Shannon v. United States Dept. of Housing & Urban Dev.

• Decision Date: 07 October 1969
• Docket Number: Civ. A. No. 69-197.
• Citation: 305 F. Supp. 205
• Parties: Maurice SHANNON et al. v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; George Romney, Secretary of Department of Housing and Urban Development; Warren P. Phelan, Regional Administrator, Region II, Department of Housing and Urban Development; and Thomas J. Gallagher, Regional Administrator, Federal Housing Administration, Department of Housing and Urban Development.
• Court: U.S. District Court — Eastern District of Pennsylvania

305 F. Supp. 205

Maurice SHANNON et al. v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; George Romney, Secretary of Department of Housing and Urban Development; Warren P. Phelan, Regional Administrator, Region II, Department of Housing and Urban Development; and Thomas J. Gallagher, Regional Administrator, Federal Housing Administration, Department of Housing and Urban Development.

Civ. A. No. 69-197.

United States District Court E. D. Pennsylvania.

October 7, 1969.

Edwin D. Wolf, Philadelphia, Pa., for plaintiffs, Michael Churchill, Stephens Clay, Robert B. Wolf, Philadelphia, Pa., of counsel.

Drew J. T. O'Keefe, U. S. Atty., Philadelphia, Pa., Merna B. Marshall, Asst. U. S. Atty., for defendants.

Arsen Kashkashian, Jr., Milton C. Sharp, Philadelphia, Pa., for Redevelopment Authority.

OPINION

JOSEPH S. LORD, III, District Judge.

This class action is brought pursuant to Title I of the Housing Act of 1949, as amended, 42 U.S.C.A. § 1441 et seq. (Supp.1969), (hereinafter cited as "Housing Act"), and the Demonstration Cities and Metropolitan Development Act, 42 U.S.C.A. § 3301 et seq. (Supp. 1969), (hereinafter cited as "Model Cities Act), by white and black residents, businessmen, and representatives of private civic organizations in the East Poplar Urban Renewal Area of Philadelphia. The individual defendants are those federal officials responsible for implementing the national housing policy under the Housing Act and the Model Cities Act. Plaintiffs initially requested a preliminary injunction against further insurance or the approval of further insurance of advances by the lending institution of construction funds for Fairmount Manor, an apartment project financed under the 221 (d) (3) program for rent subsidy under the Housing and Urban Development Act of 1965, 12 U.S.C.A. § 1715l(d) (3) (Supp.1969), and qualified for a rent supplement housing program under that Act (12 U.S.C.A. § 1701s (Supp.1969).

Fairmount Manor occupies the blocks between 6th & 7th Streets and Fairmount Avenue & Green Street within the East Poplar Urban Renewal Area, which is in turn bounded by Spring Garden Street & Girard Avenue, and by 5th & 9th Streets in Philadelphia. East Poplar is subject to an Urban Renewal Plan ("The Plan") approved by Philadelphia's City Council on December 24, 1959, and amended several times thereafter. Federal funds were made available to the Philadelphia Redevelopment Authority ("LPA") for the renewal of East Poplar under the terms of a loan and grant contract between the Department of Housing and Urban Development ("HUD") and the LPA. Plaintiffs' Exhibit 70 (hereinafter cited as "P.Ex.").

Plaintiffs' request for a preliminary injunction was denied by us on February 5, 1969, because we could find no irreparable harm to the plaintiffs if the injunction did not issue, and we could not then determine that the plaintiffs were likely to succeed on the merits of their complaint. Because of the importance to the public of the issues involved and the urgency to the plaintiffs of a decision on the merits, we heard argument on the defendants' motion to dismiss the complaint as soon as the parties were prepared. On February 17, 1969, we issued an order denying the motion.

Subsequently, after several days of testimony, the parties agreed to a settlement of the preliminary issue then facing the court, namely, whether the plaintiffs were, in fact entitled to the procedural opportunity granted in Powelton Civic Home Owners Ass'n v. Department of Housing & Urban Dev., 284 F.Supp. 809 (E.D.Pa., 1968). Under the terms of their settlement, HUD agreed to consider certain documentation in support of plaintiffs' position. On April 14, 1969, after consideration of the plaintiffs' proffered data and memoranda, HUD affirmed its earlier decision to permit the erection of Fairmount Manor.

Not unexpectedly dissatisfied with this result, the plaintiffs returned to us seeking review of HUD's decision, a possibility foreseen by the parties who had agreed that the court should retain jurisdiction over the case during HUD's deliberations. Plaintiffs adduced over a week's testimony, and now attack the Secretary's decision to approve Fairmount Manor on several grounds. Before considering them, however, it is necessary to explain at some length our reasons for denying the government's first motion to dismiss the suit, treating the issue of standing now, and deferring discussion of reviewability to our decision on the second motion to dismiss.

I.

FIRST MOTION TO DISMISS

a. Background

In their complaint, plaintiffs alleged that: pursuant to the original Plan for East Poplar, the LPA contracted with Abram Singer Sons, Inc., ("Singer") to erect 244 single family dwellings and to rehabilitate existing buildings. Relying on those facts, and representations made by Singer and the LPA, some of the plaintiffs made substantial investments, including the purchase of homes in East Poplar. However, from 1961 until the present time, only seventy-two of the 244 single family units have been constructed. In April, 1966, rehabilitation of the houses ceased, and houses on the Fairmount Manor site were demolished in lieu of rehabilitation. Singer proposed the substitution of a one-and-two-bedroom apartment project with subsidized rentals for the originally planned single family dwellings. This project received approval from the LPA and the Philadelphia City Council as well as federal funding. Construction began on January 3, 1969.

Finally, plaintiffs alleged that since the adoption of the original Plan, East Poplar has become a low-rent subsidy community contrary to the Plan's original purpose, to wit: only ninety privately-owned single family dwellings presently exist; East Poplar already has within its borders a 203-unit public housing project, and adjacent to East Poplar are two public housing projects of 1324 and 372 units; these three projects comprise 13% of all existing public housing projects in the entire City of Philadelphia. Plaintiffs further alleged that the apartment project would have a markedly deleterious impact upon the already precarious racial and socio-economic balance of the East Poplar community surrounding Fairmount Manor.

We read plaintiffs' complaint to assert their standing to challenge the adequacy of the procedures used by HUD and the LPA to change significantly the Plan of development for East Poplar. Plaintiffs initially alleged two procedural wrongs: first, that the Philadelphia City Council did not, and HUD had not required it to hold a public hearing on the question whether the allegedly significant change in the original Plan represented by Fairmount Manor should be approved; and second, that the Secretary of HUD (including his designate) refused to afford them a "procedural opportunity" as provided in Powelton Civic Home Owners Ass'n v. Department of Home & Urban Dev., 284 F.Supp. 809 (E.D.Pa., 1968), to show why the Plan's amendment should not be approved.

Their crucial allegation, as we viewed their complaint, was that, in effect, no adequate public hearing, as provided in § 105(d), 42 U.S.C.A. § 1455(d) (Supp. 1969), was held on the allegedly significant change in the Plan, and that the change was accomplished in an unfair and unauthorized manner. Plaintiffs then brought suit challenging the Secretary's approval of Fairmount Manor and requesting this court to order HUD to hear them, relying on Powelton, supra.

b. Standing

In Powelton the court enjoined the disbursement or approval by federal authorities under the control of the Secretary of additional funds to an urban renewal project, in which condemnation proceedings were still incomplete, until the plaintiffs were given an opportunity to present to HUD evidence of the inadequacy of relocation facilities for the project's displacees. The defendants sought to distinguish Powelton by pointing out that the Powelton plaintiffs were given a procedural opportunity to vindicate a specific statutory right to be relocated in adequate housing, 42 U.S.C.A. § 1455(c) (2) (Supp.1969), while plaintiffs here seek to vindicate more general provisions of the Act. These provisions place upon the Secretary a duty to assist and encourage "* * * the development of well-planned, integrated residential neighborhoods, the development and redevelopment of communities * * *", 42 U.S.C.A. § 1441 (Supp.1969), and a duty to approve loan and grant contracts only when he determines that there exists a "workable program" providing "for the establishment and preservation of a well-planned community with well-organized residential neighborhoods of decent homes and suitable living environment for adequate family life." 42 U.S.C.A. § 1451(c) (Supp.1969).

Defendants argued that the plaintiffs lacked standing to raise this issue because they did not possess the requisite directness of interest enjoyed by the plaintiffs in Powelton and the other relocation cases, since only those persons whose homes or property are taken for the project have any judicial standing. Since all such persons were removed from the tract in question by some time in 1962, no one, according to the defendants' argument, was left with standing to invoke the procedures contemplated by the Act.

This proposition we cannot accept.¹ While it may be true that in some respects the impact of the renewal project is less direct upon the present plaintiffs, who were not required to move, than upon those displaced, it cannot be gainsaid that the future impact of this plan more directly affects them. In determining whether these plaintiffs have the requisite directness of interest, the likelihood that the plaintiffs' interests will be adequately protected by the persons directly affected is a relevant consideration. Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 154, 71 S.Ct. 624, 95 L.Ed. 817 (1951) (Frankfurter, J., concurring); see, Pierce v. Society of the Sisters, 268 U.S. 510, 45 S.Ct....