Opinion ID: 2063659
Heading Depth: 1
Heading Rank: 6

Heading: Sufficiency of the Claim

Text: Lastly, IHDA argues that the appellees have failed to state a valid claim for relief. So far as we can understand, IHDA makes two arguments: (1) that the Act does not impose upon IHDA the affirmative duty of avoiding economic homogeneity in individual developments, and (2) that, even assuming such a duty, the appellees' complaint has failed sufficiently to allege that IHDA acted arbitrarily and capriciously with respect to the development at issue here. On this first issue, we agree with the appellate court below that the Act does impose a duty upon IHDA to exercise its discretion in a manner that takes into account the degree to which a particular tenant-selection plan avoids undue economic homogeneity. We have already stated in detail the facts about the legislative history of the Act which make clear that one of its purposes, although not its only purpose, was to encourage economic desegregation. This purpose is clearly reflected in the Act's specific provisions. Under the Act, IHDA has a duty to approve a tenant selection plan before funding a development and to formulate regulations    setting forth the criteria for tenant selection plans. (Ill. Rev. Stat. 1985, ch. 67 1/2, par. 310.) These criteria must include income limits    sufficiently flexible to avoid undue economic homogeneity among the tenants of a development. (Ill. Rev. Stat. 1985, ch. 67 1/2, par. 310.) Since the tenant-selection plan must conform to IHDA criteria, and IHDA criteria must avoid undue economic homogeneity among the tenants of a development, it follows that any tenant-selection plan approved by IHDA should avoid undue economic homogeneity. Given the Act's stated goal of housing persons of varied economic means in the same structures and neighborhoods (Ill. Rev. Stat. 1985, ch. 67 1/2, par. 303), undue economic homogeneity refers not only to economic segregation in a particular development, but also economic segregation in the community where the development is located. We also agree with the appellate court's determination that IHDA does not have an affirmative duty to assure any fixed level of economic integration, either in particular developments, or in the communities in which they are located. The Act only requires IHDA to consider the degree of economic segregation associated with a particular development and to take reasonable steps to avoid undue economic segregation. Put in another way, the Act only requires IHDA to avoid acting arbitrarily and capriciously with respect to the economic composition of a development. The next question is whether IHDA's exercise of its discretion with respect to the development was arbitrary and capricious. Boiled down to its essentials, the appellees' complaint contains several specific allegations against IHDA: (1) that IHDA failed to consider the economic characteristics of the community and, more particularly, that it failed to conduct a formal market study; (2) that the income limits in the tenant-selection plan do not avoid undue economic homogeneity; (3) that IHDA arbitrarily abandoned a prior policy of funding and promoting mixed-income developments; and (4) that IHDA failed to request a waiver from HUD of the very low income requirements of section 8. While it is probably not possible to enumerate all the kinds of acts or omissions which will constitute arbitrary and capricious conduct, the following guidelines apply. Agency action is arbitrary and capricious if the agency: (1) relies on factors which the legislature did not intend for the agency to consider; (2) entirely fails to consider an important aspect of the problem; or (3) offers an explanation for its decision which runs counter to the evidence before the agency, or which is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. ( Motor Vehicle Manufacturers Association of the United States, Inc. v. State Farm Mutual Automobile Insurance Co. (1983), 463 U.S. 29, 43, 77 L.Ed.2d 443, 458, 103 S.Ct. 2856, 2866-67.) While an agency is not required to adhere to a certain policy or practice forever, sudden and unexplained changes have often been considered arbitrary. (See 2 C. Koch, Administrative Law & Practice § 9.6, at 101 (1985).) The standard is one of rationality. The scope of review is narrow and the court is not, absent a clear error of judgment ( Citizens to Preserve Overton Park, Inc. v. Volpe (1971), 401 U.S. 402, 416, 28 L.Ed.2d 136, 153, 91 S.Ct. 814, 823-24), to substitute its own reasoning for that of the agency. Under this standard, the appellees' complaint adequately states a valid claim for relief. The appellees allege that IHDA failed to consider such relevant factors as the economic makeup of the surrounding neighborhood, failed to assess those factors using reasonable procedures, and arbitrarily abandoned a prior policy. IHDA's denials of these allegations, while not implausible, at best raise issues of fact which cannot be disposed of upon a judgment on the pleadings. Since they cannot, the trial court erred in granting judgment for IHDA on the pleadings; and we reverse and remand for further proceedings in the circuit court in accordance with this opinion.