The opinion of the court was delivered by: McLAREN, District Judge.
MEMORANDUM OPINION AND ORDER
This suit challenges federal subsidies of a housing project in
the Hyde Park-Kenwood neighborhood of Chicago as fostering racial
concentration. The principal plaintiff is the South East Chicago
Commission (SECC), a voluntary citizens' organization in Hyde
Park-Kenwood. Defendants include both federal and City of Chicago
housing agencies and officials, and the developers, managers and
financiers of this housing project. The principal non-government
defendant is Lake Village Associates (LVA), the developers of the
contested housing project.
Defendants have moved to dismiss the complaint for failure to
state a claim upon which relief can be granted, and both sides
have moved for summary judgment on Counts I, II and IV of the
complaint; the federal defendants have moved to dismiss the other
count, Count III; and plaintiffs have moved for a preliminary
injunction. The Court finds for the defendants on Counts I, II
and IV, and those counts will be dismissed; however, the federal
defendants' motion to dismiss Count III and plaintiffs' motion
for preliminary injunction are denied. The following incorporates
the Court's findings of fact and conclusions of law.
The building in question is presently under construction on
parcel HR1B (high density residential) in the Hyde Park-Kenwood
Urban Renewal Area located on the south side of Chicago. The
history of the project is as follows. On November 14, 1966 the
City of Chicago's Department of Urban Renewal (DUR) offered HR1B
and neighboring parcels for sale for redevelopment. Both LVA and
United Dwelling Foundation of Metropolitan Chicago-Amalgamated
Social Benefits Association (UDF-Amalgamated) made proposals.
LVA's was for mainly upper-income units.
Although both proposals met the DUR requirement of at least 20
per cent moderate income level units, the DUR staff criticized
the economic homogeneity of the developments proposed. On June
20, 1967 at a public meeting of the DUR board, LVA and
UDF-Amalgamated entered into a memorandum of agreement to divide
the parcels with LVA to develop HR1B. The DUR board approved the
agreement, which provided for a minimum of 20 per cent moderate
In January 1969, LVA proposed to DUR that due to the influx of
new luxury units in Hyde Park-Kenwood, moderate income housing
might be more appropriate for HR1B. On July 22, 1969, after
reviewing this proposal, DUR approved LVA's preliminary proposal
for moderate income housing on the site and authorized LVA to
apply for Section 236 financing under the National Housing Act of
1937, as amended, 42 U.S.C. § 1401 et seq.
LVA's final plans for HR1B were submitted to DUR, the Federal
Housing Administration (FHA) and the community. The Hyde
Park-Kenwood Conservation Community Council (CCC), the official
body through which the local community participates in urban
renewal decisions, approved the LVA § 236 project. Thereafter,
the City of Chicago Plan Commission, the City Council Committee
on Buildings and Zoning, and the City Council approved the
necessary zoning ordinances.
On July 23, 1971, HUD prepared its own analysis. Its conclusion
was that the LVA project was likely to have an integrated
occupancy. It also noted that there was a great need for Section
236 units in Hyde Park-Kenwood due to displacement of former
black residents during urban renewal.
On July 26, 1971, Ernest Stevens, Director of the Chicago FHA
Insuring Office, issued his administrative determination. He
concluded that there was a reasonable probability that the
project would be racially mixed. He also concluded that there was
a great need for low income housing in this area. In order to
further the integration objective, Stevens ordered: (1) the
Section 236 income limits waived on 20 per cent of the project's
units; (2) Section 221(d)(3) exception income limits applied to
all two-bedroom units; (3) the staging of three-bedroom units to
delay their availability until after the highrise units had been
rented; and (4) a detailed plan of tenant selection procedures
devised to attain the maximum possible racial mixed in the
occupancy of the project. LVA complied. Shortly thereafter, this
suit was filed.
In Count I, plaintiffs demand a declaration that their rights
under the Fifth and Fourteenth Amendments to the Constitution of
the United States, the National Housing Act, and the 1964 and
1968 Civil Rights Acts (42 U.S.C. § 2000d et seq.; 42 U.S.C. § 3601
et seq.) have been violated, and that they have a right to
prevent the use of federal subsidy programs to sponsor the LVA
project. They also seek an injunction prohibiting the federal
defendants and the City of Chicago from approving mortgage
insurance, an interest reduction subsidy, or rent supplement
funds for the project.
The specific claim urged in support of an injunction is that
the subsidies will increase racial concentration and segregation
in violation of plaintiffs' constitutional and statutory ...