Schroeder v. US
| Decision Date | 21 January 2010 |
| Docket Number | Civ. No. 08-1277-AC. |
| Citation | 683 F. Supp.2d 1129 |
| Parties | Alberta E. SCHROEDER, Plaintiff, v. UNITED STATES of America; Secretary of the United States Department of Agriculture; Administrator of the Rural Housing Service, United States Department of Agriculture; Oregon State Director of Rural Development, United States Department of Agriculture, Defendant. |
| Court | U.S. District Court — Virgin Islands |
William F. Schroeder, William F. Schroeder, PC, Vale, OR, for Plaintiff.
Kevin C. Danielson, U.S. Attorney's Office, District of Oregon, Portland, OR, for Defendant.
Introduction
This matter is currently before the court on the parties' cross-motions for summary judgment. Plaintiff Alberta E. Schroeder ("Schroeder") alleges that Defendants have failed to implement a final determination of the National Appeals Division ("NAD"). She asks the court to order implementation by requiring Defendants to accept payment of her remaining financial obligation for the low-income rental property she owns, and to deem satisfied the encumbrances on that property so that it no longer is subject to restricted-use provisions. Defendants assert that they have implemented the NAD determination. They ask that the court leave undisturbed their interpretation of the NAD determination and permit them to conduct a new Civil Rights Impact Analysis ("CRIA") to assist them in deciding whether Schroeder may be permitted to "prepay" her program loan.
Schroeder's motion is granted and Defendants' motion is denied. Defendants failed to implement the NAD final determination within the period required by law, thus foreclosing them from post-hoc interpretations and arguments. Thus, on the record before the NAD, Schroeder's interpretation of the NAD determination is correct. Even considering Defendants' post-hoc interpretations and arguments, they committed a clear error by interpreting the NAD determination to allow them to conduct a second CRIA, as there is no reasonable basis in the determination to support that interpretation. Furthermore, the NAD previously rejected, the position Defendants argue here to defend against Schroeder's claims in this lawsuit and to support their proffered interpretation. Accordingly, Defendants shall accept Schroeder's payment, clear the encumbrances on her property, and relieve the property from the restricted-use provision, within thirty days of the date of this opinion.1
The material facts are not disputed. In 1984, Schroeder purchased land and property in Heppner, Oregon, consisting of a parcel of land and six residential housing units in a single structure. The prior owner had purchased the property pursuant to a loan from the predecessor of the Rural Housing Service ("RHS"), an agency of the United States Department of Agriculture ("USDA"), as part of a program designed to stimulate investment in affordable housing for low-income and elderly people. Program regulations imposed restricted-use provisions on the property. When Schroeder purchased the property, the purchase was subject to the condition that "the restricted use was to continue for twenty years from September 1, 1984," regardless of payment or non-payment of the total obligation. (Plaintiffs Concise Statement of Material Facts ¶ 1.)
In November 2004, after completing her twenty-year obligation to observe the restricted-use provisions of her agreement with RHS, Schroeder notified RHS that she wished to pay the remaining financial obligation. RHS refused to accept Schroeder's payment, claiming that she was attempting a "prepayment" of her obligation inconsistent with the Emergency Low Income Housing Protection Act ("ELIHPA"), which Congress enacted several years after Schroeder bought the property. Specifically, RHS based its position on regulation 7 C.F.R. § 3560.658(b), which sets the procedural requirements for assessing whether a borrower may prepay:
Accordingly, RHS informed Schroeder that she must comply with the ELIHPA and, in April 2006, it commenced formal procedures to determine whether Schroeder would be allowed to prepay her loan. Schroeder disputed for several reasons that the ELIHPA applied to her agreement with RHS, but she nonetheless pursued her attempts to pay her loan through the ELIHPA process.2
Based on its October 2006 CRIA, the RHS concluded that Schroeder's prepayment would have an adverse effect on housing opportunities for minorities and result in a shortage of decent, safe, sanitary, and affordable housing in the market area to program-eligible tenants. In February 2007 Schroeder appealed the RHS determination to the NAD, which appeal RHS defended by arguing that the NAD lacked jurisdiction because RHS's reliance on the CRIA to deny Schroeder's request was merely a recommendation, not an "adverse decision" that could be appealed. The Hearing Officer agreed and dismissed Schroeder's appeal, and Schroeder requested Director review of the Hearing Officer's ruling in accordance with 7 C.F.R. § 11.6.
On October 11, 2007, the NAD Director reversed the Hearing Officer's determination, finding that RHS's action constituted an appealable adverse decision over which NAD had jurisdiction. Relevant to this case, RHS had argued to the Director that its CRIA showed prepayment would have had an adverse impact both on housing opportunities for minorities and on the supply of decent, safe, sanitary, and affordable housing for available program tenants. The Director specifically found that "clearly, RHS determined through an administrative process, memorialized in its CRIA, that prepayment of the multifamily housing ("MFH") loan would have an adverse effect on minorities and the supply of housing for available tenants." (Schroeder Declaration ("Decl.") (#27), Exhibit ("Ex") K at 4.) The Director remanded the matter to the Hearing Officer for a determination of Schroeder's claim on the merits.
On January 10, 2008, the merits hearing convened. Schroeder argued that the CRIA findings and conclusions were erroneous and that the CRIA actually showed sufficient numbers of available housing units in the market area, and she sought to prepay her MFH loan without restrictions. The Hearing Officer noted that RHS argued it "followed its regulations when it determined that prepayment would adversely affect minorities, and that prepayment would cause a shortage of available affordable housing for displaced tenants." (Rooney Decl., Ex. B at 1.)
On February 15, 2008, the NAD Hearing Officer issued his Remand Appeal Determination (hereinafter "the 2008 NAD Determination"). The Hearing Officer framed the issues for determination as whether, under the CRIA, RHS correctly determined that prepayment would: (1) adversely impact minorities, and (2) lead to inadequate supply of decent, safe, sanitary and affordable housing. The Hearing Officer first reaffirmed that RHS in fact had made an adverse determination against Schroeder:
RHS prepared a CRIA and determined that if Appellant's owner prepays her MFH loan without restrictions, prepayment will have an adverse impact for housing opportunities for minorities, and that an adequate supply of decent, safe, and sanitary rental housing will not be available to eligible tenants in Appellant's market area. As a result, RHS determined that Appellant's owner cannot prepay her MFH loan without restrictions.
(Rooney Decl., Ex. B at 2.) The Hearing Officer found that "RHS incorrectly determined that, based on the CRIA, prepayment would have an adverse impact on housing opportunities for minorities." Id. at 6. Specifically, the Hearing Officer found that RHS had applied an over-inclusive definition of "minority" and that when the proper the definition was applied, none of Schroeder's tenants were minorities and prepayment therefore would not have an adverse impact on minorities. Further, the Hearing Officer found there was "no evidence to support the RHS CRIA's determination that prepayment would lead to a shortage of decent, safe and sanitary affordable housing."...
To continue reading
Request your trial