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The Colorado Coalition for the Homeless v. General Services Administration

United States District Court, D. Colorado

July 1, 2019

THE COLORADO COALITION FOR THE HOMELESS, a Colorado Nonprofit Corporation, Plaintiff,
v.
GENERAL SERVICES ADMINISTRATION, and UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendants.

          ORDER AFFIRMING AGENCY DECISION

          William J. Martinez, United States District Judge.

         Plaintiff The Colorado Coalition for the Homeless (“Coalition”) seeks review under the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701 et seq., of a decision by Defendant United States Department of Health and Human Services (“HHS”) denying the Coalition's application to assume control of a surplus piece of federal property and convert it into a location providing shelter and other services to the homeless. The Coalition has also sued the General Services Administration (“GSA”), which has some oversight authority over the surplus property. However, GSA is only a marginal actor here and the Coalition currently asserts no arguments that GSA acted unlawfully. Accordingly, the Court will usually refer only to HHS below, rather than to a group designation such as “the Government” or “Defendants.”

         For the reasons explained below, the Court finds that HHS did not act arbitrarily, capriciously, or contrary to law when it denied the Coalition's application. The Court therefore affirms HHS's decision.

         I. LEGAL STANDARD

         The APA empowers a reviewing court to set aside agency action if it is, inter alia, “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). Generally, an agency decision will be considered arbitrary and capricious

if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). A reviewing court should engage in a “thorough, probing, in-depth review, ” Wyoming v. United States, 279 F.3d 1214, 1238 (10th Cir. 2002) (citation omitted), with its review of the merits “generally limited to . . . the administrative record, ” Custer Cnty. Action Assoc. v. Garvey, 256 F.3d 1024, 1027 n.1 (10th Cir. 2001).

         However, “[t]he scope of review under the ‘arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency.” Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43; see also Davis v. Mineta, 302 F.3d 1104, 1111 (10th Cir. 2002) (stating that the court's review is “highly deferential”), abrogated on other grounds by Diné Citizens Against Ruining Our Env't v. Jewell, 839 F.3d 1276 (10th Cir. 2016). The Court confines its review “to ascertaining whether the agency examined the relevant data and articulated a satisfactory explanation for its decision, including a rational connection between the facts found and the decision made.” Colo. Wild v. U.S. Forest Serv., 435 F.3d 1204, 1213 (10th Cir. 2006).

         II. STATUTORY BACKGROUND

         In 1987, Congress enacted the Stewart B. McKinney Homeless Assistance Act, Pub. L. No. 100-77, 101 Stat. 482 (codified at 42 U.S.C. §§ 11301 et seq.) (“McKinney Act” or “Act”).[1] Title V of the Act (42 U.S.C. §§ 11411-12) requires federal agencies to consider regularly whether “excess, ” “surplus, ” “unutilized, ” or “underutilized” federal properties are “suitable for use to assist the homeless.” 42 U.S.C. § 11411(a). As amended, the Act assigns to the Department of Housing and Urban Development (“HUD”) the responsibility to publish on its website a list of all excess, surplus, unutilized, and underutilized properties, and a list identifying which of those have been designated as suitable for homeless assistance. Id. § 11411(c)(1)(A).

         Upon such publication, a homeless assistance organization has thirty days to file a “written notice of intent to apply for such a property for use to assist the homeless.” Id. § 11411(d)(1)-(2). Or, if a homeless assistance organization disputes a government agency's finding that a particular property is not suitable, the organization may file “for review of [the unsuitability] determination” within twenty days. Id. § 11411(d)(3).

         As to properties deemed suitable, the application process (after submitting a notice of intent) has recently changed. Until late 2016, the McKinney Act stated that a party seeking to take over federal property was required to “submit a complete application” to HHS within ninety days “after submission of written notice of intent to apply for a property.” 42 U.S.C. § 11411(e)(2) (2012). HHS then had “25 days after receipt of a completed application” to decide whether to approve the application. Id. § 11411(e)(3).

         In December 2016, Congress enacted the Federal Assets Sale and Transfer Act (“FAST Act”), Pub. L. No. 114-287, 130 Stat. 1463. Among other things, the FAST Act amended the McKinney Act to create a two-step application procedure. See id. § 22(4). Homeless assistance providers must now file an “initial application” within seventy-five days of the notice of intent. 42 U.S.C. § 11411(e)(2)(A). This initial application must focus on “the services that will be offered, ” “the need for the services, ” and “the experience of the applicant that demonstrates the ability to provide the services.” Id. § 11411(e)(2)(B). HHS must approve or disapprove the initial application within ten days. Id. § 11411(e)(3).

         If HHS approves, the applicant has forty-five days “in which to provide a final application that sets forth a reasonable plan to finance the approved program.” Id. § 11411(e)(4). “No later than 15 days after receipt of the final application, ” HHS must “make a final determination.” Id. § 11411(e)(5). The McKinney Act contains no provision for an administrative appeal of HHS's final determination.

         III. FACTUAL & PROCEDURAL BACKGROUND

         A. The Property

         GSA owns and manages a 670-acre site in Lakewood, Colorado, known as the “Denver Federal Center.” See Colo. Coal. for Homeless v. Gen. Servs. Admin., 2018 WL 3109087, at *2 (D. Colo. June 25, 2018) (ECF No. 21) (“§ 705 Order”). “The northwest corner of the Denver Federal Center comprises a vacant 59-acre parcel commonly known as Federal Center Station because it is immediately adjacent to a bus and light rail station also known as Federal Center Station.” Id. The Court will refer to the 59-acre parcel simply as “the Property.”

         B. The Notice of Intent and the Application Packet

         In a notice dated October 6, 2017, HHS announced that the Property had been “determined suitable . . . for homeless use, ” and invited McKinney Act applications. (Administrative Record (ECF No. 27) (“R.”) at 130.)[2] Later that same day, the Coalition's president, Mr. John Parvensky, [3] submitted to HHS a letter of intent to apply for the Property. (R. at 1159.) On October 12, 2017, an HHS representative, Ms. Teresa Ritta, e-mailed Parvensky to acknowledge the Coalition's letter of intent, to provide application forms and instructions, and to establish deadlines. (R. 1157-58.) Also attached to the e-mail was a copy of 45 C.F.R., Part 12a, which governs applications such as the Coalition's. (Id. at 1157.)

         Ritta informed Parvensky that the Coalition's application would “initially [be] reviewed on the basis of four evaluation criteria: Services Offered, Need, Implementation Time, and Experience.” (Id.) These four criteria match the first four evaluation criteria (out of five total) listed in the applicable regulation. See 45 C.F.R. § 12a.9(e)(2)(i)-(iv). Alluding to the fifth regulatory criterion-“Financial Ability, ” id. § 12a.9(e)(2)(v)-or to the Fast Act (or both), Ritta then stated, “If HHS determines that the applicant [has] met [the first] four evaluation criteria, the applicant is given forty-five (45) days to present a final application containing a reasonable financial plan . . . .” (R. at 1157.)

         Ritta therefore directed Parvensky to an attached “application packet which contains instructions for completing an initial application to acquire surplus property. The applicant must complete all items of the application packet, excluding items 4. (B), 4. (C), 4. (D) and 4. (E), which pertain to the applicant's proposed financial plan.” (Id.) The excluded “items 4. (B), 4. (C), 4. (D) and 4. (E)” of the application packet called for detailed estimated costs to develop and operate the property, as well as information about ability to finance construction and operation. (R. 1174-75.) Ritta then recapitulated that, “[i]f HHS determines the applicant met the initial four review criteria, HHS will notify you by letter. At that time, the applicant will be given 45 days to submit a reasonable financial plan.” (R. at 1157.)

         The attached application instructions included the following warning:

Applications determined incomplete will either result in a disapproval of the application or a request for additional information. It is to the applicant's benefit to err on the side of providing too much information as opposed to omitting information or not providing enough detail. It is the applicant's responsibility to ensure their application presents all the information requested in a detailed and complete manner.

(R. at 1169.)

         C. The Initial Application

         On December 21, 2017, Parvensky submitted the Coalition's initial application. (R. at 140-797.) The Coalition's proposed “Phase One” project was “a campus of emergency shelter and transitional housing and services for homeless families and individuals using temporary structures constructed or placed on the site.” (R. at 148.)[4]

         On December 29, 2017, HHS sent Parvensky a letter requesting clarification or more specific information concerning numerous aspects of the initial application. (R. at 837.) Parvensky responded on January 12, 2018 (R. at 840), and HHS announced its initial approval in a letter to Parvensky dated January 23, 2018 (R. at 919). HHS therefore set a March 9, 2018 deadline (i.e., forty-five days out) for the Coalition to complete “Application Items 4B, 4C, 4D, and 4E [what the October 2017 letter referred to as ‘items 4. (B), 4. (C), 4. (D) and 4. (E)'] related to the ability to finance the development and operation of the approved program of use.” (Id.) Those application items read as follows:

(B) Detail the estimated costs anticipated to prepare the property for full utilization, including:
(1) Renoate;
(4) Funds availavations to existing facilities;
(2) Construction of new facilities; and
(3) Changes to the land areas (e.g. parking, recreational, open space).
* * *
(C) Detail the estimated costs anticipated to operate the program, including any maintenance costs.
(D) Give a full and complete statement of the ability to finance, operate, and maintain the property requested. Identify the source of funding for converting the property for its intended use, including any new improvements. Identify funding sources for program operation separately. Be sure to include the capital outlay budget and the following, if applicable:
(1) Special building funds;
(2) Undistributed reserve;
(3) Property tax rble for personnel and maintenance (include any expected volunteer resources, if applicable);
(5) Amount raised by taxation;
(6) State appropriation;
(7) Other (contracts, services, federal payments, fund-raisers, grants, etc.)
NOTE:
If the funding sources under “Other” are of a general nature, the application should provide details for each source listed under “Other”, including any past grants, uses of past grants, prior fund-raising activities, commitment letters, details of awards, etc.
* * *
(E) If the applicant contemplates that major construction/renovation is necessary to make the property suitable for full utilization, and funds are not currently available, give plans and proposed sources of funding to carry out the proposed program and development. Please include the estimated amount of funds each source will provide, including any anticipated grants.

(R. at 1174-75 (formatting in original).)

         D. The “Reasonable Plan to Finance” Portion ...


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