San Antonio Hous. Auth. v. United States

• Decision Date: 11 June 2019
• Docket Number: No. 17-1796C,17-1796C
• Parties: SAN ANTONIO HOUSING AUTHORITY, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Claims Court

SAN ANTONIO HOUSING AUTHORITY, Plaintiff, v. UNITED STATES, Defendant.

No. 17-1796C

United States Court of Federal Claims

June 11, 2019

Motion to Dismiss; Breach of Contract; Monetary Damages; Equitable Relief; Sections 8 and 9 of the 1937 Housing Act; Appropriations; Moving to Work Demonstration Program.

Stephen T. Dennis, Clark Hill Strasburger, San Antonio, TX, for plaintiff. With him was Katie Anderson, Clark Hill Strasburger, San Antonio, TX.

Isaac B. Rosenberg, Trial Attorney, Commercial Litigation Branch, Civil Division, Unites States Department of Justice, Washington, D.C., for defendant. With him were Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Robert E. Kirschman, Jr., Director, Commercial Litigation Branch, and Joseph H. Hunt, Assistant Attorney General. Of counsel were David M. Reizes, Assistant General Counsel for Assisted Housing and Civil Rights Litigation, Office of General Counsel, United States Department of Housing and Urban Development, Washington, D.C, and Kyle E. Helmick, Attorney Advisor, Office of General Counsel, United States Department of Housing & Urban Development.

OPINION

HORN, J.

Plaintiff San Antonio Housing Authority (SAHA) is a public housing agency based in San Antonio, Texas, which receives "Section 8" funding for housing rental assistance and "Section 9" subsidies for its operation costs and capital and management activities from the United States Department of Housing and Urban Development (HUD) pursuant to Section 8 and Section 9 of the United States Housing Act of 1937. See Pub. L. No. 75-412, 50 Stat. 888 (1937) (codified as amended at 42 U.S.C. § 1437 et seq. (2018)) (1937 Housing Act). Plaintiff also participates in the federal housing program titled "Moving to Work" (MTW demonstration program), which allows public housing agencies to use various sources of federal public house funding, including Section 8 funding and Section 9 subsidies, interchangeably with other grant-in-aid funds.

In 2012, HUD decided to reduce all public housing agencies' Section 9 funding with public housing agencies' operating reserves, which were excess operating funds held by the public housing agency. As both parties agree, HUD, however, did not uniformly reduce public housing agencies' Section 9 funding in 2012. For public housing agencies not participating in the MTW demonstration program (non-MTW agencies), HUD calculated each of the non-MTW agencies' operating reserve amounts and then reduced each of the non-MTW agencies' Section 9 operating subsidy for 2012 with the non-MTW agencies' actual operating reserve level. Allegedly due to an inability to calculate the amount of operating reserve levels for public housing agencies participating in the MTW demonstration program (MTW agencies), HUD did not individually assess the operating reserve levels for each of the MTW agencies. Instead, HUD offset MTW agencies' Section 9 operating subsidy with the average, pro-rata percentage of the reduction of the Section 9 operating subsidy applied to the MTW agency's peer group, a group of similarly sized non-MTW agencies.

The above-captioned case does not arise from the government's decision just to reduce Section 9 funding with public housing agencies' operating reserve levels, but, instead, from the government's allegedly unequal application of the Section 9 funding offset between non-MTW agencies and MTW agencies. Plaintiff alleges that the government discriminated against MTW agencies, including plaintiff, when the government reduced MTW agencies' Section 9 funding by a pro-rata average reduction based on MTW agencies' peer group of non-MTW agencies.

Plaintiff has filed suit in this court, alleging three counts seeking to recover a damages award of $2,874,719.00 for the government's alleged decision to unequally offset plaintiff's Section 9 operating funding for 2012. Count I alleges that the government breached a contract with plaintiff, which the parties in this case, at times, refer to as the "MTW Agreement," in which the government promised not to discriminate against plaintiff based on plaintiff's participation in the MTW demonstration program. Count II alleges that the government violated the Department of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act of 1996, Pub. L. No. 104-134, § 204, 110 Stat. 1321, 1321-281 (1996) (MTW Statute), which created and authorized the MTW demonstration program and which prohibits the government from diminishing an MTW agency's Section 9 funding based on the MTW agency's decision to participate in the MTW demonstration program. Count III alleges that the government violated the Consolidated and Continuing Appropriations Act of 2012, Pub. L. No. 112-55, 125 Stat. 552 (2011) (2012 Appropriations Act), which appropriated monies for HUD's Section 9 operating subsidies for 2012 and which required defendant to consider the operating reserves available to MTW and Non-MTW agencies when determining a potential offset for Section 9 funding. See 2012 Appropriations Act, 125 Stat. at 680.

Currently pending before the court is a motion to dismiss the above-captioned case filed by defendant, the United States, for lack of subject-matter jurisdiction, pursuant to Rule 12(b)(1) of the Rules of the United States Court of Federal Claims (RCFC) (2018). According to defendant, plaintiff's three "claims are not based upon any money-mandating source of law." In the alternative, defendant has moved to dismiss plaintiff's three count complaint for failure to state a claim, pursuant to RCFC 12(b)(6).

FINDINGS OF FACT

The Relevant HUD Programs

Pursuant to the 1937 Housing Act, HUD provides federal funding at the State and local level to promote affordable housing for low-income individuals. See 42 U.S.C. § 1437(a) (2018). HUD administers the funding to public housing agencies, which are "any State, county, municipality, or other governmental entity or public body (or agency or instrumentality thereof) which is authorized to engage in or assist in the development or operation of public housing, or a consortium of such entities or bodies as approved by the Secretary" of HUD. Id. at § 1437a(b)(6)(a) (2018). The public housing agencies, in turn, provide local affordable housing to individual tenants. Two of the federal housing programs relevant to the above-captioned case are "Section 8" rental assistance payments and "Section 9" operating and capital subsidies.

Section 8 of the 1937 Housing Act, currently codified at 42 U.S.C. § 1437f (2018), states that, "[f]or the purpose of aiding low-income families in obtaining a decent place to live and of promoting economically mixed housing, assistance payments may be made with respect to existing housing in accordance with the provisions of this section." Id. at § 1437f(a). The Secretary of HUD "is authorized to enter into annual contributions contracts with public housing agencies pursuant to which such agencies may enter into contracts to make assistance payments to owners of existing dwelling units." Id. at § 1437f(b)(1). The Secretary of HUD also is "authorized to enter into annual contributions contracts with public housing agencies for the purpose of replacing public housing." Id. at § 1437f(b)(2).

Another feature of Section 8 is the "Voucher program," which states that "[t]he Secretary may provide assistance to public housing agencies for tenant-based assistance . . . ." Id. at § 1437f(o)(1)(A). The monthly assistance payment under the Voucher program

shall be equal to the amount by which the rent (including the amount allowed for tenant-paid utilities) exceeds the greatest of the following amounts, rounded to the nearest dollar:

(i) 30 percent of the monthly adjusted income of the family.

(ii) 10 percent of the monthly income of the family.

(iii) If the family is receiving payments for welfare assistance from a public agency and a part of those payments, adjusted in accordance with the actual housing costs of the family, is specifically designated by that agency to meet the housing costs of the family, the portion of those payments that is so designated.

Id. at § 1437f(o)(2)(A).

Section 9 of the 1937 Housing Act, currently codified at 42 U.S.C. § 1437g (2018), provides subsidies for public housing agencies to help cover their operational and capital activities. See 42 U.S.C. § 1437g(d)-(e). Unlike with Section 8 assistance, the law requires that the Secretary of HUD allocate Section 9 funding into a "Capital Fund" and an "Operating Fund," from which HUD makes the subsidy payments to qualifying public housing agencies. Id. at § 1437g(c)(1) ("For fiscal year 2000 and each fiscal year thereafter, the Secretary shall allocate amounts in the Capital Fund and Operating Funds [sic] for assistance for public housing agencies eligible for such assistance." (footnote omitted)). Regarding the "Capital Fund," Section 9 states that "[t]he Secretary shall establish a Capital Fund for the purpose of making assistance available to public housing agencies to carry out capital and management activities," which include such tasks as "the development, financing, and modernization of public housing projects," "vacancy reduction," "addressing deferred maintenance needs and the replacement of obsolete utility systems and dwelling equipment." Id. at § 1437g(d)(1).

Regarding the "Operating Fund," Section 9 states that "[t]he Secretary shall establish an Operating Fund for the purpose of making assistance available to public housing agencies for the operation and management of public housing," which includes activities such as "procedures and systems to maintain and ensure the efficient management and operation of public housing units," "activities to ensure a program of routine preventative maintenance," and "anticrime and antidrug activities, including the costs of providing adequate security for public housing residents." Id. at § 1437g(e)(1). Section 9 also provides HUD with the "Right of...