# Appendix — New West, L.P. v. City of Joliet > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_1104%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 2010 - **Citation:** 559 U.S. 936 ## Text la APPENDIX A - OPINION OF THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT FILED APRIL 9, 2009 IN THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT Nos. 08-3032 & 08-3033 CITY OF JOLIET, ILLINOIS, Plaintiff-Appellee, V. NEW WEST, L.P., and NEW BLUFF, L.P., Defendants-Appellants, UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT and EVERGREEN TERRACE TENANTS, Intervening Defendants-Appellants. Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 05 C 6746—Charles R. Norgle, Sr., Judge Before EASTERBROOK, Chief Judge, and WILLIAMS and SYKES, Circuit Judges. EASTERBROOK, Chief Judge. 2a For several years the City of Joliet, [linois, has been trying to acquire the Evergreen Terrace apartment complex, which the City believes is so run-down that it constitutes a public nuisance. After the City commenced eminent domain proceedings in state court, New West, a partnership that owns the complex, removed the proceeding to federal court and filed a suit under 42 U.S.C. § 1983 seeking an injunction and damages. The district court put the condemnation on ice and dismissed the § 1983 action-erroneously, we held in New West, L.P. v. Joliet, 491 F.3d 717 (7th Cir.2007). We directed the district court to take up the condemnation proceeding first, as its disposition could resolve some or all of the issues in the § 1983 suit. One of New West’s arguments in the § 1983 suit was that, because it has accepted a federal subsidy under § 8 of the Housing Act of 1937, 42 U.S.C. § 1437f, federal law preempts the City’s proceeding. Our opinion had this to say: New West contends that § 8 and the Fair Housing Act [42 U.S.C. §§ 3601- 19] prevent condemnation of Evergreen Terrace, but it does not rely on any particular provision of that statute. Section 8 is a subsidy program, a carrot rather than a stick. HUD’s regulations implementing the § 8 program contemplate the possibility of the parcel’s condemnation; they do not purport to forbid condemnations. See 24 C.F.R. §§ 245.405, 248.101. For its part, the 3a Fair Housing Act forbids discrimination in housing programs without providing that any given housing development has a right to continued existence. Just as with § 8, federal regulations implementing the FHA cover the demolition of housing projects. 24 C.F.R. Part 970, and exempt condemned buildings from these rules, see 24 C.F.R. § 970.3. If Joliet thinks that a given parcel of land should be put to a public use, such as a park, and is willing to foot the bill, it is hard to see any obstacle in federal law. 491 F.3d at 721. In the district court the Department of Housing and Urban Development intervened and contended that § 221 of the National Housing Act of 1954 (as amended in 1961 and 1966), 12 U.S.C. § 1715/1, and the Multifamily Assisted Housing Reform and Affordability Act of 1997, 42 U.S.C. § 1437f note, block condemnation. The district court rejected that contention in reliance on our opinion, but, after concluding that HUD was making new arguments that we had not addressed, certified the case for interlocutory appeal ender 28 U.S.C. § 1292(b). We accepted the appeal, because we thought that HUD was relying on particular language said to preempt state and local condemnation laws. Now that the appeal has been fully briefed and argued, however, HUD and the other parties acknowledge that neither of these statutes has any clause preempting state law. At this point we could stop and affirm, relying on the law of the case. But because HUD was not a 4a party to the first appeal, and has invoked two statutes that New West did not mention, we think it best to give the Department a full hearing and plenary decision. First, however, a word on _ subject-matter jurisdiction. Joliet contends that there is none, because when the case was removed HUD was neither a party to the suit nor even a lender to New West. The eminent domain proceeding arises under state and local law. Although New West raised preemption as a federal defense, it has long been understood that a federal defense does not support removal. See, e.g., Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58 (1987); Gully v. First National Bank, 299 U.S. 109 (1936); Bennett v. Southwest Airlines Co., 484 F.8d 907, rehearing denied, 493 F.3d 762 (7th Cir. 2007). (The exception for “complete preemption,” see Franchise Tax Board of California v. Construction Laborers Vacation Trust, 463 U.S. 1 (1983), does not apply; no one argues that federal law occupies the fields of housing or municipal powers.) Still, the presence of the national government as a party with a security interest in the real estate supplies jurisdiction. 28 U.S.C. §§ 1444, 2410. It would be pointless to order this suit remanded, only to have HUD re-remove it in a trice. The Supreme Court has held that, when a suit is removed prematurely, the district court may proceed if it has subject-matter jurisdiction at the time it enters judgment. American Fire & Casualty Co. v. Finn, 341 U.S. 6 702 (1951); Grubbs v. General Electric Credit Corp., 405 U.S. 699 (1972); Caterpillar Inc. v. 5a Lewis, 519 U.S. 61 (1996). This rule, coupled with the presence of HUD (and its desire to have the suit resolved in federal court), means that remand is unnecessary. Three federal statutes are involved in this proceeding, and HUD contends that two of them preempt state and local law. The first statute, § 8 of the Housing Act, 42 U.S.C. § 1437f, provides federal rent subsidies for low-income tenants; as we observed in 2007, this statute does not preempt any state or local law. HUD concurs. The second is § 221 of the National Housing Act, 12 U.S.C. § 17151. This statute creates a program under which the federal government insures mortgages on privately owned, multifamily properties, some tenants of which receive rent subsidies under § 8. HUD has established criteria that owners must meet before a loan is insured. HUD also is authorized to pay off the private lenders and become a direct lender. For descriptions of this program, see Cienega Gardens v. United States, 194 F.3d 1231 (Fed. Cir. 1998), and Geneva Towers Tenants Organization v. Federated Mortgage Investors, 504 F.2d 483 (9th Cir. 1974). The final statute, the Multifamily Assisted Housing Reform and Affordability Act of 1997, 42 U.S.C. § 1437f note, allows HUD to renegotiate mortgages insured or assumed under § 221 of the National Housing Act. High mortgage payments make it hard (sometimes impossible) for owners to offer below- market rents to their tenants; renegotiated mortgages with lower monthly payments cut the rents to the beneficiaries of the § 8 program. Owners who seek lower mortgage payments under the 1997 6a Act must promise to keep their rental properties available to low-income tenants for 30 years. Evergreen Terrace, which has 356 apartments, has participated in the § 8 and § 221 programs since the 1960s. By the late 1970s the owner was in default on its mortgage loans. HUD paid off the lenders, became the mortgage holder, foreclosed, and took title to the complex. New West purchased part of the complex from HUD in 1980 for $1, and the rest in 1982 for another $1. New West took out large mortgage loans, which HUD insured under § 221. New West promised both the lenders and HUD that it “will not permit or suffer the use of any of the property for any purpose other than the use for which the same was intended at the time this Mortgage was executed.” In 2001 New West asked HUD to restructure the mortgages under the 1997 Act, reducing the monthly payments. Both the [Illinois Housing Development Authority and Heskin Signet Partners reported to HUD that the approximately 600 residents of Evergreen Terrace lack other available options for low-income housing. Relying on these reports, HUD approved the restructuring in 2006, paid off the original lenders, and became the lender (and mortgage holder) itself. As part of the transaction, New West promised that, for the next 30 years, the property “shall be used solely as rental housing with no reduction in the number of residential units unless approved in writing by HUD”. New West simultaneously entered into new 20-year agreements with HUD for § 8 subsidies to low-income tenants. These agreements undertake 7a not to transfer, assign, or encumber the property without HUD’s approval. When we agreed to hear this interlocutory appeal, we understood HUD to argue that the contracts that New West had signed in 2006 themselves preempted any state and local powers of condemnation, and we directed the parties to address the question how New West could give away a governmental power that it never possessed. (Neither the City of Joliet nor the State of Illinois has made any promise to HUD about the maintenance of Evergreen Terrace.) HUD’s appellate brief responded to our inquiry by disclaiming this theory of preemption. The contracts do not affect state or local powers, HUD recognizes. Owners such as New West must comply with all state and local laws-indeed, 24 C.F.R. § 883.310(b)(6) specifies that recipients of federal assistance are bound by all “(a]pplicable State and local laws, codes, ordinances, and regulations.” Why isn’t eminent domain among these applicable state and local laws? HUD’s answer is that condemnation would interfere with the purposes of § 221 and the 1997 Act. Both statutes are designed to enlarge, or at least preserve, the stock of housing available for low-income tenants. The “findings” in § 511 of the 1997 Act make this explicit. If Joliet can condemn Evergreen Terrace, 356 apartments for low-income tenants will disappear, and these tenants do not have ready alternatives. (That’s what the Illinois Housing Development Authority and Heskin Signet Partners concluded.) Removing 356 units from the housing 8a stock could undermine achievement of the national purpose and so is preempted, the argument concludes. This line of argument implies that local government cannot condemn any housing, whether or not the owner has secured federal financing-for demolition of unsubsidized units diminishes the supply, and drives up the price of remaining units, as surely as the demolition of units that already enjoy federal subsidies. Yet none of the litigants ventures an argument that bold. The question at hand is whether a state or local law can be preempted by the “findings” and “purposes” clauses of a federal statute, even though the state or local law does not conflict with any rule of law established in the federal statute. Recently the Supreme Court emphasized that preemption inferred from a clash of goals and objectives should not be used expansively, unless the agency has issued a preemptive regulation with the force of law, and that an agency’s view that application of local law would interfere with the national objective is no substitute for such a regulation. Wyeth v. Levine, No. 06-1249 (U.S. Mar. 4, 2009), slip op. 17-25. Justice Breyer filed a concurring opinion to stress the importance of a preempting regulation, and Justice Thomas, concurring in the judgment, expressed doubt about this entire category of implied preemption. HUD does not contend that any federal regulation prevents state and local governments from using eminent domain or otherwise exercises the federal power of preemption under the Supremacy Clause. One federal regulation issued 9a under the statutes at issue does preempt state and local law, but HUD understandably does not rely on (or even mention) it. This regulation, 24 C.F.R. § 248.183, says that no state or local law may prevent any borrower under the federal programs from prepaying the loan, and that no state or local law may set a cap on the rate of return that owners participating in the federal programs may realize. Subsection (c) of this regulation says that other state and local laws, such as zoning and building standards, are not preempted. So federal regulations not only do not contain the sort of clause that the Justices thought important in Wyeth but also state that most state property regulations survive. True, this savings clause does not mention eminent domain, but the main point is that no federal regulation even tries to displace local governments’ power to take ownership of property by paying just compensation. The approach of Wyeth to one side, it is hard to see any conflict between federal and state goals, because (a) none of the three statutes at issue makes participation compulsory; it is not a violation of federal law for a given owner to remain outside the program, so it cannot be said that federal law demands that a particular apartment unit remain standing; and (b) the agreements by which private owners enter the program do not diminish state and local powers (as HUD concedes). Private owners are entitled to withdraw their properties from the program at any time despite their 20-year and 30-year promises. All they have to do is pay off the federally insured loan. 24 C.F.R. 10a Part 248. The conditions last only as long as the loans. If private owners can withdraw (and then demolish) their properties without violating any rule of federal law, why can’t state or local governments acquire the properties through eminent domain and then withdraw and demolish them? The regulations treat condemnation as one legitimate source of proceeds used to prepay and retire the loans, and thus to escape the conditions. 24 C.F.R. § 248.101. Indeed, the regulatory approval needed to prepay the loans and withdraw from the program voluntarily is not required when proceeds of condemnation are the source of funds used to pay off the loans. Ibid. By treating condemnation as a special case, one that removes the property from an otherwise-required approval, the agency has shown that condemnation is possible. What’s the point of a special rule for applying the proceeds of condemnation if, as HUD argues, condemnation is always preempted? Another regulation provides that HUD’s approval for changing a propertys use is not required when the change results from eminent domain. 24 C.F.R. § 245.405, § 970.3. And that’s not all. The documents that New West signed contemplate the possibility of condemnation. Paragraphs 6 and 8 of the loans and mortgages provide that the proceeds of condemnation must be paid first to the lenders (including HUD) until the loans have been satisfied; that’s a strange proviso if condemnation is always forbidden by federal law. HUD dismisses all of these clauses, and its own regulations, as irrelevant because they are not issued under the 1997 Act, but the fact remains that lla there is no affirmative declaration of preemption in any statute or rule, no concrete conflict between condemnation and any part of the 1997 Act, and no good reason to think that the 1997 Act contravenes HUD’s own regulations under § 8 and § 221. All that can be said is that, when housing is withdrawn by prepayment (including prepayment made possible by just compensation paid for a taking), the statutory goal of increasing (or at least preserving) the stock of low-income housing is undercut. Yet HUD does not point to any decision of the Supreme Court holding a state or local law preempted by broad goals (such as that more housing is better than less, low prices better than high prices) or by a general declaration such as “there exists throughout the Nation a need for decent, safe, and affordable housing”, § 511(a)(1) of the 1997 Act. Nor has HUD cited any decision of any federal court holding that § 221 or the 1997 Act-or for that matter any other subsidy system, such as farm price supports or loan guarantees for veterans or small business owners, all of which include “findings” sections comparable to § 511-preempts any state or loca! authority to take ownership through eminent domain. That silence is telling. We do not deal here with a city or state as regulator of private conduct. Eminent domain is a governmental power. Many decisions of the Supreme Court hold that only a clear statement in a national statute can supersede a governmental body’s own operations. See, e.g., Cook County Solid Waste Agency v. Corps of Engineers, 531 U.S. 159, 171 (2001); Gregory v. Ashcroft, 501 12a U.S. 452, 460-61 (1991). HUD does not contend that any language in § 221 or the 1997 Act supplies a “clear statement” of a national decision to displace eminent domain. As we have mentioned, there is no statement to that effect, clear or otherwise. There is only HUD’s contention that condemnation will interfere with national goals. That stripe of argument was mate in Solid Waste Agency and Gregory, where it did not prevail. Congress may well have the power to prevent state or local governments from condemning lew-income housing, but it has not declared that it has exercised that power; there has been no debate, no opportunity for the states to make their positions known to Congress, no proposed regulation with preemptive effect, and no focused decision by the Legislative and Executive Branches of the national government. Quite apart from the Supreme Court’s plain- statement canon for federalism cases, there is the principle that general statements of national policy do not preempt concrete laws. “Findings” and “purpose” clauses are common in federal statutes. Like the clauses in § 511 of the 1997 Act, they are usually sweeping in scope and declare an urgent need to solve a problem. But in legislation details matter. How far will the legislature go, and what costs will it bear, to achieve its ends? “[N]o legislation pursues its purposes at all costs. Deciding what competing values will or will not be sacrificed to the achievement of a particular objective is the very essence of legislative choice-and it frustrates rather than effectuates legislative intent simplistically to assume that whatever furthers the statute’s primary objective must be the law.” 13a Rodriguez v. United States, 480 U.S. 522, 525-26 (1987) (emphasis in original). When courts rely on purpose clauses, rather than the concrete rules that the political branches have selected to achieve the stated ends, judges become effective lawmakers, bypassing the give-and-take of the legislative process. It is therefore no surprise that the Supreme Court does not think that declarations of purpose, however sweeping, preempt state or local laws. See Hawaii v. Office of Hawaiian Affairs, No. 07-1372 (U.S. Mar. 31, 2009), slip op. 10-11 (37 “whereas” clauses setting out congressional findings and reasons for adopting a joint resolution do not have any effect independent of the resolution’s two operative clauses). Consider Puerto Rico Dep't of Consumer Affairs v. Isla Petroleum Corp., 485 U.S. 495 (1988). A federal statute ended most federal price controls for petroleum and natural gas. The statute’s purpose clause (and the accompanying committee reports) declared that it is bad policy to interfere with the market’s pricing mechanism, in the absence of monopoly or equivalent concerns. Puerto Rico continued to enforce its own price controls for these products, and the producers contended that the Commonwealth’s legislation was preempted by the combination of the purpose clause, the end of federal regulation, and the legislative history showing the intent behind these provisions. A court of appeals agreed and held the law preempted-but the Supreme Court reversed. 14a The Court explained: “While we have frequently said that pre-emption analysis requires ascertaining congressional intent .... we have never meant that to signify congressional intent in a vacuum, unrelated to the giving of meaning to an enacted statutory text.... Respondents have brought to our attention statements that may reflect general congressional approval of a free market in petroleum products, or general congressional belief that such a market would result from enactment of the [statute], or even general congressional desire that it result. But unenacted approvals, beliefs, and desires are not laws. Without a text that can, in light of those statements, plausibly be interpreted as prescribing federal pre-emption it is impossible to find that a free market was mandated by federal law.” 485 U.S. at 501 (emphasis in original). In other words, it takes a federal command to preempt a state or local law; a conflict between a local law and legislative aspirations does not displace another jurisdiction’s law. Wyeth reiterated that point. Cf. American Hospital Ass’n v. NLRB, 499 U.S. 606 (1991); Lincoln v. Vigil, 508 U.S. 182 (1993). Similarly, Congress desired (and hoped) that § 211 and the 1997 Act would increase the stock of low-income housing, but a text that preempts state or local legislation is not among the steps that Congress took toward that objective. This is not to say that federal law leaves local powers unaffected. A state or local government is not free to use its powers in order to discriminate against persons of a particular race, for example. And federal law limits the use of condemnation powers (as well as zoning or building codes) to turn a 15a jurisdiction into an all-white, upper-income enclave. See Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252 (1977). Cf. Wisconsin Community Services, Inc. v. Milwaukee, 465 F.3d 737 (7th Cir.2006) (en banc). But HUD does not contend that Joliet has invoked the power of eminent domain with an intent, or an effect, forbidden by the Constitution or a federal statute; HUD maintains that the City does not have a power to condemn federally subsidized housing, no matter how run-down the building, no matter how large the remaining supply of housing for low-income tenants, and no matter the use to which the city will put the land. On HUD’s view, a city is forbidden to acquire and raze a decrepit and dangerous building, near a brand new apartment block with unused low-income units, in order to replace the old building with a new park or city hall-and this is so even if the federal appropriation can be redirected to another property to maintain the aggregate supply of low-income housing. (HUD does not contend that condemnation of Evergreen Terrace would leave it unable to spend its full appropriation.) Such a _ sweeping displacement of governmental authority cannot be imputed to § 221 or the 1997 Act. It might be sensible to enact a system under which HUD could certify a lack of affordable housing in a given locale and thus block any steps to diminish the existing stock. But no federal statute gives HUD this authority, let alone one that can be exercised without notice to the cities whose powers will be diminished. l6a Although HUD concedes that no court has attributed any preemptive effect to § 221 or the 1997 Act, it urges us to draw guidance from Public Utility District No. 1 of Pend Oreille County v. United States, 417 F.2d 200 (9th Cir. 1969), and Morgan City v. South Louisiana Electric Cooperative Ass’n, 31 F.3d 319 (5th Cir.1994), amended and rehearing en banc denied (over dissent), 49 F.3d 1074 (5th Cir. 1995). These decisions held that federal law preempts state or local efforts to condemn rural electric utilities that enjoyed federal financing under the Rural Electrification Act, 7 U.S.C. § 901 et seq. (At least one court of appeals has reached a contrary conclusion. See Stilwell v. Ozarks Rural Electric Cooperative Corp., 79 F.3d 1038 (10th Cir. 1996).) As HUD sees things, the decisions of the fifth and ninth circuits show that local condemnation powers are incompatible with federally subsidized financing designed to achieve a federal goal (whether providing electricity to farms or housing to low- income renters). Neither the fifth circuit nor the ninth discussed the clear-statement rule for preemption of core governmental powers, or the need (which the Court stressed in ISLA Petroleum) to find a conflict with a concrete statutory text. Perhaps those principles were not argued in those cases. To the extent these courts think that federal financing routinely displaces state laws, their decisions cannot be reconciled with Arkansas Electric Cooperative Corp. v. Arkansas Public Service Comm'n, 461 U.S. 375 (1983), and Wabash Valley Power Ass’n v. Rural Electrification Administration, 903 F.2d 445 (7th Cir. 1990). What is more, both the fifth and the 17a ninth circuits stressed that the federal interest was not principally related to financing. The problem with local condemnation is that electricity is distributed by a network. Pull out one generating station or set of transmission lines, and the rest of the network can be adversely affected. “This is not an ordinary case because what is sought to be taken here is part of a system and [if one part is condemned] a question remains as to the capacity of the remaining portions of the system to function.” Pend Oreille, 417 F.2d at 201. One jurisdiction’s condemnation thus could affect consumers in other jurisdictions; that justified a federal role. There is no comparable network externality when one city condemns an apartment block. New West, and a tenants’ association at the apartment complex, advance additional arguments, none of which HUD supports. They contend, for example, that condemnation of Evergreen Terrace violates the Contract Clause (Art. I § 10 cl. 1) because it will affect the contracts that New West has with other entities. But “the Contract Clause has never been thought to protect against the exercise of eminent domain.” Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 243 n. 6 (1984). A state cannot displace a contract by fiat, but it may take interests in contracts, as in other property. New West and the tenants’ association contend that, if this is so, then Joliet must be trying to take HUD’s mortgage interests in Evergreen Terrace, and as no state may acquire federal property against the wishes of the national government, see Armstrong v. United States, 364 U.S. 40 (1960), it follows that the City’s resort to eminent domain violates the Property 18a Clause (Art. IV § 3.cl. 2) or principles of intergovernmental immunity. Yet the national government does not own Evergreen Terrace, which Joliet proposes to acquire. HUD’s interest is as a secured creditor of New West. No case of which we are aware holds that the Property Clause (or any other part of the Constitution) treats a federal loan as immunizing the borrower from state regulation (including eminent domain) on the theory that the state is “really” regulating the federal interest as a lender. One might as well say that if New West owed taxes, and the IRS had placed a lien on Evergreen Terrace, that step would prevent the City from using eminent domain (or a bankruptcy court from selling the building to satisfy New West’s other creditors). This eminent domain proceeding has been stalled since its institution more than three years ago. We trust that the district court will now bring it to a speedy conclusion. AFFIRMED. 19a APPENDIX B - OPINION AND ORDER OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, DATED AND FILED MARCH 27, 2008 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION Case No. 05 C 6746 CITY OF JOLIET, an Illinois municipal corporation, Plaintiff, Vv. MID-CITY NATIONAL BANK OF CHICAGO, as Successor Trustee to United of America Bank, et al., Defendants. OPINION AND ORDER CHARLES R. NORGLE, District Judge. Before the court are two Motions for Summary Judgment, one filed by Defendant United States Department of Housing and Urban Development (“HUD”) and the other filed jointly by the remaining Defendants. For the following reasons, the Motions are denied. 20a I. BACKGROUND A. Facts Plaintiff City of Joliet, Illinois (“Joliet” or the “City”) is authorized under the Illinois Municipal Code to exercise the right of eminent domain to acquire real property, inter alia, (1) for the public welfare, (2) where acquisition of such property is necessary for the rehabilitation or redevelopment of any blighted or slum area, or (3) where acquisition of such property is necessary for the establishment of public parks, other public grounds, or recreational facilities. Joliet has determined that the apartment complex known as Evergreen Terrace I and Evergreen Terrace II (together, “Evergreen Terrace” or the “Property”) is, inter alia, (1) extremely dilapidated, unsafe, substandard, unsanitary, crime- infested, a substantial threat to the health, welfare and safety of its residents, (2) a “blighted or slum area” under the [Illinois Municipal Code, (3) interfering with the lawful use of nearby properties, and (4) diverting important public resources such as police and fire protection from nearby properties. It is undisputed that Evergreen Terrace is federally subsidized low-income housing, owned by private parties. The parties dispute, however, the extent to which various mortgage and regulatory agreements give HUD an interest in the Properties. Joliet entered into good faith negotiation with the owners of Evergreen Terrace for the purpose of acquiring it, and authorizing the use of the city’s eminent domain powers to eliminate the blighted conditions existing there. Joliet and the owners of 2la Evergreen Terrace, however, have been unable to reach an agreement on the price to be paid for the Property. Joliet therefore approved and adopted local Ordinance No. 15298 in order to begin eminent domain proceedings to acquire Evergreen Terrace. The City proposes to redevelop the Property to include a public park, a recreational area, and affordable housing. B. Procedural History On October 7, 2005, Joliet filed its Complaint for Condemnation in the Circuit Court of Will County, IUlinois. Joliet purportedly filed this Complaint against all persons and entities having an interest in Evergreen Terrace. One of those Defendants was the Government National Mortgage Association (“GNMA”). GNMA is an agency of the United States government. On November 29, 2005, -the United States Attorney for the Northern District of Illinois removed this case to the Northern District of Illinois. On February 27, 2006, the court granted Joliet’s Motion to Voluntarily Dismiss GNMA, but denied Joliet’s Motion to Remand, finding that HUD had a reversionary interest in the Property. The court granted Defendants’ Rule 19(a) Motion to Join HUD as a Necessary Party on March 9, 2006. On July 5, 2007, the Seventh Circuit entered an Opinion in a related case, New West, L.P. v. City of Joliet, 491 F.3d 717 (7th Cir.2007). In this related case, the owners of Evergreen Terrace sued Joliet, alleging that the Supremacy Clause prohibits the condemnation of the Property, that the City’s activities related to the condemnation violate 42 22a U.S.C §§ 1982 and 1983, and that Joliet has violated the Fair Housing Act, 42 U.S.C. §§ 3601-19, by discouraging prospective minority tenants from living in Evergreen Terrace. Jd. at 719. This court dismissed the case, but the Seventh Circuit reversed and remanded. In so doing, the Seventh Circuit indicated that this court must first resolve the condemnation suit before proceeding on the related case. Jd. at 721. Writing for the Seventh Circuit, Chief Judge Easterbrook indicated that there was no federal impediment to Joliet’s exercise of eminent domain in this case. He stressed that “[ijf Joliet thinks that a given parcel of land should be put to a public use, such as a park, and is willing to foot the bill, it is hard to see any obstacle in federal law.” Id. Following the Seventh Circuit’s Opinion in the New West case, this court issued a Minute Order in the instant condemnation case in which it granted Defendants leave to refile their Motion for Summary Judgment. Defendants have since timely filed separate Motions for Summary Judgment, These Motions are fully briefed and before the court. ! II. DISCUSSION A. Standard of Decision 1 On August 3, 2007, the court issued an Opinion and Order granting Joliet’s Motion for Judgment on the Pleadings with Respect to the Supremacy Clause Defense. Defendants’ Summary Judgment arguments regarding the Supremacy Clause are therefore moot. 23a Summary judgment is permissible when “there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law.” FED. R. CIv. P. 56(c). The nonmoving party cannot rest on the pleadings alone, but must identify specific facts, see Cornfield v. Consolidated High Sch. Dist. No. 230, 991 F.2d 1316, 1320 (7th Cir.1993), that raise more than a mere scintilla of evidence to show a genuine triable issue of material fact. See Murphy v. ITT Technical Services, Inc., 176 F.3d 934, 936 (7th Cir. 1999). In deciding a motion for summary judgment, the court can only consider evidence that would be admissible at trial under the Federal Rules of Evidence. See Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996). The court views the record and all reasonable inferences drawn therefrom in the light most favorable to the non- moving party, FED. R. CIv, P. 56(c); see also Perdomo v. Browner, 67 F.3d 140, 144 (7th Cir. 1995). “In the light most favorable” simply means that summary judgment is not appropriate if the court must make “a choice of inferences.” See United States v. Diebold, Inc., 369 U.S. 654, 655; see also First Natl Bank of Ariz. v. Cities Service Co., 391 U.S. 253, 280 (1968); Wolf v. Buss (America) Inc., 77 F.3d 914, 922 (7th Cir. 1996). The choice between reasonable inferences from facts is a jury function. See Anderson v. Liberty Lobby, Inc., 477 U.S., 242, 255 (1986). When the defendant moves for summary judgment, the court must view the record and all inferences in a light most favorable to the plaintiff. Ameritech Benefit Plan Comm. v. Communication 24a Workers of Am., 220 F.3d 814, 821 (7th Cir. 2000). However, the inferences construed in the plaintiffs favor must be drawn from specific facts identified in the record that support the plaintiffs position. Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 922-23 (7th Cir. 1994). Under this standard, “[c]onclusory allegations alone cannot defeat a motion for summary judgment.” Thomas v. Christ Hospital and Medical Center, 32S F.3d, 890, 892-93 (7th Cir. 2003) (citing Lujan v. Natl Wildlife Federation, 497 U.S. 871, 888-89 (1990)). B. Defendants’ Motions for Summary Judgment In support of their Motions for Summary Judgment, Defendants collectively make the following assertions. Certain portions of the United States Constitution bar Joliet’s condemnation of Evergreen Terrace: the Supremacy Clause, the Property Clause, and the Contracts Clause. The doctrine of intergovernmental immunity bars Joliet’s condemnation of Evergreen Terrace. Joliet is equitably estopped from condemning Evergreen Terrace. The Complaint in this case is insufficient. The court has already determined that the Supremacy Clause does not preempt Joliet’s attempt to condemn Evergreen Terrace. See Opinion and Order of August 3, 2007. 1. The Property Clause The Property Clause of the United States Constitution provides, “Ihe Congress shall have Power to dispose of and make all needful Rules and 25a Regulations respecting the Territory or other Property belonging to the United States.” U/S. CONST., art. IV, § 3, cl. 2. By its express terms, the Property Clause applies only to property owned by the United States. In this case, there is no question that Evergreen Terrace is privately owned, although the parties dispute the extent to which HUD has various contractual and reversionary interests in the Property. Even if Evergreen Terrace were somehow owned by the United States, however, the Property Clause has never been interpreted as an impediment to the application of state law or regulations such as this condemnation action. “The Property Clause itself does not automatically conflict with all State regulation of federal land.” California Coastal Comm., v. Granite Rock Co., 480 U.S. 572, 580 (1987). “[F]Jederal ownership of lands within a State does not withdraw those lands from the jurisdiction of the State.” Kleppe v. New Mexico, 426 U.S. 529, 544 (1976) (citing Wilson v. Cook, 327 U.S. 474, 487- 88 (1946) and Surplus Trading Co. v. Cook, 281 U.S. 647, 650 (1930)). The Property Clause therefore has no bearing on this case. 2. The Contracts Clause The Contracts Clause of the United States Constitution provides, “No State shall ... pass any ... Law impairing the Obligation of Contracts.” U.S. CONST., art. I, § 10, cl. 1. Courts do not interpret the Contracts Clause literally. Chrysler Corp. v. Kolosso Auto Sales, Inc., 148 F.3d 892, 894 (7th Cir. 1998). “Even big, totally unpredictable impairments of the 26a obligation of contracts can survive challenges under the contracts clause if they are responsive to economic emergencies ... and even to considerably less exigent needs.” Jd. at 896 (internal citations omitted). If the state law at issue “serve[s] a legitimate public purpose such as remedying a general social or economic problem,” and “the means chosen to accomplish this purpose are reasonable and necessary,” the law does not run afoul of the Contracts Clause. Buffalo Teachers Federation v. Tobe, 464 F.3d 362, 368 (2nd Cir. 2006) (citing Energy Reserves Group. Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411-13 (1983)). At the summary judgment stage of this litigation, the court cannot say as a matter of law that Joliet’s proposed condemnation of Evergreen Terrace serves no legitimate public purpose, and is not a reasonable means of remedying what Joliet perceives to be a “general social or economic problem.” See id. The undisputed facts establish that Joliet plans to redevelop the Property to include various public benefits. Defendants’ Contracts Clause assertions in support of their Motions for Summary Judgment therefore fail. 3. Intergovernmental Immunity The concept of intergovernmental immunity has its roots on the Supremacy Clause of the United States Constitution. [T]he States have no power, by taxation or otherwise, to retard, impede, burden, or in any manner 27a control, the operations of the constitutional laws. enacted by Congress to carry into execution the powers vested in the _ general government. This is, we think, the unavoidable consequence of that supremacy which the constitution has declared. McCulloch v. Maryland, 17 U.S. 316, 435 (1819). The court has already determined that the Supremacy Clause is no bar to Joliet’s attempt to condemn Evergreen Terrace. See Opinion and Order of August 3, 2007. Moreover, intergovernmental immunity has never been extended to private parties. It is clear that the Supremacy Clause forbids States from directly taxing or regulating the United States, United States v. New Mexico, 455 U.S. 720, 733 (1982), or “federally established instrumentalit[ies],” First Agricultural Bank v. State Tax Commission, 392 U.S. 339, 350 (1968). However, where State taxation or regulation merely “has an effect on the United States,” intergovernmental immunity does not apply.” New Mexico, 455 U.S. at 734. As the court has repeatedly explained, Evergreen Terrace is privately owned property. It is clearly not a “federally established instrumentality.” The court therefore cannot find, as a matter of law, that the doctrine of intergovernmental immunity prevents Joliet from proceeding with its condemnation action. 28a 4. Equitable Estoppel HUD asserts that Joliet is equitably estopped from finding that one of the Evergreen Terrace buildings is blighted. In making this assertion, HUD relies exclusively on language in a contract it has with Joliet which provides that Joliet is to inspect the building in question annually in order to assure that it is safe and clean. This argument is meritless. The power to condemn due to blight is not limited to specific buildings found to be in disrepair. “[T]he fact that there may be some sound buildings in the slum and blighted area is no defense to the proceedings. Property may be taken which, standing by itself, is unoffending, for the test is based on the condition of the area as a whole,” City of Chicago v. Barnes, 195 N.E.2d 629, 631 (Ill. 1964) (citing Berman v. Parker, 348 U.S. 26, 34-35 (1954)). In this case, Joliet has determined that the Evergreen Terrace area as a whole is blighted. Whether the specific building in question is or is not blighted in not relevant. 5. Insufficiency of the Complaint Finally, Defendants assert that the Complaint in this case is insufficient because Joliet has not named the tenants of Evergreen Terrace as Defendants, and because Joliet has not adequately described the interests it seeks to condemn. It is not clear to the court why these issues were not brought in a motion to dismiss. In any event, these assertions are unavailing. On January 31, 2008, the court granted the Evergreen Tenants’ unopposed Motion to Intervene. 29a The tenants of Evergreen Terrace are now Defendants in this case. Rule 71.1 of the Federal Rules of Civil Procedure (former Rule 71A) provides that, in a condemnation action, the Complaint must plainly state the “interests to be acquired.” FED R. Civ. P. 71.1(c)(2)(D). Paragraph 27 of Joliet’s Amended Complaint states that it “seeks to acquire the full fee simple title to the Subject Property.” It is difficult to discern how Joliet could have more adequately described the interests it seeks in Evergreen Terrace. Il, CONCLUSION For the foregoing reasons, Defendants’ Motions for Summary Judgment are denied. IT IS SO ORDERED. ENTER: s/ Charles R. Norgle CHARLES RONALD NORGLE, Judge United States District Court Dated: March 27, 2008 30a APPENDIX C —- OPINION AND ORDER OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, DATED AND FILED AUGUST 3, 2007 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION Case No. 05 C 6746 CITY OF JOLIET, an Illinois municipal corporation, Plaintiff, Vv. MID-CITY NATIONAL BANK OF CHICAGO, as Successor Trustee to United of America Bank, et al., Defendants. OPINION AND ORDER CHARLES R. NORGLE, District Judge. Before the court is Plaintiff City of Joliet’s Motion for Judgment on the Pleadings with Respect to the Supremacy Clause Defense. For the following reasons, the Motion is granted. 3la I. BACKGROUND A. Facts Plaintiff City of Joliet, Illinois (“Joliet” or the “City”) alleges the following facts in its Amended Complaint for Condemnation. Joliet is authorized under the [llinois Municipal Code to exercise the right of eminent domain to acquire real property, inter alia, (1) for the public welfare, (2) where acquisition of such property is necessary for the rehabilitation or redevelopment of any blighted or slum area, or (3) where acquisition of such property is necessary for the establishment of public parks, other public grounds, or recreational facilities. Joliet has determined that the apartment complex known as Evergreen Terrace I and Evergreen Terrace II (together, “Evergreen Terrace” or the “Property”) is, inter alia, (1) extremely dilapidated, unsafe, substandard, unsanitary, crime-infested, a substantial threat to the health, welfare and safety of its residents, (2) a “blighted or slum area” under the Iliinois Municipal Code, (3) interfering with the lawful use of nearby properties, and (4) diverting important public resources such as police and fire protection from nearby properties. Joliet therefore entered into good faith negotiation with the owners of Evergreen Terrace for the purpose of acquiring it, and authorizing the use of the city’s eminent domain powers to eliminate the blighted conditions existing there. Joliet and the owners of Evergreen Terrace, however, have been unable to reach an agreement on the price to be paid for the Property. Joliet therefore approved and 32a adopted local Ordinance No. 15298 in order to begin eminent domain proceedings to acquire Evergreen Terrace. The City proposes to redevelop the Property to include a public park, a recreational area, and affordable housing. B. Procedural History On October 7, 2005, Joliet filed its Complaint for Condemnation in the Circuit Court of Will County, Illinois. Joliet purportedly filed this Complaint against all persons and entities having an interest in Evergreen Terrace. One of those Defendants was the Government National Mortgage Association (“GNMA”). GNMA is an agency of the United States government. On November 29, 2005, the United States Attorney for the Northern District of Illinois removed this case to the Northern District of Illinois. On February 27, 2006, the court granted Joliet’s Motion to Voluntarily Dismiss GNMA, but denied Joliet’s Motion to Remand, finding that the United States Department of Housing and Urban Development (“HUD”) had a reversionary interest in the Property. The court granted Defendants’ Rule 19(a) Motion to Join HUD as a Necessary Party on March 9, 2006. On July 5, 2007, the Seventh Circuit entered an Opinion in a related case, New West. L.P. v. City of Joliet, --- F.3d ---, 06-3665 (7th Circuit July 5, 2007). In this related case, the owners of Evergreen Terrace sued Joliet, alleging that the Supremacy Clause prohibits the condemnation of the Property, that the City’s activities related to the condemnation violate 42 U.S.C. §§ 1982 and 1983, and that Joliet 33a has violated the Fair Housing Act, 42 U.S.C. §§ 3601-19, by discouraging prospective minority tenants from living in Evergreen Terrace. Id., slip. op. at 2. This court dismissed the case, but the Seventh Circuit reversed and remanded. In so doing, the Seventh Circuit indicated that this court must first resolve the condemnation suit before proceeding on the related case. Jd., slip. op. at 3. Writing for the Seventh Circuit, Chief Judge Easterbrook indicated that there was no federal impediment to Joliet’s exercise of eminent domain in this case. “If Joliet thinks that a given parcel of land should be put to a public use, such as a park, and is willing to foot the bill, it is hard to see any obstacle in federal law.” Id., slip. op. at 6. Following the Seventh Circuit’s Opinion in the New West case, this court issued a Minute Order in the instant condemnation case in which it granted Joliet leave to refile its Motion for Summary Judgment. This Motion will become fully briefed on approximately September 10, 2007. In the meantime, Joliet has filed the instant Motion for Judgment on the Pleadings with Respect to the Supremacy Clause Defense. Joliet has filed this Motion in response to HUD’s third affirmative defense in this case, which asserts that “[t]he Supremacy Clause of the United States Constitution prohibits the City of Joliet from exercising eminent domain over or condemning the defendant Evergreen Terrace properties.” In its Motion for Judgment on the Pleadings, Joliet argues that federal law does not preempt the Illinois Municipal Code, or the City’s 34a local ordinance, regarding the eminent domain action against Evergreen Terrace. This Motion is fully briefed and before the court. II. DISCUSSION A. Standard of Decision Federal Rule of Civil Procedure 12(h)(2) provides that “an objection of failure to state a legal defense to a claim may be made ... by a motion for judgment on the pleadings.” Federal Rule of Civil Procedure 12(c) states that “[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings.” Plaintiffs Motion for Judgment on the Pleadings with Respect to the Supremacy Clause Defense is appropriately and timely presented to the court. 1. Preemption The Supremacy Clause of the United States Constitution provides, “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof ... shall be the Supreme Law of the Land.” U.S. CONnsT., art. VI, cl.2. This Clause does not create any federal rights; instead, it “ ‘secures federal rights by according them priority whenever they come in conflict with state law.’ ” Golden State Transit Corp. v. Los Angeles, 493 U.S. 103, 107 (1989) (quoting Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 613 (1979)). The Supremacy Clause therefore “support(s] three ways in which federal law can preempt state and local law: express preemption, conflict (or implied) 35a preemption, and field (or complete) preemption.” Hoagland v. Town of Clear Lake, 415 F.3d 693, 696 (7th Cir. 2005). The only type of preemption at issue in this case, conflict preemption, occurs where “it would be impossible for a party to comply with both local and federal requirements or where local law ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’” Jd. (quoting Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995)). Courts are to presume that “ ‘Congress does not intend to supplant state law,’ This is particularly true where a party claims that federal law bars state action in areas of traditional state regulation ....” Frank Bros., Inc. v. Wis. DOT, 409 F.3d 880, 885 (7th Cir. 2005) (quoting N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654 (1995)); City of Columbus v. Ours Garage & Wrecker Serv., 536 U.S. 424, 432 (2002) (“we start with the assumption that the historic police powers of the States were not to be superceded by [a] Federal Act unless that was the clear and manifest purpose of Congress.”) (internal quotation marks and citation omitted). The burden therefore falls on the party asserting preemption to demonstrate that Congress clearly intended to override whatever state law is at issue. See In re Ocwen Federal Bank FSB Mortgage Servicing Litgation, MDL No. 1604, Lead Case No. 04 C 2714, 2006 U .S. Dist. LEXIS 21715 (N.D. Ill. March 22, 2006). 36a 2. Eminent Domain It is well-established law that municipalities may use eminent domain procedures to condemn and take private property for a legitimate public purpose. Kelo v. City of New London, 545 U.S. 469 (2005) (holding that a_ city’s carefully considered redevelopment plan was not unconstitutional, even where property would be taken from private parties and given to other private parties); Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984) (holding that a Hawaii statute under which property was taken from private landowners and transferred to lessees, in order to eliminate the “social and economic evils of land oligopoly” met the standards of a valid public use); Berman v. Parker, 348 U.S. 26 (1954) (upholding a redevelopment plan targeting a blighted area of Washington, D.C.). It is also well- established that when municipalities exercise the power of eminent domain, “the government must pay the owner just compensation, which is determined to be the property’s fair market value.” Shaikh v. City of Chicago, 341 F.3d 627, 632 (7th Cir. 2003) (citing United States v. Miller, 317 U.S. 369, 373-74 (1943); United States v. 58.16 Acres of Land, 478 F.2d 1055, 1058 (7th Cir. 1973)). In adjudicating takings cases, the Supreme Court has long deferred to the judgment of local legislatures as to whether a particular taking serves a “public purpose.” Kelo, 545 U.S. at 480. We do not sit to determine whether a particular housing project is or is not desirable. The concept of the public 37a welfare is broad and inclusive ... The values it represents are spiritua! as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as_ carefully patrolled ... If those who govern the District of Columbia decide that the Nation’s Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way. Berman, 348 U.S. at 33. The Kelo court reaffirmed Berman’s “deferential approach to legislative judgments in the field,” and noted that the Supreme Court’s “earliest cases in particular embodied a strong sense of federalism, emphasizing the great respect that we owe to state legislatures and state courts in discerning local public needs.” Kelo, 545 U.S. at 482 (citing Hairston v. Danville & Western R. Co., 208 U.S. 598, 606-07 (1908)); see also National Ass'n of Regulatory Utility v. F.E.R.C., 475 F.3d 1277, 1287 (D.C. Cir. 2007) (“Courts have long recognized that eminent domain is at the very core of state sovereignty.”). The court will therefore adopt a “deferential approach” to the decisions of the local legislature as it analyzes the issues specific to the instant motion, as well as issues relevant to this entire case. 38a B. Plaintiffs Motion for Partial Judgment on the Pleadings Defendants, with the exception of HUD, have filed a joint brief in opposition to Plaintiffs Motion. HUD, represented by the United States Attorney’s office, has filed a separate brief in opposition to this Motion. Defendants Mid-City National Bank of Chicago, et al., argue that the Supremacy Clause prohibits Joliet from condemning Evergreen Terrace because the federal government has a substantial interest in the Property, and the State laws and the local ordinance permitting the condemnation are preempted by HUD regulations, Section 8 of the United States Housing Act, and the Multifamily Assisted Housing Reform and Affordability Act (“MAHRA”). HUD asserts that Joliet’s eminent domain action, carried out pursuant to state law, is preempted by HUD regulations, MAHRA, as well as the Property Clause and the Contract Clause of the United States Constitution. 1Defendants also argue that Judge LEasterbrook’s statement, “[ijf Joliet thinks that a given parcel of land should be put to a public use, such as a park, and is willing to foot the bill, it is hard to see any obstacle in federal law,” New West, slip. op. at 6, is mere dictum, and should therefore have no bearing on this’ court’s adjudication of the instant motion. 1 The court notes that the instant Motion references only the Supremacy Clause and related preemption issues. Issues regarding the Property and Contract Clauses are not properly before the court at this point. 39a Defendants first argument, that the federal government's interest in Evergreen’ Terrace prohibits Joliet from exercising eminent domain over the Property, stems from HUD’s mortgage and reversionary interests in Evergreen Terrace. In HUD’s answer to the Amended Complaint, HUD explains that [iJn addition to HUD being a mortgage holder on Evergreen Terrace I and II, the incorporated regulatory agreements provide that in the event of a HUD-non- authorized transfer of the defendant properties, such as_ the _— subject condemnation action, the HUD Secretary would have the right to take possession of the properties, as well as foreclose on the mortgages. It is undisputed, however, that at present, Evergreen Terrace is privately owned property. Its owners have a voluntary contractual relationship ‘with HUD which gives HUD the above described interests in the Property. HUD, however, does not own Evergreen Terrace. HUD’s reliance on Shaikh, in which the Seventh Circuit observed that the City of Chicago could not pursue condemnation proceedings against HUD-owned property, is therefore misplaced. The owners of Evergreen Terrace are private parties. In Shaikh, the Seventh Circuit warned that a private party “ ‘who acquires or occupies land does so at the risk of being evicted by the exercise of the superior right of the government or its delegate to acquire his interest upon payment of just compensation.’” 341 F.3d at 40a 631 (quoting United States v. 16.92 Acres of Land, 670 F.2d 1369, 1371 (7th Cir. 1982)). Moreover, “HUD’s regulations implementing the § 8 program contemplate the possibility of the parcel’s condemnation; they do not purport to forbid condemnations.” New West, slip. op. at 6. HUD’s mortgage and reversionary interest in Evergreen Terrace is thus not an impediment to Joliet’s plan to exercise its power of eminent domain over the Property. Defendants’ arguments that federal statutes preempt Joliet’s attempt to exercise its power of eminent domain over Evergreen Terrace are also unavailing. “New West contends that § 8 and the Fair Housing Act prevent condemnation of Evergreen Terrace, but it does not rely on any particular provision of that statute. Section 8 is a subsidy program, a carrot rather than a stick.” Jd. In other words, the § 8 program was designed to encourage private property owners to provide low- income housing-there is simply no basis on which to conclude that Congress intended for this program to also preempt local governments’ use of their powers of eminent domain. See Baker v. Property Investors of Conn., 338 F.Supp.2d 321, 323 (D. Conn. 2004) (“Section 8 of the Housing Act ‘aids low-income families in obtaining a decent place to live and ... promotes economically mixed housing’... by providing federal subsidies to private building owners who are willing to rent to low-income families.”) (internal citation omitted). In enacting MAHRA, Congress intended to, inter alia, “preserve low-income _ rental housing affordability and availability ... streamline and improve federally 4la insured and assisted multifamily housing project oversight ... [and] to resolve the problems affecting financially and physically troubled federally insured and assisted multifamily housing projects + MAHRA § &11(b); see also Neighborhood Research Inst, v. Campus Ptnrs. for Cmty. Urban Dev., 212 F.R.D. 364, 366-67 (S.D. Ohio 2002). Once again, there is simply no basis on which to conclude that MAHRA was intended to _ preempt local municipalities’ ability to exercise their powers of eminent domain. Finally, it is arguable that Judge Easterbrook’s observation that “it is hard to see any obstacle in federal law” to Joliet’s condemnation of Evergreen Terrace is indeed dictum proprium: “[a] personal or individual [statement] that is given by the judge who delivers an opinion but that is not necessarily concurred in by the whole court and is not essential to the disposition.” BLACK’S LAW DICTIONARY 485 (8th ed. 2004). However, the court cannot presume that a statement by the Chief Judge of the Seventh Circuit Court of Appeals carries no weight simply because it may be dictum. To the contrary, in our hierarchical judicial system, a federal district court must take the observations of its appellate court very seriously, regardless of whether these observations are contained in the higher court’s holdings, or are indeed simply dicta. “[A] federal district court is required to give great weight to the pronouncements of its Court of Appeals, even though those pronouncements appear by way of dictum ... [W]e cannot presume that our Court of Appeals writes merely for intellectual exercise.” Pickett v. Prince, 52 F. Supp. 2d 893, 904 42a (N.D. Ill. 1999) (internal quotation marks and citation omitted). The court has_ thoroughly considered the observations of Chief Judge Easterbrook and has independently reached the conclusion that they are correct. Moreover, it is not unusual for the Seventh Circuit to offer guidance to district courts or parties. Even where such guidance is not “essential to the disposition” of the case, a district court or party overlooks it at its peril. See Blue Cross Blue Shield of Illinois v. Cruz, No. 03- 4170, slip op. at 8 (7th Cir. July 27, 2007). The court therefore declines Defendants’ invitation to ignore Judge Easterbrook’s observation regarding the lack of any federal impediment to Joliet’s condemnation of Evergreen Terrace. Ill. CONCLUSION As the court has noted, it is Defendants’ burden to demonstrate to the court that federal law preempts Joliet’s attempt to condemn and redevelop Evergreen Terrace. Defendants have failed to meet this burden. Plaintiff City of Joliet’s Motion for Judgment on the Pleadings with Respect to the Supremacy Clause Defense is therefore granted. IT IS SO ORDERED. ENTER: s/ Charles R. Norgle CHARLES RONALD NORGLE, Judge United States District Court Dated: August 3, 2007 43a APPENDIX D - ORDER OF THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT FILED JULY 14, 2009, DENYING REHEARING IN THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT Nos. 08-3032 & 08-3033 CITY OF JOLIET, ILLINOIS, Plaintiff-Appellee, Vv. NEW WEST, L.P., and NEW BLUFF, L.P., Defendants-Appellants, UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT and EVERGREEN TERRACE TENANTS, Intervening Defendants-Appellants. Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 05 C 6746—Charles R. Norgle, Sr., Judge Before EASTERBROOK, Chief Judge, and WILLIAMS and SYKES, Circuit Judges. 44a ORDER Defendants-Appellants and _ Intervening Defendants-Appellants filed three separate petitions for rehearing and rehearing en banc on May 26, 2009. No judge in regular active service has requested a vote on the petitions for rehearing en banc,* and all of the judges on the panel have voted to deny rehearing. The petitions for rehearing are therefore DENIED. * Judge Flaum did not participate in the consideration of these petitions. 45a APPENDIX E — UNITED STATES CONSTITUTION ARTICLE IV, SECTION 3, CLAUSE 2 U.S. CONST., art. IV, § 3, cl. 2 The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or Property belonging to the United States.... 46a APPENDIX F - UNITED STATES CONSTITUTION, ARTICLE VI, CLAUSE 2 U.S. CONST., art. VI, cl. 2 This Constitution, and the Laws of the United States which shall be made in Pursuance thereof... shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding. 47a APPENDIX G - 12 U.S.C. § 1701z-11. § 1701z-11. Management and disposition of multifamily housing projects (a) Goals The Secretary of Housing and Urban Development shall manage or dispose of multifamily housing projects that are owned by the Secretary or that are subject to a mortgage held by the Secretary in a manner that— (1) is consistent with the National Housing Act [12 U.S.C.A. § 1701 et seq.] and this section; (2) will protect the financial interests of the Federal Government; and (3) will, in the least costly fashion among reasonable available alternatives, address the goals of— (A) preserving certain housing so that it can remain available to and affordable by low-income persons; (B) preserving and revitalizing residential neighborhoods; (C) maintaining existing housing stock in a decent, safe, and sanitary condition; (D) minimizing the involuntary displacement of tenants; 48a (E) maintaining housing for the purpose of providing rental housing, cooperative housing, and homeownership opportunities for low-income persons; (F) minimizing the need to demolish multifamily housing projects; (G) supporting fair housing strategies; and (H) disposing of such projects in a manner consistent with local housing market conditions. In determining the manner in which a project is to be managed or disposed of, the Secretary may balance’ competing goals relating to individual projects in a manner that will further the purposes of this section. (b) Definitions For purposes of this section: (1) Multifamily housing project The term “multifamily housing project” means any multifamily rental housing project which is, or prior to acquisition by the Secretary was, assisted or insured under the National Housing Act [12 U.S.C.A. § 1701 et seq.], or was subject to a loan under section 1701q of this title. (2) Subsidized project The term “subsidized project” means a multifamily 49a housing project that, immediately prior to the assignment of the mortgage on such project to, or the acquisition of such mortgage by, the Secretary, was receiving any of the following types of assistance: (A) Below market interest rate mortgage insurance under the proviso of section 221(d)(5) of the National Housing Act [12 U.S.C.A. § 17151(d)(5)}. (B) Interest reduction payments made in connection with mortgages insured under section 236 of the National Housing Act [12 U.S.C.A. 1715z-1]. (C) Direct loans made under section 17°1igq of this title. (D) Assistance in the form of— (i) rent supplement payments under section 101 of the Housing and Urban Development Act of 1965 [12 U.S.C.A. § 1701s], (ii) additional assistance payments under section 236(f)(2) of the National Housing Act [12 U.S.C.A. § 1715z-1(f)(2)], (iii) housing assistance payments made under section 23 of the United States Housing Act of 1937 (as in effect before January 1, 1975) [42 U.S.C.A. § 1421b], or (iv) housing assistance payments made under 50a section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f] (excluding payments made for tenant-based assistance under section 8 [42 U.S.C.A. § 1437f]), if (except for purposes of section 183(c) of the Housing and Community Development Act of 1987) such assistance payments are made to more than 50 percent of the units in the project. (3) Formerly subsidized project The term “formerly subsidized project” means a multifamily housing project owned by _ the Secretary that was a_ subsidized project immediately prior to its acquisition by the Secretary. (4) Unsubsidized project The term “unsubsidized project” means a multifamily housing project owned by the Secretary that is not a subsidized project or a formerly subsidized project. (5) Affordable A unit shall be considered affordable if-— (A) for units occupied— (i) by very low-income families, the rent does not exceed 30 percent of 50 percent of the area median income, as determined by the Secretary, with adjustments for smaller and larger families; and (ii) by low-income families other than very low- income families, the rent does not exceed 30 percent of 80 percent of the area median income, as determined by the Secretary, with adjustments for smaller and larger families; or (B) the unit, or the family residing in the unit, is receiving assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f]. (6) Low-income families and very low-income families The terms “low-income families” and “very low- income families” shall have the meanings given the terms in section 3(b) of the United States Housing Act of 1937 [42 U.S.C.A. § 1437a(b)]. (7) Preexisting tenant The term “preexisting tenant” means, with respect to a multifamily housing project acquired pursuant to this section by a purchaser other than the Secretary at foreclosure or after sale by the Secretary, a family that resides in a unit in the project immediately before the acquisition of the project by the purchaser. (8) Market area The term “market area” means a market area determined by the Secretary. 52a (9) Secretary The term “Secretary” means the Secretary of Housing and Urban Development. (c) Disposition of property (1) Disposition to purchasers In carrying out this section, the Secretary may dispose of a multifamily housing project owned by the Secretary on a negotiated, competitive bid, or other basis, on such terms as the Secretary deems appropriate considering the low-income character of the project and consistent with the goals in subsection (a) of this section, only to a purchaser determined by the Secretary to be capable of— (A) satisfying the conditions of the disposition plan developed under paragraph (2) for the project; (B) implementing a sound financial and physical management program that is designed to enabie the project to meet anticipated operating and repair expenses to ensure that the project will remain in decent, safe, and sanitary condition and in compliance with any standards under applicable State or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and any such standards established by the Secretary; (C) responding to the needs of the tenants and working cooperatively with tenant organizations; 53a (D) providing adequate organizational, staff, and financial resources to the project; and (E) meeting such other requirements as the Secretary may determine. (2) Disposition plan (A) In general Prior to the sale of a multifamily housing project that is owned by the Secretary, the Secretary shall develop an initial disposition plan for the project that specifies the minimum terms and conditions of the Secretary for disposition of the project, the initial sales price that is acceptable to the Secretary, and the assistance that the Secretary plans to make available to a prospective purchaser in accordance with this section. (B) Market-wide plans In developing the initial disposition plan under this subsection for a multifamily housing project located in a market area in which at least 1 other multifamily housing project owned by the Secretary is located, the Secretary may coordinate the disposition of all such multifamily housing projects located within the same market area to the extent and in such manner as the Secretary determines appropriate to carry out the goals under subsection (a) of this section. (C) Sales price 54a The initial sales price shall be reasonably related to the intended use of the project after sale, any rehabilitation requirements for the project, the rents for units in the project that can be supported by the market, the amount of rental assistance available for the project under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 14387f], the occupancy profile of the project (including family size and income levels for tenant families), and any other factors that the Secretary considers appropriate. (D) Community and tenant input In carrying out this section, the Secretary shall develop procedures— (i) to obtain appropriate and timely input into disposition plans from officials of the unit of general local government affected, the community in which the project is situated, and the tenants of the project; and (ii) to facilitate, where feasible and appropriate, the sale of multifamily housing projects to existing tenant organizations with demonstrated capacity, to public or nonprofit entities that represent or are affiliated with existing tenant organizations, or to other public or nonprofit entities. (E) Technical assistance To carry out the procedures developed under subparagraph (D), the Secretary may provide 55a technical assistance, directly or indirectly, and may use amounts available for technical assistance under the Emergency Low Income Housing Preservation Act of 1987 [12 U.S.C.A. § 4101 et seq.], subtitle C of the Low-Income Housing Preservation and Resident Homeownership Act of 1990, subtitle B of title [IV of the Cranston-Gonzalez National Affordable Housing Act [42 U.S.C.A. § 12871 et seq.], or this section, for the provision of technical assistance under this paragraph. Recipients of technical assistance funding under the provisions referred to in this subparagraph shall be permitted to provide technical assistance to the extent of such funding under any of such provisions or under this subparagraph, notwithstanding the source of the funding. (3) Foreclosure sale In carrying out this section, the Secretary shall— (A) prior to foreclosing on any mortgage held by the Secretary on any multifamily housing project, notify both the unit of general local government in which the property is located and the tenants of the property of the proposed foreclosure sale; and (B) dispose of a multifamily housing project through a foreclosure sale only to a purchaser that the Secretary determines is capable of implementing a sound financial and physical management program that is designed to enable the project to meet anticipated operating and repair expenses to ensure that the project will 56a remain in decent, safe, and sanitary condition and in compliance with any standards under applicable State or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and any such standards established by the Secretary. (d) Management and maintenance of properties (1) Contracting for management services In carrying out this section, the Secretary may— (A) contract for management services for a multifamily housing project that is owned by the Secretary (or for which the Secretary is mortgagee in possession) with for-profit and nonprofit entities and public agencies (including public housing authorities) on a negotiated, competitive bid, or other basis at a price determined by the Secretary to be reasonable, with a manager the Secretary has determined is capable of— (i) implementing a sound financial and physical management program that is designed to enable the project to meet anticipated operating and maintenance expenses to ensure that the project will remain in decent, safe, and sanitary condition and in compliance with any standards under applicable State or local laws, rules, ordinances, or regulations relating to the physical condition of the project and any such standards established by the Secretary; 57a (ii) responding to the needs of the tenants and working cooperatively with tenant organizations; (iii) providing adequate organizational, staff, and financial resources to the project; and (iv) meeting such other requirements as the Secretary may determine; and (B) require the owner of a multifamily housing project that is subject to a mortgage held by the Secretary to contract for management services for the project in the manner described in subparagraph (A). (2) Maintenance of projects owned by Secretary In the case of multifamily housing projects that are owned by the Secretary (or for which the Secretary is mortgagee in possession), the Secretary shall— (A) to the greatest extent possible, maintain all such occupied projects in a decent, safe, and sanitary condition and in compliance with any standards under applicable State or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and any such standards established by the Secretary; (B) to the greatest extent possible, maintain full occupancy in all such projects; and (C) maintain all such projects for purposes of providing rental or cooperative housing. 58a (3) Projects subject to a mortgage held by Secretary In the case of any multifamily housing project that is subject to a mortgage held by the Secretary, the Secretary shall require the owner of the project to carry out the requirements of paragraph (2). (e) Required assistance In disposing of multifamily housing property under this section, consistent with the goal of subsection (a)(8)(A) of this section, the Secretary shall take, separately or in combination with other actions under this subsection or subsection (f) of this section, one or more of the following actions: (1) Contract with owner for project-based assistance In the case of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure or after sale by the Secretary, the Secretary may enter into contracts under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f] (to the extent budget authority is available) with owners of the projects, subject to the following requirements: (A) Subsidized or formerly subsidized projects receiving mortgage-related assistance In the case of a subsidized or formerly subsidized project referred to in subparagraphs (A) through (C) of subsection (b)(2) of this section— 59a (i) the contract shall be sufficient to assist at least all units covered by an assistance contract under any of the authorities referred to in subsection (b)(2)(D) of this section before acquisition or foreclosure, unless the Secretary acts pursuant to the provisions of subparagraph (C); (ii) the contract shall provide that, when a vacancy occurs in any unit in the project requiring project-based rental assistance pursuant to this subparagraph that is occupied by a family who is not eligible for assistance under such section 8 [42 U.S.C.A. § 1437f], the owner shall lease the available unit to a family eligible for assistance under such section 8 [42 U.S.C.A. § 1437f]; and (iii) the Secretary shall take actions to ensure that any unit in any such project that does not otherwise receive project-based assistance under this subparagraph remains available and affordable for the remaining useful life of the project, as defined by the Secretary; to carry out this clause, the Secretary may require purchasers to establish use or rent restrictions maintaining the affordability of such units. (B) Subsidized or formerly subsidized projects receiving rental assistance In the case of a subsidized or formerly subsidized project referred to in subsection (b)(2)(D) of this section that is not subject to subparagraph (A)— 60a (i) the contract shall be sufficient to assist at least all units in the project that are covered, or were covered immediately before foreclosure on or acquisition of the project by the Secretary, by an assistance contract under any of the provisions referred to in such subsection, unless the Secretary acts pursuant to provisions of subparagraph (C); and (ii) the contract shall provide that, when a vacancy occurs in any unit in the project requiring project-based rental assistance pursuant to this subparagraph that is occupied by a family who is not eligible for assistance under such section 8 [42 U.S.C.A. § 1437f], the owner shall lease the available unit to a family eligible for assistance under such section 8 [42 U.S.C.A. § 1437]. (C) Exceptions (i) Authority In heu of providing project-based assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f] in accordance with subparagraph (A)(i) or (B)(i) for a project, the Secretary may, for certain units in unsubsidized projects located within the same market area as the project otherwise required to be assisted with such project-based assistance— (I) require use and rent restrictions providing that such units shall be available to and 6la affordable by very low-income families for the remaining useful life of the project (as defined by the Secretary), or (II) provide project-based assistance under section 8 [42 U.S.C.A. § 1437f] for such units to be occupied by only very low-income persons, but only if the requirements under clause (11) are met. (11) Requirements The requirements under this clause are that— (I) upon the disposition of the project otherwise required to be assisted with project- based assistance under subparagraph (A)(i) or (B)(i), the Secretary shall make available tenant-based assistance under section 8 [42 U.S.C.A. § 14387f] to low-income families residing in units otherwise required to be assisted with such project-based assistance; and (II) the number of units subject to use restrictions or provided assistance under clause (i) shall be at least equivalent to the number of units otherwise required to be assisted with project-based assistance under section 8 [42 U.S.C.A. § 1437f] in accordance with subparagraph (A)(i) or (B)(i). (D) Unsubsidized projects 62a Notwithstanding actions taken pursuant to subparagraph (C), in the case of unsubsidized projects, the contract shall be sufficient to provide— (i) project-based rental assistance for all units that are covered, or were covered immediately before foreclosure or acquisition, by an assistance contract under— (I) the new construction and substantial rehabilitation program under section 8(b)(2) of the United States Housing Act of 1937 (as in effect before October 1, 1983) [42 U.S.C.A § 1437f(b)(2))]; (II) the property disposition program under section 8(b) of such Act [42 U.S.C.A. § 1437f(b)}; (III) the project-based certificate program under section 8 of such Act [42 U.S.C.A. § 1437f]; (ITV) the moderate rehabilitation program under section 8(e)(2) of such Act [42 U.S.C.A. § 1437f(e)(2)]; (V) section 23 of such Act (as in effect before January 1, 1975) [42 U.S.C.A. § 1421b]; (VI) the rent supplement program under section 101 of the Housing and Urban Development Act of 1965 [12 U.S.C.A. § 63a 1701s]; or (VII) section 8 of the United States Housing Act of 1937, following conversion from assistance under section 101 of the Housing and Urban Development Act of 1965 [12 U.S.C.A. § 17018]; and (ii) tenant-based assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f] for families that are preexisting tenants of the project in units that, immediately before foreclosure or acquisition of the project by the Secretary, were covered by an assistance contract under the loan management set-aside program under section 8(b) of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f(b)). (2) Annual contribution contracts for tenant-based assistance In the case of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure or after sale by the Secretary, the Secretary may enter into annual contribution contracts with public housing agencies to provide tenant-based assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f] on behalf of all low-income families who are otherwise eligible for assistance in accordance with subparagraph (A), (B), or (D) of paragraph (1) on the date that the project is acquired by the purchaser, subject to the following requirements: 64a (A) Requirement of sufficient affordable housing in area The Secretary may not take action under this paragraph unless the Secretary determines that there is available in the area an adequate supply of habitable, affordable housing for very low- income families and other low-income families using tenant-based assistance. (B) Limitation for subsidized and formerly subsidized projects The Secretary may not take actions under this paragraph in connection with units in subsidized or formerly subsidized projects for more than 10 percent of the aggregate number of units in such projects disposed of by the Secretary in any fiscal year. (3) Other assistance (A) In general In accordance with the authority provided under the National Housing Act [12 U.S.C.A. § 1701 et seq.], the Secretary may provide other assistance pursuant to subsection (f) of this section to the owners of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure, or after sale by the Secretary, on terms that ensure that— (i) at least the units in the project otherwise required to receive project-based assistance 65a pursuant to subparagraphs (A), (B), or (D) of paragraph (1) are available to and affordable by low-income persons; and (ii) for the remaining useful life of the project, as defined by the Secretary, there shall be in force such use or rent restrictions as the Secretary may prescribe. (B) Very low-income tenants If, as a result of actions taken pursuant to this paragraph, the rents charged to any very low- income families residing in the project who are otherwise required (pursuant to subparagraph (A), (B), or (D) of paragraph (1)) to receive project- based assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f] exceed the amount payable as rent under section 3(a) of the United States Housing Act of 1937 [42 U.S.C.A. § 1437a(a)], the Secretary shall provide tenant-based assistance under section 8 of such Act [42 U.S.C.A. § 1437f] to such families. (f) Discretionary assistance In addition to the actions required under subsection (e) of this section for a subsidized, formerly subsidized, or unsubsidized multifamily housing project, the Secretary may, pursuant to the disposition plan and the goals in subsection (a) of this section, take one or more of the following actions: (1) Discounted sales price 66a In accordance with the authority provided under the National Housing Act [12 U.S.C.A. § 1701 et seq.], the Secretary may reduce the selling price of the project. Such reduced sales price shall be reasonably related to the intended use of the property after sale, any rehabilitation requirements for the project, the rents for units in the project that can be supported by the market, the amount of rental assistance available for the project under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f], the occupancy profile of the project (including family size and income levels for tenant families), and any other factors that the Secretary considers appropriate. (2) Use and rent restrictions The Secretary may require certain units in a project to be subject to use or rent restrictions providing that such units will be available to and affordable by low- and very low-income persons for the remaining useful life of the property, as defined by the Secretary. (3) Short-term loans The Secretary may provide short-term loans to facilitate the sale of a multifamily housing project ae (A) authority for such loans is provided in advance in an appropriation Act; (B) such loan has a term of not more than 5 years; (C) the Secretary determines, based upon documentation provided to the Secretary, that the borrower has obtained a commitment of permanent financing to replace the short-term loan from a lender who meets standards established by the Secretary; and (D) the terms of such loan are consistent with prevailing practices in the marketplace or the provision of such loan results in no cost to the Government, as defined in section 661a of Title 2. (4) Up-front grants If the Secretary determines that action under this paragraph is more cost-effective than establishing rents pursuant to subsection (h)(2) of this section, the Secretary may utilize the budget authority provided for contracts issued under this section for project-based assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f] to (in addition to providing project-based section 8 rental assistance) provide up-front grants for the necessary cost of rehabilitation and other related development costs. This paragraph shall be effective during fiscal years 2006 through 2010 only to the extent that such budget authority is made available for use under this paragraph in advance in appropriation Acts. (5) Tenant-based assistance The Secretary may make available tenant-based assistance under section 8 of the United States 68a Housing Act of 1937 [42 U.S.C.A. § 1437f] to families residing in a multifamily housing project that do not otherwise qualify for project-based assistance. (6) Alternative uses (A) In general Notwithstanding any other provision of law, after providing notice to and an opportunity for comment by preexisting tenants, the Secretary may allow not more than— (i) 10 percent of the total number of units in multifamily housing projects that are disposed of by the Secretary during any fiscal year to be made available for uses other than rental or cooperative uses, including low-income homeownership opportunities, or in any particular project, community space, office space for tenant or housing-related service providers or security programs, or small business uses, if such uses benefit the tenants of the project; and (ii) 5 percent of the total number of units in multifamily housing projects that are disposed of by the Secretary during any fiscal year to be used in any manner, if the Secretary and the unit of general local government or area-wide governing body determine that such use will further fair housing, community development, or neighborhood revitalization goals. 69a (B) Displacement protection The Secretary may take actions under subparagraph (A) only if— (i) tenant-based rental assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f] is made available to each eligible family residing in the project that is displaced as a result of such actions; and (ii) the Secretary determines that sufficient habitable, affordable rental housing is available in the market area in which the project is located to ensure use of such assistance. (7) Transfer for use under other programs of Secretary (A) In general Notwithstanding the provisions of subsection (e) of this section, the Secretary may, pursuant to an agreement under subparagraph (B), transfer a multifamily housing project— (i) to a public housing agency for use of the project as public housing; or (ii) to an entity eligible to own or operate housing assisted under section 1701q of this title or under section 811 of the Cranston- Gonzalez National Affordable Housing Act [42 U.S.C.A. § 8013] for use as supportive housing 70a under either of such sections. (B) Requirements for agreement An agreement providing for the transfer of a project described in subparagraph (A) shall— (i) contain such terms, conditions, and limitations as the Secretary determines appropriate, including requirements to ensure use of the project as public housing, supportive housing under section 1701q of this title, or supportive housing under section 811 of the Cranston-Gonzalez National Affordable Housing Act [42 U.S.C.A. § 8013], as applicable; and (ii) ensure that no tenant of the project will be displaced as a result of actions taken under this paragraph. (8) Rebuilding Notwithstanding any provision of section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f], the Secretary may provide project-based assistance in accordance with subsection (e) of this section to support the rebuilding of a multifamily housing project rebuilt or to be rebuilt (in whole or in part and on-site, off-site, or in a combination of both) in connection with disposition under this section, if the Secretary determines that— (A) the project is not being maintained in a 7la decent, safe, and sanitary condition; (B) rebuilding the project would be less expensive than substantial rehabilitation; (C) the unit of general local government in which the project is located approves the rebuilding and makes a financial contribution or other commitment to the project; and (D) the rebuilding is a part of a _ local neighborhood revitalization plan approved by the unit of general local government. The provisions of subsection (j)(2) of this section shall apply to any tenants of the project who are displaced. (9) Emergency assistance funds The Secretary may make arrangements with State agencies and units of general local government of States receiving emergency assistance under part A of title IV of the Social Security Act [42 U.S.C.A. § 601 et seq.] for the provision of assistance under such Act [42 U.S.C.A. § 301 et seq.] on behalf of eligible families who would reside in any multifamily housing projects. (g) Protection for unassisted very low-income tenants For each multifamily housing project disposed of under this section, the Secretary shall require that, for any very low-income family who is a preexisting tenant of the project who (upon disposition) would be 72a required to pay rent in an amount in excess of 30 percent of the adjusted income (as such term is defined in section 3(b) of the United States Housing Act of 1937 [42 U.S.C.A. § 1437a(b)]) of the family— (1) for a period of 2 years beginning upon the date of the acquisition of the project by the purchaser under such disposition, the rent for the unit occupied by the family may not be increased above the rent charged immediately before acquisition; (2) such family shall be considered displaced for purposes of any system of preferences established pursuant to section 6(c)(4)(A), 8(d)(1)(A), or 8(0)(6)(A) of the United States Housing Act of 1937 [42 U.S.C.A. §§ 1437d(c)(4)(A), 1437£(d)(1)(A), and 1437f(0)(6)(A)]; and (3) notice shall be provided to such family, not later than the date of the acquisition of the project by the purchaser— (A) of the requirements under paragraphs (1) and (2); and (B) that, after the expiration of the period under paragraph (1), the rent for the unit occupied by the family may be increased. (h) Contract requirements Contracts for project-based rental assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f] provided pursuant to this section shall be subject to the following 73a requirements: (1) Contract term The contract shall have a term of 15 years, except that the term may be less than 15 years— (A) to the extent that the Secretary finds that, based on the rental charges and financing for the multifamily housing project to which the contract relates, the financial viability of the project can be maintained under a contract having such a term; except that the Secretary shall require that the amount of rent payable by tenants of the project for units assisted under such contract shall not exceed the amount payable for rent under section 3(a) of the United States Housing Act of 1937 [42 U.S.C.A. § 1437a(a)] for a period of at least 15 years; or (B) if such assistance is provided— (i) under a contract authorized under section 6 of the HUD Demonstration Act of 1993; and (ii) pursuant to a disposition plan under this section for a project that is determined by the Secretary to be otherwise in compliance with this section. (2) Contract rent The Secretary shall establish the contract rents under such contracts at levels that, together with other resources available to the purchasers, provide sufficient amounts for the necessary costs 74a of rehabilitating and operating the multifamily housing project and do not exceed the percentage of the existing housing fair market rentals for the market area in which the project assisted under the contract is located as determined by the Secretary under section 8(c) of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f(c)]. (i) Right of first refusal for local and State government agencies (1) Notification Not later than 30 days after the Secretary acquires title to a multifamily housing project, the Secretary shall notify the appropriate unit of general local government (including public housing agencies) and State agency or agencies designated by the chief executive officer of the State in which the project is located of such acquisition of title and that, for a period beginning upon such notification that does not exceed 90 days, such unit of general local government and agency or agencies shall have the exclusive right under this subsection to make bona fide offers to purchase the project. (2) Right of first refusal During the 90-day period, the Secretary may not sell or offer to sell the multifamily housing project other than to a party notified under paragraph (1), unless the unit of general local government and the designated State agency or agencies notify the Secretary that they will not make an offer to purchase the project. The Secretary shall accept a 75a bona fide offer to purchase the project made during such period if it complies with the terms and conditions of the disposition plan for the project or is otherwise acceptable to the Secretary. (3) Procedure The Secretary shall establish any procedures necessary to carry out this subsection. (j) Displacement of tenants and relocation assistance (1) In general Whenever tenants will be displaced as a result of the demolition of, repairs to, or conversion in the use of, a multifamily housing project that is owned by the Secretary (or for which the Secretary is mortgagee in possession), the Secretary shall identify tenants who will be displaced, and shall notify all such tenants of their pending displacement and of any relocation assistance that may be available. In the case of a multifamily housing project that is subject to a mortgage held by the Secretary, the Secretary shall require the owner of the project to carry out the requirements of this paragraph, if the Secretary has authorized the demolition of, repairs to, or conversion in the use of such multifamily housing project. (2) Rights of displaced tenants The Secretary shall ensure for any such tenant (who continues to meet applicable qualification standards) the right— 76a (A) to return, whenever possible, to a repaired or rebuilt unit; (B) to occupy a unit in another multifamily housing project owned by the Secretary; (C) to obtain housing assistance under the United States Housing Act of 1937 [42 U.S.C.A. § 1437 et seq.}; or (D) to receive any other available similar relocation assistance as the Secretary determines to be appropriate. (k) Mortgage and project sales (1) In general The Secretary may not approve the sale of any loan or mortgage held by the Secretary (including any loan or mortgage owned by the Government National Mortgage Association) on any subsidized project or formerly subsidized project, unless such sale is made as part of a transaction that will ensure that such project will continue to operate at least until the maturity date of such loan or mortgage, in a manner that will provide rental housing on terms at least as advantageous to existing and future tenants as the terms required by the program under which the loan or mortgage was made or insured prior to the assignment of the loan or mortgage on such project to the Secretary. (2) Sale of certain projects The Secretary may not approve the sale of any 77a subsidized project— (A) that is subject to a mortgage held by the Secretary, or (B) if the sale transaction involves the provision of any additional subsidy funds by the Secretary or a recasting of the mortgage, unless such sale is made as part of a transaction that will ensure that the project will continue to operate, at least until the maturity date of the loan or mortgage, in a manner that will provide rental housing on terms at least as advantageous to existing and future tenants as the terms required by the program under which the loan or mortgage was made or insured prior to the proposed sale of the project. (3) Mortgage sales to State and local governments Notwithstanding any provision of law that requires competitive sales or bidding, the Secretary may carry out negotiated sales of mortgages held by the Secretary, without the competitive selection of purchasers or intermediaries, to units of general local government or State agencies, or groups of investors that include at least one such unit of general local government or State agency, if the negotiations are conducted with such agencies, except that— (A) the terms of any such sale shall include the agreement of the purchasing agency or unit of local government or State agency to act as mortgagee or owner of a beneficial interest in 78a such mortgages, in a manner consistent with maintaining the projects that are subject to such mortgages for occupancy by the general tenant group intended to be served by the applicable mortgage insurance program, including, to the extent the Secretary determines appropriate, authorizing such unit of local government or State agency to enforce the provisions of any regulatory agreement or other program requirements applicable to the related projects; and (B) the sales prices for such mortgages shall be, in the determination of the Secretary, the best prices that may be obtained for such mortgages from a unit of general local government or State agency, consistent with the expectation and intention that the projects financed will be retained for use under the applicable mortgage insurance program for the life of the initial mortgage insurance contract. (4) Sale of mortgages covering unsubsidized projects Notwithstanding any other provision of law, the Secretary may sell mortgages held on projects that are not subsidized or formerly subsidized projects on such terms and conditions as the Secretary may prescribe. (5) Mortgage sale demonstration The Secretary may carry out a demonstration to test the feasibility of restructuring and disposing of 79a troubled multifamily mortgages held by the Secretary through the establishment of partnerships with public, private, and nonprofit entities. (6) Project sale demonstration The Secretary may carry out a demonstration to test the feasibility of disposing of troubled multifamily housing projects that are owned by the Secretary through the establishment of partnerships with public, private, and nonprofit entities. (1) Report to Congress Not later than June 1 of each year, the Secretary shall submit to the Vongress a report describing the status of multifamily housing projects owned by or subject to mortgages held by the Secretary, on an aggregate basis, which highlights the differences, if any, between the subsidized and the unsubsidized inventory. The report shall include— (1) the average and median size of the projects; (2) the geographic locations of the projects, by State and region; (3) the years during which projects were assigned to the Department, and the average and median length of time that projects remain in the HUD- held inventory; (4) the status of HUD-held mortgages; 80a (5) the physical condition of the HUD-held and HUD-owned inventory; (6) the occupancy profile of the projects, including the income, family size, race, and ethnic origin of current tenants, and the rents paid by such tenants; (7) the proportion of units that are vacant; (8) the number of projects for which the Secretary is mortgagee in possession; (9) the number of projects sold in foreclosure sales; (10) the number of HUD-owned projects sold; (11) a description of actions undertaken pursuant to this section, including a description of the effectiveness of such actions and any impediments to the disposition or management of multifamily housing projects; (12) a description of the extent to which the provisions of this section and actions taken under this section have displaced tenants of multifamily housing projects; (13) a description of any of the functions performed in connection with this section that are contracted out to public or private entities or to States; and (14) a description of the activities carried out under subsection (i) of this section during the preceding year. 8la APPENDIX H - 12 U.S.C. § 171517 § 17151. Housing for moderate income and displaced families (a) Purpose This section is designed to assist private industry in providing housing for low and moderate income families and displaced families. (b) Authorization The Secretary is authorized, upon application by the mortgagee, to insure under this section as hereinafter provided any mortgage (including advances during construction on mortgages covering property of the character described in paragraphs (3) and (4) of subsection (d) of this section) which is eligible for insurance as provided herein and, upon such terms and conditions as the Secretary may prescribe, to make commitments for the insurance of such mortgages prior to the date of their execution or disbursement thereon. (c) Definitions As used in this section, the terms “mortgage”, “first “mortgage”, “mortgagee”, “mortgagor”, “maturity date” and “State” shall have the same meaning as in section 1707 of this title. (d) Eligibility for insurance; conditions; limits 82a To be eligible for insurance under this section, a mortgage shall— (1) have been made to and be held by a mortgagee approved by the Secretary as responsible and able to service the mortgage properly; (2) be secured by property upon which there is located a dwelling conforming to applicable standards prescribed by the Secretary under subsection (f) of this section, and meeting the requirements of all State laws, or local ordinances or regulations, relating to the public health or safety, zoning, or otherwise, which may be applicable thereto, and shall involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as_ the Secretary shall approve) in an amount (A) not to exceed (i) $31,000 (or $36,006, if the mortgagor’s family includes five or more persons) in the case of a property upon which there is located a dwelling designed principally for a single-family residence, (ii) $35,000 in the case of a property upon which there is located a dwelling designed principally for a two-family residence, (iii) $48,600 in the case of a property upon which there is located a dwelling designed principally for a three-family residence, or (iv) $59,400 in the case of a property upon which there is located a dwelling designed principally for a four-family residence, except that the Secretary may increase the foregoing amounts to not to exceed $36,000 (or $42,000 if the mortgagor’s family includes five or more persons), $45,000, $57,600, and $68,400, respectively, in any geographical area where he finds that cost levels so 83a require; and (B) not to exceed the appraised value of the property (as of the date the mortgage is accepted for insurance): Provided, That (i)(1) in the case of a displaced family, he shall have paid on account of the property at least $200 in the case of a single-family dwelling, $400 in the case of a two- family dwelling, $600 in the case of a three-family dwelling, and $800 in the case of a four-family dwelling, or (2) in the case of any other family, he shall have paid on account of the property at least 3 per centum of the Secretary's estimate of its acquisition cost (excluding the mortgage insurance premium paid at the time the mortgage is insured), in cash or its equivalent; which amount in either instance may include amounts to cover settlement costs and initial payments for taxes, hazard insurance, and other prepaid expenses; or (ii) in the case of repair and rehabilitation, the amount of the mortgage shall not exceed the sum of the estimated cost of repair and rehabilitation and the Secretary’s estimate of the value of the property before repair and rehabilitation, except that in no case involving refinancing shall such mortgage exceed such estimated cost of repair and rehabilitation and the amount (as determined by the Secretary) required to refinance existing indebtedness secured by the property: Provided: further, That the mortgagor shall to the maximum extent feasible be given the opportunity to contribute the value of his labor as equity in such dwelling; or (3) if executed by a mortgagor which is a public body or agency (and, except with respect to a project assisted or to be assisted pursuant to 84a section 8 of the United States Housing Act of 1937 [42 U.S.C.A. § 1437f], which certifies that it is not receiving financial assistance from the United States exclusively pursuant to such Act [42 U.S.C.A. § 1437 et seq.]), a cooperative (including an investor-sponsor who meets such requirements as the Secretary may impose to assure that the consumer interest is protected), or a_ limited - dividend corporation (as defined by the Secretary), or a private nonprofit corporation or association, or other mortgagor approved by the Secretary, and regulated or supervised under Federal or State laws or by political subdivisions of States, or agencies thereof, or by the Secretary under a regulatory agreement or otherwise, as to rents, charges, and methods of operation, in such form and in such manner as in the opinion of the Secretary will effectuate the purposes of this section— (i) Repealed. Pub.L. 93-383, Title III, § 304(e)(1), Aug. 22, 1974, 88 Stat. 678 (ii)() not exceed, for such part of the property or project as may be attributable to dwelling use (excluding exterior land improvements as defined by the Secretary), $42,048 per family unit without a bedroom, $48,481 per family unit with one bedroom, 58,469 per family unit with two bedrooms, $74,840 per family unit with three bedrooms, and $83,375 per family unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit to not to exceed 85a $44,250 per family unit without a bedroom, $50,724 per family unit with one bedroom, $61,680 per family unit with two bedrooms, $79,793 per family unit with three bedrooms, and $87,588 per family unit with four or more bedrooms, as the case may be, to compensate for the higher costs incident to the construction of elevator-type structures of sound standards of construction and design; (II) the Secretary may, by regulation, increase any of the dollar amount limitations in subclause (I) (as such limitations may have been adjusted in accordance with section 1712a of this title) by not to exceed 170 percent in any geographical area where the Secretary finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the Secretary determines it necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions under section 1720 of this title (as such section existed immediately before November 30, 1983) is involved; and (iii) mot exceed (1) in the case of new construction, the amount which the Secretary estimates will be the replacement cost of the property or project when the _ proposed improvements are completed (the replacement cost may include the land, the proposed physical improvements, utilities within the boundaries of the land, architect’s fees, taxes, interest during 86a construction, and other miscellaneous charges incident to construction and approved by the Secretary), or (2) in the case of repair and rehabilitation, the sum of the estimated cost of repair and rehabilitation and the Secretary’s estimate of the value of the property before repair and rehabilitation: Provided, i‘hat the mortgage may involve the financing of the purchase of property which has been rehabilitated by a local public agency with Federal assistance pursuant to section 110(c)(8) of the Housing Act of 1949, and, in such case, the amount of the mortgage shall not exceed the appraised value of the property as of the date the mortgage is accepted for insurance: Provided further, That in the case of any mortgagor other than a_ nonprofit corporation or association, cooperative (including an investor-sponsor), or public body, or a mortgagor meeting the special requirements of subsection (e)(1) of this section, the amount of the mortgage shall not exceed 90 per centum of the amount otherwise authorized under this section: Provided further, That such property or project, when constructed, or repaired and rehabilitated, shall be for use as a rental or cooperative project, and low and moderate income families or displaced families shall be eligible for occupancy in accordance with such regulations and procedures as may be prescribed by the Secretary and the Secretary may adopt such requirements as he determines to be desirable regarding consultation with local public officials where such consultation is appropriate by reason of the relationship of such project to projects under other local programs; or 87a (4) if executed by a mortgagor and which is approved by the Secretary— (i) Repealed. Pub. L. 93-383, Title III, § 304(e)(2), Aug. 22, 1974, 88 Stat. 678. (ii)(1) not exceed, for such part of the property or project as may be attributable to dwelling use (excluding exterior land improvements as defined by the Secretary), $37,843 per family unit without a bedroom, $42,954 per family unit with one bedroom, $51,920 per family unit with two bedrooms, $65,169 per family unit with three bedrooms, and $73,846 per family unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit to not to exceed $40,876 per family unit without a bedroom, $46,859 per family unit with one bedroom, $56,979 per family unit with two bedrooms, $73,710 per family unit with three bedrooms, and $80,913 per family unit with four or more bedrooms, as the case may be, to compensate for the higher costs incident to the construction of elevator-type structures of sound standards of construction and design; (II) the Secretary may, by regulation, increase any of the dollar limitations in subclause (I) (as such limitations may have been adjusted in accordance with section 1712a of this title) by not to exceed 170 percent in any geographical area where the Secretary finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the Secretary determines it 88a necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions under section 1720 of this title (as such section existed immediately before November 30, 1983) is involved; (iii) not exceed (in the case of a property or project approved for mortgage insurance prior to the beginning of construction) 90 per centum of the amount which the Secretary estimates will be the replacement cost of the property or project when the proposed improvements are completed (the replacement cost may include the land, the proposed physical improvements, utilities within the boundaries of the land, architect’s fees, taxes, interest during construction, and _ other miscellaneous charges incident to construction and approved by the Secretary, and shall include an allowance for builder’s and sponsor’s profit and risk of 10 per centum of all of the foregoing items, except the land, unless the Secretary, after certification that such allowance is unreasonable, shall by regulation prescribe a lesser percentage); and (iv) not exceed 90 per centum of the sum of the estimated cost of repair and rehabilitation (including the cost of evaluating and reducing lead-based paint hazards, as such terms are defined in section 4851b of Title 42) and the Secretary's estimate of the value of the property 89a before repair and rehabilitation if the proceeds of the mortgage are to be used for the repair and rehabilitation of a property or project: Provided, That the Secretary may, in his discretion, require the mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation, and for such purpose the Secretary may make such contracts with and acquire for not to exceed $100 such stock or interest in any such mortgagor as the Secretary may deem necessary to render effective such restrictions or regulations, with such stock or interest being paid for out of the General Insurance Fund and being required to be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance; (5) bear interest at such rate as may be agreed upon by the mortgagor and the mortgagee; and contain such terms and provisions with respect to the application of the mortgagor’s periodic payment to amortization of the principal of the mortgage, insurance, repairs, alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the Secretary may in his discretion prescribe: Provided, That a mortgage insured under the provisions of subsection (d)(3) of this section shall bear interest (exclusive of any premium charges for insurance and service charge, if any) at not less than the lower of (A) 3 per centum per annum, or (B) the annual rate of interest determined, from time to time by the Secretary of the Treasury at 90a the request of the Secretary, by estimating the average market yield to maturity on all outstanding marketable obligations of the United States, and by adjusting such yield to the nearest one-eighth of 1 per centum, and there shall be no differentiation in the rate of interest charged under this proviso as between mortgagors under subsection (d)(8) of this section on the basis of differences in the types or classes of such mortgagors; and (6) provide for complete amortization by periodic payments (unless otherwise approved by the Secretary) within such terms as the Secretary may prescribe, but as to mortgages coming within the provisions of subsection (d)(2) of this section not to exceed from the date of the beginning of amortization of the mortgage (i) 40 years in the case of a displaced family, (ii) 35 years in the case of any other family if the mortgage is approved for insurance prior to construction, except that the period in such case may be increased to not more than 40 years where the mortgagor is not able, as determined by the Secretary, to make the required payments under a mortgage having a shorter amortization period, and (iii) 30 years in the case of any other family where the mortgage is not approved for insurance prior to construction. (e) “Mortgagor” defined; release of mortgagor or part of property (1) A mortgagor which may be approved by the Secretary as provided in subsection (d)(3) of this section includes a mortgagor which, as a condition of 9la obtaining insurance of the mortgage and prior to the submission of its application for such insurance, has entered into an agreement (in form and substance satisfactory to the Secretary) with a private nonprofit corporation eligible for an insured mortgage under the provisions of subsection (d)(3) of this section, that the mortgagor will sell the project when it is completed to the corporation at the actual cost of the project, as certified pursuant to section 1715r of this title. The mortgagor to whom the property is sold shall be regulated or supervised by the Secretary as provided in subsection (d)(3) of this section to effectuate its purposes. (2) The Secretary may at any time, under such terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the mortgage. (f) Compliance with standards; nondwelling facilities in projects in urban renewal areas; number of family units; premium charges; housing for low-income purchasers; expiration of mortgage insurance authority; “family” defined; single occupants in subsection (d)(3) housing; use of certain housing facilities for classroom purposes; return of advances for capital improvements The property or project shall comply with such standards and conditions as the Secretary may prescribe to establish the acceptability of such property for mortgage insurance and may include such commercial and community facilities as the 92a Secretary deems adequate to serve the occupants: Provided, That in the case of any such property or project located in an urban renewal area, the provisions of section 1715k(d)(8)(B)(iv) of this title shall apply with respect to the nondwelling facilities which may be included in the mortgage: Provided further, That, in the case of a mortgage which bears interest at the below-market interest rate prescribed in the proviso of subsection (d)(5) of this section, the provisions of section 1715k(d)(3)(B)(iv) of this title shall only apply if the mortgagor waives the right to receive dividends on its equity investment in the portion thereof devoted to commercial facilities. A property or project cove [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_1104%3A2. Public record. Not legal advice.