Source: http://openjurist.org/690/f2d/616
Timestamp: 2017-06-23 11:01:44
Document Index: 194205940

Matched Legal Cases: ['art 886', 'art 883', '§ 883', '§ 883', '§ 883', '§ 883', '§ 891', '§ 1439', 'art 883', '§ 883', '§ 883', '§ 899', '§ 1', '§ 880', '§ 880', '§ 1', 'art 841', 'art 215', 'art 236', '§ 880', '§ 899']

690 F. 2d 616 - Gautreaux v. R Pierce HomeFederal Reporter, Second Series 690 F.2d.
The Section 8 programs for State Housing Agencies and for Loan Management and Property Disposition involve special set-asides of funds and differ from the other Section 8 programs in their method of disbursing payments. Disbursement under the Loan Management and Property Disposition program is a combination of the disbursement methods described above. See 24 C.F.R. Part 886 (1981). The disbursement method under the State Housing Agencies program merits more detailed explanation inasmuch as it is the program under which IHDA receives its funds. Part 883 of 24 C.F.R. "establishes the procedures for allocating set-asides of contract authority to State agencies and sets the policies and procedures under which they must use this authority to provide assistance in newly constructed, substantially rehabilitated, moderately rehabilitated, and existing housing." 24 C.F.R. § 883.101(a)(3) (1981). Ordinarily, from this lump sum Congressional authorization for Section 8 programs, HUD establishes separate funding authority for each of the Section 8 programs, including a set-aside for State Housing Agencies. HUD then allocates to area HUD offices their "fair share" allocation of each in proportion to the area's population, poverty, overcrowding, housing condition, and similar indices of housing needs. Each HUD area office suballocates the funds among the various allocation areas within its jurisdiction on essentially the same "fair share" basis, which may include a separate set-aside for a State Housing Agency. 24 C.F.R. § 883.101(g) (1981). The HUD area office and the State Housing Agencies divide responsibilities for processing applications for Section 8 funding.7 For a project which it has processed, the State Housing Agency pays rental subsidies out of its own HUD funds to the project owner. 24 C.F.R. § 883.101(b) (1981). The State Housing Agencies and not HUD are responsible for arranging for the financing of any Newly Constructed or Substantially Rehabilitated Housing which is assisted under the Housing Agency program. 24 C.F.R. § 883.101(e) (1981). If any proposed project under the Section 8 program does not proceed within the prescribed time period, those funds reserved for the project are recaptured by HUD and are subject to reallocation. 24 C.F.R. § 891.405 (1981).
IHDA is the only State Housing Agency in Illinois. Its primary function is to sell tax-exempt debt instruments, that is, revenue bonds, to the public and to use the proceeds from the bonds to make first mortgage loans to non-profit or limited profit entities for the construction and substantial rehabilitation of multi-family housing developments throughout the state. IHDA's objections to the decree may be generally characterized as follows: (1) the consent decree violates HUD's regulations, the National Housing Act, and the dictates of the Supreme Court's decision in Hills v. Gautreaux, 425 U.S. 284, 96 S.Ct. 1538, 47 L.Ed.2d 792 (1976); (2) the decree was entered without the necessary procedural requisites; and (3) the consent decree is unreasonable.8
Generally, IHDA's claim that the consent decree violates the statutes and regulations governing HUD is predicated on what IHDA perceives to be the only restrictions on assisted housing which HUD may impose under the statutes and regulations and the additional restrictions which HUD may impose under the consent decree. For example, IHDA asserts that the only factors which HUD may consider in determining the annual set-aside for a State Housing Agency and the specifications for developments are contained in the regulations, and therefore that the consent decree violates the regulatory scheme by imposing additional criteria for approval and set-asides. IHDA also claims that Section 5.5.4.c. of the decree, limiting a project sponsor's withdrawal of a unit occupied by an eligible person, violates the regulations because the regulations do not contain any such limitation on withdrawal.9
As the district court noted, the consent decree does not violate the regulatory scheme "because the regulations gave HUD express discretion with respect to application for its funds." 523 F.Supp. at 671. The National Housing Act provides that the Secretary of HUD may reserve such housing assistance funds as he deems appropriate for use by a state or agency thereof. 42 U.S.C. § 1439(d)(3) (1976). Under the corresponding regulations for state housing agencies in 24 C.F.R. Part 883 (1981), as HUD notes, HUD retains broad discretion in setting the terms of set-asides for state housing agencies. Significantly, the regulations specify that if HUD decides to set aside funds for a state agency, the agency must submit a letter "agreeing to the terms of the set-aside," 24 C.F.R. § 883.204(b) (1981). " Moreover, under 24 C.F.R. § 883.312(a) (1981), the participation of a state agency in the Section 8 program is contingent upon its compliance "with Title VI of the Civil Rights Act of 1964 ... and all related rules, regulations, and requirements." Inasmuch as the consent decree is designed to bring HUD into compliance with Title VI based upon an adjudication that its practices had violated Title VI, its terms under this regulation are a related requirement with which IHDA must comply. Finally, HUD has the power to waive "any provision" of the regulatory scheme for good cause, subject to statutory limitations, 24 C.F.R. § 899.101(a) (1981).10
For these reasons, the cases of United States v. Nixon, 418 U.S. 683, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974); Otero v. New York City Housing Authority, 484 F.2d 1122 (2d Cir. 1973); and Lower Moreland Homeowner's Association v. HUD, 479 F.Supp. 886 (E.D. Pa. 1979), upon which IHDA relies, fail to support IHDA's position on this point.11 In each of these cases, a clear failure to comply with a valid regulation was established. In Lower Moreland, HUD had disavowed any claim that its actions had been in conformity with the applicable statute and regulations. 479 F.Supp. at 897-98. In United States v. Nixon, the Supreme Court found a justiciable controversy to be presented by President Nixon's refusal to turn over evidence based on assertions of executive privilege when a regulation had vested plenary authority to contest the invocation of executive privilege. 418 U.S. at 695-96, 94 S.Ct. at 3100-01. Unlike the present case, the discretion that President Nixon sought to assert had been delegated in its entirety to the Special Prosecutor pursuant to a valid, enforceable regulation. IHDA is correct in asserting that these cases establish that an agency or executive must honor binding regulations but IHDA has failed to show that anything in the consent decree clearly would compel HUD to act in abrogation of any statutory provision or regulation.
(t)he burden should properly be upon the (agency) to show that its adherence to the regulation would in all likelihood result in a violation of its duties under the Constitution and the Fair Housing Act.
484 F.2d at 1135. Thus, the district court's statement that "IHDA has failed to show that under the proposed decree HUD would be violating the mandates of ... Otero," 523 F.Supp. at 670, is correct in that IHDA failed to demonstrate a clear statutory or regulatory violation as a predicate to the applicability of Otero 's burden.
Nor does the consent decree run afoul of the Supreme Court's decision in Hills v. Gautreaux, 425 U.S. 284, 96 S.Ct. 1538, 47 L.Ed.2d 792 (1976). IHDA contends that: (1) the Supreme Court found that metropolitan relief as in the consent decree was not warranted; (2) the decree impermissibly preempts the rights and powers of local government entities; and (3) the Supreme Court's decision mandated that a fact-finding hearing be held on the issue of the appropriateness of metropolitan relief before entry of such relief. Yet, as explained above, the Supreme Court concluded that metropolitan relief was not impermissible, and that "(a)n order directed solely to HUD would not force unwilling localities to apply for assistance but would merely reinforce the regulations guiding HUD's determination of which locally authorized projects to assist with federal funds." Id. at 303, 96 S.Ct. at 1549.12 Accordingly, the district court correctly concluded:(S)ince IHDA is not legally bound to participate in the Section 8 program if it does not want to comply with HUD requirements it is difficult to see how HUD is infringing upon local governmental authorities.... HUD is not preempting IHDA's authority by exercising its discretion to award funds to authorities which comply with imposed restrictions designed to provide Gautreaux relief or violating its own regulations because the regulations give HUD express discretion with respect to application for its funds.
523 F.Supp. at 670-71.
The Supreme Court remanded the case to the district court with "(t)he nature and scope of the remedial decree to be entered on remand (as) ... a matter for the district court in the exercise of its equitable discretion, after affording the parties an opportunity to present their views." 425 U.S. at 306, 96 S.Ct. at 1550. The district court did not err in approving a metropolitan area remedy based on the evidence in the record and the reasonableness of defining the relevant housing market by the SMSA. See id. at 299-300, 96 S.Ct. at 1547. IHDA has failed to rebut the appropriateness of the metropolitan remedy other than to assert that the Supreme Court's decision prohibited such relief or that the proponents failed to carry their burden of demonstrating its appropriateness.
Nor did the Supreme Court's instructions on remand establish a procedural requisite for a fact-finding hearing before entry of such relief pursuant to the consent decree. The Court's directions signify nothing more than the established procedure for resolution of a disputed issue to be resolved on remand in light of the Court's determination. The controlling procedures for entry of a consent decree in the Manual for Complex Litigation § 1.46 (West 1982) and this court's opinion in Armstrong v. Board of School Directors, 616 F.2d 305 (7th Cir. 1980), necessitate no such hearing, and, indeed, such a requirement would undermine the underlying purposes of simplicity and expeditiousness served by consent decrees.13
IHDA claims that the plaintiffs and HUD improperly excluded IHDA from participation in the consent decree negotiations, which, under this court's decision in In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106 (7th Cir. 1979), cert. denied, 444 U.S. 870, 100 S.Ct. 146, 62 L.Ed.2d 95, would preclude district court approval of the decree. The allegations of exclusion are essentially predicated on IHDA's having received the first draft of the decree one day before it was to be explained by the proponents, its finalization on December 15, the time within which the fairness hearing was conducted, and the proponent's denials of discovery requests.
In contrast, at no time has this court intimated that the manner or methods of negotiations are irrelevant to an evaluation of the decree. Additionally, there is no evidence that the negotiations which led to the proposed decree have been irregular, nor has there been an aura of secrecy surrounding the negotiations. The settlement negotiations were announced and the proponents agreed to consult with interested parties before submitting the decree for court approval.14 The proponents also explained that the haste with which the decree was negotiated was due to the impending change in HUD's national administration and a desire to complete negotiations and the fairness hearing while the HUD counsel most intimately familiar with the case would still be able to participate. There has been no impropriety.
523 F.Supp. at 670. IDHA was afforded a meaningful opportunity to participate in the negotiations of the consent decree despite the time constraints, and had a full opportunity to present its objections to the conduct of the negotiations in the fairness hearing. The conduct of the negotiations was not exclusionary under General Motors and, therefore, does not warrant reversal of the court's approval of the decree.
(2) The Burdens of Proof and of Going Forward
IHDA's argument that the district court failed to impose the appropriate burden of proof and of going forward on the proponents of the decree is again premised on unwarranted application of this court's decision in In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106 (7th Cir. 1979), cert. denied, 444 U.S. 870, 100 S.Ct. 146, 62 L.Ed.2d 95. IHDA asserts that the district court's acceptance of the settlement as fair on its face, forcing the objectors to prove its inadequacy as was done in General Motors, necessitates reversal. Initially, we note that the grounds for reversal in General Motors were the exclusionary aspects of the settlement negotiations, not any improper allocation of the evidentiary burden. More importantly, the stringent burden of proof on the issue of fairness suggested in General Motors was indicated as appropriate only when the settlement's proponents had in some manner improperly negotiated the settlement:
Id. at 1126 n. 30.
Courts of appeals, in reviewing district court approval of class action settlements, engage in an even more limited inquiry than the district court.... Courts of appeals view the facts in the light most favorable to the settlement. In addition, they do not focus on individual components of settlements, but rather view them in their entirety in evaluating their fairness. Such deference is due the judgment of the district judge because of his familiarity with the litigants, the history of the litigation and the merits of the substantive claims asserted.
616 F.2d at 315 (citations omitted). The district court noted that the specifics of the decree are, in large part, extensions of the Letters of Understanding under which remedial efforts had been implemented for four and a half years.15 In the district court, and in this appeal, IHDA's argument that the decree's proponents failed to carry their burden is primarily premised on the proponents' purported failure to rebut the opinions of IHDA's expert witnesses. The proponents of the decree demonstrated the fairness, reasonableness, and the adequacy of the decree, through, inter alia, the testimony of witnesses with expertise in supplying remedial housing. The court also was entitled to "rely heavily on the opinion of competent counsel" advanced by the proponents. Id. at 335. Here, differences in professional opinion advanced by the proponents that inevitably result from such complex remedial framework are not sufficient to justify concluding that the district court erred in finding that the proponents had carried their burdens of proof and of going forward, or that the district court failed to set forth adequately its reasons for approving the settlement.(3) The Adequacy of Discovery and the Notice to Class Members
These procedural objections may be briefly addressed. The only discovery IHDA was denied by the court was its request to take the deposition of Laurence B. Simons, HUD's Assistant Secretary of Housing, and its motion for HUD to produce a letter from HUD to the Department of Justice seeking the Department's approval of the terms of the decree, which the court deemed to be protected by the attorney-client privilege.16 IHDA was permitted to take the depositions of four senior HUD officials involved in HUD's housing programs. Despite IHDA's protestations to the contrary, the permitted scope of discovery indicates that the effect of the court's denials, even assuming the district court abused its discretion in denying this discovery request, was not so prejudicial as to warrant reversal. IHDA's assertion that, "given the nature of this case," the district court erred in denying this discovery, appears to suggest that the district court must be held to some higher standard upon appellate review of an approved consent decree than that set forth in Armstrong. That is simply not the case. Again, General Motors is inapposite given the exclusionary negotiation methods and court's prohibition of any discovery concerning the negotiations in that case. As to the adequacy of the notice to the class members, HUD and the proponents of the decree point out IHDA has no standing to assert that the notice to class members was inadequate. It may not assert rights possessed by other individuals. Society Hill Civic Association v. Harris, 632 F.2d 1045, 1060 (3rd Cir. 1980). As IHDA has failed to rebut this argument, we need not address the adequacy of the notice to the class members.17
It is important to keep in mind that all parties concerned have the same goal-a fervent desire to see the development of safe, clean public housing which not only provides relief to the plaintiff class, but furthers integrated living and urban redevelopment-in short, a plan which makes Chicago a better place for all of us to live. No consent decree can please all those who are involved; this decree, however, provides for a workable program, one which can be enacted within the foreseeable future, and will be of benefit to the entire community.
523 F.Supp. at 672. No more explicit or extensive consideration of the public interest was necessary in the opinion. The entire thrust of the hearing was to devise a workable plan for providing integrated housing-a goal coextensive with the public interest to be served by a viable consent decree. We have previously found herein that the evidence presented in the decree was sufficient to sustain the proponents' burden of demonstrating that the consent decree was fair, reasonable, and adequate in serving this goal. IHDA's claim that the district court failed to address specifically the effects of the decree on third parties and IHDA's objections are a variation on IHDA's argument addressed in Part II.B. (2) supra. Our analysis in that section adequately serves to establish that no more detailed findings or conclusion were necessary than those in the district court's opinion.18
IHDA's remaining challenges to the reasonableness of the decree focus on the viability of the decree and the map designating the General, Limited, and Revitalizing Areas. Its objections to the viability of the decree may be briefly addressed in light of our previous discussion. To sustain in part its argument that the decree is unworkable, IHDA essentially reiterates the objections it stated to the provisions of the decree which it claimed conflicted with the statutory and regulatory requirements.19 As we noted in Part II.A., supra, the possibility, if any, that the decree's requirements may conflict with the statutory and regulatory requirement is remote. The provisions for waiver of the decree and regulations may be used to accommodate any difficulties.
No consent decree, particularly in such complex litigation as this, can ever resolve every question of implementation that might arise. If potential difficulties in implementation could render a consent decree invalid for unviability, few consent decrees would ever pass muster. As the district court acknowledged, the specifics of the decree were to a large extent extensions of the Letters of Understanding that had "proved workable for the past four and a half years," 523 F.Supp. at 672, and we find the viability of that plan is a persuasive indicator of the decree's viability.20 See note 15 supra. As we have previously noted the district court was "entitled to rely heavily on the opinion of competent counsel," Armstrong v. Board of School Directors, 616 F.2d 305, 325 (7th Cir. 1975), that past experience indicated the decree was workable, over IHDA's projections of future difficulties.
IHDA's challenges to the mapping of the General, Limited, and Revitalizing Areas are that: (1) the decree does not contain a map of these areas; (2) notices to the class members did not contain a map or list of census tracts; (3) the designation of areas was not based on 1980 census data; (4) the General Area, contrary to the district court's assertion, did not have less than 30% minority concentration; (5) the Chicago SMSA should not have been used; and (6) changes in the mapping are left to HUD and the plaintiffs. Although the decree's exhibits do not include a map, the exhibits do identify by census tracts those areas included within the General, Limited, and Revitalizing Areas and a map was presented to the district court. Totally aside from the issue of whether IHDA may challenge the notice to class members, discussed previously herein, class members were informed that a map of the area was on file with the district court clerk. The district court did not abuse its discretion in refusing to postpone evaluation and promulgation of the decree for four months or longer until the 1980 census data became available. Moreover, designations in the decree are subject to reclassification under P 8.3 of the decree based upon the now available 1980 census data. As noted in Part II.A., supra, there was sufficient basis for metropolitan-wide relief and use of the Chicago SMSA in providing relief.
IHDA also claims that the district court erroneously stated that "each General Area census tract had 'less than 30% minority concentration.' " First, we note that the court said only that the General Area tracts as a whole had less than 30% minority concentration. 523 F.Supp. at 668. IHDA has not demonstrated this characterization to have been inaccurate. Moreover, the court's statement was nothing more than a rough characterization of the General Area for purposes of comparison with the 1969 Judgment Order, not in any sense necessary to sustain the court's approval of the decree.21 Any misclassifications of census tracts in the General or Limited Areas based on 1980 census data may be modified under the provisions of the decree. Finally, the decree is not unreasonable in providing for modifications to the mapping at the instigation of HUD or the plaintiffs subject to court approval. The decree is sufficiently specific to avoid arbitrary designations, with the further safeguard of required court approval. HUD and the plaintiffs, as the parties primarily bound by the decree, are also the parties primarily responsible for the decree. In summary, we are unpersuaded by IHDA's arguments that the district court erred in approving the decree.
The RPCC includes fifty residents and property owners in Census Tract 101, claiming that subsidized new construction would lower property values. RPCC did not move to intervene until the fairness hearing, and was permitted to present its evidence in the hearing as if it were a formal party. RPCC has failed to demonstrate that its objections to the designation of Revitalizing, General, and Limited Areas were not adequately represented in this manner and by other parties to the suit, most notably IHDA and appellant Mack.22 For these reasons, RPCC failed to satisfy the requisites for intervention of right. See, e.g., Wade v. Goldschmidt, 673 F.2d 182, 186 n. 7 (7th Cir. 1982) The same reasons militate against permissive intervention under Rule 24(b)(2).23 RPCC's interests were adequately represented by its own representation and that of other parties so that formal intervention would have served no purpose and unnecessarily complicated and delayed an adjudication.24
In essence, Mack's first and second arguments are that the presently designated Revitalizing Areas contain substantial minority populations and concentrations of assisted housing and, therefore, the provisions of the decree which still permit assisted housing to be placed in those areas authorize the continuation of clearly illegal conduct and fail to remedy the discrimination. These arguments fail to meet the standard in Armstrong for a demonstration of clear illegality, but more importantly misconstrue the illegal conduct upon which relief is now predicated. It is not a constitutional violation to place assisted housing in areas with a substantial minority population. As adjudicated in this case, it is a constitutional violation to do so in order to limit assisted housing projects to areas with substantial minority population. The decree does not condone or perpetuate such illegal conduct. The decree limits the number of units which may be placed in the Limited Area to not more than one-third. Mack's argument that the decree continues segregation by permitting up to two-thirds of the housing units to be placed in the Limited Area and Revitalizing Area ignores the fact that the designation of the Revitalizing Area is predicated on its potential for an integrated, stable community based on criteria other than population statistics.25 As the district court noted, the creation of the Revitalizing Area promotes integration by encouraging the development of assisted housing before land values and rents become prohibitively expensive and before low-income individuals are displaced by physical redevelopment. 523 F.Supp. at 671. Although the limits on housing for the Limited Area and Revitalizing Area might not be of the magnitude Mack would wish, that in itself does not render the decree invalid. See Armstrong v. Board of School Directors, 616 F.2d 305, 315 (7th Cir. 1980).
1) undergoing visible redevelopment or evidences impending construction; 2) located along the lakefront; 3) scheduled to receive Community Development Block Grant Funds; 4) accessible to good transportation; 5) an area with a significant number of buildings already up to code standards; 6) accessible to good shopping; 7) located near attractive features, such as the lake or downtown; 8) free of any excessive concentration of assisted housing; 9) located in an area which is not entirely or predominantly in a minority area and 10) not densely populated.
523 F.Supp. at 671. The designation of the Revitalizing Area does not necessitate that "racial tipping" be a consideration. Meaningful evaluation of any potential for racial tipping can be made more effectively at the time a specific project is proposed. HUD's regulations require exactly that, and thus would render superfluous the inclusion of such a criterion before designation of a Revitalizing Area could be made. Under the regulations a site for Section 8 New Construction must not be located in:
24 C.F.R. § 880.206(c) (1981). The site and neighborhood must also be suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of Title VI of the Civil Rights Act of 1964, Title VIII of the Civil Rights Act of 1968, Executive Order 11063, and HUD regulations issued pursuant thereto. 24 C.F.R. § 880.206(b) (1981). King v. Harris, 464 F.Supp. 827, 837 (E.D.N.Y.), aff'd mem. sub nom. King v. Faymor Development Co., 614 F.2d 1288 (2d Cir. 1979), vacated, 446 U.S. 905, 100 S.Ct. 1828, 64 L.Ed.2d 256 (1980), upon which Mack relies for required consideration of racial tipping, stated that HUD's obligation to avoid unnecessary concentration of low-income and minority families is served by HUD's site and neighborhood standards, and reviewed the "tipping" impact of imminent construction in that context. Unlike King, any necessary consideration of racial tipping from imminent construction may yet be made by HUD pursuant to its regulations. "A consent decree need not in explicit terms require that the actions specified therein shall be carried out in conformity with all applicable federal, state and local law." Society Hill Civic Association v. Harris, 632 F.2d 1045, 1060 (3d Cir. 1980). It is sufficient that the decree does not authorize or require conduct in violation of the law. Id.
In sum, we reject Mack and IHDA's argument that the district court abused its discretion in approving the decree due to the inadequacy of the criteria. Given the adequacy of these criteria, there was ample evidence in the record for the district court to find that Hyde Park-Kenwood was appropriately designated as Revitalizing. 523 F.Supp. at 672. There was testimony in the fairness hearing that the area was redeveloping lake front property with a strong housing market and a stable, racially mixed population with potential for continued integration.
As the essence of settlement is compromise, a consent decree is never a totally satisfactory victory on all issues for all parties. The plaintiff class members and HUD, in this spirit of compromise, have negotiated what the district court found to be a fair and viable plan to remedy the continuing effects of the discriminatory practices. HUD has agreed to limit its discretion in the disbursement of federal funds accordingly. As this court noted in Armstrong:Because settlement of a class action, like settlement of any litigation, is basically a bargained exchange between the litigants, the judiciary's role is properly limited to the minimum necessary to protect the interest of the class and the public. Judges should not substitute their own judgments as to optimal settlement terms for the judgment of the litigants and their counsel.
616 F.2d at 315. The consent decree, and the efforts of the district court and the parties toward its realization, are a laudable attempt to accommodate individual and community interests, as well as the public interest, in providing adequate non-discriminatory public housing. We have evaluated in the course of our review each of the many objections to the decree raised in this appeal. We find no reversible error in the court's entry of the decree or abuse of discretion in that court's determination that the settlement was fair, reasonable, and adequate.26
The judicial proceedings reported from 1966 on include the following: Gautreaux v. Romney, 448 F.2d 731 (7th Cir. 1971); Gautreaux v. Chicago Housing Authority, 436 F.2d 306 (7th Cir. 1970), cert. denied, 402 U.S. 922, 91 S.Ct. 1378, 28 L.Ed.2d 661 (1971); Gautreaux v. Pierce, 538 F.Supp. 1009 (N.D. Ill. 1982); Gautreaux v. Pierce, 535 F.Supp. 423 (N.D. Ill. 1982); Gautreaux v. Chicago Housing Authority, 524 F.Supp. 56 (N.D. Ill. 1982); Gautreaux v. Chicago Housing Authority, 523 F.Supp. 684 (N.D. Ill. 1981), aff'd, 690 F.2d 601 (7th Cir. 1982); Gautreaux v. Landrieu, 498 F.Supp. 1072 (N.D. Ill. 1980); Gautreaux v. Chicago Housing Authority, 384 F.Supp. 37 (N.D. Ill. 1974), petition for writ of mandamus denied sub nom. Chicago Housing Authority v. Austin, 511 F.2d 82 (7th Cir. 1975); Gautreaux v. Romney, 363 F.Supp. 690 (N.D. Ill. 1973), rev'd sub nom. Gautreaux v. Chicago Housing Authority, 503 F.2d 930 (7th Cir. 1974), aff'd in part sub nom. Hills v. Gautreaux, 425 U.S. 284, 96 S.Ct. 1538, 47 L.Ed.2d 792 (1976); Gautreaux v. Chicago Housing Authority, 342 F.Supp. 827 (N.D. Ill. 1972), aff'd sub nom. Gautreaux v. City of Chicago, 480 F.2d 210 (7th Cir. 1973), cert. denied, 414 U.S. 1144, 94 S.Ct. 895, 39 L.Ed.2d 98 (1974); Gautreaux v. Romney, 332 F.Supp. 366 (N.D. Ill. 1971), rev'd, 457 F.2d 124 (7th Cir. 1972); Gautreaux v. Chicago Housing Authority, 304 F.Supp. 736 (N.D. Ill. 1969); Gautreaux v. Chicago Housing Authority, 265 F.Supp. 582 (N.D. Ill. 1967); Gautreaux v. Chicago Housing Authority, 265 F.Supp. 582 (N.D. Ill. 1967)
The Court stated that the relevant geographic area for remedial purposes would be the Chicago housing market. The Court noted with approval that in principal markets such as Chicago, the Chicago Standard Metropolitan Area (SMSA) is considered coterminous with the housing market area. 425 U.S. at 299 n. 15, 96 S.Ct. at 1547 n. 15
The first step in district court review of a class action settlement is a preliminary, pre-notification hearing to determine whether the proposed settlement is "within the range of possible approval." Its purpose is to ascertain whether there is any reason to notify the class members of the proposed settlement and to proceed with a fairness hearing. Manual for Complex Litigation § 1.46, at 53-55 (West 1981). If the district court finds that a proposed settlement is "within the range of possible approval," the next step is the fairness hearing. Class members are notified of the proposed settlement and the fairness hearing in which they and all interested parties have an opportunity to be heard. The goal of the hearing is to "adduce all information necessary for the judge to rule intelligently on whether the proposed settlement is 'fair, reasonable, and adequate.' " Id. at 57
Throughout this opinion references to the "General Area," "Limited Area," or "Revitalizing Area," refers to the entire area encompassed by the relevant census tracts for each Area. References, for example, to "General areas" or "classification as a General area" are used to indicate individual census tracts included within the General Area
Eligible person is defined as any person who:
(1) either (a) occupies family or handicapped public housing in the City of Chicago at any time prior to the termination of the decree, or (b) has applied to, and received, a registration number, from CHA, for family or handicapped public housing prior to the effective date of the decree;
(2) is eligible for family public housing under applicable HUD and CHA regulations when assisted housing is offered to such person;
(3) has never occupied assisted housing in either the General Area or Revitalizing Area; and
(4) has not been offered and refused three opportunities pursuant to the decree to occupy assisted housing in the General Area or Revitalizing Area; and
(5) has not been identified as a person declining to consider opportunities under the decree and living in assisted housing in the Limited Area.
In addition to these Section 8 programs, the definition of assisted housing includes the Public Housing New Construction and Acquisition program set forth in 24 C.F.R. Part 841 (1981), and Rent Supplement and Rental Assistance Payments programs set forth in 24 C.F.R. Part 215 and Part 236, subpart D (1981). The Public Housing New Construction and Acquisition program is the primary program under which CHA receives its funds. The Rent Supplement and Rental Assistance Payments programs are the forerunners to the Section 8 rent subsidy programs and have now been eclipsed in magnitude by the Section 8 programs. An exposition of the precise operation of these programs is not necessary to this appeal
For further elaboration on the division of duties, see South East Lake View Neighbors v. HUD, 685 F.2d 1027 at 1031-32 (7th Cir. 1982)
IHDA claims to take exception to the following provisions of the consent decree on appeal: (1) the 6%-12% requirement; (2) the 100-unit maximum requirement; (3) the no children above the third story requirement; (4) the 10% three bedroom requirement; (5) the locational and impaction requirements; (6) the mapping; (7) inability to terminate the Section 8 contract; (8) the exclusion of the public interest in the future; and (9) the open-ended nature of the decree. By its own admission, IHDA concedes that of the first five requirements, only the 6%-12% requirement "directly affects IHDA applying to each development financed by it." IHDA having failed to demonstrate any direct injury from these first five requirements other than the 6%-12% requirement, we do not need to address their validity in our evaluation of IHDA's appeal. Society Hill Civic Association v. Harris, 632 F.2d 1045, 1059-1060 (3d Cir. 1980); see also South East Lake View Neighbors v. HUD, 685 F.2d 1027 at 1034 n. 6 (7th Cir. 1982)
In part IHDA's objection is based on its misinterpretation of the provision. Paragraph 5.5.4.c does not prohibit foreclosure by IHDA on any project; it only prohibits a "sponsor" of a project to withdraw an individual unit occupied by an eligible person except under certain conditions. Under the applicable regulation, 24 C.F.R. § 880.504(a) (1981), an owner may not lease more than 10% of its assisted units in a project to ineligible families without approval from HUD in any event
In rebuttal, IHDA has pointed out that, inter alia, any waiver must be in writing upon determination of good cause, 24 C.F.R. § 899.101(a) (1981), and that no written waiver has been made. No waiver is necessary, however, as no clear conflict has been shown between the decree's provisions and those of the regulations and statute. The provisions for waiver are of significance insofar as they may be used to avoid any conflict when actual implementation of the decree begins
In Society Hill Civic Association v. Harris, 632 F.2d 1045, 1057-58 (3d Cir. 1980), the court was evaluating whether the complaint stated a claim upon which relief could be granted for which the allegations of conflict were viewed in the light most favorable to the appellant. It does not establish a lower standard of review for the illegality of a consent decree than that in Armstrong, as IHDA contends it does
This statement by the Court refutes IHDA's assertion that the potential repercussions of the decree on IHDA's financing capabilities constitute such interference with a local housing agency to invalidate the decree. Certainly cognizant of the crucial role of federal funds in supporting local agencies as a practical matter, 425 U.S. at 303 n. 19, 96 S.Ct. at 1549 n. 19, the Court nevertheless found that an order directed solely to HUD would not restructure local governments or use up any local decision-making authority as had been done in Milliken, because such an order would not force unwilling localities to apply for funds
Moreover, we note that at least one of IHDA's fears of injury from implementation of the decree is misconceived. IHDA has claimed that it cannot operate without Section 8 funding because Section 103(b)(4)(A) of the Internal Revenue Code requires that a specified percentage of its units in a project be funded pursuant to Section 8 for the interest on its financing bonds to be tax exempt. However, Section 103(b)(4)(A), when read in conjunction with Section 167(k)(3)(B), requires only that the units be occupied by individuals of low or moderate income as defined by the Secretary in a manner consistent with the provisions of Section 8. There is no requirement that units actually be subsidized with Section 8 funds.
We need not address the merits of IHDA's motion to dismiss the second supplemental complaint against IHDA for failure to state a claim in light of our disposition of this appeal. See note 25 infra
Without benefit of any direct authority, IHDA contends that inclusion of IHDA in "post-agreement" negotiations only was not adequate inclusion. Nothing in General Motors or the facts of this case mandated that IHDA be allowed to participate more fully in the negotiations between HUD and the plaintiffs in their initial attempts to reach an agreement
We are cognizant of the differences between the remedial system under the Letters of Understanding and that under the consent decree. Despite those differences, both systems are sufficiently similar in the scope and manner of relief to warrant comparison. We agree, therefore, with the district court that the viability of the system under the Letters of Understanding lends support to the proponents' assertions of the decree's viability
The district court had denied without prejudice IHDA's motion to take the deposition of the Secretary of HUD, Moon Landieu, which motion IHDA did not seek subsequently to renew
In any event, we are unpersuaded that the 21-day notice period and the descriptive summary in the notice were inadequate under Federal Rule of Civil Procedure 23(c)(2)
The Ninth Circuit's decision in Mandujano v. Basic Vegetable Products, Inc., 541 F.2d 832 (9th Cir. 1976), is not authority to the contrary. In Mandujano the district court had failed entirely to address the central question of whether the class members had been adequately involved in promulgation of the settlement based on numerous procedural objections raised by the class members
Aside from the 6%-12% requirement, IHDA specifically challenges as unworkable the impaction requirement, locational requirement, the 10% three bedroom requirement, the 100 unit maximum, and the prohibition against children above the third story. IHDA again acknowledges that these requirements do not directly affect IHDA. See note 8 supra. In any event, our discussion adequately dispenses with these objections
The provision which IHDA appears to find most offensive as unviable, the 6%-12% requirement, IHDA concedes found its genesis in the Letters of Understanding
The decree simply defines "General Area" as "predominantly non-minority" and "Limited Area" as "predominantly minority." The proponents take the position that "minority" as used in defining the General and Limited Areas is based on the percentages of black population, a reasonable position in that the definition of the plaintiff class is limited to blacks. Although not necessary to our decision, we consider the proponents' interpretation reasonable although the definition of "eligible persons" is not limited to blacks and the definition of the Limited Area under the district court's 1969 Judgment Order was determined by black population. In both instances, it was clearly specified that groups other than blacks were included in any computation or definition
The only case cited by RPCC on this point is inapposite. In Planned Parenthood of Minnesota, Inc. v. Citizens for Community Action, 558 F.2d 861 (8th Cir. 1977), the defendants (the mayor and members of city council) were defending against charges of discrimination and bad faith in their promulgation of an ordinance imposing a moratorium on the construction of abortion clinics in the community pending further study. A community group supported the moratorium on construction in their community. Although both the defendants and the community group were in a sense pursuing the same goal-upholding the ordinance-the Eighth Circuit noted that the defendants were actually concerned with showing that their actions were not discriminatory and the community group was concerned with the effect of construction on their property values. Additionally, the city council was split on the advisability of the ordinance and could easily be realigned in interest with the municipality in regard to the issues in litigation. Id. at 870. In contrast, a major focus of the objections of both IHDA and Mack is the proper designation of Revitalizing Areas and the impact of allegedly improper designations on those areas
Rule 24(b) provides in relevant part:
In light of our holding that Rogers Park had no right to intervene, we need not address the merits of its contention that Census Tract 101 was misclassified as a Revitalizing Area. We do note, however, while the determination might be a close one de novo, that we are of the view that the evidence was sufficient to sustain the determination in this appeal. In this sense, our discussion in relation to Mack's appeal is generally supportive of the classification of Census Tract 101 as a Revitalizing Area
For this reason, we reject Mack's contention that the continuing increase in minority population in the Revitalizing Area based on the 1980 census data invalidates the designation of the Area. The relief is predicated on the assumption that communities are continuing to suffer from the effects of past discrimination. Potential for integration may be reasonably based on factors other than current demographics, such as physical redevelopment and access to transportation
The proponents of the decree have stated that they will seek voluntary dismissal of the second supplemental complaint against the additional defendants named, including IHDA, upon our upholding of the consent decree. We, therefore, need not address the merits of IHDA's motion to dismiss the complaint