The opinion of the court was delivered by: J. Waldo Ackerman, District Judge.
This case arises from a rental dispute between the plaintiff
and the Bloomington Housing Authority (hereinafter referred to
as BHA). It raises the question of the propriety of the BHA's
establishing certain eligibility requirements before issuing
a Certificate of Family Participation to applicants seeking
housing under Section 201(a)(8) of the United States Housing
and Development Act of 1974, 42 U.S.C. § 1437f (hereinafter
referred to as "Section 8"). Three United States District
Courts and the United States Courts of Appeal for the Third and
Sixth Circuits have considered precisely this same issue, with
differing results. It appears to be a matter of first
impression in this Circuit.
Plaintiff Dorothy Kohl applied for a Certificate of
Participation in the Section 8 program administered by the
BHA. Her application was rejected because she allegedly owed
rent on a conventional public housing unit. This debt arose
from plaintiff's failure to give thirty days' written notice
of termination of her lease to the BHA.
Plaintiff and her twelve-year-old daughter are both
afflicted with multiple disabilities. Plaintiff leased an
apartment from BHA on March 7, 1979, but never took
possession. She became ill at the time she was to occupy the
apartment and the apartment stairs were not manageable by her
daughter, thus making the apartment unsuited to their needs.
Although she was contacted twice about her intentions to
either move in or return the key, Mrs. Kohl did neither until
August 30 when she returned the key. At an informal hearing
where she was represented by counsel, it was determined that
plaintiff owed rent through July 20, the date on which BHA
leased the apartment to a new tenant.
Plaintiff contends that to deny her the opportunity to
participate in the Section 8 program because of an alleged
rent arrearage owing to BHA from an unrelated housing program
is unlawful because (1) it creates an additional condition of
eligibility not authorized by Congress; (2) the use of the
Section 8 program as a private collection device violates
defendants' fiduciary duty to administer federal funds to aid
lower income families in obtaining decent, safe, and sanitary
dwellings, i.e. in a manner consistent with the Housing Act;
and, (3) it denies plaintiff equal protection of the law and
violates her substantive due process rights.
Plaintiff's position is that the PHA may apply only the
specific criteria for eligibility outlined in the HUD
regulations. Those criteria relate primarily to family
composition and income. See 24 C.F.R. § 889.101 (1981) et seq.;
24 C.F.R. § 882.102 (1981); and, 24 C.F.R. § 812.1 (1981) et
seq. She contends that any additional criteria not specifically
authorized by Congress are invalid.
Under the regulations, the PHA is to submit an equal
opportunity housing plan to HUD no later than the time it
submits the PHA-executed ACC. 24 C.F.R. § 882.204(b)(1) (1981).
That plan is supposed to describe the PHA's policies and
procedures for, inter alia, "[S]electing among eligible
applicants those to receive Certificates of Family
Participation, including any provisions establishing local
requirements for eligibility or preference for selection in
accordance with § 882.209(a)(3)."
24 C.F.R. § 882.204(b)(1)(i)(C) (1981). Section 882.209(a)(3) provides that
a PHA may select families in accordance with its own
HUD-approved rules for preferences. It further provides that
"Requirements or preferences for those living in the
jurisdiction of the PHA at the time of application are
permissible" except that no requirement or preference may be
based upon the location of the housing or upon length of
residence in the jurisdiction of the PHA. Lastly, § 882.209(f)
delineates the procedures to be followed if an applicant is
determined by the PHA to be ineligible "on the basis of Income
or family composition, or for any other reason. . . ."
Thus, the HUD regulations contemplate that the PHA may
establish local eligibility requirements other than those
prohibited by 24 C.F.R. § 882.209(a)(3) (1981), so long as the
PHA's policies and procedures are submitted for HUD approval in
its equal opportunity housing plan. The BHA's Equal Opportunity
Housing Plan and Regulations which contain the rental arrearage
policy were expressly approved by HUD on April 21, 1980.
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 ...