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November 18, 1992



The opinion of the court was delivered by: GERARD L. GOETTEL


 This case involves a harsh reality, and for many uncomfortable questions. The reality is that homelessness is a problem that has spilled out of America's major metropolises and now touches even the smallest communities. To complicate matters, the homeless have many different faces which mask a complex array of needs. The questions are how will we respond to the myriad of challenges they represent and how will we meet their divergent needs?


 Plaintiff City of Peekskill has brought suit to prevent the acquisition of three condominium units, each located in a different development situated within the City of Peekskill. Defendant Rehabilitation Support Services, Inc. ("RSS") wished to acquire the units as new locations for transitional housing for a total of nine homeless mentally disabled persons, three in each condominium unit.

 RSS originally submitted an application to the United States Department of Urban Development ("HUD") for $ 522,141 in funding under the Transitional Housing component of the supportive Housing Demonstration Program, 42 U.S.C. § 11381 et seq., in May 1991. Along with that application RSS submitted a certification from the Deputy Commissioner of Westchester County's Department of Planning that the proposed activities were consistent with the County's Comprehensive Homeless Assistance Plan ("CHAP").

 In February 1992, RSS was informed by HUD that its application had received conditional funding approval. After the state Office of Mental Health ("OMH") advised RSS that it was withdrawing its funding commitment, RSS was advised by HUD that regulations permitted RSS to obtain a site different from the site identified in its original application. See 24 C.F.R. § 577.405(a).

 On July 24, 1992, RSS formally requested a site change identifying Peekskill, New York as the location of its proposed three two-bedroom condominium units. In its July application, RSS reduced its requested grant to $ 202,500. In September 1992, HUD informed RSS that the local government notification requirements still applied to RSS's application but that RSS could seek a waiver of the requirements.

 OMH has already approved RSS's application and disbursed some $ 250,000 of its funds to RSS. Defendant RSS used this state money coupled with over $ 150,000 of its own funds to purchase two of the units, the unit at Hendrick Hills and the one at society Hill.

 Besides RSS and HUD, plaintiff has sued two HUD officials, the Commissioner of New York's Department of Mental Hygiene, the state of New York, and the United States. Plaintiff claims that the proposed project runs afoul of several state and federal laws and regulations. In particular, plaintiff contends that defendants have failed to complete an environmental review as mandated by federal and state law. The City also claims that defendants have not provided certain required documentation like a certificate of consistency with HUD-approved Comprehensive Homeless Assistance Plan, written notice to plaintiff of proposed use and site, and written statement that proposed use not inconsistent with City's municipal goals and planning. Plaintiff also alleges that defendants have not demonstrated that the City needs additional transitional housing.

 In short, the City maintains that defendants have tried to shortcut all notification to plaintiff. Plaintiff contends that because a large percentage of its population receives public assistance (and has little political influence) and 17% of its housing stock already receives public assistance, defendants are trying to "dump" state mental patients on the City.

 By Order To Show Cause, plaintiff is seeking a preliminary injunction to prevent defendants from acquiring the transitional housing units it plans to purchase. According to plaintiff, it will suffer irreparable harm by the increased demand for its municipal services, loss of value to other condominium units in same developments, decline in its tax base from departure of families and businesses, impairment of its comprehensive zoning plan, and adverse environmental effects.


 As plaintiff recognizes, with a public interest at stake, a stricter standard must be met in order for plaintiff to secure a preliminary injunction. To garner the issuance of a preliminary injunction, plaintiff must establish that (1) irreparable harm will result if no injunction issues and (2) a likelihood of success on the merits. See La Plaza Defense League v. Kemp, 742 F. Supp. 792 (S.D.N.Y. 1990).

 A. The State Defendants

 The New York state defendants contend that plaintiff's action against them is moot. Plaintiff recognizes that OMH has issued formal approval and disbursed its funds to RSS and that RSS had used these state funds to purchase two of the three units comprising its transitional housing project. However, plaintiff contends that OMH's approval issued pursuant to Article 41 of the Mental Hygiene Law failed to comply with the site selection process specified in § 41.34(c) of the law.

 We disagree. As all parties recognize, OMH has disbursed all the state funds it intends to contribute to RSS's project. Those funds have already been used to purchase two of the three units comprising RSS's transitional housing project. Moreover, RSS which was not originally a named defendant in this action is not subject to the temporary restraining order now in effect. By its express terms, § 41.34 applies only to supportive living facilities with four or more residents up to a maximum of fourteen.

 The transitional units proposed by RSS will each house only three mentally disabled persons. At oral argument, plaintiff argued that common sense dictates that these disabled residents will require 24-hour supervision by at least one health care professional thus raising the total number of residents to four and exposing RSS's proposal to the selection requirements of Article 41. The short answer to this point is that RSS's plan in its present form provides for only three residents in each condominium. Plaintiff having offered no evidence that the RSS units shall house more than three live-in residents has not met its burden of demonstrating a likelihood of success on the merits of this issue.

 Indeed, OMH which approved RSS's funding request recognized that the three separate units will not have twenty-four hour on-site supervisory staff. See Meyer Affidavit P 10 at 3. RSS has confirmed this position. See Schonfeld Reply Affidavit at P 8. With no evidence of a fourth resident in any of the units, we find that RSS's proposed transitional housing does not qualify as "community residential facilities for the disabled" under § 41.34 of New York's Mental Hygiene Law. Therefore, we conclude that the action is moot as against the state defendants.

 Plaintiff lastly argues that no mootness exists since the state must issue an operating certificate to RSS before it can commence operation of its transitional housing project. At oral argument, the state denied the need for such a certificate. Neither party has bothered to do anything more than raise this issue in the most cursory manner. We shall dispose of the issue in similar fashion. Section 31.02 of New York's Mental Hygiene Law requires an operating ...

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