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ROTH v. CITY OF SYRACUSE

May 5, 2000

NORMAN E. ROTH, UNIVERSITY HILL REALTY, LTD., STAMPEDE, LLC., STAMPEDE II, LLC., STAMPEDE III, LLC., PLAINTIFFS,
V.
CITY OF SYRACUSE, SYRACUSE HOUSING AUTHORITY, FREDERICK R. MURPHY, INDIVIDUALLY AND IN HIS PROFESSIONAL CAPACITY AS DIRECTOR OF SYRACUSE HOUSING AUTHORITY, ROY BERNARDI, INDIVIDUALLY AND IN HIS PROFESSIONAL CAPACITY AS MAYOR, VITO SCISCIOLI, INDIVIDUALLY AND IN HIS PROFESSIONAL CAPACITY AS DIRECTOR OF COMMUNITY DEVELOPMENT, AND TERRY KRESSER, INDIVIDUALLY AND IN HIS PROFESSIONAL CAPACITY AS SUPERVISOR OF SYRACUSE HOUSING AUTHORITY'S SECTION 8 PROGRAM, DEFENDANTS.



The opinion of the court was delivered by: Mordue, District Judge.

MEMORANDUM-DECISION AND ORDER INTRODUCTION

Plaintiff Norman E. Roth is in the business of property rental and management. He owns and manages several rental propertie, in the neighborhoods in and around the University area in the City of Syracuse. The other named plaintiffs are all businesses owned and operated by Roth.

Defendant Syracuse Housing Authority ("SHA") is a public corporation and a public housing agency responsible for administering state and federal low-income housing programs within the City of Syracuse. SHA is a separate legal entity from the City of Syracuse. SHA employees are not employees of the City of Syracuse and vice versa. Defendant Frederick R. Murphy is employed by SHA as its Executive Director. Defendant Terry Kresser supervises SHA's administration of low-income housing programs in the City of Syracuse.

Defendant Roy Bernardi is the Mayor of the City of Syracuse, which municipal entity has no involvement in any affairs of SHA. Defendant Vito Sciscioli is Director of Development for the City of Syracuse and reports directly to the Mayor. In his capacity as an employee of the City of Syracuse, he has no involvement in the management, control or direction of SHA's administration of low-income housing programs. Sciscioli is a member of SHA's Board of Directors.

The present complaint comprises 114 paragraphs and alleges that defendants violated a number of plaintiffs' federal and constitutional rights. Defendants move for dismissal pursuant to Fed.R.Civ.P. 12(b)(6) or, in the alternative, for summary judgment on a variety of legal and factual grounds.*fn1

FACTUAL BACKGROUND

Plaintiffs rented properties to students at Syracuse University and LeMoyne College for many years until 1992 when Syracuse University amended its student housing policy to require sophomore, as well as freshman students, to live on campus. This change left many owner/landlords, such as plaintiffs, with vacant properties. Plaintiff then became involved in the federally subsidized, low-income housing program known as "Section 8," which is administered in the City of Syracuse by SHA and funded by the United States Department of Housing and Urban Development ("HUD").

Under the Section 8 program, a low income individual or family requiring rent assistance applies to a public housing agency such as SHA for approval to receive benefits based on family composition, income and citizenship status. The approved individual or family then locates a rental property and landlord who will accept Section 8 payments. Once such a property and landlord are identified, the tenant signs a lease and the public housing agency and landlord enter into a standard Housing Assistance Payment ("HAP") contract. Under this arrangement, the public housing agency pays the majority of the rent and the tenant and/or local social services agency is responsible for the balance.

In the fall of 1996, various neighborhood associations began complaining to local and federal elected officials that Roth and other Section 8 owners/landlords were renting properties to tenants with propensities toward excessive noise, debris, destruction of property and criminal activity, with deleterious effects on the neighborhoods. Residents further complained that building code violations were consistently ignored. One such property, 315-317 Greenwood Place in the City of Syracuse, was owned by Roth. In October 1996, SHA advised Roth in writing that it had received a request from a United States Senator's office to remedy complaints regarding the offensive lifestyle of tenants of said property, which was contributing to a decline in the quality and desirability of the surrounding neighborhood. SHA's letter to Roth indicated that its hands were tied with respect to terminating Section 8 benefits paid to such "undesirable" tenant and that it was up to Roth and other landlords to preserve the integrity of the subsidized housing program by adhering to their "contractual" responsibilities. It appears from memoranda and documentation submitted by plaintiffs herein that SHA's main concern in this regard was that Roth and other Section 8 landlords screen prospective tenants by directing inquiries to their former landlords so as to avoid renting to disruptive people. The City and Mayor's office pressured SHA to ensure that its subsidized properties were inspected for building code violations and encouraged the agency to be more responsive to citizen complants regarding Section 8 tenants and landlords who were viewed as public nuisances.

In September 1997, SHA notified Roth that he and his companies were suspended from participation in the Section 8 housing program pending its investigation of his property management practices." SHA indicated that during its investigation, present contracts would be honored, but no new HUD contract would be executed. Roth's attorney immediately requested a meeting with SHA to discuss the suspension. The meeting was scheduled to take place on November 6, 1997. On October 30, 1997, however, HUD advised SHA in writing that Roth's suspension did not conform to federal regulations and the HUD contract*fn2 and ordered SHA to reinstate Roth to full and unrestricted participation in the Section 8 program. Based on the order of reinstatement, Roth's attorney canceled the November 6, 1997, meeting with SHA.

On November 12, 1997, Roth filed a complaint with HUD alleging that SHA had violated the Fair Housing Act (42 U.S.C. § 3601 et seq.) by suspending him from participation in the section 8 program because he was renting to African-American tenants in primarily all-white neighborhoods. Roth alleged that SHA was thereby denying minority tenants fair housing by interfering with their use of Section 8 federal subsidies. In January 1999, after investigating these charges, PU!) issued a "Determination of No Reasonable Cause" to believe that SHA engaged gaged in any discriminatory housing practices.

Notwithstanding its compliance with HUD's October 1997 order of reinstatement, SHA advised Roth's attorneys on November 17, 1997, that its investigation of Roth was continuing. In January 1999, as part of it investigation, SHA invited Roth to attend a meeting with Director Murphy to discuss the issue of whether and how he screened his tenants. Roth, through his attorney, chose not to meet with SHA on the grounds that failure to screen was not a valid basis on which to disapprove of Roth as a Section 8 landlord and that HUD ad exclusive jurisdiction over any decisions regarding Roth's participation in the Section 8 program.

On February 5, 1998, SHA advised Roth in writing that, after concluding its investigation into whether he screened prospective tenants as required by existing HUD contracts, SHA would not approve any future Section 8 leases submitted by Roth or any of his businesses, although it would not termimate any existing HAP contracts, SHA explained that its decision was based on evidence it gathered which established not only that Roth had not screened tenants as required by his contracts, but that he had falsely represented to SHA that he had done so, with the purpose of influencing the outcome of SHA's investigation. SHA advised that it was exercising its discretion under HUD regulations to deny approval to tenants wishing to lease units from Roth or any of his companies.

Roth filed a petition challenging SHA's determination pursuant to N.Y.C.P.L.R, Article 78. On October 27, 1998, the Honorable Parker J. Stone, New York State Supreme Court, holding that owners were not required to screen prospective tenants in order to participate in the Section 8 program,*fn3 granted Roth's petition in part by vacating SHA's determination not to approve any future Section 8 leases submitted by Roth or his compames.

In March 1999, HUD responded to a complaint made by Roth regarding SHA's February 1998 determination to deny approval of any future HAP contracts, stating that SHA complied fully with its October 1997 directive to restore Roth to the housing program. HUD noted that this directive applied only to the October 1997 suspension and not to future matters involving Roth and SHA. Nor was the directive intended to require SHA to seek HUD approval before taking future action against Roth. HUD noted that public housing agencies such as SHA had "clear authority to disapprove an owner and refuse to do business with him/her." Moreover, HUD stated that it ...


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