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May 24, 1972


The opinion of the court was delivered by: McLAREN, District Judge.


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 income housing.

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.

In May 1971 the SECC objected to the project on the ground that it would concentrate low-income blacks in the area. On July 15, 1971 a conference was called by HUD and FHA — at SECC's request and in response to its objections to the project. The parties were represented by counsel and made oral and written presentations.

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 ...

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