Latinos Unidos De Chelsea En Accion (Lucha) v. Secretary of Housing and Urban Development, No. 85-1573

• Court: U.S. Court of Appeals — First Circuit
• Writing for the Court: Before COFFIN and TORRUELLA; COFFIN
• Citation: 799 F.2d 774
• Parties: 41 Fair Empl.Prac.Cas. 838, 41 Empl. Prac. Dec. P 36,628, 55 USLW 2111 LATINOS UNIDOS DE CHELSEA EN ACCION (LUCHA), et al., Plaintiffs, Appellants, v. SECRETARY OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants, Appellees.
• Decision Date: 12 August 1986
• Docket Number: No. 85-1573

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799 F.2d 774 41 Fair Empl.Prac.Cas. 838,
41 Empl. Prac. Dec. P 36,628, 55 USLW 2111 LATINOS UNIDOS DE CHELSEA EN ACCION (LUCHA), et al.,
Plaintiffs, Appellants,
v.
SECRETARY OF HOUSING AND URBAN DEVELOPMENT, et al.,
Defendants, Appellees. No. 85-1573. United States Court of Appeals,
First Circuit. Argued May 7, 1986.
Decided Aug. 12, 1986.

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Alan Jay Rom, Lawyers Committee for Civil Rights Under Laws of the Boston Bar Ass'n, with whom Stuart T. Rossman, Sheara F. Friend and Gaston Snow & Ely Bartlett were on brief for plaintiffs, appellants.

Marshall D. Stein, Sp. Counsel to the City of Chelsea, with whom Cherwin & Glickman was on brief for City of Chelsea and Mayor of Chelsea, Mass.

Howard S. Scher, Civ. Div., Dept. of Justice, with whom William F. Weld, U.S. Atty., Richard K. Willard, Asst. Atty. Gen., Michael Jay Singer, Civ. Div., Dept. of Justice, Gershon M. Ratner, Associate Gen. Counsel for Litigation, Howard M. Schmeltzer, Sp. Asst. to the Associate Gen. Counsel for Litigation, and Anthony J. Ciccone, Jr., Trial Atty., HUD Office of Litigation, were on brief for federal defendants, appellees.

Before COFFIN and TORRUELLA, Circuit Judges, and MALETZ, ^* Senior Judge.

COFFIN, Circuit Judge.

Plaintiffs brought this civil rights action alleging that the city of Chelsea, Massachusetts, and three officials of the United States Department of Housing and Urban Development (HUD), ¹ deprived Chelsea's minority population of equal opportunities in employment, housing and government contracts made available through several federally funded programs. The plaintiffs, Latinos Unidos De Chelsea En Accion (LUCHA) and four individual members of LUCHA, appeal three orders of the district court, which denied class certification, granted the federal defendants' motion to

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dismiss, granted summary judgment for the city defendants on all but one claim and, after trial, held that the city did not discriminate in its Housing Improvement Program. We have carefully reviewed the record and the legal precedents and have found no reversible error.

In an effort to simplify the many issues in this case, we begin with a description of the relevant funding programs. We then present factual background about the city of Chelsea, the nature of the community development activities for which it used federal funds, and the annual reviews of the city's projects. Finally, we discuss why we find no violations of antidiscrimination laws in the challenged areas of employment, housing and contracts.

I.

Chelsea received the federal grants at issue in this case between 1975 and 1980 under the Community Development Block Grant (CDBG) Entitlement Program, 42 U.S.C. Secs. 5301-5317; the Small Cities Program (SCP), 42 U.S.C. Sec. 5306(d), which is a subprogram of the CDBG; and the Urban Development Action Grant (UDAG) program, 42 U.S.C. Sec. 5318. All three programs are part of Title I of the Housing and Community Development Act (HCDA) of 1974, whose primary objective "is the development of viable urban communities, by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income." 42 U.S.C. Sec. 5301(c). ² See also 42 U.S.C. Sec. 5304(b)(3) (current law) (maximum feasible priority should be given "to activities which will benefit low- and moderate-income families or aid in the prevention or elimination of slums or blight").

Both the CDBG and UDAG programs have nondiscrimination requirements. Recipients in both programs, under a specific provision of the HCDA, are prohibited from discriminating on the basis of race, color, national origin or sex. 42 U.S.C. Sec. 5309. CDBG grantees also are required to certify "that the program will be conducted and administered in conformity" with Title VI of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000d et seq., and Title VIII of the Civil Rights Act of 1968, 42 U.S.C. Secs. 3601-3631. 42 U.S.C. Sec. 5304(a)(5). Title VI prohibits recipients of federal funds from discriminating on the basis of race, color or national origin in the use of those funds; Title VIII prohibits discrimination in the sale or rental of housing. The Secretary is charged with making an annual review of the CDBG recipient's programs to determine compliance with applicable laws, and may impose conditions on a present year's grants as a result of the review of a prior year's program. 24 C.F.R. Sec. 570.910(b) (April 1979).

Under the UDAG program, nondiscrimination provisions are built into the eligibility requirements. Cities may receive UDAG grants only if they have "demonstrated results in providing housing for low- and moderate-income persons and in providing equal opportunity in housing and employment for low- and moderate-income persons and members of minority groups." 42 U.S.C.A. Sec. 5318(b)(1) (West 1986). And in selecting one UDAG application over another, HUD must consider the "impact of the proposed urban development action program on the special problems of low- and moderate-income persons and minorities." 42 U.S.C. Sec. 5318(e)(3).

Aside from these nondiscrimination limitations, CDBG and UDAG recipients have wide latitude in choosing specific programs that meet the statute's objectives. See 42 U.S.C. Sec. 5305. Acceptable community development programs include the acquisition and rehabilitation of blighted or deteriorated property; construction of neighborhood facilities such as senior centers, utilities, streets, parks and fire protection

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services; code enforcement in deteriorated areas; and provision of public services concerned with child care, health and drug abuse. 42 U.S.C. Sec. 5305(a)(1)-(12).

II.

Chelsea is a densely populated city of 1.8 square miles. According to the 1960 census, Chelsea's population was 33,749, including about 1% minorities. The 1970 census showed that the city's population had dropped to 30,625, of which 1.6% were black and 3.5% were Hispanic. In the mid-1970s, Chelsea's population changed dramatically. By the time the city conducted a survey in February 1978, the Hispanic population had risen to 19.5% of the total, with other minorities representing an additional 2.6%. The survey showed that about half of the Hispanics had arrived in the preceding three years, and that less than one-fourth had lived in Chelsea for five years or more. Despite the rapid growth in the number of Hispanics, the overall population in Chelsea continued to decline, falling to approximately 25,000 in 1979. In a 1978 letter to HUD, Chelsea's mayor attributed the outmigration to "fires, general deterioration and abandonment, high taxes and few amenities and fewer services from a poor city to a dependent population". [App. at 469.]

The 1978 survey also revealed the following characteristics of Chelsea:

--85.6% of Hispanic households in the city were designated by HUD standards as low- or moderate-income, while 78.5% of the nonminority households also qualified for HUD assistance;

--rental households comprised 73.3% of all households in Chelsea (only 1% of black residents and 5.1% of Hispanic residents were homeowners);

--Chelsea is a city of multi-unit housing structures; 725 buildings contained a single unit; 1529 contained two units; 948 contained three units; and 455 contained four or more units; [App. at 248.]

--overcrowding was a problem for 17.8% of households surveyed, and a problem particularly for Hispanics;

--a significantly higher percentage of blacks and Hispanics (compared with non-minorities) reported housing problems such as sewage backup, leaky roof, cracked/broke interior walls or ceilings, peeling paint; rodents and insects;

--the elderly population, which is 98.6% non-minority, comprised about 20% of the total population.

Thus, when Chelsea began applying for federal community development funds in 1975, it was largely a city of renters, losing residents overall but with a growing Hispanic population that apparently was experiencing the city's housing problems more acutely than other residents. Many housing structures needed varying degrees of physical rehabilitation, although a large percentage of the population apparently was unable to make the personal investment in the needed improvements. In addition, a 1976 survey showed a 1% vacancy rate; thus, the city presumably needed additional housing, with the greatest need in all likelihood among low-income families.

III.

Over the course of the six years under consideration in this case, Chelsea received approximately $20 million in federal funds for community development projects. We discuss below the nature of some of these projects, and the reaction toward them from agencies reviewing the city's compliance with nondiscrimination requirements.

A. Community Development Block Grant Programs, 1975-1980. Chelsea participated in the CDBG program for five years, conducting a variety of programs aimed at different aspects of community development, including fire prevention, housing code enforcement, playground development, street lighting, and road construction. Several of these programs were begun in the areas with the largest minority populations. ³ In addition, in the early

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years of the CDBG program, funds also were allocated to a bilingual day care center, a housing legal services program for low income families, minorities and the elderly, and health services directed toward lower income minority persons.

1. The first two years (1975-1976; 1976-1977)

A major project begun in the first year was the Mayor's Housing Improvement Program (HIP), which provided grants of 20 percent of the cost of repairs undertaken in owner-occupied homes. This program was expanded the second year to include repairs done by absentee landlords "because it was felt that many of the persons the program should be affecting live in units owned by absentee landlords." Most of the people benefiting from this particular program...