Opinion ID: 319420
Heading Depth: 1
Heading Rank: 3

Heading: the claim of right to a hearing

Text: 11 In disposing of the case at hand we refer to the analysis in Thompson v. Washington, No. 71-2049, 162 U.S.App.D.C. , 497 F.2d 626 decided this day That opinion suffices to establish jurisdiction and standing. In Thompson we held that tenants of lower income public housing programs established under the United States Housing Act, 42 U.S.C. 1401 et seq., have a right to contest rent increase proposals through written statements. In Marshall v. Lynn, No. 71-1786, also decided this day, we found a similar right to participate held by tenants of housing financed with FHA aid mortgage insurance at below market interest rates, pursuant to Section 221(d)(3) of the National Housing Act, 12 U.S.C. 1715l (1970). We based this procedural protection on our finding that tenants were intended beneficiaries of the rent limitation provisions of those housing programs. 12 The same analysis leads us to a different result for tenants in housing constructed under 220 of the National Housing Act. Unlike the other housing programs, 220 was not passed to benefit any specific class of tenants. Its purpose was to 10 13 aid in the elimination of slums and blighted conditions and the prevention of the deterioration of residential property . . . 14 This was a remedial program to eliminate slum conditions, while the production of new housing for specific classes of needy persons was left to other programs. 11 It was a different, though complementary, program that was established under 221(d)(3), combining FHA insurance with below-market-interest-rate loans to developers, to benefit low-and-middle-income 12 families displaced by 220 urban renewal projects. 13 And public housing was also to serve the needs of low-income families. 15 This absence of purpose to benefit tenants accounts for the absence of any language in 220 corresponding to the 207 provision regarding 'reasonable rentals.' The omission was intentional. Although the Presidential Advisory Commission had proposed that such language be included in the statute, 14 this suggestion was not followed in the bills put forward for House and Senate consideration. 15 At the hearings the omission was called to the attention of the legislative committees, 16 but the 'reasonable rentals' language was not inserted. 16 Section 220 did enable HUD to control rents through a provision that the Secretary 17 may in his discretion require such mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return and methods of operation, and for such purpose the Secretary may make such contracts with . . . any such mortgagor as the Secretary may deem necessary to render effective such restriction or regulations. 17 18 Pursuant to this authority, the Secretary promulgated a regulation providing that in reviewing a developer's quests for rent increase HUD will consider the economic soundness of the project and a reasonable return on the investment consistent with reasonable rentals to tenants. 24 C.F.R. 207.19(e). While the HUD regulations are not entirely clear as to the objectives sought during review of rental increases, 18 it is our sense that taken as a whole they were not intended to establish a legally protected tenant interest in the setting of rents. The government's interest as a mortgagee in the economic soundness of the project accounts for a concern that rentals be 'reasonable.' This concern would not necessarily coincide with that of the mortgagor. The government may have attitudes toward risk, and preferences for distribution of profits over time, different from those of a project developer. Moreover, the government will be concerned with external effects of a developer's management decisions on the character of property not owned by the developer but within the total area upgraded through the government's efforts. A developer might, for example, regard high rents with the likelihood of a high turnover rate or a substantial vacancy rate as offering the best opportunity to maximize his profits. But turnover and vacancies may affect the appearance of the larger residential community and the quality of neighborhood life in general-- effects to which the government involved in the entire upgraded area may be more sensitive than a single landlord. 19 19 The government's interest in reviewing the mortgagor's rent-setting decisions may on occasion coincide with the desires of particular tenants to moderate rents, and the Secretary's use of the power to review rent increase proposals may also promote tenants' welfare. Nevertheless, the interests of tenants and that of the government are analytically distinct. It is our view, on this record, that neither Congress nor the Secretary intended to establish a program of rent control for the purpose of protecting resident tenants. 20 Whatever protection tenants in fact derive from the process of review they receive as incidental beneficiaries, and this interest is insufficient to support a claim of right to be heard either under the statute or under the due process clause. 21 20 Affirmed.