South East Lake View Neighbors v. Department of Housing and Urban Development, Sheldon Baskin, Intervening

685 F.2d 1027, 13 Envtl. L. Rep. (Envtl. Law Inst.) 20047, 1982 U.S. App. LEXIS 17063
CourtCourt of Appeals for the Seventh Circuit
DecidedJuly 28, 1982
Docket81-2104
StatusPublished
Cited by52 cases

This text of 685 F.2d 1027 (South East Lake View Neighbors v. Department of Housing and Urban Development, Sheldon Baskin, Intervening) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
South East Lake View Neighbors v. Department of Housing and Urban Development, Sheldon Baskin, Intervening, 685 F.2d 1027, 13 Envtl. L. Rep. (Envtl. Law Inst.) 20047, 1982 U.S. App. LEXIS 17063 (7th Cir. 1982).

Opinions

HARLINGTON WOOD, Jr., Circuit Judge.

Two non-profit associations and four individual plaintiffs appeal the district court’s dismissal of their action against the Department of Housing and Urban Development (“HUD”) and several agency officials. The [1030]*1030South East Lake View Association and the Park West Community Association, two neighborhood associations devoted to promoting the quality of life in the BroadwayDiversey area in the City of Chicago and Richard Means, Cheryl Raff, Clara Goldman, and Evelyn Caldwell, all residents of the neighborhood, brought suit against HUD to halt federal funding of the Broadway-Diversey building project. After the plaintiffs filed the action, the project developers and several prospective tenants, given preferential status because they had lived in the old Rienzi Hotel demolished to make way for the Broadway-Diversey building, intervened as defendants.1

Plaintiffs alleged HUD processed the request for federal funding under the wrong regulations and did not file the environmental impact statement required by 42 U.S.C. § 4332(2)(C). The plaintiffs alleged that construction and occupation of the building, an apartment complex for low income, handicapped, or elderly residents, would lead to increased noise and air pollution, heightened risks of crime and injury, increased crowding and congestion, and enlarged traffic and parking difficulties. Although the plaintiffs filed this action before construction began on the building, the district court did not decide HUD’s motion to dismiss until after construction was virtually complete, nearly one year later. The district court held the plaintiffs lacked standing and dismissed the suit because, with the building virtually complete and soon to be occupied, no judicial relief would redress the plaintiff’s injuries. We affirm.

I. Background

A. The Broadway-Diversey Building And Neighborhood

The Broadway-Diversey building is a seventeen-story, 249-unit apartment building standing at the corner of Diversey Street and Broadway Street in Chicago. The building was constructed with HUD’s promise to subsidize rents and with the developer’s guarantee that of the 249 units, 147 would be occupied by low income families with children or by handicapped or elderly residents. Under the agreement, the remaining 102 apartments, forty percent of the building’s total, would be rented at prevailing market rates.

The Illinois Housing Development Authority filed the initial application requesting HUD to reserve funds for subsidizing rents in the building. Section 201(a) of the Housing and Community Development Act of 1974, 42 U.S.C. § 1437f (“Section 8”), authorizes HUD to contract with state housing agencies and commit federal funds to subsidize rents in privately owned apartment buildings catering to low income tenants. Holbrook v. Pitt, 643 F.2d 1261, 1266-67 (7th Cir. 1981). Under Section 8, tenants receive federal subsidies so no resident pays more than twenty-five percent of his net income in rent. Those subsidies are paid directly to the building owner. HUD also guaranteed the building’s mortgage pursuant to Section 221(d)(4) of the National Housing Act of 1934, 12 U.S.C. § 17157, and the Government National Mortgage Association eventually purchased it under Title III of the National Housing Act of 1934, 12 U.S.C. §§ 1716 et seq.

The building stands on a site which the plaintiffs allege is notorious for its violent crime and sordid atmosphere. They claim male and female prostitution is prevalent, a methadone drug rehabilitation clinic is located within a block of the building, and that the site, the frequent scene of illegal narcotics transactions, commands and receives extraordinary police protection. They also allege that the building stands in an area among the most congested in the country: it holds between 82,000 and 100,-000 inhabitants per square mile, and over 40,000 automobiles and 12,000 pedestrians pass through the Broadway-Diversey intersection daily.

[1031]*1031The plaintiffs first sought to stop federal participation in construction of the apartment building in mid-summer 1980, when they filed their original complaint in this action. They filed the complaint one year after the Illinois Housing Development Authority applied to HUD to reserve Section 8 funds for the project and one month after existing structures were razed. In September, 1980, HUD gave final approval for federal rent assistance and mortgage insurance, and building construction began. At the same time, HUD moved to dismiss this action for the plaintiffs’ lack of standing to sue. In response to the motion, the plaintiffs amended their complaint, adding neighbors Evelyn Caldwell and Clara Goldman as plaintiffs.

B. The Complaint

Under HUD regulations, Section 8 rental assistance is available for three types of housing: new construction, rehabilitated existing structures, and already existing structures. If a structure is inhabitable, HUD may enter into a long term commitment to provide federal rent supplements for low income tenants meeting eligibility criteria. The Broadway-Diversey complex is new construction, and if HUD’s commitment withstands the challenge of this lawsuit, the agency will pay approximately $20 million in rent supplements to the building owners over the next two decades.

The plaintiffs allege HUD approved Section 8 funding under the wrong regulations and argue that, as a result, the BroadwayDiversey area does not satisfy the site and neighborhood standards which condition the allocation of Section 8 funds under HUD regulations.2 HUD and state housing agencies divide responsibilities for processing applications for Section 8 funding. The state agency processes applications exclusively requesting Section 8 funding. It examines those applications under the “fast tract” regulations, 24 C.F.R. §§ 883 et seq. (1979), where HUD plays only a supervisory role. On the other hand, HUD processes applications requesting both Section 8 funding and federal mortgage insurance under the agency’s “slow track” regulations, 24 C.F.R. §§ 880 et seq., where it gives the proposal closer scrutiny. While the Broadway-Diversey funding request did not initially seek federal mortgage insurance, the plaintiffs contend that once the Illinois Housing Development authority added the request to the application, slow track regulations governed. The plaintiffs have alleged that HUD regulations required the federal agency to process the Broadway-Diversey funding application itself and if the regulations had been followed the building would have failed the site and location test. The regulation at issue, 24 C.F.R. § 880.112

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Bluebook (online)
685 F.2d 1027, 13 Envtl. L. Rep. (Envtl. Law Inst.) 20047, 1982 U.S. App. LEXIS 17063, Counsel Stack Legal Research, https://law.counselstack.com/opinion/south-east-lake-view-neighbors-v-department-of-housing-and-urban-ca7-1982.