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ROCKY FORD HOUS. AUTH. v. USDA

January 18, 1977

ROCKY FORD HOUSING AUTHORITY et al., Plaintiffs,
v.
UNITED STATES DEPARTMENT OF AGRICULTURE et al., Defendants



The opinion of the court was delivered by: RICHEY

 UNITED STATES DISTRICT, JUDGE CHARLES R. RICHEY

 This case is before the Court on plaintiffs' motion for class certification and on cross-motions for summary judgment. The case arises out of the refusal of the Secretary of Agriculture to implement the "rural rent supplement program" created by section 514 *fn1" of Title V of the omnibus Housing and Community Development Act of 1974 [the 1974 Act]. If implemented, this program would make rental housing available to low-income families in rural areas at a rate not to exceed 25 per cent of income. See H.R. Rep. No. 93-1114, 93d Cong., 2d Sess. 385 (1974). The funds for this program would be derived from "excess rental charges," as provided in 42 U.S.C. § 1490a(a)(2)(C), and from the Rural Housing Insurance Fund [RHIF], as provided in 42 U.S.C. § 1490a(c), which would be reimbursed for such outlays by annual appropriations.

 There are two classes of plaintiffs, low-income individuals in rural areas and sponsors of multifamily housing financed by FmHA. They assert that section 514 mandates the Secretary to implement the rural rent supplement program. Alternatively, they claim that if the Secretary had discretion to decide whether to implement section 514, he has abused that discretion. Finally, they argue that even if the Court concludes that the Secretary has discretion not to implement the program and that he has not abused such discretion, the Court should still grant relief to the plaintiffs because the defendants have failed to comply with the Impoundment Control Act of 1974. 31 U.S.C. §§ 1400 et seq. (Supp. V 1975). The plaintiffs seek declaratory and injunctive relief ordering the defendants to implement the section 514 program.

 In their cross-motion for summary judgment, the defendants take the position that none of the named or class organizational plaintiffs have standing to bring the present action and that not all of the named or class individual plaintiffs have standing. The Court will treat this aspect of defendants' summary judgment motion as a motion to dismiss. For this and other reasons, *fn2" defendants also oppose any class action certification in this case. With regard to the merits, the defendants assert that section 514 does not mandate implementation of the rural rent supplement program but rather confers a discretionary authority on the Secretary. They further argue that the Secretary's decision not to implement the program is reasonable and not an abuse of discretion since "nearly identical benefits" will be provided to the intended beneficiaries of section 514 as a result of the Secretary's Memorandum of Understanding with the Department of Housing and Urban Development [HUD]: Pursuant to this Memorandum, rental assistance for low-income families residing in rural areas would be made available pursuant to section 201(a) of the Housing and Community Development Act of 1974, 42 U.S.C. § 1437f, *fn3" rather than pursuant to section 514. Finally, defendants assert that plaintiffs fail to state a claim upon which relief can be granted under the Impoundment Control Act and that the refusal to implement the section 514 program is not an "impoundment" within the meaning of the Act.

 I. Defendants' Motion to Dismiss for Lack of Standing

 The first issue that the Court must address is that of standing. The defendants contend that (1) not all of the named, individual plaintiffs have standing, and (2) no named, organizational plaintiff has standing.

 (A) Individual Plaintiffs

 The defendants admit, and there can be no doubt under even the most restricted reading of the law of standing, that those plaintiffs who (1) presently live in "qualified" housing projects, *fn4" (2) presently pay in excess of 25 per cent of their "adjusted income" for rent, *fn5" and (3) would pay no more than 25 per cent of their adjusted income for rent if the section 514 rural rent supplement program were implemented have standing to maintain this action. The Court concludes that five named plaintiffs -- Josie Burciago, Della Martinez, Emilla Camacho, Connie Warman, and Rafael Villagran -- have sufficiently established these three facts to support their standing.

 The remaining two named, individual plaintiffs -- Julia Middleton and Blanch Mullen -- currently live in "nonqualified" housing. Plaintiff Julia Middleton states in her affidavit that she has already completed an application for a unit in the Lambertville project being constructed by plaintiff Northwest New Jersey Housing Development Corporation. In her affidavit, plaintiff Blanch Mullen specifically states that she desires to and would live in the Lambertville project if she could afford it. Because of the extremely low incomes of both these plaintiffs, they now pay and, unless they receive rental subsidies, will continue to pay far more than 25 per cent of their adjusted income for rent. Notwithstanding these undisputed assertions, the defendants contend that the most recent Supreme Court decisions on standing, Warth v. Seldin, 422 U.S. 490, 45 L. Ed. 2d 343, 95 S. Ct. 2197 (1975), and Simon v. Eastern Kentucky Welfare Rights Organization [Eastern Kentucky], 426 U.S. 26, 96 S. Ct. 1917, 48 L. Ed. 2d 450 (1976), preclude plaintiffs Julia Middleton and Blanch Mullen from maintaining the present action.

 Although the precise parameters of standing are none too certain in the wake of Warth and Eastern Kentucky, it seems clear that both of these plaintiffs have standing to bring this case. Warth requires that a plaintiff "must allege facts from which it reasonably could be inferred that . . . there is a substantial probability" that the plaintiffs would be able to find the desired low-cost housing "if the court affords the relief requested." 422 U.S. at 504 . . . Certainly it must be more than "speculative" that the exercise of the Court's remedial powers would result in the availability to the plaintiffs of the low-cost housing they seek. Eastern Kentucky, 96 S. Ct. at 1926. More specifically, the Warth Court suggested that plaintiffs challenging zoning restrictions would have standing "as applied to particular projects that would supply housing within their means, and of which they were intended residents," 422 U.S. at 507, even if the plaintiffs possessed no "present contractual interest." 422 U.S. at 508 n. 18. *fn6"

 On the basis of the foregoing it seems clear that the determination that plaintiffs Julia Middleton and Blanch Mullen have standing in the present case is not only not inconsistent with Warth, but is in fact expressly sanctioned by the Supreme Court's opinion: If this Court grants the plaintiffs the relief they request and orders the defendants to implement the section 514 rural rent supplement program, there is a substantial probability that the particular project in which they seek to live would be able to provide them with housing at rentals no higher than 25 per cent of their adjusted incomes.

 (B) Organizational Plaintiffs

 The defendants contend that neither the Rocky Ford Housing Authority [Rocky Ford], the Northwest New Jersey Housing Development Corporation, nor the Community Development Board of Avon Park, Frostproof, and Wauchula Area, Inc., [Avon Park] have standing to challenge the Secretary's decision not to implement section 514. For the following reasons, the Court concludes that both Rocky Ford and Northwest have standing, but that Avon Park does not.

 Plaintiff Rocky Ford is a public housing authority that owns and manages two "qualified" low-income housing projects, which contain a total of 40 units, in the City of Rocky Ford, Colorado. Plaintiff Rocky Ford states that it requested rental assistance for its two projects on January 30, 1976, but was told that no assistance would be available because section 514 was not being implemented. It asserts that present tenants who are forced to pay more than 25 per cent of their income for rent have "constantly" fallen behind in their payments and that these arrearages are causing it serious financial difficulties. Rocky Ford alleges that implementation of section 514 would better enable tenants to meet their rents and thus alleviate the Authority's financial problems.

 The essence of defendants' position is that neither Rocky Ford nor Northwest have suffered (1) any injury "in fact" or (2) an interest "arguably within the zone of interests protected or regulated" by section 514. See Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970). In assessing defendants' argument, it must be remembered that

 
. . . Congress may create a statutory right or entitlement the alleged deprivation of which can confer standing to sue even where the plaintiff would have suffered no judicially cognizable injury in the absence of statute.

 Warth v. Seldin, supra, 422 U.S. at 514. Thus, unlike in Warth, where no federal statute was involved, this Court must examine the statutory scheme in considering the plaintiffs' alleged injuries.

 The defendants are correct, of course, in asserting that the primary intended beneficiaries of section 514 are low-income persons residing in rural areas who are unable to find decent rental housing for 25 per cent or less of their income. However, it is certainly possible for Congress to have intended that section 514 serve the interests of housing sponsors as well. *fn7" The Court, after analyzing the entire rural housing scheme enacted by Congress, concludes that Congress intended to invest housing sponsors with a legally cognizable interest in providing decent housing to a particular type of tenant -- low-income persons. Since it is clear that Rocky Ford is, and that Northwest will be, forced, in the alternative, to incur financial injury as a result of the inability of low-income tenants to pay in excess of 25 per cent of their income for rent or to suffer injury to their statutory interest in providing housing to low-income persons, cf. Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 50 L. Ed. 2d 450, 97 S. Ct. 555, 45 U.S.L.W. 4073, 4076 (1977), the Court concludes that both Rocky Ford and Northwest have standing in the present case. See Commonwealth of Pennsylvania v. Lynn, 362 F. Supp. 1363 (D.D.C. 1973), rev'd on other grounds, 163 U.S. App. D.C. 288, 501 F.2d 848 (1974); Battles Farm Co. v. Hills, 414 F. Supp. 521 (D.D.C. 1976). These plaintiffs are clearly asserting their own rights and not, as defendants contend, the "putative rights of third parties." Warth v. Seldin, supra, 422 U.S. at 514.

 Moreover, the Court finds further support for its conclusions on these organizations' standing in the administrative scheme established by section 514. Any contracts for rental assistance pursuant to this section would be between the project owner and the Secretary and all payments would be made directly to the owner. Furthermore, section 514 imposes significant duties on the owner of any assisted project. In view of the essential role that project owners would play if section 514 were implemented, the Court feels confident that Congress intended that they have the right to sue to protect their interests.

 With regard to plaintiff Avon Park, however, the Court agrees with the defendant that Avon Park's claims should be dismissed. The complaint alleges that Avon Park has applied to FmHA seeking a section 515 loan to construct 52 units of rental housing. *fn8" In addition, it alleges that Avon Park has applied for rental assistance pursuant to section 514 for 10 of the units. Unless its section 515 loan application is approved, plaintiff Avon Park would not even qualify for rental assistance. Moreover, until the section 515 loan is approved, there will not even be the probability that the proposed project will be completed. Thus, the Court must conclude that plaintiff Avon Park's complaint fails to allege a "live, concrete dispute." Warth v. Seldin, supra, 422 U.S. at 517. Accordingly, the Court will dismiss plaintiff Avon Park's claims against the defendants.

 II. Plaintiffs' Motion for Class Certification

 The named, individual plaintiffs seek class action certification pursuant to Fed.R.Civ.P. 23 as representatives of all individuals who are now or in the future become (1) eligible to receive the benefits of the rural rent supplement program; *fn9" (2) tenants or applicants of the proposed class of organizational plaintiffs; and (3) who are now paying or will in the future have to pay more than 25 per cent of their adjusted income for rent. The named, organizational plaintiffs seek certification to represent all private nonprofit corporations and public housing authorities that own, operate, have under construction, or have filed applications to own or operate or will in the future file applications to own and operate rural housing financed under sections 514, 515, and 517 *fn10" of the Housing Act of 1949, as amended, 42 U.S.C. §§ 1484, 1485, 1487 ...


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