Aguiar v. Hawaii Housing Authority
55 Haw. 478, 522 P.2d 1255, 1974 Haw. LEXIS 124 (1974)
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Rule of Law:
An agency's statements of general applicability that prescribe policy, such as setting income limits and rent schedules for public housing, are 'rules' that must be adopted in compliance with the state's Administrative Procedure Act. Furthermore, the Due Process Clause requires an agency to provide a pre-deprivation evidentiary hearing before increasing a public housing tenant's rent based on an individualized determination of 'overincome' status, as the tenant's interest in low-cost housing is a constitutionally protected property interest.
Facts:
- The plaintiffs were tenants in federally-funded public housing administered by the Hawaii Housing Authority (HHA).
- Each tenant signed a standard lease allowing the HHA to adjust rent based on changes in the tenant's income according to an 'established rent schedule.'
- In 1968 and on several other occasions, the HHA amended its 'Master Management Resolution' to establish new rent schemes and maximum income limits for continued occupancy.
- The HHA did not follow the public notice and hearing procedures required by the Hawaii Administrative Procedure Act (HAPA) when it adopted these amendments.
- Based on these improperly adopted amendments, the HHA determined that the plaintiffs' incomes exceeded the maximum allowed.
- The HHA sent each plaintiff a notice stating their lease would be terminated in six months and their rent would be substantially increased immediately.
- The HHA's procedures did not provide tenants with an opportunity for a hearing to contest the 'overincome' determination prior to the rent increase taking effect.
Procedural Posture:
- Several tenants in HHA housing (plaintiffs) filed an action in a state trial court against the Hawaii Housing Authority (defendant).
- The plaintiffs sought an injunction to prevent the HHA from evicting them or charging them increased rents.
- The trial court concluded that the HHA's amendments were 'rules' adopted without compliance with HAPA and were therefore invalid.
- The trial court also held that the plaintiffs were constitutionally entitled to an administrative hearing prior to any future rent increases or lease terminations based on overincome status.
- A judgment was entered in favor of the plaintiffs on December 1, 1972.
- The Hawaii Housing Authority, as appellant, appealed the trial court's judgment to the Supreme Court of Hawaii.
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Issue:
Does the Due Process Clause require the Hawaii Housing Authority to provide an adjudicatory hearing to public housing tenants before increasing their rent based on an individualized determination of 'overincome' status, and are the agency's regulations setting income limits and rent schedules 'rules' that must be adopted pursuant to the Hawaii Administrative Procedure Act?
Opinions:
Majority - Levinson, J.
Yes. The regulations are 'rules' that must comply with the Hawaii Administrative Procedure Act (HAPA), and due process requires a pre-deprivation hearing before increasing rent based on an individualized overincome determination. The HHA's amendments to its Master Management Resolution constitute 'rules' under HAPA because they are agency statements of general applicability and future effect that implement law and policy affecting the private rights of tenants. They are not merely matters of 'internal management,' and because they were not adopted pursuant to HAPA's procedures, they are invalid. Furthermore, a public housing tenant's statutory benefit of low-cost housing is a 'property' interest protected by the Due Process Clause. The potential for substantial deprivation from an erroneous rent increase outweighs the government's fiscal interest in prompt collection, thus mandating a pre-imposition evidentiary hearing. Any purported waiver of this right in the standard lease is ineffective, as the lease is a contract of adhesion signed by parties with grossly unequal bargaining power.
Analysis:
This decision solidifies the application of administrative procedure acts to public housing authorities, preventing them from sidestepping public input when setting fundamental policies like rent and eligibility. More importantly, it extends the due process protections established in Goldberg v. Kelly to the context of public housing rent increases, classifying the benefit of low-rent housing as a 'property' interest that cannot be diminished through individualized determinations without a prior hearing. The ruling strengthens tenants' procedural rights against government landlords and reinforces the principle that form contracts (leases of adhesion) cannot be used to waive fundamental constitutional rights, setting a precedent for requiring administrative hearings before adverse actions based on eligibility determinations.
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