Full opinion text
MEMORANDUM MERHIGE, District Judge. Plaintiffs, low-income black residents of Greensville County, Virginia, bring this class action against the County, the members of the Board of Supervisors (“Board”) of the County in their individual and official capacities, and the Board’s tie breaker in his individual and official capacity alleging that the defendants’ veto of a proposed low-income housing development to be located in the County and to participate in the federal Section 8 Housing Assistance Payments program for rent subsidies for lower income families in new housing units under 42 U.S.C. § 1437f was violative of the Fair Housing Act, Title VIII of the Civil Rights Act of 1964, 42 U.S.C. §§ 3601 et seq., 42 U.S.C. § 1982, the thirteenth amendment, and the equal protection and due process clauses of the fourteenth amendment. Also present as plaintiffs are the two would-be developers of the housing project. The Virginia Housing Development Authority (“VHDA”) and the United States Department of Housing and Urban Development (“HUD”) were joined as defendants by the Court under Fed.R.Civ.P. Rule 19(a) to assure complete relief should the plaintiffs prevail. Plaintiffs’ statutory causes of action rest on 42 U.S.C. § 3612, 42 U.S.C. § 1981 and 42 U.S.C. § 1982. The Court’s jurisdiction over these claims vests pursuant to 28 U.S.C. §§ 1331 and 1343(3), and 42 U.S.C. § 3612. Their constitutional claims, based on 42 U.S.C. § 1983, are within this Court’s jurisdiction under 28 U.S.C. § 1343(3). Plaintiffs on behalf of the two classes they represent seek a court order declaring that Greensville County’s veto of the proposed project and the state statute allowing the veto, Va.Code § 36-55.39(B) (“Veto Statute”), to be null and void, prohibiting the County from vetoing the project, assuring Section 8 subsidies and construction financing for the housing complex, permanently enjoining the County from denying access to housing on the basis of race, color, religion, sex or national origin, directing the County to adopt a plan of housing assistance for families in need of rental assistance and to establish a mandatory fair housing educational program for all county officials involved in implementing the court order. The Court having heard the evidence, and argument of counsel, this memorandum as its findings of fact and conclusions of law. 1. Factual Background Plaintiffs Maurice Steingold and Simon Miller, developers of lower income housing (“S & M”), entered into a contract in early 1981 to purchase approximately 12 acres of land in Greensville County for $150,000. S&M planned to construct on the property a federally-subsidized, family rental housing project to be known as Emporia Heights. The proposed site is located on Route 58, east of the City of Emporia, Virginia and is situated near water and sewer facilities, municipal and social services, shopping, a hospital and potential employment. S&M applied for a mortgage construction loan from the VHDA envisioning that the residents of Emporia Heights would receive rental assistance payments under the Section 8 Housing Assistance Payments program of Section 8 of the United States Housing Act of 1937, 42 U.S.C. § 1437f. The named individual plaintiffs (“minority plaintiffs”) are black residents of Greens-ville County, currently paying more than 25% of their respective incomes in rent and living in homes without indoor plumbing, who would have eligible for Section 8 assistance in Emporia Heights! An examination of the financing system for projects similar to Emporia Heights is in order at this point. The VHDA, a political subdivision of the Commonwealth of Virginia, is authorized by Va.Code § 36-55.25 to encourage the investment of private capital in and stimulate the construction and rehabilitation of residential housing through public financing to meet the housing needs of persons of low and moderate income. The agency is empowered to make mortgage loans, insure mortgage loans, borrow money, issue bonds, enter agreements with federal and state governments and administer federal loan programs. Va.Code § 36-55.30. VHDA may pursuant to Va.Code § 36-55.30(10) accept “rent supplement payments made on behalf of eligible persons or families or for the payment in whole or in part of the interest expense for a housing development ...,” which would include rental assistance payments provided by the federal government under the Section 8 program. Under the Section 8 program, the Secretary of HUD is authorized to make rental assistance payments with respect to existing (“Section 8 Existing”), newly constructed (“Section 8 New”) and substantially rehabilitated (“Section 8 Substantial Rehabilitation”) housing “[f]or the purpose of aiding lower-income families in obtaining a decent place to live and of promoting economically mixed housing ... . ” 42 U.S.C. § 1437f(a). Generally, families whose incomes do not exceed 80% of the median income for the area as determined by HUD and who pay between 15% and 25% of their income for rent and utilities are eligible for this rental assistance. 24 C.F.R. §§ 883.-101(c) and § 889.102. Section 8 subsidies are available in connection with financing by the Farmers Home Administration (“FmHA”), or directly from HUD field offices for newly constructed housing, substantially rehabilitated housing, existing or moderately rehabilitated housing, for elderly housing in conjunction with direct HUD loans, and for existing HUD-insured and HUD-held housing. See 24 C.F.R. § 883.101(a)(2). Another line of access to Section 8 assistance, and the one most relevant to this action, is through statewide or special purpose housing agencies, like the VHDA, established by the various states. See 24 C.F.R. § 883.101(a)(1). The Section 8 program provides only rental assistance, not construction or permanent financing. Rather, it is the responsibility of the agency participating in the program to arrange the financing for newly constructed or substantially rehabilitated housing, and of the owner to finance moderately rehabilitated housing. 24 C.F.R. § 883.101(e). The Section 8 Substantial Rehabilitation program provides certain rent subsidies for eligible families residing in housing improved to "decent, safe and sanitary condition in accordance with [standards set in the agreement among the state agency, HUD and the developer or owner] from a condition below those standards.” 24 C.F.R. § 881.201. The Section 8 Existing program provides rental assistance payments for residents of approved existing housing projects or to holders of a Certificate of Family Participation, a family declared eligible to participate in the program by a state or local public housing entity or body, who selects a suitable dwelling unit. 24 C.F.R. §§ 882.-' 102, 882.103. Housing qualifies as “existing” housing, however, only if it meets the standards of decency, safety and sanitation set by HUD in 24 C.F.R. § 882.109, which require, inter alia, hot and cold running water, a flush toilet, certain kitchen facilities, the presence of a living room, kitchen, bathroom and at least one sleeping area for every two persons, lockable doors and windows, safe heating and/or cooling facilities, electricity, adequate illumination, and other structural and material characteristics. 24 C.F.R. §§ 882, 101(a)(2), 882.102, 882.109. Special procedures are provided in 24 C.F.R. Part 882, Subparts D and E for assistance payments to eligible residents of moderately rehabilitated units, i.e., rehabilitation which involves a minimum expenditure of $1,000 for a unit for “modest” improvements needed to comply with the housing quality standards. 24 C.F.R. § 882.402. S & M sought coverage for Emporia Heights under the Section 8 New program, which provides rent subsidies for residents of newly constructed housing units. 24 C.F.R. Part 880. Under the state agency method of distributing Section 8 New rental subsidies in Virginia, HUD, through the VHDA, enters into an agreement to join a housing assistance payments contract with the private developer of the new housing project. HUD assistance payments, which amount to the difference between the total contract rent for the unit and the rent paid by the tenant, which in turn is determined by a certain portion of his income, are funneled through the VHDA directly to the owner of the project. 24 C.F.R. §§ 101(b); 883.302, 883.602. Each fiscal year, HUD Section 8 New rental assistance funds, in the form of “contract authority,” are allocated by HUD Central in Washington, D. C. among HUD, the VHDA and FmHA. HUD Central apportions the authority for rent subsidies to its regional offices, including the Philadelphia Office of Region III, on a “fair share” formula reflecting population, poverty, overcrowding, housing condition and similar indices of housing need. The Region III Philadelphia office in turn suballocates this authority in December or January of each year to the area HUD offices, including the area office in Richmond, Virginia (“HUD-Richmond”). HUD-Richmond then develops a plan to allocate this contract authority in various market areas throughout the state of Virginia on essentially the same fair share basis, using Housing Assistance Plans (“HAPS”) submitted by various localities and an economist’s percentage distribution according to housing needs. This apportionment rests generally within HUD’s discretion, although the VHDA is usually asked whether or not it has a particular project in a certain area which could use the funds. In rural or “non-metro” areas, VHDA normally tries to serve areas, such as Greensville County, which have not previously had a federally-subsidized rental assisted housing project. VHDA receives from HUD a “set-aside” consisting of its contract authority, or its specific expenditures for that fiscal year, and its budget authority, i.e., the extended authority against the contract authority, or the total amount of rental subsidy to be available over the term of the mortgage loan for the project, which is frequently between 25 and 30 years. Notice of the size of its set-aside each year reaches the VHDA informally in November or December, and formally in January. Periodically during the fiscal year, statements of the status of VHDA’s contract authority are sent by HUD to the agency on a Form 185.1, which indicates the authority allocated to date along with that which remains. Once VHDA receives the official notice of its HUD set-aside, it places advertisements in major newspapers throughout Virginia requesting proposals to use the set-aside and specifying a submission period for such proposals. Also considered are projects previously submitted to VHDA by developers but not yet funded which lie “in the pipeline” for funds as they become available. Developers who inquire regarding possible locations of projects are advised of localities yet “unserved” by the Section 8 program. After the end of the submission period, VHDA reviews the project proposals received arid already in the pipeline to select those to be funded that fiscal year. Before the VHDA can finance any housing development undertaken by a housing sponsor, Va.Code § 36-55.39 A requires that it find: (1) That there exists a shortage of decent, safe and sanitary housing at rentals or prices which persons and families of low income or moderate income can afford within, the general housing market area to be served by the proposed housing development. (2) That private enterprise and investment have been unable, without assistance, to provide the needed decent, safe and sanitary housing at rentals or prices which persons or families of low and moderate income can afford or to provide sufficient mortgage financing for residential housing for occupancy by such persons or families. (3) That the housing sponsor or sponsors undertaking the proposed housing development in this Commonwealth will supply well-planned, well-designed housing for persons or families of low and moderate income and that such sponsors are financially responsible. (4) That the housing development, to be assisted pursuant to the provisions of this chapter, will be of public use and will provide a public benefit. (5) That the housing development will be undertaken within the authority conferred by this chapter upon [VHDA] and the housing sponsor or sponsors. Trained VHDA personnel review the project proposals in the geographic areas to receive funding and examine the site, the market, the availability of transportation, the project design, the experience of the developer, environmental impact, racial impact, and whether or not the area represents an unserved need. The favored projects then get “approved for further processing,” meaning that the initial selection is tentative and examination of the project continues throughout the process. The 1978 amendment to Va.Code § 36-55.39 which sparked the instant controversy requires that VHDA, before it can finance a housing project, shall also find, in connection with the financing of the new construction or substantial rehabilitation of any proposed multi-family residential housing development, that the governing body of the locality in which such housing development is to be located has not, within sixty days after written notification of the proposed financing has been sent the governing body by [VHDA], certified to [VHDA] in writing its disapproval of the proposed multi-family residential housing development. Va.Code § 36-55.39 B. VHDA normally sends the 60-day letter called for by the veto statute to the locality at the time a project is “approved for further processing.” After the initial selection of a project, it is presented to the VHDA mortgage loan committee to be accepted formally for processing. At the completion of the underwriting process, it is again reviewed by the mortgage loan committee to be recommended to the VHDA Board of Commissioners for issuance of a mortgage loan commitment. This process usually takes four to six months. VHDA obtains the construction financing in a separate procedure for floating bond issues. The agency’s general policy is to go to the bond market with all its set-asides for a single issue for that year’s projects, and to attempt to obtain the lowest interest rate possible. Thus, VHDA selects the projects it desires to fund and, after the preliminary approval for further processing, submits them to HUD as requests for “reservations” of its rental assistance set-aside under the Section 8 New program. The choice belongs to VHDA, for HUD’s review of the projects is merely a technical one. See 24 C.F.R. § 883.102(a). Although HUD is charged with the duty to make an independent determination that the proposed project is consistent with the field office allocation plan, the addition of the units will not adversely affect occupancy in existing federally-assisted projects, the state agency meets all equal opportunity requirements in the operation of its programs, and that the project complies with 24 C.F.R. part 891 guidelines on housing need, its review involves no discretionary exercise of judgment or substantive examination, but more closely resembles an audit or technical compliance review. HUD has no authority to make a reservation against VHDA’s contract authority in the absence of a proposal submitted to it by the agency. Further, the Court finds that unavailability of HUD rental subsidies in the form of VHDA contract authority effectively aborts a proposed VHDA-financed Section 8 new construction housing project, despite the availability of long-term construction financing through the VHDA. Two additional means by which contract authority may become available for housing projects not initially selected by VHDA for development deserve mention here. First, the Secretary of HUD has in the past retained in HUD Central 20% of all the funds appropriated by Congress for Section 8 programs in the form of a Central Office Reserve, or, as it is colloquially known, a Secretary’s Discretionary Fund. The balance of Section 8 funds is distributed from HUD Central throughout the country through the regular process described above. The Discretionary Fund can be used for various purposes. It may be made available to a state agency, like VHDA, near the end of the fiscal year to provide contract authority for additional projects. Theoretically, a state agency may request the use of the Fund during the year to meet a special need. Issuance of contract authority to VHDA through HUD-Richmond is reflected in a Form 185.1 from the Philadelphia Region III office in the usual fashion. For example, a September 9, 1981 Form 185.1 indicated a $473,000 increase in VHDA’s Section 8 New contract authority. As with the majority of allocations from the Discretionary Fund, this authority came earmarked for a particular purpose, the construction of an 88-unit project in Warren-ton, Virginia known as Warrenton Manor. The criteria for selection of projects to be funded from the Discretionary Fund, and the specifics of the procedure for gaining access to the Fund, are somewhat ambiguous. For the period before September 30, 1981, the applicable' regulation provided that the reserve was to be used for unforeseeable housing needs, such as those caused by natural disaster or relocation requirements, activities designed to meet lower-income housing needs described in HAPS submitted by local governments, housing in new communities, alternative or innovative methods for meeting housing needs, and to satisfy the needs of community development block grant recipients. 24 C.F.R. § 891.403(b). For fiscal years beginning after September 30, 1981, the possible uses have been narrowed to some degree to include unforeseeable housing needs, the needs of the handicapped or to support minority enterprise, provide for litigation settlements, fund small research and demonstration projects, and to fund HAP needs and innovative plans. At his deposition, R. Carter Sanders, a HUD Associate General Deputy Assistant Secretary, was either unable to or unwilling to detail the exact steps necessary before September 30, 1981 to secure authority from the Discretionary Fund for a proposed development. The net result of Sanders’ testimony is that an erstwhile developer can apply directly to an area or regional office of HUD, HUD-Central, or through the state agency for authority from the Fund. According to Sam Schull, Deputy Director for Development in HUD’s Housing Division, HUD personnel are under the assumption that access to the Discretionary Fund is gained through some sort of political or other influence by “pulling strings.” Second, at various unpredictable times throughout the fiscal year, contract and budget authority reserved for a particular project becomes available for reallocation because the project never reaches fruition. Occasionally, an approved project aborts because excess costs or some subsurface soil anomaly renders it unfeasible, the owner decides to abandon the project, or for other possible reasons. The authority originally reserved for such a project is “recaptured” and reverts to the HUD area office. The VHDA may then review the projects in its pipeline to recommend one to HUD for reuse of the recaptured authority, but the final decision on whether the project will receive a reservation rests with HUD. It is even possible that HUD will decide to retain the recapture for use in another year and not to fund a project currently. HUD will not assign recaptured authority to a project disapproved of by a locality under the veto statute, for the project is not viable in the absence of VHDA construction financing. Nor does a vetoed project remain in the VHDA pipeline for any future consideration whatsoever. On January 15, 1981, VHDA and HUD-Richmond were notified that the contract authority set-aside from VHDA for the fiscal year 1981 amounted to $4,213,000. This subsidy was allocated under the fair share formula between metropolitan and non-metropolitan projects and among the various geographic housing areas into which Virginia is divided by HUD. VHDA calculated the amount of financing necessary to fund housing projects to use fully this contract authority, and began to advertise for sponsors. Approximately 150 applicants responded, of which 30 were for Greensville County. S & M submitted the Emporia Heights application for financing and Section 8 subsidies for 150 units in February, 1981. VHDA then began its review of the applications to select those most deserving of the limited funds at its disposal. During the process, in March, 1981, VHDA was notified by HUD that because of federal budgetary reductions, the agency was likely to receive only 50% of the set aside originally allocated to it. Nonetheless, on April 21, 1981, VHDA selected “for further processing” eleven proposed projects, funding for which exceeded 50% of original authority, for HUD review and approval. Empo-ria Heights, scaled down to 74 units, was within this group of eleven. The project was selected because Greensville County represented an unserved need, the site was acceptable, and because of S & M’s experience and reputation in the field. Also on April 21, 1981, VHDA sent to Charles Sabo, Chairman of the Board of Supervisors of Greensville County, the 60-day letter called for by Va.Code § 36-55.39 B. The Court finds that in April VHDA forwarded all eleven projects to HUD for review, but listed seven as being of top priority, and four as good but not of such priority. This ranking was based on VHDA’s awareness of the level of local political support for the project, which the agency used as a barometer of the likelihood that the project would go forward to completion. If local support was known, either because of approval by the local governing body or from informal indications from that body, VHDA listed the project within the top priority group. Absence of any evidence of local support caused a project to be listed in the non-priority class. Emporia Heights was placed in the non-priority group, despite the lack of any contact between VHDA and Greens-ville County at the time the list was sent to HUD in April, 1981. The seven prioritized projects eventually received HUD approval and were subsidized out of VHDA’s 1981 set-aside. They were the only projects so funded through HUD-Richmond that year. Of these only four were, like the Emporia Heights proposal, family units in a non-metropolitan area. Then, on May 19, 1981, the Greensville Board of Supervisors met to consider the 60-day letter and the Emporia Heights proposal. A motion to disapprove of the project and to pursue instead Section 8 Existing. and Moderate Rehabilitation rental assistance resulted in a tie. A separate motion to pursue the Section 8 Existing and Moderate Rehabilitation program passed unanimously. The Board’s tie-breaker, Williani Robinson, appeared at a June 1, 1981 meeting but concluded that he lacked sufficient information to cast hi's vote. Robinson subsequently met with S & M and with a local realtor who supported the Em-poria Heights project, and at a June 16, 1981 meeting of the Board voted to disapprove of the project. In a letter dated July 17, 1981, the County’s Planning Director, K. David Whittington, communicated the Board’s veto of the project to HUD-Richmond. Meanwhile, VHDA was learning further about the extent of the reductions in the Section 8 New budget for the 1981 fiscal year. In a June 4, 1981 meeting of Larkin Goshorn, the VHDA Director of Multi-Fam-ily Development, VHDA Executive Director John Ritchie, and a HUD representative, VHDA was informed that the cutback amounted to 40% of the original set-aside, rather than 50%. As previously noted, the seven priority projects eventually consumed the total contract authority available to the VHDA for the fiscal year 1981, and the agency received no additional set-aside during the remainder of the year. A July 14, 1981 Form 185.1 confirmed the reduction in VHDA’s contract authority to $3,147,000. Although the year-end statement of Section 8 funding through HUD-Richmond shows that during the year VHDA was assigned total contract authority of $4,395,000, all the authority above the agency’s total set-aside of $3,147,000 came from the Secretary’s Discretionary Fund earmarked by HUD for specific projects, and could not be assigned by VHDA to other projects. Thus, even if the County’s June 16 veto of the Emporia Heights project had not occurred, the development would never have received Section 8 New contract authority through VHDA out of the agency’s set-aside, for there was no contract authority available. The project’s fate was sealed once it was not listed as one of the seven prioritized projects presented to HUD by VHDA in its original April selection of projects for reservation of contract authority. This fact becomes important in consideration of the impact of the County’s veto. Plaintiffs have shown that certain projects not listed in VHDA’s favored seven eventually received Section 8 New authority, but did so through access to the Secretary’s Discretionary Fund. Thus, the County’s veto was not totally devoid of any effect. The speculative nature of the inquiry into whether Emporia Heights might have received authority out of the Discretionary Fund does, however, weaken plaintiffs’ damages claim. II. The Veto Statute as Applied by Greensville County The developer plaintiffs, S & M, the minority plaintiffs and the class of lower income minority persons resident in Greens-ville County raise several challenges to the Board of Supervisors’ application of the veto statute by disapproving of the Empo-ria Heights proposal. A. The Fair Housing Act Plaintiffs contend that the County’s veto of the Emporia Heights project contravened the policy and requirements of §§ 804, 808 and 817 of the Fair Housing Act, 42 U.S.C. §§ 3604, 3608 and 3617 They have provided no explanation of the applicable rules under these respective sections of the Act, or of how they differ or interrelate. The Court is of the view that in this action, where the same conduct by the same set of defendants is alleged to violate §§ 3604, 3608 and 3617, the validity of the § 3608 and § 3617 claims depend on whether the defendants’ veto of the proposed development ran afoul of § 3604. Metropolitan Housing Development Corp. v. Village of Arlington Heights, 558 F.2d 1283, 1288 n.5 (7th Cir. 1977), cert, denied, 434 U.S. 1025, 98 S.Ct. 752, 54 L.Ed.2d 772 (1978) (“Arlington Heights IT) (§ 3617). See United States v. City of Black Jack, Missouri, 508 F.2d 1179 (8th Cir. 1974), cert, denied, 422 U.S. 1042, 95 S.Ct. 2656, 45 L.Ed.2d 694 (1975) (§ 3617); United States v. American Institute of Real Estate Appraisers, 442 F.Supp. 1072 (N.D.Ill.1977), appeal dismissed, 590 F.2d 242 (7th Cir. 1978) (§ 3617). Plaintiffs have failed to articulate any theory under which the duty imposed on HUD by § 3608, and possibly also upon local housing authorities, falls as well upon the County of Greensville and its Board of Supervisors. Since the Court is unable to conceive of any rationale for applying § 3608 to the County, the § 3608 count against it will be given no further consideration. The Congressional purpose in enacting the Fair Housing Act was “to provide, within constitutional limitations, for fair housing throughout the United States.” 42 U.S.C. § 3601. Although proof of a discriminatory intent is a prerequisite to a finding of a violation of the equal protection clause of the fourteenth amendment, Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977) (“Arlington Heights I”), a breach of § 3604 can be established, under certain circumstances, by a showing of discriminatory effect without proof of a discriminatory motive. Smith v. Town of Clarkton, North Carolina, 682 F.2d 1055 (4th Cir. 1982); Robinson v. 12 Lofts Realty, Inc., 610 F.2d 1032 (2nd Cir. 1979); Arlington Heights, II, supra; United States v. Mitchell, 580 F.2d 789 (5th Cir. 1978); Resident Advisory Board v. Rizzo, 564 F.2d 126 (3rd Cir. 1977), cert, denied, 435 U.S. 908, 98 S.Ct. 1457, 55 L.Ed.2d 499 (1978); Smith v. Anchor Building Corp., 536 F.2d 231 (8th Cir. 1976); United States v. City of Black Jack, Missouri, supra. The plaintiffs in Arlington Heights 71, a would-be developer and several prospective tenants of a low and moderate income housing project planned for the Village of Arlington Heights, sought to compel the town to rezone the proposed site to permit construction of the multi-family project. The court ruled that the Village’s refusal to rezone the property had a disproportionately adverse impact upon the area’s black residents, because a greater number of black people than white in the area satisfied the income requirements for federally-subsidized housing, and because the Village’s population was almost totally white and the preclusion of the housing project prevented achieving the racially integrative effect of locating the development in that area. The Court refused, however, to conclude that every action which produces some discriminatory effect is thereby illegal under the Fair Housing Act. Ruling that courts are instead to use their discretion in deciding whether relief is warranted under the particular circumstances of each case, the court used four critical factors to determine whether a violation of the Act has occurred: (1) how strong is the plaintiff’s showing of discriminatory effect; (2) is there some evidence of discriminatory intent, though possibly not enough to satisfy the constitutional standard of Washington v. Davis, 426 U.S. 229, 96 S.Ct. 2040, 48 L.Ed.2d 597 (1976); (3) what is the defendant’s interest in taking the action complained of, and (4) does the plaintiff seek to compel the defendant affirmatively to provide housing for members of minority groups or merely to restrain the defendant from interfering with individual property owners who wish to provide such housing. 558 F.2d at 1290. The Court of Appeals for the Fourth Circuit adopted this exact analysis in Smith v. Town of Clarkton, North Carolina, supra, where a black resident of Bladen County, in which Clarkton was located, contended that Clarkton’s withdrawal from a multi-municipality housing authority formed with two neighboring towns, which effectively blocked the construction of a federally-subsidized low-income housing project in the county, was racially motivated in violation of the fourteenth amendment and produced racially disparate effects unlawful under the Fair Housing Act. Plaintiffs have succeeded in this action in showing that the County’s veto of the Emporia Heights project generated a racially discriminatory impact. The court in Arlington Heights II identified two types of discriminatory effects which can be produced by a facially neutral housing decision. First, the decision may have a greater adverse impact on one racial group than on another. Second, the decision may have a pejorative effect on the community involved by perpetuating existing patterns of segregation and preventing interracial association. 558 F.2d at 1290. The first type of impact is established largely through the use of population, income and housing statistics for the affected area. The Village’s refusal to rezone in Arlington Heights II had a disproportionately adverse impact on blacks than on whites because a greater number of blacks than whites satisfied the income requirements for federally subsidized housing. In Smith v. Town of Clarkton, supra, the Court of Appeals for the Fourth Circuit reached a similar conclusion, using somewhat different statistics. It noted that 56% of all poverty level families in the county were black, 69.2% of all black families in the county were eligible for low income housing while only 26% of the white population was so qualified, 60% of the substandard housing in the county was black-occupied, and the per capita income of blacks averaged $1,722, compared to $3,206 countywide, all of which showed that the black population was most in need of new construction to replace substandard housing. It is undisputed that there is an overwhelming need for improved housing in Greensville County, which has the lowest per capita income of any county in the state. Further, the Court finds that the existence of substandard housing, and therefore the need for newly constructed or otherwise improved housing, is concentrated disproportionately among the blacks of the County. The County was 57.3% black in 1970 and 56.6% black in 1980. The 1979 median income for all families in the County was $5,883, while the median black family income was $4,302 or 73% of the countywide median. In 1979, per capita income in the County was $1,546, but for blacks it was only $994, or 64.3% of the level for the general population. Also, 29.6% of all Greensville County families were below the poverty level in 1969, but 49.1% of black families were so situated. Thus, 78.8% of all families below the poverty level were black. The HAP prepared by the County in connection with its Community Development Block Grant (“CDBG”) application in 1980 reveals that 83.9% of the 1019 low-income families designated as needy of housing assistance were black and 94.4% of the 535 renter households needing housing assistance were black. Plaintiffs demonstrated that 72.6% of all black-occupied housing units in the County lack some or all plumbing facilities and 62.7% of the black units lacked running water entirely. Moreover, of all the units in the County which lack some or all plumbing facilities, 83.8% are black-occupied, while only 16.2% are occupied by whites. Of all the housing units in the County which are overcrowded, i.e., containing more than 1.1 persons per room, 80% of them are black-occupied. Northwoods Village Apartments, a Section 8 New project located in the City of Emporia, has over 400 households on the waiting list. Of these, all but eight are black. This picture of the housing and income characteristics of the County’s population reveal that the County’s black residents are those most in need of improved, low-income housing and thus are disproportionately adversely affected by any decision by the County which hampers the development of such housing. The County’s assertion that’there is “no showing in the record ... that [the veto affects] low-income minorities to any greater extent than low-income whites” is patently erroneous. The Court also finds that white and black households in the County are grouped along racial lines, and continue to reflect the segregated patterns enforced by the County by law in earlier years. The closest populated area to the proposed Emporia Heights site is a predominantly white residential area of the City of Emporia. Locating the development on that site would have achieved this beneficial integrative effect. It is appropriate at this juncture to address the County’s argument that the Board’s veto of the Emporia Heights proposal was a mere act of futility, totally devoid of any impact, discriminatory or otherwise, because by the time of the June 16 veto all of the VHDA set-aside from HUD for the 1981 fiscal year had been allocated to seven other projects. From this, the County maintains that Emporia Heights would never have been funded even without the veto, since no further authority was forthcoming from HUD and the project could not be developed in the absence of Section 8 rental subsidies. The Court has found that by June 4, 1981, VHDA had learned of the reductions in its set-aside and of its inability to fund all the projects in the state it had originally proved. It is correct that by the time of the Board’s veto, which would preclude VHDA from providing the construction financing for .Emporia Heights, the project had been effectively aborted by rescission in HUD’s 1981 budget. Thus, the Board’s disapproval did not have the obvious direct effect of precluding a viable low-income housing development which, but for the veto, would have been built. Nonetheless, the Court is convinced that the veto had an impact. Its impact was primarily prospective, in that it placed an immovable obstacle in the way of VHDA construction financing for Emporia Heights. VHDA officials were optimistic that despite the HUD reductions, additional authority might be available from the Secretary’s Discretionary Fund, and developers with projects pending were urged to “call their congressman ...” to seek funds from the “Secretary’s Discretionary pot.” The would-be developers of Emporia Heights were precluded from attempting to tap that source of funds by VHDA’s inability to participate further. Also, the veto removed the Emporia Heights proposal from VHDA’s pipeline, which made it ineligible to receive any recaptured authority which might have arisen during the remainder of 1981 or might surface at any time in the future. Absence from the pipeline also means that the project will not be considered in future fiscal years for reservation from the VHDA’s yearly set-aside. Clearly, however, the possibility that funding could have been arranged from the Discretionary fund, or that recapture or reservation will be available in the future, is all highly speculative. This may weaken the force of the effect of the veto under the first of the four Arlington Heights II critical factors. Nonetheless, the Court holds that the veto had some impact, and that that impact was discriminatory in nature. Thus, the Court must proceed to analyze the four critical factors to determine whether a violation of the Fair Housing Act indeed occurred. 1. Type of Impact: As the Court has noted, the adverse impact of the Board’s veto fell more heavily on the black population of Greensville County, for it is the group most in need of new construction to replace substandard housing, and it has the highest percentage of presumptively eligible applicants. See Smith v. Town of Clarkton, supra. The Arlington Heights II court concluded that this sort of discriminatory effect was weakened, in that case, because while the Village’s refusal to rezone had an adverse impact on a greater percentage of the nonwhite people in the Chicago area than of the white people in the area, it was also true that the class harmed by the decision was not predominantly nonwhite, as 60% of those people in the area eligible for federal housing subsidization were- white. The court contrasted those statistics with the situation in Rizzo, supra, where 95% of the persons on the waiting list in the subject area were members of minority groups. 558 F.2d at 1291. The circumstances of the instant action resemble more closely those of Rizzo than of Arlington Heights II. Blacks reside in 83.8% of the units in the County lacking some or all plumbing facilities. Of those families designated by the County as needy of housing assistance, 83.9% are black, while 94.4% of the renter households needing assistance are black. Thus the class injured by the Board’s veto was predominantly black. This aspect of the impact factor favors the plaintiffs, but it must be remembered that the effect of the veto is weakened somewhat by the speculative nature of whether the project would have ever received HUD funding without the veto. The Court has also found that the construction of Emporia Heights would have had a racially integrative effect. In Arlington Heights II, the court was unable to assess the weight to be given this aspect of the impact analysis, for the record was unclear on whether there were other sites within the Village on which the town had no objection to the construction of low-cost housing projects. 558 F.2d at 1291. Empo-ria Heights would not have been located in an overwhelmingly white area, for nearby to the northwest is a predominantly black residential part of the City of Emporia. It does appear, however, that the chances of development of any such project at any location in the County are very dim. The Board blocked construction of other proposed low-income, federally-funded or federally-subsidized housing projects in January, 1971, December, 1971, and March, 1981. At its December 9, 1971 meeting, the Board passed a resolution that it “go on record as opposing this type housing.” When it disapproved of the Emporia Heights proposal, the Board voted to pursue instead the Section 8 Existing and Moderate Rehabilitation programs, and has defended the veto in this cause by pointing to this policy. These Section 8 programs, however, would tend to reinforce existing patterns of racial segregation, for the only units in the County suitable for participation in the program are in the Washington Park community, which is entirely black. The Court concludes that the Board’s veto did tend to perpetuate segregated housing in the County, but again this effect is weakened by the doubt regarding the availability of HUD funding absent the veto. On the whole, however, the impact factor tips in favor of the plaintiffs. 2. Racial Intent: Arlington Heights II labeled the presence of some evidence of racial intent factor the least important of the four to be considered. 558 F.2d at 1292. Proof of racial bias is extremely difficult, for “[a]s overly bigoted behavior has become more unfashionable, evidence of intent has be•come harder to find.” Arlington Heights II, supra, 558 F.2d at 1290. Moreover, efforts to discern the intent of an entity such as a county or municipality are inherently problematic. Id. “Determining whether invidious discriminatory purpose was a motivating factor demands a sensitive inquiry into such circumstantial and direct evidence of intent as may be available.” Arlington Heights I, supra, 429 U.S. at 266, 97 S.Ct. at 563. Fair Housing Act plaintiffs do not have to establish that race was the sole, or the primary, motivation for the action complained of. Nor is such a high level of proof even required to make out a constitutional violation, which can be found if “a discriminatory purpose has been a motivating factor in the decision,” or was a “competing consideration ...” in the process which led to the decision. Arlington Heights I, supra, 429 U.S. at 265-66, 97 S.Ct. at 563. See Smith v. Town of Clark-ton, supra; United States v. City of Parma, Ohio, 661 F.2d 562, 575 (6th Cir. 1981), cert. denied, - U.S. -, 102 S.Ct. 1972, 72 L.Ed.2d 441 (1982); United States v. Mitchell, supra, 580 F.2d at 791. Plaintiffs have produced no direct evidence of a racial animus behind the Board’s veto. Thus, the Court must analyze the circumstantial evidence surrounding the Board’s vote to determine if a racially discriminatory intent may be inferred. The Court will proceed also to assess the evidence at this point to ascertain whether it rises to the level of a constitutional violation, and if not, whether there is sufficient suggestion of some racial motive to cause this factor to favor the plaintiffs under the Arlington Heights II Fair Housing Act analysis. In Arlington Heights I, the Court identified six factors to be considered in an effort to glean a discriminatory purpose from a defendant’s conduct: (1) the discriminatory impact of the official action; (2) the historical background of the decision; (3) the “specific sequence of events leading up to the challenged decision;” (4) departures from the “normal procedural sequence ...;” (5) departures from normal substantive criteria; and (6) the legislative or administrative history of the decision. 429 U.S. at 266-68, 97 S.Ct. at 563-565. See Resident Advisory Board v. Rizzo, supra, 564 F.2d at 143. The Court has previously determined that the black residents of the County will disproportionately suffer from the Board’s veto and the impact of the decision falls more heavily on them than on the white population in the County. See Smith v. Town of Clarkton, supra. The Arlington Heights I Court noted that the historical background of a decision is particularly relevant “if it reveals a series of official actions taken for invidious purposes.” 429 U.S. at 267,97 S.Ct. at 564. As noted earlier, since 1970, the County has blocked three other proposed low income housing projects in the County. In 1971, the Board went on record as “opposing this type housing.” At a March 17, 1981 meeting of the Board, Supervisor Woodruff, who voted against the Emporia Heights proposal, stated his opposition to low-income housing as follows: Mr. Chairman, in the past I thought the Board in the past has been against low-income housing. I personally am against low-income housing. I look at it as being in some cases an asset to begin with, but then in some ... many cases a real liability in a few years to come and I just, I don’t, I have a problem with giving people something for nothing and I don’t think you make them better citizens. I think ..., but I think everybody ought to know what it is to pay and if not then they have to take some of the other things for less. I mean there’s no point, I know some cases where people living in apartments and buildings better than they ever/lived in their life, better than their forefathers lived in, yet don’t do anything. I know a lot of country homes out here, some of them tenant houses that were or either country homes that you’ve seen go down to nothing. Yet, people could have lived in these houses. I just have a real problem with low-income housing and what’s been the record over the years in other areas where they were built. I read an article just recently on that and they were saying that where somebody was being sued because they didn’t want to get into that type thing and by that they were discriminating and yet they, these type people would tear the project all to pieces. They didn’t want to rent to them. So that’s where I have some problems at. I’ve read too many things and places where the people were put in there and given these things, pay nothing, end up stealing the plumbing out of them and everything else, you know, I just. In other words, they were an asset but became a liability. Although there is no direct evidence of a racial basis for Woodruff’s position on low-income housing, the Court is of the view that against the background of the overwhelming need for such housing in the County and the County’s stated policy, these statements may be interpreted as “camouflaged” racial expressions. See Smith v. Town of Clarkton, supra. Also, despite the County’s recognition of the need for improved housing within the borders, its statement in its May, 1980 HAP submitted to HUD in its CDBG application that it would “actively seek available federal, State and local funding to facilitate the provision of assisted housing in rural areas and keep low and moderate-income persons informed of available assistance,” and the July 14, 1980 offer by Steven Player, who administers such programs in a comparable rural county in North Carolina, to assist Greensville in developing similar assistance programs, the County currently has no rental subsidy programs. Although the Court is unable on the present record to conclude that the County has taken a “series of official actions ... for invidious purposes,” it does appear that the County policy rests on a deep-seated opposition to rental assistance programs, and that at least some racial overtones cloud the County’s experience with low-income housing proposals. The specific sequence of events which led up to the Board’s veto of the Emporia Heights development has been outlined by the Court. In Arlington Heights I, the Supreme Court hypothesized that a locality’s sudden change in the zoning classification of a tract of property from multi-family residential to one which would preclude construction of a low-income project upon learning of plans to erect such housing would provide strong evidence of racial motive. 429 U.S. at 267, 97 S.Ct. at 564. The instant plaintiffs have failed to suggest any peculiarities in the chronology of the Board’s actions relative to Emporia Heights, standing alone, which cast suspicion on its motives. Nor were there any deviations by the Board from its normal procedures for considering low-income housing proposals. The court in Smith” v. Town of Clarkton, supra, found significant an “opinion poll” conducted by town officials for the first time in Clarkton’s history immediately after expressions of racial opposition to the building of public housing units had surfaced within the community. Also important were Clarkton’s sequential withdrawal from participation in the housing project and recommended discharge of housing authority personnel based solely on the negative results of the poll. No analogous procedural irregularities occurred in this action. The Board considered the Emporia Heights proposal in its usual fashion, called in the tiebreaker, and voted on the matter according to its ordinary rules of business. Plaintiffs claim that the veto statute itself represents a departure from procedural norms, since it fails to specify standards to govern the locality’s decision and only low-income housing financed through VHDA faces the possibility of veto. This argument, however, sheds little light on the Board’s purpose in vetoing the proposed development. The Arlington Heights I Court indicated that substantive departures are particularly relevant if the “factors usually considered important by the decisionmaker strongly favor a decision contrary to the one reached.” 429 U.S. at 267, 97 S.Ct. at 564. Application of this factor to the case at bar is a bit problematical, for the County has generated outward appearances of having two conflicting policies. On the one hand, the Board went on record in 1971 as “opposing this type housing” when it disapproved of a proposed low-income housing development. On the other, the County’s 1979 Comprehensive Plan, its 1980 CDGB application, and an April 29, 1980 letter from Dean BeLer, County Administrator, to HUD evidence a professed desire on the part of the County to implement a fair housing strategy and provide low-income housing for its residents. Recognizing the substandard quality of much of the housing in the County and that it had not taken advantage of federal housing programs, the County set as its goals in the 1979 Comprehensive Plan that the “County should respond to the problems of substandard shelter ...” and should “[e]ncourage the construction of multi-family housing units ... .” The Plan also designated an area around the City of Emporia, which includes the Emporia Heights site, as a “growth area” which is “desirable for higher density multi-family developments ... .” In the HAP submitted by the County with its successful application with HUD in March, 1980 for a $575,000 CDBG grant under the Housing and Community Development Act of 1974, 42 U.S.C. §§ 5301 et seq., the County professed its intention “actively [to] seek available federal, State and local funding to facilitate the provision of assisted housing in rural areas ... .” In the April 29, 1980 letter, the County boasted of its assistance to “private developers with proposals for assisted family housing outside of minority-concentrated areas.” It appears that the County may have been drifting away from the absolute opposition to low-income housing it adopted in 1971. At any rate, to the extent that the County’s statements in these documents carried any meaning whatsoever, the veto of the Emporia Heights project deviated from the substantive criteria they provided. Lastly, the Court considers the administrative history of the Board’s veto. In Arlington Heights I, the Court noted that contemporary statements by members of the decisionmaking body, minutes of its meetings, or other indicators of the thought processes of the decisionmakers are especially relevant. 429 U.S. at 268, 97 S.Ct. at 565. By the time of the Board’s vote on Empo-ria Heights, its members were certainly aware of the substandard level of much of the housing in the County. Supervisors Faison, who is black, and Sabo, who is white, voted in favor of the project at the May 19,1981 meeting of the Board. Supervisors Woodruff and Wiley, both of whom are white, voted against it. The tiebreaker, William Robinson, who is white, also voted to disapprove of the project at the June 16 meeting. The minutes of the May 19, 1981 meeting reveal nothing of the Board’s deliberations. Faison testified that race was not mentioned at all during the meetings on the subject, but that it was his impression that the Board had a policy opposing low-income developments. County Administrator BeLer stated at trial that the Board did not discuss the racial aspects of the Emporia Heights Proposal, and the Court so finds. The Court further finds, however, that Woodruff and Wiley made statements contemporaneous with the veto which may be interpreted as veiled references to race. In an interview with a newspaper reporter for a story which appeared in a July 2, 1981 edition of a local paper, Woodruff indicated that he opposed subsidized housing because he felt that “giving people something for nothing” destroys their initiative to work and better themselves. Of those then in substandard housing in the County Wood-ruff said, “most of them could be living in better homes if they wanted to. With the handicapped and elderly it’s a different story.” Except for “some hardship cases,” he continued, most people “who really try” can work and afford to build a decent home. “You just don’t make better citizens out of people when you give them something for nothing.” A July 9 article by the same reporter indicated that Woodruff denied there was any racial motivation behind the Board’s veto. Also, to the same reporter, Wiley stated that she was “not in favor of housing projects per se ... It’s been proven that crime is on the rampage in housing projects.” The July 9 article related that Wiley said she feared the projects “would degenerate to slum-like conditions, with an abundance of crime.” Based on review of these exhibits, and the testimony of the author of the articles, John Sizemore, the Court finds them to be an accurate recordation of the supervisors’ statements. In Smith v. Town of Clarkton, supra, the court found hidden racial meaning in the town mayor’s concern about an influx of “undesirables” if the project were built. Similar meaning was seen in statements by residents at a public hearing on the question that the new occupants of the projects would “dilute” the public schools, that they were concerned about personal safety because of the influx of “new” people “just as bad” who would move into the houses vacated by those moving into the new low-income housing. At 1066. Certainly as much racial meaning can be hidden in Woodruff’s references to “them,” and the “people” who “get something for nothing,” a group he obviously juxtaposed with the “handicapped and elderly” for whom it is a “different story.” Wiley’s feeling that “crime was on the rampage” in the projects which would “degenerate to slum-like conditions” may also rest on a veiled reference to race. These comments must also be viewed in light of the County’s recognition in its 1979 Comprehensive Plan that the majority of those needing improved housing, and thus of those who would live in Emporia Heights, were black. Robinson, the tie-breaker, testified that his opposition to the project was based solely on its cost, rather than race, and the Court is convinced that race was not a consideration in his decision. With the aid of an accountant, he computed that the project would cost HUD $15,624,000 in rental subsidies over a 40-year period which, with interest at a rate of 10%, would total a $190,164,317 cost over that period. He further computed that the average monthly cost to HUD for each unit would amount to $5,353. Robinson testified that he objected to the “several million dollars” of profit the developers told him they would earn off the project, and to the $412-$511 monthly rental for units in Emporia Heights, compared to $200-$250 rental per month for private apartments in the County. According to his testimony, Robinson was in favor of low-income housing, but felt that the Section 8 New program was a “rip-off” of the national taxpayer. Robinson himself was reared in a predominantly black community and had no electricity or plumbing in his home until he was 24 years of age. He also specifically maintained that race was not a factor in his vote, and the Court so finds. The last contemporaneous indicator of the rationale for the Board’s veto lies in a July 17,1981 letter from the County’s Planning Director, David Whittington, to HUD to report the Board’s disapproval of the Emporia Heights proposal. Whittington related that the negative votes on the issue rested on concern that “the housing project would deteriorate to a slum-like condition,” that “deteriorated public housing projects experience a very high crime rate,” and “there are other methods available to provide decent housing rather than a public housing project.” Also, said Whittington, the Board considered a petition by residents in the area of the Emporia Heights site who opposed the project. Whittington related that Robinson’s opposition was grounded on the cost of the project and the “possible adverse impact to the adjoining neighborhood.” At trial, Robinson denied that any concern for the neighborhood of the project colored his decision, and the Court finds that it did not. The record does not reveal the basis of the area residents’ opposition to the proposal, and there is no evidence that this petition, or other public opinions provided the Board, were of the sort of obvious racial opposition present in Smith v. Town of Clarkton, supra. The County attempts to dispel any suspicion surrounding the motives of those who voted against the Emporia Heights proposal by contending that the Board declined to pursue the Section 8 New program because of its cost, electing instead to participate in the Section 8 Existing and Moderate Rehabilitation programs by passing a resolution to that effect at its May 19, 1981 meeting. In April, 1981, the County’s Housing Committee met with Tom Crawford of the VHDA to discuss the Section 8 programs. Barbara Holloway, Assistant to the County Administrator and County Housing Coordinator, prepared a report on the Section 8 Existing and the Moderate Rehabilitation programs for the benefit of the Board. This report, dated May 11, 1981 and sent out to the Board members before their May 19 meeting, described the workings of the Existing and Moderate Rehabilitation programs. It cited as benefits of the programs the provision of decent housing at affordable prices and the guarantee of fair market rental rates to owners. Holloway also urged that “communities will benefit from the program since, instead of new construction, which would bring with it an impact on governmental services and expenditures of tax dollars, a portion of the housing needs of lower-income families can be met by using existing units.” In a May 13, 1981 memorandum to the Board, County Administrator BeLer recommended to the Board for its May 19 meeting, at which it was to vote on Emporia Heights, that it consider the Section 8 Existing and Moderate Rehabilitation programs described by Holloway “as an alternative means of improving the housing stock in Greensville County, given the previous policy statement against housing projects. ” BeLer listed as benefits, of the plans Holloway described, that participation would primarily be by home owners and landlords from within the County, the local governing body would set “priorities as to participation in the program,” and the subsidies would improve the housing stock and would provide economic incentives to increase the amount of rental housing. A negative effect, said BeLer, was that rent levels could increase “pending an incre