Charleston Housing Authority v. U.S. Department of Agriculture

Nos. 04-1884, 04-2620 (8th Cir. Aug. 18, 2005) ; Clearinghouse Number: 54423

Description

Preservation Act’s Prepayment Restrictions Prevail Over Prepayment Rights Established by Section 515 Contract, Eighth Circuit Holds

Abstract

The Eighth Circuit upheld the validity of the Emergency Low-Income Housing Preservation Act’s prepayment restrictions, even though they directly conflicted with established contractual rights to prepay Section 515 Rural Rental Housing loans. In 1981 housing authority financed the purchase of an apartment building with a Section 515 loan. The loan agreement required housing authority to operate the property as public housing and granted it an unconditional right to prepay the loan. The Preservation Act, passed in 1987, required an assessment of whether prepayment would adversely affect minorities or leave displaced tenants without adequate, safe housing before prepayment was allowed. In 2000–2001, as part of its plan to vacate and demolish the apartment building, housing authority attempted to tender final payment on its Section 515 loan to eliminate the contractual restrictions on the apartments’ use. When the U.S. Department of Agriculture (USDA) refused to accept the payment, housing authority sued. Ruling against housing authority, the district court determined that the Preservation Act applied, the tendered final loan payment was a prepayment under the Act, and the Act precluded USDA’s acceptance of the prepayment unless housing authority first followed the Act’s protocol for preservation of public housing. In a separate multicount action against both housing authority and USDA as well as the U.S. Department of Housing and Urban Development, current and former apartment residents and a nonprofit housing organization sought to prevent housing authority from implementing its demolition plan. The district court enjoined the plan’s implementation and ordered housing authority to lease vacant units to eligible applicants. Housing authority appealed both cases. The Eighth Circuit, rejecting housing authority’s arguments that the loan agreement’s terms rather than the Preservation Act’s requirements controlled and agreeing with the district court that residents established that housing authority’s plan had a disparate impact on minorities in violation of the Fair Housing Act, affirmed all of the district court’s decision other than the scope of the injunctive relief and remanded the case for further proceedings on injunctive relief.

Additional Information

Attorney Information
Appellees represented by Lew Polivick, Legal Services of Southern Missouri, 116 N. Main St., P.O. Box 349, Charleston, MO 63834 (573.683.3783); Ann B. Lever, Daniel E. Claggett, Legal Services of Eastern Missouri, 4232 Forest Park Ave., St. Louis, MO 63108 (314.534.4200); Gideon Anders, Todd Espinosa, National Housing Law Project, 614 Grand Ave., Suite 320, Oakland, CA 94610 (510.251.9400).
Docket Date
2005-08-18 00:00:00+00:00
Attorney Email
lew@lsosm.org