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Henry Horner Mothers Guild v. Chicago Housing Authority

November 20, 2009

HENRY HORNER MOTHERS GUILD, ET AL., PLAINTIFFS,
v.
THE CHICAGO HOUSING AUTHORITY (CHA), AN ILLINOIS MUNICIPAL CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: James B. Zagel United States District Judge

Judge James B. Zagel

MEMORANDUM OPINION AND ORDER

On September 1, 1995, I approved an Amended Consent Decree ("the Decree") binding Defendants, the Chicago Housing Authority et al., and Plaintiffs Henry Horner Mothers Guild et al., to the terms set forth therein. Paragraph 16 of the Decree mandates that the Chicago Housing Authority ("CHA") must confer with the Horner Residents Committee's ("HRC")*fn1 attempt to agree on the selection of a new management entity. The Decree grants this Court the authority to resolve any disputes arising out of failures to perform under this Paragraph. The Decree states

The CHA defendants and the development manager shall consult and attempt to agree with the plaintiffs and the Horner LAC. . . in determining the identity of the entities who will develop and manage the revitalized Horner development . . . no management plan (other than occupancy standards and tenant selection procedures . . .) or security plan [shall be] adopted, unless the CHA defendants first agree with the HRC [Horner Residents Committee]. The CHA defendants and development manager shall provide the HRC with access to all site plans, surveys, architectural drawings, Requests for Proposals ("RFPs"), proposal materials, financial information and other documents received, compiled or maintained by the CHA or development manager in conjunction with the Horner Revitalization Program. Notwithstanding the foregoing, the HRC, on behalf of the plaintiffs, shall not unreasonably withhold its consent. . .any disputes concerning the HRC's performance under this Paragraph or any relief to be granted due to the HRC's failure to perform under this Paragraph shall be resolved by the Court.

CHA has recently initiated a search for new management, and Plaintiffs allege that CHA's actions are in violation of Paragraph 16 of the Decree. CHA now moves for this Court to approve a contract with H.J. Russell & Co. as property manager for Phase I of the Henry Horner Development, or in the alternative, require the HRC to consult with CHA on the selection of a property manager for the Horner Phase I Portion of the development from a pre-selected group of four firms. Plaintiffs object arguing that CHA has violated the terms of Paragraph 16 by excluding the HRC from the selection process, and states that CHA must issue a new procurement for the management of the Phase I Horner development. For the foregoing reasons, I grant in part, and deny in part, the CHA's motion.

I. BACKGROUND

The Henry Horner Development is a housing development that consists of two "phases." Phase I contains 461 public housing units plus 90 public housing units located in the Annex. Phase II consists of mixed-income housing with 744 units, including 258 public housing units. Phase II is still under development. All of the Phase I units are for public housing families and are owned by CHA. As owner, CHA contracts for the management of the Phase I units.

Prior to 2009, CHA had fourteen different property management firms involved in managing its traditional family public housing developments such as Horner's Phase I. CHA's traditional family public housing developments include seventeen different developments and 11,182 units of housing. Additionally, CHA had twenty four property management firms managing senior, scattered-site, family and other mixed-income units. CHA determined that utilizing numerous management firms was inefficient and costly and therefore, on February 10, 2009, it initiated a nationwide RFP to reduce the cost of management by lowering the number of property management firms involved in the management of the traditional family public housing developments to five or less. Addenda were issued in March and April of 2009.

Prior to the issuance of the RFP, in September of 2008, CHA announced to the Central Advisory Council ("CAC"), which included Horner Local Advisory Council ("LAC") President and HRC member Crystal Palmer, its desire to reduce the number of management firms and to "bid out all management work." Each month, CHA staff briefed CAC on the progress of the management search, however, Plaintiffs assert that these talks were exclusively with CAC President Dverra Beverly and CHA counsel Robert Whitfield -- not with Ms. Palmer.

The solicitation was national in scope and the RFP sought bids for the entire portfolio of CHA housing, "or at least all of the units in one or more of the four categories or portfolios of housing. . . ." No RFP was issued for Horner Phase I specifically, nor was a firm able to bid solely on Horner Phase I. In fact, Horner Phase I "represented less than 5% of the 11,182 traditional public housing units, and only 2.3% of all 23,141 public housing units for which management was sought in the RFP."

On February 19, 2009 and March 13, 2009 CHA conducted pre-proposal conferences with prospective bidders and did not include the HRC in these conferences. Additionally, on February 24, 25, and 26, Plaintiffs allege that CHA conducted a bus tour of the properties included in the RFP, including Horner, but did not notify the HRC about the occurrence of these tours.

On April 10, 2009 CHA received fourteen*fn2 bids for its traditional family units, and the bids were reviewed by an evaluation committee.*fn3 The committee consisted not only of CHA officials, but also individuals elected by each CHA development's Local Advisory Council to ensure that residents had input into the selection panel. The members of the evaluation committee examined and rated each proposal, and the firms receiving the highest four*fn4 ratings for the traditional family housing, in order, were: (1) H.J. Russell; (2) the Habitat Co.; (3) the Woodlawn Community Development Corp.; and (4) East Lake Management. Plaintiffs allege that HRC was excluded from this process and was therefore never able to evaluate the merits of any proposal.

On July 9, 2009 CHA Assistant General Counsel orally informed Horner class counsel about the RFPs and asked HRC to "negotiate" with CHA over the finalists selected by CHA. CHA counsel delivered RFP documents to Plaintiffs' counsel's office on July 28, 2009 and asked that HRC make a selection by August 6, 2009. HRC met on August 5, 2009 to consider the issue and decided to "respectfully decline to select a Horner Phase I property manager from the list of finalists CHA had selected" because, in their view, CHA's "procurement had violated Paragraph 16 of the Amended Consent Decree."

Plaintiffs assert that the HRC was improperly excluded from the Phase I management selection process, but note that CHA informed the HRC, through HRC member Crystal Palmer, of the RFP plan on three occasions. Plaintiffs acknowledge that in September 2008 ,CHA announced to the CAC, which included Horner LAC President and HRC member Ms. Palmer, its desire to reduce the number of management firms and to "bid out all management work." Next, in June 2009 Ms. Palmer and Charles Hillman (Charles Hillman is the Senior Vice-President for Asset Management, Family Portfolio) encountered each other at CHA's main office. At this time, Mr. Hillman informed Ms. Palmer that he wanted her assistance regarding the RFP for Phase I management. Upon learning of the RFP, Ms. Palmer stated that CHA needed to "immediately involve" the HRC in the process, and Mr. Hillman assured Ms. Palmer that HRC ...


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