Doris Gholston, Ind. and on Behalf of All Others Similarlysituated, Plaintiffs-appellants, v. the Housing Authority of the City of Montgomery; J.c.miller, Ind. and in His Official Capacity As Executivedirector of the Housing Authority of the City of Montgomery;jesse H. Griffin; Frank Parquette; Jerry Kyser; John F.mcknight, Jr. and Anne B. Upchurch, Ind. and in Theirofficial Capacities As Members of the Board of Commissionersof the Housing Authority of the City of Montgomery,defendants-appellees, 818 F.2d 776 (11th Cir. 1987)

The appellants in this case are applicants for public housing who brought a class action against the Housing Authority of the City of Montgomery, Alabama and various officials of the housing authority (hereinafter referred to collectively as the MHA). Appellants contend that the MHA violated provisions of the United States Housing Act of 1937, 42 U.S.C. §§ 1401-1440 (1982 & Supp. III 1985), and of the implementing regulations issued by the United States Department of Housing and Urban Development (HUD). Specifically, they allege that the MHA (1) categorically denied admission to public housing applicants whose rent payments would be one to twenty dollars per month and to those who would be entitled to zero or negative rent, see 24 C.F.R. Sec. 960.204(c) (1) (1986); (2) failed to implement statutorily mandated admission preferences for displaced families, families occupying substandard housing, and families paying more than fifty percent of their income for housing, see 42 U.S.C. § 1437d(c) (4) (A) (1982 & Supp. III 1985); (3) held housing units vacant to await higher income tenants while lower income applicants remained on a waiting list, see id.; (4) failed to comply with the 1981 and 1983 amendments to the Housing Act, which limit the percentage of available housing units that can be filled by families other than very low income families, see 42 U.S.C. § 1437n (1982 & Supp. III 1985) (codifying 1981 and 1983 amendments); and (5) failed to advise very low income families of an approximate occupancy date, in violation of 24 C.F.R. Sec. 960.207(b) (1986). Appellants sought injunctive and monetary relief for these violations under 42 U.S.C. § 1983 (1982).¹ 

After a bench trial, the district court found that the MHA had not violated any provision of the Housing Act or HUD regulations, and therefore entered judgment for the appellees. This appeal followed.

Congress enacted the Housing Act "to assist the several States and their political subdivisions to remedy the unsafe and unsanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of lower income." 42 U.S.C. § 1437 (1982). To further these objectives, the Act authorizes HUD to provide low interest loans, grants, and other assistance for the construction and operation of housing for low income families. See, e.g., id. Secs. 1437b-d, 1437g & 1437i (1982 and Supp. III 1985). By subsidizing local housing authorities like the MHA, Congress enables, and requires, the housing authorities to set rents for eligible low income tenants below the market price. See id. Sec. 1437a(a). Other provisions of the Housing Act govern the housing authorities' admissions policies, see id. Sec. 1437d(c) (3)-(4) (A), administrative grievance procedures, id. Sec. 1437d(k), and lease terms and conditions, id. Sec. 1437d(l).

One general policy of the Housing Act is "to vest in local public housing agencies the maximum amount of responsibility in the administration of their housing programs." Id. Sec. 1437. Local housing authorities must, however, comply with the Housing Act's statutory directives and with HUD regulations.

This case concerns the MHA's compliance, since 1982, with the Housing Act's admissions provisions. The Housing Act permits housing authorities to rent dwelling units "only to families who are lower income families at the time of their initial occupancy" of the units. Id. Sec. 1437a(a); see also 24 C.F.R. Sec. 913.103 (1986). "Lower income families" are defined as families whose income, adjusted for family size, does not exceed eighty percent of the median family income for their geographic area. 42 U.S.C. § 1437a(b) (2) (Supp. III 1985); 24 C.F.R. Sec. 913.102(e) (1986).

In 1981, Congress amended the Housing Act in order to redirect limited housing funds to the neediest of families. Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35, Title III, Sec. 323, 95 Stat. 404 (codified as amended at 42 U.S.C. § 1437n (1982 & Supp. III 1985)); see S.Rep. No. 139, 97th Cong., 1st Sess. 229-30, reprinted in 1981 U.S.Code Cong. & Admin.News 396, 525-26. The new provision of the Housing Act provided as follows:

Not more than 10 per centum of the dwelling units which were available for occupancy under public housing annual contributions contracts ... under [the Housing Act] before October 1, 1981, and which will be leased on or after October 1, 1981, shall be available for leasing by lower income families other than very low-income families.

42 U.S.C. § 1437n(a) (1982) (amended 1983).²  Two years later, Congress amended this provision to permit housing authorities to rent up to twenty-five percent of dwelling units to families other than "very low-income families." Domestic Housing & International Recovery & Financial Stability Act, Pub. L. No. 98-181, Title II, Sec. 213, 97 Stat. 1184 (1983) (codified at 42 U.S.C. § 1437a (Supp. III 1985)); see also 24 C.F.R. Sec. 913.104 (1986). The term "very low-income families," as used in the Housing Act, refers to lower income families whose income, adjusted for family size, does not exceed fifty percent of the median family income in the relevant geographic area. 42 U.S.C. § 1437a(b) (2) (1982 & Supp. III 1985); 24 C.F.R. Sec. 913.102(e) (1986). Thus, to comply with section 1437n(a), as amended, a housing authority must lease at least seventy-five percent of its dwellings to very low income families; the housing authority may lease the remainder of its dwellings to low income families.

In addition to setting eligibility requirements for applicants for public housing, the Housing Act permits HUD to establish "preferences" among otherwise eligible applicants and to set goals for local housing authorities:

Every contract for annual contributions [between HUD and the local housing authority] shall provide that ... the public housing agency shall comply with such procedures and requirements as the Secretary may prescribe to assure that sound management practices will be followed in the operation of the project, including requirements pertaining to ... the establishment of tenant selection criteria which gives preference to families which occupy substandard housing or are involuntarily displaced at the time they are seeking assistance under this chapter or are paying more than 50 per centum of family income for rent and which is designed to assure that, within a reasonable period of time, the project will include families with a broad range of incomes and will avoid concentrations of lower income and deprived families with serious social problems, but this shall not permit maintenance of vacancies to await higher income tenants where lower income tenants are available....

42 U.S.C. § 1437d(c) (4) (A) (Supp. III 1985). Under this provision, HUD is authorized to promulgate four tenant selection criteria: (1) a preference for families occupying substandard housing; (2) a preference for families who are involuntarily displaced; (3) a preference for families who are paying more than fifty percent of their income for rent; and (4) criteria designed to establish an economic mix of tenants, avoiding "concentrations of lower income and deprived families with serious social problems," but constrained by the requirement that the public housing authority cannot maintain vacancies to await higher income tenants when lower income tenants are available.

Finally, HUD regulations require that local housing authorities follow prescribed procedures for informing applicants of their eligibility for low-income housing and of the availability of such housing. Those regulations provide as follows:

(a) The [local housing authority] shall promptly notify any applicant determined to be ineligible for admission to a project of the basis for such determination and shall provide the applicant upon request, within a reasonable time after the determination is made, with an opportunity for an informal hearing on such determination.

(b) When a determination has been made that an applicant is eligible and satisfies all requirements for admission including the tenant selection criteria, the applicant shall be notified of the approximate date of occupancy insofar as that date can be reasonably determined.

24 C.F.R. Sec. 960.207(a)-(b) (1986).

We begin our review of the district court's decision by noting that there is some question whether the admissions provisions of the Housing Act and HUD's implementing regulations establish rights enforceable under 42 U.S.C. § 1983 (1982), and whether Congress has established a comprehensive enforcement scheme in lieu of section 1983 enforcement. See generally Middlesex County Sewerage Auth. v. National Sea Clammers Ass'n, 453 U.S. 1, 101 S. Ct. 2615, 69 L. Ed. 2d 435 (1981); Pennhurst State School & Hosp. v. Halderman, 451 U.S. 1, 101 S. Ct. 1531, 67 L. Ed. 2d 694 (1981). The Supreme Court, in its recent decision in Wright v. City of Roanoke Redevelopment and Hous. Auth., --- U.S. ----, 107 S. Ct. 766, 93 L. Ed. 2d 781 (1987), resolved analogous issues with regard to the Brooke Amendment to the Housing Act, Pub. L. No. 91-152, Sec. 213, 83 Stat. 379, 389 (1969) (codified as amended at 42 U.S.C. § 1437a (1982 & Supp. III 1985)). In Wright, public housing tenants brought suit under section 1983, alleging that the defendant housing authority overcharged them for their utility services in violation of the Brooke Amendment. The Court observed that the Housing Act and the Brooke Amendment gave public housing tenants rights, which, under Supreme Court precedent, were cognizable under section 1983, and noted that Congress did not expressly preclude the tenants' section 1983 claim against the local housing authority. In addition, the Court held that Congress did not include a comprehensive enforcement scheme in the Housing Act and thus did not implicitly foreclose relief under section 1983.

Although Wright involved the rent ceiling of the Housing Act instead of the admissions provisions implicated in this suit, the Supreme Court's reasoning in that case guides our analysis. In particular, the Court's conclusion that Congress did not expressly or implicitly preclude section 1983 claims based on violations of the Housing Act probably applies with equal force in this case. Whether the admissions provisions create rights enforceable under section 1983 is, however, a more difficult question.

In this case, we need not determine whether the appellants state a claim upon which relief can be granted, because the MHA failed to raise this question on appeal. The district court denied the MHA's pretrial motion to dismiss, see Fed. R. Civ. P. 12(b) (6), as well as its motion for judgment on the pleadings at the conclusion of the bench trial. The MHA did not choose to cross-appeal from these rulings; nor did it raise the issue in its initial brief on appeal.³  Because the failure to state a claim is not a jurisdictional question, see Davis v. Passman, 442 U.S. 228, 239 n. 18, 99 S. Ct. 2264, 2274 n. 18, 60 L. Ed. 2d 846 (1979); Bell v. Hood, 327 U.S. 678, 682, 66 S. Ct. 773, 776, 90 L. Ed. 939 (1946), we need not address the issue sua sponte, particularly when there is no "plain error."⁴  See Tyler v. Pasqua, 748 F.2d 283, 287 (5th Cir. 1984) (unlike subject matter jurisdiction, the defendant generally must raise the issue of failure to state a claim and may waive that defense); see also Dick v. New York Life Ins. Co., 359 U.S. 437, 444-45, 79 S. Ct. 921, 926, 3 L. Ed. 2d 935 (1959) (declining to address a threshold question, whether the state or federal standard for sufficiency of the evidence supporting a jury verdict should be applied in diversity cases, because it was not raised by the parties and the standards "are substantially the same"); United States v. Spector, 343 U.S. 169, 172, 72 S. Ct. 591, 593-94, 96 L. Ed. 863 (1952) (in case involving alleged vagueness of deportation statute, Court refused to consider another constitutional ground for overturning the statute because " [t]hat question was neither raised by the appellee nor briefed nor argued here"); Freeman v. B & B Assocs., 790 F.2d 145, 151 (D.C. Cir. 1986) ("An appellate court ... will freely consider any argument by an appellee that supports the judgment of the district court....") (emphasis added); cf. Dart v. Brown, 717 F.2d 1491, 1493 n. 1 (5th Cir. 1983) (refusing to resolve issue of failure to state a claim in light of appellee's failure to cross-appeal from favorable judgment on the merits), cert. denied, 469 U.S. 825, 105 S. Ct. 105, 83 L. Ed. 2d 49 (1984).

Moreover, to decide this appeal on the merits, it is not necessary to resolve the issue of failure to state a claim. In some cases, a court of appeals, as a logical matter, may need to decide whether a party's allegations properly state a claim before reaching the merits of an appeal. Cf. Ammar v. American Export Lines, Inc., 326 F.2d 955, 959 (2d Cir.) ("Although [appellee's] point was not properly preserved by an objection to the jury instructions, we rule upon it since its decision was implicit in our analysis of [an issue before the court].") (citation omitted), cert. denied, 379 U.S. 824, 85 S. Ct. 48, 13 L. Ed. 2d 34 (1964). Here, however, the MHA indisputably has certain duties under the Housing Act and HUD regulations, and the appellants alleged that they were harmed by its violations of those duties. We need not decide the underlying question--whether appellants can bring suit under section 1983 or whether HUD is the exclusive enforcer of federal housing law--in order to determine whether the MHA violated the Housing Act or HUD regulations. In sum, in discussing the merits of this case, we intimate no view as to whether the types of claims appellants present can withstand a motion to dismiss for failure to state a claim.

In assessing whether the MHA has violated the rights of public housing applicants, we note that the Housing Act gives local housing authorities discretion to select applicants and otherwise to manage the day-to-day affairs of the subsidized housing projects. See 42 U.S.C. § 1437 (1982) (local housing authorities given "maximum amount of responsibility" to administer subsidized housing). The administration of local housing authorities is a difficult task, particularly because the number of applicants greatly exceeds the available housing. See Fletcher v. Housing Auth. of Louisville, 491 F.2d 793, 798 (6th Cir.), vacated, 419 U.S. 812, 95 S. Ct. 27, 42 L. Ed. 2d 39 (1974), reinstated on remand, 525 F.2d 532 (6th Cir. 1975). Consequently, the scope of judicial review of a local housing authority's policies and practices is limited, and we will not view its actions as a violation of the Housing Act or HUD regulations unless it abused its discretion. See Fletcher, 491 F.2d at 798.

The appellants' first claim at trial was that the MHA categorically denied admission to applicants whose estimated monthly rent ranged from one to twenty dollars and to those who would be entitled to zero or negative rent.⁵  Low-income and very low-income tenants can be classified according to the amount of rent they must pay, and the appellants represented those falling within the two lowest rent ranges of eligible applicants for public housing. The parties stipulated that a large majority of these applicants are families who receive welfare payments and who have a single, black female as the head of the household. The exclusion of applicants from the lowest rent ranges allegedly violated HUD regulations, which provide that local housing authorities shall " [n]ot automatically deny admission to a particular group or category of otherwise eligible applicants (e.g., unwed mothers or families with children born out of wedlock)." 24 C.F.R. Sec. 960.204(c) (1) (1986). The appellants also contended that the MHA's policies and practices violated 24 C.F.R. Sec. 960.205(a) (1986) ("The criteria to be established and information to be considered shall be reasonably related to individual attributes and behavior of an applicant and shall not be related to those which may be imputed to a particular group or category of persons of which an applicant may be a member.") (citation omitted).

The district court believed that appellants sought "overriding priorities ... [for] persons whose rent would be $20.00 a month or less," and indicated that such a policy would violate Congress' goal of "assur [ing] that, within a reasonable period of time, the [housing] project will include families with a broad range of incomes and will avoid concentrations of lower income and deprived families with serious social problems." 42 U.S.C. § 1437d(c) (4) (A) (1982 & Supp. III 1985).

The gist of appellants' claim, however, is not that applicants from the lowest rent ranges should receive preference over eligible applicants from higher rent ranges. Neither Congress nor HUD has ever mandated that local housing authorities grant such a preference; indeed, this preference is inconsistent with the Housing Act's requirement that housing authorities attain an economic mix of eligible tenants. See id. Appellants merely contend that the MHA violated HUD regulations by automatically denying admission to applicants in the lowest rent ranges.

Congress' requirement that local housing authorities seek, within a reasonable time, to house families from a broad range of low incomes, see id., is entirely consistent with HUD's requirement that local housing authorities not automatically deny admission to categories of otherwise eligible applicants, see 24 C.F.R. Sec. 960.204(c) (1) (1986). To comply with these requirements, a local housing authority must not categorically exclude applicants from the lowest income ranges.

The district court made no specific finding on the factual issue whether, during the years from 1982 to 1985, the MHA categorically excluded applicants in the lowest rent ranges, particularly the zero to negative range.⁶  Consequently, we vacate the district court's determination that the MHA complied with 24 C.F.R. Sec. 960.204(c) (1) (1986) and remand for further findings on this issue. On remand, the district court, giving due deference to the decisions of the MHA, should determine if it had a policy or practice of categorically excluding applicants from the lowest rent ranges.

Appellants' second claim is that the district court erred in concluding that the MHA did not violate the applicable preference provisions of the Housing Act and of HUD's implementing regulations. As noted above, the Housing Act, as amended, states in relevant part: "Every contract for annual contributions shall provide that ... the public housing agency shall comply with such procedures and requirements as the Secretary may prescribe to assure that sound management practices will be followed in the operation of the project, including ..." the establishment of (1) preferences for families occupying substandard housing, (2) preferences for families who are involuntarily displaced, (3) preferences for families paying more than fifty percent of their income for rent, and (4) criteria designed to attain an economic mix of tenants. 42 U.S.C. § 1437d(c) (4) (A) (1982 & Supp. III 1985).

This provision and HUD's implementing regulations were modified a number of times during the time period relevant to this case. Prior to 1979, section 1437d(c) (4) (A) listed only the fourth criterion, the economic mix requirement, and HUD issued regulations in accordance with the provision as it was then written.⁷  In 1979, Congress amended this provision to include preferences for families who occupy substandard housing or who have been involuntarily displaced. Housing and Community Development Amendments of 1979, Pub. L. No. 96-153, Title II, Sec. 206(a), 93 Stat. 1108. HUD's regulations, which were amended in 1980, did not include any reference to the new preferences Congress enumerated in its 1979 amendments.⁸  Finally, in 1983, Congress added a preference for families who are paying more than fifty percent of their income for rent. Domestic Housing and International Recovery and Financial Stability Act, Pub. L. No. 98-181, Title II, Sec. 203(a), 97 Stat. 1153, 1178 (1983). HUD subsequently modified its regulations governing admission to public housing, but did not promulgate any regulation⁹  concerning preferences for the three categories of families enumerated in section 1437d(c) (4) (A). See 24 C.F.R. Secs. 960.204, 960.205 (1986).¹⁰ 

Thus, the question we must decide is whether these preference provisions are self-executing, i.e., whether the MHA must grant applicants these preferences in the absence of implementing regulations promulgated by HUD. The express language of section 1437d(c) (4) (A) simply indicates that local housing authorities "shall comply with such procedures and requirements as the Secretary may prescribe." 42 U.S.C. § 1437d(c) (4) (A) (1982 & Supp. III 1985) (emphasis added). By its express terms, the statute does not require HUD to prescribe preferences;¹¹  nor does it require local housing authorities to grant preferences absent HUD implementing regulations. The legislative history of the preference provision does not discuss whether Congress intended to create a self-executing preference requirement or to authorize HUD, in its discretion, to promulgate the preference requirements. See generally S.Rep. No. 142, 98th Cong., 1st Sess. 32-33, reprinted in 1983 U.S.Code Cong. & Admin.News 1770, 1803-04 (explaining preference provisions applicable to the public housing program involved in this case, as well as the provisions applicable to other housing programs); H.R.Rep. No. 154, 96th Cong., 1st Sess. 16, reprinted in 1979 U.S.Code Cong. & Admin.News 2317, 2332 (discussing preference provisions).

Given that HUD possesses a large degree of discretion to administer the Housing Act programs and that local housing authorities have discretion to manage the housing projects on a day-to-day basis, we hold that section 1437d(c) (4) (A) is not self-executing. Thus, until HUD promulgates final rules mandating that local housing authorities grant preferences for families occupying substandard housing, displaced families, and families paying more than fifty percent of their income for rent, local housing authorities are not required to grant these preferences. They may grant the preferences on their own initiative, so long as they otherwise comply with the Housing Act and HUD regulations, but they do not violate the Act by failing to do so. We therefore affirm the district court's determination that the MHA did not violate the Housing Act's preference provisions.

Appellants' next claim is that the district court erred in concluding that the MHA did not hold dwelling units vacant, while applicants from lower income ranges were available, in order to await applicants from higher income ranges. The parties do not dispute that the Housing Act and HUD regulations prohibit local housing authorities from holding units vacant to await higher income applicants when applicants from lower rent ranges are available. See 42 U.S.C. § 1437d(c) (4) (A) (1982 & Supp. III 1985); 24 C.F.R. Sec. 960.205(c) (8) (1986). Rather, their disagreement centers on whether the evidence at trial supported the district court's conclusion.

The evidence on this issue was conflicting. Appellants rely principally on a HUD audit report, which criticized the MHA for having a large number of vacancies in 1981 to 1983 "because [the] maintenance [department] had been slow to repair vacant units and the MHA had decided to leave some units vacant rather than to rent them at low rates." Finding that the latter practice was a "contributing factor to high vacancies," the audit report recommended that " [i]f the MHA cannot rent to higher income tenants, vacant units should be made available to other eligible applicants." MHA officials, on the other hand, testified that the MHA did not maintain vacancies to await higher income tenants. They indicated that its high vacancy rate was caused by delay in modernization and maintenance of vacated units, in contacting prospective tenants, and in processing the applications of new tenants.

The district court's finding of fact on this issue will not be disturbed absent clear error. Fed. R. Civ. P. 52(a); United States v. United States Gypsum Co., 333 U.S. 364, 394-95, 68 S. Ct. 525, 541-42, 92 L. Ed. 746 (1948); Hardin v. Stynchcomb, 691 F.2d 1364, 1372 (11th Cir. 1982). In light of the evidence that the MHA suffered from a high turnover rate and that legitimate reasons existed for its high vacancy rate, we do not believe that the district court's conclusion was clearly erroneous. We therefore affirm its decision on this claim.

Finally, the appellants contend that the district court erroneously concluded that the MHA complied with 42 U.S.C. § 1437n(a) (1982 & Supp. III 1985), which requires that no more than twenty-five percent¹²  of the local housing authority's dwelling units be leased to families other than very low-income families. See also 24 C.F.R. Sec. 913.104 (1986). The first issue involved in this claim is whether the twenty-five percent ceiling of section 1437n(a) applies to the percentage of other than very low-income families admitted in a given period, or to the percentage of such families in the entire tenant population of the housing authority. In concluding that the MHA complied with section 1437n(a), the district court discussed both the percentage of families admitted from 1981 to 1984 and the percentage of those families in the total tenant population during those years.

We hold that the correct reading of section 1437n is that it establishes a maximum limit on the number of families other than very low-income families newly admitted into public housing. This view is supported by HUD's implementing regulations. See 24 C.F.R. Sec. 913.104(b) (1986) (for purposes of compliance with section 1437n, local housing authorities shall maintain records of "the number of Families occupying [subsidized housing] units that were admitted to them on or after July 1, 1984 and were not Very Low-Income Families when admitted ") (emphasis added); id. Sec. 913.104(a) (" [Section 1437n] provides that not more than 25 percent of the dwelling units that were available for occupancy under public housing Annual Contributions Contracts ... taking effect before October 1, 1981 and that are leased on or after that date shall be available for leasing by Lower Income Families other than Very Low-Income Families.") (emphasis added).

In this case, the district court apparently found that over ninety percent of families admitted during each year from 1981 to 1984 were very low-income families.¹³  Although the court also discussed the percentage of families in the total tenant population that were very low-income families, which is not relevant to the section 1437n issue, we affirm based on the court's finding on the MHA's admissions practices during 1981 to 1984.¹⁴ 

In sum, we vacate the district court's ruling that the MHA did not violate 24 C.F.R. Sec. 960.204(c) (1) (1986) and remand this case for reassessment of the evidence and a specific finding on this issue. On remand, the district court should also determine if applicants for MHA housing who are in rent ranges above twenty dollars per month should be joined in this action as necessary parties. See Fed. R. Civ. P. 19; see also Fed. R. Civ. P. 21 ("Parties may be ... added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just."). The interests of these persons in obtaining MHA housing may be affected by a favorable ruling for appellants because the appellants' remedies may include changes in the ordering of applicants on the MHA waiting list. In all other respects, the decision of the district court is affirmed.

AFFIRMED in part, VACATED in part, and REMANDED.

ANDERSON, Circuit Judge, concurring in part and dissenting in part.

I concur in Judge Tjoflat's opinion, except for its failure in Part III.B. to enforce the statutory preferences¹  for families which occupy substandard housing, for families which have been involuntarily displaced, and for familiies which pay more than 50% of their income for rent. I respectfully dissent from Part III.B. of Judge Tjoflat's opinion because a thorough investigation of legislative history persuades me that Congress intended for the statutory preferences to be honored by public housing authorities regardless of the promulgation of regulations by HUD. Moreover, it is clear in the legislative record that the "economic mix" criteria has been deemphasized by Congress. While that factor should not be ignored, it would be error for a public housing authority to have an absolute preference for higher-income tenants over those applicants who qualify for the statutory preferences for families in substandard housing, displaced families, or families paying more than 50% of their income in rent. It is undisputed in this case that the Montgomery Housing Authority had an absolute preference for higher-income tenants over applicants who qualified for the foregoing three statutory preferences. Because this violates the preference provisions of the statute, I would reverse.

Judge Tjoflat's opinion correctly traces the somewhat convoluted history of 42 U.S.C. § 1437d(c) (4) (A). In 1974, the Housing Act of 1937 was amended to include a provision requiring public housing authorities to consider "economic mix" in the selection of tenants. Housing and Community Development Act of 1974, Pub. L. No. 93-383, Title II, Sec. 201(a), 88 Stat. 660. In 1979, Congress further amended this section to include the requirement that public housing authorities have tenant selection criteria which include preferences for families which occupy substandard housing or which have been involuntarily displaced. Housing & Community Development Amendments of 1979, Pub. L. No. 96-153, Title II, Sec. 206(a), 93 Stat. 1108. The third preference for families which are paying more than 50% of their income for rent was added in 1983. Domestic Housing & International Recovery and Financial Stability Act, Pub. L. No. 98-181, Title II, Sec. 203(a), 97 Stat. 1153, 1178 (1983).

In 1981, the Senate proposed another amendment to the Housing Act--to eliminate the "economic mix" requirement altogether. S.Rep. No. 139, 97th Cong., 1st Sess. 235, 255 reprinted in 1981 U.S.Code Cong. & Ad.News 396, 531, 551. The Senate observed that " [t]his economic mix policy has the ill effect of giving moderate income families priority for housing subsidies while truly poor families remain on waiting lists." 1981 U.S.Code Cong. & Ad.News at 530. In this same Report, the Senate repeatedly emphasized its commitment to providing public housing to the neediest of families:

The Committee's other principal purpose in adopting Title II of the bill is to focus limited housing assistance funds on those who need the taxpayer's help the most.... Because funds are limited, each moderate-income family that gets into the programs effectively reduces the odds that a truly poor family can be decently housed.

The Committee believes it is a fairer and more compassionate policy to limit eligibility to the more needy.... [T]he Committee rejects the argument that for cost reasons moderate-income people should get housing while the poor wait in line.... The government's purpose in lower-income housing programs ... should be to help those who most need assistance.

The Committee also believes that local public housing agencies ... should not be required to pursue a policy of obtaining tenants with a mix of different income levels. The managers of these programs should be free to house the neediest households first.

Id. at 525-26. Also proposed by the Senate Report and adopted in conference were provisions to reduce income eligibility for applicants for public housing and to reduce the percentage of units available for families other than very-low income.

The Conference Report did not adopt the Senate's amendment regarding the abolition of the economic mix criteria. However, the Conference Report did not reject the Senate proposal out of hand; rather, it acknowledged a concern about the way in which the "economic mix" criteria was being applied:

The conferees are also concerned that in carrying out the policy of creating a mix of families having a broad range of lower incomes in assisted housing that families whose incomes are between 50 and 80 percent of median not be given a priority for occupancy by virtue of their income. In addition, the conferees do not intend that a community should be required to achieve the same distribution of incomes between lower income families living in assisted housing and lower income families living in the community at large. Such a rigid formula can inhibit a community from fulfilling the basic purpose of the assisted housing programs without delay--to aid lower income families in obtaining a decent place to live.

H.R.Conf.Rep. No. 208, 97th Cong., 1st Sess. 695, reprinted in 1981 U.S.Code Cong. & Ad.News 1010, 1054. Thus, I take the legislative history behind the 1981 Amendment to mean that the "economic mix" factor, while still a criteria to be considered, cannot take priority over families who have a statutory preference. The Conference Report expressly said that higher-income applicants should not have a priority. Yet this is precisely how the Montgomery Housing Authority is admittedly choosing tenants.

I find that the statute at issue here--42 U.S.C. § 1437d(c) (4) (A)--is clear enough, when read in conjunction with its legislative history,²  to provide adequate guidance to public housing authorities, even in the absence of interpretive regulations promulgated by HUD. Congress' intent was that economic mix not be a priority over preferences for families who live in substandard housing, who are homeless, or whose rent is over 50% of their incomes. Thus, regardless of whether the statutory preference provision is self-executing, the actions of the Montgomery Housing Authority reverse the statutorily mandated preferences and are in conflict with this statutory policy. See Martinez v. Rhode Island Housing & Mortgage Finance Corp., 738 F.2d 21, 25 (1st Cir. 1984) (absolute preference for higher-income applicants violates statutory policy of Section 8 program, even though statute is not self-executing).

The record is clear with respect to the Montgomery Housing Authority's absolute preference for higher-income tenants. Indeed, the parties stipulated prior to trial that the Montgomery Housing Authority currently has a priority for renting to applicant families in the highest rent ranges, that to the extent preferences are given to families which are displaced or living in substandard housing, those preferences are only granted within rent ranges, and that there has never been a preference granted to those families which are paying over 50% of their income for rent. See Record on Appeal at 221, 222 (Pre-trial Stipulations, paragraphs 52, 57, and 61). Since I believe the district court erred in not finding this policy to be a statutory violation, I would reverse and grant plaintiffs relief from the tenant selection procedures being applied by the Montgomery Housing Authority.