APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA D.C. Civil No. 80-0919
Before Aldisert, Rosenn and Weis, Circuit Judges.
Residents of a neighborhood in which subsidized housing for the elderly and handicapped is to be constructed appeal from the dismissal of their action, brought in the Western District of Pennsylvania, seeking an injunction to halt the proposed housing complex. We reverse and remand.
St. Francis General Hospital (Hospital), established in 1886, is a long-standing, integral part of the health care and rehabilitation community in Pittsburgh. In June 1978 the Hospital filed a preliminary application with the United States Department of Housing and Urban Development (HUD), to sponsor a housing project for the elderly and handicapped. Construction of the project, organized as St. Francis Plaza, Inc. (Plaza or Project), was to be funded principally with monies loaned under section 202 of the Housing Act of 1959 (Act), as amended, 12 U.S.C. § 1701q (1976 & Supp. IV 1980).*fn1 HUD granted approval for funding of the Plaza, ultimately planned as a fourteen-story building with the three lowest floors designated for commercial space; floors four through thirteen, residential apartments; and the fourteenth floor, a penthouse community area. Because the total commercial space in the Plaza represented 13 percent of the Plaza's gross floor area, exceeding the 10 percent commercial area limitation for section 202 projects, see HUD Handbook 4571.1 REV P 5-23C, the project sponsor sought and obtained special authorization for the inclusion of the excess commercial space.
At the time the Hospital sponsored and obtained approval for the Project, it was closely tied to the Plaza in several respects. First, the Plaza was to be located adjacent to the Hospital on land then owned by the Hospital. Second, the commercial space in the Plaza was to be divided to provide one floor of offices for doctors on the Hospital's staff and two floors for the Hospital's computer system, all of which were then located within the Hospital itself. Finally, the Hospital and the Project had identical boards of directors. Although an official at HUD acknowledged that this arrangement raised "concerns involving institutional character," Memorandum dated March 21, 1980, of Paul T. Cain, Pittsburgh Area Office, HUD, to George O. Hipps, Jr., Director of Multifamily Housing Development, HUD, that official concluded that the benefits to be derived from having the variety of health services so conveniently available to the elderly and handicapped residents of the Plaza outweighed the institutional concerns.
The Plaza met with outspoken resistance from area residents, who orchestrated a campaign against the Plaza's construction. When lobbying efforts proved unavailing, a core of local residents commenced the instant lawsuit*fn2 naming the Hospital, the Plaza, and HUD as defendants.
The plaintiffs' complaint*fn3 seeks temporary and permanent injunctive relief to halt construction of the Plaza. The complaint raised several grounds for holding HUD approval of funding of the Plaza improper, only three of which warrant discussion.*fn4
Plaintiffs' primary allegation, brought in their capacities both as local residents directly affected by the Plaza and as taxpayers, is that the HUD funds will be used primarily for the benefit of the sponsor; i.e., the Hospital, and not for the benefit of the elderly as required by 12 U.S.C. § 1701q. They allege that the proposed structure is merely an extension of the Hospital and thus violates guidelines set forth in pertinent HUD regulations, and that neither the computer center nor a full floor of medical offices is necessary to serve the projected one hundred residents of the Plaza. The complaint also avers that no member of the community was allowed representation on the board of directors of the Plaza. Finally, the complaint alleges that the plaintiffs will suffer both financial and nonfinancial harm because their neighborhood will be blighted by additional commercial property and their residential property will decrease in value, because federal funds will be misappropriated, and because the elderly will not be the primary beneficiaries of the Plaza. Plaintiffs' jurisdictional allegations implicitly incorporate additional substantive claims.*fn5
The district court denied the plaintiffs' motion for temporary injunctive relief and then, perhaps impatient with the disorder of plaintiffs' pleadings and arguments, summarily granted the defendants' motion to dismiss on the twin grounds that the plaintiffs lacked standing and they failed to state a claim for which relief could be granted. On appeal, plaintiffs address two questions: standing and "subject matter jurisdiction," the latter in reality a discussion of both the district court's subject matter jurisdiction -- a matter not raised by the district court order nor by the defendants in this court*fn6 -- and the sufficiency of the plaintiffs' claim for relief. We conclude that, however unartfully drafted, the complaint is sufficient to withstand dismissal at this stage of the proceedings.
The district court concluded, inter alia, that "plaintiffs have no standing to seek judicial review of economic and financial determinations committed by law to the discretion of HUD." Kirby v. United States, No. 80-919, typescript at 1 (W.D.Pa. Jan. 8, 1981). That conclusion incorporates the resolution of two separate questions. The first is whether the plaintiffs are the proper persons to bring an action challenging HUD's decision to provide funds for the Plaza, i.e. whether they have standing to sue. See Warth v. Seldin, 422 U.S. 490, 499, 95 S. Ct. 2197, 2205, 45 L. Ed. 2d 343 (1975); Bowman v. Wilson, 672 F.2d 1145 at 1150 (3d Cir. 1982). The second question focuses not on the identity of the parties but on whether the legality of HUD's action is subject to judicial review, i.e. whether there exists a ...