I originally wrote the following for a manuscript I
have in development on stopping evictions during Covid-19. But it’s too much of
a deviation from that topic, and had to be removed. So I am posting it here as
kind of a stand-alone blog and tribute to a great advocate and mentor. Without
further ado…
I first met Jim Grow toward the end of 2007, when I
was working at the Northwest Justice Project in Seattle. He called me on the phone to talk
about a case called Hendrix v. Seattle Housing Authority.
SHA’s arbitrary omission of tenants’ arguments and
defenses rendered their hearings utterly meaningless, failing to afford the due
process rights to which families facing the loss of their homes were entitled.
Through public records requests, we discovered this was a systemic, recurring
problem: over 270 families had been evicted or expelled from SHA housing
programs through these sham hearings. It was an outrage, and addressing it
entailed a multi-year campaign of civil rights litigation.
One major component of that litigation campaign was a
federal lawsuit, Hendrix v. SHA. We’d brought
the case seeking to enjoin SHA from hearing new housing voucher termination
cases until they’d corrected their hearing procedures and hired new hearing
officers with the training and skills to consider and evaluate tenant defenses.
The judge in Hendrix issued a favorable ruling in November 2007,
essentially rejecting SHA’s contention that “legal arguments” were
inappropriate at voucher termination hearings, and allowing our case to go
forward.
The favorable decision in Hendrix had been easily the most significant accomplishment in my legal career to that point. Though SHA’s practices were extreme, housing authorities across the country were notorious for violating tenants’ due process rights—whether through ersatz hearings and biased hearing officers like at SHA, using procedural tricks that kept tenants from even having hearings at all, or sometimes by simply ignoring or disavowing a hearing decision that didn’t go the housing authority’s way. So having a federal judge issue an opinion confirming that such practices were wrong and violated the U.S. Constitution, and recognizing a tenant’s right to actually hold the housing authority accountable in court, was a major win.
The
ruling would provide the bargaining leverage we needed to negotiate a
far-reaching consent decree[1]
with SHA to reform its hearing practices for voucher tenants, critically
ensuring that tenants could raise any pertinent argument or defense, and that
new, legally-trained hearing officers would be hired to preside over all future
voucher cases.
I was glad to make Jim’s acquaintance that day.
Because about seven years after the Hendrix case, I began representing
an organization of tenants living in a north Seattle building called the
Theodora, a HUD-subsidized property for disabled tenants. The property had
recently reached the end of a 50-year “Section 202” mortgage, which had
required the owner to keep the property affordable to qualified low-income
residents. But that obligation expired with the mortgage, and now the owner
planned on selling the Theodora to a developer for conversion into luxury
apartments.
Such “housing preservation” cases can be bewildering,
requiring an understanding of affordable housing finance, knowledge of various
obscure laws that might be leveraged to slow down or ultimately derail a
pending sale, an ability to navigate complex ethical and regulatory obstacles
and represent groups of residents whose objectives may or may not uniformly
align, and in this particular case, advance a fair housing theory that requiredstatistical proof of discrimination (i.e., that the planned sale and
redevelopment would substantially diminish housing opportunities for people
with disabilities in the vicinity, an outcome the seller could avoid by
conveying the property to a preservation-minded buyer instead).
Without Jim we wouldn’t have stood a fighting chance.
Few front-line legal aid attorneys spend much time thinking about how
commercial housing deals are structured, and I was no exception. I had even
attended multiple training presentations on the subject dating back years, but
without many opportunities to make use of the information it never really took.
I had no idea how to handle a complex housing preservation case that. Jim did.
An affordable housing project has certain “capital
needs” costs, Jim explained, mainly the price of the land and the construction
or rehabilitation needs of the building. Then, once the housing project is up
and running, there will be operating costs—the amounts needed to pay the staff,
maintain the physical plant, service the debt, and so on. For a project to be
feasible basically required enough up-front money to meet the initial
development costs and, once in operation, taking in enough rent and subsidy
payments to cover the project’s operating costs.
That was simple enough. But I also didn’t have any
idea how to figure out what those numbers actually were in connection with any
particular project. The acquisition costs and capital needs for the Theodora I
knew because we had obtained figures from the already-planned transaction
through discovery in the lawsuit. But those numbers just showed how much a preservation
buyer would need to pay if they wanted to match the existing offer on the
Theodora—not how much they could afford or where the money might come from.
Again, Jim knew. “Talk to some nonprofit developers in your area,” he
recommended. “See if there are any interested in the project.”
It turned out that numerous Seattle-area nonprofit
developers were interested in the Theodora. The property was in Wedgewood, by
then an impenetrably cost-prohibitive area to place new affordable housing.
Executives from four different affordable housing providers signed affidavits
describing the building’s importance as a rare asset for meeting the housing
needs of low-income Seattle residents, and people with disabilities
specifically, in high-cost northeast Seattle. Each explained that the sale
caught them off-guard and they’d likely have bid on the property if given the
chance. But the seller had inked a deal with Goodman Real Estate, a for-profit
entity known for voraciously scooping up the area’s aging affordable housing
with no concerns for the futures of current residents, before the nonprofits
ever had a chance.
The only problem seemed to be that the highest price
any of the nonprofit developers could have afforded to offer for the Theodora
was about $6 million—and the seller’s contract with Goodman was for $7 million.
That left what affordable housing developers call a “gap.” Either the price had
to come down, or more money would need to come from somewhere to fill
it—otherwise a preservation deal wouldn’t work even if we could force or
negotiate one through the litigation.
We knew a sale to a preservation-minded buyer could
have required the seller to discount the price; by how much, we didn’t know at
the outset. But now we knew, and it was the difference between the $6 million
the nonprofits knew they could come up with, and the $7 million that Goodman
was willing to pay. How might a $1 million gap be closed? Again, as a guy who
concentrated on the nuances of individual tenant matters like housing
admissions or eviction proceedings, I hadn’t the faintest idea.
Jim, on the other hand, had plenty of ideas. Money
isn’t easy to come by in the nonprofit world, but those who look hard enough
can often locate various sorts of strange, hard-to-access funding opportunities—tax
credits, federal contracts, state bonds, small pots of federal appropriations
that nobody ever qualified for. If there was money out there the nonprofits had
missed, or that they might qualify for with some tweak in the laws, then they
might be able to close the gap—at least part of the way. Otherwise, the only
way to bring the gap down would be for the seller to sell the property for
less.
Expecting a seller to simply take less money might
ordinarily have seemed out of the question. But here, the seller was itself a
nonprofit organization. The seller would clear at least a $2 million gain on
the sale to Goodman, and had already committed to investing the funds in some
other unspecified manner to help people with disabilities in the Seattle area.
But they didn’t have a plan for what that help would be. Leaving some of that
anticipated profit on the table to allow preservation of the Theodora seemed to
us quite a logical way to help Seattleites with disabilities.
He didnot. Even though the seller was a nonprofit, the judge ultimately ruled, maximizing its profit on the sale of the Theodora was a sufficiently strong business reason to sell to Goodman as to justify displacing its disabled residents.
The effort to save the Theodora was not successful. But to the tenants who’d organized and fought to save their homes, the case had been deeply meaningful and well worth the effort despite the outcome. I was proud of the effort, happy to have served the clients, but disappointed with the result.
With Jim’s help I’d touched the rim on a higher level of legal advocacy. And yet I’d only touched it—I certainly couldn’t dunk yet. I didn’t want to just be the well-meaning legal aid guy in way over his head, but with the case having ended in a ball of fire we only hoped wouldn’t make the Federal Supplement,[2] I had to admit that’s what I had been.
I wanted to be the expert national guy with all the answers. I wanted to actually win those cases. I wanted to learn the ways of the force and become a Jedi like Jim Grow.
“Grocery shopping,” I answered, fumbling the
half-bagged cabbage back into the display.
A mild chuckle suggested Jim could actually sense my
one-handed shopping struggles from his shady back yard in Oakland. At least it
was a good enough excuse. “Well,” he said, “When you get home, check it.
Congressional staff is trying to reach you about the national eviction moratorium.”
[1] A
“consent decree” is a type of legal settlement that is judicially approved and
entered as a court order, so that the decree may be judicially enforced (i.e.,
violations constitute contempt of court).
[2]
The Federal Supplement is a series of legal case reporters published by West
Publishing, which contains important federal district court opinions issued
since 1932. Though not binding on other courts, opinions that appear in the Federal
Supplement tend to receive greater deference from fellow judges than
non-published opinions.
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