Tenants' Council of Tiber Island-Carrollsburg Square v. James Lynn, Individually and in His Capacity as Secretary of Housing and Urbandevelopment

sufficiently granted Con- heated winter.1 to a Before FHA insurance is gress perma- improve to project, concluded that must be rental schedules nently areas, appearance of proved by en- the Commissioner.7 to tire be permis- would have communities schedules of a maximum consist replanned.2 ceiling sible rental and an initial Originally approved schedule. ceilings FHA development plan on centered en $1,169,035 $1,093,476, of and listing private investors. It of $947,580 and initial rent schedules contemplated insist would $998,700, and Car- for Tiber Island high equity re return and low rollsburg Square respectively. These private quirements- committing aggregate figures an to amounted capital redevelopment to of slum areas.3 average per initial rental unit about 220 of Act 1954 Section per month for the units in the 811 $200 was to serve as the vehicle. Under ceiling projects, two combined awith program envisioned, developers could ac Using approximately per month.8 $230 areas, quire land renewal after urban assumption a spend that families conventional had been written down in cost on income about their agencies,4 mortgage terms local loan 20% average family rent,9 the income of the would for the value be available 90% fact, $13,800. In unit was envisioned as subject to a construction range be in a incomes seem to $50,000,000 limit,5 and FHA would $12,000 $45,000 per In the annum. guarantee repayment loan. tenants, chil- family case of few have large guarantee, which insured in Project Servicing Handbook, 7. HUD Insured Parker, 1. See Berman v. 348 U.S. 75 Supp. 1, Chapter 4, RHM 4350.1 3.3 (1954). sec. S.Ct. 99 L.Ed. 27 (as 1970). September Development David, Philip Land Urban average monthly 8. The rent of all tenants of (1970). 383-98 dwelling unit, per $238.- 3. Id. at 384. Aaron, supra in 1968. note 5 at 208 B). (Appendix Johnstone, (1970). 4. 42 Q. See Program, The Federal Urban Renewal figure derive income used to (1958). 301, 320 U.Chi.L.Rev. limits from the maximum rentals Public Henry Aaron, J. Shelters and Subsidies: Housing. Report See The the President’s Who Benefits Poli- From Housing, Technical Urban (Appendix A) (1972) ; cies B. T. Fitz- Studies, Furstenberg V. Federally Von and H. G. patrick, FHA and FNMA Assistance Moskof, Rental Assisted Multi-Family Housing, Contempo- & Law Groups Programs: Which Income Have rary (1967). Problems They They or Whom Ex- Served Can Be Report pected 6. See The of the President’s Commit- Serve Housing, tee on “A Decent Home” 55 resolving dispute living usually concern- both their renewed with them dren levels, only part Typically and wife work. husband approved by put doc- crease FHA was into professionals lawyers, tenants are — immediately tors, is con- effect their work economists—and protected by agreement. On this with the Federal Government. nected record the District sum- gave February 3, mary judgment to the FHA officials. bringing required approval We affirm. per $1,063,440 the rental schedules per $1,085,580 year Tiber III. THE CLAIM OF A RIGHT TO Carrollsburg Square. The Ten- year for HEARING believing Council, ants’ requested unjustified, an audit disposing of the case at hand we support reports analysis submitted financial refer meeting FHA Washington, with and a of the increase 71-2049, No. 162 U.S.App. representatives day the merits D.C.-, to discuss 497 F.2d 626 decided this requests were opinion Both juris increase. That suffices to establish standing. refused. diction and In we public held that tenants of lower income litigation in events resulted These housing programs established under the of Gen- of Columbia the District Housing Act, 42 U.S.C. § project owners between eral Sessions right seq., 1401 et have a to contest rent placed had tenants who numerous increase written es- into increment rental statements. 71-1786, Marshall v. No. le- of the pending a determination crow gality day, also decided this we found in- increases, as the well right by participate a similar held present These action. stitution of the housing tenants of FHA financed with Thereafter, were dismissed. suits insurance at below market Agreement December, 1969, a Settlement rates, pursuant interest 221(d)(3) to Section Tenants’ into between was entered Housing Act, and the owners. Council this We based alleged agreed for not to seek restitution procedural finding protection on our overcharges of FHA in excess rental that tenants intended were beneficiaries they re- máximums, which for return of the rent limitation in escrow tained funds housing programs. against until increases protected further 1970, depending July analysis or November The same leads us to a options housing each tenant of two different result for tenants in on which constructed elected. under 220 of the National § Unlike the other Act. August programs, passed 220 was bene § rental round of a second any specific fit class of tenants. Its accompa- allegedly creases, which was purpose was to10 setting methods of new nied aid in of slums and the elimination calculating al- maximum blighted prevention conditions and the required rent sched- lowable under the deterioration of residential again to ob- tried Tenants’ Council ule. property . gain informa- access tain an audit or program increase; to elimi- its re- This was a remedial justifying rent tion conditions, produc- slum while the nate the FHA. On quests were refused specific tion of classes new Tenants’ Coun- September 1970, needy persons again left to other was entered owners cil and though programs.11 different, temporarily agreement It was into a settlement provide for rehabilitation 220 does Section 10. 12 U.S.C. properties areas, in urban renewal loans for program may complementary, require that was estab- such discretion combining mortgagor regulated 221(d)(3), lished or restrict- to be capital sales, charges, FHA insurance with below-market-inter- ed rents or developers, structure, benefit of return and methods est-rate loans to dis- operation, families for such low-and-middle-ineome12 Secretary projects.13 may placed urban renewal make such contracts mortgagor any to serve And . such with . . necessary Secretary families. the needs of low-income as the deem render effective such restriction purpose to bene absence regulations.17 absence for the fit tenants accounts corresponding to any language in § authority, to this Pursuant regarding “reason provision the § regulation promulgated pro inten The omission was able rentals.” viding reviewing developer’s Although Advi the Presidential tional. quests for con increase HUD will sory had Commission sider the economic soundness statute,14 in the be included project and a reasonable return suggestion in the was not followed investment consistent reasonable put and Senate bills forward House 207.19(e). rentals to tenants. hearings At consideration.15 regulations, While the are not en to the attention omission called tirely objectives sought clear as to the legislative committees,16 the but the during increases,18 of rental review not rentals” “reasonable is our sense that taken whole as a inserted. they were not intended to establish legally protected a tenant in control interest did enable HUD Section 220 setting government’s the The through provision of rents. the Sec- that rents a mortgagee interest as a eco- retary in the Banking may, Currency, Cong., down, generally ou run and and 83d 2d are which therefore, (1954) groups. ; 2938, Cong., 83d 2d income Sess. S. benefit lower Sess. (1954), reprinted Hearings, expressed housing in su benefi- Senate had no such New ciary pra 12, note at 652. class. Thimmes, Congress 16. envisioned Statement of James G. Vice- 12. It that seems clear President, CIO, legislation income class and United Steelworkers of as middle America, Hearings, 12, supra, Hear- Senate note Act of oriented. See ings He in on 497-98. stated: do find the Committee “We not Before the U. S. Senate legislation Banking Currency, Cong., 83d 2d Sess. the recommendation Advisory there made that 558-61 Committee supervision be some form of rent projects on rental Cong., H.R.Rep.No.1429, 83d 2d Sess. 13. govern- built or rehabilitated with aids, mental no matter what the size Advisory Report project.” 14. A the President’s Housing Policies Committee on Government (d) (2) (A). § 17. 12 U.S.C. Programs (1953). The Committee stated: Secretary’s reg- Appellants that the' stress agrees unreasonable that incorpo- simply ulations for § 220 ought rehabil- rent not to follow regulations rate the FHA § proposal contem- itation. The Section plates requirement of “reasonable rentals maximum establishment 207.19(e). This was tenants.” units. rents for of 12 or more structures by reference, 24 C.F.R. 220.511. done proce- follow the same control would that did not The fact take occasion dures used the Federal now objec- differing regulations in its refine large-scale in its Administration not the sub- tives of rent control does alter housing program. in character and interest stantial differences Cong., of tenants 2d Sess. 83d See H.R. housing projects. (1954), reprinted other Act of Hearing the U.S. House Committee Before government’s project ac- interest review nomic soundness ing mortgagor’s rent-setting rentals concern that deci counts a may would on This concern sions occasion coincide with the be “reasonable.” particular necessarily that of desires of to moderate coincide with tenants may mortgagor. government rents, Secretary’s have and the use power risk, preferences review rent attitudes toward time, may promote profits over distribution tenants’ welfare. Nevertheless, devel- of a different from those the interests tenants government oper. Moreover, government analyti will and that of the cally view, a de- distinct. It concerned external effects of is our management record, veloper’s decisions neither nor property pro character of not owned intended to establish a up- gram developer area but within total control for the graded protecting government’s ef- resident tenants.20 Whatever example, developer might, A forts. derive from fact regard high process the likelihood rents with in review receive as high va- beneficiaries, turnover a substantial cidental and this interest offering opportu- cancy support the best insufficient rate as claim right nity profits. turn- But to maximize to be heard either under the stat may process ute over and affect or under vacancies the due clause.21 larger pearance com- residential Affirmed. neighborhood munity quality of and the general to which life FAHY, Judge, —effects Senior Circuit dissent- government up- in the entire involved ing: graded than be more sensitive area requirement The basic rentals single landlord.19 development projects involved acknowledges brief The Government’s Hearings, supra amounts. See Senate intended, on rents the restrictions part, are 12, note at 1375-76. The of dis- to safe- “as a brake on [investors] cretionary rental was in restrictions the bill 9) guard against (p. exorbitant returns” by House, as introduced the before the runaway possible “as a barrier to revenues” “mortgaging-out” problem emerged at the (p. 11). objective to be this as an We take hearings, and the solution of cost-certifica- concomitantly with, inde- served than rather prior mortgage approval tion to was later pendently of, a Government’s interest as provided by regulations. 220.- prudent mortgagee. We are confronted an investor always prepared is “HUD to consider 21. contending the Government is unreason- objections timely sup- or contentions ably subsidizing curtailing his return and porting HUD, documentation submitted to high-income a tenants with rental restriction concerning any (including matter such rent- possible that bears relation no to increase-matters) under HUD considera- Presumably, mortgage of interest. quoted tion.” This is in the Government’s per- investor so situated as 13) (p. part brief of a letter from the soaring mit private rentals obtain economic could Attorney appellants’ United States coun- replace that would sel, dated 16 March 1973. The brief states: government accompanying mortgage and its part “While letter is not a restraints. record, obviously it a document with argued appellants under Plaintiffs have familiar, “abuse” which are and reference prior statutes, by teaching examined Sen- to it falls within the of United during hearings 220, Kearney, U.S.App.D.C. 328, ate led on § States v. provide authority n.4, fix rents. 170, (1969).” n.4 F.2d found, however, Apart judicial permissibility The unrelated abuses were consid- charges. Kearney to rent gress the Con- obviously What concerned under eration is so practice duty officials, any so-called “mort- reaped gaging-out” developers by elementary functions, which view of their profits receipt judicial presump- windfall mort- warrant notice under building gages, by mortgag- regularity. than less tion of participa- limited amount of stems from section creases shall be reasonable rea- of their 207(b)(2) Act. in the determination tion accordingly Even the standard com- sonableness. holds in a court judged principally to be panion case, No. 71- reasonableness Marshall v. viewpoint the need of from the -, U.S.App.D.C. 497 F.2d investor, pay also who rent should those projects develop- tenants irt by be heard some fashion Act, provid- ed under section 221 of the in more comfort- authorities. And those for low or moderate income others should opportunity able circumstances than shall be afforded an oppor- an not because of that be denied to contest written statements tunity the reasonableness de- to contest Yet the court increases. proj- their rentals. own nies this to tenants developed 220 of the ects under section

Act, which have the of rehabili-

tating blighted areas. The rentals projects required to be are legal

reasonable, and I find no basis op-

depriving of the same their tenants

portunity projects accorded developed under section 221. In both The NATIONAL FOR ORGANIZATION situations the reasonable standard the REFORM OF MARIJUANA LAWS 207(b)(2) section forward is carried (NORML) al., Petitioners, et regulations agreed arrangements be- or the devel- tween the Administrator and al., John E. et INGERSOLL arrangements, oper. regulations Respondents. may be, un- established No. 72-1854. authority granted Admin- der the istrator, by in a sec- section Appeals, project, section tion 221(d) (3) District of Columbia Circuit. project. in a section 221 Argued Dec. situa- distinction between the two Decided Jan. court, tions drawn based on the purposes two difference

types justi- projects, I think is not

fied. each instance the reasonable applies.

standard What is reasonable quite

one different other, depend-

what is reasonable among factors, a number ability pay,

them the these differ- but judged,

ent considerations must be settings, by pre-

their own the same

scribed standard Therefore, reasonableness. legal me, no seems de-

distinction should be drawn which

nies to one the

the other. are entitled to reason- Both respect

able treatment to their re- spective rentals. assuring there is need for

While developer

fair return his in-

vestment, it inconsistent with this facing permit need to

Case Details

Case Name: Tenants' Council of Tiber Island-Carrollsburg Square v. James Lynn, Individually and in His Capacity as Secretary of Housing and Urbandevelopment

Court Name: Court of Appeals for the D.C. Circuit

Date Published: Dec 20, 1973

Citation: 497 F.2d 648

Docket Number: 71-1931

Court Abbreviation: D.C. Cir.