The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge
In this case, Plaintiffs challenge the Department of Housing and Urban Development's implementation of an appropriations act applying a new funding structure to the Section 8 low-income housing program as violating the Administrative Procedure Act (APA) and the Due Process and Takings Clauses of the Fifth Amendment. Presently before the Court are  Plaintiffs' Motion for Summary Judgment and  Defendants' Motion for Summary Judgment. After reviewing the Parties' motions and related filings, the operative complaint, the relevant statutes and case law, and the entire record herein, the Court shall 1) grant Defendants' Motion and deny Plaintiffs' Motion with respect to Plaintiffs' Takings and Due Process claims, accordingly dismissing said claims; 2) grant Plaintiffs' Motion and Deny Defendants' Motion with respect to Plaintiffs' APA claim; and 3) issue a remand to HUD to implement the Act at issue in a manner that comports with the APA as set forth in the instant Opinion.
A. Public Housing Authorities and Section 8*fn1
The Section 8 Program, authorized by Congress in 1974, provides rental subsidies to eligible individuals and families. Cisneros v. Alpine Ridge Group, 508 U.S. 10, 12, 113 S.Ct. 1898, 1900, 123 L.Ed. 2d 572 (1993). Recipients live in a variety of facilities, including new construction, rehabilitated properties, properties with mortgages secured by the federal government, and privately owned rental properties. HUD, Section 8 Program Background Information, at http://www.hud.gov/ offices/hsg/mfh/rfp/s8bkinfo.cfm (content updated Mar. 18, 1999) ("Section 8 Background"). Section 8 is aimed primarily at providing housing for very low income families, defined as those families "whose annual income is at or below 50% of the median income of the area in which the project is located, adjusted for family size." Id. Such families are expected to contribute no more than thirty percent of their adjusted gross monthly income for rent, with Section 8 funds making up the difference between the beneficiary's payment and the local reasonable rent level or the actual rent, whichever is lower.*fn2 Id.; Catalogue of Federal Domestic Assistance § 14.871 (Jan. 2004) ("CFDA"). The primary distribution system for Section 8 housing assistance funds is the Housing Choice Voucher Program ("Voucher Program"). The Voucher Program has a two-tiered administrative system. At the national level, the United States Department of Housing and Urban Development (HUD) oversees distribution of funds appropriated by Congress. At the local level, roughly 2600 Public Housing Authorities (PHAs) conduct eligibility determinations, disbursement of funds, inspections of subsidized housing units, and related duties. See 42 U.S.C. § 1437f(o) (West 2004); Plaintiffs' Amended Complaint ("Am. Compl.") ¶ 111. A PHA is "[a]ny State, county, municipality or other governmental entity . . . authorized to administer the program," a consortium of such entities, or, in some limited circumstances, a private non-profit entity. 24 C.F.R. § 982.4 (West 2004).
The Voucher Program aims to create "a single market-driven program that will assist in making tenant-based rental assistance more successful at helping low-income families obtain affordable housing and will increase housing choice for low-income families." CFDA § 14.871. Once issued a voucher, the beneficiary is responsible for locating a dwelling unit of sufficient quality with a willing owner. 24 C.F.R. 982.1(a)(2) (West 2004). If the PHA approves the beneficiary's selection, it contracts directly with the owner of the unit and makes payments on behalf of the family. Id. In Fiscal Year 2003, the Voucher Program served approximately 2.1 million clients, disbursing $12.86 billion in rent payments. CFDA § 14.871.
PHAs are subject to a number of conditions in connection with their administration of the Voucher Program. These conditions are contained in a consolidated Annual Contributions Contract ("ACC") between HUD and each individual PHA.*fn3 The relevant provisions for the purposes of this case are as follows:
2. Funding for HA Certificate or Voucher Program
c. By giving written notice to the HA [Housing Authority], HUD may revise the funding exhibit [statement of funding for a fiscal year] for a program:
(1) To add a funding increment,*fn4 or
(2) To remove a funding increment for which the ACC term has expired.
d. The HUD notice must include a revised funding exhibit, specifying the term, contract authority [the maximum annual payment by HUD to the HA for a funding increment irrespective of funds appropriated by Congress], and budget authority [the maximum amount of funds actually available for payment to the HA for a funding increment] for each funding increment under the consolidated ACC. The HUD notice of a revised funding exhibit for a program constitutes an amendment of the consolidated ACC.
4. HUD Payments for Program
a. HUD will make payments to the HA for a program in accordance with HUD regulations and requirements.
b. For each HA fiscal year, HUD will pay the HA the amount approved by HUD to cover:
(1) Housing assistance payments by the HA for the program.
(2) HA fees for administration of the program.
5. Maximum Payments for Program
a. Annual Limit Except for payments from the consolidated ACC reserve account, the HUD annual payments for a program during a fiscal year must not be more than the sum of the contract authority amounts for the funding increments in the program.
b. Limit on Payments for Funding Increment The total amount of payments for any funding increment over the increment term must not exceed budget authority for the funding increment.
6. Reduction of Amount Payable by HUD
a. If HUD determines that the HA has failed to comply with any obligations under the consolidated ACC, HUD may reduce to an amount determined by HUD:
(1) The amount of the HUD payment for any funding increment.
(2) The contract authority or budget authority for any funding increment.
b. HUD must give written notice of the reduction.
c. The HUD notice must include a revised funding exhibit specifying the term, contract authority, and budget authority for each funding increment under the consolidated ACC. The HUD notice of revisions to the funding exhibit for a program constitutes an amendment to the consolidated ACC.
9. Budget and Requisition for Payment
a. Each fiscal year, the HA must submit to HUD an estimate of the HUD payments for the program. The estimate and supporting data must be submitted at such a time and in such form as HUD may require, and are subject to HUD approval and revision.
b. The HA must requisition periodic payments on account of each annual HUD payment. Each requisition must be in the form prescribed by HUD. Each requisition must include certification that:
(1) Housing assistance payments have been made in accordance with the contracts in the form prescribed by HUD and in accordance with HUD requirements; and
(2) Units have been inspected by the HA in accordance with HUD requirements.
c. If HUD determines that payments by HUD to the HA for a fiscal year exceed the amount of the annual payment approved by HUD for the fiscal year, the excess must be applied as determined by HUD. Such applications determined by HUD may include, but are not limited to, application of the excess payment against the amount of the annual payment for a subsequent fiscal year. The HA must take any actions required by HUD respecting the excess payment, and must, upon demand by HUD, promptly remit the excess payment to HUD.
a. The HA must comply, and must require owners to comply, with the requirements of the U.S. Housing Act of 1937 and all HUD regulations and other requirements, including any amendments or changes in the law or HUD requirements.
b. The HA must comply with its HUD-approved administrative plan, and HUD-approved program funding applications.
a. The HA must use program receipts [amounts paid by HUD to the HA for a program, and any other amounts received by the HA in connection with the program] to provide decent, safe, and sanitary housing for eligible families in compliance with the U.S. Housing Act of 1937 and all HUD requirements. . . .
b. The HA must not make any program expenditures, except in accordance with the HUD-approved budget estimate and supporting data for a program.
c. Interest on the investment of program receipts constitutes program receipts.
d. If required by HUD, program receipts in excess of current needs must be promptly remitted to HUD or must be invested in accordance with HUD requirements.
12. Administrative Fee Reserve
a. The HA must maintain an administrative fee reserve for a program. The HA must credit to the administrative fee reserve the total of:
(1) The amount by which program administrative fees paid by HUD for a fiscal year exceed HA administrative expenditures for the fiscal year, plus
(2) Interest earned on the administrative fee reserve.
b. The HA must use funds in the administrative fee reserve to pay administrative expenses in excess of program receipts. If any funds remain in the administrative fee reserve, the HA may use the administrative reserve funds for ...