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Grant v. City of Roanoke

United States District Court, W.D. Virginia, Roanoke Division

July 18, 2017

MARK T. GRANT, Plaintiff,



         Mark T. Grant, proceeding pro se, filed this action against the City of Roanoke (the "City"), alleging that the City improperly retained $26, 257.30 from the sale of certain real property, which was previously rehabilitated for occupancy, using funds made available to the City through the federal HOME Investment Partnerships Program ("HOME Program"). Grant claims that the City violated regulations implementing the HOME Investment Partnerships Act and his constitutional right to due process, and that he is entitled to relief under 42 U.S.C. § 1983. The case is presently before the court on the City's motions for summary judgment. For the reasons that follow, the motions will be granted in part and denied in part.

         Statutory and Regulatory Background

         Before delving into the factual background of this dispute, the court will summarize the statutory and regulatory context in which the facts developed.

         The HOME Program is a federal block grant program created pursuant to the Cranston-Gonzalez National Affordable Housing Act of 1990 ("NAHA"), as amended, 42 U.S.C. § 12701 et seq. One of the stated purposes of the NAHA is "to extend and strengthen partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of housing affordable to low-income and moderate-income families." Id. § 12703(3).

         Subtitle A of Title II of the NAHA, also known as the HOME Investment Partnerships Act ("HOME Act"), authorizes the Secretary of the United States Department of Housing and Urban Development ("HUD") "to make funds available to participating jurisdictions for investment to increase the number of families served with decent, safe, sanitary, and affordable housing and expand the long-term supply of affordable housing in accordance with provisions of this part." Id. § 12741. The HOME Act directs the Secretary to establish by regulation certain procedures with which states and municipalities must comply in order to be designated as participating jurisdictions and receive their own allocations of HOME funds. See id. § 12746. The Secretary is further directed to establish a HOME Investment Trust Fund for each participating jurisdiction, along with a line of credit that includes the participating jurisdiction's allocated HOME funds. See id § 12748.

         The HOME Act invokes Congress's authority under the Spending Clause to place conditions on the receipt of federal funds allocated by the Secretary.[1] Section 212 of the HOME Act, titled "Eligible uses of investment, " describes the types of activities for which HOME funds may be used by participating jurisdictions, each of which relates to increasing the supply of affordable housing.[2] See id. § 12742(a)-(c). The statute provides in relevant part as follows:

Funds made available under this part may be used by participating jurisdictions to provide incentives to develop and support affordable rental housing and homeownership affordability through the acquisition, new construction, reconstruction, or moderate or substantial rehabilitation of affordable housing, including real property acquisition, site improvement, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced persons, families, businesses, or organizations, to provide for the payment of reasonable administrative and planning costs, to provide for the payment of operating expenses of community housing development organizations, and to provide tenant-based rental assistance.

Id. § 12742(a)(1). The statute further provides that a participating jurisdiction "shall give preference to rehabilitation of substandard housing, " unless it determines that "such rehabilitation is not the most cost effective way to meet the jurisdiction's need to expand the supply of affordable housing" and "the jurisdiction's housing needs cannot be met through rehabilitation of the available stock." Id. § 12742(a)(2).

         The HOME Act requires participating jurisdictions to match a certain percentage of the HOME funds that they spend in a fiscal year with their own contributions to housing that qualifies as affordable housing under the Act. See Id. § 12750(a). The Act further provides that "[e]ach participating jurisdiction shall make all reasonable efforts ... to maximize participation by the private sector, including nonprofit organizations and for-profit entities, in the implementation of the jurisdiction's housing strategy, including participation in the financing, development, rehabilitation and management of affordable housing." Id. § 12751.

         Section 215 of the HOME Act establishes specific requirements that housing for homeownership must meet in order to qualify as "affordable housing" for purposes of the Act. See id. § 12745(b). The statutory requirements are as follows:

         Housing that is for homeownership shall qualify as affordable housing under this subchapter only if the housing-

(1) has an initial purchase price that does not exceed 95 percent of the median purchase price for the area, as determined by the Secretary with such adjustments for differences in structure, including whether the housing is single-family or multifamily, and for new and old housing as the Secretary determines to be appropriate;
(2) is the principal residence of an owner whose family qualifies as a low-income family-
(A) in the case of a contract to purchase existing housing, at the time of purchase;
(B) in the case of a lease-purchase agreement for existing housing or for housing to be constructed, at the time the agreement is signed; or
(C) in the case of a contract to purchase housing to be constructed, at the time the contract is signed;
(3) is subject to resale restrictions that are established by the participating jurisdiction and determined by the Secretary to be appropriate to-
(A) allow for subsequent purchase of the property only by persons who meet the qualifications specified under paragraph (2), at a price which will-
(i) provide the owner with a fair return on investment, including any improvements, and
(ii) ensure that the housing will remain affordable to a reasonable range of low-income homebuyers; or
(B) recapture the investment provided under this subchapter in order to assist other persons in accordance with the requirements of this subchapter, except where there are no net proceeds or where the net proceeds are insufficient to repay the full amount of the assistance; and
(4) if newly constructed, meets the energy efficiency standards promulgated by the Secretary in accordance with section 12709 of this title.


         If a participating jurisdiction is found to have "failed to comply substantially with any provision" of the HOME Act, the Secretary of HUD is directed to take certain corrective measures. See id. § 12753. Specifically, the Secretary "shall reduce the line of credit in the participating jurisdiction's HOME Investment Trust Fund by the amount of any expenditures that were not in accordance with the requirements of [the Act]." Id. The Secretary may also prevent withdrawals from the participating jurisdiction's HOME Investment Trust Fund, restrict the participating jurisdiction's activities under the HOME Act, or preclude the participating jurisdiction from receiving allocations of funds made available under the Act. Id.

         HUD has promulgated regulations implementing the HOME Program. See 24 C.F.R. § 92.254. Pursuant to the regulations, housing that is for acquisition by a family must meet certain "affordability requirements." Id. § 92.254(a). In particular, the housing must be single-family, modest housing; it must be acquired by a low-income family and used as the family's principal residence; and it must meet the affordability requirements for a specific period as determined by the amount of assistance provided. See Id. § 92.254(a)(1)-(4). For example, HOME assistance over the amount of $40, 000 triggers a minimum affordability period of fifteen years. See id. § 92.254(a)(4).

         Additionally, to ensure affordability, a participating jurisdiction is required to establish either "resale" or "recapture" requirements that comply with the regulatory standards established by HUD. Id. § 92.254(a)(5). The resale or recapture requirements must be included in the consolidated plan that the participating jurisdiction submits to HUD for approval, and HUD must determine that they are appropriate, hi During the relevant time period, the regulation included the following provisions applicable to resale and recapture requirements:

(i) Resale. Resale requirements must ensure, if the housing does not continue to be principal residence of the family for the duration of the period of affordability, that the housing is made available for subsequent purchase only to a buyer whose family qualifies as a low-income family and will use the property as its principal residence. The resale requirements must also ensure that the price at resale provides the original HOME-assisted owner a fair return on investment (including the homeowner's investment and any capital improvement) and ensure that the housing will remain affordable to a reasonable range of low-income homebuyers. The period of affordability is based on the total amount of HOME funds invested in the housing.
(A) Except as provided . . ., deed restrictions, covenants running with the land, or other similar mechanisms must be used as the mechanism to impose the resale requirements....
(ii) Recapture. Recapture provisions must ensure that the participating jurisdiction recoups all or a portion of the HOME assistance to the homebuyers, if the housing does not continue to be the principal residence of the ...

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