Paris v. Department of Housing and Urban Development, 87-1217

Decision Date11 September 1987
Docket NumberNo. 87-1217,87-1217
Citation843 F.2d 561
PartiesAntonia PARIS, et al., Plaintiffs, Appellees, v. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants, Appellants. . Heard
CourtU.S. Court of Appeals — First Circuit

Anthony J. Steinmeyer, Appellate Staff, Civ. Div., Dept. of Justice, with whom Marleigh D. Dover, Appellate Staff, Civil Div., Dept. of Justice, Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Lincoln C. Almond, U.S. Atty., Providence, R.I., Gershon M. Ratner, Associate Gen. Counsel for Litigation, John W. Herold, Asst. Gen Counsel for Litigation, and Anthony J. Ciccone, Jr., Office of Litigation, Dept. of Housing and Urban Development, Washington, D.C., were on brief, for federal defendant, appellant.

Paul D. Snyder, Boston, Mass., for appellant Corcoran Management Co., Inc.

John W. Dineen, Rhode Island Legal Services, with whom Michael V. Milito, Rhode Island Legal Services, Providence, R.I., was on brief, for plaintiffs, appellees.

Before CAMPBELL, Chief Judge, GARTH, * Senior Circuit Judge, and BOWNES, Circuit Judge.

LEVIN H. CAMPBELL, Chief Judge.

This is an appeal from a preliminary injunction entered by the district court which prevents the Department of Housing and Urban Development ("HUD") and Corcoran Management Company ("Corcoran") from employing a controversial tenant selection scheme in the leasing of certain apartments at the Chad Brown public housing project in Rhode Island. This scheme, adopted by the project manager, Corcoran, and approved by HUD, seeks to provide for a broad economic mix of tenants by allowing certain higher income families to "skip" over "very low income" families that are senior to them on the waiting list. Antonia Paris and three other named plaintiffs are "very low income" families who purport to represent a class of the same.

I.

Chad Brown is a public housing project begun in 1943. It is a part of the Providence (Rhode Island) Housing Authority's public housing system. By the late 1970s, Chad Brown had fallen into disrepair. Not only apartments but entire buildings were vacant and boarded up.

During the late 1970s or early 1980s, HUD itself assumed an active role in the management of Chad Brown, planning a multistage modernization program. In conjunction with the Providence Housing Authority, HUD hired Corcoran to take over the management of Chad Brown and to oversee its modernization.

The modernization program consisted of sequential renovations of groups of apartments. The renovation of the first 134 units was designated "Phase I." In selecting families to reside in the Phase I apartments, Corcoran adopted criteria designed to ensure that the residents--all of whom were "lower income" for purposes of eligibility for public housing--had a broad range of incomes among themselves. Families eligible for residence at Chad Brown were divided into three groups according to income, and roughly one-third of each type of apartment in Phase I was earmarked for each of the three income groups. 1

The Phase I apartments were further subdivided into Phase I.A, I.B, and so on. Phase I.A, consisting of 42 apartments, was completed in August 1986. These apartments were rented to families who were relocated from other Chad Brown apartments. In November 1986, renovations were completed on the 32 units in Phase I.B. The majority of these units were to be rented to new tenants.

The challenged preliminary injunction pertains to the 32 Phase I.B apartments. Corcoran maintains a waiting list for each type of apartment in Chad Brown. If Corcoran had filled the Phase I.B apartments by taking families in the order in which they had appeared on the waiting lists, the income-mixing goals would not have been met. Accordingly, in a September 17, 1986, letter to the tenant association's chairperson, Corcoran stated that it would ask higher income families on other Providence Housing Authority waiting lists to apply for two-bedroom apartments at Chad Brown. The result of this intended procedure was to allow higher income families to "skip over" lower income families on the Chad Brown waiting lists.

In response to Corcoran's stated "skipping" policy, the named plaintiffs brought the present action on October 6, 1986, seeking declaratory and injunctive relief against both HUD and Corcoran. Plaintiffs claimed to represent all "very low income" families on the Chad Brown waiting lists. The complaint alleges that by adopting the income-mixing scheme, HUD and Corcoran have violated the United States Housing Act of 1937 ("Housing Act"), 42 U.S.C. Secs. 1437 et seq. (1982 & Supp. III 1985), especially 42 U.S.C. Sec. 1437n thereof; the Fair Housing Act, 42 U.S.C. Secs. 3601 et seq. (1982); and the due process and equal protection clauses of the Constitution of the United States.

On January 14, 1987, the United States District Court for the District of Rhode Island entered a memorandum and order allowing plaintiffs' motion for a preliminary injunction. The court's ruling was based solely on the plaintiffs' Housing Act claim, and it granted class-wide relief although no class had in fact been certified. The effect of the district court's order was to enjoin preliminarily any future admissions to Chad Brown based on the income-mixing scheme. 2

While this appeal was under consideration, one provision of the Housing Act relevant to this appeal was amended by the Housing and Community Development Act of 1987, Pub. L. No. 100-242, 101 Stat. 1815 (signed Feb. 5, 1988). Paris and HUD have submitted memoranda addressed to the effect of the new law, and we have considered these amendments in our review of the district court's decision to enjoin the Chad Brown income-mixing scheme. See pages 573-74, infra.

This case comes after this court's decision in Martinez v. Rhode Island Housing & Mortgage Finance Corp., 738 F.2d 21 (1st Cir.1984). We upheld in Martinez a preliminary injunction enjoining an income-mixing scheme in so-called "Section 8 housing." The present case poses the question whether a like result should obtain here, in "public housing." Because of key differences--in both the applicable statutory law and in HUD's own regulations--we believe that Martinez is not controlling, and we vacate the district court's preliminary injunction.

II.

The Housing Act authorizes two types of federally assisted housing: "public housing" (the kind in issue here) and "section 8 housing" (the kind in the Martinez case, 738 F.2d 21). Public housing was authorized by the original Housing Act of 1937. Section 8 housing was created by the Housing and Community Development Act of 1974, Pub.L. No. 93-383, Sec. 201(a), 88 Stat. 633, 662. Section 8 housing differs from public housing in several ways. Most important, section 8 housing is owned by private parties who enter into contracts with government authorities, while public housing is owned directly by Public Housing Authorities ("PHAs"). The two types of federally assisted housing are defined at different places within the United States Code. See 42 U.S.C. Secs. 1437a-1437e, 1437g-1437m (1982 & Supp. III 1985) (public housing); id. Sec. 1437f (section 8 housing). Separate regulations have been issued by the Secretary of Housing and Urban Development, who oversees both programs. See 24 C.F.R. Secs. 912-999 (1987) (public housing); id. Secs. 811-899 (section 8 housing).

Occupancy in both types of federally assisted housing is limited to "lower income families," defined as "families whose incomes do not exceed 80 per centum of the median income for the area." 42 U.S.C. Sec. 1437a(b)(2) (Supp. III 1985). The class of lower income families is divided into two subclasses; low income families, 3 whose incomes are from 80 percent to 50 percent of the median, and very low income families, whose incomes are below 50 percent of the median. Id.

Applying the terminology to this case, Paris claims to represent all very low income families on the Chad Brown waiting list. The district court found that the Chad Brown selection procedure, as applied, favors low income families over very low income families. Paris claims that this preference is contrary to law.

III.

In Martinez, 738 F.2d 21, we upheld a preliminary injunction striking down a housing corporation's rule that no more than 35 percent of its section 8 assisted housing units could be rented to very low income families, leaving the rest for low income tenants. Central to our reasoning in Martinez was Congress's recent adoption of the Omnibus Budget Reconciliation Act of 1981 ("OBRA"), 4 containing a provision, codified at 42 U.S.C. Sec. 1437n (1982 & Supp. III. 1985), that for the first time reserved the lion's share of both public housing and section 8 housing, on a national basis, for very low (as opposed to low) income families. Clause (a) of section 1437n provides that "[n]ot more than 25 per centum 5 of the dwelling units which were available for occupancy under [public housing and section 8] before October 1, 1981, and which will be leased on or after such effective date shall be available for leasing by lower income families other than very low income families." Clause (b) provides that "[n]ot more than 5 per centum of the dwelling units which become available for occupancy under [public housing and section 8] on or after October 1, 1981, shall be available for leasing by lower income families other than very low income families."

We noted in Martinez that the OBRA amendments had deleted a prior provision of law, relative to section 8 but not to public housing, that required only 30 percent of assisted families to be in the very low income category at the time of the initial renting of dwelling units. 42 U.S.C. Sec. 1437f(c)(7) (1976) (repealed). We also noted, as further signifying a change in congressional policy, that the conference report issued in 1981 at the time of OBRA's adoption had stated as...

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