NHLP | Advancing Housing Justice



IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NORTHERN TEXAS

Civil Action No.

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MEMORANDUM IN SUPPORT OF APPLICATION FOR

TEMPORARY RESTRAINING ORDER/PRELIMINARY INJUNCTION

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I. INTRODUCTION AND SUMMARY OF CLAIMS

Since approximately October 2003, up to 75 low income tenants of Prince Hall Chambre Apartments (“Prince Hall”) have been forced to pay unaffordable rents because the defendant owner Giddens has deprived them of federal rent subsidies to which they were entitled. Not only have these tenants and their families endured the financial and other hardships caused by paying more than they could afford for rent, some have already suffered and others are threatened with termination of utilities and ultimately the loss of their homes. Not only have these families been deprived of the section 8 subsidies to which they’ve been entitled, but the actions of both the owner and the United States Department of Housing and Urban Development (“HUD”) threaten to prematurely and illegally terminate their right to “enhanced “ vouchers, which would ensure their right to remain living at Prince Hall.

In their complaint, the plaintiffs raise a number of claims against both the owner and HUD. This motion, however, is focused on just a part of the case that needs the Court’s immediate attention. Plaintiffs seek a temporary restraining order and/ preliminary injunction to achieve two objectives : 1. preserving the right of all sSection 8 eligible residents to receive enhanced vouchers, including, if necessary preserving the existing Section 8 contract at Prince Hall until the Court can determine plaintiffs’ claims to sSection 8 assistance; 2. provide short term protection to plaintiff tenants from the risk of eviction or displacement by preventing eviction or lockouts or termination of utilities based on a tenant’s inability to pay market rate rents.

The first objective is necessary because if the Section 8 contract expires on June 30, HUD may take the position that they no longer have legal authority to provide the sSection 8 subsidies which plaintiffs seek. The second objective is necessary because a number of Prince Hall residents have been threatened with or experienced eviction, utility termination and lockout solely because they could not afford to pay an illegally excessive rent.

As a result Pplaintiffs move pursuant to Rules 65 (a) of the Federal Rules of Civil Procedure for a temporary restraining order and preliminary injunction to enjoin the defendants from taking actions that will threaten the permanent loss of housing subsidies to which plaintiffs would be entitled but for the illegal actions of defendants and that will lead to the displacement of the low income plaintiff tenants from their homes at Prince Hall Chambre Apartments. Without preliminary injunction relief, plaintiffs are faced with these irreparable injuries before their underlying claims against the defendants for their unlawful actions can be fully adjudicated

Defendant Owner’s unlawful actions which threaten plaintiffs with irreparable injury include (a) failure to fully utilize rent subsidies for the benefit of plaintiffs as required by 24 C.R.F. §§ 245.205 and 886.129, and the terms of a section 8 Housing Assistance Payments (HAP) contract, and (b) failure to comply with the terms of a Use Agreement and the HAP contract which require ongoing maintenance of the property in good, decent and sanitary condition, thereby threatening the residents who are participating in the sSection 8 program with loss of their homes.

Defendant HUD’s unlawful actions which threaten plaintiffs with irreparable injury include (a) failing to assure that the oOwner not interfere with tenants’ obtaining rent subsidies as required by 12 U.S.C. § 1715z-1b, which would prevent their displacement and (b) violating the enhanced voucher statute, 42 U.S.C. §1437f(t); and (c) violating itsHUD’s duty to administer its programs so as to affirmatively further fair housing, 42 U.S.C. § 3608.

Moreover, the defendants’ actions have had and will continue to have a disparate adverse impact upon minority residents and minorities in need of subsidized housing, in violation of the Fair Housing Act.

II. FACTUAL AND LEGAL BACKGROUND

A. Prince Hall Chambre Apartments – Affordable Housing for Low Income Tenants

Prince Hall Chambre Apartments (Prince Hall) is a 192 -unit apartment complex located at 3650 Dixon Avenue, Dallas, Texas. The complex contains a mix of 1, 2, 3 and 4 bedroom units. Affordable rental units, particularly larger units available for families, are a scarce housing resource in the Dallas area.

Almost all of the tenants at Prince Hall are racial minorities. Most residents are African American and almost all the rest are Hispanic. In contrast, according to the latest data available, from the 2000 Census, 13.6 % of the Dallas metropolitan area population is African-American, and African Americans disproportionately need subsidized housing. Approximately 87% of the Dallas Housing Authority’s Ssection 8 recipients and those on its waiting list are African American.

The complex was previously owned by the Prince Hall Chambre Charitable Trust (the “Trust”) which conveyed the property to the current owner, defendant, Harvey Giddens (“Owner”) sometime in October 2003. Mr. Giddens’ involvement with the property began much earlier when he was retained to manage in the property in approximately March 2002.

Prior to October 2003, the property was subject to a mortgage made and subsidized under the federal section 221(d)(3) mortgage program under which rents were restricted to ensure the project remained affordable to its lower income residents.. As is the case with many developments under federal multifamily programs, HUD determined that further subsidies were necessary to make these buildings affordable to very low income households beyond subsidizing the owner’s mortgage payments. As a result, the property is further subsidized with a project-based sSection 8 contract or Housing Assistance Payments contract (HAP) originally covering all 192 units and now covering 168 of the 192 units. Under this contract, the residents of the units covered pay rent equal to thirty percent of their adjusted incomes and the oOwner receives a subsidy from HUD to cover the difference between the rent paid by the tenants and the Contract Rents approved by HUD. The HAP contract obligates the Owner to ensure that the maximum number of units covered by the contract be rented to eligible tenants who will benefit from the subsidy provided. This is also required by applicable HUD regulations. 24 C.F.R. §§ 245.205; 886.129. The HAP contract also requires maintenanceainance of the property in good and habitable condition.

Severely substandard conditions at Prince Hall led to a lawsuit by the City of Dallas in 2002 to compel the then owner, the Trust, to address the problems. Following a judgment and injunction in favor of the City in March 2002, the ownerTrust took two other actions. First, iIt decided not to renew the Section 8 HAP contract, issuing a one year notice of the intention to “opt out” of the program. Second, the owner and it hired defendant Harvey Giddens to manage the property.

At some point in time the owner Trust also agreed to transfer ownership of the property to the ddefendant, Harvey Giddens. Prior to the decline in conditions leading to the City’s lawsuit, the tenants of Prince Hall generally were the recipients of the full authorization of 168 units of sSection 8 subsidies. However, because of deteriorating conditions and the beginning of the rehabilitation process, about half the units becamewere vacant during this period of time.

As defendant Giddens completed his rehabilitation of the vacant units, he re-rented them to new tenants. Many, if not all of these tenants, are likely to be eligible for Section 8. Despite that fact,Nonetheless, defendant Giddens refused to process and certify these tenants for Section 8 subsidies, even wheren these tenants inquired about rent subsidies. HUD officials were aware Giddens was failing to certify new tenants for Section 8, but apparently took no action to assure that heGiddens began compliedying with his Section 8 duties.

As a result, up to 75 households now reside at Prince Hall without the benefit of subsidized rent.

On or about August 7, 2002, defendant Giddens executed a Use Agreement with HUD. Both the HAP contract and Use Agreement prohibit the Owner from discrimination based on race and require compliance with the Fair Housing Act.

B. The Plaintiff Tenants Association and Individual Plaintiffs.

Prince Hall Chambre Tenants’ Association (the “Association”) is an unincorporatedion association of tenants living at Prince Hall. Although the Association has been in existence for a number of years, it resumed regular meetings in November 2002 when a steering committee was formed. Membership in the Association is open to all residents of Prince Hall. The Association’s mission includes representing residents in issues affecting their homes and influencing management decisions about the property for the best interests of the residents. The Association complies with the HUD definition of tenant organization and has met at least monthly and sometimes much more often since November 2002. The Owner’s violations of the HAP contract and Use Agreement and HUD’s violations of law have significantly harmed Tthe ability of the Association to carry out its mission mission.has been significantly harmed by the Owner’s violations of the HAP contract and Use Agreement and by HUD’s violations of law.

As a result, some of the Association’s members have been denied the benefit of sSection 8 assistance under the HAP contract and are paying rent well in excess of that which they can afford. These members will continue to struggle with unaffordable rent burdens and may have to move from Prince Hall either voluntarily or in response to the oOwner’s eviction for nonpayment of rent.

In addition to depriving many tenants being deprived of Section 8 assistance, all tenants have been deprived of the right to remain in their homes with their Section 8 benefits. This right exists because Federal law requires that when owners such as defendant Giddens choose to “opt out” (not renew the contract) of the Section 8 program , tenants who had been receiving a project based Section 8 subsidy attached to their unit will instead receive an “enhanced voucher.” 42 U.S.C. § 1437f (t). These enhanced vouchers permit tenants to take their rent subsidies and move elsewhere, or if the tenant stays, the vouchers providevouchers provide rent protections to the tenants should the owner increase the rents after the contract expiration. Further, the statute protects tenants with enhanced vouchers from displacement by mandating that they be allowed to remain living at the property after the contract expiration subject to lease termination only for cause.

HUD has taken no steps to provide enhanced vouchers to Section 8 eligible tenants who are not currently receiving Section 8 assistance, despite HUD policies which make such vouchers available to all low income tenants whose units are covered by the Section 8 project-based contract, which require HUD to begin processing the vouchers at least 120 days prior to contract expiration, and which requireprovide that residents should receive these vouchers 60 days prior to contract expiration. HUD Notice PIH 2001-41, ps. 14-16, 19; HUD Section 8 Renewal Policy, § 11-3.B.2. The low income tenants who reside in the 75 units which the Owner refused to make part of the HAP contract could be denied the benefit of the enhanced vouchers upon expiration of the contract on June 30, 2004. Even if they subsequently receive the Section 8 assistance of which they have been deprived of, unless the assistance comes in the form of enhanced vouchers, there will be no assurance they can remain at Prince Hall.

These affected tenants include disabled individuals, single working mothers with minor children, and other very low income working families who are already struggling to provide a stable home environment. If they have to move from their current homes they it will suffercause significant disruption and harm to these low income plaintiff families. These tenants chose Prince Hill Chambre as their homes in part because of its location that is close to their jobs (Jones Declaration,), their children’s’ schools (Jones Declaration), friends, family and accessible public transportation (Declaration). Some of these tenants have already endured harm related to their having to suffer tThis burden of unaffordable rent has already caused harm to some tenants who have been charged huge late fees for nonpayment, had electricity to their unit shut off and been denied access to their unit by the owner’s changing of the locks. (Durham Declaration)

C. HUD’s Actions

HUD approved the transfer to Giddens, knowing of his intention to prepay the mortgage and opt out of Section 8. HUD knew that this path would necessitate the issuance of enhanced vouchers to tenants to give them the protections of federal law. However, HUD has taken no steps to make enhanced vouchers available. Thus the 75 households who have been illegally denied project subsidies also face the threat of permanent loss of the ability to receive enhanced vouchers once the project-based contract expires at the end of June.

HUD consented both to Mr. Giddens’ purchase of the property and his desire to pay off the HUD mortgage early. Defendant Giddens’ response has been to flout his legal obligations to provide tenants with Section 8 and to maintain the property. At a tenants’ meeting on April 22, 2004, Giddens told tenants, “ I“I danced to HUD’s tune for two or three years. Now they are dancing to mine.” Rollins Declaration.

III. ARGUMENT

Plaintiffs’ Complaint seeks the following relief:

1. A permanent injunction directing the Owner and HUD to immediately take all steps necessary to provide all eligible tenants with the benefits of the project’s sSection 8 contract and an order that the Owner reimburse all eligible tenants for the Owner’s previous failure to provide such tenants with the benefits of the project’s sSection 8 contract.

2. A permanent injunction prohibiting the Owner from taking any action to terminate the occupancy of any tenant eligible to receive assistance under the HAP contract but for whom assistance was not sought by the Owner.

3. A permanent injunction directing the Owner to take all steps necessary to bring the condition of Prince Hall in compliance with the HAP contract and the Use Agreement and an award of damages for the Owner’s failure to provide decent safe and sanitary housing to Section 8 recipients.

4. A permanent injunction requiring HUD to issue vouchers to all low income tenants receiving, or eligible to receive, assistance under the HAP contract, so as to allow them to remain living at Prince Hall.

5. A permanent injunction requiring HUD and the Owner to permit any persons displaced by the Owner’s failure to adequately maintain the property to return to the property after repairs are made and to continue their residence there with ana voucher.

In order to maintain the status quo, and prevent irreparable injury to the plaintiffs pending resolution of the case on the merits, plaintiffs are entitled to a temporary restraining order and preliminary injunction:

1. Ordering that Ddefendant Giddens immediatelyGiddens immediately notify all current residents not receiving Section 8 that they will be required to pay rent equal to no more than thirty per cent of their adjusted gross income and that as long as tenants pay rent equal to that standard they shall not be evicted or subjected to lock-outs or utility terminations for non-payment of rent even if they owe arrears from prior to the date of this order. Any tenants who have had their electricity terminated for non-payment of rent shall immediately have their service restored by defendant Giddens. As long as a tenant pays future rent based upon this standard, they shall not be locked out or have their utilities terminated during the pendency of this action.

2. Ordering that Plaintiff Valenshay Durham immediately be offered the next vacant apartmentvacant apartment in Prince Hall and shall subsequently be charged rent based upon the standard set out above.

3. Ordering that during the pendency of this action, any new tenants moving in shall have their rent determined by the same standard set out above, providing they are eligible for the section 8 program and that the total number of tenants on Section 8 has not exceeded 168.

4. Ordering that the oOwner and HUD immediately take all necessary actions to ensure that eligible tenants do not lose the opportunity to secure enhanced vouchers pending a determination on the merits, including, if necessary, extending the existing Ssection 8 contract.

5. Ordering that HUD set aside legal and budget authority for 168 enhanced vouchers, to be provided both to Prince Hall tenants previously receiving Section 8 as well as those tenants who have been deprived of Section 8 assistance, and shall be prohibited from taking any action which would deny enhanced voucher eligibility for these households pending a final determination on the merits.

A. Plaintiffs satisfy the requirements for Issuance of a Temporary Restraining Order and Preliminary Injunction

1. Standards for Temporary and/or Preliminary Injunctive Relief

Rule 65 of the Federal Rules of Civil Procedure provides for the issuance of preliminary relief.. A plaintiff seeking preliminary injunctive relief must show: (a) the threat of irreparable injury to the plaintiffs if the injunction is not granted; (b) the threatened injury to the plaintiff must outweigh the threatened injury to the defendant if the injunction is granted; (c) a substantial likelihood the plaintiffs will succeed on the merits; and, (d) the injunction must not disserve the public interest. Evergreen Presbyterian Ministries, Inc. v. Hood, 235 F.3d 908, 917-18 (5th Cir. 2000), State of Texas v. Seatrain International, S.A., et. al., 518 F.2d 175, 179 (5th Cir. 1975). As explained below, plaintiffs readily satisfy these standards.

2. Plaintiffs Will Suffer Immediate and Irreparable Harm in the Absence of a Temporary Restraining Order and/or Injunctive Relief

Irreparable harm to the moving party creates the urgency justifying immediate relief, and is, therefore, a vital element of injunctive relief. Although the injury can take many forms, it must be of such a nature that a legal remedy will not make the injured party whole. Dresser-Rand Company v. Virtual Automation Inc., 361 F. 3d 831, 847-48 (5th Cir 2004). See generally 11A C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure § 2948.1 (2d ed. 1995).

Those tenants who’ve never been given the benefit of Section 8 struggle on a daily basis to pay unaffordable rents. This has caused some tenants to default on their rent obligations, which has lead to threatened or actual eviction, and even termination of electricity and locking out of families from their homes. See Declarations of Plaintiff Durham and Declarant Fitzgerald. This is an immediate harm that can only be effectively remedied by the Court’s intervention. In addition, unless the Court acts to preserve HUD’s ability to provide Section 8 assistance and enhanced vouchers by preventing the termination of the Section 8 contract on June 30, these tenants may lose the chance to remedy the deprivation they have suffered.

Some families have, and will continue to have to move, unless the Court acts. Any family involuntarily forced to move suffers harm, but for low income families with limited incomes the effect is often devastating and irreparable. The forced move uproots the families, disrupts their existing social, school and community ties, and results in unanticipated and unaffordable costs. . These affected tenants include disabled individuals, single working mothers with minor children, and other very low income working families who are already struggling to provide a stable home environment. Moving from their current homes will cause significant disruption and harm to these low income plaintiff families. These tenants chose Prince Hill Chambre as their homes in part because of its location that is close to their jobs (Jones Declaration,), their children’s’ schools (Jones Declaration), friends, family and accessible public transportation (Declaration

In addition, the families’ chances of finding comparable stable, affordable replacement housing in a neighborhood comparable to the one in which they live in Dallas are negligible.

Courts have repeatedly recognized that substantial rent increases and the risk of losing one’s home, especially a subsidized home, are irreparable injuries supporting preliminary relief. McNeill v. New York City Housing Authority, 719 F. Supp. 233, 254 (S.D.N.Y. 1989) (public housing authority enjoined from collecting increased rents); Brown v. Artery Organization, Inc., 654 F. Supp. 1106, 1118-19 (D.D.C. 1987) (landlord enjoined from evicting tenants during conversion of complex to high rent units; “it is axiomatic that wrongful eviction constitutes irreparable injury”); Mitchell v. HUD, 569 F. Supp. 701 (N.D. Cal. 1983); Gibson v. Harris, 438 F. Supp. 487, 490-91 (E.D. Va. 1977); Tenants for Justice v. Hills, 413 F. Supp. 389, 393 (E.D. Pa. 1975) (landlords enjoined from evicting tenants when HUD foreclosed on a subsidized project and sold it without rent restrictions); Bloodworth v. Oxford Village Townhouses, Inc., 377 F. Supp. 709, 719 (N.D. Ga. 1974);Johnson v. United States Dept. of Agric., 734 F.2d 774, 789 (11th Cir. 1984) (“irreparable injury is suffered when one is wrongfully ejected from his home”); Edwards v. Habib, 366 F.2d 628, 630 (D.C. Cir. 1965) (“certainly being evicted into the street is irreparable damage”). The irreparable harm of wrongful eviction includes not only the loss of physical shelter but also the disruption of families’ lives.

Financial compensation, whether that offered by HUD or in the form of court awarded damages or cash relocation assistance or housing vouchers cannot compensate the plaintiff families for this loss. Courts have held that denial of housing assistance to low income tenants causes irreparable harm even where a plaintiff has the prospect of recovering money damages. See Bolthouse v. Continental Wingate Co., Inc, 656 F. Supp. 620, 628 (W.D. Mich. 1987) (citing Bloodworth v. Oxford Village Townhouses, 377 F. Supp. 709, 719 (N.D. Ga. 1974); Keller v. Kate Maremount Found., 365 F. Supp. 798, 803 (N.D. Cal. 1972), aff'd, 504 F.2d 483 (9th Cir. 1974)).

In addition, defendants’ fair Hhousing violations provide an additional basis for a finding of irreparable harm. In section III (4) (c) of this Memorandum, Pplaintiffs establish that the defendants’ proposed actions constitute violations of the Fair Housing Act, 42 U.S.C. § 3601 et. seq. Under § 3613 (c) of the Act, a court may issue a temporary restraining order and preliminary and permanent injunctive relief to prevent a Fair Housing Act violation which is about to occur. Irreparable injury is presumed as a result of a violation of the Fair Housing Act. South Central Bell Telephone Company v. Louisiana Public Service Commission, 744 F.2d 1107, 1120 (5th Cir. 1984)(where injunction authorized by statute, irreparable injury need not be shown, citing Gresham v. Windrush Partners, Ltd., 730 F.2d 1417, 1423 (11th Cir. 1984) with respect to the Fair Housing Act).

3. The Equities Favor the Granting of Injunctive Relief

In determining a request for injunctive relief, the court must determine “whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined.”

The threat of irreparable harm to the plaintiffs absent injunctive relief far outweighs any potential injury the injunction may inflict on the defendants. If the owner is concerned that he will lose money if tenants pay rent equal to no more than thirty per cent of their incomes he can fix that problem by processing tenants for Section 8 so he can receive subsidies from HUD. As for HUD, plaintiffs merely seek the preservation of funding authority that HUD has already allocated to this complex.

In another case in which lower income minority tenants sought a preliminary injunction to prevent their eviction by apartment complex owners who intended to rehabilitate their project and covert it to high rent housing, the Court characterized the lost potential financing, increased rehabilitation costs, and similar financial harm claimed by the owners as “clearly not of the same magnitude as the injuries suffered by the tenants should they be wrongfully evicted.” Brown v. Artery Organization, Inc., 654 F. Supp. 1106, 1119 (D. D.C. 1987).

4. Plaintiffs Have a Substantial Likelihood of Prevailing on Their Claims

Plaintiffs have requested alternative temporary and/or preliminary injunctive relief. That plaintiffs are likely to succeed on the claims underlying these alternative requests for relief is demonstrated below.

a. Defendant Owner Has Violated the Requirements of §§ 24 C.F.R. 245.205 and 886.129 and of the HAP Contract by not making Section 8 subsidy available to eligible tenants; HUD has violated 12 U.S.C. § 1715z-1b(b) by not assuring Owner Ccompliance.

The HUD regulations at 24 C.F.R. § 245.205 provide that a person subject to a project based HAP contract such as the one at Prince Hall Chambre:

Shall not refuse to make assistance under such contract available to an existing tenant who is eligible therefore, provided that sufficient contract and budget authority and contract units are available under the contract.

Further, the regulations at 24 C.F.R. § 886.129, which also apply to Prince Hall Chambre provide:

Availability of units for occupancy by Eligible Families. During the term of the Contract, an owner shall make available for occupancy by eligible families the total number of units for which assistance is committed under the contract.

Here, the Owner has violated this regulation and permitted 75 units to go without subsidy, although many current residents are eligible for such subsidy. Further, Section 11 of the HAP contract requires the oOwner to make a good faith effort to lease all contract units to eligible households. The Owner has violated this provision, which tenants may enforce as third party beneficiaries. Holbrook v. Pitt, 643 F.2d 1261 (7th Cir. 1981); see also Gomez v.Housing Authority of El Paso, 805 F.Supp. 1363 (W.D. Tx 1992), aff’d 20 F.3d 1169, Ccert. Ddenied 513 U.S. 873 (holding tenants third party beneficiaries of the ACC between HUD and the PHA because the terms of the ACC also indicate a purpose to benefit residents and applicants). Given these clear violations, the Owner should be enjoined from terminating the tenancies of eligible households for failure to pay more than 30% of income for rent, pending a decision on the merits.

Further, HUD is required by 12 U.S.C. § 1715z-1b (b) (2) to assure that the Owner not interfere with residents obtaining housing subsidies. HUD has violated this requirement by permitting the owner to fill the rehabilitated units in the building with eligible tenants, but withholding Section 8 assistance from these tenants. HUD has not only failed to assure Oowner complaincecompliance, but has publicly denied the oOwner’s obligation to fully utilize Section 8.

Defendantb. Defendant HUD has violated its obligation to provide enhanced vouchers.

HUD has further compounded the adverse effects of the Owner’s failure to fully utilize the project based section 8 contract by failing to provide enhanced voucher assistance to eligible residents. Pursuant to 42 U.S.C. § 1437f(t),the expiration of a project based Section 8 contract is an event creating eligibility for enhanced tenant based Section 8 vouchers. These enhanced vouchers were intended by Congress intended that these enhanced vouchers wouldto continue a section 8 subsidy to eligible tenants after termination of a project-based Section 8 contract. There is nothing in this statute which suggests that eligible tenants who are entitled to, but have not yet received the benefits of, project based Section 8 assistance should be excluded from eligibility for enhanced vouchers. Indeed, applicable HUD notices make it clear that any income-eligible resident “residing in a unit covered by the expiring Section 8 project-based contract on the date of expiration” is eligible for enhanced vouchers. HUD Notice PIH 2001-41, p. 19; HUD Section 8 Renewal Policy, Section 11-3.B.2. Here, eligible households living in 75 units covered by the expiring contract are eligible for enhanced vouchers under these provisions.

HUD’s own policies require the agency to begin processing eligible residents for enhanced vouchers at least 120 days prior to expiration of the contract and is to have issued enhanced vouchers to eligible families no later than 60 days prior to expiration of the project based contract. HUD Notice PIH 2001-41, p.s. 14-16, Step 13. That means these families should have received enhanced vouchers by May 1. However, HUD has taken no steps to make enhanced vouchers available.

In order to assure than expiration of the project based contract in June does not deprive 75 eligible low income households from long term enhanced voucher assistance, HUD mustHUD bemust be required to set aside an adequate number of enhanced vouchers for these households and be prohibited from taking any steps which would result in irreversible loss of voucher eligibility by these households pending a final adjudication on the merits.

c. The dDefendants’ aActions Vviolate the Fair Housing Act of 1968, as amended, 42 U.S.C. § 3601 et seq.

The combined actions of the oOwner and the federal government threaten to overwhelmingly adversely impact Section 8 , and Section 8 eligible tenants as a group. Section 8 recipients in Dallas are overwhelmingly people of color. Rollins Declaration, ¶ . These actions threaten violations of the Fair Housing Act because they will have disparate adverse effects on Section 8 minority families and because the defendants cannot claim any legitimate business necessity as a defense. Pursuant to 42 U.S.C. § 3613(c), the Court may grant a temporary or preliminary relief prohibiting violations or ordering affirmative relief as appropriate.

The Fair Housing Act applies not only to intentional discrimination, but also to policies and actions which have a significant adverse or disproportionate impact on members of a protected class. Pfaff v. HUD, 88 F.3d 739, 745 (9th Cir. 1996); Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926, 934-36 (2d Cir. 1988), aff’d, 488 U.S. 15 (1988); Hanson v. Veterans Admin., 800 F.2d 1381, 1386 (5th cir. 1986); Dews v. Town of Sunny dale, 109 F.Supp. 2nd 526, 530-31 (N.D.Tex. 2000).. No showing of discriminatory intent is necessary to establish a disparate impact or perpetuation of segregation claim under the Act. Huntington, 844 F.2d at 934-36; Dews, 109 F.Supp.2d at 5301(adopting the Huntington standard for disparate effect).

When a plaintiff establishes a prima facie case by showing that the defendant’s actions or policies have had or will have a racially disparate impact or will perpetuate segregation, the defendants, to avoid liability, must respond by showing that their actions furthered a legitimate interest and that there were no alternatives with a less discriminatory effect. Huntington, 844 F.2d at 936; Dews, 109 F.Supp. 2nd at 531.

Here all of the tenants facing or threatened with harm are sSection 8 recipients or Section 8 eligible families, and almost all are minorities. See, Huntington, 844 F.2d at 938(black familesfamilies disproportionately affected because need subsidized housing at 3.4 times the rate of all families); Dews, 109 F.Supp. 2nd at 564-65(African Americans disproportionately affected by apartment ban because they disproportionately use rental housing and subsidized housing in Dallas Metropolitan Area compared to whites). As in Dews, the Ddefendants’ actions have a disproportionate adverse effect on African-Americans. A majority of the residents at Prince Hall Apartments who should have received rent subsidies and other protections under the HAP contract are African Americans. In contrast, according to the 2000 U.S. Census, 13.6% of the Dallas metropolitan area residents are African American; the African American poverty rate is 24.6% compared to 7.4% for whites. 2000 U.S. Census Data, Summary File 3, Tables P7, P87, P159B.. Approximately 87% of Dallas Housing Authority section 8 recipients as well as those on the section 8 waiting list areat African American. The impact of the defendants’ actions will fall almost completely upon minority individuals and families. The actions of the defendants which have contributed to the threat of termination of Section 8 subsidies to tenants at Prince Hall Apartments have caused this disparate impact and are, therefore, unlawful pursuant to the Fair Housing Act.

Because the actions of the private defendants are contrary to their obligations under the HAP Contract, Use Agreement and applicable federal statutes and regulations, they will have no defense of legitimate business necessity. Further, both the Use Agreement and HAP contract rquirerequire complaincecompliance by the oOwner with the Fair Housing Act and the USEse Agreement explicitly permits tenants to enforce its terms.. HUD is also without a valid justification for its actions as it did not even follow its own policies on issuing enhanced vouchers. If a Court finds that a violation of the Act has occurred or is about to occur, the Court may award both damages and injunctive relief. 42 U.S.C. § 3613(c). Plaintiffs are thus entitled to preliminary injunctive relief against the defendants’ actions.

d. HUD has violated its duty to affirmatively further fair housing under Section 3608 of the Fair Housing Act.

HUD is required by 42 U.S.C. § 3608 to administer its programs and activities in a manner which affirmatively furthers the purposes of the Fair Housing Act. The obligation to affirmatively further fair housing has been widely and universally construed to impose a duty to do more than simply refrain from discrimination. NAACP v. Secretary of Dept. of Hous. and Urban Dev., 817 F.2d 149, 155 (1st Cir. 1987). At a minimum, an agency must consider the effects of an action on fair housing before taking the action. Shannon v. U.S. Dept. of Hous. and Urban Devel., 436 F.2d 809 (3d Cir. 1970); Pleune v. Pierce, 765 F. Supp. 43, 47 (E.D.N.Y. 1991. Agency decisions reached without consideration of the fair housing implications must be set aside. Blackshear Residents Organization v. Housing Authority of Austin, 347 F.Supp. 1138, 1148 (W.D.Tx 1972). Agencies must then act so as to further the goals and policies of the Fair Housing Act. NAACP v. Secretary of Dept. of Hous. and Urban Dev., 817 F.2d at 155; Young v. Pierce, 544 F.Supp. 1010, 1018 (E.D. Tx 1982); Clients Council v. Pierce, 711 F.2d 1406, 1425 (8th Cir. 1983), quoting Banks v. Perk, 341 F. Supp. 1175, 1182 (N.D. Ohio 1972), aff’d in part, rev’d on other grounds, 473 F.2d 910 (6th Cir. 1973) (“Fair Housing Act carried with it the clear implication that [agencies] . . . are to affirmatively institute actions the direct result of which was to be the implementation of the dual and mutual goals of fair housing and the elimination of discrimination in housing”).

As demonstrated above, the Owner’s actions and intended actions constitute violations under the Fair Housing Act. It is clear that the Owner regards Section 8 as a burden. Thus sSince assuming ownership the Owner has systematically proceeded to limit the number of tenants affected by the project based section 8 contract and to ensure that he would not have to deal further with section 8 tenants through the enhanced vouchers by failing to maintain the Section 8 units at minimum program standards.

HUD has facilitated these actions rather than acting affirmatively to advance the goals of the Act. HUD has refused to assure that eligible tenants received rent subsidies under the HAP contract and to require the owner to maintain the property. Instead HUD has pursued a course of action which facilitates the Owner’s illegal actions and assured a disparate adverse impact on the projects’ minority residents by fostering their displacement and denying them the benefits of enhanced vouchers. HUD took this approach without any regard to the fair housing consequences of its actions. HUD’s course of action with respect to the HAP contract, Use Agreement, and enhanced vouchers violates its duty to affirmatively further fair housing and an order that HUD refrain from taking steps to displace these tenants is appropriate under 5 U.S.C. § 706.

5. The Public Interest Favors the Granting of Injunctive Relief

The public policy expressed in the statutes discussed above favoring the preservation of decent affordable housing for low income persons and discouraging displacement of low income persons from their homes will be furthered by the injunction requested by the plaintiffs. An injunction requiring all defendants to comply with the terms of the section 8 contract, the Use Agreement and the Fair Housing Act promote the public interest.

Congress itself articulated the public interest in preserving affordable low-income housing and in preventing the displacement of existing tenants, even in projects in which the federal mortgage has been prepaid or section 8 contracts not renewed.

As the court in Ross v. Community Services. Inc. found with regard to federally subsidized housing:

it is of the utmost interest to the public that administrative bodies obey the law. Secondly, it is in the public interest that these low-income tenants receive the help that Congress has directed they should receive, if, as it appears, they qualify for it.

396 F. Supp. 278, 288 (D. Md. 1975). See also Johnson v. United States Dept. of Agric., 734 F.2d 774, 787-88 (11th Cir. 1984); Edwards v. Habib, 366 F.2d 628, 630 (D.C. Cir. 1965) ("the public interest lies in keeping [these families] housed, at least until the court can determine petitioner's rights.")

B. Plaintiffs Should Not Be Required to Post a Bond

A bond is sometimes required as a condition of granting preliminary injunctive relief. Rule 65c, Fed.R.Civ.P. The amount of the bond is within the discretion of the court to provide security for any costs or damages that might be incurred by a party wrongfully enjoined. As previously discussed, enforcement of the sSection 8 contract and uUse agreements is not likely to result in damages to the defendants. (See C, supra) Therefore, there is no justification for requiring a bond.

However, even if the defendants could prove potential damages, the court has the discretion to waive the bond requirement in a proper case. City of Atlanta v. Metropolitan Atlanta Rapid Transit Authority, 363 F.2d 1084, 1095 (5thCir. 1981); Little Earth of United Tribes v. U.S. Dept. of H.U.D., 584 F. Supp. 1301, 1303 (1983; D.C. Minn), citing Warner Chemical, Inc. v. Columbus Agency Service Corporation, 567 F.2d 692, 701 (7th Cir. 1977). Ample authority exists to support a waiver of the bond if the plaintiffs are indigent or lack the financial ability to provide it; City of Atlanta, 363 F.2d at1095; Governing Council of Pinoleville Indian Community v Mendocino County, 684 F Supp 1042 , (1988 N.D. Cal); if requiring security would deny a party’s access to judicial review, People of the State of California ex rel, Van De Kamp v Tahoe Regional Planning Agency (1985 CA9 Cal), 766 F 2d 1319, am’d on other grounds (CA 9) 775 F 2d 998 and later proceeding (CA 9 Cal) 792 F 2d 775; or if there are significant issues of public policy at stake, Bass v. Richardson (1971 SDNY) 338 F Supp 478, 16 FR Sev 2d 881; Natural Resource Defense Council v Morton, (1971 DC Dist Col) 337 F Supp 167.

The individual plaintiffs are indigent persons without the financial ability to provide security of any kind (See affidavits). Likewise, the plaintiff tenants aAssociation, an unincorporated unincorporated organizationassociation with no assets, is financially unable to provide securitysecurity. (See affidavit). Requiring security of these plaintiffs will deny them access to judicial review of their claims and the underlying significant public policy issues, a result that is, itself, contrary to the public interest.

Under appropriate circumstances, the trial court may waive the bond requirement of Rule 65(c) of the Federal Rules of Civil Procedure. See Miller v. Carlson, 768 F. Supp. 1131 (N.D. Ca. 1991); Touissant v. Rushen, 553 F. Supp. 1365, 1383 (N.D. Cal. 1983). Ordinarily, an indigent party should not be required to provide security. See Ryan v. Shea, 394 F. Supp. 894, 902 (D. Colo. 1974), aff’d, 525 F. 2d 268 (10th Cir. 1975) (bond waived for indigent plaintiffs subject to disability termination); see also Bass v. Richardson, 338 F. Supp. 478 (S.D.N.Y. 1978) rev’d on other grounds, 467 U.S. 526 (1984); J.L. V. Parham, 412 F. Supp. 112 (M.D.Ga. 1976), rev’d on other grounds, 442 U.S. 584 (1979).

V. CONCLUSION

Plaintiffs are entitled to preliminary relief under the standards set forth in Lundgrin v. Claytor, 619 F. 2d 61, 63 (10th Cir. 1980). Therefore plaintiffs request this Court to grant the preliminary injunction requested by plaintiffs requiring the defendants to take all steps necessary to ensure that all eligible tenants receive the benefits of Ssection 8 assistance.

Dated: ____________________________

David E. Jones

State Bar # 10869575

Of Counsel

Hyatt, Crabtree & Moore

5910 N. Central Expressway, Suite 680

Dallas, Texas 75206

_____________________________.

Ann M. Norton

Minnesota State Bar # 7987X

Timothy Thompson

Minnesota State Bar #

Housing Preservation Project

570 Asbury Street, #105

St. Paul, MN 55104

Attorneys for Plaintiffs

-----------------------

Prince Hall Chambre Tenants Association, Valenshay Durham, Lakisha Jones, Joyce Sallie, Emma Jones, Jacqueline Edwards, and Tonya Wells,

PPlaintiffs,

v.

U.S. Department of Housing and Urban

Development; Alphonso Jackson, Secretary of the U.S. Department of Housing and Urban

Development, in his official capacity; and Harvey Giddens,

Defendants.

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