Ressler v. Landrieu

• Decision Date: 21 November 1980
• Docket Number: Civ. No. A77-228.
• Citation: 502 F. Supp. 324
• Parties: Margaret RESSLER, individually and on behalf of all others similarly situated, Plaintiffs, v. Moon LANDRIEU, Secretary of Housing and Urban Development; John Duffy, Director of Anchorage Area Office of the Department of Housing and Urban Development; United States of America; Alaska Pacific Ventures, a partnership; James W. Y. Wong, Consolidated Services, Inc., Defendants.
• Court: U.S. District Court — District of Alaska

502 F. Supp. 324

Margaret RESSLER, individually and on behalf of all others similarly situated, Plaintiffs, v. Moon LANDRIEU, Secretary of Housing and Urban Development; John Duffy, Director of Anchorage Area Office of the Department of Housing and Urban Development; United States of America; Alaska Pacific Ventures, a partnership; James W. Y. Wong, Consolidated Services, Inc., Defendants.

Civ. No. A77-228.

United States District Court, D. Alaska.

November 21, 1980.

Alaska Legal Services Corp. Bessie O'Rourke et al., Anchorage, Alaska, for plaintiff Margaret Ressler.

U. S. Atty. Rene Gonzales, Anchorage, Alaska, Herbert Goldblatt, Sheila Lieber, Alphonse M. Alfano, Dept. of Justice, Washington, D. C., for defendant United States.

George Dickson, Anchorage, Alaska, for James Wong, Pacific Ventures & Consolidated Services.

MEMORANDUM AND ORDER

VON DER HEYDT, Chief Judge.

Plaintiff Margaret Ressler, a lower income resident of Jewel Lake Villa Apartments, brought this class action suit, Fed.R. Civ.P. 23(b)(2), against the Secretary of Housing and Urban Development (hereafter HUD), the director of the Anchorage area office of HUD, and the owners of Jewel Lake Villa Apartments. The class represented by plaintiff, and certified by Order of this court on August 22, 1978, consists of all persons in Alaska who (1) are now or will in the future be eligible to receive the benefits of rent subsidies pursuant to § 8 of the United States Housing Act of 1937, as amended, 42 U.S.C. § 1437f, and (2) who are not receiving or will not receive benefits under this program because of defendants' illegal acts.

The owners of Jewel Lake Villa Apartments receive the benefit of having their mortgage notes insured by the federal government under § 236 of the National Housing Act, 12 U.S.C. § 1715z-1. Plaintiff seeks benefits under the § 8 Housing Assistance Program of the United States Housing Act of 1937, as amended, 42 U.S.C. § 1437f, which authorizes the Secretary of HUD to enter into contracts to make assistance payments to owners of existing projects already receiving the benefit of mortgages insured by the government under the National Housing Act.

The assistance contract sets forth a comprehensive scheme wherein the receipt of payments and the retention of the right of individual tenant selection by the owner are conditioned on the owner's compliance with HUD tenant eligibility criteria, viz the owner's initial rental of a prescribed minimum percentage of units to "very low-income families," 42 U.S.C. § 1437f(c)(4), and rental of the remaining units to "lower income families." 42 U.S.C. § 1437f(c)(7).

I

By Order of March 6, 1980,¹ this court granted partial summary judgment to plaintiff and the class she represents, holding that applicants for § 8 housing are entitled to due process under the Fifth Amendment of the United States Constitution. Due process safeguards were triggered by two findings:

-that there was sufficient government involvement in the program to warrant such protection; and

-that plaintiff's interest rose to the constitutionally protected "property" level.

Geneva Towers Tenants Organization v. Federated Mortgage Investors, 504 F.2d 483 (9th Cir. 1974).

The court found support in the record for a finding that government involvement in the § 8 program was sufficient to subject the actions of the project owners to the requirement of the Fifth Amendment. Id. at 487-88. In fact, the government did not contest this point.

The more difficult task was to determine whether plaintiff had a "legitimate, objectively justifiable claim to the benefits of the governmental program." Id. at 489; see Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). The court found that several factors supported such a claim.

First, the Congressional purpose underlying the § 8 program aims at affording housing benefits to lower-income families: "For the purpose of aiding lower-income families in obtaining a decent place to live and of promoting economically mixed housing, assistance payments may be made with respect to existing, newly constructed, and substantially rehabilitated housing in accordance with the provisions of this section." 42 U.S.C. § 1437f(a). See Geneva Towers at 489-90.

Second, courts have extended the rationale first enunciated in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), to protect not merely recipients of public benefits, but applicants for those benefits as well. Griffeth v. Detrich, 603 F.2d 118 (9th Cir. 1979). Applicants for public housing in particular have been afforded specific due process protections, Vandermark v. Housing Authority of the City of York, 492 F.Supp. 359 (M.D.Pa. 1980); Neddo v. Housing Authority of the City of Milwaukee, 335 F.Supp. 1397 (E.D. Wis.1971); Davis v. Toledo Metropolitan Housing Authority, 311 F.Supp. 795 (N.D. Ohio 1970), and first had their property interest recognized and protected even before Goldberg eliminated the distinction between "rights" and "privileges." Holmes v. New York City Housing Authority, 398 F.2d 262 (2 Cir. 1968).

While recognizing that all eligible applicants for § 8 benefits will not receive them, the court emphasized that the reality of limited financial resources did not relieve defendants of the need to insure that available benefits were distributed in a manner which comported with due process. Cf. Holmes (procedural safeguards required where a housing authority is faced with a number of eligible applicants that far outstrips the number of available units). The court rejected the argument that the statutory power of tenant selection given to the project owner was inconsistent with the existence of a "legal entitlement" on the part of the applicant, noting that project owners were vested with limited discretion in selecting tenants, were primarily bound by eligibility criteria promulgated by the Secretary, and were subject to sanctions for their non-compliance with these criteria. 24 C.F.R. § 886.120, § 886.129, § 886.130 (1980).

Having determined that the plaintiff's interest in § 8 benefits was entitled to due process protection, the court ordered the parties to submit memoranda on the form and extent of procedural safeguards to be afforded § 8 applicants.²

II

The parties agree that given a finding of a constitutionally protected property interest, the contours of due process in a particular case are to be determined under the test of Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976):

Our prior decisions indicate that identification of the specific dictates of due process generally requires consideration of three distinct factors: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.

424 U.S. at 334-35, 96 S.Ct. at 902-03.

The application of this balancing test in the subsidized housing area involves a difficult weighing of strong competing interests. The "private interest" of the "lower income" or "very low-income" family which seeks to fulfill an essential human need in applying for these limited housing resources is enormous. On the other hand, the government understandably seeks to minimize the financial cost of the application procedure (both to itself and to the private project owner) and to structure the procedure in a way which is neither so elaborate, expensive, and time-consuming, nor so restrictive of owner discretion in tenant selection, as to discourage private participation in the § 8 program.³ With these underlying concerns in mind, the inquiry turns to an evaluation of the proposed procedures.

A. TENANT SELECTION STANDARDS

At the outset, the parties differ over the degree of discretion afforded the project owner in the tenant selection process. The statute itself reflects an accommodation between preserving owner prerogative and insuring that needy families receive the benefit of the government subsidy: "the selection of tenants for such unit shall be the function of the owner, subject to the provisions of the annual contributions contract between the Secretary and the agency ...." 42 U.S.C. § 1437f(d)(1)(A); See too 42 U.S.C. § 1437f(c)(4), (7).

In its proposed regulations, HUD has included language which attempts to define the nature of the owner's statutory discretion in the tenant selection process:

If the owner of a project participating in the Section 8 program determines that the family is eligible for a unit with Section 8 assistance and is otherwise acceptable ...

If the owner determines that an applicant is ineligible for a unit with Section 8 assistance on the basis of income or family composition, or that the owner is not selecting the applicant for other reasons related to his ability to fulfill his obligations as a tenant of the project ...

(Emphasis added).

Plaintiff objects to the inclusion of such language, arguing that while Public Housing Authorities (PHAs) are allowed to apply analagous tenant selection criteria, such criteria, while significantly more specific than those proposed here, have nonetheless often been applied arbitrarily.⁴ Plaintiffs argue that these criteria are vague, fail to set forth "ascertainable standards," and are particularly subject to abuse when applied by private project owners who lack access to the supervision, training, and legal expertise available to employees of PHAs.

The court cannot agree that despite the clear (although not unlimited) statutory grant of discretion to project owners, such owners are nonetheless powerless to deny a § 8 unit to an otherwise eligible applicant who would be likely "to...