The Inclusive Communities Project Inc v. Abbott

Brief/Memorandum in Support

N.D. Tex.April 18, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION THE INCLUSIVE COMMUNITIES PROJECT, INC., Plaintiff, v. GOVERNOR GREG ABBOTT ONLY IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE STATE OF TEXAS, AND THE CITY OF DALLAS Defendants. § § § § § § § § § § Civil Action No. 3:17-cv-440 DEFENDANT GOVERNOR ABBOTT’S BRIEF IN SUPPORT OF MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT FOR LACK OF SUBJECT-MATTER JURISDICTION & FAILURE TO STATE A CLAIM TO THE HONORABLE JUDGE OF SAID COURT: The Housing Choice Voucher Program (“the Voucher Program” or “Section 8”) provides financial assistance from the federal government for tenants who lease with private landlords. Landlords who participate in the Voucher Program agree to comply with federal regulations and requirements, which impose limitations and potential costs. Federal and state law makes landlord participation voluntary. In 2014, two municipalities began enacting ordinances to prohibit voucher status discrimination, thereby effectively mandating landlord participation in the Voucher Program. To keep participation voluntary, the Texas Legislature passed Section 250.007 of the Texas Local Government Code (“Section 250.007”), which prohibits municipalities from enacting such ordinances. Inclusive Communities Project (“ICP”) contends that Section 250.007 discriminates on the basis of race. For the reasons set forth in this brief, ICP’s claims should be dismissed. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 1 of 30 PageID 179 ii. TABLE OF CONTENTS I. BACKGROUND ........................................................................................................... 1 A. The Housing Choice Voucher Program ............................................................ 1 B. Section 250.007 of the Texas Local Government Code ................................... 3 C. ICP’s First Amended Complaint ...................................................................... 4 1. Disparate Treatment (Equal Protection & 42 U.S.C. § 3604(a)) ................. 5 2. Disparate Impact (42 U.S.C. § 3604(a)) ........................................................ 5 3. FHA’s Effect on State Laws provision (42 U.S.C. § 3615) ........................... 6 4. Non-race claim under the Equal Protection clause ..................................... 6 II. STANDARD OF REVIEW .............................................................................................. 7 III. ARGUMENTS & AUTHORITIES ................................................................................... 8 A. Motion to Dismiss for Lack of Subject-Matter Jurisdiction ............................ 8 1. ICP lacks an injury fairly traceable to Governor Abbott and therefore lacks standing ......................................................................................................... 8 2. Governor Abbott has Eleventh Amendment immunity ............................... 9 B. Motion to Dismiss for Failure to State a Claim ............................................ 12 1. ICP fails to state a claim for disparate treatment ..................................... 12 2. ICP fails to state a claim for disparate impact .......................................... 19 3. ICP fails to state a claim to invalidate Section 250.007 under the FHA’s Effect on State Laws provision ............................................................................. 23 4. ICP fails to state a non-race claim under the Equal Protection clause .... 24 IV. PRAYER FOR RELIEF ............................................................................................... 24 Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 2 of 30 PageID 180 iii. TABLE OF AUTHORITIES CASES Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009).................................................................. 7, 12 Austin Apartment Ass’n v. City of Austin, 89 F.Supp.3d 886 (W.D. Tex. 2015) ................................................................................................................. passim Bell Atl. Corp. v. Twombly, 550 U.S. 544, (2007) ......................................................... 7 City of Los Angeles v. Wells Fargo & Co., Case No. 2:13-cv-09007-ODW, 2015 WL 4398858 (C.D. Cal. 2015) ......................................................................... 20 Dews v. Town of Sunnyvale, Tex., 109 F.Supp.2d 526 (N.D. Tex. 2000) ................... 14 F.C.C. v. Beach Commc’ns, Inc., 508 U.S. 307 (1993) ................................................ 24 Friends of the Earth, Inc. v. Laidlaw Envt’l. Servs. (TOC), Inc., 528 U.S. 167 (2000) ....................................................................................................... 8, 9 FW/PBS, Inc. v. City of Dallas, 493 U.S. 215 (1990) ..................................................... 8 Graoch Assocs. #33, L.P. v. Louisville/Jefferson Cnty. Metro Human Relations Comm’n, 507 F.3d 366 (6th Cir. 2007) ........................................ 18, 22, 23 Hafer v. Melo, 502 U.S. 21 (1991) .................................................................................. 9 Heller v. Doe by Doe, 509 U.S. 312 (1993) ................................................................... 24 Hooks v. Landmark Indus., Inc., 797 F.3d 309 (5th Cir. 2015) ................................... 7 Inclusive Cmty. Project, Inc. v. Tex. Dep’t of Housing & Cmty. Affairs (ICP VII), Civil Action No. 3:08-CV-0546-D, 2016 WL 4494322 (N.D. Tex. 2016) ................................................................................................................. 19 Inclusive Cmty. Project, Inc. v. United States Dep’t of Treasury, Civil Action No. 3:14-CV-3013-D, 2016 WL 6397643 (N.D. Tex. 2016) .............. 19, 20, 21 Int’l Truck & Engine Corp. v. Bray, 372 F.3d 717 (5th Cir. 2004) ............................... 3 Jim Sowell Const. Co., Inc. v. City of Coppell, 61 F.Supp.2d 542 (N.D. Tex. 1999) ................................................................................................................. 13 K.P. v. LeBlanc, 729 F.3d 427 (5th Cir. 2013) ............................................................ 10 Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383 (5th Cir. 2010) .................................................................................................................... 8 Lovelace v. Software Spectrum Inc., 78 F.3d 1015 (5th Cir. 1996) .............................. 8 Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992) ............................................................. 9 McCardell v. U.S. Dep’t of Housing & Urban Dev., 794 F.3d 510 (5th Cir. 2015) .................................................................................................................. 10 Morris v. Livingston, 739 F.3d 740 (5th Cir. 2014) .............................................. 10, 11 Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 3 of 30 PageID 181 iv. Okpalobi v. Foster, 244 F.3d 405 (5th Cir. 2001) ........................................................ 10 Patino v. City of Pasadena, Civil Action No. H–14–3241, 2017 WL 68467 (S.D. Tex. 2017) ............................................................................................. 14 Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89 (1984) ............................. 10 Personnel Adm’r of Mass. v. Feeney, 442 U.S. 256 (1979) .................................... 12, 16 Plotkin v. IP Axess Inc., 407 F.3d 690 (5th Cir. 2005) ...................................... 7, 12, 17 Quern v. Jordan, 440 U.S. 332 (1979) ......................................................................... 10 Ramming v. U.S., 281 F.3d 158 (5th Cir. 2001) ........................................................... 7 Salute v. Stratford Greens Garden Apartments, 136 F.3d 293 (2d Cir. 1998) ................................................................................................................. passim Territory of Alaska v. Am. Can Co., 358 U.S. 224 (1959) ............................................. 3 Tex. Dep’t of Housing & Cmty. Affairs v. Inclusive Cmty. Project, Inc. (ICP VI), 135 S.Ct. 2507 (2015) ............................................................. 19, 20, 21, 23 Veasey v. Abbott, 830 F.3d 216 (5th Cir. 2016) ......................................... 13, 14, 15, 18 Vill. of Arlington Heights v. Metro. Hous., 429 U.S. 252 (1977) .......................... 12, 18 STATUTES 42 U.S.C. § 1983 ....................................................................................................... 4, 10 42 U.S.C. § 3601 ............................................................................................................. 4 42 U.S.C. § 3604 ............................................................................................................. 6 42 U.S.C. § 3604(a) .......................................................................................... 2, 5, 6, 12 42 U.S.C. § 3615 ................................................................................................. 6, 23, 24 42 U.S.C. §§ 1437–37f .................................................................................................. 16 TEX. LOCAL GOV’T CODE § 250.007 .......................................................................... 4, 11 TEX. LOCAL GOV’T CODE § 250.007(a) .......................................................................... 20 TEX. LOCAL GOV’T CODE § 250.007(c) ............................................................................ 4 TEX. PROP. CODE § 301.021(a) .................................................................................. 2, 24 RULES FED. R. CIV. P. 12(b)(1) ................................................................................................... 7 FED. R. CIV. P. 12(b)(6) ................................................................................................... 7 FED. R. EVID. 201(b)(2) ................................................................................................... 3 FED. R. EVID. 201(d) ....................................................................................................... 8 Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 4 of 30 PageID 182 v. REGULATIONS 24 C.F.R. § 982.1 ............................................................................................................ 1 24 C.F.R. § 982.302(a) .................................................................................................... 1 24 C.F.R. § 982.302(b) .................................................................................................... 1 24 C.F.R. § 982.53 .......................................................................................................... 2 Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 5 of 30 PageID 183 1 I. BACKGROUND A. The Housing Choice Voucher Program The Voucher Program is funded by the United States Department of Housing and Urban Development (“HUD”), but administered by state and local public housing authorities (“PHAs”). Austin Apartment Ass’n v. City of Austin, 89 F.Supp.3d 886, 889–90 (W.D. Tex. 2015) (providing a detailed overview); see also 24 C.F.R. § 982.1, et seq. Once a family is approved and receives a voucher, the family “may search for a unit.” 24 C.F.R. § 982.302(a). “If the family finds a unit, and the owner is willing to lease the unit under the program, the family may request PHA approval of the tenancy.” Id. at § 982.302(b). Once the family has located a willing landlord and the family and landlord have negotiated the terms of the lease, the PHA must also approve the prospective tenancy. The landlord and family fill out and submit to the PHA a two-page Request for Tenancy Approval, which provides the PHA with basic information such as the address and size of the unit to be rented and the utilities and appliances provided by the landlord versus paid for by the tenant. The Request for Tenancy Approval also requires landlords who rent more than four units to disclose the rent charged for comparable units, so the PHA can ensure the rent charged to the voucher holder is comparable to that charged to unassisted tenants. Austin Apartment Ass’n, 89 F.Supp.3d at 890 (internal citations omitted). “If the PHA approves the tenancy, an inspection of the house or apartment to be leased to the family is scheduled. The inspection ensures the unit passes basic federal housing quality standards. . . .” Austin Apartment Ass’n, 89 F.Supp.3d at 890 “If a property fails inspection, the landlord is required to make any needed repairs and notify the PHA when the property is ready for re-inspection.” Id. at 891. “Once the unit has passed inspection, the landlord and the PHA must execute the HUD- Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 6 of 30 PageID 184 2 prepared Housing Assistance Payments [HAP] Contract.” Id. “The landlord cannot modify or negotiate the HAP Contract, it must be word-for-word identical to the form prescribed by HUD.” Id. The Voucher Program also limits landlords in other ways, such as limiting their ability to charge late fees or terminate a tenancy. Id. “Federal law does not require landlords to accept housing vouchers, and landlords who do accept vouchers are not required to approve tenants merely because they are voucher holders.” Austin Apartment Ass’n, 89 F.Supp.3d at 890. Some courts have concluded “that the voluntariness provision of Section 8 reflects a congressional intent that the burdens of Section 8 participation are substantial enough that participation should not be forced on landlords, either as an accommodation to handicap or otherwise.” Salute v. Stratford Greens Garden Apartments, 136 F.3d 293, 300 (2d Cir. 1998). However, federal law does not “pre-empt operation of State and local laws that prohibit discrimination against a Section 8 voucher-holder because of status as a Section 8 voucher-holder.” 24 C.F.R. § 982.53. Neither the Texas Legislature nor the United States Congress has enacted legislation prohibiting discrimination on the basis of voucher status. See Austin Apartment Ass’n, 89 F.Supp.3d at 890. Neither legislature has decided that landlords should be required to take on the administrative and financial burden of mandatory participation in the Voucher Program. See id.; see also Salute, 136 F.3d at 300. However, both the Texas Fair Housing Act and the FHA prohibit housing discrimination based on “race, color, religion, sex, familial status, or national origin.” TEX. PROP. CODE § 301.021(a); 42 U.S.C. § 3604(a). Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 7 of 30 PageID 185 3 B. Section 250.007 of the Texas Local Government Code In 2014, both the City of Dallas and the City of Austin were in the process of enacting ordinances that would add source of income, including voucher status, as a protected category in their housing discrimination ordinances. Doc. #12, ¶¶23–30. This would, for the first time in the State of Texas, effectively mandate participation in the Voucher Program.1 See id. After the ordinances became effective, refusal to accept a voucher holder on that basis would become illegal and expose the landlord to potential liability. See id. Post-enactment, landlords who wanted to use their own lease, or who did not want to lose revenue by leaving a unit unfilled while awaiting inspection, or who simply did not want to become entangled in government bureaucracy would have no choice—if they wanted to avoid engaging in conduct made illegal by the ordinances. See supra, 1–2. In response, the Texas Legislature enacted Section 250.007. Doc. #12, ¶¶26– 28. In so doing, the Legislature recognized both the Voucher Program’s “essential” importance “to ensuring that very low income individuals and families can get housing” and also the cost that its regulations and requirements impose on participating landlords. Author’s / Sponsor’s Statement of Intent, 1.2 1 ICP argues that the protection against discrimination on the basis of voucher status is not the same as an obligation to participate in the voucher program because the landlord can still use other criteria such as inability to pay rent. See Doc. #12, ¶105. This argument misses the point. Accepting a potential tenant participating in the Voucher Program itself imposes burdens on the landlord. See supra, 1–2. When landlords cannot legally consider the burdens imposed by participation in the Voucher Program, that participation effectively becomes mandatory. 2 Bill analyses are subject to judicial notice. See FED. R. EVID. 201(b)(2); Territory of Alaska v. Am. Can Co., 358 U.S. 224, 226–27 (1959); Int’l Truck & Engine Corp. v. Bray, 372 F.3d 717, 728 at n. 13 (5th Cir. 2004). The enrolled bill analysis for Section 250.007, enacted as S.B. 267 during the 84th Legislative Session, attached as Exhibit 1, is available at: http://www.capitol.state.tx.us/tlodocs/84R/analysis/pdf/SB00267F.pdf#navpanes=0. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 8 of 30 PageID 186 4 Section 250.007 insists that participation in the Voucher Program remain voluntary by prohibiting cities and counties from mandating landlord participation. See TEX. LOCAL GOV’T CODE § 250.007; House Research Organization’s bill analysis.3 At the same time, Section 250.007 also expressly allows cities and counties to create incentive programs that encourage landlords to choose participation. TEX. LOCAL GOV’T CODE § 250.007(c). Section 250.007 states, in full: Except as provided by this section, a municipality or county may not adopt or enforce an ordinance or regulation that prohibits an owner, lessee, sublessee, assignee, managing agent, or other person having the right to lease, sublease, or rent a housing accommodation from refusing to lease or rent the housing accommodation to a person because the person’s lawful source of income to pay rent includes funding from a federal housing assistance program. (b) This section does not affect an ordinance or regulation that prohibits the refusal to lease or rent a housing accommodation to a military veteran because of the veteran’s lawful source of income to pay rent. (c) This section does not affect any authority of a municipality or county or decree to create or implement an incentive, contract commitment, density bonus, or other voluntary program designed to encourage the acceptance of a housing voucher directly or indirectly funded by the federal government, including a federal housing choice voucher. TEX. LOCAL GOV’T CODE § 250.007 (effective September 1, 2015). C. ICP’s First Amended Complaint As described below, ICP brings claims pursuant to both the FHA (42 U.S.C. § 3601, et seq.) and 42 U.S.C. § 1983 (Equal Protection Clause claim). Doc. #12, ¶1, ¶¶184–189. The gravamen of ICP’s complaint is that Section 250.007 has the intent and effect of discriminating on the basis of race (black or African American). See id. 3 The House Research Organization’s bill analysis, attached as Exhibit 2, is available at: http://www.hro.house.state.tx.us/pdf/ba84r/sb0267.pdf#navpanes=0. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 9 of 30 PageID 187 5 1. Disparate Treatment (Equal Protection & 42 U.S.C. § 3604(a)) Under a disparate treatment theory, ICP contends that Section 250.007 violates the Fourteenth Amendment’s Equal Protection Clause and the FHA. Doc. #12, ¶¶184–185. ICP argues that Section 250.007 violates the Equal Protection Clause by “intentionally singling out a racially identifiable Black or African American group for unequal treatment and by intentionally perpetuating racial segregation.” Id. at ¶185. ICP argues that because the majority of voucher holders in the City of Dallas are Black or African American, and the City of Dallas was preparing to enact an ordinance prohibiting voucher status discrimination when the Texas Legislature enacted Section 250.007, the “circumstantial evidence prove[s] [the Legislature’s] racial purpose to perpetuate racial segregation and to disadvantage a predominantly Black group.” See id. at ¶¶67–76. Also under a disparate treatment theory, ICP contends that Section 250.007 violates the FHA’s prohibition on discrimination in the sale or rental of housing. Doc. #12, ¶184. Like the Texas Fair Housing Act, the FHA makes it unlawful to “refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” 42 U.S.C. § 3604(a). Although the FHA makes participation in the Voucher Program voluntary for landlords, ICP contends Section 250.007 violates the FHA. 2. Disparate Impact (42 U.S.C. § 3604(a)) Under a disparate impact theory, ICP contends that Section 250.007 violates the FHA’s prohibition on discrimination in the sale or rental of housing. Doc. #12, Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 10 of 30 PageID 188 6 ¶186 (citing 42 U.S.C. § 3604). ICP argues that (1) the majority of voucher holders “in the Dallas metropolitan area are Black or African American,” (2) “[m]ost of the multifamily landlords with units that can be rented at voucher program rents in White non-Hispanic areas refuse to rent to voucher households,” (3) if permitted, the City of Dallas would force landlords to rent to voucher holders by prohibiting voucher status discrimination, (4) Section 250.007 prohibits this would-be prohibition, and therefore (5) Section 250.007 has “adverse effects on a disproportionately Black group.” See id. at ¶¶126–135. ICP brings a disparate impact claim based on this causation sequence. See id. 3. FHA’s Effect on State Laws provision (42 U.S.C. § 3615) ICP brings a claim under 42 U.S.C. § 3615, the FHA’s “Effect on State Laws” provision. Doc. #12, ¶1, ¶¶146–150. This provision states, in relevant part, “any law of a State, a political subdivision, or other such jurisdiction that purports to require or permit any action that would be a discriminatory housing practice under this subchapter shall to that extent be invalid.” 42 U.S.C. § 3615. ICP contends that Section 250.007 violates this provision because it “is a discriminatory housing practice that perpetuates racial segregation by making units unavailable because of race and violates 42 U.S.C. § 3604(a).” Doc. #12, ¶149. 4. Non-race claim under the Equal Protection clause Finally, ICP brings a non-race claim under the Equal Protection clause, contending that Section 250.007 does not have a rational relationship with any legitimate State interest. See Doc. #12, ¶104; see also Doc. #11, 9–10 (arguing that Governor Abbott’s first motion to dismiss did not address this claim). Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 11 of 30 PageID 189 7 II. STANDARD OF REVIEW Federal Rule of Procedure 12(b)(1) governs motions to dismiss for lack of subject-matter jurisdiction. FED. R. CIV. P. 12(b)(1). When the court lacks the statutory or constitutional power to adjudicate a case, the case is properly dismissed for lack of subject-matter jurisdiction. Hooks v. Landmark Indus., Inc., 797 F.3d 309, 312 (5th Cir. 2015). “The burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction.” Ramming v. U.S., 281 F.3d 158, 161 (5th Cir. 2001). “Accordingly, the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist.” Id. Federal Rule of Procedure 12(b)(6) governs motions to dismiss for failure to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). To avoid dismissal under Rule 12(b)(6), a plaintiff must plead sufficient facts to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. While courts must accept all factual allegations as true, they “do not accept as true conclusory allegations, unwarranted factual inferences, or legal conclusions.” Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005); see also Iqbal, 556 U.S. at 679. When reviewing a motion to dismiss for failure to state a claim, courts may consider “the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.” Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 12 of 30 PageID 190 8 594 F.3d 383, 387 (5th Cir. 2010). Courts “may also consider matters of which they may take judicial notice.” Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1017–18 (5th Cir. 1996); see also FED. R. EVID. 201(d) (“The court may take judicial notice at any stage of the proceeding.”). III. ARGUMENTS & AUTHORITIES A. Motion to Dismiss for Lack of Subject-Matter Jurisdiction 1. ICP lacks an injury fairly traceable to Governor Abbott and therefore lacks standing ICP names Governor Abbott as the sole defendant and in his official capacity only. Doc. #12, ¶21. “Official-capacity suits . . . generally represent only another way of pleading an action against an entity of which an officer is an agent.” Kentucky v. Graham, 473 U.S. 159, 165 (1985). ICP lacks standing for its claims against Governor Abbott because it has not alleged an injury that is fairly traceable to the Office of Texas Governor. See Friends of the Earth, Inc. v. Laidlaw Envt’l. Servs. (TOC), Inc., 528 U.S. 167, 180–81 (2000) (listing the elements for the plaintiff to establish standing). Consequently, the Court lacks subject-matter jurisdiction. “[S]tanding is perhaps the most important of the jurisdictional doctrines.” FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990) (internal quotation omitted). To establish standing, a plaintiff must show: (1) an actual or imminent, concrete and particularized “injury-in-fact”; (2) that is fairly traceable to the challenged action of the defendant (causation); and (3) that is likely to be redressed by a favorable decision (redressability). Friends of the Earth, Inc., 528 U.S. at 180–81. All three elements are “an indispensable part of the plaintiff’s case” and the party seeking to invoke federal Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 13 of 30 PageID 191 9 jurisdiction bears the burden to establish them. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). Here, ICP has not established standing against Governor Abbott because ICP has not alleged an injury fairly traceable to him. See Lujan, 504 U.S. at 561. ICP concedes that Section 250.007 “does not contain a specific provision for gubernatorial enforcement.” Doc. #12, ¶48. However, the pleading alleges that“[t]he Governor can generally enforce this provision and other state laws or federal laws in his execution of the power to make and withhold grants to local governments.” Id. Although ICP alleges that Governor Abbott has threatened to withhold state funding based on a city’s unwillingness to enforce federal immigration law, no such threat has been alleged as it relates to this case. See generally Doc. #12; id. at ¶¶50–51. The alleged ability to take an action is not the same as taking or even threatening it. In sum, the pleadings do not allege that Governor Abbott or, rather, the Office of Texas Governor took any action that caused ICP to suffer a particularized injury. Compare Doc. #12 with Friends of the Earth, Inc., 528 U.S. at 180–81. Consequently, ICP lacks standing. Therefore Governor Abbott asks the Court to grant his motion to dismiss for lack of subject-matter jurisdiction. 2. Governor Abbott has Eleventh Amendment immunity Even if ICP had standing to sue Governor Abbott, its claims would still be barred by his Eleventh Amendment immunity. “Suits against state officials in their official capacity [] should be treated as suits against the State.” Hafer v. Melo, 502 U.S. 21, 25 (1991). Absent a valid waiver of immunity, the Eleventh Amendment bars citizens from bringing suit against their own states in federal court. Pennhurst State Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 14 of 30 PageID 192 10 Sch. & Hosp. v. Halderman, 465 U.S. 89, 100–01 (1984). ICP brings claims under the FHA and 42 U.S.C. § 1983. Doc. #12, ¶¶184–189. Neither the FHA nor 42 U.S.C. § 1983 waives Eleventh Amendment immunity from suit. McCardell v. U.S. Dep’t of Housing & Urban Dev., 794 F.3d 510, 522 (5th Cir. 2015) (the FHA); Quern v. Jordan, 440 U.S. 332, 345 (1979) (42 U.S.C. § 1983). Lacking a waiver, ICP must rely instead on the Ex parte Young exception. However, this exception is unavailing. Under the Ex parte Young exception, a state official may be sued in his official capacity by a plaintiff seeking prospective injunctive relief based on an alleged ongoing violation of the federal constitution. K.P. v. LeBlanc, 729 F.3d 427, 439 (5th Cir. 2013). However, to fall within this exception, the defendant must have “the particular duty to enforce the statute in question and a demonstrated willingness to exercise that duty.” Morris v. Livingston, 739 F.3d 740, 746 (5th Cir. 2014) (quoting Okpalobi v. Foster, 244 F.3d 405, 414–15 (5th Cir. 2001) (en banc)). Here, the Ex parte Young exception is inapplicable because Governor Abbott has no particular duty to enforce Section 250.007 of the Texas Local Government Code. In Morris, for example, the plaintiff challenged the constitutionality of a Texas statute, naming Governor Perry as a defendant in both individual and official capacities. 739 F.3d at 742–43. The Fifth Circuit held that the official capacity claim was barred by Governor Perry’s Eleventh Amendment immunity. Id. at 744, 746. Analyzing the applicability of the Ex parte Young exception, the Morris Court noted that the challenged statute did “not specially task Governor Perry with its enforcement, or suggest that he will play any role at all in its enforcement.” Id. at Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 15 of 30 PageID 193 11 746. The court determined that Governor Perry’s “general duty to see that the laws of the state are implemented” was insufficient and held that “Governor Perry [was] not a proper defendant.” Id. Here, as in Morris, Section 250.007 does not specifically task Governor Abbott with its enforcement, or suggest that he will play any role at all in its enforcement. See TEX. LOCAL GOV’T CODE § 250.007; see also Doc. #12, ¶48 (Section 250.007 “does not contain a specific provision for gubernatorial enforcement”). ICP alleges that Governor Abbott “has the specific duty to cause the laws to be faithfully executed in his funding, budget, and regulatory authority over several programs that focus on local government” and that he is in charge of coordinating local jurisdictions’ applications for federal financial assistance. Id. at ¶¶49–53. In an attempt to tie these allegations back to Section 250.007, ICP speculates that Governor Abbott might threaten to withhold funds from a municipality if a municipality ever passed an ordinance in violation of Section 250.007. See id. All these allegations fail to demonstrate that Governor Abbott has both “the particular duty to enforce the [Section 250.007] and a demonstrated willingness to exercise that duty.” See Morris, 739 F.3d at 746. ICP’s pleadings amount to nothing more than Governor Abbott’s general duty to see that the laws of the state are implemented paired with a demonstrated willingness to enforce laws not at issue in this case. See Doc. #51, ¶¶48–54. Consequently, Governor Abbott has Eleventh Amendment immunity from suit and asks the Court to grant his motion to dismiss for lack of subject-matter jurisdiction. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 16 of 30 PageID 194 12 B. Motion to Dismiss for Failure to State a Claim Assuming that ICP is able to establish this Court’s subject-matter jurisdiction, the case should nevertheless be dismissed for failure to state a claim upon which relief can be granted. ICP has not pleaded factual content that allows the Court to draw the reasonable inference that Section 250.007 violates either the Equal Protection Clause or FHA. See Iqbal, 556 U.S. at 678. 1. ICP fails to state a claim for disparate treatment ICP fails to state a disparate treatment (intentional discrimination) claim under either the Equal Protection Clause or the FHA. See Doc. #12, ¶¶184–185. The Equal Protection Clause prohibits discrimination on the basis of race. Vill. of Arlington Heights v. Metro. Hous., 429 U.S. 252, 265 (1977). Likewise, the FHA makes it unlawful to “make unavailable or deny[] a dwelling to any person because of race.” 42 U.S.C. § 3604(a). Here, ICP has not alleged facts that create the reasonable inference that the Texas Legislature enacted Section 250.007 with intent to discriminate against black or African American people. See Iqbal, 556 U.S. at 678; Plotkins, 407 F.3d at 696. “Proof of racially discriminatory intent or purpose is required to show a violation of the Equal Protection Clause.” Vill. of Arlington Heights, 429 U.S. at 265. “[O]fficial action will not be held unconstitutional solely because it results in a racially disproportionate impact.” Id. at 264–65. A discriminatory purpose requires more than “intent as volition or awareness of consequences.” Personnel Adm’r of Mass. v. Feeney, 442 U.S. 256, 279 (1979). The decision-maker must select “a particular course of action at least in part ‘because of’ . . . its adverse effects upon an identifiable group.” Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 17 of 30 PageID 195 13 Id. “Legislators’ awareness of a disparate impact on a protected group is not enough: the law must be passed because of that disparate impact.” Veasey v. Abbott, 830 F.3d 216, 230 (5th Cir. 2016) (en banc). Factors that courts might consider in making this evaluation of intent include: “(1) the historical background of the decision, (2) the specific sequence of events leading up to the decision, (3) departures from the normal procedural sequence, (4) substantive departures, and (5) legislative history, especially where there are contemporary statements by members of the decision-making body.” Veasey, 830 F.3d at 230 (articulating the Arlington Heights factors). The Northern District of Texas has employed these same factors for assessing disparate treatment claims brought under the FHA. E.g. Jim Sowell Const. Co., Inc. v. City of Coppell, 61 F.Supp.2d 542, 546–47 (N.D. Tex. 1999). The historic background and sequence of events leading to the enactment of Section 250.007 do not support a reasonable inference of discriminatory intent. See Veasey, 830 F.3d at 230 (factors one and two). From the Voucher Program’s inception in 1974 to present, Congress has always made landlord participation voluntary. See Housing & Community Development Act of 1974, Pub.L. No. 93-383, 88 Stat. 653 (codified as amended at 42 U.S.C. §§ 1437–37f). “[T]he voluntariness provision of Section 8 reflects a congressional intent that the burdens of Section 8 participation are substantial enough that participation should not be forced on landlords. . . .” Salute, 136 F.3d at 301. In 2014, two municipalities in Texas began enacting ordinances to force landlord participation in the Voucher Program. See Doc. #12, Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 18 of 30 PageID 196 14 ¶¶23–27. The Texas Legislature passed Section 250.007 to keep landlord participation voluntary across the state. Exhibit 1. Procedural departures from the norm do not support a reasonable inference of discriminatory intent because there are none in this case. See Veasey, 830 F.3d at 230 (factor three); see also Dews v. Town of Sunnyvale, Tex., 109 F.Supp.2d 526, 571–72 (N.D. Tex. 2000) (describing the factor as a procedural departure from the norm). ICP has not alleged any departures from the normal procedural sequence during Section 250.007’s enactment. Compare Doc. #12, ¶¶23–41 with e.g. Patino v. City of Pasadena, Civil Action No. H–14–3241, 2017 WL 68467, at *44–45 (S.D. Tex. 2017) (describing the city’s substantial departures from the usual legislative procedures, including usage of a special committee, closed meetings, a rushed review process, a newly- enacted special rule to limit council member speaking time, and a vote after three council members walked out in protest). Substantive departures from the norm do not support a reasonable inference of discriminatory intent because there are none in this case. See Veasey, 830 F.3d at 230 (factor four); Dews, 109 F.Suppp.2d at 571–72. ICP argues that “substantive standards [] would have been expected to lead to a decision contrary to one reached.” Doc. #12, ¶88. But Section 250.007 makes the same policy decision as the FHA itself— both make landlord participation in the Voucher Program voluntary. See Austin Apartment Ass’n, 89 F.Supp.3d at 890. Just as Congress did not commit a substantive departure from the norm when it made participation in the Voucher Program voluntary, neither did the Texas Legislature in keeping it that way. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 19 of 30 PageID 197 15 As the United States District Court for the Western District of Texas observed when analyzing a challenge to Austin’s voucher status discrimination ordinance, “There is, at the very least, room for a fair difference of opinion as to the necessity and reasonableness of the Ordinance in providing for the real needs of the people as consistently as may be with private property rights.” Austin Apartment Ass’n, 89 F.Supp.3d at 899 (internal quotations omitted). “Room for a fair difference of opinion” on an issue in which the Texas Legislature reached the same conclusion as Congress does not amount to a substantive departure from the norm. See id. at 890–91, 899– 900; Veasey, 830 F.3d at 230. Finally, the legislative history does not support a reasonable inference of discriminatory intent. See Veasey, 830 F.3d at 230 (factor five). The author / sponsor acknowledged both the enormous benefits of the Voucher Program and the cost imposed on participating landlords. See Exhibit 1, 1. The witnesses who supported the legislation were real estate partners and apartment associations from all over the state. See Exhibit 2. Describing the costs on landlords for participating in the Voucher Program, the bill’s supporters argued that, “A source-of-income ordinance essentially requires landlords to participate. . . .” Id. The bill’s opponents argued that landlords could use other criteria to screen applicants, noting that “[c]urrently, no city or county in Texas is mandated to adopt a source-of-income ordinance or regulation.” Id. Nothing in this legislative history points to race as a motivation for Section 250.007’s enactment. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 20 of 30 PageID 198 16 ICP alleges that the “legislative record contains statements by State legislators explicitly taking the City of Dallas obligation to consider a voucher discrimination ordinance and the City of Austin enactment of such an ordinance into consideration as factors supporting the enactment of the Statute.” Doc. #12, ¶28. It is unsurprising that legislators would reference these ordinances when discussing the bill that would become Section 250.007. After all, the ordinance were attempting to change landlord participation in the Voucher Program from voluntary (as had been true for more than 40 years) to mandatory (for the first time). See Housing & Community Development Act of 1974, Pub.L. No. 93-383, 88 Stat. 653 (codified as amended at 42 U.S.C. §§ 1437–37f). A mere mention of the city ordinances that Section 250.007 was intended to preempt does not create a reasonable inference that the Legislature acted with intent to discriminate on the basis of race. ICP has alleged that the voucher population is disproportionately Black and that “[t]he evidence of the racial and ethnic minority composition of the voucher population in urban areas and the racial segregation of the vouchers was presented in the legislative hearings on [Section 250.007].” Doc. #12, ¶¶34–41, ¶¶127–135. Yet these alleged facts do not create the reasonable inference that the Texas Legislature passed Section 250.007 “‘because of,’ not merely ‘in spite of,’ its adverse effects upon an identifiable group.” See Personnel Adm’r of Mass., 442 U.S. at 279. ICP concludes that “singling out of the voucher participants is unexplainable on grounds of than race of the voucher tenants, Black or African American.” Doc. #12, ¶68. But this conclusion is not entitled to deference and it ignores the legitimate and Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 21 of 30 PageID 199 17 non-racial policy interests that led Congress to make the Voucher Program voluntary in the first place. See Plotkin, 407 F.3d at 696; Salute, 136 F.3d at 300. Namely, that participation in the Voucher Program involves certain costs for landlords that should not be imposed on them without their consent.4 See Austin Apartment Ass’n, 89 F.Supp.3d at 889–91, 899–900; Exhibit 1, 1 (“Once a property owner participates in the Section 8 program, HUD has the discretion to withhold rent, inspect apartments, control rent increases, and mandate utility allowances.”). ICP’s pleadings aver that “ordinances prohibiting discrimination against voucher holders did not make landlord participation in the voucher program mandatory.” Doc. #12, ¶110. This distinction is without a difference. The consequence of an ordinance removing a landlord’s right to reject a potential tenant on the basis of their voucher participation is that “at least some landlords who do not wish to do so will be required to sign the HAP Contract and subject themselves to the regulations governing the [Voucher] Program.” Austin Apartment Ass’n, 89 F.Supp.3d at 900; see also supra, 3, n.1. ICP argues that “if a voucher holder did not meet the landlord’s rent or the landlord’s rental criteria or the refusal to rent to a voucher holder was based on a legitimate business reason then the landlord would not be required to accept the voucher tenant.” Yet the existence of other legal criteria does not change the effect of removing voucher status as a legal criterion. Moreover, this argument ignores the 4 ICP suggests that maintaining voluntary participation in the Voucher Program for landlords is not a legitimate government interest. Doc. #12, ¶112. But virtually all laws involve a cost-benefit analysis based on the anticipated effect on affected groups. In performing this analysis, the Texas Legislature is not limited to considering only the interests of tenants, as the pleadings suggest. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 22 of 30 PageID 200 18 considerable authority holding that not wanting to participate in the Voucher Program is itself a legitimate business reason. E.g. Knapp v. Eagle Property Mgmt. Corp., 54 F.3d 1272, 1280 (7th Cir. 1995); Salute, 136 F.3d at 302; Graoch Assocs. #33, L.P. v. Louisville/Jefferson Cnty. Metro Human Relations Comm’n, 508 F.3d 366, 377 (6th Cir. 2007). As the U.S. District Court for the Western District of Texas recently put it: The Court agrees these [Voucher Program] regulations place some burden on the landlords subject to them, and acknowledges the potential for lost revenue while a PHA inspection is scheduled and a unit sits vacant. It is likely there are different, less burdensome ways the City could entice property owners to participate in the Program. It is also conceivable an individual landlord could experience an unusually significant financial burden flowing from participation in the Program so great it could support an as-applied constitutional claim warranting an exception from participation. Austin Apartment Ass’n, 89 F.Supp.3d at 900. In light of the five non-exhaustive factors set out in Arlington Heights applied to the factual allegations, ICP’s pleadings do not create the reasonable inference that the Texas Legislature enacted Section 250.007 with intent to discriminate on the basis of race. See Veasey, 830 F.3d at 230 (describing the factors). Even if the “Texas legislatures were made fully aware of the race of the voucher holders and of the racially segregated locations of the housing,” “[l]egislators’ awareness of a disparate impact on a protected group is not enough: the law must be passed because of that disparate impact.” Doc. #12, ¶35; Veasey, 830 F.3d at 230. Because ICP’s pleadings do not bridge the gap between knowledge and intent, Governor Abbott respectfully asks the Court to dismiss ICP’s disparate treatment claims under both the Equal Protection Clause and the FHA for failure to state a claim. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 23 of 30 PageID 201 19 2. ICP fails to state a claim for disparate impact ICP contends that Section 250.007 causes a disparate impact on Black or African American people in the City of Dallas. See Doc. #21, ¶186. The Court should dismiss ICP’s disparate impact claim for three reasons. First, ICP fails to identify a specific policy that creates an artificial, arbitrary, or unnecessary barrier to fair housing. Second, ICP fails to allege facts that meet the disparate impact claim’s robust causality requirement. Third, the disparate theory itself does not apply to non- participation in the voucher program, as three circuits have held. “Governmental or private policies are not contrary to the disparate-impact requirement unless they are artificial, arbitrary, and unnecessary barriers.” Tex. Dep’t of Housing & Cmty. Affairs v. Inclusive Cmty. Project, Inc. (ICP VI), 135 S.Ct. 2507, 2524 (2015) (internal quotation omitted). “To prove a disparate impact claim, the plaintiff must first identify a facially-neutral policy that has resulted in the disparate impact.” Inclusive Cmty. Project, Inc. v. Tex. Dep’t of Housing & Cmty. Affairs (ICP VII), Civil Action No. 3:08-CV-0546-D, 2016 WL 4494322, at *6 (N.D. Tex. 2016) (citing ICP VI, 135 S.Ct. at 2514–15). “This is not a ‘trivial burden.’” Id. “ICP must identify a specific policy that has created barriers to fair housing.” Id. “ICP must affirmatively identify a specific policy that produced a disparate impact, rather than point to a lack of policy that caused it.” Id. In another ICP case, this Court recently held that a disparate impact claim cannot rely on a lack of policy or a failure to take action to prevent discrimination. Inclusive Cmty. Project, Inc. v. United States Dep’t of Treasury, Civil Action No. 3:14- CV-3013-D, 2016 WL 6397643, at *11 (N.D. Tex. 2016). Disparate impact claims must Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 24 of 30 PageID 202 20 solely seek to remove barriers—not “to impose new policies on government actors.” Id. at *11. In ICP’s case against the Department of Treasury, this Court concluded that ICP had failed to state a claim because the “policy” constituted the absence of “standards that would prevent racial segregation and accomplish affirmatively furthering fair housing.” Id. The Court held that the absence of these standards did not create a barrier to fair housing.5 Id. Here, ICP fails to meet its burden because Section 250.007 is not a policy—it is a lack of policy codified. Neither the Texas Fair Housing Act nor the (federal) FHA prohibit voucher status discrimination, nor do they require landlords to participate in the Voucher Program. See Austin Apartment Ass’n, 89 F.Supp.3d at 890. Section 250.007 preserves this long-standing legal reality against the possibility of change. See TEX. LOCAL GOV’T CODE § 250.007(a). But the absence of a prohibition on voucher status discrimination does not itself create “an artificial, arbitrary, or unnecessary barrier” to fair housing. See Dep’t of Treasury, 2016 WL 6397643, at *11; see also ICP VI, 135 S.Ct at 2524. Otherwise, the FHA would effectively violate itself for failing to include that prohibition in the first place. In addition to failing to plausibly identify a policy, ICP’s pleading also fails to plausibly demonstrate a causal connection between a policy and the disparate impact. See ICP VI, 135 S.Ct. at 2523. “A plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make 5 Other district courts acting in the wake of the Supreme Court’s ICP VI opinion have similarly held that a lack of policy cannot form the basis for a disparate impact claim. E.g. City of Los Angeles v. Wells Fargo & Co., Case No. 2:13-cv-09007-ODW, 2015 WL 4398858, at *8 (C.D. Cal. 2015). Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 25 of 30 PageID 203 21 out a prima facie case of disparate impact.” Id. (emphasis added). “A robust causality requirement ensures that racial imbalance does not, without more, establish a prima facie case of disparate impact and thus protects defendants from being held liable for racial disparities they did not create.” Id. (internal quotations omitted). The mere showing of a statistical disparity is not sufficient. Id.; id. at 2512. Put another way, the defendant in a disparate impact claim can “only be held liable for racial disparities that it actually created.” See Dep’t of Treasury, 2016 WL 6397643, at *12. Here, ICP’s pleadings fail to allege facts that plausibly meet the “robust causality requirement” for disparate impact claims. See ICP VI, 135 S.Ct. at 2523. While ICP has alleged statistics regarding voucher holders and housing in the City of Dallas, it fails to allege facts that create the reasonable inference that Section 250.007 is legally responsible for those statistics. Compare id. with Doc. #12, ¶¶114– 37. At no point has either the United States Congress or the Texas Legislature made landlord participation in the Voucher Program mandatory. See Austin Apartment Ass’n, 89 F.Supp.3d at 890. But that does not mean that Texas’s decision to keep landlord participation voluntary is the legal cause of statistical disparities in housing. See Dep’t of Treasury, 2016 WL 6397643, at *12. Otherwise, voluntary participation— as secured by Section 250.007’s proscription on voucher status discrimination ordinances—could theoretically be held responsible for all housing patterns across the entire state. Consequently, ICP has not plausibly alleged that Section 250.007 is the legal cause for a disparate impact in housing. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 26 of 30 PageID 204 22 Finally, several circuits have held that a landlord’s non-participation in the Voucher Program cannot form the basis for a disparate impact claim. Knapp, 54 F.3d at 1280; Salute, 136 F.3d at 302; Graoch Assocs. #33, L.P., 508 F.3d at 377. While the Fifth Circuit has never squarely addressed this issue, the aforementioned holding is consistent with Supreme Court precedent. See ICP VI, 135 S.Ct. at 2522 (“Disparate- impact liability mandates the ‘removal of artificial, arbitrary, and unnecessary barriers,’ not the displacement of valid governmental policies.”). In Knapp, the Seventh Circuit noted that disparate impact analysis applied to the FHA as a general matter and that “non-participating [landlords] routinely reject section 8 voucher holders.” 54 F.3d at 1280. However, the court also noted that the FHA made landlord participation in the Voucher Program voluntary. Id. Therefore, the court held “that [landlords’] non-participation constitutes a legitimate reason for their refusal to accept section 8 tenants and that we therefore cannot hold them liable for racial discrimination under the disparate impact theory.” Id. In Salute, the Second Circuit “agree[d] with the Seventh Circuit's observation that because the Section 8 program is voluntary and nonparticipating owners routinely reject Section 8 tenants, the owners’ ‘non-participation constitutes a legitimate reason for their refusal to accept section 8 tenants and . . . we therefore cannot hold them liable for . . . discrimination under the disparate impact theory.’” 136 F.3d at 302 (quoting Knapp, 54 F.3d at 1280). In Graoch Assocs. #33, L.P., the Sixth Circuit also “agree[d] that a landlord should never face disparate-impact liability for non-participation in Section 8.” 508 Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 27 of 30 PageID 205 23 F.3d at 377. “Non-participation could be said to have a theoretical impact on members of a protected class, but the size and composition of the affected group is indeterminate.” Id. at 377. Moreover, “[a] non-participating landlord presumptively can appeal to his interests in not wanting to spend time learning about the program and not wanting to become entangled in government bureaucracy.” Id. Thus, “one cannot bring a disparate-impact challenge to Section 8 non-participation.” Id. The Supreme Court has warned that disparate impact claims must not “prevent[] [governmental entities] from achieving legitimate objectives.” See ICP VI, 135 S.Ct. at 2524. Here, ICP argues that the Texas Legislature cannot make a statewide policy decision because it would allegedly cause a disparate impact in one particular municipality. See Doc. #12, ¶¶114–121. Although the FHA itself does not make participation mandatory, ICP effectively contends that the FHA prevents Texas from keeping participation voluntary. Because disparate impact claims based on non- participation in the Voucher Program are not cognizable, at least in this context, ICP fails to state a disparate impact claim upon which relief can be granted. For these reasons, Governor Abbott respectfully asks the Court to dismiss ICP’s disparate impact claim under the FHA for failure to state a claim upon which relief can be granted. 3. ICP fails to state a claim to invalidate Section 250.007 under the FHA’s Effect on State Laws provision ICP also brings a claim under the FHA’s Effect on State Laws provision. See Doc. #12, ¶¶146–150 (referencing 42 U.S.C. § 3615). This provision invalidates any state laws that purport to require or permit any action that would be a discriminatory Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 28 of 30 PageID 206 24 housing practice under Subchapter I, Chapter 45, Title 42 of the United States Code. 42 U.S.C. § 3615 (under Fair Housing, Generally). For the reasons already discussed, Section 250.007 neither requires nor permits discriminatory housing practices. See supra, 12–23; TEX. PROP. CODE § 301.021(a). Therefore, Section 250.007 does not violate the Effect on State Laws provision. See 42 U.S.C. § 3615. Governor Abbott respectfully asks the Court to dismiss ICP’s Effect on State Laws claim for failure to state a claim upon which relief can be granted. 4. ICP fails to state a non-race claim under the Equal Protection clause The rational-basis test is satisfied “if there is any reasonably conceivable state of facts that could provide a rational basis” for the law. F.C.C. v. Beach Commc’ns, Inc., 508 U.S. 307, 313 (1993). To succeed on a rational-basis challenge, a plaintiff must “negative every conceivable basis which might support [the law in question].” Id. “A classification does not fail rational-basis review because it is not made with mathematical nicety or because in practice it results in some inequality.” Heller v. Doe by Doe, 509 U.S. 312, 321 (1993). In this case, the Texas Legislature determined that—although voluntary participation may be encouraged through local government incentives—the burdens of Section 8 participation are substantial enough that they should not be forced on unwilling landlords. See supra, 1–4; Exhibit 1; Exhibit 2. While reasonable people may disagree about this policy judgment, the judgment itself does not fail rational-basis review. Consequently, ICP fails to state a claim. IV. PRAYER FOR RELIEF WHEREFORE, Governor Abbott respectfully asks the Court grant his motion and dismiss ICP’s claims against him with prejudice. Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 29 of 30 PageID 207 25 Respectfully submitted, KEN PAXTON Attorney General of Texas JEFFREY C. MATEER First Assistant Attorney General BRANTLEY STARR Deputy First Assistant Attorney General JAMES DAVIS Deputy Attorney General for Civil Litigation ANGELA V. COLMENERO Division Chief - General Litigation /s/ Benjamin L. Dower BENJAMIN L. DOWER Assistant Attorney General Texas Bar No. 24082931 Office of the Attorney General P.O. Box 12548, Capitol Station Austin, Texas 78711-2548 Phone: 512-463-2120 Fax: 512-320-0667 Benjamin.Dower@oag.texas.gov Attorney for Defendant CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document has served through the Court’s Electronic Filing System on April 18, 2017, to: Michael M. Daniel Laura B. Beshara DANIEL & BESHARA, P.C. 3301 Elm Street Dallas, Texas 75226-1637 Tel: 214-939-9230 Fax: 214-741-3596 Email: daniel.michael@att.net Email: laurabeshara@swbell.net Attorneys for Plaintiff /s/ Benjamin L. Dower BENJAMIN L. DOWER Assistant Attorney General Case 3:17-cv-00440-D Document 15 Filed 04/18/17 Page 30 of 30 PageID 208 SRC-CFJ S.B. 267 84(R) Page 1 of 2 BILL ANALYSIS Senate Research Center S.B. 267 By: Perry et al. Business & Commerce 6/17/2015 Enrolled AUTHOR'S / SPONSOR'S STATEMENT OF INTENT Recently, a Texas city passed an ordinance to create a protected class based on “source of income.” These ordinances in effect require owners to participate in programs such as the federal Housing Choice Voucher Program, commonly known as Section 8. The Section 8 program is funded by the United States Department of Housing and Urban Development (HUD). In Texas, the program is administered by the Texas Department of Housing and Community Affairs. The Section 8 program is essential to ensuring that very low income individuals and families can get housing. Many rental property owners who are used to dealing with the intricacies of the Section 8 program and the housing authorities that administer the program are able to work with it successfully and do not experience problems. Other rental property owners choose not to participate in the program because they do not want to comply with the regulations and requirements that participating in Section 8 requires. Once a property owner participates in the Section 8 program, HUD has the discretion to withhold rent, inspect apartments, control rent increases, and mandate utility allowances. Section 214.903 of the Texas Local Government Code, which was passed in 1991, has been interpreted to prohibit cities from passing ordinances expanding fair housing protected classes. However, the law is not explicitly clear, so legislation is necessary to bring clarity on this issue. S.B. 267 clearly states that cities and counties may not pass an ordinance or regulation that prohibits a rental property owner or the owner's agent from having the right to choose whether to rent housing to someone based on the person's lawful source of income, including a federal housing choice voucher. S.B. 267 amends current law relating to the regulation by a municipality or county of the rental or leasing of housing accommodations. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 250, Local Government Code, by adding Section 250.007, as follows: Sec. 250.007. REGULATION OF RENTAL OR LEASING OF HOUSING ACCOMMODATIONS. (a) Prohibits a municipality or county, except as provided by this section, from adopting or enforcing an ordinance or regulation that prohibits an owner, lessee, sublessee, assignee, managing agent, or other person having the right to lease, sublease, or rent a housing accommodation from refusing to lease or rent the housing accommodation to a person because the person's lawful source of income to pay rent includes funding from a federal housing assistance program. Case 3:17-cv-00440-D Document 15-1 Filed 04/18/17 Page 1 of 2 PageID 209 SRC-CFJ S.B. 267 84(R) Page 2 of 2 (b) Provides that this section does not affect an ordinance or regulation that prohibits the refusal to lease or rent a housing accommodation to a military veteran because of the veteran's lawful source of income to pay rent. (c) Provides that this section does not affect any authority of a municipality or county or decree to create or implement an incentive, contract commitment, density bonus, or other voluntary program designed to encourage the acceptance of a housing voucher directly or indirectly funded by the federal government, including a federal housing choice voucher. SECTION 2. Effective date: upon passage or September 1, 2015. Case 3:17-cv-00440-D Document 15-1 Filed 04/18/17 Page 2 of 2 PageID 210 HOUSE SB 267 RESEARCH Perry ORGANIZATION bill analysis 5/22/2015 (Huberty) SUBJECT: Prohibiting local source-of-income housing ordinances COMMITTEE: Urban Affairs — favorable, without amendment VOTE: 4 ayes — R. Anderson, Elkins, Schaefer, M. White 2 nays — Alvarado, Bernal 1 absent — Hunter SENATE VOTE: On final passage, April 7 — 20-11 (Ellis, Garcia, Hinojosa, Lucio, Menendez, Rodriguez, Uresti, Watson, West, Whitmire, Zaffirini) WITNESSES: (On House companion bill, HB 2909) For — Stacy Hunt, Greystar Real Estate Partners; Howard Bookstaff and David Mintz, Texas Apartment Association; Michael Garcia; Gregory Johnson; Marc Ross; Bob Thompson; (Registered, but did not testify: Giovanna Frazza, Justin Cislo, and Shandy Kellams, Alliance Residential Company; Monica Kamka, and Eric Torres, Atlantic Pacific Management; LaShawn Bailey, Ruben Barraza, Michelle Forbes, Maria Apodaca, Kristan Arrona, Keri Mohler, Sharon Mooney, Rhonda Navarro, David Osmeyer, Stephani Park, William Roland, and Christy Sanchez, Austin Apartment Association; Raymundo Raybel, Demetria Acevedo, Eloy Guerrera, and DeAnne Garza, Capstone Real Estate Services; Katie Lytle, Stonegate Apartments, Alliance Residential Company; Daniel Gonzalez, Texas Association of Realtors; Ned Munoz, Texas Association of Builders; Wade Long, Texas Manufactured Housing; Adriana Diaz; Stephanie Saez) Against — Isabelle Headrick, Accessible Housing Austin; Kimberly Hale and Heiwa Salovitz, ADAPT of Texas; Elizabeth Spencer and Kathy Tovo, City of Austin; Tanya Lavelle, Easter Seals Central Texas; Ann Howard, Ending Community Homelessness Coalition; Charlie Duncan and Karen Paup, Texans for Housing Choice; Madison Sloan, Texas Appleseed; Ken Martin, Texas Homeless Network; John Henneberger, Texas Low Income Housing Information Service; Linda Litziner; Case 3:17-cv-00440-D Document 15-2 Filed 04/18/17 Page 1 of 4 PageID 211 SB 267 House Research Organization page 2 (Registered, but did not testify: Freddie Gonzalez, Jennifer McPhail, and Renee Lopez, ADAPT of Texas; Jo Kathryn Quinn, Caritas of Austin, Texas Homeless Network; Katharine Ligon, Center for Public Policy Priorities; Anna Holmes, City of Dallas; Sherry Johnston, Grade; Carl Richie, Housing Authority of the City of Austin; Gyl Switzer, Mental Health America of Texas; Greg Hansch, National Alliance on Mental Illness-Texas; Kelly Rodgers, SafePlace; Eileen Garcia, Texans Care for Children; Jeff Patterson, Texas Catholic Conference of Bishops; Jess Heck, Texas Family Council; Laura Mueller, Texas Municipal League; Jennifer Allmon, The Texas Catholic Conference of Bishops; and 10 individuals) On — (Registered, but did not testify: Betsy Spencer, City of Austin) BACKGROUND: The federal Housing and Community Development Act of 1974 established Section 8 rental housing assistance programs to help low- income families, the disabled, and the elderly find decent housing. Section 8 housing vouchers also are known as the Housing Choice Voucher Program. To be eligible, participants may not have incomes that exceed 50 percent of the area median income. Voucher participants may choose any housing if the owner agrees to rent under the voucher program and the rent does not exceed established payment standards based on U.S. Department of Housing and Urban Development fair market rents. Funding for the voucher program is administered by a local public housing authority (PHA). By law, a PHA must provide 75 percent of its available vouchers to applicants whose incomes do not exceed 30 percent of the area median income. The PHA is required to reexamine the voucher user’s income annually and inspect the rental unit annually. DIGEST: SB 267 would prohibit any municipality or county from adopting or enforcing an ordinance or regulation that would prevent an owner or other person with the right to lease, sublease or rent a housing accommodation from refusing to lease or rent a housing accommodation to a person because of the person’s lawful source of income to pay rent, including a Case 3:17-cv-00440-D Document 15-2 Filed 04/18/17 Page 2 of 4 PageID 212 SB 267 House Research Organization page 3 federal housing choice voucher. The bill would not apply to an ordinance or regulation adopted before January 1, 2015. The bill would take immediate effect if finally passed by a two-thirds record vote of the membership of each house. Otherwise, it would take effect September 1, 2015. SUPPORTERS SAY: SB 267 would permit landlords and property owners to continue to freely rent their property. A source-of-income ordinance essentially requires landlords to participate in the federal Section 8 housing program. Participation in this voucher program is meant to be strictly voluntary for both renters and property owners. An ordinance by a city or county could force property owners into a federal contract by requiring a landlord to rent to a voucher user if the individual passed the background check. Landlords should retain the right to choose their tenants. Entering into the federal housing voucher program can lead to delays of payment and involve complicated legal guidelines, which can create financial risk and uncertainty for landlords. Property owners and landlords who rent to Section 8 tenants are required to sign a U.S. Department of Housing and Urban Development (HUD) lease addendum inconsistent with the leases utilized by the vast majority of property owners and are placed under numerous other restrictions and conditions that can add substantial costs to their normal course of business. Landlords and property owners should not be required by a local ordinance to enter into such an arrangement if they did not wish. If a landlord fails to conform to the HUD-approved rent level, tenancy can be jeopardized. Additionally, because public housing authorities must inspect a rental unit annually, the inspection process can increase the amount of time required for a landlord to rent out a property. Voucher users also cannot be evicted if their federal sponsor fails to pay the rent, can leave their leases for various reasons, and can only be evicted for cause, which puts an unfair burden on landlords. Case 3:17-cv-00440-D Document 15-2 Filed 04/18/17 Page 3 of 4 PageID 213 SB 267 House Research Organization page 4 OPPONENTS SAY: SB 267 is unnecessary because local source-of-income ordinances do not force private rental owners to participate in the housing choice voucher program. Landlords may continue to screen and apply rental criteria for potential renters, and if the potential renter does not satisfy the landlord’s expectations, the landlord may refuse the rental. The landlord retains the right to eviction, can seek legal remedy for missed payments for which the renter is responsible, and may initiate a new yearly lease. Source-of- income ordinances merely prohibit the landlord from making the renter’s lawful source of income the reason to reject the potential renter. Currently, no city or county in Texas is mandated to adopt a source-of- income ordinance or regulation. It should be the local choice of residents in a city or county whether to allow or prohibit such an ordinance. The Legislature should be wary of enacting legislation that takes such control away from people at the local level. Many families who use housing vouchers have difficulty finding suitable housing. Prior to Austin’s adoption of a source-of-income ordinance, a very small number of rental properties accepted housing vouchers. The lack of choice for voucher users meant low-income families and individuals often were pushed to certain parts of the city considered low- opportunity areas. Source-of-income ordinances are used to protect individuals, including people with disabilities and veterans, who use housing vouchers and may have few choices for affordable housing in safe locations. Housing vouchers cover a large portion of a voucher user’s rent, and this portion is automatically received by the landlord every month once payments start. Landlords who participate in the housing voucher program enjoy rent security for the portion that is paid by the public housing authority. NOTES: A House companion bill, HB 2909 by Springer, was placed for second- reading consideration on the General State Calendar for May 12 but was not considered. Case 3:17-cv-00440-D Document 15-2 Filed 04/18/17 Page 4 of 4 PageID 214