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CITY OF LEBANON v. UNITED STATES HUD

September 23, 1976

CITY OF LEBANON and SENIOR CENTER OF LEBANON VALLEY, INC. Plaintiffs
v.
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Defendant and DRZ CORPORATION, Intervening Defendant



The opinion of the court was delivered by: HERMAN

 Before the court is an application by plaintiffs for a preliminary injunction restraining construction of a subsidized housing facility for the elderly at Reinoehle Street, in the northwestern section of Lebanon, Pennsylvania (hereinafter "City"). The project is to be erected by intervening defendant, DRZ Corporation (hereinafter "DRZ"), Under a housing assistance agreement with the Department of Housing and Urban Development (hereinafter "HUD"). *fn1"

 Plaintiffs object to the project on the grounds that it is not in accordance with the City's Housing Assistance Plan, *fn2" and contend that HUD has acted arbitrarily and in excess of its authority in approving the project over the City's objection. Specifically, plaintiffs claim that the remoteness of the proposed housing from the commercial, cultural and medical facilities located in the central business district of the City will result in serious hardship to the elderly persons who will ultimately reside there. *fn3"

 The standards which govern the issuance of a preliminary injunction in a case such as this have been stated as follows:

 1) Has the plaintiff made a strong showing that it is likely to prevail on the merits?

 2) Has the plaintiff shown that without such relief it will be irreparably injured?

 3) Would the issuance of an injunction substantially harm other parties interested in the proceedings?

 4) Where lies the public interest? *fn4"

 For reasons discussed below, we find that plaintiffs have failed to make a convincing showing under any of the above criteria.

 The scope of judicial review of agency actions of the type here complained of is an extremely narrow one. As set forth in CITIZENS TO PRESERVE OVERTON PARK v. VOLPE, 401 U.S. 402, 28 L Ed 2d 136, 91 S. Ct. 814 (1971), our inquiry must be limited to 1) whether the agency has acted within the scope of its statutory authority, and 2) whether the agency's action is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." *fn5" It is beyond dispute that the commitment of HUD monies to the Reinoehle Street Project does not exceed the scope of the agency's statutory mandate. The Housing Act specifically authorizes arrangements such as this between HUD and private developers, *fn6" and plaintiffs do not dispute such authority. Thus, any attack on the validity of the actions of HUD in this case must be predicated upon either abuse of discretion or substantial violation of the prescribed statutory procedure.

 Defendants have submitted extensive evidence of the procedures involved in reaching the decision to sanction the construction of subsidized housing on the Reinoehle Street site. Initially HUD advertised the availability of funding for federally assisted housing in the City of Lebanon and invited developers to submit proposals for the construction of such housing. A total of ten proposals were received for the development of seven sites throughout the City. *fn7" A complete investigation, including on-site inspections by HUD field personnel, was conducted for each proposal, evaluating each on the basis of such factors as desirability of site, compliance with environmental standards, performance of the developer and architect on other HUD-financed projects, ability to secure financing, and reasonableness of the proposed rents. After all investigations were completed, HUD personnel analyzed the results and ranked the proposals according to their aggregate scores for all the relevant factors. The study of the proposal by DRZ contained negative comment on the distance of the site from the downtown area. However, the DRZ proposal rated highly on most of the other factors considered, and all of the other proposed sites were deficient in one or more respects, with the result that the DRZ proposal was chosen as the most desirable. In recognition of the problems that the remote location of the site might cause for elderly residents, HUD required DRZ, as a condition of the acceptance of its proposal, to provide an hourly minibus service from the apartment house to downtown Lebanon.

 We feel that the procedures outlined above show that the selection of the site for this project was the result of a reasoned consideration of all the relevant factors. HUD has demonstrated that its actions have not been arbitrary, but rather have been the result of a rational decision making process. This being established, we may not indulge in second-guessing HUD as to the wisdom of its decision. SABIN v. BUTZ, 515 F.2d 1061 (10th Cir. 1975); Udall v. Taunah, 398 F.2d 795 (Cir. 1968).

 While it is apparent that plaintiffs could not succeed in voiding the agency's action as arbitrary or capricious, our analysis of the merits of the case must go one step further, for plaintiffs also allege that in approving development of the Reinoehle Street site over the City's objection, HUD has violated the procedural requirements of the Housing Act. *fn8" The specific violations complained of are, 1) that HUD failed to forward the development proposals to the City to afford an opportunity to object within ten days after their receipt, *fn9" and 2) having decided to proceed with the Reinoehle Street proposal despite the City's objection, HUD failed to provide a written statement of reasons for its decision. *fn10"

  To succeed in having the agency's commitment to the Reinoehle Street Project set aside on the basis of these procedural irregularities, plaintiffs would be required to show that the errors resulted in some prejudice to the plaintiffs' interests. DENTON v. SECRETARY OF THE AIR FORCE, 483 F.2d 21 (9th Cir. 1973); N.L.R.B. v. SELWYN SHOE MFG. CORP., 428 F.2d 217 (8th Cir. 1970). No evidence appears in the record that either of the irregularities complained of substantially affected the ultimate decision to proceed, *fn11" ...


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