Three other district courts have considered the issue of
whether a PHA may require payment of arrearages before issuing
a Section 8 certificate. In Baker v. Cincinnati Metropolitan
Housing Authority, 490 F. Supp. 520 (S.D.Ohio 1980), the
district court rejected arguments similar to those made by the
plaintiff here. In that case, plaintiffs were denied Section 8
Certificates of Family Participation because of an arrearage
resulting from prior tenancy in Cincinnati Metropolitan Housing
Authority-owned public housing. Id. at 522. Plaintiffs argued
there (1) that defendants' policies and practices conflicted
with federal statutes and regulations; (2) that this practice
violated equal protection and due process rights of the
plaintiffs; and, (3) that defendants' acts constituted an
unlawful collection practice. Plaintiffs also attacked as
inadequate the procedures afforded to ineligible Section 8
applicants. Those procedures are not in issue here.
The court in Baker held that the policies and practices of
the CMHA did not conflict with federal statutes, regulations,
the ACC or Administrative Plan of the housing authority. Id. at
528. Furthermore, it held that there was a rational basis for
excluding from the Section 8 program past CMHA residents who
were in arrears. Such a policy would encourage assisted
families to meet lawful obligations for rental payments,
thereby maximizing effective use of available federal financial
assistance to meet national housing goals. Consequently, the
court held that the CMHA policy did not violate the Equal
The court also rejected plaintiff's claim that CMHA's policy
amounted to an illegal debt collection practice. It noted
first that CMHA took no affirmative action to collect the
arrearages. Furthermore, disputes about the appropriateness of
the assessments could be handled at a hearing. Therefore,
because a hearing would substantially diminish the likelihood
of improper assessment of the past debt, the court found
CMHA's policy did not constitute an illegal collection
practice. Id. at 531.
The United States Court of Appeals for the Sixth Circuit
recently affirmed the district court's judgment, holding,
inter alia, that because the arrearage policy operated pursuant
to fixed rules which provided adequate procedural safeguards,
there was no danger of arbitrary application of the policy.
Baker v. Cincinnati Metropolitan Housing Authority,
675 F.2d 836 at 841 (1982).
The court in Vandermark v. York Housing Authority,
492 F. Supp. 359 (M.D.Pa. 1980) also upheld the policy of a local
housing authority to exclude applicants with arrearages owing
to the authority from participating in the Section 8 program.
This policy was embodied in the York Housing Authority's
(hereinafter referred to as YHA) administrative plan which had
been submitted to and approved by HUD. Id. at 361.
Plaintiffs claimed, inter alia, that YHA's policy of
excluding families on the basis of alleged indebtedness to YHA
violated the Federal Housing Act and regulations governing the
Section 8 program, and that the policy violated their rights of
substantive due process and equal protection under the
Fourteenth Amendment. Id. The Vandermark court noted that
Congress specifically recognized the necessity of granting the
maximum amount of power and responsibility to the local housing
agencies to promote efficient management of the program. Id. at
362. See 42 U.S.C. § 1437. Relying upon the
regulations cited above, namely 24 C.F.R. §§ 882.209(f) and
882.204(b)(1)(i)(c) (1981), the Court found that consistent
with the declaration of policy contained in 42 U.S.C. § 1437,
HUD had vested in the local housing authorities the right to
make reasonable policy decisions not specifically authorized in
the Housing Act. Id. It found that the regulations clearly
allowed the application of eligibility criteria other than
income and family composition. See also Ressler v. Landrieu,
502 F. Supp. 324, 330 n. 11 (D.Alas. 1980), where the court
rejected plaintiff's claim that decisions on eligibility for
participation in a Section 8 program must be made solely on the
basis of the applicant's income and family composition.
Additionally, the court found that PHAs are required to
establish adequate procedures to assure prompt payment and
collection of rents. Id. See 42 U.S.C. § 1437d(c)(4)(B).
Indeed, under the regulations, if a Section 8 assisted family
wishes to move and wants to obtain another Certificate of
Participation, the PHA must deny the certificate if it
determines that the family owes money to the owner for
non-payment of rent or other liability under the lease.
24 C.F.R. § 882.209(e)(1) (1981).
As an inducement to owners to participate in the Section 8
program, the PHA is obligated to reimburse the owner for
unpaid rent if a family vacates the unit owing money under the
lease. 24 C.F.R. § 882.112(d) (1981).*fn1 Accordingly, in
light of the above cited regulations, the court concluded that
YHA's policy of requiring payment of arrearages prior to
issuance of a Certificate of Participation was consistent with
the federal regulations and with the over-all policies of the
Section 8 Housing Program. 492 F. Supp. at 392.
Furthermore, the court held that YHA's policy did not
violate plaintiffs' rights under the equal protection clause.
YHA's criteria applies equally to all applicants.
Furthermore, YHA's policy is reasonably related
to an appropriate governmental interest; that
interest being to foster fiscal responsibility in
the administration of the Section 8 Existing
Housing Programs, to ensure to landlords and the
public the intent to administer a sound program,
and to maintain a viable program providing
maximum assistance to the largest amount of
492 F. Supp. at 363.
Finally, the court declined to find the policy violative of
substantive due process. Although an automatic rejection based
upon the existence of a debt, together with the failure to
afford the applicant an opportunity to explain, would be
arbitrary and unreasonable, a provision for a proper hearing
would eliminate any arbitrariness. Id. at 364. In a later
decision, the court held that since the hearings afforded
plaintiffs the opportunity to explain their reasons for not
paying the rent or to explain that conditions had changed so
that they could now or in the future pay their rent,
plaintiffs' due process rights were adequately protected.
Vandermark v. York Housing Authority, 502 F. Supp. 574, 575-76
(M.D.Pa. 1980). However, plaintiff in the case at bar has not
challenged the procedures afforded to her in order to contest
her exclusion from the Section 8 program, apparently because
such procedures were not constitutionally defective.*fn2 She
was represented by counsel, a written summary was made of the
hearing, and she received written notice of the decision and
The United States Court of Appeals for the Third Circuit
recently affirmed the district court's decision in
Vandermark v. York Housing Authority, 663 F.2d 436 (3d Cir.
1981). The court held that income and family composition are
not necessarily the exclusive criteria to be used in
determining eligibility for Section 8 housing, relying on
24 C.F.R. § 882.209(f), cited above. Id. at 439. Moreover, it
recognized that the PHA
has a clear fiscal and management interest in ensuring that
debts owed to it by Section 8 applicants are paid prior to
issuance of participatory certificates. Id. at 440. In sum, the
court found the policy of requiring payment of past debts to
the housing authority to be consistent with the federal
regulations and the overall policies of the Section 8 housing
program. Id. The court also approved the district court's
holding that the policy did not violate the equal protection
clause, finding that the policy rationally furthered the
interests delineated by the district court.
Plaintiff does cite a district court decision favorable to
her position. In Ferguson v. Metropolitan Development and
Housing Agency, 485 F. Supp. 517 (M.D.Tenn. 1980), the court
found defendants' policy of excluding persons with arrearages
owing to the Metropolitan Development and Housing Agency
(hereinafter referred to as MDHA) to be an unauthorized
collection practice, "precluding from the program people who
have had trouble paying rent, who are the very persons whom the
Section 8 program was intended to help." 485 F. Supp. at 524. It
held that the defendants' policy violated the stated purpose of
the statutes, regulations and legislative history creating the
Moreover, the Ferguson court thought the criterion outlined
in the legislative history, i.e. income ceilings, to be
exclusive and a limit on the discretion of state agencies in
deciding who may participate in the Section 8 program. It found
support for its determination in Section 2.2 of the ACC which
stated: "The PHA shall use the Annual Contribution solely for
the purpose of providing Decent, Safe, and Sanitary dwellings
for Families in compliance with all applicable provisions of
the Act and all regulations issued pursuant thereto. . ." An
identical provision appears in the BHA's ACC and plaintiff here
relies on that section to show that defendants have breached
the ACC by adopting the "indebtedness" exclusionary policy.
However, I interpret this section of the ACC differently. It
obligates the PHA to use the federal assistance to provide
housing for eligible families. The PHA is not authorized to
divert federal funds into other programs with which it may be
concerned; e.g. housing for families of low income but not low
enough to qualify for Section 8 assistance per se. Or, if the
PHA could assist families in ways other than housing, it could
not do so with Section 8 funds. Thus, I find no conflict
between the ACC and BHA's policy.
Plaintiff also contends that assistance may be terminated to
a tenant if the family fails to comply with its obligations
under the certificate of participation. The certificate,
plaintiff argues, only obligates a family to:
(a) provide such Family income information and
records as may be required in the administration
of the program; (b) permit inspection of its
dwelling unit at reasonable times after
reasonable advance notice; and, (c) give at least
30 days notice to the Agency of the Family's
intention to vacate the unit.
Thus, plaintiff asserts that since no other obligations are
set forth in the regulations, no other conditions of
eligibility are permissible. The Ferguson court adopted this
approach. 485 F. Supp. at 525. However, this argument must fail.
These obligations accrue to a family once it has been issued a
certificate of participation. This occurs after an eligibility
determination for participation in the program has been made.
The obligations owed once a certificate issues have no
connection with the initial eligibility determination.
I have examined the regulations involved and the available
legal precedents and am persuaded that BHA's policy does not
violate the statute, regulations or constitutional rights of
the plaintiffs, as a class. The rationale employed by the
Vandermark court in particular appears to be the correct
interpretation of the applicable law. This Court, therefore,
declines to find that a local housing authority may not deny
participation in a Section 8 program to a family with
arrearages owing to the authority. Plaintiffs' motion for
summary judgment is denied.
Although relief is not forthcoming for the class, I find
that BHA's decision to deny plaintiff Dorothy Kohl a Section
8 Certificate of Participation was arbitrary. Defendants admit
that she is a desirable tenant who has always paid her rent
and fulfilled her obligations to the BHA in the past. As
previously stated, the arrearage policy is reasonably related
to, inter alia, an appropriate governmental interest in
fostering fiscal responsibility in the administration of the
Section 8 program. Plaintiff Kohl poses no threat to that
fiscal responsibility; in fact, she has been a model tenant in
the past. She has located a landlord willing to lease an
appropriate dwelling to her and her daughter and currently
occupies that apartment. The rental arrearage policy as applied
to plaintiff Kohl is being used solely as a collection device
to ensure payment of a good faith disputed obligation.
Accordingly, the terms of the preliminary injunction granted
solely as to plaintiff Kohl shall be made permanent.