South East Lake View Neighbors v. Department of Housing and Urban Development, No. 81-2104

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtBefore WOOD and CUDAHY, Circuit Judges, and DUMBAULD; HARLINGTON WOOD, Jr.; CUDAHY
Citation685 F.2d 1027
Parties13 Envtl. L. Rep. 20,047 SOUTH EAST LAKE VIEW NEIGHBORS, et al., Plaintiffs-Appellants, v. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants-Appellees, Sheldon Baskin, et al., Intervening Defendants-Appellees.
Docket NumberNo. 81-2104
Decision Date28 July 1982

Page 1027

685 F.2d 1027
13 Envtl. L. Rep. 20,047
SOUTH EAST LAKE VIEW NEIGHBORS, et al., Plaintiffs-Appellants,
v.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, et al.,
Defendants-Appellees,
Sheldon Baskin, et al., Intervening Defendants-Appellees.
No. 81-2104.
United States Court of Appeals,
Seventh Circuit.
Argued Sept. 25, 1981.
Decided July 28, 1982.

Page 1029

Lawrence P. Bemis, Kirkland & Ellis, Chicago, Ill., for plaintiffs-appellants.

Dan K. Webb, U. S. Atty., Frederick H. Branding, Asst. U. S. Atty., Chief, Civil Division, Mary S. Rigdon and Edward J. Moran, Ass't. U.S. Attys., Chicago, Ill., for defendants-appellees.

Jack M. Siegel, Chicago, Ill., for intervening defendants-appellees.

Before WOOD and CUDAHY, Circuit Judges, and DUMBAULD, Senior District Judge. *

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

Page 1030

South East Lake View Association and the Park West Community Association, two neighborhood associations devoted to promoting the quality of life in the Broadway-Diversey 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. § 1715l, 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.

Page 1031

The 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 Broadway-Diversey 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, essentially requires HUD to examine a neighborhood for its safety, sanitation, racial concentration, and social, recreational, and employment resources before committing federal funds to the building and offering low income tenants the opportunity to reside there at subsidized rents. Plaintiffs, therefore, contend that Section 8 funding to the project is an illegal expenditure of funds. They ask the district court to enjoin Section 8 funding, invalidate the federal mortgage insurance, and rescind the purchase of the mortgage.

The plaintiffs also alleged HUD did not file an environmental impact statement under Section 102(2)(C) of the National Environmental Policy Act of 1969, 42 U.S.C. § 4332(2)(C) ("NEPA"), before approving the application. 3 Rather than prepare a

Page 1032

full environmental impact statement, HUD issued a special environmental clearance under its own regulations, 24 C.F.R. §§ 50 et seq. An environmental clearance is an abbreviated inquiry undertaken after HUD concludes its actions are too minor to justify an exhaustive environmental study. HUD concluded in the environmental clearance that the project would not damage the neighborhood. Contending the environmental clearance was inadequate, the plaintiffs alleged, first, that subsidizing the building was a major federal action requiring full environmental study under 42 U.S.C. § 4332(2)(C) and second, that despite the express directives of 42 U.S.C. § 4332(2)(C)(iii), alternatives to the site were not considered before HUD approved funding. The plaintiffs again asked the district court to enjoin Section 8 funding.

Finally, the plaintiffs sought to enjoin HUD from insuring advances on the building mortgage and the Government National Mortgage Association from purchasing it. The plaintiffs' possible success on these two counts rests on the building's eligibility for Section 8 funding. The National Housing Act of 1934, 12 U.S.C. § 1715l (b), allowed HUD to insure advances on mortgages for new construction eligible for Section 8 funding. However, the Illinois Housing Development Authority applied for federal mortgage insurance only after it became clear that the project could not qualify for advantageous tax treatment under the original plan. Filed in August, 1979, the amended application was approved in September, 1980 when HUD insured the mortgage for $16.8 million over the next forty years. The plaintiffs allege that since the project was ineligible for Section 8 funding, the mortgage insurance agreement...

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38 practice notes
  • Banks v. Secretary of Indiana Family and Social Services Admin., No. 92-2299
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • June 15, 1993
    ...that the plaintiffs' claims are not moot. Cf. South East Lake View Neighbors v. Department of Housing and Urban Development, 685 F.2d 1027, 1039 n. 9 (7th Cir.1982) (analyzing case under standing principles rather than mootness doctrine because standing was basis of district court's decisio......
  • Alschuler v. Department of Housing and Urban Development, No. 81-1904
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • August 4, 1982
    ...(Brennan, J., concurring). Those allegations are sufficient to confer Article III standing. 4 See South East Lake View Neighbors v. HUD, 685 F.2d 1027 No. 81-2104 (7th Cir. The district court also concluded that plaintiffs satisfied the zone of interests test. 515 F.Supp. at 1228. Defendant......
  • GETTYSBURG BATTLEFIELD v. Gettysburg College, Civ. A. No. 1:CV-91-1494.
    • United States
    • United States District Courts. 3th Circuit. United States District Court of Middle District of Pennsylvania
    • July 2, 1992
    ...(standing) must continue throughout its existence...." See, e.g., South East Lake View Neighbors v. Department of Housing & Urban Dev., 685 F.2d 1027, 1039 n. 9. (7th Cir.1982). Here federal defendants argue that, because NEPA only applies to federal projects, courts only have the authority......
  • Cornell Village Tower Condo. v. DEPT. OF HUD, No. 88 C 10099.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • October 9, 1990
    ...412 U.S. 669, 686-87, 93 S.Ct. 2405, 2415-16, 37 L.Ed.2d 254 (1973); South East Lake View Neighbors v. Dep't of Housing & Urban Dev., 685 F.2d 1027, 1035 (7th Cir.1982), a generalized and abstract grievance common to all citizens, such as the interest in ensuring compliance with a constitut......
  • Request a trial to view additional results
38 cases
  • Banks v. Secretary of Indiana Family and Social Services Admin., No. 92-2299
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • June 15, 1993
    ...that the plaintiffs' claims are not moot. Cf. South East Lake View Neighbors v. Department of Housing and Urban Development, 685 F.2d 1027, 1039 n. 9 (7th Cir.1982) (analyzing case under standing principles rather than mootness doctrine because standing was basis of district court's decisio......
  • Alschuler v. Department of Housing and Urban Development, No. 81-1904
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • August 4, 1982
    ...(Brennan, J., concurring). Those allegations are sufficient to confer Article III standing. 4 See South East Lake View Neighbors v. HUD, 685 F.2d 1027 No. 81-2104 (7th Cir. The district court also concluded that plaintiffs satisfied the zone of interests test. 515 F.Supp. at 1228. Defendant......
  • GETTYSBURG BATTLEFIELD v. Gettysburg College, Civ. A. No. 1:CV-91-1494.
    • United States
    • United States District Courts. 3th Circuit. United States District Court of Middle District of Pennsylvania
    • July 2, 1992
    ...(standing) must continue throughout its existence...." See, e.g., South East Lake View Neighbors v. Department of Housing & Urban Dev., 685 F.2d 1027, 1039 n. 9. (7th Cir.1982). Here federal defendants argue that, because NEPA only applies to federal projects, courts only have the authority......
  • Cornell Village Tower Condo. v. DEPT. OF HUD, No. 88 C 10099.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • October 9, 1990
    ...412 U.S. 669, 686-87, 93 S.Ct. 2405, 2415-16, 37 L.Ed.2d 254 (1973); South East Lake View Neighbors v. Dep't of Housing & Urban Dev., 685 F.2d 1027, 1035 (7th Cir.1982), a generalized and abstract grievance common to all citizens, such as the interest in ensuring compliance with a constitut......
  • Request a trial to view additional results

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