Walker v. U.S. Dept. of Housing and Urban Development

• Decision Date: 27 September 1990
• Docket Number: Nos. 89-1914,89-1973,s. 89-1914
• Citation: 912 F.2d 819
• Parties: Debra WALKER, et al., Plaintiffs-Appellees, v. The UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Defendant-Appellant, v. The HOUSING AUTHORITY OF THE CITY OF DALLAS, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 819

912 F.2d 819

Debra WALKER, et al., Plaintiffs-Appellees, v. The UNITED STATES DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT, Defendant-Appellant, v. The HOUSING AUTHORITY OF THE CITY OF DALLAS, Defendant-Appellee.

Nos. 89-1914, 89-1973.

United States Court of Appeals Fifth Circuit.

Sept. 27, 1990.

Mark W. Pennak, Michael Jay Singer, U.S. Dept. of Justice, Civ. Div., Appellate Staff, Joseph W. LoBue, Office of Gen. Counsel, U.S. Dept. of HUD, Washington, D.C., for defendant-appellant.

Joseph G. Werner, Kathleen McIntosh Beasley, Haynes & Boone, Dallas, Tex., for Housing Authority.

Michael M. Daniel, Elizabeth K. Julian, North Central Texas Legal Services, Inc., Dallas, Tex., for Debra Walker, et al.

Appeal from the United States District Court for the Northern District of Texas.

Before THORNBERRY, JOHNSON, and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

A local public housing agency agreed to demolish certain vacant and uninhabitable units of Dallas public housing in compliance with a consent decree entered by the parties to cure racial housing segregation within the city. The planned demolitions have been stalled indefinitely, however, as a consequence of financing problems. Specifically, the United States Department of Housing and Urban Development (HUD) announced a reduction in the subsidization of vacant units to a level that the local agency claims undermines its efforts to raze the condemned structures. The local public housing agency maintains that both its adherence to the demolition schedule and the consent decree have been thwarted as a result. Sadly, the long-term revitalization of one of Dallas's worst slums has become derailed as local and federal agencies debate their respective fiscal obligations incident to a consent decree.

This civil rights litigation has drawn the attention of Congress, which has enacted two pieces of restrictive housing legislation in the interim. One statute purports to eliminate any federal funding intended to demolish the particular Dallas units slated for destruction by the consent decree; the other restricts federal approval of demolitions. Of particular significance here is the statutory precondition that federally subsidized public housing be replaced on a one-for-one basis for each unit of low-income housing that is demolished.

We are presented with two separate cases, which are consolidated for purposes of this appeal. In the first, HUD challenges court-ordered subsidization of a Dallas public housing agency in regard to vacant units slated for demolition. In the other, HUD maintains that the post-decree legislation that eliminates federal funding for the demolition of the units is not, as the district court held, an unconstitutional breach of the doctrine of separation of powers. Further, HUD asserts that the legislation limiting federal approval of public housing demolitions contemplates only the prospective, not retroactive, application of its restrictive housing replacement features. We vacate in one appeal and reverse in the other.

I.

This housing discrimination case traces back to 1985, when minority participants in low-income housing programs challenged the nonparticipation of Mesquite, Texas, in a federally financed voucher plan to desegregate housing. The complaint was amended to include other Dallas metropolitan suburbs, the Dallas Housing Authority (DHA), and HUD. ¹ The putative class, comprised of about 7,200 black households residing in DHA-owned or -managed property and participating in the voucher program, alleged that the defendants historically had administered Dallas's housing assistance programs in a racially discriminatory fashion.

In particular, minority families living in a dilapidated urban housing project, known colloquially as the "West Dallas project," claimed that they were being denied full participation in DHA's "Section 8 Existing Housing Program." This social program is designed to desegregate the racially identifiable Dallas projects through the use of certificates ² and vouchers. ³ Participants are entitled to select rental housing in more affluent Dallas metropolitan areas and thus depart the historically dangerous slums.

To enlist local property owners, HUD is authorized to compensate landlords in the section 8 program at 120% of fair market rental. In this case, HUD agreed to provide such above-market compensation for DHA vouchers and certificates, although the district court concluded that DHA failed to administer this program aggressively. Nevertheless, the section 8 program offers the promise of desegregating housing and alleviating the enormous governmental expense of reconstructing housing for the indigent.

Those suburban communities that agreed to participate in the DHA section 8 program were dismissed from the litigation, ⁴ leaving the minority plaintiff class, DHA, and HUD. The case never went to trial, however, as the litigants entered into a consent decree regarding the future of the West Dallas project. ⁵ The district court approved the decree as being fair to all parties.

The consent decree recognizes that of the 3,500 West Dallas housing units still standing, approximately 1,300 are vacant and unfit for human habitation because of lead contamination and physical deterioration. The decree also recognizes "an unbroken pattern of purposeful racial segregation and discrimination by DHA dating from the inception of DHA's program to the present day...." Essentially, DHA traditionally had operated its housing program to prevent blacks from moving into white areas of the city, and it purposefully maintained separate, racially identifiable housing projects. HUD, however, disclaims any liability or discriminatory conduct in this matter.

The decree obligated DHA to develop and submit to HUD for approval a comprehensive plan for revitalization of the West Dallas project. The plan accordingly developed by DHA recommends the modernization of 800-900 units with the $18 million of federal funds previously allocated to DHA in 1983 and the demolition of the remaining 2,600 units over a five-year period. The demolition at West Dallas would be coupled with the issuance of a like number of section 8 certificates and vouchers to replace demolished units and to house displaced families.

The anticipated five-phase demolition schedule, it was hoped, would mimic the pace at which substitute housing was made available to class members. By a combination of modernization, certificates and vouchers, and limited construction, all units of West Dallas housing would be replaced on a one-for-one basis. At the time, federal law did not require one-for-one substitution of housing to secure HUD approval for demolitions.

HUD approved DHA's revitalization plan as being in compliance with federal low-income housing laws, see 42 U.S.C. Secs. 1437 et seq. Further, it pledged sufficient federal resources to DHA to provide 1,000 units of additional housing under the revitalization plan, apart from the 800-900 units to be modernized. HUD's commitment translated into the reconstruction of 100 units of public housing--the first such construction to take place in Dallas since the 1950's--and the issuance of 450 units of section 8 certificates and 450 units of section 8 vouchers. All parties recognize that the revitalization plan reflects the fact that no possibility exists of achieving an acceptable physical and social living environment in the West Dallas project, absent a massive commitment of about $65-88 million in unavailable resources.

In January 1987, the district court approved the consent decree and the eventual demolition of 2,654 units, after extensive public hearings on the proposed settlement from various interest groups. Approximately eighteen months thereafter, in July or August 1988, HUD announced to DHA that it would drastically reduce, from $124.96 to $50.00 per unit per month, the $1.2-1.5 million "operating subsidy" used to maintain vacant units slated for demolition.

HUD never secured court approval for the reduction in subsidization. Further, it implemented the reduction retroactively for fiscal years 1987 and 1988. The minority plaintiffs responded by filing a motion to restore the deprogrammed units, and DHA filed separately to enforce or modify the decree to restore past levels of subsidization regarding vacant units. The minority plaintiffs contended, and the court agreed, that HUD's reduction in operational subsidies is barred by paragraph 8 of the consent decree, which provides,

During the implementation of the Decree and Plan, any proposal to sell or otherwise remove from the housing inventory of DHA any housing units, other than as provided in this Decree or as may occur in the normal operations of DHA programs in order to provide office or support staff, will be submitted to the Court for approval to insure that such action will not interfere with implementation of the Decree and Plan. This requirement will cease at such time as DHA is determined, as provided below, to have complied with this Decree. This requirement shall not apply to proposals to modernize, upgrade or redevelop project sites in a manner that does not result in a reduction in the number of units available at the project site.

After a November 1988 hearing, the court admonished HUD for undermining the consent decree. It ordered HUD to pay $1.8 million to DHA, representing the aggregate loss to DHA in federal funding. Alternatively, the court modified the decree to award the same relief, reasoning that it would not have approved the plan absent the annual $1.2-1.5 million operational subsidy from HUD for the vacant units. The court concluded that since DHA has no power to tax, "its ability to comply with the Decree would have been virtually impossible without the operating subsidy from HUD."

The reduced federal subsidization translated into a significant loss of annual revenue to DHA, which complained bitterly that...