Rodriguez v. Carson, 17-CV-4344 (JMF)

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: JESSE M. FURMAN, United States District Judge
• Citation: 377 F.Supp.3d 401
• Parties: Robert RODRIGUEZ, et al., Plaintiffs, v. Ben CARSON, in his official capacity as Secretary of Housing and Urban Development, et al., Defendants.
• Docket Number: 17-CV-4344 (JMF)
• Decision Date: 29 March 2019

377 F.Supp.3d 401

Robert RODRIGUEZ, et al., Plaintiffs,
v.
Ben CARSON, in his official capacity as Secretary of Housing and Urban Development, et al., Defendants.

17-CV-4344 (JMF)

United States District Court, S.D. New York.

Signed March 29, 2019

377 F.Supp.3d 403

Cristina Maria Quinones-Betancourt, Willkie Farr & Gallagher, Kevin Michael Cremin, Shi-Shi Wang, Mobilization for Justice, Roopal Patel, Manhattan Legal Services, Richard Semegram, Lynn Amanda Horowitz, Housing Conservation Coordinators, Inc., New York, NY, Edward Joseph Josephson, South Brooklyn Legal Services, Brooklyn, NY, for Plaintiffs.

Kerri Ann Devine, NYC Law Department, New York, NY, for Defendants Maria Torres-Springer, New York City Department of Housing Preservation & Development.

Casey Kyung-Se Lee, United States Attorney's Office, New York, NY, for Defendants Ben Carson, United States Department of Housing & Urban Development.

OPINION AND ORDER

JESSE M. FURMAN, United States District Judge:

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The United States Housing Act of 1937 establishes a complex scheme of financial assistance to low- and middle-income renters. Section 8 of the Act ("Section 8"), codified as amended at 42 U.S.C. § 1437f, provides for — among other types of aid — "project-based assistance," pursuant to which the federal government, through state and local agencies, subsidizes rental units on a project- or development-wide basis. Under certain circumstances, an owner of such a development can opt out of the program and "convert" the development into unsubsidized, market-rate housing. When that happens, tenants may remain in their apartments and receive tenant-specific financial assistance through Section 8's "Enhanced Voucher" program. Section 8(t) of the Housing Act, codified at 42 U.S.C. § 1437f(t),¹ governs how much such tenants have to pay toward their rent. The United States Department of Housing and Urban Development ("HUD") has long interpreted that provision to mean that, when an Enhanced Voucher recipient's income falls by a certain amount, the statute prescribes that the tenant must permanently pay the same percentage of monthly income in rent that she had paid at the time her building was "converted." As described below in more detail, the net effect of that interpretation is that a participating tenant whose income decreases by the requisite amount but later recovers can end up paying more than she would have paid if her income had never declined at all.

The question presented here — which arises on cross-motions for summary judgment and appears to be one of first impression — is whether HUD's interpretation of Section 1437f(t) is correct. Plaintiffs Robert Rodriguez, Elaine Pinnock, and Jovanny Pichardo are participants in the Enhanced Voucher program who experienced significant, but temporary, dips in their monthly income. Now that their incomes have recovered, HUD's interpretation of Section 1437f(t) requires two of them to pay more in rent than they would have had to pay had their incomes remained the same all along — a result that Plaintiffs believe is inconsistent with the statute. They bring this action under 42 U.S.C. § 1983 and the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701 et seq. , seeking declaratory and injunctive relief against two federal Defendants — HUD and its Secretary, Ben Carson (together, the "Federal Defendants") — and two local Defendants — the New York City Department of Housing Preservation and Development ("HPD") and its Interim Commissioner, Eric Enderlin (the "City Defendants"). See Docket No. 50 ("Am. Compl."), ¶¶ 61-71.² Plaintiffs argue that Defendants' implementation of the Enhanced Voucher program violates both

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Section 1437f(t) and the Constitution's equal protection guarantees. See id. ¶¶ 1-2.

For the reasons stated below, the Court agrees with Plaintiffs that HUD's interpretation is inconsistent with the plain language of the Housing Act (and thus does not reach Plaintiffs' constitutional claims). In particular, HUD misreads Section 1437f(t)(1)(D) — which sets a maximum rent payment for tenants whose incomes have declined the requisite amount — as though it imposes a minimum as well. And HUD ignores the background statutory provision that sets the rent payment obligations for all Enhanced Voucher recipients, subject to a minimum and, when applicable, a maximum. The upshot is that, by misreading the statute, HUD is requiring two of the Plaintiffs to pay more than the statute says they should have to pay. (As discussed below, the rent of the third Plaintiff is unaffected.) It follows that those Plaintiffs are entitled to a declaratory judgment against the Federal Defendants. By contrast, the Court concludes that there is no basis or need to award relief separately as to the City Defendants, both because the claims against those Defendants fail as matter of law and because they are required by law to enforce the applicable federal standards, which the Court clarifies today.

BACKGROUND

The Court begins with a description of the relevant statutory scheme and HUD's interpretation of it, and then turns to the facts relevant to each of the Plaintiffs. The relevant facts, drawn from the Amended Complaint and admissible materials submitted in connection with the pending cross-motions, are either undisputed or construed in the light most favorable to the non-moving party. See Starke v. SquareTrade, Inc. , 913 F.3d 279, 281 n.1 (2d Cir. 2019). As it happens, the facts relevant to the disposition of these cross-motions are all undisputed.

A. The Statutory Scheme and HUD's Interpretation

HUD provides housing rental assistance to low-income families through the Section 8 housing program. See 42 U.S.C. § 1437f(a). The program is funded by the federal government, but administered by local public housing authorities — in New York City's case, by HPD. See, e.g. , Park Vill. Apartment Tenants Ass'n v. Mortimer Howard Tr. , 636 F.3d 1150, 1152 (9th Cir. 2011). Congress enacted this program "[f]or the purpose of aiding low-income families in obtaining a decent place to live and of promoting economically mixed housing." 42 U.S.C. § 1437f(a). Generally speaking, Section 8 offers two types of housing assistance: first, "tenant-based" assistance, pursuant to which HUD provides vouchers to tenants, who can then use those vouchers to pay rent at the housing unit of their choosing, see 42 U.S.C. § 1437f(f)(7), (o) ; 24 C.F.R. § 982.1(b) ; and second, "project-based" assistance, pursuant to which owners of housing units enter into long-term contracts with HUD to rent the units to low-income families meeting Section 8 eligibility requirements in exchange for rental assistance from the government, see 42 U.S.C. § 1437f(b), (f)(6) ; 24 C.F.R. §§ 886.309, 886.311. Under both forms of assistance, tenants are required to pay a statutorily prescribed portion of the rent, usually thirty percent of the tenant family's "adjusted income" or ten percent of their gross income, whichever is greater. See 42 U.S.C. § 1437f(o)(2) ; see also id. § 1437a(a)(1).³ The federal government

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then pays the balance of the rent up to a statutorily capped amount. See 42 U.S.C. § 1437f(c), (o)(1)-(2).

Beginning in the late 1980s, the long-term, project-based assistance contracts between housing project owners and HUD began to expire in large numbers. Congress was apparently concerned that those housing project owners would decline to renew or otherwise opt out of their contracts with HUD and raise rents to market-based rates that exceeded Section 8's limits on federal housing assistance payments, thereby forcing out low-income tenants in large numbers. See Park Vill. Apartment Tenants Ass'n , 636 F.3d at 1152-53. In response, Congress enacted — among other measures — the Enhanced Voucher program. See Preserving Affordable Housing for Senior Citizens and Families into the 21st Century Act, Pub. L. No. 106-74, § 538, 113 Stat. 1100, 1122 (1999). The program requires the HUD Secretary to provide "enhanced vouchers" to tenants residing in housing units whose owners have elected not to renew their project-based assistance contracts on the date the contract expires, 42 U.S.C. § 1437f(t)(1)(B), (2) ; see also Pub. L. No. 106-74 § 531, 113 Stat. at 1113, codified at 42 U.S.C. § 1437f note — an event called a "conversion."

Section 1437f(t) establishes the relevant rules governing enhanced vouchers. It provides, in relevant part:

Enhanced voucher assistance under this subsection for a family shall be voucher assistance under subsection (o), except that under such enhanced voucher assistance —

(A) subject only to subparagraph (D), the assisted family shall pay as rent no less than the amount the family was paying on the date of the eligibility event for the project in which the family was residing on such date; ... [and]

(D) if the income of the assisted family declines to a significant extent, the percentage of income paid by the family for rent shall not exceed the greater of 30 percent or the percentage of income paid at the time of the eligibility event for the project.

42 U.S.C. § 1437f(t)(1). Section 1437f(o), in turn, provides in relevant part that...