Baker v. Cincinnati Metropolitan Housing Authority

• Decision Date: 20 April 1982
• Docket Number: No. 80-3441,80-3441
• Citation: 675 F.2d 836
• Parties: Donna BAKER, Jean Nelson, Kathleen Pickens, Victoria Banks, individually/on behalf of persons similarly situated, Plaintiffs-Appellants, v. CINCINNATI METROPOLITAN HOUSING AUTHORITY, and Henry R. Stefanik, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 836

675 F.2d 836

Donna BAKER, Jean Nelson, Kathleen Pickens, Victoria Banks individually/on behalf of persons similarly situated, Plaintiffs-Appellants, v. CINCINNATI METROPOLITAN HOUSING AUTHORITY, and Henry R Stefanik, Defendants-Appellees.

No. 80-3441.

United States Court of Appeals Sixth Circuit.

Argued Oct. 23, 1981.

Decided April 20, 1982.

John E. Schrider, Legal Aid Society of Cincinnati, Cincinnati, Ohio, for plaintiffs-appellants.

Booth Shepard, Richard S. Rust, IV, Cincinnati, Ohio, for defendants-appellees.

Before LIVELY and MARTIN, Circuit Judges, and PECK, Senior Circuit Judge.

BOYCE F. MARTIN, Jr., Circuit Judge.

This appeal involves the government program established by Section 8 of the United States Housing Act of 1937, as amended by the Housing and Community Development Act of 1974, 42 U.S.C. § 1437f et seq. The Section 8 program provides housing assistance to low income families. More specifically, it is a rent subsidy plan under which owners of existing private housing receive payments on behalf of low income tenants. The funds, although released by the Department of Housing and Urban Development (HUD), are disbursed by local public housing authorities. Defendants-appellees are the Cincinnati Metropolitan Housing Authority (CMHA) and its executive director. Appellants are a class of former and present residents of the housing authority who claim that they have been wrongfully excluded from participation in the Section 8 program. In order to understand the issues raised, a brief discussion of the Section 8 program is necessary.

Local public housing authorities enter the program by executing an annual contributions contract with HUD. This contract authorizes the local agencies to enter into leases with participating owners. As part of its application to HUD, the local agency must file an administrative plan which specifies the criteria by which it will determine family eligibility and assistance priority. 24 C.F.R. § 882.204(b)(3)(i) (1981). The only requirements mandated by HUD pertain to family status and income limitations. 24 C.F.R. § 812.1 et seq. and § 889.101 et seq. (1981). Otherwise local agencies are free to adopt additional criteria, subject only to the provision that they be reasonably related to the program's objectives and be approved by HUD as part of the agency's administrative plan. 24 C.F.R. § 882.209(a)(3) (1981). Persons seeking assistance must apply to a local authority for a Certificate of Family Participation. Once certified, families may be placed on a waiting list until the agency can find a unit for them; alternatively, families may locate an apartment on their own and begin to receive benefits once a lease is approved and signed.

The two Cincinnati Metropolitan Housing Authority policies at issue are: (a) the ranking of current residents of CMHA publicly owned and operated housing behind all other applicants for Section 8 private housing benefits, and (b) the refusal to process the Section 8 applications of former CMHA residents who left the authority in arrears and have not yet satisfied their debt.

As part of its application for an annual contributions contract, CMHA submitted to HUD an administrative plan which contained the following order of preference for persons already holding Certificates of Family Participation:

Order of Preference

1. Displaced families of disabled veterans or servicemen;

2. Displaced families of deceased veterans or servicemen;

3. Displaced families of families of veterans or servicemen;

4. Displaced families;

5. Families of Disabled Veterans or servicemen;

6. Families of Deceased Veterans or Servicemen;

7. Families of Veterans or servicemen;

8. Present residents of CMHA developments;

9. All other families not included in groups 1 through 7 above.

The plan also established certain constraints to govern the issuance of Section 8 Certificates. An addendum to the plan provided:

13. Lowest priority shall be given to persons now residing in any owned and/or operated developments of Cincinnati Metropolitan Housing Authority.

14. No other preference or priorities will be used.

Although the preceding "Order of Preference" appears to give rather high priority to present residents, the constraints section effectively abrogates any favorable treatment that ranking might otherwise afford them. This is the result of a HUD regulation which states that local housing authorities are not to issue more Certificates of Family Participation than they can honor. 24 C.F.R. § 882.209(a)(5) (1981). Because demand for housing assistance from non-resident applicants alone invariably exceeds CMHA's Section 8 resources, present residents, who, according to the constraints policy, stand last in line for certificates, are never reached. Thus, present residents are effectively locked out of the Section 8 program.

The arrearage policy, which excludes from the Section 8 program all former CMHA residents who left owing rent to the authority, is not written into the CMHA administrative plan approved by HUD. Instead the practice evolved within the authority itself. The policy, however, is one which HUD recommends in a handbook distributed to local authorities. In addition, it was in this instance approved by HUD in a letter to CMHA. Furthermore, the policy operates according to specific guidelines. Those excluded are given notice of the debt and an opportunity to contest it at an informal hearing.

Appellants, past and current residents of CMHA housing excluded from the Section 8 program by these two policies, filed a class action suit against the authority under 42 U.S.C. § 1981 seeking declaratory and injunctive relief as well as attorney's fees. They complained that the aforementioned practices violated the Housing and Community Development Act, supra, federal regulations, and the equal protection and due process clauses of the Fourteenth Amendment to the Constitution. The District Court disagreed and granted defendant's motion for summary judgment. It also denied plaintiff's similar motion with limited exceptions pertaining to the structure of the arrearage policy's notice and hearing procedures. 490 F.Supp. 520.

The current residents offer three arguments in support of their contention that CMHA's policy of excluding them from the Section 8 program is unlawful. First, they claim that the policy violates CMHA's own administrative plan and the federal regulations governing the content of such plans. Second, they contend that the policy acts as a conclusive presumption and so denies them their constitutional right to due process of law. Finally, they argue, the policy establishes a discriminatory classification scheme in contravention of the Fourteenth Amendment's equal protection clause. We will address these arguments in order.

The claim that the policy violates the administrative plan focuses on the order of preference which gives current residents priority over all other families except the rather narrow group listed above them in numbers 1-8. However, plaintiffs ignore the fact that this scheme applies only to families already holding Section 8 certificates. Hence, the ranking which operates to deny current residents is not the order of preference but is instead the portion of CMHA's administrative plan which defines the constraints to be applied to the issuance of Section 8 certificates. That section relegates current residents to the lowest priority. Therefore CMHA is following its own administrative plan when it denies Section 8 benefits to current CMHA residents. Although there is some dispute as to whether the constraint ranking current residents last was properly appended to CMHA's original plan, we find adequate evidence in the record to support the lower court's determination that it was.

Moreover, we do not believe that this policy violates the federal statute or the regulations. Both provide for the exercise of local discretion in the process of determining family eligibility. As we noted earlier, HUD requires only two criteria: family status and low income. Under the regulations, local housing authorities may establish additional criteria subject only to the provision that the criteria be reasonably related to program objectives and receive HUD approval. 24 C.F.R. § 882.209(a)(3) (1981). Approval of the low priority given to current residents was tacit in HUD's acceptance of the Cincinnati plan. Furthermore, HUD's Regional Office specifically recommended this policy in a letter to CMHA.

Similarly, the United States Housing Act of 1937, 42 U.S.C. § 1437 et seq., of which the Section 8 program is a part, encourages local decision-making: "It is the policy of the United States ... to vest in local public housing agencies the maximum amount of responsibility in the administration of their housing programs." 42 U.S.C. § 1437. Therefore, we find no impediment to CMHA's exercise of this type of authority in either the federal statute or regulations. The rule excluding present residents was approved by HUD; a federal agency's interpretation of its own governing regulations is entitled to deference. Detroit Edison Co. v. U. S. Environmental Protection Agency, 496 F.2d 244, 248 (6th Cir. 1974).

With respect to the constitutional questions, we find no merit in either of appellants' arguments. They insist that ranking present residents beneath all other applicants creates a conclusive presumption which violates their right to due process under the Fourteenth Amendment. According to appellants, this rule presumes that present residents are better housed than nonresident applicants. This, they contend, is not always true. Instead, they argue that current residents of CMHA housing are often more poorly housed than nonresident Section 8 applicants. Appellants claim that the presumption inherent in the rule locks them out of the Section 8 program on the basis of a proposition which is not "necessarily or universally true" and...