Can a nonprofit created by an out-of-state government, qualifying as a public housing agency in its home state, also act as a public housing agency in Oregon just because it registered to do business as a foreign corporation here?

Subject

Housing and Community Services Dept.

Plain-English summary

Oregon Housing and Community Services Department (OHCS) asked a clean federalism question: if some other state's government creates a nonprofit corporation to act as a "public housing agency" under federal law, and that nonprofit registers to do business in Oregon as a foreign corporation, can it operate as a public housing agency in Oregon?

The AG said no, on three grounds.

First, the laws of one state cannot confer Oregon governmental authority. The U.S. Supreme Court in Pacific Employers Insurance Co. and Nevada v. Hall established that the structure of federalism prevents one state from exporting its governmental status into another. An Oregon governmental entity exists only where Oregon's constitution or statutes expressly grant or necessarily imply that authority.

Second, registering as a foreign corporation under ORS 65.714 does not provide governmental authority. Foreign corporation registration grants the entity the same rights and privileges as a "domestic corporation of like character," and ORS 65.077 says the corporate form by itself confers only "the same powers as an individual" to conduct affairs. So registering as a nonprofit does not let an out-of-state government's nonprofit body take on Oregon governmental functions.

Third, Oregon already has its own statutory regime for public housing agencies. The Housing Authorities Law (ORS 456.055-456.235) creates local housing authorities for cities and counties, but only after the local governing body declares a need by resolution. ORS 456.060 caps each housing authority's geographic reach. OHCS itself has statewide authority under ORS 456.625 and is the "central source" for Oregon housing programs. The AG read the geographic limits and the OHCS framework as inconsistent with letting an out-of-state nonprofit operate statewide as a public housing agency.

The AG noted federal law does include a narrow exception. 42 USC § 1437a(b)(6)(B)(iii)(II) permits "a public housing agency for another area" to act, "notwithstanding any provision of State or local law," but only where the HUD Secretary has determined no PHA has been organized or that the existing PHA is unwilling, unable, or not performing effectively. The AG was not aware of any such determination as to OHCS.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why does it matter who counts as a "public housing agency"?

Federal housing programs (especially Section 8 vouchers) flow through entities defined as "public housing agencies" under 42 USC § 1437a(b)(6). These agencies receive HUD funds, contract with landlords, and screen tenants. The opinion was apparently triggered by an out-of-state government's nonprofit attempting to expand into Oregon.

Does the corporate form do nothing for the entity?

Not nothing, but not much for this purpose. Registering lets the nonprofit do business in Oregon, sue and be sued, sign contracts, employ staff, and so on. ORS 65.077 simply makes clear that the corporate form gives a nonprofit "the same powers as an individual." It does not create governmental authority. A private hospital corporation registered in Oregon does not become a state agency just because it filed paperwork.

Could federal law just override Oregon's restrictions?

In some circumstances. The AG flagged 42 USC § 1437a(b)(6)(B)(ii) (private nonprofits administering tenant-based assistance as of the 1998 effective date of the Quality Housing and Work Responsibility Act) and (B)(iii)(II) (HUD Secretary's determination of unmet need). Those exceptions exist precisely because Congress contemplated cases where state-law gaps might block tenant assistance. But the carve-outs require specific federal triggers; they are not a general invitation for out-of-state agencies to operate freely.

Does this mean Oregon localities have no flexibility?

No. The AG explained that Oregon's Housing Authorities Law lets each city and county establish a housing authority by resolution under ORS 456.075. Once established, those local housing authorities have the powers in ORS 456.120 (lease, rent, finance, manage housing projects) and even eminent domain under ORS 456.145. They are limited to their geographic area under ORS 456.060. OHCS handles statewide functions.

Could the out-of-state nonprofit still partner with an Oregon authority?

The opinion does not foreclose contractual arrangements. It addresses only whether the foreign nonprofit can act as a public housing agency under its own authority in Oregon. Subcontracts and service agreements with Oregon-authorized PHAs are a different question.

Background and statutory framework

The federal definition at 42 USC § 1437a(b)(6)(A) reads: "any State, county, municipality, or other governmental entity or public body (or agency or instrumentality thereof) which is authorized to engage in or assist in the development or operation of public housing." That definition is governmental in character, not corporate.

Oregon's Housing Authorities Law (ORS 456.055-456.235) creates the framework for local housing authorities. ORS 456.075 creates a "public body corporate and politic" in each city and county, but the entity cannot transact business until its local governing body adopts a resolution declaring need. ORS 456.060 imposes geographic limits.

OHCS has its own enabling statute. ORS 456.625 grants OHCS broad authority including making and participating in residential loans, foreclosing on mortgages, and acquiring property. ORS 456.625(12) authorizes OHCS to perform "any other duties that [OHCS] determines necessary or appropriate to carry out housing programs." ORS 456.550(5) makes OHCS the "central source" for housing services. ORS 456.559(1)(f) makes OHCS the "central state department" to receive and distribute federal housing grants.

The federalism backdrop comes from Pacific Employers Insurance Co. v. Industrial Accident Comm'n (federal union prevents Full Faith and Credit from forcing one state to apply another's statutes) and Nevada v. Hall (a state has no inherent sovereign authority outside its borders).

Citations

• 42 USC § 1437a(b)(6)(A); 1437a(b)(6)(B)(ii)-(iii); 42 USC § 1437f
• ORS 65.077; 65.714
• ORS 456.055-456.235; 456.060; 456.075; 456.120; 456.145
• ORS 456.550(5); 456.559(1)(f); 456.625
• Pacific Employers Ins. Co. v. Industrial Accident Comm'n, 306 US 493 (1939)
• Nevada v. Hall, 440 US 410 (1979)
• Ochoco Construction, Inc. v. DLCD, 295 Or 422, 667 P2d 499 (1983)
• City of Sandy v. Metro, 200 Or App 481, 115 P3d 960 (2005)

Source

• Landing page: https://www.doj.state.or.us/oregon-department-of-justice/office-of-the-attorney-general/attorney-general-opinions/
• Original PDF: https://www.doj.state.or.us/wp-content/uploads/2011/10/op2011-2.pdf

Original opinion text

JOHN R. KROGER

MARY H. WILLIAMS

Attorney General

Deputy Attorney General

DEPARTMENT OF JUSTICE
GENERAL COUNSEL DIVISION

October 5, 2011

Richard W. Crager, Deputy Director
Oregon Housing and Community
Services Department
725 Summer Street NE, Suite B
Salem, OR 97301-1266

Re: Opinion Request OP-2011-2

Dear Mr. Crager:

You have asked whether a nonprofit corporation with certain characteristics may act as a "public housing agency" in Oregon. Your specific question and our short answer are set forth below, followed by our analysis.

QUESTION PRESENTED

A state or local government outside of Oregon creates a nonprofit corporation to act as an instrumentality of that government. In the state where it is created, that corporation has authority to act as a "public housing agency" as that term is defined in 42 USC §1437a(b)(6). The corporation is authorized to conduct business in Oregon pursuant to ORS 65.714. Does Oregon law authorize the corporation to act as a "public housing agency" within the state of Oregon?

SHORT ANSWER

No.

DISCUSSION

For purposes of the United States Housing Act of 1937, as amended, a "public housing agency" is "any State, county, municipality, or other governmental entity or public body (or agency or instrumentality thereof) which is authorized to engage in or assist in the development or operation of public housing." 42 USC §1437a(b)(6)(A). As described in the question, the nonprofit corporation at issue is an instrumentality of a "governmental entity," but not of an Oregon governmental entity. The corporation satisfies the requirements of 42 USC §1437a(b)(6) in the state of its creation, and thus may act as a "public housing agency" within that state.

However, the laws of another state cannot confer authority to exercise Oregon government functions. Only Oregon law can do that. See Pacific Employers Ins. Co. v. Industrial Accident Comm'n, 306 US 493, 501, 59 S Ct 629, 83 L Ed 940 (1939) ("[T]he very nature of the federal union of states, to which are reserved some of the attributes of sovereignty, precludes resort to the full faith and credit clause as the means for compelling a state to substitute the statutes of other states for its own statutes dealing with a subject matter concerning which it is competent to legislate.") Nor do other states' governmental entities possess inherent authority to govern in Oregon. See Nevada v. Hall, 440 US 410, 99 S Ct 1182, 59 L Ed2d 416 (1979). Indeed, Oregon government authority exists only where a statutory or constitutional provision expressly grants that authority or necessarily implies it. See, e.g., Ochoco Construction, Inc. v. Department of Land Conservation and Development, 295 Or 422, 426-427, 667 P2d 499 (1983); City of Sandy v. Metro, 200 Or App 481, 485-486 115 P3d 960 (2005).

Thus, although the entity at issue is a governmental entity of an out-of-state government, and can act with the authority of that out-of-state government to the full extent permitted by the laws of the other state, only Oregon laws can give the entity authority to carry out functions of Oregon government. Furthermore, as Nevada v. Hall explains, such an entity is generally subject to Oregon's laws when it acts in Oregon, even if it is properly acting as a governmental entity of its origin state.

Authorization to conduct business as a corporation under ORS 65.714 does not constitute authority to act as an Oregon governmental entity. Instead, that provision confers upon a foreign corporation authorized to transact business in Oregon "the same but no greater rights and * * * the same but no greater privileges as, and except as otherwise provided by this chapter * * * the same duties, restrictions, penalties and liabilities now or later imposed on, a domestic corporation of like character." ORS 65.714(1).

As discussed above, a governmental entity of another state does not possess authority to act as an Oregon governmental entity. Thus, a "domestic corporation of like character" to the nonprofit corporation at issue would be a domestic corporation created by an entity lacking Oregon governmental authority. ORS 65.077 provides that the corporate form, by itself, confers only "the same powers as an individual" to carry out the corporation's affairs. Consequently, a governmental entity of another state cannot use the corporate form to confer upon itself the power to act as an Oregon governmental entity. Any Oregon "governmental entity" with "authori[ty] to engage in or assist in the development or operation of public housing" must be specifically authorized by Oregon law.

And in fact, Oregon has enacted specific statutes that authorize particular entities to act as public housing agencies within the meaning of 42 USC §1437a(b)(6)(A). But those statutes apply, by their terms, to Oregon governmental entities at the state and local level.

The "Housing Authorities Law," codified at ORS 456.055 to 456.235, largely governs public housing agencies at the county and municipal level. Specifically, ORS 456.075 provides, in part, that "[i]n each city, as defined in ORS 456.055, and county there hereby is created a public body corporate and politic to be known as the 'housing authority' of the city or county." A housing authority established under this section cannot "transact any business or exercise its powers until or unless the governing body of the city or the county, by proper resolution, declares that there is need for an authority to function in such city or county." ORS 456.075. ORS 456.120 generally describes the powers granted to a local housing authority; those powers include "all the powers necessary or convenient to carry out and effectuate the purposes of the Housing Authorities Law." ORS 456.145 separately confers the power to utilize eminent domain.

ORS 456.060 circumscribes the geographic area within which a municipal or county "housing authority" may act. Inside of those geographic bounds, the powers granted to the governmental "housing authorities" created by ORS 456.055 to 456.235 qualify them as "public housing agencies" within the meaning of 42 USC §1437a(b)(6)(A). We do not believe it is plausible to infer authority for government entities of other states to operate as public housing authorities throughout Oregon, when Oregon's county and municipal governments are subject to this express geographic limitation.

In addition to these local bodies, the various powers statutorily conferred upon the Oregon Housing and Community Services Department (OHCS) qualify OHCS as a "public housing authority" within the meaning of 42 USC §1437a(b)(6)(A). ORS 456.625 enumerates the powers of OHCS. Subsection (7) of that statute confers broad authority to exercise the power described in 42 USC §1437a(b)(6)(A), including power to make or participate in the making of residential loans to qualified individuals or housing sponsors for acquisition, improvement, rehabilitation and other purposes, to purchase and sell such loans, to foreclose on mortgages and security interests, to acquire or take possession of property subject to such interests and to complete, conserve, improve or otherwise use such property. In addition, ORS 456.625(12) authorizes OHCS to "contract for, act on or perform any other duties that [OHCS] determines necessary or appropriate to carry out housing programs and community services programs." These provisions confer on OHCS authority "to engage in or assist in the development or operation of public housing" within the meaning of 42 USC §1437a(b)(6)(A).

Indeed, ORS 456.550(5) establishes OHCS as Oregon's "central source" for "housing information, planning, educational services and technical assistance and a revolving fund." And ORS 456.559(1)(f) requires OHCS to act as "the central state department to apply for, receive and distribute, on behalf of appropriate state agencies, governmental bodies and public or private housing sponsors in the state, grants, gifts, contributions, loans, credits or assistance from the federal government or any other source for housing programs except when the donor, grantor, or lender of such funds specifically directs some other agency to administer them." Taken together, these various statutes indicate that OHCS is the sole "public housing authority" granted statewide power by the Oregon Legislative Assembly.

As noted above, the power to act as an Oregon government entity requires constitutional or statutory provisions that expressly confer or necessarily imply such authority. The laws of other states cannot make an entity into an Oregon government entity. Oregon statutes qualify OHCS to operate statewide as a "public housing agency" within the meaning of 42 USC §1437a(b)(6)(A). And each of the "housing authorities" established by ORS 456.075 may operate as a "public housing agency" within its area of operation, provided that the governing body of the relevant locality has issued the required resolution. No Oregon statutes confer similar authority on governmental entities of other states. By itself, the authority to carry on business as a corporation in Oregon merely confers "the same powers as an individual" to carry on a business. The corporate form of the entity in question does not give it Oregon governmental powers.

We conclude that Oregon law does not authorize a nonprofit corporation created by a governmental entity of another state to act as a "public housing authority" within Oregon. That is true even if the laws of the corporation's state of origin would authorize the corporation to fulfill that role in that state. Under Oregon law, only OHCS is a "governmental entity or public body * * * authorized to engage in or assist in the development or operation of public housing" on a statewide basis.

Of course, federal law could authorize entities to act as "public housing agencies" for purposes of federal law, regardless of their authority under the laws of the relevant state. In fact, the relevant federal statute does precisely that under some circumstances related to "the provision of tenant-based assistance" under 42 USC §1437f. One such exception applies to "any * * * private nonprofit entity that * * * was administering any program for tenant-based assistance" as of the effective date of the Quality Housing and Work Responsibility Act of 1998. 42 USC §1437a(b)(6)(B)(ii). Perhaps more telling is 42 USC §1437a(b)(6)(B)(iii)(II). That provision permits "a public housing agency for another area" to act as a "public housing agency," "notwithstanding any provision of State or local law," but only "with respect to any area in which no public housing agency has been organized or where the Secretary determines that a public housing agency is unwilling or unable to implement a program for tenant-based assistance [under] section 1437f of this title, or is not performing effectively." We are informed that the Secretary has not made any such determination regarding the Oregon Department of Housing and Community Services. We are not aware of any basis that would support such a determination by HUD.

Sincerely,

David E. Leith
Associate Attorney General and
Chief Counsel, General Counsel Division
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