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May 1, 1981

Thomas P. DAUBNER, Maria Isabel Solares, Marcelle Crepeau and George Bittner, Sr., Each individually and on behalf of all other persons similarly situated and affected by the policies, practices and usages complained of, Plaintiffs,
Patricia Roberts HARRIS, Secretary of United States Department of Housing & Urban Development et al., Defendants; Elizabeth GITLIN, Plaintiff, v. DWELLING MANAGERS, INC., and Manhattan Plaza, Inc., Defendants

The opinion of the court was delivered by: GRIESA

These two actions challenge the criteria for selection of tenants in the Manhattan Plaza apartment complex on West 42nd Street, New York City, a project in which the great majority of the tenants receive federal rent subsidies under Section 8 of the United States Housing Act of 1937, as amended, 42 U.S.C. § 1437f. Plaintiffs allege violation of that statute, and also violations of their constitutional rights.

The Gitlin action is an individual claim by Elizabeth Gitlin against the owners of Manhattan Plaza.

 There are four plaintiffs in the Daubner action: Thomas P. Daubner, Maria Solares Vega, Marcelle Anne Crepeau and George E. Bittner. The defendants in the Daubner action are Manhattan Plaza, Inc. and certain other parties associated with the Manhattan Plaza project; the City of New York and various city officials; and officials of the Federal Government.

 Daubner was brought as a class action. The class described in the complaint consists of residents of the area in which the Manhattan Plaza project is located, who would be eligible for subsidies under federal law and who were allegedly excluded because of the criteria used by defendants in selecting tenants. The class is said to number more than 10,000 persons.

 The Daubner plaintiffs failed to move for class certification, and defendants made an application to dismiss the class action allegations. This application was not decided before trial.

 The question of whether Daubner should proceed as a class action is somewhat academic. Although the prayer for relief in the complaint contains a request for damages on behalf of the class, this is little more than a token pleading. The issues which have been litigated in earnest relate to the requests for injunctive relief, and can be completely disposed of by dealing with the claims of the individual plaintiffs. See Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 263-64, 97 S. Ct. 555, 562, 50 L. Ed. 2d 450 (1977). Defendants in Daubner are entitled, however, to a ruling on their application to dismiss the class action allegations. Since there was no timely motion by plaintiffs for class certification, defendants' application is granted. See East Texas Motor Freight v. Rodriguez, 431 U.S. 395, 97 S. Ct. 1891, 52 L. Ed. 2d 453 (1977).

 Both the Gitlin and Daubner actions were tried to the court without a jury. This opinion constitutes the court's findings of fact and conclusions of law.

 For the reasons hereafter set forth, the court finds that plaintiffs' claims are without merit. The complaints are dismissed.


 Manhattan Plaza occupies the entire city block bounded by West 42nd and 43rd Streets and Ninth and Tenth Avenues. There are 1,688 apartments in the development. Thirty-seven percent (626) of the units are studio apartments; 47 percent (798) have one bedroom; and 16 percent (264) have two bedrooms.

 When the project was originally conceived, it was to receive benefits under New York State's Mitchell-Lama Law, Article 2 of the Private Housing Finance Law i. e., it was to receive certain real property tax exemptions and mortgage financing benefits. The original proposal did not include federal rent subsidies.

 The developers of Manhattan Plaza and the New York City Housing and Development Administration ("HDA") *fn1" obtained Mitchell-Lama approval in 1973 from the City Planning Commission and the Board of Estimate. Construction began in early 1974.

 For a variety of reasons it became clear that the Manhattan Plaza apartments would not be able to be rented at rates necessary to cover operating costs and debt service. This led to efforts to obtain federal rent subsidies under Section 8 of the Housing Act.

 Among the steps which must be carried out in order to obtain Section 8 rent subsidies is the submission of an "Affirmative Fair Housing Marketing Plan" to the Department of Housing and Urban Development ("HUD"). Manhattan Plaza and HDA submitted such a plan to HUD dated December 8, 1975. Since this plan was later superseded, the details of this plan need not be described, except to note that it included the following statement about the expected racial composition of the project:

"As a result of our special outreach efforts, we expect to achieve an integrated tenancy approximately 70% white, 20% black, and 10% Spanish speaking."

 HUD notified HDA of its approval of this marketing plan by letter dated October 7, 1976.

 Meanwhile, a federal court action had been brought challenging the project. The Broadway Association, Inc. v. Carla Hills, et al. (S.D.N.Y. 76 Civ. 1521). The action apparently resulted from concern that federally subsidized housing for low-income families would have a detrimental effect upon the area. On May 25, 1976 the case was settled by stipulation. In view of the fact that the 1973 submission of the project to the City Planning Commission and the Board of Estimate did not include the concept of federal rent subsidies, it was agreed that the proposal would be resubmitted. The City Planning Commission and the Board of Estimate would be asked to decide whether to approve Mitchell-Lama benefits for Manhattan Plaza now that the plan included the intention to seek federal subsidies.

 Manhattan Plaza and HDA developed a new Affirmative Fair Housing Marketing Plan. They retained Settlement Housing Fund, Inc., an organization with considerable expertise in the field of low income housing, to prepare this new plan.

 The Fund's report was issued in July 1976. The report contained an extensive analysis of information about residential and employment patterns in the area. According to the testimony of the Study Director, several alternative plans were considered, and were evaluated on the basis of how they would foster the following goals achieving racial integration, obtaining responsible tenants, and producing a desirable impact on the mid-Manhattan west side area and New York City as a whole. The study recommended that there be priority given for all the apartments in Manhattan Plaza to persons in the performing arts. The basis for this recommendation was the view that performing artists would have a particular tie to, and a particular interest in preserving and upgrading, the Times Square area and the theater district of New York City. It was also thought that performing artists constituted a racially integrated group, from which a responsible tenantry could be obtained.

 On November 3, 1976 there was a public hearing before Community Planning Board No. 4, whose area of responsibility is roughly the Chelsea and Clinton neighborhoods on Manhattan's midtown west side. Following the hearing, the board passed a resolution proposing that Manhattan Plaza should be predominantly occupied by performing artists, but recommending that a substantial percentage of the apartments be reserved for community residents, including the elderly, who are not affiliated with the performing arts.

 Subsequently the City Planning Commission considered two alternate proposals. The first was to market 100% of the apartments to performing artists. The second was to market 85% of the apartments to performing artists and 15% to residents of Community Planning District No. 4 who were living in sub-standard housing. On January 3 and 4, 1977 the City Planning Commission approved the first alternative and voted to reject the second.

 By resolutions of February 3, 1977 and March 14, 1977, the Board of Estimate approved the concept of federal rent subsidies for Manhattan Plaza on the basis of a marketing plan which would give priority to performing artists for at least 70% of the apartments; priority to elderly persons in Community Planning District No. 4 for up to 15% of the apartments; and priority to persons residing in sub-standard housing within Community Planning District No. 4 for up to 15% of the apartments. The Affirmative Fair Housing Marketing Plan was submitted to HUD. This plan included the priorities approved by the Board of Estimate, and projected that the racial composition of the tenant households would be 1180 Whites (non-minority), 235 Blacks, 235 Spanish American, 10 American Indian, and 30 Oriental. These figures work out to the following percentages: White (non-minority) 69.8% Black 13.9 Spanish American 13.9 American Indian .6 Oriental 1.8

 In conjunction with the submission of the Affirmative Fair Housing Marketing Plan, the owners of Manhattan Plaza requested that HUD grant an increase in the income ceilings for persons eligible for Section 8 rent subsidies at the project. The context of this request was that, under Section 8, rent subsidies can be paid only for "lower-income families," defined in the statute to be those families whose incomes do not exceed 80 per centum of the median income for the area, as determined by the Secretary. 42 U.S.C. § 1437f(f)(1). The basic income limits applicable to Manhattan Plaza in 1977 were as follows: One person $ 9,050 Family of two $ 11,600 Family of three $ 13,050 Family of four $ 14,500 Pursuant to authority in 42 U.S.C. § 1437f(f)(1), the Secretary of HUD is empowered to establish income ceilings higher than 80 per centum of the median for the area under certain circumstances. In connection with the Manhattan Plaza project, HUD raised the applicable income limits by 35% for up to 30%, or 506, of the apartments. This meant that, for these apartments, the income limits were: One person $ 13,700 Family of two $ 15,700 Family of three $ 17,600 Family of four $ 19,600

 HUD also approved the Affirmative Fair Housing Marketing Plan, including the 70% priority to performing artists, 15% priority to elderly persons, and 15% to persons residing in sub-standard housing. HUD specified that there would be a reexamination, after 25% of the units had been assigned, in order to determine if satisfactory racial integration had been achieved.

 On May 19, 1977 HUD entered into an Annual Contributions Contract with HDA, providing that up to approximately $ 11 million per year in rental subsidies would be paid for Manhattan Plaza. On May 25, 1977 HDA entered into a contract with Manhattan Plaza under which HDA agreed to pay over the rental subsidy amounts to the owners of Manhattan Plaza.

 The processing of applications commenced in early 1977. As would be expected, there were far more applications than apartments. The complex was fully occupied by January 1978.

 In 1978, HUD conducted a review of the racial composition of Manhattan Plaza, which showed that 71% of the units were occupied by Whites (non-minority); 15% by Blacks; 12% by Hispanics; and 2% by Orientals.

 The evidence at trial showed that the racial composition of the Chelsea-Clinton Area is approximately 72% non-minority Whites, and 28% minorities.


 The following are the facts regarding the individual plaintiffs.

 Thomas P. Daubner

 Daubner is White and an attorney. Since 1964 he has resided in an apartment building at 300 West 49th Street, in the Clinton area. This is a rent controlled building. He pays approximately $ 125 per month for his 31/2 room apartment.

 According to Daubner's testimony, he devotes a substantial amount of his time to legal work for which he receives little or no compensation. During the time relevant to this action he earned only about $ 6,000 a year from his law practice. Family income from other sources, including Social Security payments to his wife and daughter, brought the total family income up to about $ 10,000 a year.

 Daubner learned about the opportunity to apply for Manhattan Plaza in early February 1977, and immediately filed an application for a subsidized apartment, which stated that he resided in sub-standard housing. His application was considered by Manhattan Plaza in relation to the sub-standard housing category.

 In June 1977 a representative of Manhattan Plaza inspected Daubner's apartment at 300 West 49th Street. Later in the same month Daubner was given a personal interview. On June 24, 1977 Daubner signed a lease for Apartment M-16 in Manhattan Plaza and made a deposit of $ 495, covering one month's rent of $ 205, a security deposit of another month's rent, and the cost of investigation. Daubner was given a tentative move-in date of July 12. In early July 1977 a representative of Manhattan Plaza asked Daubner for a certified copy of his 1976 income tax return. Daubner was ...

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