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July 23, 1991


Joyce Hens Green, United States District Judge.

The opinion of the court was delivered by: GREEN


 Pending before the Court are plaintiffs' motion for partial summary judgment; defendant's motion for summary judgment; plaintiffs' motion to reopen discovery; and the parties' respective oppositions and replies to those motions. Because, as explained below, the Court lacks jurisdiction over this action, the motions are denied and the case is dismissed.


 Plaintiffs Associated Financial Corporation, United-Germano-Millgate Limited Partnership ("the Partnership"), and United Housing Preservation Corporation brought this action to compel defendant ("HUD") to provide funding that it allegedly committed to plaintiffs as a "Flexible Subsidy loan" to go forward with the rehabilitation of low-income housing units known as the Germano-Millgate Apartments.

 Briefly stated, the HUD program that is the backdrop of this controversy operates as follows. Under a statute authorizing assistance to troubled multifamily housing projects, 12 U.S.C. § 1715z-1a, HUD administers a "Flexible Subsidy Fund," see id. § 1715z-1a(j)(1), to provide "assistance for capital improvements in accordance with this section." Id. § 1715z-1a(j)(4). Such assistance includes "any major repair or replacement of a capital item in a multifamily housing project," and is conditioned on the owner of a project who receives such assistance agreeing to contribute to the funding in a specified manner. Id. § 1715z-1a(k)(1), (2). The statute further directs that the Secretary of HUD, "in providing, and contracting to provide, assistance for capital improvements," shall give priority to certain projects. Id. § 1715z-1a(k)(4). The implementing regulations provide that "assistance is available for capital improvements," id. § 219.305(a), and that "the Secretary will provide this assistance only if the Secretary determines" that the project owner meets certain financing and other requirements, id. § 219.305(b) (emphasis supplied). The regulations further require that the component funds be administered "by spending 40 percent of its allocation, or its share of the stated dollar amount (whichever is less), to the extent of approvable applications," and the Secretary of HUD "will not use less than $ 30 million, or 40 percent of the amounts available . . . . for purposes of providing capital improvement loans . . . . to the extent of approvable applications." 24 C.F.R. §§ 219.115(d), (e).

 The events that led to the instant lawsuit grew out of plaintiffs' application to HUD for a Flexible Subsidy loan. In June 1988, the owner of The Germano-Millgate Apartments, a 1960's housing project in Chicago, submitted to the HUD Chicago area office an application for HUD's consent to the transfer of physical assets ("TPA") to the Partnership, a plaintiff herein. The application outlined rehabilitation and financial plans to address the problems at the project, and noted that the Partnership would later apply for a Flexible Subsidy loan to supply the principal funding for the rehabilitation program. See Complaint Exh. B. In August, the Partnership submitted a formal application for the loan. Id. Exh. C. A Management Improvement and Operating Plan ("MIO Plan") was also submitted, setting forth plans for the rehabilitation program. Id. Exh. I. The plans for funding the program included a $ 3,000,000 Flexible Subsidy loan, a $ 500,000 loan from the City of Chicago, and a $ 1,300,000 owner contribution; it also budgeted $ 3,700,000 to cover builder fees and other costs, and $ 1,100,000 to pay past due taxes and other property costs. Id.

 The Partnership also sought to obtain an allocation of low-income housing tax credits from the State of Illinois to fund the owner contribution. Plaintiffs' Statement of Material Facts, para. 6. This tax credit program required evidence of HUD's commitment to fund the Flexible Subsidy loan before the requested tax credit would be allocated. Id. para. 7. The 1988 tax credits would expire if the rehabilitation of the property were not complete and the buildings were not in service by December 31, 1990. See generally 26 U.S.C. § 42.

 On November 10, 1988, Donald A. Kaplan, Director of the Office of Multifamily Housing Management at HUD headquarters (the office that administers the Flexible Subsidy program) wrote a letter to the Partnership, which read, in pertinent part:

In consideration of the deadlines that exist with respect to your ability to participate in Illinois' tax credit program, this letter should be considered as evidence of HUD's commitment to fund your proposal [for a Flexible Subsidy loan] in the approximate amount of $ 3,000,000, subject to your timely compliance with all existing handbook requirements and completion of HUD processing.

 Complaint Exh. D. It is this letter, and the above-quoted passage therefrom, that forms the core of the instant controversy.

 Meanwhile, HUD conditioned approval of the TPA on the Partnership providing a $ 100,000 irrevocable letter of credit, which the Partnership did on December 2, 1988. Complaint Exh. G. Four days later, a final revision to the MIO plan was submitted to the Chief of Loan Management at the HUD Chicago Area Office. Id. Exh. H. On December 29, 1988, the Housing Management Director of the HUD Chicago Area Office granted Preliminary Approval of the Germano-Millgate TPA, which meant that it approved the rehabilitation proposal, found that the proposal would satisfy the needs of the property, and approved the transfer of the property to the Partnership. Id. Exh. J.

 On January 12, 1989, both a Desk Chief and Branch Officer, *fn1" after reviewing the rehabilitation proposal and concluding that the Flexible Subsidy application met applicable Flexible Subsidy Handbook requirements, recommended HUD approval of a Flexible Subsidy loan for Germano-Millgate. Id. Exh. K. Shortly thereafter, the Partnership paid past due taxes (over $ 600,000) owed on the property. Id. Exhs. L, A.

 With no funding of the Flexible Subsidy loan forthcoming, the Senior Vice-President of Multifamily Housing Initiatives of the Federal National Mortgage Association sent a letter on July 27, 1989, to HUD's Acting Deputy Assistant Secretary for Multifamily Housing programs, James Logue, requesting confirmation of HUD's commitment to fund the $ 3,000,000 Flexible Subsidy loan for Germano-Millgate. On August 9, 1989, Mr. Logue replied by letter stating that "HUD has not committed itself to making the Flexible Subsidy loan. Under new guidelines to be issued soon, all requests for funding will be reconsidered along with any new applications that are submitted." Id. Exh. M. ...

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