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July 19, 1973

Prudencio T. FELICIANO et al., Plaintiffs,
George ROMNEY, Secretary of the Department of Housing and Urban Development, et al., Defendants

Edward Weinfeld, District Judge.

The opinion of the court was delivered by: WEINFELD

EDWARD WEINFELD, District Judge.

In April 1971, the ten named plaintiffs commenced this suit individually and as a class action on behalf of all indigent families residing in the Milbank-Frawley Circle I Urban Renewal Area (hereafter Milbank-Frawley). The complaint alleges in essence that the governments involved -- city, state and federal -- have failed in their obligations both under the Constitution and federal statutes by not providing area residents with the required relocation, rehabilitation, and site maintenance for present structures, adequate jobs and job training on a nondiscriminatory basis, and that they have actively interfered with an organization representing the community. The instant motion seeks to dismiss the complaint for lack of federal jurisdiction, failure to state a claim, and because primary jurisdiction to decide all issues raised is in the Department of Housing and Urban Development ("HUD"). If these motions fail, defendants seek to deny plaintiffs class action status. *fn1"

 The Milbank-Frawley Circle I Urban Renewal Area, located in the center of the Harlem Community, is bounded generally by 125th Street on the north, 110th Street on the south, Park Avenue on the east and Lenox Avenue on the west. The area covers forty square blocks of substantially substandard housing, vacant land and public facilities, and is divided into some forty-five sites, twenty of which the City has already acquired as "early action" sites on which there are 1,800 apartments of slum housing slated to be replaced by 2,640 units of new and rehabilitated housing. The entire area contains some of Harlem's poorest housing stock. This neighborhood is in turn located within the federally financed Harlem-East Harlem Model Cities area (Harlem-East Harlem), a neighborhood three times as large as the Milbank-Frawely area. Numerous agencies and programs, apart from and unrelated to Milbank-Frawley, function within the Harlem-East Harlem Model Cities project. Milbank-Frawley is an urban renewal project, whereas Harlem-East Harlem is a model cities neighborhood project. They are separate and distinct programs. They are to be developed and funded under different statutes with different goals, although intended to advance interrelated national objectives of housing and community needs.

 Plaintiffs seek to represent approximately 7,000 families, consisting of 50,000 persons, almost entirely Blacks and Puerto Ricans of low income, who resided in the Milbank-Frawley urban renewal area in August 1970. At that time, when the City acquired the twenty "early action" sites, *fn2" approximately 1,700 families lived on those sites; only 800 families remained at the beginning of 1972. The other site residents were relocated into standard housing; many of them into public housing. The plaintiffs resided on early action site 23, *fn3" a single block, when this action was commenced, but have since been relocated. Presently under construction on that site are two thirty-five-story towers and one twelve-story building, known as Frawley Plaza, scheduled for completion in December of this year. It will replace approximately 150 slum apartments and when completed will house 600 families of low and moderate income and will have three community facilities, including two day care facilities and a new home for the North Side Center Development.

 All of the defendants save one *fn4" are officials of the city, state and federal governments who are involved in the Milbank-Frawley and Harlem-East Harlem Model Cities projects; they are sued both as individuals and in their official capacities. *fn5"

 It is important to a determination of the present motion to note the separate nature of the two undertakings and to sketch the operational framework of the two major federal statutes involved -- the Demonstration Cities and Metropolitan Development Act of 1966 *fn6" ("the Model Cities Act"), and the Housing Act of 1949 *fn7" ("the Housing Act"), under which urban renewal projects are authorized -- and the manner in which they have been implemented in the Milbank-Frawley and Harlem-East Harlem projects.


 The Model Cities Act was passed to upgrade the total environment of the nation's urban slums and blighted areas, to better the living conditions of its residents and to increase the supply of housing for low and moderate income families not satisfied by existing programs. Its objectives are more comprehensive than those of the programs under other national housing acts. It is designed to concentrate public and private resources in a comprehensive five-year attack on the social, economic and physical problems of slum and blighted neighborhoods. Its broader purpose is to improve educational facilities and programs; to combat disease and ill health; to reduce crime and delinquency; and to enhance recreational and cultural opportunities -- as well as to expand housing and job opportunities. *fn8" It seeks to accomplish these ends by aiding localities in the planning and implementation of "comprehensive city demonstration programs," the locally developed and scheduled plans providing for a coordinated federal, local and private effort to implement the Act's purpose. *fn9" The federal government, through the Secretary of HUD, is authorized to make grants to participating cities to cover 80% of the cost of planning and developing such programs. *fn10" When a program has been formulated and approved by the locality, and is found to be in conformity with federal standards, the Secretary of HUD is authorized to make supplemental grants to assist the local agency established to administer the comprehensive programs. *fn11" The Act emphasizes local initiative and widespread citizen participation at every stage of the program. *fn12"

 In November 1967, HUD approved New York City's application to participate in the Model Cities program and advanced $283,650 as a one-year planning grant for three neighborhoods, including Harlem-East Harlem. In June 1969, HUD approved the City's Comprehensive City Demonstration Program and entered into a grant agreement which provided the City with $65 million for the first year for the three designated neighborhoods, $12,033,071 of which was set aside for the Harlem-East Harlem Model Cities Neighborhood. In the City's Second Year Program, approved on April 7, 1971, $12,033,000 was reserved for Harlem-East Harlem. The City's Third Year Program was approved and $14,500,000 was reserved for Harlem-East Harlem. The only Model Cities funds which have been specifically used in connection with the Milbank-Frawley urban renewal project was a loan of $200,000 to the Milbank-Frawley Circle Housing Development Fund Co., Inc. to commence rehabilitation of several buildings on sites 5, 11, 18, referred to hereafter. *fn13"


 The Housing Act of 1949 expressed the national policy of "the realization as soon as feasible of the goal of a decent home and a suitable living environment for every American family." *fn14" Congress, from time to time, has sought by various governmental aids to achieve that objective. Urban renewal is one such method and seeks to deal with the problems of slums and urban blight and to create better communities by the planned rehabilitation or redevelopment of deteriorated or deteriorating areas, both residential and nonresidential. *fn15" It is locally conceived, planned and carried out and involves cooperation among local and state governments, private enterprise, citizen groups and the federal government. An urban renewal program may involve acquisition and clearance of a slum or blighted area, disposition of the land for redevelopment in accordance with planned uses, or rehabilitation of substandard structures by either the local public agency or property owners, accompanied by provision for necessary public improvement; it may involve a combination of such activities. Local public agencies, authorized by state law to undertake urban renewal and receive federal assistance are eligible for renewal assistance. Urban renewal is financed by an arrangement between the local agency and the federal government acting through HUD and involves local contributions, federal advances and loans, and ultimately a federal capital grant, usually two-thirds of the net project cost. To obtain such federal assistance, the locality must initially survey its needs and provide documentation as to its eligibility for urban renewal assistance. Upon the submission of a Survey and Planning Application, the Secretary of HUD may advance funds to the local public agency *fn16" -- in the case of New York City the Housing and Development Administration ("HDA") -- for additional and intensive surveys to determine the feasibility of urban renewal and for the formulation of surveys and plans for specific projects. *fn17" The period between approval of the Survey and Planning Application and approval of the ultimate Loan and Grant contract is referred to as the planning stage. During this planning stage, specified activities such as land acquisition and related activities of site clearance and tenant relocation may be carried out even before a Loan and Grant contract is approved if a "Letter of Consent" is issued by HUD to the local agency. Such a letter is not a commitment by the federal government that the expenditures for such activities will be included in gross project cost, nor is it a commitment that the federal government will enter into a loan and grant contract to provide the funds for the execution of the project. It does constitute a determination that the expenditures for such activities will not be ineligible for eventual reimbursement solely because they were incurred before HUD had entered into a contract with the agency. HUD regulations specify the Letter is only to be used "where absolutely necessary" and upon a demonstration of the necessity for undertaking such activities during the project planning stage. *fn18" During this planning stage, the Urban Renewal Plan is formulated, and if approved by HUD and the local public agency, *fn19" becomes the basis for the contract of Loan and Grant between HUD and the local agency pursuant to which federal funding is provided. The Housing Act specifies the requirements of such a contract including a feasible method for the adequate relocation of individuals and families displaced from the urban renewal area.

 In the summer of 1967, HUD granted the City's application for a Survey and Planning Advance and thereafter advanced $945,000 to examine the feasibility of the proposed urban renewal project in the Milbank-Frawley area. *fn20" On September 21, 1967, the Board of Estimate approved the urban renewal plan, authorized condemnation in several stages and approved the filing of applications for a "Letter of Consent" and a contract for loan and grant under Title I of the Housing Act of 1949.

 HUD issued the City a Letter of Consent on July 18, 1969 and an amended Letter of Consent on March 17, 1970, under which permission was thereafter granted to undertake condemnation of the twenty "early action" sites which the City acquired in August, 1970. The City then began to encounter increasing difficulty in formulating a workable relocation plan. On February 11, 1971, HUD, after a review of all federal housing programs within New York City, and not based on a review of any particular project, placed an embargo on all future acquisitions of real property by the City which might involve residential relocation; and, within Milbank-Frawley, no additional properties have been acquired. On June 29, 1971, HUD returned the City's application for a contract for Loan and Grant as unaccepted, stating: "The application fails to demonstrate that a feasible relocation program can be carried out for the project." HUD requested additional information, suggested revisions of the relocation plan to satisfy HUD requirements, and the City contemplates resubmission of the application. To date no contract for Loan and Grant has been entered into with the City and there is no assurance of federal funding of the Milbank-Frawley project.

 It is against this backdrop of the City's efforts at urban renewal and its difficulties in providing adequate relocation resources that the present suit is set. *fn21" Based upon a survey of the relocation needs of the Milbank-Frawley Urban Renewal Area a relocation plan was formulated for the area coupled with a city-wide relocation plan. Plaintiffs allege it was formulated in cooperation with the Milbank-Frawley Circle Housing Council, Inc., a designated community organization, purporting to represent the local residents, and then under contract with the City. *fn22" Approved by the City in November 1968, the relocation plan provided for a staged method of rehabilitating structurally sound buildings and for building on existing vacant land first, so that needed relocation facilities would be created prior to the need for any relocation. Plaintiffs allege that instead of proceeding with that staged plan, the City began eviction proceedings in the state courts on March 16, 1971, in order to obtain possession of site 23, the early action site on which all the plaintiffs resided. *fn23" In response to the eviction proceeding, plaintiffs commenced this suit on April 7, 1971, and soon thereafter moved for extensive preliminary injunctive relief which sought to enjoin their eviction and, among other matters, to enjoin all further attempts with respect to acquisition, site clearance and relocation efforts in the renewal area until a definitive plan for relocation or rehabilitation acceptable to them was produced; also to enjoin the City from relocating them except in compliance with the previously approved community development plan. The City indicated it would only seek to evict immediately the remaining tenants on the westerly portion of site 23, and the preliminary injunction was denied on May 5, 1971. *fn24" In denying the motion, Judge Tenney relied in part on the lack of any federal commitment to the City pursuant to a contract for Loan and Grant. "That the [relocation] plan which may be approved by HUD may be violative of federal statutory or regulatory requirements is obviously too speculative a basis upon which presently to issue an injunction." *fn25" The court further found that the balance of hardship weighed against granting the injunction; since the displaced residents were to be relocated in satisfactory temporary facilities, granting the injunction would imperil the construction of 600 desperately needed apartments. *fn26" Shortly after this decision, the residents were displaced from the westerly portion of site 23.

 On August 23, the City commenced a proceeding in the state court for a writ of assistance to remove the remaining tenants from the easterly portion of site 23. Plaintiffs again sought preliminary injunctive relief; again it was denied. Upon resumption of the state court proceeding, the remaining tenants were ordered to vacate site 23 by January 17, 1972. Though plaintiffs filed a notice of appeal from the order denying their second motion for preliminary injunctive relief, they have not prosecuted that appeal but rather moved for a trial preference and for assignment of the case to a single judge. *fn27" Shortly after assignment of the case to this court, defendants brought on the present motion to dismiss and deny class action status. Against this background of the objectives of the two major federal programs, contrasted with events in achieving those objectives, the complaint seeks federal relief.



 As noted at the outset, plaintiffs in essence charge that the federal, state and city governments have failed in their obligations in the Milbank-Frawley area with respect to relocation, rehabilitation, site maintenance, jobs and job training, and in their relation to a community organization.

 Plaintiffs' voluminous thirty-page complaint, at times discursive, contains a series of broader based charges. These include denial of their rights under the relocation standards required by the Housing Act of 1949, *fn28" by Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, *fn29" and also required as part of any comprehensive program eligible for assistance under a Model Cities Program. *fn30" They charge that while there was a workable relocation plan, the city and state defendants have violated that plan by submitting false statistics to the federal defendants, and by staging construction which destroys the feasibility of the plan. It is claimed that rather than relocation in accordance with federally mandated standards, displaced residents have been offered no relocation resources at all, or only substandard housing, and that the City by various improper and harassing means has attempted to cause residents either to move out of the area or to accept inadequate housing. Acceptance by the federal government of the assurances given by the city defendants as a basis for initial and continued federal funding is alleged to be arbitrary and capricious.

 Similarly, plaintiffs claim a denial of their rights under federal civil rights statutes *fn31" and the equal protection and due process clauses of the Constitution in that the defendants have forced Black and Puerto Rican residents into a housing market already plagued by an extremely low vacancy rate and that they have failed to provide any significant rehabilitation to compensate for the planned displacement. In short, in the context of alleged city-wide practices of racial discrimination and discrimination against indigent and welfare recipients, the charge is that city defendants have contributed to a shrinkage in the supply of decent, safe, standard and sanitary housing available to all residents and especially to Black and Puerto Rican residents of low income. *fn32"

 With respect to rehabilitation, the complaint charges that the City has failed to follow the plan which it had originally approved providing for the rehabilitation of structurally sound buildings in the area, thereby violating the requirement of a feasible relocation plan under a loan or capital grant contract under the Housing Act, *fn33" and also thereby violating the eligibility for assistance provision mandated under a comprehensive city demonstration program required by the Model Cities Act. *fn34"

 The further charge is made that the City owns and maintains buildings which "are in sub-standard condition, uninhabitable, and . . . a peril to the life, health and safety of the occupants and their neighbors," *fn35" which it is alleged is inconsistent with the federal requirements under the Model Cities program which requires a substantial increase in the supply of standard housing of low and moderate cost. *fn36" The City's ...

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