Moorer v. Department of Housing and Urban Development, 76-1830
| Decision Date | 09 September 1977 |
| Docket Number | No. 76-1830,76-1830 |
| Citation | 561 F.2d 175 |
| Parties | Juanita MOORER, Marilyn Gilbert, Roy Isom and Barbara Isom, Capitola Cunningham, Jan Willsey, Norma Thomas, Hazel Haughenberry and Lamont Chandler, Individually and on behalf of all others similarly situated, Appellees, v. The DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Carla A. Hills, Secretary of the Department of Housing and Urban Development, William R. Southerland, Area Director, Department of Housing and Urban Development, American Development Corporation, Kenwood Apartments, a California Limited Partnership, James E. Thompson, Operations Officer, American Development Corporation, and Westport Co-operative Mission, Inc., Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Bruce G. Forrest, U. S. Dept. of Justice, Appellate Sec., Civ. Div., Washington, D. C., for appellants; Bert C. Hurn, U. S. Atty., Kansas City, Mo., Ronald R. Glancz, Atty., Civ. Div., Dept. of Justice, Washington, D. C.; Rex E. Lee, Asst. Atty. Gen., on briefs; and Barbara Allen Babcock, Asst. Atty. Gen., Washington, D. C., on appellants' reply brief.
J. D. Riffel, Legal Aid and Defender Society, Kansas City, Mo., for appellees; James Gramling, Kansas City, Mo., on the brief.
John Sherman Cooper, Theodore Voorhees, Jr., Sana F. Shtasel and Douglas E. Winter of Covington & Burling, Washington, D. C., and Florence W. Roisman, National Housing Law Project, Washington, D. C., amicus curiae on brief.
Before STEPHENSON and WEBSTER, Circuit Judges, and BENSON, District Judge. *
In this case, the Department of Housing and Urban Development, Carla A. Hills, the Secretary, and William R. Southerland, Area Director, have appealed from a decision of the district court and have stated the issue to be
whether the Uniform Relocation and Assistance and Real Property Acquisition Policies Act ("URA") 42 U.S.C. 4601, et seq., provides benefits for persons displaced by a private company which acquired property for rehabilitation with the aid of federal mortgage insurance and interest subsidies.
The district court ordered the case certified as a class action, dismissed it as against the non-federal defendants and held that plaintiffs-appellees were entitled to URA financial benefits. We reverse the holding that the class is entitled to URA financial benefits.
On a stipulation of facts, the plaintiffs-appellees moved the district court for summary judgment on the issue of liability, and the federal defendants, appellants herein, filed their cross-motion for summary judgment of dismissal. The following, in abbreviated form, are the facts as summarized by the trial court. 1
Project Rehab was initiated by the Department of Housing and Urban Development (HUD) in 1969 as an internally developed program utilizing existing mortgage insurance programs in order to encourage large scale rehabilitation of existing structures to provide adequate housing for low and moderate income residents of central cities. Project Rehab was to be funded through existing mortgage insurance and federal subsidy programs available for residential rehabilitation.
One of the existing mortgage insurance programs utilized by HUD in connection with Project Rehab was Section 236 of the National Housing Act, 12 U.S.C. § 1715z-1, which consists of mortgage insurance and periodic interest reduction payments to private mortgagors to reduce the private sponsor's mortgage interest cost to as low as one percent. The savings were to be passed on to tenants in the form of lower rents.
A city, to participate in Project Rehab, had to be officially designated by HUD as a Project Rehab city. Once a city was so designated, HUD would commit the necessary housing subsidy funds.
The city of Kansas City, Missouri, submitted a proposal to HUD requesting that Kansas City be designated a Project Rehab city. The proposal was based on private sponsorship of large scale inner-city housing rehabilitation. The city also agreed to provide assistance to persons displaced by the project and to coordinate such activities through its central relocation agency.
HUD approved the proposal and invited the city to participate as a Project Rehab city, conditioned on the city's agreement to establish a Project Rehab Steering Committee (PRSC) to coordinate Project Rehab activities in the city. A PRSC was appointed and was given the responsibility of screening applications of private sponsors submitted to HUD. An application would not receive Project Rehab funds unless first approved by the PRSC. The PRSC received no funds from HUD or any other federal agency.
Defendant American Development Corporation (ADC), a private agent for six California limited partnerships, received approval as a sponsor by the PRSC and HUD to rehabilitate and market six housing projects in Kansas City under Project Rehab, each to be operated by one of the limited partnerships. All six projects were to receive interest subsidy payments and FHA insured mortgage financing authorized by Section 236. 2 In addition, each limited partnership entered into an agreement with HUD for rental assistance to be provided for a certain percentage of the units involved.
After approval of its application and sponsorship, ADC negotiated the purchase of the property for the six projects and notified the residents that their tenancies would be terminated. All the buildings were located outside areas designated by HUD as Model Cities, Urban Renewal or Neighborhood Development areas of Kansas City. 3 The relocation of all individuals displaced was accomplished by means of a private relocation agency and not according to the procedures set forth in the URA.
URA benefits were not provided because HUD interpreted the URA to exclude from its terms moves resulting from private acquisition of property unless the displacee resided in areas designated for Model Cities, Urban Renewal or Neighborhood Development Programs. Pursuant to the agreement ADC had with HUD, it tendered to a private, non-profit relocation agency a maximum payment of $300 for actual moving expenses incurred by the displaced person. The relocation agency ultimately paid a maximum of $200 to qualified occupants and retained the remaining $100 per unit for administrative costs. None of the persons displaced received benefits, assistance or services provided by the URA.
The parties also stipulated that congressional appropriations have neither been sought nor received for Project Rehab activities, and no legislation has been enacted. The rehabilitation on all the projects was accomplished with private mortgage money on F.H.A. guaranteed loans from private institutions.
The real property from which the class was dispossessed had been acquired by a private party who received federal financial assistance under Section 236 of the National Housing Act, in the form of interest and rental subsidy payments and F.H.A. mortgage insurance. Plaintiffs-appellees claim they were entitled to URA benefits, arguing that they were forced to move as a result of an acquisition of property by Project Rehab, which they contend is a program or project of a federal agency. They further contend that the fact that the property was acquired by a private party who thereafter terminated their tenancies is irrelevant in determining eligibility under URA.
HUD resists plaintiffs' claim and contends that URA benefits are limited by statute to persons displaced as a result of an acquisition of real property by a federal agency, or by a state agency receiving federal financial assistance. It argues that in this case ADC, in participating in Project Rehab, is neither a federal agency nor a state agency receiving federal assistance.
The issue presented involves a matter of statutory construction. 42 U.S.C. § 4622(a) provides:
(a) Whenever the acquisition of real property for a program or project undertaken by a Federal agency in any State will result in the displacement of any person on or after January 2, 1971, the head of such agency shall make a payment to any displaced person, upon proper application as approved by such agency head, for
(1) actual reasonable expenses in moving himself, his family, business, farm operation, or other personal property;
(2) actual direct losses of tangible personal property as a result of moving or discontinuing a business or farm operation, but not to exceed an amount equal to the reasonable expenses that would have been required to relocate such property, as determined by the head of the agency; and
(3) actual reasonable expenses in searching for a replacement business or farm.
The benefits therefore accrue to any "displaced person." "Displaced person" is defined for the purposes of the URA in 42 U.S.C. § 4601(6) as follows:
(6) The term "displaced person" means any person who, on or after January 2, 1971, moves from real property, or moves his personal property from real property, as a result of the acquisition of such real property, in whole or in part, or as the result of the written order of the acquiring agency to vacate real property, for a program or project undertaken by a Federal agency, or with Federal financial assistance; and solely for the purposes of sections 4622(a) and (b) and 4625 of this title, as a result of the acquisition of or as the result of the written order of the acquiring agency to vacate other real property, on which such person conducts a business or farm operation, for such program or project.
The question for resolution, therefore, is whether persons displaced by private acquisitions of real property, which acquisitions are aided by federal financial assistance through mortgage insurance and interest rent subsidy payments, are "displaced persons" as that term is defined in 42 U.S.C. § 4601(6).
The URA, Public Law 91-646, 84 Stat. 1894, enacted January 2, 1971, has a policy declaration in 42 U.S.C. § 4621:
The purpose of this subchapter...
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