The opinion of the court was delivered by: Moran, District Judge.
Plaintiffs, Wicker Park Historic District Preservation Fund and
several individual residents of the Wicker Park Historic
District ("Historic District"),*fn1 have brought this action
against the United States Department of Housing and Urban
Development ("HUD") and its Secretary to challenge HUD's
approval of a proposal for federally-subsidized rental housing,
part of which will be constructed on vacant lots within the
Historic District. The developers of the proposed project,
Bickerdike Redevelopment Corporation and West Town Housing
Partners (sometimes referred to as "Bickerdike"), have
intervened as defendants. Plaintiffs charge in their complaint
that HUD's processing and approval of the proposed project was
in violation of its statutory duties under the National
Historic Preservation Act, 16 U.S.C. § 470 et seq. ("NHPA"),
and the National Environmental Policy Act, 42 U.S.C. § 4331 et
seq. ("NEPA"). The complaint thus typifies the not uncommon
opposition that HUD has encountered from neighborhood
organizations in connection with the proposed construction of
federally-subsidized housing within their communities.*fn2
It also illustrates the frequently inevitable conflict between
the legitimate and laudable goals of differing federal policies
embodied in legislation. See Wisconsin Heritages, Inc. v.
Harris, 490 F. Supp. 1334, 1342 (E.D.Wis. 1980). In this case
the conflict is between the preservation of historically and
architecturally valued urban communities and the provision of
affordable and decent housing to lower income people in a
variety of geographic settings.*fn3
The parties have filed cross-motions for summary judgment
pursuant to Fed.R. Civ.P. 56. This court finds that there are
no genuine issues of material fact and that, under the
appropriate standard of review, HUD's approval of the proposed
project may not be disturbed. Defendants' motion
for summary judgment is therefore granted.
The project in question, known as the Bickerdike Redevelopment
Project, originally provided for the construction of 140 rental
units in low density ratios on sites scattered throughout the
Near Northwest Side of Chicago (R. 1, 5). The portion of the
project that plaintiffs challenge is known as "Cluster C" and
involves the construction of 27 one-, two- and three-bedroom
units on four vacant lots located within the Historic District
(R. 272-79).*fn5 The developers originally sought financing
from the Government National Mortgage Association ("GNMA") and
rental subsidies under § 8 of the United States Housing Act,
42 U.S.C. § 1437f. When they were unable to obtain GNMA funding
the developers reapplied to HUD for financing with tax-exempt
bonds under § 811(b) of the National Housing Act, 12 U.S.C. § 1748h-3(b).
HUD ultimately approved the project for FHA
mortgage insurance, 12 U.S.C. § 17151 (d)(4), the issuance of
tax-exempt bonds, and § 8 rental subsidies.
The developers began the funding process in March of 1980 by
submitting their proposal for initial technical approval by HUD
(R. 1-2).*fn6 Among other exhibits included in this
application were a location map, site plan, main elevation and
floor plans for the proposed project, and details regarding the
design and structure of the housing (R. 3, 84-85). HUD
conducted a preliminary evaluation and field inspection (R.
84-105). It ranked each of the proposed building clusters along
certain criteria. Cluster C received an overall ranking of 3.8
out of a possible five points. On the criterion of "Design
Compatibility — is the building design suited to the site,
does it fit in the neighborhood?", Cluster C received an
average ranking of 4 (R. 99).
As part of its preliminary evaluation HUD completed form ECO
2/3 — Normal and Special Environmental Clearance (R. 127-130).
On the question of compliance with standards concerning
historic properties, the project received a rating of A-(R.
127). The HUD field officer and a State Historic Preservation
officer ("SHPO") were listed as the "source/documentation" for
this rating. On the question of availability of various
utilities and other services, the project received a uniform
"A" rating, based on documentation by the City of Chicago (R.
HUD did not complete the section of the ECO 2/3 entitled
"Impacts on the Environment (Special Clearance)." This section
requires ratings on such questions as "impact on social fabric
and community structures" and "impact on aesthetics and urban
design" (R. 128). Under "Environmental Findings", HUD concluded
that "No EIS [Environmental Impact Statement] required. Project
is consistent with HUD environmental policies and requirements
and is not a major federal action significantly affecting the
quality of the environment" (R. 130). In addition, the project
was reviewed by nine different divisions of HUD and given
preliminary approval by each (R. 120). One of these divisions,
the Architectural Branch, concluded that the proposed design
concept of the project was desirable and the proposed living
unit designs were suitable (R. 163).
During the conditional commitment phase HUD representatives
attended a meeting with the developers, officials of the
Illinois Department of Conservation ("IDOC") and members of
various Wicker Park community groups to discuss the proposed
construction of subsidized housing in the Historic District (R.
383). Internal HUD memoranda during this period also indicate
HUD awareness that it was required to examine the effect of the
proposed project on the Historic District in determining
whether or not to fund the project (R. 384, 411).
The developer was required to, and did, submit details of the
design proposal for Cluster C to the SHPO for evaluation of its
compatibility with the Historic District (R. 385, 408, 410).
HUD representatives, in turn, were in touch with various SHPO's
and relied on their evaluations in conducting their historic
effects review (R. 416, 464).
On June 18, 1981, the Old Wicker Park Committee, a community
group, wrote to Bickerdike expressing its opposition to the
Cluster C development. The letter, which was copied to HUD,
IDOC and the National Trust for Historic Preservation, among
others, objected to (1) the architectural design as "totally
non-sympathetic with the rich architectural features of the
overall Wicker Park area;" (2) the introduction of a large
density of low income units "that would not inspire future
private development"; (3) the site planning which failed to
give adequate consideration to "views, landscaping . . . and
services such as garbage and parking"; and (4) the general
appearance and subsequent maintenance of the project (R.
406-407). The developer responded specifically to each of these
concerns in a letter which it copied to HUD and the other
entities noted above (R. 388-90).
On September 24, 1981, HUD submitted to the federal Advisory
Council on Historic Preservation ("ACHP") a report concluding
that the Bickerdike project would not have an adverse effect on
the Historic District (R. 412-457). The report specified that
the proposed structures were in scale with buildings in the
Historic District and that the proposed building design was
compatible with existing structures in six respects (R.
413-414). The report also noted three respects in which the
project would benefit the Historic District: (1) the proposed
sites were vacant lots which have a detrimental aesthetic
effect; (2) the new construction would be an incentive to
additional investment in the area; and (3) the project would
provide a limited amount of low- and moderate-income housing
where "gentrification" had reduced the supply of such housing
(R. 414). HUD concluded its report with the recognition that
the construction of housing even more compatible with the
Historic District was theoretically possible but unlikely,
given the cost limits on construction of § 8 housing (R.
414-15). HUD's finding of no adverse effect was expressly
conditioned upon the SHPO's review and approval of the final
plans (R. 412).
On October 13, 1981 ACHP concurred in HUD's report and finding
of no adverse impact (R. 458). On October 26, 1981 HUD
completed an amended ECO 2/3 (R. 464-68), in which it rated the
proposed project "B" as to compliance with applicable standards
for historic properties (R. 465). As to all other criteria, HUD
gave the project the same ratings it had received on the
original ECO 2/3.
The developer then initiated the firm commitment review process
(R. 272-73). During this phase of review the project architect
submitted to IDOC a set of drawings and specifications for the
proposed Cluster C development, which incorporated changes
earlier suggested by the SHPO. Also submitted were samples of
building materials to be used in construction (R. 472). The
SHPO reviewing the project then informed HUD and the Advisory
Council on Historic Preservation that, based on these final
plans and specifications, IDOC had no objection to initiation
of construction activities. He requested, however, an
opportunity to review and approve paint color selections as
they were chosen (R. 473).
On January 18, 1981 plaintiffs in this action wrote to Senator
Charles Percy to voice their objections to the Cluster C
development. Plaintiffs charged that HUD had ignored the
required review process for federally-funded projects in
designated historic districts. The letter further complained
that IDOC and ACHP had approved the project without soliciting
comments of plaintiffs or other members of the community.
Finally, plaintiffs contended that the proposed project would
encourage demolition, discourage rehabilitation and strain
already inadequate city services (R. 345-46).
Percy forwarded the letter to HUD (R. 347). HUD responded that
(1) the project involved no demolition; (2) the project
architect had designed buildings compatible in style, scale and
texture with the Historic District; (3) the architect
redesigned certain features of the project in conjunction with
the SHPO; (4) it believed the project would encourage
reinvestment in and preservation of the Historic District; (5)
both IDOC and ACHP had concluded that the project would have no
adverse effect on the District; and (6) the SHPO did attend a
meeting with community groups on March 30, 1981 to discuss the
project (R. 348)
After completing the three-step review process, HUD gave final
approval for funding of the Bickerdike Development Project
On August 19, 1981 plaintiffs filed a two-count complaint
against HUD, seeking a declaration that it had violated
statutory requirements for reviewing the proposed project and
an injunction against HUD's participation in the project. On
January 18, 1982 this court dismissed the case with leave to
reinstate because HUD had not yet completed its review process
nor had it made a final determination regarding federal funding
of the project.
On September 20, 1982 plaintiffs filed an amended complaint
challenging HUD's approval of the project, and moved for a
temporary restraining order. That motion was denied on
September 21, 1982, after discussion with the parties
respecting the expectable course of development and, in that
context, a briefing schedule on summary judgment motions was
THE CROSS-MOTIONS FOR SUMMARY JUDGMENT
The parties agree that the standards governing this court's
review of HUD's decision to approve mortgage insurance and
rental subsidies for the Bickerdike Redevelopment Project are
found in the Administrative Procedure Act ("APA"), 5 U.S.C. § ...