several deadline extensions from HUD (R. 184-189). This
application contained, among other documents, exhibits
evidencing permissive zoning, a location map, and schematic
drawings of the project (R. 189).
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.
On the amended ECO 2/3, HUD completed the special environmental
clearance section, giving the project an "A" rating on the
criteria of "impact on social fabric and community structure"
and "impact on aesthetics and urban design." The amended ECO
2/3 contained two additional comments: first, that
environmental clearance was "subject to compliance with the
`Determination of No Adverse Effect,' namely SHPO's review and
approval of final plans and specifications for the project";
and second, that "this form has been completed pursuant to
advice of counsel to clearly demonstrate that special clearance
procedures were followed for project. . ." (R. 468). HUD issued
a conditional commitment on the proposed project on October 26,
1981 (R. 269-71).
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
B. The Litigation
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
A. Standard of Review
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. § 702
et seq. HUD's decision can be set aside only if it is
found to be
(A) arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with the law;
(B) contrary to constitutional right, power, privilege, or
(C) in excess of statutory jurisdiction, authority, or
limitations, or short of statutory right;
(D) without observance of procedure required by law. . . .
5 U.S.C. § 706(2).
As to the claims which plaintiffs make in this case, the APA
requires the court to engage in a threefold inquiry: (1) Did
HUD review and assess all factors it is legally required to
consider in making a final determination; that is, did it
comply with statutorily mandated procedures? Stryker's Bay
Neighborhood Council v. Karlen, 444 U.S. 223, 227, 100 S.Ct.
497, 499, 62 L.Ed.2d 433 (1979); Citizens to Preserve Overton
Park v. Volpe, 401 U.S. 402, 417, 91 S.Ct. 814, 824, 28
L.Ed.2d 136 (1970); Alschuler v. Dept. of Housing and Urban
Development, 686 F.2d 472, 481 (7th Cir. 1982); Nat. Ctr. for
Preservation Law v. Landrieu, 496 F. Supp. 716, 724 (D.S.C.),
aff'd 635 F.2d 324 (4th Cir. 1980); (2) In reaching its
decision, did HUD develop a factual record sufficiently
specific to permit judicial review? Ely v. Velde,
451 F.2d 1130, 1138 (4th Cir. 1971); Edgewater Community Council, Inc.
v. Dept. of Housing and Urban Development, No. 80 C 5690, p. 5
(N.D.Ill. 1982); and (3) Was HUD's decision reasonably
supported by the administrative record so developed? Bowman
Transp. v. Ark.-Best Freight System, 419 U.S. 281, 285-86, 95
S.Ct. 438, 441-442, 42 L.Ed.2d 447 (1974). Thus, although this
court's "inquiry into the facts is to be searching and careful,
the ultimate standard of review is a narrow one. The court is
not empowered to substitute its judgment for that of the
agency." Citizens to Preserve Overton Park v. Volpe, 401 U.S.
at 416, 91 S.Ct. at 824.*fn7
B. HUD's Duties Under the National Historic Preservation
Act and the National Environmental Policy Act
The National Historic Preservation Act, 16 U.S.C. § 470 et
seq., which was enacted for the purpose of aiding in the
preservation of "the historical and cultural foundations of the
Nation," requires that federal agencies,