COMMUNITY HOUSE v. CITY OF BOISE, IDAHO

at the denial was administrative, we decided that the Council and its members were not entitled to legislative, immunity, and we did so for two reasons.

First, the denial was "based on the circumstances of the particular case and did not effectuate policy or create a binding rule of conduct." Id.

Second, "[i]n denying a single application for a CUP, the Council did not change Maui's comprehensive zoning ordinance or the policies underlying it, nor did it affect the City's budgetary priorities or the services the County provides to residents." Id. at 1223-24. The CUP by its terms applied only to Plaintiff Barker's parcel and did not involve rezoning or an application for rezoning. Id. at 1223 n. 7.

To articulate our reasoning in that case is to demonstrate that Kaahumanu is manifestly distinguishable from the case at hand. Here, the actions of which CHI complains were taken specifically to supersede old policy and to effectuate a new approach to a continuing civic problem for which the City was searching for a remedy. The City's final decision had nothing to do with the rote administration of the existing policy. Unlike the disputed decision in Kaahumanu, the discretionary decision here directly affected an important service the City provided to a disadvantaged segment of its residents, and it did so with considerable budgetary implications. Bogan, 523 U.S. at 55-56, 118 S.Ct. 966 ("The ordinance [qualifying for legislative immunity for the officials responsible for it] reflected a discretionary, policymaking decision implicating the budgetary priorities of the city and the services the city provides to its constituents."). In effect, although the Maui City Council is normally a legislative body, its decision to deny an isolated CUP to Barker had all the hallmarks of an ad hoc implementing executive decision, not a legislative one. Thus, we conclude that Kaahumanu is distinguishable from both this case, as well as from San Pedro Hotel where the public funds aspect of the decision tipped the scales in favor of legislative immunity. San Pedro Hotel by itself would be enough to support our decision.

In discussing the long-standing tradition of legislative immunity, the Supreme Court has emphasized that the freedom of legislators to make decisions without worrying about personal liability is necessary to protect the citizens — not just the legislators:

These privileges are thus secured, not with the intention of protecting the members against prosecutions for their own benefit, but to support the rights of the people, by enabling their representatives to execute the functions of their office without fear of prosecutions, civil or criminal.

Tenney, 341 U.S. at 373-74, 71 S.Ct. 783 (citation and quotation marks omitted). The decisions about how to further the City's laudable goal of fighting homelessness is a prime example of the need to allow city council members the freedom to make important and difficult discretionary decisions without fear of being personally sued for doing so.

B. The Mayor

CHI asserts that Mayor Bieter is not entitled to legislative immunity because "[a] mayor is a city's chief administrative official," the "act of signing a public contract is ministerial," and he "did not vote on the Ordinance or lease." This argument ignores the Supreme Court's insistence that the question of whether an act is legislative turns on the nature and character of the particular act, not on any bright-line rule. Bogan, 523 U.S. at 54, 118 S.Ct. 966. Indeed, the Court held in Bogan that an executive official's introduction of a budget and signing of a local ordinance were legislative acts. Id. at 55, 118 S.Ct. 966.

Here, the mayor's office participated in the entire legislative process regarding Community House. Members of the mayor's staff attended various CHI Board meetings to discuss potential solutions to Community House issues. The mayor requested in February 2004 that CHI make a proposal if it needed financial assistance. The Advisory Committee, of which Watson was a member, stated its intent to help Mayor Bieter — not just the City Council members — evaluate the best course of action with respect to Community House. As contemplated by state law, he signed the Ordinances and approved the Resolutions passed by the City Council. See id. Because the mayor was intricately involved in the City's policy decision to provide shelter for the homeless, he is entitled to legislative immunity along with the council members, even though he is nominally an executive official.

That the mayor and council members knew the BRM was a religious organization and would allow only single men to stay at the shelter does not change our analysis. Courts must be extremely careful that considerations of a legislator's motive do not infect the determination of whether an act is legislative:

The claim of an unworthy purpose does not destroy the privilege. Legislators are immune from deterrents to the uninhibited discharge of their legislative duty, not for their private indulgence but for the public good. One must not expect uncommon courage even in legislators.

Tenney, 341 U.S. at 377, 71 S.Ct. 783. "It [is] not consonant with our scheme of government for a court to inquire into the motives of legislators. . . ." Id.

The importance of absolute legislative immunity to our system of government cannot be overstated:

In times of political passion, dishonest or vindictive motives are readily attributed to legislative conduct and are readily believed. Courts are not the place for such controversies. Self-discipline and the voters must be the ultimate reliance for discouraging or correcting such abuses.

Id. at 378, 71 S.Ct. 783 (footnote omitted). For their legislative decisions, legislators are answerable to the citizenry — not to a court of law. The specters of impeachment, recall, lost elections, and criminal prosecution for bribery and other crimes are enough checks against a legislator's malfeasance. As a matter of sound public policy, we must not and should not add personal financial liability to that list.

IV QUALIFIED IMMUNITY

In § 1983 actions, the doctrine of qualified immunity protects city officials from personal liability in their individual capacities for their official conduct so long as that conduct is objectively reasonable and does not violate clearly-established federal rights. Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982) (citations omitted). Qualified immunity is necessary to "protect[] the public from unwarranted timidity on the part of public officials" and to avoid "dampen[ing] the ardour of all but the most resolute, or the most irresponsible." Richardson v. McKnight, 521 U.S. 399, 408, 117 S.Ct. 2100, 138 L.Ed.2d 540 (1997) (citation and internal quotation marks omitted). True to these purposes, the qualified immunity standard "`gives amplex room for mistaken judgments' by protecting `all but the plainly incompetent or those who knowingly violate the law.'" Hunter v. Bryant, 502 U.S. 224, 229, 112 S.Ct. 534, 116 L.Ed.2d 589 (1991) (quoting Malley v. Briggs, 475 U.S. 335, 341, 343, 106 S.Ct. 1092, 89 L.Ed.2d 271 (1986)). "Moreover, because `[t]he entitlement is an immunity from suit rather than a mere defense to liability,' we repeatedly have stressed the importance of resolving immunity questions at the earliest possible stage in litigation." Hunter, 502 U.S. at 227, 112 S.Ct. 534 (citation deleted) (emphasis in original). Qualified immunity, however, is a defense available only to government officials sued in their individual capacities. It is not available to those sued only in their official capacities. Eng v. Cooley, 552 F.3d 1062, 1064 n. 1 (9th Cir. 2009); Kentucky v. Graham, 473 U.S. 159, 165-68, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985).

We recognize that public employees — such as Birdsall and Chatterton — carrying out the express legislative will of a city are ordinarily entitled to rely on its lawfulness. As we said in Dittman v. California, 191 F.3d 1020, 1027 (9th Cir. 1999), "when a public official acts in reliance on a duly enacted statute or ordinance, that official is entitled to qualified immunity." See also Grossman v. City of Portland, 33 F.3d 1200, 1210 (9th Cir. 1994).

As to the Dittman/Grossman rule, however, the parties hotly dispute the specific role played in this matter by Birdsall and Chatterton. Not unexpectedly, the City says its employees, who "did not vote for or authorize the lease or sale of the building," were unmistakably acting "in furtherance of decisions made by the City Council." CHI, on the other hand, asserts that the City's argument "fails to recognize the primary role [Chatterton and Birdsall] played in wrongful conduct and in developing the plan and advising the Council." During oral argument, CHI's attorney called them the "primary movers" who deliberately and in knowing violation of the law "orchestrated" CHI's demise. CHI refers us in this respect to our qualification in Grossman that "[w]here a statute authorizes official conduct which is patently violative of fundamental constitutional principles, an officer who enforces that statute is not entitled to qualified immunity." Id. at 1209.

Given this heated dispute, and because we must accept the facts and reasonable inferences in the light most favorable to CHI, we hesitate in these circumstances to apply the Dittman/Grossman rule. Instead, we examine this immunity issue according to Saucier's second prong: whether the rights allegedly violated were clearly established at the relevant times.

We note here some considerable and perplexing fog in the record. CHI's Second Amended Complaint says in paragraphs 34 and 35 that it pursues defendants Chatterton and Birdsall in their "official capacit[ies]." In that event, the principle of qualified immunity would be utterly inapposite. However, the district court's opinion and the parties' briefs and oral arguments give every indication that these defendants are being sued in their individual capacities, as the complaint's Preliminary Statement suggests:

3. The Plaintiff, CHI, seeks monetary damages, declaratory, and injunctive relief against the City of Boise, and individually named defendants who are officials or employees of the municipality to redress the Defendant's discriminatory practices and policies, under color of state law. . . .

(emphasis added). Furthermore, the first words from the City's attorney at oral argument were that this appeal is about qualified immunity, which, we repeat has no application to persons sued their official capacities.

The district court's opinion lumps all the defendants together, and, in denying qualified immunity to all, the court makes no distinction whatsoever between defendants in their official capacities and defendants in their individual capacities. Given the rule that qualified immunity covers only defendants in their individual capacities, one can only wonder why the district court denied Chatterton's and Birdsall's request for the same if the court and the parties understood this distinction and viewed these City employees as being sued only in their official capacities. The briefs filed by both parties do not acknowledge or recognize this important principle. Indeed, during oral argument, CHI's counsel manifested an intention to attempt to recover punitive damages from the individual defendants, saying that to leave the City as the only defendant would deprive them of that opportunity:

(By the court)

Q. Are you looking for money judgments against the individual defendants?

(By counsel for the plaintiff's)

A. Well, . . . It's not what we are looking for, but the question is the court has to apply the law as to qualified immunity. . . .

Q. So, you're looking for money judgments against these individuals?

A. If that's what the evidence reflects and the jury determines that. . . .

Q. If [the individuals] all disappeared from the case, is there anything you cannot get from the City of Boise in terms of compensatory and injunctive relief?

A. We may lose punitive damages.

Q. Against the City of Boise?

A. Or the individuals. . . .

Q. Are you going to go after punitive damages if you prevail?

A. If the evidence shows and the jury agrees, then that's a possibility. . . .

We simply cannot find anything in the record that suggests that either the parties or the district court appreciate the difference between personal and official capacity § 1983 lawsuits. When asked during oral argument about the capacities of the defendants, CHI's counsel could not recall what was in the complaint. Thus, it is an appropriate time to republish the Supreme Court's explanation of this important distinction.

Proper application of this [immunity] principle in damages actions against public officials requires careful adherence to the distinction between personal- and official-capacity suits. Because this distinction apparently continues to confuse lawyers and confound lower courts, we attempt to define it more clearly through concrete examples of the practical and doctrinal differences between personal- and official-capacity actions.

Personal-capacity suits seek to impose personal liability upon a government official for actions he takes under color of state law. . . . Official-capacity suits, in contrast, "generally represent only another way of pleading an action against an entity of which an officer is an agent." . . . As long as the government entity receives notice and an opportunity to respond, an official-capacity suit is, in all respects other than name, to be treated as a suit against the entity. . . . It is not a suit against the official personally, for the real party in interest is the entity. Thus, while an award of damages against an official in his personal capacity can be executed only against the official's personal assets, a plaintiff seeking to recover on a damages judgment in an official-capacity suit must look to the government entity itself.

Graham, 473 U.S. at 165-66, 105 S.Ct. 3099 (citations and footnotes omitted).

This case is here for the second time on an interlocutory basis. The trial is still in the distant future. Therefore, given the Supreme Court's admonishment in Hunter v. Bryant to decide immunity issues as early as possible, see 502 U.S. at 227, 112 S.Ct. 534, we "believe it prudent" at this juncture in an exercise of our supervisory power to clear up this apparent confusion now and to address qualified immunity as it relates to Chatterton and Birdsall — which is what both parties ask us to do. MGA Entertainment, Inc. v. Mattel, Inc., 616 F.3d 904, 913 (9th Cir. 2010) (Kozinski, C.J.). The record as it stands is ripe and adequate to do so. To fail to do so risks continuing confusion in the district court, a possible new amended complaint, and a trial on issues not properly in the case. Thus, we take counsel for CHI at his word and address the question of qualified immunity as it applies to the Establishment Clause and FHA claims against Chatterton and Birdsall in their individual capacities.

A qualified immunity analysis consists of two prongs: (1) whether, "[t]aken in the light most favorable to the party asserting the injury, . . . the facts alleged show the [official's] conduct violated a constitutional right"; and (2) whether that right was clearly established. Saucier v. Katz, 533 U.S. 194, 201, 121 S.Ct. 2151, 150 L.Ed.2d 272 (2001), modified by Pearson v. Callahan, ___ U.S. ___, 129 S.Ct. 808, 172 L.Ed.2d 565 (2009). Addressing the two prongs of the test in this order is often beneficial, but it is not mandatory. Courts may "exercise their sound discretion in deciding which of the two prongs of the qualified immunity analysis should be addressed first in light of the circumstances in the particular case at hand." Pearson, 129 S.Ct. at 818.

To determine whether a right was clearly established, a court turns to Supreme Court and Ninth Circuit law existing at the time of the alleged act. See Osolinski v. Kane, 92 F.3d 934, 936 (9th Cir. 1996). In the absence of binding precedent, courts should look to available decisions of other circuits and district courts to ascertain whether the law is clearly established. Id.

This inquiry "must be undertaken in light of the specific context of the case, not as a broad general proposition." Saucier, 533 U.S. at 201, 121 S.Ct. 2151. For the law to be clearly established, "[t]he contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right." Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987). It is not necessary that the "very action in question has previously been held unlawful," but "in the light of preexisting law the unlawfulness must be apparent." Id. "The relevant, dispositive inquiry . . . is whether it would be clear to a reasonable [official] that his conduct was unlawful in the situation he confronted." Norwood v. Vance, 591 F.3d 1062, 1068 (9th Cir. 2010) (quoting Saucier, 533 U.S. at 202, 121 S.Ct. 2151) (omission and emphasis in original), petition for cert. filed, April 7, 2010. In addition, "[c]ourts have . . . held that the existence of a statute or an ordinance authorizing particular conduct is a factor which militates in favor of the conclusion that a reasonable official would find that conduct constitutional." Grossman, 33 F.3d at 1209.

A. Jurisdiction

CHI argues initially that we lack jurisdiction to consider the qualified immunity issue. Although the district court found — on the first prong of the qualified immunity analysis — that there were genuine issues of material fact regarding whether there had been a violation of the Establishment Clause, the court ended its analysis there. Cmty. House II, 654 F.Supp.2d at 1166. It did not go on to determine the purely legal issue of whether the law was so clearly established that a reasonable official would have known his conduct violated that law — known as the "second prong" of the test. Therefore, goes CHI's argument, our review cannot be separated from the merits of the case, and we have no jurisdiction to consider the issue.

It is true that when reviewing a denial of qualified immunity, "our appellate jurisdiction is limited to questions of law." Robinson, 566 F.3d at 821. However, we have power to consider qualified immunity even where facts are disputed, so long as we "assum[e] that the version of the material facts asserted by the non-moving party is correct." Jeffers v. Gomez, 267 F.3d 895, 903 (9th Cir. 2001) (per curiam). We have made such an assumption and thus have jurisdiction to consider the second prong of Saucier's test. It would be quite incongruous if a public official's right to an immediate appeal from a denial of qualified immunity were to evaporate simply because the district court failed or chose not to complete the required Saucier analysis.

B. Forfeiture

The individual defendants did not specifically raise in the district court the defense of qualified immunity with respect to the FHA claims. CHI thus urges that we find the issue forfeited and refuse to consider it. We do note, however, that the individual defendants including Chatterton and Birdsall did generally raise this issue in their amended memorandum in support of their motion for summary judgment. They argued that their motion fairly read was addressed to all claims against them, including the FHA claim.

Appellate courts will generally not entertain arguments that were not raised in the district court. However, we may exercise our discretion to consider an issue first raised on appeal if it "is a pure question of law and the record is sufficient to review the issue." United States v. Alisal Water Corp., 431 F.3d 643, 654 n. 4 (9th Cir. 2005). Qualified immunity is such an issue. Bibeau v. Pac. Nw. Research Found., Inc., 188 F.3d 1105, 1111 n. 5 (9th Cir. 1999), as amended, 208 F.3d 831 (9th Cir. 2000) ("Because qualified immunity presents a pure question of law which we review de novo, any decision by the district court would be entitled to no deference."). We have on occasion considered qualified immunity sua sponte. Graves v. City of Coeur D'Alene, 339 F.3d 828, 846 n. 23 (9th Cir. 2003), abrogated on other grounds by Hiibel v. Sixth Judicial Dist. Court of Nev., 542 U.S. 177, 124 S.Ct. 2451, 159 L.Ed.2d 292 (2004).

CHI will not be prejudiced by our consideration of qualified immunity on the FHA claims because, as we have noted, we assume all disputed facts in CHI's favor, and the dispositive issue — which was fully addressed during oral argument — is one of law only. We turn now to the merits.

C. The Fair Housing Act

The FHA applies only to "dwellings." 42 U.S.C. § 3604. A dwelling is a structure "occupied as, or designed or intended for occupancy as, a residence," id. at § 3602(b), an "abode or habitation to which one intends to return as distinguished from the place of temporary sojourn or transient visit," Lakeside Resort Enters., LP v. Bd. of Supervisors of Palmyra Township, 455 F.3d 154, 157 (3d Cir. 2006) (citation and internal quotation marks omitted). This court's previous application of the FHA to Community House — which did not involve the question of qualified immunity — was based on the state of the record at the time of the preliminary injunction appeal, when the building contained an emergency shelter and SROs, where residents would stay for up to a year and a half. Cmty. House I, 490 F.3d at 1048 n. 2. We did not determine whether the River of Life facility under the BRM's management would also be a dwelling. In fact, after our decision in Community House I, the Idaho District Court determined in a separate case that the very facility at issue, as operated by the BRM, is not a dwelling. Intermountain Fair Hous. Council v. Boise Rescue Mission Ministries, 655 F.Supp.2d 1150, 1159 (D. Idaho 2009), as amended, 2010 WL 1913379 (D. Idaho 2010).

However, we need not decide whether the FHA applies to the shelter as currently operated, because even if it does, that application was not clearly established in 2005. We had not determined whether homeless shelters in general met the definition of a "dwelling," and we did not decide the issue in the previous appeal. Cmty. House I, 490 F.3d at 1048 n. 2. Other courts had considered the issue, but there was no consensus on the FHA's applicability to such shelters. Compare Woods v. Foster, 884 F.Supp. 1169, 1173-74 (N.D.Ill. 1995) (shelter was a dwelling because the homeless have no other place to which to return), with Johnson v. Dixon, 786 F.Supp. 1, 4 (D.D.C. 1991) (shelter was likely not a dwelling but a "place of overnight repose and safety").

As far as Chatterton and Birdsall knew, the BRM was most likely to use the facility only as a short-term, emergency homeless shelter. The BRM's initial proposal to the City — which was declined in 2003 — proposed retaining the longer-term transitional apartments and SROs. However, by the time the BRM responded to the City's RFI/RFP process, its proposal did not state that Community House would be used in such a manner. The proposal focused instead on the BRM's "basic" emergency shelter programs. Chatterton requested that the BRM clarify how its men-only policy and religious services affected the "emergency shelter services" to be offered by the BRM. Ordinances 6402 and 6404, which declared Community House surplus property subject to sale, explicitly invoked Boise's need for an emergency shelter. Although the BRM was authorized under the lease to provide additional services, the BRM was required to provide only emergency shelter services and a soup kitchen. There is evidence that, as late as August 2005, the BRM was still considering including longer-term SROs in the building. But CHI has pointed to no evidence suggesting that the BRM discussed these considerations with Chatterton or Birdsall.

Finally, even if it was clearly established that the FHA applied to Community House, a reasonable official could not have known that the single-men-only policy violated the statute. It was not until the earlier appeal that we determined what types of justifications could validate a facially discriminatory, men-only policy — an issue already subject to a circuit split. Cmty. House I, 490 F.3d at 1050. The council members questioned the BRM regarding the policy, were assured that the women could stay at the City Light shelter and that it would be safer to house men and women in separate facilities, and even verified the BRM's claims of fewer police calls. These were reasonable actions, especially considering that this court later determined that a discriminatory policy based on legitimate, non-stereotypical safety concerns would in fact pass muster under the FHA. Id.

D. The Establishment Clause

The Establishment Clause of the First Amendment provides that "Congress shall make no law respecting an establishment of religion." U.S. Const. amend. I. Applied to the states by the Fourteenth Amendment, the Establishment Clause does not prohibit all government involvement with religion. It allows the government to provide aid to a religious organization as long as the government action has a secular purpose and does not have the primary effect of advancing religion. Cmty. House I, 490 F.3d at 1055. CHI does not challenge this court's earlier conclusion that the lease and sale of Community House to the BRM had a secular purpose — to provide shelter for the homeless. Id. at 1055 n. 9.

Government aid to a religious organization will fail the "primary effect" test if it (1) results in government indoctrination; (2) defines the recipients of the aid by reference to religion; or (3) creates "excessive government entanglement" with religion. Id. at 1055. Because the lease and sale to the BRM did not define anybody by reference to religion and because under the lease the City retained no control over the BRM's management of the facility, our inquiry here focuses on indoctrination. Thus, to prove a violation of the Establishment Clause, CHI must show that (1) the BRM's activities at the River of Life Mission (formerly Community House) result in indoctrination, and (2) such indoctrination is "attributable to the government." Id. at 1056. We assume without deciding that the BRM's chapel services and pre-meal prayers indoctrinate the shelter's guests. However, we conclude that it was not clearly established at the time of the lease that such indoctrination could be attributable to the government.

The district court determined that the BRM's indoctrination was attributable to the government for two reasons. First, during the lease period, "the City only charged the BRM rent of $1 per year for the building . . ., insured the premises[,] and paid for necessary repairs." Cmty. House II, 654 F.Supp.2d at 1162. Second, the record contained conflicting evidence on whether the option price of $2 million was less than the market value of the property. Id. We address each in turn.

Simply to adopt our previous analysis on this issue would be improvident. We now have the benefit of an expanded record on summary judgment, rather than the limited record we had in the preliminary injunction appeal.

1. Favorable Lease Terms

As we recognized in Community House I, CHI's lease with the City was more favorable than the BRM's. 490 F.3d at 1057. The BRM was obligated to pay rent of $1 per year for the first five years, after which rent would escalate to a commercial rate, and the maximum term of the lease was only ten years. The CHI lease, on the other hand, required rent of only $1 per year for its fifty-year lease term. The City had similar repair and insurance responsibilities under both leases.

CHI correctly points out that, although the BRM lease was (at worst) neutral when compared to the CHI lease, this fact is not, by itself, sufficient to defeat an Establishment Clause claim. Cmty. House I, 490 F.3d at 1057-58 (citing Mitchell v. Helms, 530 U.S. 793, 838-39, 120 S.Ct. 2530, 147 L.Ed.2d 660 (2000) (O'Connor, J., concurring)). But neutrality is a very important factor in the indoctrination inquiry and tends to show that a private entity's indoctrination cannot be attributed to the government. See Mitchell, 530 U.S. at 810, 120 S.Ct. 2530 (plurality) ("[I]f the government, seeking to further some legitimate secular purpose, offers aid on the same terms, without regard to religion, to all who adequately further that purpose . . . then it is fair to say that any aid going to a religious recipient only has the effect of furthering that secular purpose."). Here, not only was the City neutral toward the BRM in its lease terms when compared to CHI's lease, the BRM actually got the worse deal. Where the BRM would have been required to pay market rent after five years, CHI was guaranteed that — throughout the entire fifty-year term of its lease — its rent would never exceed $1 per year.

CHI argues that the correct annual rent comparison between the two leases is the $1 per year the BRM paid versus the $125,000 in rent CHI reported to the City from the occupants of Community House. CHI ignores the fact that when the City was receiving this rent, it was also expending over $200,000 annually to fund operations at Community House. Once the BRM took over, the City was able to save that money and use it for other projects.

If charging below-market rent to a non-profit religious organization on the same or worse terms than those received by a previous secular non-profit tenant would constitute government indoctrination, that was not clearly established in 2005. In Christian Science Reading Room Jointly Maintained v. City and County of San Francisco, 784 F.2d 1010, 1015 (9th Cir. 1986), as amended, 792 F.2d 124 (9th Cir. 1986), we held that leasing public property to a religious organization does not violate the Establishment Clause, as least where the lease was on the same terms as leases offered to commercial tenants. That case did not address whether it would violate the Establishment Clause if such a lease were offered on the same terms as those received by other non-profit tenants. When pressed during oral argument for their best case on this issue, plaintiff's' counsel cited this case. It does not help them.

At least one court has decided such a case. In Fairfax Covenant Church v. Fairfax County Sch. Bd., 17 F.3d 703 (4th Cir.), cert. denied, 511 U.S. 1143, 114 S.Ct. 2166, 128 L.Ed.2d 888 (1994), the Fourth Circuit considered a school board policy of leasing public facilities for an amount of rent determined by the type of entity. Student organizations and groups primarily benefitting the public did not have to pay rent. Id. at 704. Cultural, civic, and educational groups paid rent at a "noncommercial" rate. Id. For five years churches paid the noncommercial rate, which then escalated to the commercial rate. Id. at 705. The court held that charging churches the same below-market rent as the other non-profit groups would not violate the Establishment Clause, but that charging them commercial rent — which it termed "rent discrimination" — violated the Free Exercise and Free Speech Clauses. Id. at 706-07.

Faced with a dearth of binding case law on the subject of non-profit leases to religious organizations — and a Fourth Circuit case holding that "rent discrimination" based on religion was unconstitutional — a reasonable official would not have known that the BRM lease violated the Establishment Clause. When the City undertook its RFI/RFP process, the BRM was the only entity that proposed to purchase Community House. Given that no other non-profit organizations were willing or able to keep the doors of the shelter open, the decision to lease the building to the BRM was reasonable.

2. The $2 Million Sale Price

With respect to the option to purchase, case law before 2005 suggested that, generally, a sale of public property to a religious organization for less than market value would likely violate the Establishment Clause. See, e.g., Freedom, from Religion Found., Inc. v. City of Marshfield, 203 F.3d 487, 492 (7th Cir. 2000) (sale constitutional even though city did not solicit alternate bids: sale complied with state law, purchaser paid market value, and the city had no further maintenance responsibilities); Southside Fair Hous. Comm. v. City of New York, 928 F.2d 1336, 1348-49 (2d Cir. 1991) (sale constitutional where party paid market value, land was transferred for private use, and property did not appear connected to the city in any way). But no case in the Ninth Circuit or elsewhere had held that a below-market sale would be unconstitutional where the organization also executed an important city policy and saved the city money — the situation with which we are confronted here. The City did not give the BRM a gift; in fact, it received substantial consideration from the BRM. In return for management and ownership of the property, the City was relieved of the obligation and costs of operating the shelter, while at the same time ensuring as a matter of City policy that the shelter stayed open.

Moreover, although there might be an issue of fact as to the market value of the property, it would not have been clear to a reasonable official that setting the option price at $2 million would violate the Constitution. The appraisal prepared at the request of the City of Community House was accompanied by an explicit warning that the $3.22 million use value was not market value. Knipe told the City that the figure might be used as an opening offer during purchase negotiations, but the City was required by law to put the property up for auction. It could hardly have set the minimum auction price at the highest possible value and expect to receive any bids. The City knew only that the most probable sale price of the building was somewhere between $850,000 and $3.22 million. The property failed to receive a satisfactory bid at $2.5 million. The BRM initially wanted to pay only $1.8 million. Negotiating a $2 million option price, which under the lease would increase as time went on, seems a reasonable solution to the somewhat elusive concept of market value.

Although CHI offered to purchase the property for $2.5 million of its "equitable interest," CHI had no equitable interest to bid. It had agreed in 2004 to terminate the lease and the Operating Agreement and to transfer all of its assets to the City. Thus, Chatterton was correct in informing the mayor and council members that CHI could not possibly purchase the property.

Having received no viable bids at the auction, the City was not required to begin the entire the process all over again. Because the facility did not sell at the auction, the City Council was specifically empowered by Idaho law to dispose of the property however it believed was "in the best interest of the [C]ity." Idaho Code § 50-1403(1). And it did so.

Even if the auction had generated a viable bid, the City would not have been required to accept it. No principle of Establishment Clause jurisprudence requires that the government choose a secular entity over a religious one simply because it is secular. Having had problems with CHI's management in the past, the City was not obligated to continue to work with CHI when another opportunity presented itself. CHI was consistently late in providing the required financial audits and rental income reports to the City. CHI faced an allegation of embezzlement, and the President of CHI admitted that CHI had not been able properly to track all of its money. The City had given CHI a chance at helping the City ensure that the Boise homeless would have a place to sleep — a chance that lasted nearly ten years. Its decision to give a similar chance to the BRM did not violate the First Amendment.

V CONCLUSION

CHI must be satisfied with the City and the Council as defendants on the substantive issues raised in this case and with Chatterton and Birdsall in their official capacities only. Our decision today has no effect on CHI's claims against them. As the Supreme Court held in Owen v. City of Independence, "imposing personal liability on public officials could have an undue chilling effect on the exercise of their decision-making responsibilities, but . . . no such pernicious consequences [are] likely to flow from the possibility of a recovery from public funds." 445 U.S. 622, 653 n. 37, 100 S.Ct. 1398, 63 L.Ed.2d 673 (1980) (municipalities have no immunity from damages flowing from their constitutional violations). We hold only that as a matter of law, the individual defendants are beyond the reach of CHI's claims. To pursue these individuals — as suggested at oral argument by CHI's counsel — for damages, punitive or otherwise, serves no legally cognizable purpose.

Mayor Bieter and City Council members Jordan, Clegg, Bisterfeldt, Eberle, Mapp, and Shealy are absolutely immune from suit, either for damages or injunctive relief. The lease and sale of Community House to the BRM, preceded as it was by the City's long partnership with CHI and grants of large amounts of funding, "reflected a discretionary, policymaking decision implicating the budgetary priorities of the [C]ity and the services the [C]ity provides to its constituents." Bogan, 523 U.S. at 55-56, 118 S.Ct. 966.

City employees Chatterton and Birdsall are entitled to qualified immunity with respect to CHI's Establishment Clause and FHA claims against them in their individual capacities. At the time of the lease to the BRM, a reasonable official would not have known that those actions would result in government indoctrination or in violations of the FHA.

REVERSED and REMANDED.