Geneva Towers Tenants Organization v. Federated Mortgage Investors

504 F.2d 483

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 2, 1974
• Docket: Nos. 72-2338, 72-2270, 72-2314, 72-2756, 72-2784 and 72-2788
• Status: Published

Opinions

CHOY, Circuit Judge:

This is a consolidated appeal by tenants in two federally financed housing projects: Geneva Towers Appartments and Crescent Park. In two district court actions, they sought rescission of rent' increases granted their landlords by the Federal Housing Administration (FHA) and an injunction compelling the federal defendants to grant the tenants a full and fair hearing prior to the implementation of the rent increases. They also sought a declaratory judgment that the actions of their landlords in applying for and the FHA in granting the rent increases violated the National Housing Act, the Administrative Procedure Act and the Due Process Clause of the Fifth Amendment. The district court in each case ruled that the Due Process Clause requires: (1) that tenants be given notice of their lessor’s application for approval of a rent increase; (2) that tenants have a reasonable opportunity to make written objections; and (3) that tenants be furnished with a concise statement of the FHA’s reasons for approving an increase.¹ All parties appealed. The landlords and the government contend that the district courts improperly established procedures for tenant review of rent increase applications. The tenants reassert their argument for full-scale hearings.² We affirm.

Geneva Towers and Crescent Park were financed by the federal government pursuant to § 221(d)(3) of the Housing Act of 1961, 12 U.S.C. § 1715¿(d) (3). Congress determined that there are many families who have sufficiently high incomes to preclude them from eligibility for low-rent public housing, but who cannot afford home ownership even if assisted by conventional FHA insurance.³ Section 221(d)(3) was designed to assist private industry in providing housing for these low and moderate income families and, in addition, persons displaced by urban renewal.⁴ The means Congress chose were the incentive of subsidized interest rates, 12 U.S.C. § 1715J(d)(5), and certain tax advantages.⁵

Those eligible to receive subsidized mortgages include nonprofit corporations, such as the Kate Maremont Foundation, and limited dividend corporations, such as Geneva Apartments, Inc. See 24 C.F.R. § 221.510 (1973). Congress decided that the benefits of federal financing would be available only where mortgagors operated the projects subject to controls on admissions, rents and profits.⁶ Therefore, the FHA has promulgated extensive regulations governing § 221(d)(3) developments. The regulations prescribe the form and content of mortgage instruments, wage labor and construction standards, occupancy requirements, and priorities, and establish federal controls over capital structure, rate of return on investment and rents. See 24 C.F.R. § 221.502-749 (1973).

Geneva Apartments, Inc. and Kate Maremont Foundation each- signed the standard regulatory agreement to receive federal financing of its project. The agreement implements the regulatory provisions outlined above and, with respect to rent increase applications, provides:

The Commissioner will at any time entertain a written request for a rent increase properly supported by substantiating evidence and within a reasonable time shall;

Approve a rent schedule that is necessary to compensate for any net increase, occurring since the last approved rental schedule, in taxes (other than income taxes) and operating and maintenance expenses over which the owners have no effective control, or

(2) Deny the increase stating the reasons therefore.⁷

The goal is to provide reasonable charges to tenants and a fair return to the mortgagor.⁸

Both landlords applied for and were granted rent increases. In neither case were the tenants given notice of the application or an opportunity to participate in the determination of a rent increase. No FHA procedure, regulation or federal statute provides for tenant participation. The issues presented on this appeal are: (1) whether there is sufficient governmental participation and involvement to subject § 221(d)(3) projects to the due process clause; (2) whether the tenants’ interest in not having their rents increased is a constitutionally protected “property interest”; and if so (3) what procedural safeguards does due process require to protect that interest.

I. GOVERNMENT INVOLVEMENT

The Due Process Clause of the Fifth Amendment applies to and restricts only the federal government and not private persons. Public Utilities Comm’n v. Pollak, 343 U.S. 451, 461, 72 S.Ct. 813, 96 L.Ed. 1068 (1952). The standards utilized to find federal action for purposes of the Fifth Amendment are identical to those employed to detect state action subject to the strictures of the Fourteenth Amendment. See United States v. Davis, 482 F.2d 893, 897 n. 3 (9th Cir. 1973). What is “private” action and what is “state” action is often difficult to determine. See Evans v. Newton, 382 U.S. 296, 299, 86 S.Ct. 486, 15 L.Ed.2d 373 (1966). “Only by sifting facts and weighing circumstances can the nonobvious involvement of the State in private conduct be attributed its true significance.” Burton v. Wilmington Pkg. Auth., 365 U.S. 715, 722, 81 S.Ct. 856, 860, 6 L.Ed.2d 45 (1961). Burton held that where a state-owned and operated parking facility leased a portion of its building to a coffee shop which engaged in racial discrimination, the state so far insinuated itself into a position of interdependence as to be a joint participant in the unconstitutional activity. Therefore, the Fourteenth Amendment was applicable. The interdependence was principally financial. The rents paid by the shop partially defrayed the cost of the public facility and enhanced its success. Improvements by the shop did not result in increased taxes to it because the fee was held by a tax-exempt government agency. There were a variety of incidental mutual benefits.

Moose Lodge No. 107 v. Irvis, 407 U. S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1972), reveals a situation distinguishable from the symbiotic relationship in Burton. The Court held that a state-issued liquor license with accompanying regulation did not amount to sufficient state involvement to require the application of the Fourteenth Amendment. The Lodge was a private club in its own building without public funding. The state regulation did not make the state a partner in the club’s enterprise. Id. at 177, 92 S.Ct. 1965.

Analysis of the facts and circumstances in the instant cases discloses sufficient government involvement in the § 221(d)(3) program to subject the activities of the landlords to the Fifth Amendment. Private investors such as Geneva Apartments, Inc. and Kate Maremont Foundation, are engaged in a joint undertaking with the federal government to provide housing for low and moderate income families. Participation in the § 221(d)(3) program subjects the investors to an elaborate and pervasive body of government regulations. The benefits are mutual. The investors are able to construct facilities aided by government financing, below-market interest rates and tax advantages. The government alleviates the housing crisis and insures compliance with its goal through a monitoring system that commences with construction of the housing and does not terminate until the mortgagors’ obligations are satisfied. The § 221(d)(3) program is not merely a case of government subsidization but an independent relationship comparable to that found in hospital construction under the Hill-Burton Act.⁹ We hold the Fifth Amendment applicable to these § 221(d)(3) projects. Accord McQueen v. Druker, 438 F.2d 781, 784-785 (1st Cir. 1971); Harlib v. Romney (N.D.Ill., March 6, 1973); Paulsen v. Coachlight Apartments Co. (W.D.Mich., March 8, 1973); Colon v. Tomkins Square Neighbors, Inc., 294 F.Supp. 134, 137-138 (S.D.N.Y.1968); Note, Procedural Due Process in Government-Subsidized Housing, 86 Harv.L.Rev. 880, 895-96 (1973) ; see Langevin v. Chenango Court, Inc., 447 F.2d 296, 304 (2d Cir. 1971) (Oakes, J., dissenting); McClellan v. University Heights, Inc., 338 F.Supp. 374, 380-382 (D.R.I.1972). But see Langevin v. Chenango Court, Inc., supra at 301.

II. TENANTS’ PROPERTY INTEREST

The Supreme Court, in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970),¹⁰ enunciated a two-step process for analyzing cases involving the deprivation of a governmental benefit. First, it must be ascertained whether the interest at issue is a constitutionally protected “property” or “liberty” interest. See id. at 262, 90 S.Ct. 1011.¹¹ Second, if the interest is a protected one, the beneficiary’s interest in avoiding .loss must be balanced against the government's interest in summary adjudication. Id. at 262-266, 90 S.Ct. 1011.¹² See generally Note, supra, 86 Harv.L.Rev. at 889.

The Court recently elaborated upon the first requirement of Goldberg v. Kelly in announcing broad guidelines for the assessment of “property interests” —Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972), and Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972). Roth was a nontenured teacher who completed a one year term of employment and was not rehired. State law required four years of year-to-year employment prior to tenure and entitled a new teacher to nothing beyond one academic year. The Court made clear “that the property interests protected by procedural due process extend well beyond actual ownership of real estate, chattels, or. money, ... Yet the Court . . . has at the same time observed certain boundaries.” Board of Regents v. Roth, supra 571-572, 92 S.Ct. 2171 at 2706. Certain attributes of “property interests” were delineated:

To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. It is a purpose of the ancient institution of property to protect those claims upon which people rely in their daily lives, reliance that must not be arbitrarily undermined.

Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law —rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.

Id, at 577, 92 S.Ct. at 2709. Roth’s rights were defined by his appointment, and the Court held that he had merely an abstract concern and not a “property' interest” in being rehired. Therefore, he was not afforded procedural due process.

Sindermann had taught in the Texas state college system, a system without formal tenure, for ten years. The Court remanded the case after finding that rules and understandings concerning teacher reappointment could have created a de facto tenure program objectively justifying Sindermann’s legitimate claim of entitlement to continued employment. Perry v. Sindermann, 408 U.S. at 601-603, 92 S.Ct. 2593.

Thus Roth requires more than an abstract need or unilateral expectation of a benefit. And Sindermann demonstrates that the source need not be explicit but can be implicit in the overall workings of a governmental program. Accord, Morrissey v. Brewer, 408 U.S. 471, 479, 481-482, 92 S.Ct. 2593, 2599 (1972) (interest of parolees in continued liberty qualifies for protection; “[ijmplicit in the system’s concern with parole violations is the notion that the parolee is entitled to retain his liberty as long as he substantially abides by the conditions of his parole.” The touchstone is whether those seeking the protection of the Fifth Amendment have a legitimate, objectively justifiable claim to the benefits of the governmental program.¹³

We think the tenants of § 221(d)(3) housing do have such a claim, and it lies in their expectation, statutorily created, that they will continue to receive the benefits of low cost housing.

Section 221(d)(3) plainly contemplates that low and moderate income tenants are to be its principal beneficiaries ; as the statute’s statement of purpose declares, the program is “designed to assist private industry in providing housing for low and moderate income families and displaced families.” 12 U. S.C. § 17151(a). See generally Marshall v. Lynn, 497 F.2d 643 (D.C.Cir. 1973). Section 221 was originally enacted as a part of the National Housing Act of 1954, 68 Stat. 599. It established means of providing housing for families displaced by urban renewal. See National Housing Act of 1954, P.L. 560, § 221(a), 68 Stat. 599 (1954); Conf. Report, H. Rep.No. 2271, 83rd Cong., 2d Sess. 70 (1954). So, at the outset the purpose of the program was to benefit a class of individual tenants.- In 1961 the class of beneficiaries was broadened to include those of low and moderate income in addition to those displaced by urban renewal. See Housing Act of 1961, P.L. 87-70, 75 Stat. 149 (1961). The concern, however, was still with benefitting the individual tenants expected to occupy subsidized housing. The House Report emphasizes this in setting forth for whom the program was created:

There are many families whose incomes are sufficiently high so that they are not eligible for low-rent public housing but who . . . also cannot afford apartment-type housing even of modest design if it is financed at the going FHA interest rate and subject to the regular FHA insurance premium.

H.Rep. No. 447, 87th Cong., 1st Sess. 11 (1961); S.Rep. No. 281, 87th Cong., 1st Sess. 7 (1961), U.S.Code Cong. & Admin.News, p. 1929. In short, there can be little doubt that Congress intended to endow those occupying the housing with some form of benefit. Compare Marshall v. Lynn, supra (§ 221(d)(3) intended to benefit individual tenants) with Tenants Council of Tiber Island-Carrollsburg Square v. Lynn, 497 F.2d 648 (D.C.Cir., 1973) (§ 220 of the National Housing Act, 12 U.S.C. § 1715k, primarily intended for urban renewal purposes and not to aid individual tenants of the projects).¹⁴

Since entitlement under the Roth-Sin-dermann analysis depends on a right to the specific benefit the deprivation of which is threatened by the government, the next question is what type of benefit did Congress intend to bestow upon the tenants of § 221(d)(3) housing. Congress’ purpose was, again quite clearly, to provide the tenants with the benefit of low cost housing. The source of the tenants’ entitlement is explicit: it lies in the congressionally stated purpose of providing persons of meager economic means with low-priced housing, see 12 U.S.C. § 17151(a), and the statutory requirement that the FHA regulate the rents charged by the private developer. See 12 U.S.C. § 17151(d)(3). The legislative history buttresses this conclusion. As the 1961 House Report stated it:

The below-market interest rate and reduction of FHA mortgage insurance premiums would .be made available only where the mortgagors [are willing to] operate the housing subject to related controls on rentals and income limits for admission of tenants to the housing.

H.Rep. No. 447, supra at 11; S.Rep. No. 281, supra at 8, 1961 U.S.Code Cong. & Admin.News, p. 1930. The tenants of § 221(d)(3) housing sign leases with the expectation — created by the congressional commands — that rents will be kept as low as economically feasible. Therefore, even more so than with the type of implicit expectations giving rise to property rights in Sindermann and Morrissey, the tenants of § 221(d)(3) housing have an objectively justifiable right to low cost housing. Accord, Burr v. New Rochelle Municipal Housing Authority, 479 F.2d 1165, 1167-1168 (2d Cir. 1973) ; Paulsen v. Coachlight Apartments Co., (W.D.Mich., March 8, 1973); Note, supra, 86 Harv.L.Rev. at 896; see Marshall v. Lynn, supra; Thompson v. Washington, 497 F.2d 626 (D.C.Cir.1973).

III. PROCEDURAL DUE PROCESS

The second step of the Goldberg analysis requires that we determine what form of procedural due process need be accorded tenants of a § 221(d)(3) project. This calls for an analysis of three factors: (1) the importance of the tenants’ interest; (2) the input the tenants can make in the adjudicatory process; and (3) the governmental interest at stake.¹⁵

The interest of the tenants in procedural safeguards is substantial. They seek to retain decent housing at a price that is within their power to pay. A rise in the cost of housing could force tenants to forego other perhaps necessary purchases and could even force some tenants to seek other less expensive housing. Moreover, the tenants desire to insure that any rent increase is fairly justified by all the relevant data. And, not the least important, affording the tenants some participation in the rent adjustment process “generat[es] the feeling . . . that justice has been done.” Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 172, 71 S.Ct. 624, 649, 95 L.Ed. 817 (1951) (Frankfurter, J., concurring); see also U. S. Dep’t. of Housing and Urban Development, Management of HUD-Insured Multifamily Projects Under Section 221(d)(3) & Section 236, A HUD Guide, No. HM G 4351.1 at 209 (1971).

As to the input tenants can make, rent determination is based in significant part upon various technical factors. See id. at 209. Tenants can contribute little to such calculations. This argues for giving the tenants less than a full-dress hearing. But it does not mean that they should be denied any role whatsoever. The FHA must also consider whether increased expenses have occurred and whether unnecessary expenses have been minimized, for the FHA will only entertain rent increases when justified by expenses “over which owners have no effective control.” Id.¹⁶ Moreover, a rent increase hinges on whether there are any violations of the Regulatory Agreement and whether the property is being adequately maintained. U. S. Dep’t of Housing and Urban Development, Insured Project Servicing Handbook, A HUD Handbook, No. RHM 4350.1 Supp. 1 at 3, 5 (1970). Obviously, tenants are in a good position to know the facts relative to these matters. Hence, this factor justifies some limited tenant involvement.

The government’s interest is also substantial. It is to preserve the flexibility of the § 221(d)(3) program, for if the program becomes encumbered with bureaucratic obstacles, private investment in the program may be significantly deterred.

However, we find, as did the district courts, that the government’s interest is not sufficient to outweigh entirely the need — and helpfulness — of permitting tenants a limited right of intervention. A full-dress hearing is not necessary. The potential for lengthy delay if a hearing precedes a rent increase would be particularly great with such a requirement especially considering the sheer number of tenants involved. Moreover, as we have said, the tenants’ contribution is not likely to be as important as, say, that of the welfare recipient in Goldberg v. Kelly, because of the technical issues which are a part of a rent determination. However, “[t]he formality and procedural requisites for [a due process] hearing can vary, depending upon the importance of the interests involved and. the nature of subsequent proceedings.” Boddie v. Connecticut, 401 U.S. 371, 378, 91 S.Ct. 780, 786, 28 L.Ed.2d 113 (1971). The tenants’ substantial interest in low cost housing added to the contribution they can make on certain rent adjustment issues requires, we think, that they be given notice of the rent increase, an opportunity to make written objections and receipt of a concise statement of the FHA’s reasons for its action, as the two district judges here specified.

Furthermore, the tenants must be given notice of the proposed rent increase and a right to reply before the FHA approves the landlord’s request. Although Mitchell v. W. T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974), has perhaps cast doubt on the continued vitality of the “presumption” in cases like Bell v. Burson, 402 U.S. 535, 542, 91 S.Ct. 1586 (1971) and Boddie v. Connecticut, 401 U.S. at 378-379, 91 S.Ct. 780, in favor of pre-action notice and opportunity for hearing,¹⁷ the balancing process in this case leads nonetheless to the pre-deprivation result.¹⁸ Here, there is no grave danger that providing an opportunity for written objections will significantly delay justified rent increases and, therefore, deter investment in § 221(d)(3) housing; indeed, the danger is remote at best. True, it could be argued that the tenants’ countervailing interest is minimal, for if the tenants are given a post-increase right to challenge and the rent is then rolled back, their deprivation will only be temporary. But “the extent of deprivation has a qualitative and not a mere quantitative character.” Thompson v. Washington, 497 F.2d at 636. A slight deprivation to most of us may be very serious to a poor person. See Burr v. New Rochelle Municipal Housing Authority, 479 F.2d at 1168 (increase of rent in public housing) ; Hunt v. Edmunds, 328 F.Supp. 468 (D.Minn. 1971) (reduction of welfare benefits); Woodson v. Houston, 27 Mich.App. 239, 183 N.W.2d 465 (1970) (same); but see Hahn v. Gottlieb, 430 F.2d 1243, 1247 (1st Cir. 1970). In that sense it is like the form of pre-judgment wage garnishment condemned in Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969). There too the deprivation would have been temporary if the wage-earner had ultimately prevailed, but, as the Court observed, that temporary loss could “as a practical matter drive a wage-earning family to the wall.” Id. at 341-342, 89 S.Ct. 1820, 1823 (footnote omitted). Here also a temporary deprivation could have very serious effects, serious enough, we think, to require the procedural safeguards outlined by the district courts.¹⁹

Affirmed.

1 . Keller v. Kate Maremont Found., 365 F.Supp. 798 (N.D.Cal.1972) ; Geneva Towers Tenants Org. v. Federated Mortgage Investors, No. C-70 104 SAW (N.D.Cal., Jan. 2, 1973), summarized at 2 CCH Pov.L.Rep. If 16,402.

The district court in Geneva Towers also specified that notice to the tenants must be adequately in advance of the effective date of the proposed increase and include the lessor’s reasons; that relevant information was to be provided in the application to permit effective challenge; and that the tenants might request information supplied by the FIIA to the lessor regarding rents, rent increases and comxrarable cost structures.

2 . The district court stayed its order in Geneva Towers pending appeal. Pursuant to stipulation, the rent increase has been paid by the tenants; but the monies have been deposited with the district court.

There have been a number of developments in Keller during the pendency of this appeal. The court granted the government’s motion for a stay pending appeal with the proviso that the rents be paid but deposited by the landlord into a special account. Kate Mare-mont Foundation claimed it was unable to meet the proviso and requested that the FHA reprocess the rent increase application in accordance with the order of the district court. The FHA notified the tenants of the application, received written submissions and, after extensive investigation, granted an additional 4.74% "rent increase over the original 10% granted in 1971. The FHA subsequently provided a concise statement of the reasons for approving the increase on April 20, 1973. The ramifications of these developments have been discussed in the context of mootness by the parties in supplemental briefs.

Mootness is not the problem here, for the controversy over what due process rights, if any, should be afforded the tenants of § 221(d) (3) projects, remains a live one to the foundation. Cf. Powell v. McCormack, 395 U.S. 486, 495-500, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969). The issue is whether Kate Maremont Foundation’s compliance with the district court’s order forecloses its appeal. We think it does. The general rule in the federal courts is that compliance with a judgment, of itself, does not cut off the right of appeal. Ferrell v. Trailmobile, Inc., 223 F.2d 697, 698 (5th Cir. 1955). There are exceptions to the rule: (1) when compliance is by way of compromise or shows an intention to abide by the judgment; (2) when compliance is coupled with acceptance of a benefit; or (3) when compliance renders appellate relief futile. Id. at 698. Not only did Kate Maremont Foundation indicate an intention to abide by the order of the district court, there is no relief this court can now grant the Foundation other than of a declaratory nature. We point out that our foreclosing of Kate Maremont’s appeal in no way jeopardizes that of the tenants or the government in Nos. 72-2756, 72-2784, or 72-2788.

3 . H.Rep. No. 447, 87th Cong., 1st Sess. 11 (1961).

4 . 12 U.S.C. § 1715i(a).

5 . See Note, Procedural Due Process in Government-Subsidized Housing, 86 Harv.L.Rev. 880, 884 n. 19 (1973).

6 . 12 U.S.C. § 1715l(a) ; H.Rep. No. 447, supra note 3, at 11; S.Rep. No. 281, 87th Cong., 1st Sess. 8 (1961), U.S.Code Cong. & Admin.News. p. 1923.

7 . This is in accordance with federal regulation, 24 C.F.R. § 221.531(c) (1973), which provides:

Bents and Charges. In approving the allowable rents and charges and in passing upon applications for changes, consideration will be given to the following and similar factors:

(1) Rental income necessary to maintain the economic soundness of the project.

(2) Rental income necessary to provide a reasonable return on the investment consistent with providing reasonable rentals to tenants.

The procedure for FIIA approval of a rent increase is found in U.S. l)ei>’t. of Housing and Urban Development, Insured Project Servicing Handbook, A IIUD Handbook, No. RHM 4350.1, supp. 1 (1970).

8 . Regulations also specify that a limited distribution mortgagor, sucli as Geneva Apartments, Inc., cannot receive more than a six percent return on its initial equity investment. 24 O.F.R. § 221.532(a) (1973).

9 . 42 Ü.S.C. §§ 291-291o (1970). The Hill-Burton Act provides federal subsidization for the construction of private nonprofit hospital facilities pursuant to a federally-approved state plan. A number of courts have found the requisite federal action in the program. See, e. g., Simkins v. Moses H. Cone Memorial Hosp., 323 F.2d 959 (4th Cir. 1963).

10 . The Court held in Goldberg that welfare benefits were a matter of statutory entitlement for persons qualified to receive them, id. at 262, 90 S.Ct. 1011, and required a bearing before benefits could be terminated. Id. at 266-271, 90 S.Ct. 1011.

11 . See Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974) ; Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972) ; Board of Regents v. Roth, 408 U.S. 564, 569-572, 92 S.Ct. 2701 (1972) ; Perry v. Sindermann, 408 U.S. 593, 599-600, 92 S.Ct. 2694 (1972) ; Fuentes v. Shevin, 407 U.S. 67, 84, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972).

12 . See, e. g., Morrissey v. Brewer, supra at 483-490, 92 S.Ct. 2593.

13 . Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974), does not affect this frame of analysis but, in fact, reaffirms it. There, the Court held that a federal civil service employee had no right to a full hearing prior to dismissal from his job. Tiie case centered on a provision of the Lloyd-LaFollette Act, 5 U.S.O. § 7501, which provides that “Lajn individual in the competitive service may be removed or suspended without pay only for such cause as will promote the efficiency of the service.” In subsection (b) of this provision the employee is given tiie right to respond in writing to the charges but is specifically denied tire right to a full scale hearing which would include the right to confront witnesses and the like. Justice Rehnquist’s plurality opinion, joined by the Chief Justice and Justice Stewart, reasons that the employee did not have a statutory entitlement to continued employment based on a right to a pre-dis-o.harge hearing because the right to employment was statutorily conditioned on a denial of a full hearing. Id. at 136, 94 S.Ct. 1633. However, the other six justices rejected this reasoning. See id. at 164, 171, and 206, 94 S.Ct. 1633 (Justice Powell, concurring; Justice White, concurring in part and dissenting in part; and Justice Brennan, dissenting). They basically agreed that once a substantive right lias been created, it is the Due Process Clause which provides the jirocedural mínimums, and not a statute or regulation. Justice Powell, joined by Justice Blackmun, agreed with the plurality only as to the result based on a Goldberg-typo balancing; he reasoned that the statutory procedures were sufficient to satisfy Due Process, particularly since the employee had a right to a full post-discharge hearing. Sec id. at 164, 94 S.Ct. 1633.

14 . It is perhaps possible to argue that the primary beneficiaries of § 221(d)(3) are the class of low income housing consumers, and not merely the tenants of the projects, since a purpose of the program is arguably to depress the cost of housing available to the entire class by adding to the stock. Therefore, it could be said that since no individual benefit is intended, the tenants have no claim of entitlement. Although it is perhaps true that low income housing consumers are a class of beneficiaries, the legislative history leaves little doubt that the individual tenants were intended to be the principal beneficiaries. See ante and compare Tenants Council of Tiber Island-Carrollsburg Square v. Lynn, 497 F.2d 648 (D.C.Cir.1973).

15 . Hee, e. g., Morrissey v. Brewer, 408 U.S. at 481-490, 92 S.Ct. 2593; Bell v. Burson, 402 U.S. 535, 539-542, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971) ; Richardson v. Perales, 402 U.S. 389, 401-406, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971) ; Goldberg v. Kelly, 397 U.S. at 263-271, 90 S.Ct. 1011; Note, supra, 86 Harv.L.Rev. at 891.

16 . This Guide, at 209, sets forth the general factors that the FHA will consider:

HUD will entertain a written request for a rent increase to compensate for any net increases in taxes and operating expenses over which owners have no effective control.

[T]he mortgagor should carefully consider the local rental market to determine if a rent increase will allow the project to remain competitive. .

A mortgagor must also be certain that all unnecessary expenses are reduced to a minimum.

Evidence of increased expenses must also be submitted.

17 . See Mitchell v. W. T. Grant Co., supra at 624-627, 94 S.Ct. at 1908-1909 (Powell, L, concurring).

18 . In Mitchell, in which the Court upheld a Louisiana statute permitting a seller to gain sequestration of installment-purchased goods without prior notice and hearing, the balance worked out quite differently. If pre-sei-zure notice and hearing were to be required, the rights of the seller — who was viewed, importantly, as a joint owner of the goods, id. at 604, 94 S.Ct. at 1898 — would be jeopardized since the goods would continue to de-precíate and the debtor might sell the goods cutting off the seller’s security interest altogether. Id. at 604^605, 94 S.Ct. at 1899. On the other hand, the debtor was relatively well protected. The seller was required to put up a bond adequate to cover the value of the goods and attorney’s fees should the sequestration prove groundless; process was issued by a judge and not a court clerk, thus “Minimiz [ing] the risk of error,” id. at 609, 94 S.Ct. at 1901; the debtor could regain the property by putting up a bond; and the debtor could have an immediate post-sequestration hearing on the matter of possession.

19 . Certain other courts are in agreement. See Marshall v. Lynn, supra; Thompson v. Washington, supra; Burr v. New Rochelle Municipal Housing Authority, supra; Paul-sen v. Coachlight Apartments Co., supra. But see Hahn v. Gottlieb, supra; People’s Rights Org. v. Bethlehem Associates, 356 F.Supp. 407 (E.D.Pa.1973).