Summary
The Supreme Court considered whether Section 801 of the Department of Housing and Urban Development Reform Act of 1989 violated the Fifth Amendment Due Process Clause by affecting landlords' claimed contractual rights to automatic rental-subsidy increases under Section 8 housing assistance contracts. The Court held that the contracts' overall-limitation provision permitted HUD to use comparability studies to cap rent adjustments at levels not materially exceeding rents for comparable unassisted units. Because the contracts did not provide the asserted right, the Court did not reach the constitutionality of Section 801 and reversed the Ninth Circuit.
Topics
Practice areas
Questions Presented
- Whether the Section 8 assistance contracts prohibited HUD from using independent comparability studies to cap formula-based rent adjustments.
- Whether § 801 of the Department of Housing and Urban Development Reform Act of 1989 violated the Fifth Amendment Due Process Clause by abrogating respondents' alleged contractual right to unobstructed formula-based rent increases.
Holdings
- The assistance contracts did not prohibit HUD from using comparability studies to impose an independent cap on formula-based rent adjustments. The contracts' overall limitation required that adjustments not produce material differences between assisted and comparable unassisted rents.
- Respondents had no contract right to formula-based rent adjustments that materially exceeded market rents for comparable units.
- The Court did not reach the constitutional question because respondents had no contractual entitlement to unobstructed formula-based rent adjustments for Congress to abrogate.
Key quotations
“As we have noted previously in construing statutes, the use of such a "notwithstanding" clause clearly signals the drafter's intention that the provisions of the "notwithstanding" section override conflicting provisions of any other section.” (508 U.S. at 18)
“In sum, we think that the contract language is plain that no project owner may claim entitlement to formula-based rent adjustments that materially exceed market rents for comparable units.” (508 U.S. at 21)
Factual background
HUD entered into long-term Housing Assistance Payments contracts with private developers participating in the Section 8 housing program. The contracts provided for annual rent adjustments using automatic adjustment factors but also included an overall limitation barring material differences between assisted and comparable unassisted rents. After HUD suspected that formula-based increases produced rents above prevailing market rates, it conducted comparability studies and used private-market rents as an independent cap.
Procedural history
After landlords challenged HUD's use of comparability studies, the district courts entered summary judgment for the landlords. In a consolidated appeal, the Ninth Circuit affirmed, holding that the contracts prohibited independent rent caps and that Congress's authorization of those caps unconstitutionally deprived respondents of vested contract rights. The Supreme Court reversed because the contracts themselves permitted comparability-based limitations, eliminating the asserted contract right.