Moorer v. Department of Housing & Urban Dev., 75 CV 255-W-1.

• Decision Date: 28 July 1976
• Docket Number: No. 75 CV 255-W-1.,75 CV 255-W-1.
• Citation: 417 F. Supp. 1261
• Parties: Juanita MOORER et al., Plaintiffs, v. The DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

417 F. Supp. 1261

Juanita MOORER et al., Plaintiffs, v. The DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT et al., Defendants.

No. 75 CV 255-W-1.

United States District Court, W. D. Missouri, W. D.

July 28, 1976.

J. D. Riffel, Legal Aid and Defender Society, Kansas City, Mo., for plaintiffs.

Bert C. Hurn, U. S. Atty., Mary Schneider, Asst. U. S. Atty., Thomas P. McNally, Regional Counsel of Housing and Urban Development, Gordon D. Gee, Stinson, Mag, Thomson, McEvers & Fizzell, Kansas City, Mo., for defendants.

MEMORANDUM AND ORDER

JOHN W. OLIVER, District Judge.

I.

This case presents the question of whether the Uniform Relocation Assistance and Real Property Acquisition Policies Act URA, 42 U.S.C. § 4601 et seq., covers displacement of persons resulting from the acquisition of property by a private developer under a program or project sponsored by the Department of Housing and Urban Development HUD.

In their complaint plaintiffs, individually and on behalf of a class of persons similarly situated, allege that they are resident tenants of several apartment buildings in Kansas City, Missouri. They further allege that they were notified by defendant American Development Corporation that they would have to vacate the premises on account of rehabilitation work to be done under Project Rehab, a program sponsored by defendant HUD to rehabilitate dilapidated inner-city dwellings.¹ Plaintiffs also assert that, although they have received or will receive some relocation assistance, they are entitled to the full benefits and services provided under the URA. Plaintiffs seek declaratory and injunctive relief establishing their entitlement to relocation services and benefits under the URA.²

Jurisdiction is asserted under various federal statutes including 28 U.S.C. §§ 1331, 1336, 1343(3) and (4), 1346(a)(2), 2201, 2202, and Section 10 of the Administrative Procedure Act, 5 U.S.C. §§ 701-06. We find and conclude that judicial review of agency action is proper here. Tullock v. State Highway Commission, 507 F.2d 712 (8th Cir. 1974); Lewis v. Brinegar, 372 F.Supp. 424 (W.D.Mo.1974).

Plaintiffs seek to represent all persons similarly situated "who have been or will be displaced by those phases of Project Rehab sponsored by defendant American Development Corporation, and denied assistance, services, benefits and rights provided by the Uniform Relocation Act URA."³ It is undisputed that at least 450 individuals and families who were occupying the various apartment buildings involved in American Development's phase of Project Rehab in issue here have been displaced. We find that the proposed class is so numerous that joinder of all members is impracticable. We further find that the question of basic entitlement to URA benefits is common to all members of the class and that the claims of each of the representative parties are typical of the class. We find also that the representative parties are represented by experienced and able counsel and will fairly and adequately protect the interests of the class. Finally, we find and conclude that the action is properly maintainable as a class action for injunctive and declaratory relief under Rule 23(b)(2), Fed.R.Civ.P.

The parties in this case have agreed to submit the question of plaintiffs' entitlement to URA benefits on a stipulated record. On August 14, 1975, a stipulation of fact was filed together with a stipulation of documents that could be considered by the Court. Thereafter, plaintiffs and defendant HUD filed cross-motions for summary judgment.⁴ American Development has filed a motion to dismiss which will be treated as a motion for summary judgment. Since there is no genuine issue as to any material fact claimed by any party, we find and conclude that the case is appropriate for disposition on summary judgment.

II.

The basic factual circumstances surrounding the displacement of plaintiffs from their residences are contained in the stipulation. That stipulation is lengthy and somewhat confusing in its sequence of events. Rather than reproduce the entire stipulation here, we will summarize the pertinent facts. We, of course, incorporate by this reference as further factual findings the stipulation filed by the parties. Any apparent variance between the following summation of fact and the stipulation will be governed by the stipulation.

Project Rehab was initiated by HUD in 1969 as an internally-developed program utilizing existing mortgage insurance programs in an effort to stimulate privately-sponsored rehabilitation of dilapidated inner city properties. The declared purpose of the program was to encourage large scale rehabilitation of existing structures in an effort to provide standard housing for low and moderate income residents of central cities and to meet a portion of the nation's housing production goal for the decade ending in 1978. It was determined by HUD that Project Rehab would be a priority commitment involving full-time staff, special intra-agency organizational relations, and special funding set aside. The program was to be funded through existing mortgage insurance and federal subsidy programs available for residential rehabilitation.

One of the existing mortgage insurance mechanisms utilized by HUD in connection with Project Rehab was the Section 236 program, 12 U.S.C. §§ 1715z-1 et seq. Section 236 of the National Housing Act was enacted in 1968 to provide assistance in financing the rehabilitation and construction of multi-family rental and cooperative projects for low and moderate income families.⁵ The type of assistance provided by Section 236 consists of mortgage insurance and periodic interest reduction payments to a private mortgagor to reduce the private sponsor's⁶ mortgage interest cost down as low as one percent, depending on the eventual tenant's income. Benefits were to be passed on to tenants in the form of lower rents. Tenants in the rehabilitated structure must pay either 25 percent of their adjusted income, or the "basic rental charge" determined by the costs of operating the project with debt service requirements on a one percent interest mortgage, whichever is greater, but in no event will the rental exceed the apartment's fair market value. Normally, a tenant's income for initial occupancy cannot exceed 135 percent of the public housing income limits for the area. Up to 20 percent of the units, and with special permission up to 40 percent of the units, can receive rent supplement assistance which is paid directly to the project owner.⁷

In order for a city to participate in the Project Rehab program, it had to be officially designated by HUD as a Project Rehab city. HUD established a processing procedure with specific criteria for determining on what basis cities would be invited to participate. Cities were screened on the basis of these criteria. Personal visits were conducted by HUD to each city considered. Once a city was designated as a Project Rehab city, HUD would commit the necessary housing subsidy funds.

On October 29, 1970, the City of Kansas City, Missouri, submitted a proposal to HUD, requesting that Kansas City be designated a Project Rehab City. That proposal was based on private sponsorship of large scale rehabilitation, including the use of the Section 236 program for multi-family structures. The City also recognized that assistance would have to be provided to persons displaced by the Project and agreed to coordinate such activities through its central relocation agency. After a visit by the HUD Review Team, Kansas City was invited to participate in the program as a Project Rehab City. Kansas City accepted the offer and HUD ear-marked assistance funds to finance rehabilitation of up to 2,500 housing units.

The HUD offer of participation was conditioned on the City's agreeing to establish a Project Rehab Steering Committee PRSC which was to coordinate Project Rehab activities in Kansas City. This condition was accepted and the Mayor appointed a Steering Committee consisting of representatives of various housing agencies and programs,⁸ and including, in an advisory capacity, a representative of the HUD area office. Among other responsibilities PRSC was charged with the duty of making a preliminary determination on applications of private sponsors seeking mortgage subsidy assistance. PRSC adopted policy statements and procedures governing the processing of applications in order to determine whether the applications submitted would satisfactorily further Project Rehab's goal of rehabilitating dilapidated inner city properties. PRSC screened all applications for assistance, including those submitted under the Section 236 program. Unless the PRSC approved the submission of the private sponsor's application to HUD, it could not be considered for the assistance funds earmarked for Project Rehab.⁹ PRSC did not, however, receive any funding from HUD or any other Federal agency.

Defendant American Development Corporation (in its capacity as agent for six California limited partnerships to be formed at the time of initial closing) applied for and was approved as a sponsor by PRSC and HUD to rehabilitate and market six housing projects under Project Rehab. American Development proposed to rehabilitate multi-family structures under the Section 236 program with a projected capacity of 680 dwelling units. All six projects were to receive interest subsidy payments and FHA insured mortgage financing as authorized by Section 236. In addition, each of the limited partnerships which would operate the six individual projects entered into an agreement with HUD for rent supplement assistance to be provided for a certain percentage of the units involved.

After approval of its application for sponsorship, defendant American Development acquired the property for the six multi-family projects, and apparently notified the residents that their tenancies would be terminated. All of the buildings acquired were located outside of areas...