Community House, Inc. v. City of Boise, Case No. CIV 05-283-S-BLW.
| Decision Date | 29 July 2009 |
| Docket Number | Case No. CIV 05-283-S-BLW. |
| Citation | 654 F.Supp.2d 1154 |
| Parties | COMMUNITY HOUSE, INC., et al., Plaintiffs, v. CITY OF BOISE, et al., Defendants. |
| Court | U.S. District Court — District of Idaho |
Thomas A. Banducci, Banducci Woodard Schwartzman, PLLC, Howard A. Belodoff, Boise, ID, for Plaintiffs.
Phillip J. Collaer, Robert A. Anderson, Anderson Julian & Hull, Scott B. Muir, Boise City Attorney's Office Franklin George Lee, Martin C. Hendrickson, Givens Pursley & Huntley, Boise, ID, for Defendants.
This matter comes before the Court on Defendants' Motion for Summary Judgment. For the reasons discussed below, the Court will grant the Motion in part and deny it in part. The Court will also deny the parties' Motions to Strike.
This dispute centers around a homeless shelter called Community House. Plaintiff Community House, Inc. ("CHI") is a non-profit corporation that provides housing services to homeless and low income persons.
On February 8, 1994, CHI and the City of Boise (the "City") entered into a Memorandum of Understanding ("MOU").1 The MOU stated that it was "the intent of the City and [CHI] to enter into a cooperative public/private partnership with the primary objective being to provide housing and comprehensive services for the homeless in our community."2 The MOU goes on to state that "[l]ike any good partnership, this one must be based on trust, common interest and philosophy, good communication, and a fair and clearly defined method of dissolving the partnership."3 The MOU stated that the City supported CHI and would "endeavor to provide funds necessary to make the project successful."4
The MOU set out the goals of the project, which included entering into a partnership to construct a homeless shelter which CHI would lease for a term of fifty (50) years at a cost of one dollar ($1.00) per year.5 Once constructed, CHI was to operate a homeless shelter and resource center at the building and provide emergency, temporary, and transitional housing for homeless families and individuals.6
In addition to the MOU, CHI and the City entered into two other agreements: the Lease Agreement and the Operating Agreement. CHI and the City entered into the Lease Agreement on November 2, 1994.7 The Lease Agreement provided for a term of fifty (50) years, ending on October 1, 2044.8 Under the Lease Agreement, CHI agreed to pay the City one dollar ($1.00) per year.9
The Lease Agreement contained the following provision:
In the event [CHI's] right to Operate the Building is terminated (see "The Operating Agreement" attached as Exhibit B to this Lease Agreement), [CHI] shall assign the lease to a Successor Operation; provided, however, [CHI] shall be under no obligation to assign the lease unless the Federal Home Loan Bank of Seattle (the Bank) consents to the assignment and releases [CHI] from all liability under the construction loan obtained from the Bank by [CHI]; provided further that before [CHI] assigns its rights under the lease to a Successor Operator, [CHI] shall first offer to assign the lease to the City on the condition that the City first repay the construction loan obtained from the Bank or obtain a release of [CHI's] liability under such loan.
In the event [CHI's] right to Operate the Building is terminated, and in the event the Bank has not consented to the assignment of the lease and has not released [CHI] from all liability stemming from the loan to [CHI] from the Bank, [CHI] shall have the exclusive right to continue to manage and operate the building. Nothing in this paragraph shall be construed as a limitation on the City's right to purchase [CHI's] lease upon termination of the Operating Agreement by repaying the construction loan obtained from the Bank or obtaining a release of [CHI's] liability under such loan.10
CHI entered into the Operating Agreement on November 30, 1994.11 The Operating Agreement provided for an initial term of sixty (60) months and could be renewed for an additional sixty (60) months with the consent of both parties. The Operating Agreement was renewed once, but was not renewed again.
In January 2004, CHI notified the city that it was facing financial difficulties and requested assistance from the City.12 Deanna Watson, the Community House Board President, met with City Council members Vern Bisterfeldt and Peggy Sedivey, as well as Boise Mayor David Bieter to discuss the issues facing Community House. Ms. Watson was directed to contact Jan Blickenstaff, the Manager of the Boise City Department of Housing and Community Development.
On February 2, 2004, Ms. Watson wrote to Mr. Blickenstaff informing him of the situation and asked for assistance.13 Mr. Blickenstaff responded, requesting various information from CHI.14
The City eventually took over day-to-day operations of Community House. From March 2, 2004, through September 6, 2005, the City operated Community House.15 The City drafted a Management Agreement for Community House.
Under the Management Agreement, CHI agreed to transfer all of Community House's assets to the city.16 CHI agreed to relinquish oversight of Community House.17 Further, CHI agreed to terminate the Lease Agreement and Operating Agreement previously entered into between CHI and the City.18 In return, the City agreed to take over operations at Community House.19
There are disputed facts as to whether or not the CHI Board approved the Management Agreement.20 The Management Agreement was signed in June by Mayor Bieter and Ms. Watson. Plaintiffs claim that Ms. Watson did not have the authority to enter into the Management Agreement.
On February 7, 2005, the City issued a Request for Interest/Request for Proposals (RFI/RFP) which invited service providers to offer proposals to assume ownership and/or management of the various programs which existed at Community House.21 The RFI/RFP process was divided into two phases. First, interested parties were invited to provide the City with creative approaches to providing any or all of the services at Community House. Second, based on the responses received, the Selection Committee would invite a shortlist of respondents to submit proposals under the Request for Proposals phase.
The City received proposals from a number of providers, including: the Boise Rescue Mission ("BRM"), the Salvation Army, Boise City/Ada County Housing Authority, Neighborhood Housing Services, Giraffe Laugh Daycare, Supportive Housing and Innovative Partnerships, Inc. ("SHIP"), and El-Ada, Inc. CHI has presented evidence that it too submitted a proposal,22 but that proposal was not considered by the City. The RFP Review Committee reviewed the responses and requested formal proposals from all respondents except SHIP. The City also did not seek a proposal from CHI as it did not consider its February 25, 2005 proposal.
The BRM and Giraffe Laugh submitted formal proposals. CHI has presented evidence that it also submitted a formal proposal.23 The City states that this proposal was submitted past the deadline and did not conform with the RFI/RFP requirements.24
Around this same time, the City decided that it would sell Community House at a public auction to be held on July 15, 2005.25 The minimum bid amount was set at $2.5 million. Potential buyers would be required to accept the property with a deed restriction which would require the property to be used to operate a homeless shelter for a period of 10 years.26 That deed restriction was later amended by Boise City Ordinance No. 6404 to require property to be used as "a shelter for a minimum of 66, single, homeless, men" for a period of 10 years.27
The BRM advised the City that it would not participate in the auction.28 The City claims that it did not receive any responsive bids at the auction. CHI claims that it bid on Community House at the auction and that its bid was accepted by the City. The City claims that CHI's bid was nonconforming to the bid requirements and was rejected by the City Council.
After the auction, the City and the BRM negotiated a lease. On September 2, 2005, the BRM entered into a Lease Agreement with the City for the Community House facility.29 The Lease Agreement would commence on September 9, 2005, and would terminate on June 30, 2006, but could be extended for up to nine more years.30 The Lease provided for an initial rent of $1.00 per year.31 The Lease required that the BRM operate an emergency homeless shelter with a capacity to serve not fewer than sixty-six (66) guests and a soup kitchen.32 While the Lease itself did not limit the shelter to men, as City Ordinance No. 6404 did, "City Resolution No. 18765, approving the lease of Community House to the BRM, specifically incorporates the restrictions of City Ordinance No. 6404."33 The Lease also contained an option that would allow the BRM to purchase the facility, subject to the deed restriction set forth above.34
The City had stopped leasing transitional housing units at Community House in May of 2005. In June, the City informed the residents of Community House that Community House would be closing. The City ceased operations and the Community House facility was closed on September 6, 2005. On or about September 14, 2005, the BRM took possession of the vacant Community House property and renamed it the "River of Life Rescue Mission." Approximately 30 days later, the BRM reopened the facility.
The Boise City Council authorized the repayment of $716,591.00 in HOME funds and $637,750.00 in CDBG funds to HUD.35 These funds were wired to HUD on September 6, 2005.36 On September 14, 2005, Bruce Chatterton, Director of Planning and Development Services for the City, wrote to HUD concerning the repayment of CDBG and HOME funds.37 On November 20, 2006, the City repaid the...
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