|Legal Opinion: |
Text of Document: February 3, 2010
Re: Housing Authority
Dear City Manager,
You have asked generally about the authority the City has over the Housing Authority established in 1969 under our State laws. Specifically, the City wants some policy changes enacted and the current board may not be willing to make the desired changes. You have asked if housing authority commissioners may be removed and replaced, if the membership of the board may be enlarged, and what other options may be available to the City in this situation.
The Housing Authority was established by resolution no. 8-90-69, in accordance with what is now Tennessee Code Annotated §§ 13-20-401 and 408 (formerly T.C.A. §§ 13-901 and 908). This is that chapter of our laws under which city housing authorities are created and operated, and the statutory language controls your options.
T.C.A. § 13-20-408 contains provisions controlling the appointment of commissioners to the authority, the size of the authority board, and terms of office of commissioners. Subsection (a) provides that the authority “shall consist of five (5) commissioners to be appointed by the mayor...” Later paragraphs added to this section of the law permit cities located in counties with specified populations to create seven (7) member boards, but those provisions are not applicable to your City due to the population requirements. I do not find legal authority for the City to increase membership of the housing authority board, in any section of the law.
The Tennessee Supreme Court ruled that a city may deviate from the state law through a charter amendment in Mink v. City of Memphis, 435 S.W.2d 114 (Tenn. 1968). (Memphis actually accomplished this through private act, but later became a home rule city. Your City could only take such action through home rule charter amendment.) The facts in the Mink case involve the very section of the law discussed below controlling the removal of a housing authority commissioner. The Memphis Charter provided that commissioners could be removed by the mayor, with concurrence of the governing body, and this is different than the notice and hearing required under the law. The Supreme Court ruled such a difference is permitted, if adopted as part of a city’s charter.
Your City’s charter does not have language concerning the housing authority, so it is currently controlled by the state law. That being the case, let’s examine the method the statute provides for termination of a commissioner from the housing authority. In the chapter applicable to city housing authorities, the statute states:
(a) The mayor may remove a commissioner for inefficiency or neglect of duty or misconduct in office, but only after the commissioner shall have been given a copy of the charges against such commissioner (which may be made by the mayor) at least ten (10) days prior to the hearing thereon and had an opportunity to be heard in person or by counsel.
(b) Any obligee of the authority may file with the mayor written charges that the authority is violating willfully any law of the state or any term, provision or covenant in any contract to which the authority is a party. The mayor shall give each of the commissioners a copy of such charges at least ten (10) days prior to the hearing thereon and an opportunity to be heard in person or by counsel, and shall within fifteen (15) days after receipt of such charges remove any commissioner of the authority who is found to have acquiesced in any such willful violation.
(c) A commissioner shall be deemed to have acquiesced in a willful violation by the authority of a law of this state or of any term, provision or covenant contained in a contract to which the authority is a party, if, before a hearing is held on the charges against the commissioner, the commissioner has not filed with the authority a written statement of the commissioner's objections to or lack of participation in such violation.
(d) In the event of the removal of any commissioner, the mayor shall file in the office of the city clerk a record of the proceedings, together with the charges made against the commissioner and the findings thereon. Tenn. Code Ann. § 13-20-411 (West)
Under this section, a commissioner may be removed for cause “for inefficiency or neglect of duty or misconduct in office,” but only after notice of the charges against him and a hearing. If any violation of laws or contract provision is alleged against the authority, then the commissioner must respond to such charges in writing or is presumed to have participated in the violation. I do not think that is the situation in your City. It rather appears that paragraph (a) above is the applicable provision. Under (a), the charges must be in writing and the notice of charges must be served on the commissioner at least ten (10) days before a hearing on such charges. The commissioner is not required to respond to the charges in writing, and may be represented by counsel in the hearing.
The statute does not provide any further information concerning the hearing to be conducted. Presumably, as it states “the mayor may remove…” the hearing may be simply before the mayor, as he is the decision maker in the process. There is no indication the governing body would be involved in the hearing. The hearing may also be closed to the public, as it concerns the exercise of discretion of only one elected official, the mayor, and is not a matter impacting a vote by the city governing body or public policy. A record of the proceedings must be created and placed on file with the city clerk, so none of the information received in the hearing is actually confidential.
The Supreme Court has ruled that the above section of the law on termination of commissioners is mandatory for cities operating housing authorities under the state law. Mayor of Jackson v. Thomas, 313 S.W.2d 468 (Tenn. 1957).
What conduct would be deemed “inefficiency or neglect of duty or misconduct in office” as would warrant removal from office? There is no explanation in the statute, and no court case or even Attorney General opinion to guide us. The duty of the authority and commissioners is stated in the law:
The authority and its commissioners shall be under a statutory duty to comply or to cause compliance strictly with all provisions of this chapter, and the laws of the state and in addition thereto with each and every term, provision and covenant in any contract of the authority on its part to be kept or performed. Tenn. Code Ann. § 13-20-409 (West).
Other than the duty to abide by covenants in contracts, the statute really doesn’t expand further on the duties of the authority. The law states that commissioners are subject to the conflicts of interest statutes that apply to other government officers and shall not have an interest in contracts (T.C.A. § 13-20-410); the authority is required to file yearly reports of activities with the mayor (T.C.A. § 13-20-412); and, housing projects managed by the authority cannot operate for profit (T.C.A. § 13-20-413). There are no other prohibitions or requirements contained in the law to which the commissioners may be held. That does not mean that a commissioner cannot be removed for “inefficiency or neglect,” only that such charges must be proven in the hearing and supported by the record. A conflict of interest or violation of a contract would provide simpler grounds for removal.
With no power to expand the membership of the housing authority, and with the above limitations on the termination of commissioners, the next issue we turn to is whether the City may simply abolish the housing authority. The housing authority statutes were passed by our state legislature because local governments do not have the legal ability to provide housing to the poor or to manage housing projects. The act of providing or developing housing or managing housing projects is considered a “private enterprise” in which cities cannot participate, unless a separate housing authority is established through charter or under the state law. Therefore, the City governing body may not simply step into the shoes of the housing authority and perform the same functions. Cities have that ability generally with respect to utility boards and some other boards established to carry out city functions, but that does not extend to housing authorities.
The Tennessee Attorney General was asked if a city may develop residential property in opinion no. 98-042. The AG states:
But the charter provides no specific power for the development of a single family residential subdivision. This Office has concluded in the past that a charter containing the general powers like those contained in the City Manager-Commission Charter does not authorize a city to develop a residential subdivision. Op. Tenn. Atty. Gen. U95-021 (March 6, 1995). That conclusion was based on the principle, articulated in McQuillin, Municipal Corporations, that a municipality's authority to buy and hold real estate exists only to the extent that it may be necessary to carry into effect corporate purposes and that speculative dealing in real estate is not among the usual powers bestowed on municipal corporations. As a result, such power does not arise by implication from the powers ordinarily conferred on municipal corporations. McQuillin, Municipal Corporations, §§ 28.11 and 36.03.05. In addition, this Office is unaware of any Tennessee statutes or cases contrary to this general rule. Therefore, the Charter of the City of Berry Hill does not give the City the authority to develop a residential subdivision. The interpretation of the city charter, however, does not mean that the City is prohibited from using its resources to develop housing projects specifically authorized by a statute of general applicability. Under general state law, a city may lend or donate its funds to a housing authority created under Tenn. Code Ann. §§ 13-20-401, et seq. Tenn. Code Ann. § 13-20-417. A city may also develop and participate in an urban renewal project that may include improvements to housing in a blighted area. Tenn. Code Ann. § 13-20-214. Several other statutory schemes authorize a city to improve or develop low income housing in connection with slum clearance or urban rehabilitation. See, e.g., Tenn. Code Ann. §§13-21-101, et seq.; Tenn. Code Ann. §§ 13-22-101, et seq. Tenn. Op. Att'y Gen. No. 98-042 (Feb. 17, 1998)
Cities may only develop residential property, and manage housing projects, under these general law statutes, absent specific charter authority.
The ability of the City to abolish the housing authority depends on the outstanding legal obligations of the authority, and perhaps the will to get out of the housing authority business. If the housing authority has received grants, and the grant periods have not yet expired, the City will have to return those grant funds if the housing authority is abolished. If the housing authority has entered into contracts, the City will still have to honor those agreements, and the City’s ability to do so will be limited, or perhaps non-existent. If the housing authority has issued bonds, the authority cannot be dissolved until those bonds are satisfied. State ex rel. Barr v. Town of Selmer, 24 McCanless 304 (Tenn. 1967). In the Town of Selmer case, the city sought to dissolve the utility board and designate the governing body as the new utility board, pursuant to specific statutory authority. The Supreme Court ruled that, despite legal authority to make the governing body the utility board, due to outstanding bonds the city cannot take action to disband the utility board until those bonds expire or are otherwise satisfied.
What about dissolving the housing authority and creating another housing authority to take over those duties? The problem with that option is the Housing Authority is a public body registered with the Secretary of State, and in my opinion no other housing authority can be established by the City so long as that registration is valid. The law states that no other housing authority may operate within the boundaries of another housing authority, in T.C.A. 13-20-405. If the City decides to dissolve this authority, statutory procedures for the dissolution of nonprofit corporations will have to be followed, found in T.C.A. §§ 48-64-101 through 109. Another option is to form a regional housing authority with another city or with the county, dissolve the City’s housing authority and turn over all operations to a consolidated or regional body, created under T.C.A. § 13-20-418 or T.C.A. § 13-20-502. However, any outstanding contracts held by the housing authority cannot simply be assigned to another entity without the other parties’ agreement.
I know of no other options available to the City with regard to the Housing Authority. Unless the City Charter is amended with language providing for the creation of and control over a housing authority, the City must follow the provisions of the general law applicable to city housing authorities. The controlling statute does not permit the expansion of the board of commissioners of the housing authority, and requires notice of charges and hearing prior to the removal of any commissioner. Dissolution of the housing authority is not a simple matter, and should only occur after full consideration of all obligations and contracts of the existing entity.
I hope this information is helpful. Please let me know if you have further questions or need more information.
Melissa A. Ashburn
MTAS Legal Consultant