Owens v. Charleston Housing Authority, 1:01 CV 70 CDP.

• Court: U.S. District Court — Eastern District of Missouri
• Writing for the Court: Perry
• Citation: Owens v. Charleston Housing Authority, 336 F.Supp.2d 934 (E.D. Mo. 2004)
• Decision Date: 23 June 2004
• Docket Number: No. 1:01 CV 70 CDP.,1:01 CV 70 CDP.
• Parties: Timothy OWENS, Priscilla Johnson, Essie McCatrey, and Housing Comes First, Plaintiffs, v. CHARLESTON HOUSING AUTHORITY, Paul Page, Department of Housing and Urban Development, Mel Martinez, United States Department of Agriculture, and Ann M. Veneman, Defendants.

336 F.Supp.2d 934

Timothy OWENS, Priscilla Johnson, Essie McCatrey, and Housing Comes First, Plaintiffs, v. CHARLESTON HOUSING AUTHORITY, Paul Page, Department of Housing and Urban Development, Mel Martinez, United States Department of Agriculture, and Ann M. Veneman, Defendants.

No. 1:01 CV 70 CDP.

United States District Court, E.D. Missouri, Southeastern Division.

March 11, 2004.

Order Amending Judgment in Part June 23, 2004.

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Ann B. Lever, Legal Services of Eastern Missouri, Daniel E. Claggett, St. Louis, MO, for Plaintiffs.

John L. Oliver, Jr., Oliver and Oliver, Michael A. Price, Office of U.S. Attorney, Cape Girardeau, MO, Raymond W. Gruender, III, U.S. Attorney Office in care of James Martin, St. Louis, MO, for Defendants.

MEMORANDUM OPINION

PERRY, District Judge.

This consolidated action is before me for decision following a bench trial. The disputes arise out of the plan by the Charleston Housing Authority (CHA) to demolish the Charleston Apartments, a low-income apartment complex in Charleston, Missouri, that has been funded by various federal programs. In the Hines¹ action the plaintiffs raise claims against CHA, the United States Department of Housing and Urban Development (HUD), and the United States Department of Agriculture (USDA). In the USDA action,² CHA seeks to require the USDA to accept its final payment on the promissory note and mark the note paid, and it seeks quiet title to the Charleston Apartments.

I previously granted summary judgment to CHA on Counts I and II of the Hines' plaintiff's complaint, and I granted summary judgment to the USDA on all claims brought by both the CHA and the Hines plaintiffs against it. Following the bench trial, the plaintiffs and the USDA entered into a stipulation for entry of judgment regarding Count XIII of the Hines complaint.

Counts III through XII of the Hines action remain pending for decision following the bench trial. Counts XI and XII are brought against HUD. The other counts are brought against CHA. The parties have submitted extensive post-trial briefs. Having fully considered all the evidence and arguments presented, I conclude that plaintiffs have shown that CHA's plan to demolish the Charleston Apartments has a disparate impact on African Americans and therefore violated the Fair Housing Act. This decision also violated CHA's duty to affirmatively further fair housing under the Quality Housing and Work Responsibility Act (QHWRA), 42 U.S.C. § 1437c-1(d)(15). Plaintiffs are entitled to judgment against CHA on these claims, contained in Counts X and XI of their Third Amended Complaint. Plaintiffs have not shown that they are entitled to relief on their other claims, including their claims against HUD.

In accordance with my prior summary judgment ruling, I will also enter judgment in favor of the USDA on all of CHA's claims against it.

I. FINDINGS OF FACT

Housing Comes First is a nonprofit corporation whose mission includes the preservation of affordable housing for low-income families in Missouri. Essie McCatrey and Timothy Owens are African-American residents of the Charleston Apartments. Priscilla Johnson is an African American who voluntarily moved from the complex in July 2002.

The Charleston Apartments are owned and operated by defendant Charleston Housing Authority, a public housing agency, under two federal programs. Defendant Paul Page is the executive director of Charleston Housing Authority and is sued in his official capacity.

Defendant Department of Housing and Urban Development administers the housing authority's project-based rent subsidy program. Mel Martinez is the Secretary of HUD and is sued in his official capacity.

Defendant U.S. Department of Agriculture, through its Rural Housing Services Division, administers the project mortgage financing program for CHA. Ann Veneman is sued in her official capacity as Secretary of USDA.

The Charleston Apartments were built in the early 1970s and consist of 50 rental units in twenty-two buildings located near to one another in Charleston, Missouri. CHA purchased the complex in 1981 and converted the apartments to an FmHA-mortgaged § 8 Project-Based Substantial Rehabilitation project. This transaction is reflected in a Loan Resolution, Promissory Note, and Deed of Trust. Pursuant to these documents, the government, through the Farmer's Home Administration, loaned CHA $740,000 under the § 515 Rural Rental Housing Program. The Rural Housing Services, an agency of the USDA, administers FmHA loans such as the one made to the housing authority.

The Promissory Note was for a term of fifty years, with the final payment due in 2031. The Note states that "prepayments of scheduled installments or any portion thereof may be made at any time at the option of the borrower." It also states that "refunds and extra payments as defined in the regulations (7 CFR 1861.2) of the Farmer's Home Administration according to the source of funds involved, shall, after repayment of interest be applied to the installment last to become due under this note and shall not affect the obligation of the borrower to pay the remaining installments as scheduled therein." It also states: "This note shall be subject to the present regulations of the Farmer's Home Administration and to its future regulations not inconsistent with the expressed provisions hereof."

The Deed of Trust and Loan Resolution obligate the borrower to comply with all applicable federal laws and regulations.

In addition to the above documents, CHA also entered into a twenty-year Housing Assistance Payments (HAP) contract with HUD to obtain project-based § 8 assistance for the project. In the HAP contract CHA agreed not to terminate any tenancy or assistance except in accordance with HUD regulations and other federal, state and local law. The HAP contract also obligated CHA to maintain the units. The HAP contract expired by its own terms on April 20, 2001.

The Promissory Note called for 588 payments in the amount of $5624, with the first payment due April 27, 1982, and the last in 2031. Before the first payment was due, however, CHA returned or refunded $109,903.71 to FmHA, representing a portion of the loan proceeds that was not used in the purchase transaction. On other occasions it also made payments in excess of the amounts called for by the loan.

On or before July 12, 1999, CHA contacted the USDA about payment of the balance of the § 515 loan, which by this time was less than $50,000, because of the earlier refund and payments in excess of the amounts required. In November of 1999 CHA adopted a de-concentration policy, and in December it decided not to rent units in Charleston Apartments as they became vacant.

On February 14, 2000, CHA adopted Resolution 604, which resolved to pay off the loan agreement, not seek renewal of the HAP contract and demolish the Charleston Apartments. CHA adopted resolution 604 at the urging of the City of Charleston and representatives of the Charleston Police Department. These city officials believed that crime in the area was attributable to the apartments. CHA stated its reasons for wanting to demolish the apartments were: (1) high density of public housing, (2) a history of drug activity and violent crime, and (3) limited funding available to improve the apartments. Plaintiffs have shown that all three of these asserted reasons were false.

First, the density figures that CHA relied on did not relate specifically to the project. The letter claimed that there were 170 public housing units in a four-block area, but this was not true. The four-block area referred to did include thirty-nine of the Charleston Housing units as well as seventy units of public housing that are near to it. But the remaining 61 units were well outside the referenced four-block area. Moreover, the Housing Authority did not attempt to quantify or even articulate any detrimental effects from this supposed "high density." In fact, when the area is evaluated under HUD's own "deconcentration" policies, the density is well within the acceptable range. For concentrations of public housing such as this, HUD does not require any special efforts to attempt to retain or attract moderate-income tenants — actions that would be required if low-income housing was too concentrated under HUD rules.

The second stated reason — drugs and violence — was also not supported by any evidence. The evidence showed that the Housing Authority has had a one strike policy for a number of years, that it has the right to evict and/or refuse to rent to people involved in criminal activity, and that it can ban people it considers troublemakers. CHA has rigorously enforced these measures. CHA has also benefited from various crime reduction programs such as weed and seed and community policing. The evidence showed that CHA had taken numerous effective measures to control crime and drug trafficking in the Charleston Apartments. The statistical evidence did not support CHA's assertion that crime was a particular problem at the apartments.

The third reason — lack of funding to make improvements — was also shown to be false. CHA's own financial records showed that the apartments were financially stable and that CHA had untapped resources available for improvement of the properties. CHA paid down the loan of the properties early, which is inconsistent with its claim of lack of resources. Plaintiffs presented substantial evidence that there were several federal programs available to CHA which it never investigated.

At the time that CHA adopted Resolution 604, 47 units were occupied. CHA has not rented any vacated or vacant apartments since the adoption of Resolution 604. During the period after the adoption of Resolution 604, CHA offered public housing units in its public housing projects to all tenants of the Charleston Apartments and gave them preference over others on the...