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June 26, 1974

MICHAEL E. TULLY, JR., and TOWN OF NORTH HEMPSTEAD, First Respondent, HECTOR H. GAYLE, Executive Director, BERNARD GARTLER, Chairman, JOSEPH CECI, DR. CURTIS KENDRICK, Local Urban Renewal Planners, Second Respondents, JAMES T. LYNN, Secretary, Department of Housing and Urban Development, Third Respondent

The opinion of the court was delivered by: BARTELS


 In the last few years federal courts have been faced with mounting problems in determining whether the United States Department of Housing and Urban Development ("HUD") has violated the Civil Rights Acts of 1964 and 1968 in site selections for locations for federally assisted housing projects in areas of racial concentration. Here we are concerned with the racial and socioeconomic effects of the construction of a proposed one hundred unit low- and moderate-income housing project ("the Project") on a site selected by HUD in "Spinney Hill", a predominantly black area within the Town of North Hempstead, Nassau County, State of New York ("the Town"). Petitioners, several individuals who reside in Spinney Hill, and the Great Neck Manor Civic Association, *fn1" an association of property owners in Spinney Hill, have instituted this class action against the Town, the Local Urban Renewal Agency, established by the Town as its Local Public Agency under the Housing Act of 1949, 42 U.S.C. § 1451(b), ("The LPA"), and HUD to enjoin the construction of the Project, contending that the construction of the Project will perpetuate racial concentration in the Spinney Hill area in violation of § 601 of the Civil Rights Act of 1964, 42 U.S.C. § 2000d, and § 808 of the Civil Rights Act of 1968, 42 U.S.C. § 3608. Jurisdiction is predicated upon 28 U.S.C. §§ 1331, 1343.


 In order to obtain funds from HUD, the Town Board must make an acceptable application. In this case the Town Board determined that the Spinney Hill area is a "substandard and unsanitary" area appropriate for urban renewal, and has designed the Project to replace existing structures, 80% of which the Town Board has determined to be "blighted," with commercial, residential and recreational buildings. HUD committed itself to fund the Spinney Hill Project under its Neighborhood Development Program ("NDP"), which authorizes funding of such projects in annual increments. As finally approved by HUD, the Project involves Federal grants and loans for site acquisition only, with support for actual construction to be provided under New York State's "Mitchell-Lama" Program, N.Y. Private Housing Finance Law § 10 (McKinney's, supp. 1973). Petitioners allege that the Town and the LPA have deliberately selected the predominantly black Spinney Hill area to locate the Project, which is also expected to be predominantly black, and have made no attempt to acquire non-segregated sites within the Town for the location of additional low- and moderate-income housing projects. It becomes necessary, therefore, to examine the factors, procedures and information utilized by HUD in approving the Spinney Hill site for assistance under the Neighborhood Development Program.

 According to the Neighborhood Development Program Handbook, an application for assistance will not pass beyond the preliminary screening stage unless there is an affirmative finding for each of the following six prerequisites: (1) Workable Program; (2) Local General Plan (official documents concerning land use, zoning ordinance and map, subdivision regulations to serve as a comprehensive guide for the physical development of the locality as a whole); (3) Civil rights (evidence of compliance with Title VI of the 1964 Civil Rights Act and Executive Order 11246); (4) Relocation Requirements (compliance with Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970); (5) A-95 Coordination (procedure involving review of applications under the Office of Management and Budget Circular A-95); and (6) Housing Component (absence of any known barrier which would preclude all assisted housing sites in the project area from receiving at least an adequate rating on the Housing Production and Mortgage credit project selection system).

 The Town's Workable Program

 Under the provisions of the Housing Act of 1949, 42 U.S.C. § 1451, before any Federal urban renewal assistance may be made available in a community, including that under the Neighborhood Development Program, that community must submit to HUD an acceptable "workable program for community improvement" including "an official plan of action . . . for effectively dealing with the problem of urban slums and blight within the community and for the establishment and preservation of a well-planned community with well-organized residential neighborhoods of decent homes and suitable living environment for adequate family life." HUD's initial acceptance or certification of a community's workable program is valid for only two years and recertification is predicated on a review of the progress submitted by the community to HUD biannually thereafter. Under § 1451 HUD is required to determine that (1) the workable program is of sufficient scope and content to furnish a basis for evaluation of the need for the urban renewal project, and (2) the project is in accordance with the program. Under the Civil Rights Act of 1968, 42 U.S.C. § 3608(d) (5), HUD is also required to administer the programs relating to housing and urban development "in a manner affirmatively to further the policies" of the Act against discrimination.

 As required by its workable program procedure, HUD exercised supervision and control over the Town's efforts to provide non-segregated low- and moderate-income housing to avoid the perpetuation of racial concentration. For example, in March, 1971, before the Spinney Hill NDP was proposed, HUD withheld recertification of the Town's workable program pending the submission of evidence of its efforts to provide relocation housing outside racially concentrated areas for those displaced by governmental redevelopment programs, a concept of scatter-site housing. Only after the Town Board unanimously passed a resolution expressing its intent "to utilize all resources available to encourage construction of low- and moderate-income housing outside areas of racial concentration for residents of all races and economic mixes . . ." *fn2" was recertification granted by HUD. Pursuant to this commitment the Town Board proposed three sites to HUD, two of which, the Cutter Mill and Port Washington Boulevard sites, were approved in March, 1972. The third proposed project, for twenty-six low-income units in the Spinney Hill area, was rejected by HUD's Equal Opportunity Division because it was in an area of racial segregation. The Cutter Mill site is located in a predominantly white neighborhood and will accommodate approximately seventy low-income units, while the Port Washington Boulevard site will accommodate approximately twenty-eight low-income units in an area adjacent to an existing predominantly black housing project. The two projects were approved as a package by HUD with the less costly Port Washington Boulevard site making the more costly Cutter Mill site feasible. In January, 1973, a challenge to the Cutter Mill project was raised by a community group based primarily on its environmental impact which is presently under study both by HUD and by the New York State Department of Environmental Conservation.

 The Spinney Hill Application

 The current Spinney Hill Project, approved for its first year of funding under the Neighborhood Development Program in September, 1972, called for acquisition of nine acres of land and two hundred housing units to be funded under the federally subsidized housing program, 12 U.S.C. § 1715z-1, for which HUD allowed the Town a $1,400,000 loan and a $1,300,000 capital grant for first year site acquisition. Because of a moratorium on funding of federally subsidized housing in 1973, the Project was modified in the first year to obtain other sources of financing. Accordingly, the second year NDP application was adjusted to accommodate only one hundred units of housing to be financed under the "Mitchell-Lama" program, NYPHFL § 10 (McKinney's supp. 1973). The Town's plan provided that the land originally acquired in the first year, together with an additional fourteen parcels funded by HUD, would be sold to a developer in a package upon the condition that the profits on the commercial development would be employed to reduce rents on the one hundred units of housing. Further rent supplements were to be added from a fund already contributed by various local organizations, including the Inter-Faith Council of Manhasset. Pursuant to this application, HUD approved a $1,175,000 grant and a $1,612,643 loan to the Town for acquisition of the fourteen parcels.

 Before the Spinney Hill NDP was approved, and pursuant to the requirements of the Housing Act of 1949, 42 U.S.C. § 1455(d), public hearings were held, first by the Town's Planning Board in May, 1972, and then by the Town Board in June, 1972. Public notice was given in advance of the Town Board hearings through posting of notices in conspicuous places about the Town and by publication in The Great Neck Record on June 1st and June 8th, 1972. Various speakers at the hearings recounted the conditions of overcrowding, crime, and drug use which were present in the redevelopment area and expressed their views in favor of the Project, explaining how the Project would alleviate these conditions. At these hearings the attorney for the petitioners and petitioner Jones on behalf of the Great Neck Manor Civic Association *fn3" opposed the Project. A number of other area residents and representatives of local civic and civil rights organizations including the local chapter of the NAACP and the Manhasset Inter-Faith Council, spoke in favor of the Project. A petition signed by 700 area residents supporting the Project was also presented to the meeting. After hearing the voice of the area residents, the Town Board unanimously approved the Project on June 13, 1972 in compliance with 42 U.S.C. § 1469(c) (1).

 HUD's Evaluation

 The Town's application for funding under the Neighborhood Development Program was evaluated under the procedures set out in HUD's NDP Project Selection System, 24 CFR §§ 511 et seq., and was approved for its first year of funding in September, 1972. Under this system, applicants for assistance under the Neighborhood Development Program, such as the Town of North Hempstead, are required to submit "acceptable assurances of compliance with the Civil Rights Act of 1964, . . . and HUD title VI regulations 24 CFR Part I, . . ." as a prerequisite to further consideration of their application, 24 CFR § 511.4(c). Once this and other prerequisites have been met, HUD is obligated to evaluate pursuant to § 511.20 the degree to which the locality in which the Project is to be located "has a realistic plan to expand the supply of standard low- and moderate-income housing in a nondiscriminatory way outside areas of concentration of economically disadvantaged or minority citizens."

 The affidavits of HUD officials clearly establish that the Project was evaluated under this selection system pursuant to which HUD determined that (1) the prerequisite of "acceptance assurance of compliance with the Civil Rights Act of 1964, . . ." 24 CFR § 511.4(c), was met by the expressed commitment of the Town Board to equal opportunity in housing as evidenced by its resolution of June 15, 1971 and its proposal of the Cutter Mill and Port Washington Boulevard sites; (2) the Town deserved an "adequate" rating upon the question of whether there had been a significant expansion of the supply of standard housing for low- and moderate-income families in a nondiscriminatory way, and a "good" rating on the question of whether it had a realistic plan for the expansion of such housing outside areas of racial concentration, 24 CFR § 511.20; (3) one of the objectives of the Spinney Hill NDP was to promote equal housing opportunities and to encourage a reduction in the concentration of minority group persons within the Spinney Hill community; (4) the Project received the support of numerous community groups and many area residents who expressed their support at the two public meetings held by the Town in ...

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