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December 16, 1982


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.


A. HUD Review

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. 128).

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).

Based on the foregoing review, the Bickerdike project received preliminary approval for § 8 subsidies on September 7, 1980 (R. 173-176), and the developers then proceeded to the next review stage, the conditional commitment process. The developers submitted their application for a conditional commitment on February 12, 1981 after receiving 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 established.


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. ยง ...

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