Oti Kaga v. South Dakota Housing Development Auth.
| Decision Date | 15 September 2003 |
| Docket Number | No. 02-1673.,02-1673. |
| Parties | Oti Kaga, Inc., Plaintiff-Appellant, v. South Dakota Housing Development Authority; William Earley; Darlys Baum; John Rothstein; Kevin Culhane; Lynn Hager; Thomas Schramm; Leland Kleinsasser, Defendants-Appellants. Cheyenne River Housing Authority; Cheyenne River Sioux Tribe, Amicus on behalf of Appellants |
| Court | U.S. Court of Appeals — Eighth Circuit |
Rita Allen, argued, Sioux Falls, SD (Mark Berry, on the brief), for appellant.
Rebecca L. Kidder, argued, Eagle Butt, SD, on behalf of amicus on behalf of appellants.
Mark F. Marshall, argued, and Michael L. Luce, argued, Sioux Falls, SD, for appellees.
Before HANSEN, Chief Judge,1 HEANEY and BYE, Circuit Judges.
Oti Kaga appeals the district court's2 grant of summary judgment dismissing its eleven-count complaint against the South Dakota Housing Development Authority (SDHDA) and its seven-member board. The complaint alleges SDHDA discriminated against Oti Kaga by rejecting its applications for tax credits under Internal Revenue Code (IRC) § 42, and for funding under the HOME Investment Partnership Act (HOME Program), 42 U.S.C. §§ 12741-12756. We affirm.
Oti Kaga is a non-profit corporation established by the Cheyenne River Sioux Tribal government pursuant to the United States Housing Act of 1937, 42 U.S.C. §§ 1437-1437x. Oti Kaga's purpose is to acquire, construct, and operate rental housing and related facilities on the Cheyenne River Sioux Indian Reservation.
SDHDA is an independent public instrumentality exercising essential public functions under S.D. Codified Laws § 11-11-10. SDHDA is responsible for, among other things, adopting and implementing a tax credit allocation plan pursuant to IRC § 42, as well as administering the state HOME Program in South Dakota. Appellees William Earley, John Rothstein, Kevin Culhane, Lynn Hager, Thomas Schramm and Leland Kleinsasser are members of SDHDA's Board of Commissioners, and appellee Darlys Baum is SDHDA's Executive Director. Baum and the board members were sued individually and in their official capacities.
Oti Kaga's claims arise out of SDHDA's administration of two federal housing programs. The first, the tax credit allocation program, is authorized by IRC § 42, and encourages investment in low-income housing projects. Under the tax credit allocation program, state housing agencies are responsible for allocating tax credits for the construction of low-income housing. IRC § 42(h)(3) limits the total number of housing credits a state may allocate annually, and IRC § 42(m) requires the credits to be allocated in accordance with a "qualified allocation plan." The annual plan must be prepared by the state's housing agency and approved by the governmental unit of which the agency is a part. IRC § 42(m)(1)(A)(i). SDHDA is the authorized housing agency for South Dakota. S.D. Codified Laws § 11-11-47.
The second program at issue is the HOME Program. The HOME Program provides federal housing funds directly to participating jurisdictions. The jurisdictions disburse those funds in the form of loans and grants "to provide incentives to develop and support affordable rental housing and home ownership affordability." 42 U.S.C. § 12742(a)(1). Prior to 1998, states, certain municipalities, and Indian tribes were participating jurisdictions in the HOME Program. 42 U.S.C. § 12747(a)(2). Accordingly, each Indian tribe in South Dakota could apply directly to the Department of Housing and Urban Development (HUD) for an Indian HOME Program allocation. Indian tribes could also apply to the state housing development authority for state HOME Program funds. According to HUD regulation 24 C.F.R. Part 92, "[a] State may fund projects on Indian reservations located within the State provided that the State includes Indian reservations in its consolidated plan." Because of the separate allocation existing prior to 1998, SDHDA adopted annual HOME Program Plans which included reservation demographics but precluded the use of state HOME Program funds for tribal projects.
In 1996, Congress enacted the Native American Housing and Self-Determination Act (NAHASDA), 25 U.S.C. §§ 4101-4243. In conjunction with NAHASDA, Congress terminated several programs which had provided Indian housing assistance, including the Indian HOME Program. Thereafter, Indian housing assistance was funded directly through Indian Housing Block Grants (IHBG), 25 U.S.C. § 4111, and disbursed to recipients on the basis of Indian Housing Plans (IHP) prepared by the tribes and submitted to HUD. 25 U.S.C. § 4112. Unlike HOME Program funding, which is based on a competitive process, IHBGs are entitlement funds which tribes use to meet locally identified needs. 25 U.S.C. § 4116(b)(1).
Notwithstanding consolidation of Indian-funding programs under NAHASDA, HUD regulations implementing the HOME Program continue to allow states the discretion to fund projects on Indian reservations provided the state includes the reservations in its annual HOME Program Plan. 24 C.F.R. § 92.201. Prior to passage of NAHASDA, SDHDA chose to include reservations in its annual plan but did not award state HOME Program funds to Indian reservations or other jurisdictions receiving separate allocations of funds.3 After NAHASDA became effective SDHDA continued this practice.
In March 1996, Oti Kaga, with the assistance of David Bland,4 submitted an application for tax credits to SDHDA in connection with a proposed housing development (Elk View I) located on the Cheyenne River Sioux Indian Reservation. Of the twenty-three applications for tax credits received by SDHDA in 1996, four came from Indian tribes. SDHDA considered the applications and ranked them from one to twenty-three according to its tax credit allocation plan, with one being the highest rated and twenty-three the lowest rated application. Oti Kaga's application was ranked six out of twenty-three but, as with other higher ranked applications, it did not receive an award of tax credits. Only one of the tax credit awards went to an Indian sponsor. In addition to ranking criteria set out in IRC § 42(m)(1)(C)(i-viii), SDHDA considered the extent to which the sponsor of the application was ready to proceed. One member of SDHDA testified this factor weighed heavily against Oti Kaga. Another board member stated the board decided it should award one tax credit to an Indian tribe, and a lower ranked Indian-sponsored application was selected. In October 1996, Oti Kaga was subsequently awarded the tax credits after a successful applicant declined its award. Oti Kaga contends it was discriminated against because the decision to initially deny tax credits was based on race.
Oti Kaga intended to build Elk View I using tax credits and Indian Home Program funding obtained in 1996. It intended to build the second phase of the Elk View project (Elk View II) using tax credits and Indian Home Program funding awarded in 1997. Oti Kaga contends it suffered "distinct and palpable" injuries in connection with those planned projects caused by the delay in awarding tax credits in 1996. Oti Kaga alleges it was told Indian Home Program funding would not be awarded in 1996 unless tax credits were also awarded. Because it was initially denied tax credits, Oti Kaga ignored the 1996 Indian HOME Program application deadline. As a result, Elk View I was delayed until 1997 and ran into cost overruns. Oti Kaga alleges it was further harmed because it was forced to use Indian Home Program funds obtained in 1997, which had been earmarked for Elk View II, to construct the delayed Elk View I project, thereby in turn delaying Elk View II. Oti Kaga also alleges a price quote it obtained for an environmental assessment for Elk View I increased significantly from 1996 to 1997.
Oti Kaga also claims discrimination resulting from SDHDA's decision not to award state HOME Program funds in 1997. As previously noted, Oti Kaga alleges it was forced to use 1997 Indian HOME Program funds to build Elk View I. As a result, it had to seek alternative funding for Elk View II. Thus, in 1997 Oti Kaga applied to SDHDA for state HOME funding to finance Elk View II. Its application for state HOME Program funding was denied. Among the reasons given for denying the application were SDHDA's belief that 1) housing projects on Indian reservations were provided for under NAHASDA, and 2) state HOME Program funds were no longer available for Indian projects. As with the denial of tax credits, Oti Kaga argues the decision to deny its application for state HOME Program funding was based on race. Oti Kaga contends it was harmed by the discriminatory refusal to award state HOME Program funds because the lack of funding delayed construction of Elk View II.
Oti Kaga brought suit against SDHDA and its board members claiming 1) disparate treatment under the Fair Housing Act of 1968(FHA), 42 U.S.C. §§ 3604 & 3605; 2) disparate impact under the Fair Housing Act of 1968, 42 U.S.C. §§ 3604 & 3605; 3) violation of the right to contract, 42 U.S.C. § 1981; 4) violation of the property rights of citizens, 42 U.S.C. § 1982; 5) disparate treatment/impact under the Civil Rights Act of 1866, 42 U.S.C. §§ 1981 and 1982; 6) negligent performance of statutory obligations; 7) discrimination in the allocation of HOME Program funds, 42 U.S.C. § 12832; 8) discrimination in Title VI programs (disparate treatment), 42 U.S.C. § 2000d; 9) improper allocation of tax credits, IRC § 42(m); 10) state Fair Housing Act violation, S.D. Codified Laws Ch. 20-13; and 11) deprivation of rights under color of law, 42 U.S.C. § 1983. Appellees moved for summary judgment on the basis of standing, political question doctrine, mootness, qualified immunity, the inability of a corporation to recover damages for personal injury, statute of limitations, the inability to prove...
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