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February 7, 1975

Sadie E. COLE et al., Plaintiffs,
James T. LYNN et al., Defendants

Gesell, District Judge.

The opinion of the court was delivered by: GESELL

GESELL, District Judge.

 This is a class action brought by present and former tenants *fn1" challenging the decision of the Secretary of the Department of Housing and Urban Development (HUD) to demolish Sky Tower, a multifamily housing project, renovated with federal funds at substantial expense, for low-income families in this city. The matter came before the Court on plaintiffs' application for preliminary injunction. A hearing was held and after considering the testimony, affidavits, briefs and arguments of counsel, the Court issued a Temporary Restraining Order on January 28, 1975, to prevent further demolition pending the preparation of findings of fact, conclusions of law and an appropriate form of preliminary injunction. The Court's detailed findings and conclusions are set out herein and present the basis on which the Court has concluded that a preliminary injunction is required.

 Background of the Project

 Rehabilitation work began at Sky Tower in May of 1971. By November, 1972, two contractors had defaulted in their performance of the rehabilitation work. At that time, eight buildings had been completely rehabilitated, three were approximately 50 percent rehabilitated, and work had not yet begun on eight others. Although the non-profit sponsor wished to complete the rehabilitation work, and the mortgagee was prepared to allow that, HUD insisted that the property be foreclosed. See 24 C.F.R. § 236.56. Title was transferred to HUD on June 15, 1973.

 When HUD took title to the property, the eight rehabilitated buildings had new air-conditioning and heating systems, new kitchens, laundry facilities and other amenities. These buildings, all of which remain standing, comprised 63 units: 18 two-bedroom; 15 three-bedroom; 21 four-bedroom; 1 five-bedroom and 8 six-bedroom. Rents ranged from approximately $75 to $225. Approximately 70 families were residing at Sky Tower.

 After acquiring title to the property, HUD employed a management firm, Urban Management Services, Inc., to operate the project and new leases were executed with the tenants. The lease with NCHA was continued and the public housing tenants continued in possession. Urban Management Services executed new rent supplement leases with the tenants who had been receiving rent supplement benefits. HUD then began to consider what to do with the property.

 HUD considered several alternatives to demolition consisting of various permutations of partial rehabilitation and rent supplements. In each case, insufficient subsidies were available to insure economic feasibility without risks that "would not be in the best interests of the Secretary" and therefore it was decided that there was "no alternative" to demolition. On September 17, 1974, HUD concluded that the property would be cleared and the vacant land made available for sale to developers for the construction of single-family homes for the middle class. The cost of demolition will exceed $150,000, but the gross return from sale of the land is projected at only approximately $58,000.

 When HUD demolition plans became known, tenants were under increasing pressure to leave, vandalism increased and gradually the whole project became moribund except for a few families that still remain, presumably due to inability to find comparable living arrangements. Those who felt obliged to leave have found inferior quarters at higher rent. Indeed, no comparable low-income housing of equal quality was available to any of the tenants at the time the demolition decision was made. In fact, at all relevant times, there has been an acute housing shortage in the District of Columbia, which has been particularly serious for low-income persons with large families, the very class Sky Tower serves. Thus, NCHA has a current waiting list of over 4,000 families, concentrated in the four-bedroom and larger category. Only one other HUD-assisted project in the District of Columbia metropolitan area has any six-bedroom units whatsoever.

 This litigation has brought into sharp focus a most anomalous situation. HUD, an agency directed by Congress to implement national housing policy by creating decent, sanitary housing for low-income families and generally authorized to foster improved living conditions in slum-like areas, proposes to wreck and demolish eight low-income apartment buildings containing 63 apartments which were recently renovated at a net "sunk" investment of over $2 million in Government money and are now occupied by low-income tenants. It is planning to take this action against the expressed wishes of the Government of the District of Columbia, and squarely in the face of an acute low-income housing shortage which causes much distress in this community. HUD is proceeding without published demolition regulations, *fn2" without providing even minimum notice and rule-making hearings, and without any statement of its reasons adequately explaining why other alternatives short of demolition expressly provided by federal statutes are disregarded or deemed impractical. See 12 U.S.C. §§ 1715z-3(a)(2); 1713(l).

 HUD was created by Congress to carry out a national housing policy which Congress has developed, refined and implemented over a period of years by a series of enactments. In brief, that policy is designed to remedy acute shortages of decent, sanitary housing for low-income families and to preserve rather than destroy existing housing by rehabilitation and other measures. See 42 U.S.C. § 1441a, as amended by § 801 of Pub.L. 93-383, 88 Stat. 633 (1974). "HUD is obliged to follow these policies. Action taken without consideration of them, or in conflict with them, will not stand." Commonwealth of Pennsylvania v. Lynn, 163 U.S. App. D.C. 288, 501 F.2d 848, 855 (U.S.App.D.C., 1974).

 Assuming, although it is far from clear, *fn3" that the Secretary is authorized to demolish useful buildings built with Government funds that are serving an undisputed housing need, he must yet act in an appropriate manner and for a rational reason related to the ...

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