises of local self-government power are few and far between.³⁵ Landlord-tenant law is not historically a power of local self-government under the home rule analysis.³⁶ Because the enactment of a pay-to-stay ordinance is likely not an exercise of local self-government, analysis must turn to whether this is a police power.³⁷ Police power is not explicitly defined, but it does include laws created for the general welfare of the people.³⁸ Pay-to-stay is a law that helps individuals stay in their homes and not be subject to eviction proceedings, which appears to provide for the welfare of the citizens.

B. Is the new law enacted by HB 430 a general law under the four-part test in Canton?

Because pay-to-stay is likely a proper exercise of a local government’s police power, the next step in the framework is to determine if the state statute is a general law under the four-part test in City of Canton v. State.³⁹ First, establish if the statute is part of statewide and comprehensive legislation.⁴⁰ Chapter 5321 is the landlord-tenant law for all of Ohio and is enacted statewide across all political subdivisions of Ohio.⁴¹ Second, determine if the parts of the legislation apply uniformly throughout the State.⁴² Chapter 5321 is uniformly applied across the State for all landlord-tenant discrepancies and does not change when applied to differing political subdivisions in the State.⁴³ Third, examine if the statute sets forth police, sanitary, or similar regulations.⁴⁴ Because police powers are so broad, and Chapter 5321 generally deals with landlord-tenant law and the general welfare of those involved, Chapter 5321 is presumed to be within the scope of police power.⁴⁵ Fourth and finally, determine if the statute prescribes a rule of conduct upon the citizens in a general way.⁴⁶ Chapter 5321 generally lays out the conduct required by landlords and tenants in the state of Ohio.⁴⁷ Chapter 5321 as amended by HB 430 seems to pass through this second part of the Canton framework.

C. Do local pay-to-stay ordinances conflict with Chapter 5321 of the Ohio Revised Code?

Since Chapter 5321 as amended by HB 430 likely passes the general law test, it must now be determined if Chapter 5321 conflicts with pay-to-stay ordinances.⁴⁸ This is the most important part of the analysis because the courts’ interpretation of the new language introduced by HB 430 will determine whether pay-to-stay could continue to operate, or whether pay-to-stay is preempted and potentially unconstitutional.⁴⁹

The amended language at the end of Section 5321.20 states in relevant part: “The general assembly reiterates, by enactment of Chapter 5321. of the Revised Code, that it is the intent of the general assembly to preempt political subdivisions from regulating the rights and obligations of parties to a rental agreement that are regulated by this chapter.”⁵⁰ If this is viewed in a broad sense—in a way that interprets the meaning of the language as complete preemption—this could mean that landlord-tenant laws can only come from the State.⁵¹ In this case, pay-to-stay ordinances would be in jeopardy. Pay-to-stay ordinances are enacted by local governments and clearly involve the rights of parties to a rental agreement by providing an affirmative defense for tenants in eviction proceedings against landlords. Under a narrow reading of Section 5321.20, landlord-tenant laws coming from any local authority that is not the state legislature are improper.⁵²

If the new language in Section 5321.20 is viewed narrowly—meaning there is no general preemption of locally enacted landlord-tenant law—then no conflict exists between Chapter 5321 and pay-to-stay ordinances.⁵³ This would mean pay-to-stay ordinances would continue to operate as a permissible exercise of local governments’ home rule authority. This, however, does not seem likely due to a couple factors: judicial deference to the state in a home rule authority analysis⁵⁴ and the inferred legislative intent from the body of individuals who voted yes for HB 430.⁵⁵ It seems highly likely that the language of Section 5321.20 may be construed in a broad sense, which is an absolute travesty for the already limited tenant protections in Ohio.

IV. Conclusion

Rent increases are a major problem not just in Ohio, but across the United States.⁵⁶ While pay-to-stay measures attempt to help combat this problem at the local level, new language introduced in HB 430 and enacted in Chapter 5321 may preempt pay-to-stay measures and take away this relief that soon-to-be-evicted Ohioans rely on.⁵⁷ Without pay-to-stay, there will be an increase in evictions, homelessness, adverse health effects, and countless other ramifications.⁵⁸ It is landlord-tenant law for a reason—not landlord law. The continued imbalanced favoritism of landlords in this State continues to disproportionately harm tenants in an inexcusable way.

Cover Photo by Blake Wheeler on Unsplash

Haley C. Dominique

Haley Dominique received her bachelor's degree in Business Administration (2020) and a Graduate Certificate in Public Administration (2021) from Ball State University. She is interested in legal issues pertaining to mental health, economic development, sports, and social media.

References

1
See Databases, Tables & Calculators by Subject, U.S. Bureau of Lab. Stats., https://data.bls.gov/timeseries/CUUR0000SEHA?output_view=pct_12mths (change output options to read from “2021” to “2022” from dropdowns; then choose “include annual averages”; then click “go”) (last visited Sept. 15, 2022).
2
See Jung Hyun Choi et al., The Real Rental Housing Crisis is on the Horizon, Urb. Institute (Mar. 11, 2022), https://www.urban.org/urban-wire/real-rental-housing-crisis-horizon [https://perma.cc/PK3H-U476].
3
Id.
4
See Ohio Housing Needs Assessment Executive Summary, Ohio Hous. Fin. Agency (2021), https://ohiohome.org/hna-20/executivesummary-hna.aspx [https://perma.cc/34LN-TCAJ]. In 2018, there were only 80 available affordable units for every 100 low-income households. The gap is larger when looking at extremely low-income households: only 44 available affordable units for every 100 households. Id.
5
See Choi et al., supra note 2. Landlords are finding different ways to vacate tenants, are raising rents at an alarming rate, and emergency funds for tenants are not distributing quick enough. Id.
6
“Pay to Stay” Offers New Protection for Tenants Coming Out of COVID-19, The Legal Aid Soc’y of Cleveland (Dec. 16, 2021), https://lasclev.org/11072021-5/ [https://perma.cc/R333-BZRT].
7
See Pay To Stay Technical Guide Statewide Edition, Coal. on Homelessness and Hous. in Ohio (2022), https://cohhio.org/ohio-pay-to-stay-guide/ [https://perma.cc/9CZY-AAAH].
8
See Ohio Rev. Code §§ 5321.01–.20 (2022).
9
Pay To Stay Technical Guide Statewide Edition, supra note 7, at 3.
10
Id. It is important to note that the judge still has discretion during an eviction proceeding, but this ordinance gives the court the authority to consider accepting the defense. Id.
11
Id.
12
Id.
13
“Pay to Stay” Offers New Protection for Tenants Coming Out of COVID-19, supra note 6.
14
See Ben Harrold, Rent Control is Prohibited in One More State, Nat’l Apartment Ass’n (Aug. 16, 2022), https://www.naahq.org/rent-control-prohibited-one-more-state [https://perma.cc/H4LC-XNM5].
15
See Ohio Rev. Code §§ 5321.01–.20 (2022).
16
Id.
17
See Ohio Rev. Code § 5321.01(Q) (2022) (“‘Political subdivision’ means a county, township, municipal corporation, or any other body corporate and politic that is responsible for government activities in a geographic area smaller than that of the state.”).
18
See Ohio Rev. Code § 5321.19(A) (2022).
19
See Ohio Rev. Code § 5321.20 (2022) (proclaiming that obtaining adequate housing supply is a matter of statewide concern and Chapter 5321 is a statewide and comprehensive legislation regulating all aspects of landlord-tenant relations).
20
ORC 5321 Ohio’s Landlord and Tenant Law – An Overview, City of Newark Fair Hous., http://www.newarkohio.net/city/OnlineDocs/dod/FH-OhioLandlord&TenantLaw-AnOverview.pdf [https://perma.cc/YD2Y-EEFW].
21
Ohio Const. art. XVIII, § 3.
22
Wendy H. Gridley & Amber Hardesty, Municipal Home Rule, 133 Legis. Serv. Comm’n Members Only Brief 2-3 (2020), https://www.lsc.ohio.gov/documents/reference/current/membersonlybriefs/133Municipal%20Home%20Rule.pdf [https://perma.cc/CM62-RU8V]. There is no specific definition of what the limits of local self-government are, but there are some examples of matters found to be: internal organization, control and use of public property, salaries and benefits of local employees, local election recall, regulating streets, regulating procedures for the sale of local property, and regulating city civil service. Id.
23
See, e.g., Miami County v. Dayton, 92 Ohio St. 215 (Ohio 1915). Police power is “the authority to make regulations for the public health, safety, and morals and the general welfare of society.” Gridley & Hardesty, supra note 22, at 4.
24
Ohio Const. art. XVIII, § 3.
25
As noted later in this discussion, the state law would only be invalid if the local law is one that is of local government concern, which is a limited subset of areas. See infra Section III.
26
See Gridley & Hardesty, supra note 22, at 1.
27
Mendenhall v. City of Akron, 117 Ohio St. 3d 33, 36-37 (Ohio 2008) (using the three-step analysis to conclude the city ordinance in this case must yield to the conflicting state statute).
28
See Canton, 95 Ohio St. 3d at 152; Mendenhall, 117 Ohio St. 3d at 36-37.
29
Mendenhall, 117 Ohio St. at 37.
30
See, e.g., City of Cleveland v. State, 157 Ohio St. 3d 330 (Ohio 2019) (ruling a local law requiring contractors of public improvement projects to employ a specific number of local residents unconstitutional); State ex rel. Morrison v. Beck Energy Corp., 143 Ohio St. 3d 271, 276 (Ohio 2015) (finding the municipality could not pass additional ordinances that affected a permit for oil and gas operations granted by the state).
31
See Gridley & Hardesty, supra note 22, at 1.
32
Ohio Rev. Code § 5321.20 (2022).
33
Id.
34
David Forster, Athens City Council Passes ‘Pay to Stay’ Ordinance to Protect Tenants, but Asks for Legal Review, WOUB Pub. Media (Sept. 7, 2022), https://woub.org/2022/09/07/athens-city-council-passes-pay-to-stay-ordinance-to-protect-tenants-but-asks-for-legal-review/ [https://perma.cc/M6WJ-NFJ6]. This article discusses two local attorneys and their views on the pay-to-stay ordinance compared to Chapter 5321 and how a narrow view keeps the pay-to-stay ordinances legal, but a broad view makes pay-to-stay illegal. Id.
35
Marich v. Bob Bennett Constr. Co., 116 Ohio St. 3d 553 (Ohio 2008). The power of local self-government is narrowly construed, including regulating the internal organization of city government, elections, salaries of local officials, etc. Id. There is no mention of landlord-tenant law or anything similar to analogize this as a power of local self-government.
36
Id.
37
Mendenhall v. City of Akron, 117 Ohio St. 3d 33, 36-37 (Ohio 2008).
38
City of Columbus v. Teater, 53 Ohio St. 2d 253, 257 n.2 (Ohio 1978).
39
City of Canton v. State, 95 Ohio St. 3d 149, 152-54 (Ohio 2002).
40
Id. at 154.
41
Ohio Rev. Code § 5321.20 (2022).
42
See Canton, 95 Ohio St. 3d at 154.
43
See Ohio Rev. Code §§ 5321.01–.20 (2022).
44
See Canton, 95 Ohio St. 3d at 154.
45
Ohio Rev. Code §§ 5321.01–.20 (2022); see also Pay to Stay Technical Guide Statewide Edition, supra note 7, at 16-18.
46
See Canton, 95 Ohio St. 3d at 154.
47
Ohio Rev. Code §§ 5321.01–.20 (2022).
48
Mendenhall v. City of Akron, 117 Ohio St. 3d 33, 36-37 (Ohio 2008).
49
Forster, supra note 34.
50
Ohio Rev. Code § 5321.20 (2022).
51
Forster, supra note 34.
52
Ohio Rev. Code §§ 5321.01–.20 (2022).
53
Ohio Rev. Code §§ 5321.01–.20 (2022). This chapter of the Ohio Revised Code does not state anything that would otherwise explicitly preempt pay-to-stay provisions. Because that is the case, the narrow reading would allow pay-to-stay ordinances to continue to operate.
54
See e.g., City of Cleveland v. State, 157 Ohio St. 3d 330 (Ohio 2019); State ex rel. Morrison v. Beck Energy Corp., 143 Ohio St. 3d 271, 276 (Ohio 2015).
55
House Bill 430 Votes, Ohio Legislature (June 1, 2022), https://www.legislature.ohio.gov/legislation/legislation-votes?id=GA134-HB-430 [https://perma.cc/FE7U-Y82W] (displaying fifty-nine ‘yeas’ votes from fifty-eight Republicans and one Democrat, and thirty-one ‘nays’ votes from all Democrats).
56
See Databases, Tables & Calculators by Subject, supra note 1.
57
Margie Glick, Tenant Protections like “Pay to Stay” Create Stability During Pandemic and Beyond, Cleveland (Mar. 28, 2021, 5:28 AM), https://www.cleveland.com/opinion/2021/03/tenant-protections-like-pay-to-stay-create-stability-during-pandemic-and-beyond-margie-glick.html [https://perma.cc/BZ97-GLZU].
58
Robert Collinson et al., Eviction and Poverty in American Cities (Working Paper, 2022), https://robcollinson.github.io/RobWebsite/Evictions_CHI_NYC.pdf [https://perma.cc/W4SQ-LX4K].