National Housing Law Project Housing Law Bulletin

Recently, the federal district court in Chicago issued two decisions that will impact the demolition of public housing and development of replacement housing there. One decision was in the Henry Horner case and concerned HUD’s obligation to fund replacement housing for a portion of that development that is slated for demolition.¹ The second was another decision in the Gautreaux case that addressed the question whether the development of replacement housing for projects demolished as part of the HOPE VI program would be exempt from the limits on building public housing in racially impacted Chicago neighborhoods.²

The Henry Horner decision arose out of a dispute about HUD’s obligation under the consent decree to fund replacement housing for some of the units in the Henry Horner project that will be demolished. The case itself was a challenge to the Chicago Housing Authority’s long neglect of the development brought under the de facto demolition doctrine.³ After much discovery and many motions for summary judgment, the litigation was settled by a detailed consent decree, just before Congress began to rescind public housing development funds and suspend the one-for-one replacement requirement.⁴ The decree allowed for the demolition in several phases of some of the Henry Horner buildings and committed HUD to fund replacement housing for all the buildings demolished during Phase 1 of the demolition process.

The trouble arose when the Chicago Housing Authority (CHA) applied to HUD for approval to demolish two of the Phase 2 buildings during Phase 1, and HUD granted approval. HUD’s approval, however, was not conditioned upon replacing each of the units in that building and did not include a commitment from HUD of funds for such replacement. The plaintiffs, after some unsuccessful negotiations, moved the court for an order requiring one-for-one replacement of the two buildings in question. The court granted the requested order, with certain qualifications.

The first issue the court had to resolve in deciding the motion was whether the one-for-one replacement requirements of the consent decree would apply to buildings that were labeled as Phase 2 in the decree, but demolished during Phase 1. HUD had argued that the Phase 1 one-for-one replacement obligations applied only to Phase 1 buildings demolished during Phase 1, not to other buildings that might be demolished incidentally during that first phase. The court, however, was not impressed. In its view, the replacement obligations covered anything that was demolished in Phase 1 and, if these Phase 2 buildings were demolished during that first demolition phase, they would have to be replaced.

As an alternative argument, HUD relied upon an amendment to the law suspending the one-for-one replacement requirement that it had secured from Congress in 1996. The original act suspending the requirement had provided that the suspension would not apply to any demolitions undertaken pursuant to a court order issued before the sus-pension’s enactment.⁵ When the suspension was extended for a second fiscal year in 1996, Congress did not include the language exempting demolitions undertaken pursuant to a court decree.⁶ HUD argued that Congress’ failure to include that language the second time nullified the exemption for court decrees. Again, the court did not accept HUD’s view. The court read the 1996 act as an amendment that could be harmonized with the original act that had exempted court decrees. Reading the 1996 act as not disturbing the original exemption enabled the court to prevent HUD from unilaterally changing the consent decree it had negotiated and evoking concerns about the constitutionality of any such legislation.

HUD’s next argument was that it could not be ordered to fund these replacement units because it did not have any appropriated funds for them. The court, and the plaintiffs, agreed that the court could not order HUD to spend funds that Congress had not appropriated. However, the plaintiffs claimed that CHA had some comprehensive grant funds from prior years that it was holding to pay back to HUD and that those funds could be used to cover the replacement units, instead of being returned to HUD. To avoid resolving this factual dispute, on which HUD had presented no evidence, the court ordered HUD and the CHA to produce an accounting of those funds. If the buildings had actually been demolished in Phase 1, it ordered that any future congressional appropriations for replacement units be made available to replace these units.

Finally, HUD argued that it had met any replacement obligations the consent decree might have imposed upon it by providing at least 131 vouchers to Horner residents and had funded 150 replacement units. The court, however, rejected that argument for two reasons. First the consent decree allowed only certificates, not vouchers, to count as replacement units. Second, 75 of the 150 hard units were for families earning 50 to 80 percent of the area median income, not for Horner residents. The court refused to allow HUD to count such lower middle-income units to count as replacement housing within the meaning of the decree.

All told, the plaintiffs in the Horner case did well.

The decision in the Gautreaux case also arose out of a dispute about the proper interpretation of the court’s decree, here not a consent decree, but the 30-year-old judgment in the case. Gautreaux, as you will remember, was filed in 1966 as a challenge to the Chicago Housing Authority’s development and maintenance of a racially segregated public housing system.⁷ Because the court found that the Chicago Housing Authority (CHA) had located almost all of its public housing in predominantly black neighborhoods and intentionally steered all of its black applicants away from the few public housing units located in white areas, in violation of the Fourteenth Amendment. It issued a remedial judgment requiring, initially, that CHA develop three units in "general" areas of Cook County, i.e., those that were at least 70 percent white, for each unit developed in "limited" areas, i.e., those with minority populations exceeding 30 percent.⁸ Later the ratio was changed to one-to-one.

For the first 20 years of the Gautreaux judgment there was not much development of public housing in Chicago and most of the focus of the Gautreaux litigation has been on the Section 8 certificate and voucher programs.⁹ However, the CHA, like many other large city public housing authorities, is undertaking a massive effort to transform its public housing developments, much of it under the HOPE VI program. That undertaking involves massive demolitions, closing of projects, and some development of replacement units. In this context, the question arose whether any replacement units developed on the sites of demolished projects in the limited areas would be subject to the Gautreaux decree and prohibited in the absence of the development of an equivalent number of units in the general areas.

Faced with this issue, CHA asked the court for an order clarifying the original judgment as not applying to the development of on-site replacement units with HOPE VI funds. The court read CHA’s motion as resting upon an irreconcilable conflict between the judgment and the HOPE VI legislation, apparently claiming that HOPE VI barred it from spending any funds for replacement housing outside the distressed neighborhoods where the original developments were located. The court, of course, easily rejected that argument, citing the ample legislative history and HUD materials about the use of HOPE VI funds to deconcentrate public housing, for scattered-site development and for tenant-based assistance.

The court also emphasized its original and continuing purpose of requiring CHA to desegregate its public housing. It quoted the original judge’s opinion:

One must wonder whether CHA’s concerns and the matters at issue here should have been so lightly dismissed. It is no doubt true that CHA could revitalize the neighborhoods in which its public housing is located and desegregate that housing by demolishing it all and building no replacement housing for the displaced tenants. That, however, does not do much for the victims of the segregation who have lived in the segregated projects. If they are forced out of their homes and provided no replacement housing, their injuries can hardly be said to have been remedied. If they are provided replacement housing, but it is not located on the revitalized sites of the old developments and that is where they want to live, their injuries have not been remedied either.

A judgment has to be tailored to the wrongdoing and the injury it produced. It has to take into consideration the interests of the people injured by the segregation, which includes, at least, the current residents of Chicago public housing and the applicants for it. When the court is faced with a different circumstance from that faced in 1969 — the massive demolition of public housing, not merely the construction of additional public housing — it has an obligation to tailor its judgment to fit that circumstance. In that context, the court should be ensuring that every resident and potential resident of the housing that is being demolished is assured of a decent home in a neighborhood of his or her choice, regardless of race. It is not enough to arbitrarily say that at least half of the housing developed to replace demolished units must be located in predominantly white neighborhoods. Justice requires more sensitivity to the interests of the people now living in the buildings in question.

1. Henry Horner Mothers Guild v. Chicago Hous. Auth., No 91 C 3316 (N.D. Ill. Memorandum and Order entered March 5, 1998).
2. Gautreaux v. Chicago Hous. Auth., No. 66 C 1459 (N.D. Ill. Memorandum Opinion and Order entered Feb. 23, 1998).
3. Henry Horner Mothers Guild v. Chicago Hous. Auth., 780 F. Supp. 511 (N.D. Ill. 1991).
4. Pub. L. No. 104-19, § 1002(a), 109 Stat. 194, 234 (July 27, 1995).
5. Id.
6. Pub. L. No. 104-134, § 201(b) of § 101(e), 110 Stat. 1321, 1321-278 (Apr. 26, 1996).
7. Gautreaux v. Chicago Hous. Auth., 265 F. Supp. 582 (N.D. Ill. 1967).
8. Gautreaux v. Chicago Hous. Auth., 296 F. Supp. 907 (N.D. Ill. 1969), enforced in 304 F. Supp. 736 (N.D. Ill. 1969), aff’d as modified, 436 F.2d 306 (7th Cir. 1970), cert. denied, 402 U.S. 922 (1971).
9. Gautreaux v. Chicago Hous. Auth., 961 F. Supp. 1091 (N.D. Ill. 1997).
10. Gautreaux v. Chicago Hous. Auth., No. 66 C 1459 (N.D. Ill. Memorandum Opinion and Order entered Feb. 23, 1998), slip op. at 1, citing Gautreaux v. Chicago Hous. Auth., 296 F. Supp. 907, 914 (N.D. Ill. 1969).
11. Id., slip op. at 4, citing Gautreaux v. Landrieu, 498 F. Supp. 1072, 1075 (N.D. Ill. 1980).