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Gautreaux v. Pierce

April 29, 1983


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 66 C 1459 and 66 C 1460 -- Marvin E. Aspen, Judge.

Before CUMMINGS, Chief Judge, BAUER and POSNER, Circuit Judges.

Per Curiam. This case is still another aspect of the Gautreaux saga commencing in 1966 and primarily involving locations for public housing in the Chicago metropolitan area. The history of this complex litigation is described in Gautreaux v. Pierce, 690 F.2d 616, 619-621 (1982), where we approved a June 30, 1981, consent decree terminating the litigation that had lasted until then.*fn1 Paragraph 8.1 of the consent decree provides that jurisdiction is retained by the district court to enable the Gautreaux plaintiffs and the Department of Housing and Urban Development (HUD) to apply for further orders involving the construction, implementation, modification or enforcement of the consent decree. Gautreaux v. Landrieu, 523 F. Supp. 665, 680-681 (N.D. Ill. 1981). The present controversy involves HUD's approval of housing assistance payments for development of the Academy Square housing project on the Near West Side of Chicago.

On September 30, 1981, HUD approved the Academy Square project being developed by intervenors Eugene Heytow, Richard Parrillo and Marcel Lutwak (developers).Academy Square is a proposed 200-unit project consisting of 100 units of assisted family housing and 100 units of elderly housing at Van Buren and Loomis Streets in Census Tract 2817 which is within a "Revitalizing Area." Such an area is defined in the consent decree as a Chicago area "having substantial minority occupancy and undergoing substantial minority occupancy and undergoing substantial physical development" located within certain census tracts including Census Tract 2817. 523 F. Supp. at 674, 683. According to Paragraph 5.8.2(iii) of the consent decree, HUD will not reserve contract authority for new construction assisted housing units in a Revitalizing Area of Chicago if the number of apartments and single family residences made available under an assisted housing program in the particular census tract "would constitute more than 15% of the total number of apartments and single family residences in such census tract." Id. at 680. In deciding to reserve funds for the Academy Square project, HUD relied to some extent on 1970 census data because its Chicago area office did not have 1980 census data at the time. Although construction of Academy Square is within the density ceiling udner the 1970 census data, under the 1980 data non-elderly assisted housing would constitute 18.25% of the dwelling units. Gautreaux v. Pierce, 548 F. Supp. 1284, 1286 n. 2, 1289 (N.D.Ill. 1982).

On August 20, 1982, the developers petitioned the district court for an order declaring that no previous court orders precluded HUD from providing Section 8 housing assistance payments program for new construction refers to non-elderly housing subsidized by HUD under Section 8 of the United States Housing Act of 1937 (42 U.S.C. ยง 1437(f)). Assisted housing is defined in the consent decree as non-elderly housing subsidized by HUD. 523 F. Supp. at 673. The requested relief was to satisfy bond counsel and was in the nature of emergency relief "because of the indisputable and uncontested need for immediate action by the bonding authorities." 548 F. Supp. at 1288 n. 5.

On the same day, William Lavicka and Barbara Piegare (residents), who live near the Academy Square project, petitioned the district court to issue a rule to show cause why the Secretary of HUD and its Chicago area manager should not be held in contempt of court for reserving Section 8 assisted housing funds for the Academy Square project. The developers and residents were permitted to intervene*fn2 for the limited purposes of requesting the district court to determine whether previous orders precluded HUD and others from providing housing assistance payments ot the Academy Square development and financing for its construction and whether HUD's actions with regard to that project were permitted by the consent decree. 548 F. Supp. at 1286.On August 23, Judge Aspen entered an order granting the devlopers the relief they requested. Residents' App. 23-25. On August 25 the district judge handed down a memorandum opinion and order reiterating permission for the developers and residents to intervene, and holding that nothing in the consent decree or prior orders of the district court precluded HUD, the Chicago Housing Authority or the Chicago Metropolitan Housing Development Corporation from providing financing for the construction of Academy Square. 548 F. Supp. 1284-1289. Despite this firm holding, the district court also granted the residents leave to supplement the record on the question of the availability to HUD of the 1980 census data, essentially "so that the issue will be preserved for an eventual appeal, should that occur." Id. at 1289.

On September 2, 1982, Judge Aspen handed down a second memorandum opinion and order reported in 548 F. Supp. 1284, 1289-1294. The court granted the residents' motion for reconsideration of the August 25 opinion and order, but after reviewing the supplemental factual submissions and hearing oral argument, the district judge reaffirmed his earlier opinion and again held that the Academy Square project complied with the consent decree even though HUD had based its September 30, 1981, approval in large part on 1970 census data rather than on 1980 census data. In this second opinion, the district court found that 1980 census data was not available to HUD's Chicago area office at the time it approved the Academy Square project and that HUD had acted reasonably in using the 1970 data supplemented by on-site visits to ascertain whether the project complied with the density requirements of the consent decree.

In addition, because of the "severe time constraints involved in securing financing for and beginning construction of the Academy Square project and the virtual certainty of an appeal," id. at 1292, the district judge held in the alternative that even if the project approval was in violation of the consent decree, a waiver of the density requirements was appropriate in this case. HUD had not sought a waiver in September 1981 when it originally approved the project because at that time its Chicago area director thought the project complied with the consent decree's density requirement (Residents' App. 76-77). However, at the suggestion of the district court, HUD filed a motion on August 30 requesting waiver of the 15% density ceiling of Paragraph 5.8.2(iii) pursuant to Paragraph 8.5 of the consent decree, both quoted in the Appendix hereto. Included in the materials supporting HUD's motion was a letter from the Gautreaux plaintiffs' counsel joining in that request. Judge Aspen stated that if the Gautreaux plaintiffs' counsel and HUD had agreed to such a waiver before HUD approved the project, no court intervention would have been necessary under Paragraph 8.5. Since the waiver question arose after HUD's approval, the court held it should determine whether approving the contract authority "is in the best interests of the community where the assisted housing would be located," a determination required to be made under Paragraph 8.5 of the consent decree in the absence of consent by plaintiffs' counsel. After reviewing the evidence, the court concluded that the Academy Square project is in the best interests of the community, and that waiver was appropriate. We affirm on the basis of waiver.

The consent decree contains two provisions which control the outcome of this case. As noted above, Paragraph 5.8.2(iii) provides a 15% density ceiling on assisted housing units in a Revitalizing Area. Paragraph 8.5 of the consent decree, however, permits HUD to waive the 15% density ceiling "with the written consent of plaintiffs' counsel without obtaining an order from the Court." Lacking such consent, Paragraph 8.5 empowers HUD to seek a court order waiving the density requirement upon showing "that approving the contract authority is in the best interests of the community where the assisted housing would be located." 523 F. Supp. at 681. Because the Gautreaux plaintiffs' consent came after HUD had approved the contract authority, the district court held that a "best interests" determination was necessary under Paragraph 8.5. We express no opinion on this interpretation of Paragraph 8.5, but merely review the district court's "best interests" determination.

Although both intervenors appear to agree that the district court's "best interests" finding is a finding of fact, they disagree on our standard of review. The residents argue that the clearly erroneous standard of Federal Rule of Civil Procedure 52(a) does not apply in cases that are presented entirely on a paper record. See, e.g., John R. Thompson Co. v. United States, 477 F.2d 164, 167 (7th Cir. 1973).Without expressing any views on the validity of this proposition, we note that this case did not consist solely of documentary materials. At the August 20 hearing, the district court heard testimony from Ms. Nancy Jefferson, executive director of the Midwest Community Council, a community organization on the Near West Side.*fn3 The district court made explicit reference to her testimony, 548 F. Supp. at 1293 and n. 8, and also noted that its conclusions were based on the written submissions, and "the written and oral comments on those submissions by all concerned parties." Id. at 1293. We therefore review the district court's findings in accordance with the "clearly erroneous" test.

In holding that the Academy Square project was in "the best interests of the community where the assisted housing would be located," the district court relied on several factors.First, the court was impressed with the fact that the Gautreaux plaintiffs' counsel had joined in HUD's waiver request. Although the letter from plaintiffs' counsel to HUD indicates his belief that, because of the timing of the waiver request, approval of the project by the court would be appropriate, it also clearly indicates his belief that "a waiver is appropriate":

For the reasons that you stated in our consultations, we believe that, on balance, given the specific facts and particular circumstances of the Academy Square project, a waiver is appropriate. Therefore, we consent to your request for a waiver.

Since you have requested our consent to a waiver subsequent, rather than prior, to your approval of contract authority for the Academy Square project, we believe it is appropriate that the District Court authorize approval of the project.

Because plaintiffs' consent would have been dispositive if it had occurred prior to authorization of the project, and because the consent decree was intended to protect the plaintiff class, plaintiffs' consent must be given considerable weight.

Second, the court relied on uncontested evidence showing that the census tract had suffered extensive demolition of existing housing and loss of population since 1970, and agreed with HUD that the Academy Square project would enhance the neighborhood by the infusion of both elderly and family housing. 548 F. Supp. at 1293. The court also found that the construction of Academy Square would not deter other redevelopment and revitalization of the neighborhood because the area is favorably situated in close proximity to major educational, medical, industrial and business institutions and the availability of private and public transportation. Third, the court relied on undisputed evidence showing that at present there are not assisted housing units in the census tract. Finally, the court density ceiling would be exceeded by only 18 units, and that the residents had not ...

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