Velez v. Cisneros

MEMORANDUM and ORDER

I. PROCEDURAL HISTORY

Plaintiffs filed this action on behalf of the class of past, present, and future tenants of Chester Housing Authority public housing against the United States Department of Housing and Urban Development, its secretary Jack L. Kemp, Chester Housing Authority, and its Executive Director Earline Mann. Defendants Henry Cisneros and Jacquelyn M. Pryor were substituted for defendants Kemp and Mann, respectively, pursuant to Fed.R.Civ.P; 25(d). 1 The Second Amended Complaint (“Complaint”) requested declaratory and injunctive relief for alleged violations of federal housing law, the Administrative Procedures Act (“APA”), civil rights laws, and breach of the Annual Contributions Contract (“ACC”) between HUD and CHA. With the consent of the parties, the court appointed the Honorable William M. Marutani as mediator to promote discussion between the parties, assist them to develop and ex^ change pertinent information concerning the issues, and arrive at a mutually acceptable resolution of the controversy. ■ While media *1260 tion was underway, HUD declared CHA a “Troubled Housing Authority” in substantial breach of its obligations under the ACC and assumed control of the assets and management of CHA.

Mediation was unsuccessful. On October 25,1991, plaintiffs filed a motion for a preliminary injunction alleging that dangerous conditions threatened the lives, health, and safety of the tenants. While this motion was pending, HUD took control of CHA and contracted with the Quadel Consulting Corporation (“Quadel”), a professional management firm, to manage CHA and remedy the problems causing the “Troubled Housing Authority”' designation. The future operation of CHA was uncertain, so the parties agreed to continue the preliminary injunction hearing several times. At a hearing held on January 9, 1992, plaintiffs withdrew the motion for preliminary injunction to give new management a chance to improve the conditions of which plaintiffs complained. The court placed the case in administrative suspense to enable the parties to complete fact finding and discuss settlement further in light of the new developments.

The defendants conducted a Needs Assessment, prepared a Comprehensive Grant Plan according to the requirements of HUD’s Comprehensive Grant Program regulations, 42 U.S.C. § 1437(a)-(o), 24 C.F.R. § 968, and initiated a plan of reconstruction and restoration. Plaintiffs remained dissatisfied and opposed defendants’ plan to hire an executive director without “adequate input” from the tenants and the City of Chester. On July 31, 1992, plaintiffs filed a motion to restore the case to active status and preliminarily enjoin the appointment of an executive director.

The court held hearings on plaintiffs’ motion for a preliminary injunction for nine days, beginning September 25, 1992. Many tenants testified on behalf of the plaintiffs and aired general grievances against CHA management and housing conditions. The selection of a new executive director — the ostensible réason for the hearing — was scarcely mentioned. The court granted the motion to return the case to active status but declined to enjoin the appointment of an executive director for lack of a showing of irreparable harm. The court set a February 17, 1993 trial date.

Plaintiffs, requesting several extensions of time for discovery, represented that personnel changes at Delaware County Legal Assistance and in the executive branch of the federal government made preparation for trial overly burdensome and possibly unnecessary. Plaintiffs also stated that additional time would enable newly retained counsel to assume significant responsibilities. The court, by order of January 7, 1993, modified the trial schedule to accommodate the plaintiffs. The trial, continued until May 3, 1993, was allowed to proceed on behalf of a plaintiff class consisting of “all current tenants of public housing owned and operated by CHA or HUD.” Memorandum and Order of February 17, 1993. A non-jury trial was held on twelve days during the period from May 3, 1993 to July 9, 1993.

II. SUMMARY OF THE COMPLAINT

The plaintiff class claims that defendants have caused constructive demolition (“de facto demolition”) of CHA hqusing by failure to fill vacant units, maintain occupied units in a habitable condition, train maintenance workers, perform routine inspections, and respond promptly to tenant complaints.

Count I of the complaint alleges that CHA took action to demolish a portion of the William Penn Homes without HUD approval and without meeting the statutory criteria required by 42 U.S.C. § 1437p. Although HUD initially approved CHA’s demolition plan, CHA withdrew its proposed demolition plan shortly after obtaining funds, for comprehensive modernization of the project in September, 1992. This Count will be dismissed as moot.

Counts II and III allege that CHA’s gross neglect and mismanagement constitute constructive (de facto) demolition of public housing units in violation of 42 U.S.C. § 1437p. Count IV alleges that HUD violated 42 U.S.C. § 1437p by approving the plan to demolish a portion of William Penn Homes even though the plan failed to meet statutory and regulatory criteria. At trial, plaintiffs also argued that HUD had engaged in de *1261 facto demolition of CHA housing units by failing to prevent de facto demolition of housing units prior to November 6, 1991 and by permitting it as manager of the projects subsequent to November 6, 1991.

Count V alleges that HUD’s approval of the now-withdrawn plan to demolish a portion of William Penn Homes violated the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701-06. Plaintiffs also argued at trial that HUD violated the APA by failing to prevent de facto demolition of units prior to November 6, 1991 and making arbitrary and capricious decisions as manager of CHA housing units subsequent to November 6, 1991.

Count VI alleges that defendants have violated the ACC and that plaintiffs are entitled to enforce its provisions against CHA as third party beneficiaries.

Count VII alleges that the defendants’ failure to preserve public housing units and defendants’ actual and de facto demolition of units have had a racially discriminatory impact in violation of § 3604 of the Fair Housing Act, 42 U.S.C. §§ 3601-3631 (“Housing Act”). Count VIII alleges that HUD violated the Housing Act by failing to protect plaintiffs from racially discriminatory treatment. Count IX alleges that the actions and omissions by defendants are a part of a pattern of intentional discrimination against non-whites in public housing in violation of Title VI of the Civil Rights Act, 42 U.S.C. § 2000d. Plaintiffs presented no evidence regarding Counts VII, VIII, and IX; these counts were dismissed for failure of proof at close of plaintiffs’ case.

Count X alleges that CHA violated the Housing Act by including a lease requirement requiring tenants to pay for repairs necessary to restore housing units to habitable conditions. Count X also alleges that CHA violated the Housing Act by requiring tenants to pay for repairs caused by normal wear and tear or acts of third parties.

III. FINDINGS OF FACT AND CONCLUSIONS OF LAW

The court makes the following findings of fact and conclusions of law in accordance with Fed.R.Civ.P. 52(a).

A. Findings of Fact

1. Conditions Prior to November 6, 1991

a. Vacancies and Turnaround Time

CHA operates five public housing developments in the City of Chester, Pennsylvania: Ruth Bennett Homes (“Bennett”), Lamokin Village, William Penn Homes (“Penn”), McCaffery Village, and Chester Towers. These developments contain approximately 1,700 public housing units.

According to HUD performance indicators, a vacancy rate of 3% or above is “deficient.” 24 C.F.R. § 901.05(k); 24 C.F.R. § 901.-10(b)(l)(vii); at that rate, more than 51 vacancies for CHA’s 1,700 units would be “deficient” performance. However, HUD allows a Public Housing Authority (“PHA”) to deduct units approved for demolition in calculating the vacancy rate, 24 C.F.R. § 901.-05(e)(1), and permits adjustment for funded on-schedule modernization. 24 C.F.R. § 901.10(b)(l)(vii)(B).

On December 30, 1987, there were 97 vacant units at the five CHA developments; as of December 30, 1988, this number had increased to 138. Pis.’ Ex. 1; Administrative Record (“A.R.”) at 20413. By December 30, 1990, there were 262 vacant units; 79 of these units were vacant pursuant to a HUD-approved plan to demolish portions of Penn. Id. On December 30, 1991, the number of vacancies rose to 320; 100 vacancies were in anticipation of the planned demolition at Penn. Pis.’ Ex. 1.

According to HUD performance indicators, an annual average of vacancy days per turnaround of 30 or more calendar days is “deficient.” 24 -&F.R. § 901.05(k); 24 C.F.R. § 901.10(b)(5). In 1986, the average time for CHA to prepare a vacant unit for occupancy was 62 days; by 1989-90, the average time to prepare a vacant unit for occupancy had risen to 315 days. A.R. at 20414.

b. Physical Conditions

On November 1, 1991, William Henderson, Chief of Assisted Housing Management Branch for HUD’s Philadelphia regional of *1262 fice, visited Bennett, Lamokin Village, Penn, and McCaffery Village. A.R. at 4289. Henderson did not walk through the Penn project because of concern for his personal safety; however, half of the vacant units that he observed were “not secured and had broken, wide open windows on the second and third floors,” and “trash was strewn throughout the site with no indications that it had been recently picked up.” A.R. at 4289-90. His opinion was that Penn was “clearly moving towards being an uninhabitable site.” A.R. at 4290.

At Bennett, Henderson found that every boarded vacant unit on the first floor had been entered, boarded windows and doors were unsecured, and windows on the second floor were broken and open to rain and vandalism. A.R. at 4289. “Trash was strewn throughout the site with no apparent recent attempts to pick it up in the areas with significant numbers of vacancies.” Id. Drug dealers appeared to be on the project grounds, and “[tjhere appeared to be a direct relationship between this suspected drug dealing and the serious dilapidation of units.” Id. Henderson believed that Bennett was “rapidly sliding to the point that it will be as deteriorated as William Penn in six to twelve months.” A.R. at 4290.

At McCaffery, about half of the approximately 38 vacant units had been entered and vandalized; the vandalized second floor units had broken windows. Id. “Junction boxes on the second floor of several units were uncovered exposing the wiring to rain,” this created a fire hazard. Id. Henderson suspected that illegal drug activity was also taking place there. Id. While more stable than Bennett or Penn, McCaffery was “at the beginning stages of a serious decline if conditions [were] not quickly reversed.” Id. At Lamokin, Henderson observed a drug sale before leaving the site out of concern for his personal safety. A.R. at 4289. Trash collection was a serious problem. Id.

On October 11, 1991, Michael Smerconish, a HUD regional administrator, summarized the state of the projects in a memorandum stating that:

The Authority’s housing stock is in disrepair; its projects are not being maintained; the present management lacks the capability to obtain and manage the funds necessary to make needed physical improvements; it is unable to prepare vacant units in a timely fashion; its procurement is deficient resulting in the purchase of supplies and services at excessive prices and without assurance that they are of the highest quality----

A.R. at 20399-400. CHA had “not expressed even the intention to institute the remedial and curative actions to make CHA a viable independent public housing authority.” A.R. at 20400. The “vast majority of units” had “basic health and safety” problems. A.R. at 20401. Most of the over 300 vacant units had been seriously vandalized and needed major repairs. A.R. at 20402.

An inspection of the sites on December 3, 1991, by Linda Williams, Underwriting Manager for Foxco Insurance Management Services, Inc., revealed the condition of the projects just after the HUD takeover. Squatters in the projects were “a constant problem”; vacant units had live electrical systems with torn switch boxes and outlet boxes leaving exposed live wires; ,one unit had a sink torn out and another had a valve left open so that water was dripping into the units below them; some steam radiators had not been shut off (the units were “so hot its [sic] like entering a steam bath” despite the absent or broken windows in those units); hardwood floors in vacant units had been damaged by rain water; numerous windows in occupied and unoccupied units were broken; and debris accumulation in some stairwells at Penn was so bad that “a person would need to have the surefootedness of a mountain goat to get up or down.” A.R. at 30501-02. It was evident that CHA had either conducted no routine inspections of the units or was clearly failing to respond to readily observable problems. Id.

A Quadel draft report in February, 1992, based on an assessment conducted from December 2, 1991 to January 31, 1992, stated that although the condition of dwelling units varied from “poor to very good”, CHA units suffered from “several chronic problems” such as “frequent sewer back-ups,” “leaks from steam and water pipes causing weak *1263 ened and buckled floors, plaster damage, deterioration to cabinets, sweating walls (from steam condensate), peeling paint and electrical shortages,” broken windows, missing screens, and inoperable locks. A.R. at 24345, 24399. Trash collection was a serious problem. “Trash and garbage lie everywhere. Wild dogs, birds and rodents abound on CHA properties, sustained by the bountiful garbage. The situation is totally out of control.” A.R. at 24400.

c. Maintenance

Maintenance of the units at the time of the HUD takeover was very poor. CHA maintenance staff was not capable of maintaining housing units in a decent, safe, and sanitary condition. A.R. at 20412. Quadel, in its draft report to HUD, found that ten of CHA’s budgeted forty-three full-time line worker positions were not filled by active workers; staff had been hired in accordance with a “pervasive system of patronage,” with “little attention ... to the skills or work habits of applicants for employment”; staff productivity was low, with some staff “completing] as few as one work order per week”; the workforce was “generally under-qualified,” although some workers had developed good skills on the job; the quality of work “reflectfed] a wide variety of skill levels”; few maintenance records were kept; CHA did not manage resident work orders in an organized or centralized system; 2,000 work orders logged in 1991 were unaccounted for; the work order process made it “nearly impossible to track employee activity and to hold staff accountable for poor performance”; and although emergencies were usually abated, the quality of work was often poor. A.R. at 24345, 24393-400.

d. Financial Conditions

In his October, 1991 memorandum, Smerconish described CHA’s financial condition as in a “state of collapse.” A.R. at 20418. From 1989 through 1991, actual expenditures had exceeded the budget on controlled line items by $432,709; CHA lost $582,889 by failing to collect rents owed; and CHA lost $556,123 by failing to have vacant units reoccupied. A.R. at 20419-24. In addition, CHA had written off $461,944 in collection losses. A.R. at 20419. CHA’s operating reserve had dropped from $1632,359 in 1989 to $290,304 in 1991; however, the reserve was only a paper figure, and Smerconish believed that CHA’s bills actually exceeded its available funds. A.R. at 20419. Because of the “precipitous decline” in CHA’s financial condition, Smerconish believed that CHA could not “continue to provide basic services for very long.” A.R. at 20418.

2. The HUD Takeover

On November 5, 1991, HUD notified CHA that it had substantially breached and defaulted on the ACC and that HUD was exercising its right under sections 501 and 502 of the ACC to take immediate possession of CHA and its operations. A.R. at 19916-18. 2 On November 6, 1993, CHA voluntarily surrendered possession of the Authority’s assets and property and agreed not to interfere with the operation of CHA by the HUD designee. A.R. at 19954-55. CHA’s Board of Commissioners was left with only residual authority; reconstituting the Board was at HUD’s sole discretion. A.R. at 19955. CHA’s Board of Commissioners has not met since November 5, 1991. Henderson, Tr. 5/6/93 at 15. On November 7, 1993, HUD issued a memorandum delegating “all power and authority necessary to oversee and control the entire operation” of CHA to Henderson. A.R. at 19914. Although HUD took possession of CHA, HUD did not exercise its option to assume title to CHA. The memorandum delegating oversight and control of CHA to Henderson stated that “HUD has assumed oversight of the normal operations of [CHA].” Id. (emphasis supplied).

*1264 Henderson exercised all of the essential powers with regard to CHA that were formerly exercised by CHA’s Board of Commissioners, including control of management, maintenance, finance, and expenditure or commitment of any funds. Henderson, Tr. 10/5/92 at 180. A memorandum from Henderson to all CHA employees stated, “[A]ll Documents but not limited to including [sic] letters, contracts purchase orders and checks are to be signed only by William Henderson.” A.R. at 333. The memorandum also stated that Henderson’s signature block on all letters should include the phrase “Acting on behalf of and in the name of the CHESTER HOUSING AUTHORITY.” Id. However, Henderson did sign some documents on behalf of the Chester Housing Authority/Board of Commissioners shortly after the takeover. Henderson, Tr. 5/6/93 at 14-15.

On November 25, 1991, CHA, through Henderson, entered into a contract with Quadel; Quadel was to provide management, consulting, and technical assistance to CHA for at least six months beginning December 2,1991, with an option to extend the contract for a one-year period. Pis.’ Ex. 85; A.R. at 20664-89. The contract was extended for one year on June 2, 1992. Pis.’ Ex. 85. CHA and Quadel entered into a contract for an additional year on June 2, 1993. Cayford, Tr. 6/14/93 at 124.

3. Conditions at Time of Trial

a. Vacancies

At the time of the HUD takeover in November, 1991, Henderson and Smerconish planned to move quickly to reduce the number of vacancies. Shortly after the HUD takeover, approximately 75 units were rehabilitated for immediate occupancy. Collins, Tr. 5/5/93 at 52. However, that initial plan was abandoned in order to do lead testing and concentrate funds on occupied units. Henderson, Tr. 5/6/93 at 64-65. The subsequent availability of large HUD grants for modernization and reconstruction resulted in a decision not to rehabilitate vacant units for immediate occupancy. Id. at 65. As a result of this decision, the number of vacancies continued to rise. There were 405 vacancies on December 30, 1992, Pis.’ Ex. 1, and approximately 440 at the time of trial. Collins, Tr. 5/5/93 at 56. None of these vacancies were pursuant to the demolition plan for Penn, withdrawn shortly after CHA was awarded funds for Major Reconstruction of Obsolete Public Housing (“MROP”) in September, 1992. Watts, Tr. 5/12/93 at 201-02; Rotondaro, Tr. 11/2/92 at 79-80.

CHA, managed by HUD (“CHA/HUD”), boarded and sealed units as they became vacant and did not prepare them for immediate occupancy. When a unit became vacant, a CHA/HUD crew secured any immediate hazards, removed trash and debris, and then boarded the unit to seal it without regard to the cost of rehabilitating the unit for immediate occupancy. Id. at 44, 47; Collins, Tr. 5/5/93 at 49. This policy applied to all the developments except Chester Towers. Id. at 51. Because of the proposed comprehensive modernization and reconstruction program, CHA/HUD believed it would be fiscally and managerially more efficient to allow units to remain vacant pending a large-scale modernization and reconstruction program than to perform interim repairs to rehabilitate vacant apartments for immediate occupancy. Henderson, Tr. 5/6/93 at 47; Collins, Tr. 5/5/93 at 49-50. Aside from units at Chester Towers, the only units recently rehabilitated or undergoing rehabilitation were eight four bedroom units for occupancy by families entitled to four bedroom units but in apartments too small for them. Id. at 48.

b. Maintenance

In the first week of December, 1991, Quadel appointed Paul Collins, a Quadel employee, to serve as CHA’s maintenance superintendent. Collins, Tr. 5/5/93 at 6-7. At that time, there were ten maintenance staff positions vacant; Collins hired laborers and aides to fill those positions. Id. at 28. With one exception, the staff employees were not licensed plumbers or electricians, id. at 12-13; however, CHA’s union contract was not based on licensed trades. Id. at 13, 26. Some of the staff employees may have had skills equivalent to those in licensed trades. Id. at 28. Collins called experts or contractors when faced with a problem beyond the *1265 qualifications or abilities of his staff. Id. at 76-77.

Collins reorganized the maintenance staff into site-based crews, eliminated patronage considerations in hiring, and gave employees basic skills tests. Collins, Tr. 5/12/93 at 7, 9. Collins instituted formal methods of tracking worker productivity. Id. at 11-12. The maintenance department instituted a preventive maintenance plan and hoped to expend approximately 30% of its work on preventive maintenance by the end of 1993. Id. at 16. Collins made considerable personal efforts to have the maintenance department more responsive to tenant complaints and concerns by attending tenant meetings and speaking with individual tenants. Id. at 25, 26. Collins also instituted a centralized work order system. Id. at 25-27.

The maintenance department responded to over 90% of situations considered threatening to immediate health or safety within 24 hours, and responded to over 90% of urgent, but not life-threatening, complaints within five days. Id. at 28-30. Almost all other work orders were completed within thirty days of reporting. Id.; see also Def. CHA Ex. 50; Def. CHA Ex. 51. No list was kept of work orders recurring after a previous repaii', Collins, Tr. 5/5/93 at 47-48; however, Collins believed that the number of work orders of this kind were very small. Id. at 48.

Although work orders were completed, Collins did not evaluate his staffs maintenance work by recognized written standards. Collins, Tr. 5/5/93 at 14-15. Instead, he evaluated the quality of work through site visits and personal standards developed through fifteen years of experience in supervision of maintenance employees. Id. Collins also relied on tenant reports of satisfaction with repair work and on reports by City of Chester building code inspectors. Id. at 15; Collins, Tr. 5/12/93 at 40. Collins did not determine whether the repair work met code requirements. Collins, Tr. 5/5/93 at 17.

Dr. Thomas Nutt-Powell,- CHA’s expert witness, testified that the quality of maintenance work was acceptable, Nutt-Powell, Tr. 5/11/93 at 75-76; plaintiffs expert witness, William Smith, testified that maintenance and rehabilitation work was of poor quality. Smith, Tr. 5/3/93 at 138-40. Both experts based their opinions on questionable small random samples of occupied units. See Nutt-Powell, Tr. 5/11/93 at 97-98 (opinion based on inspection of no more than three or four units at each development in January, 1993); Smith, Tr. 5/3/93 at 155-171 (opinion based on random sample of 31 occupied units without regard to distribution by unit size or floor).

Defendants’ expert witness, William Ewall, director of construction at the Cambridge Housing Authority; had extensive experience in maintenance and large-scale modernization consulting and was the most credible expert. Ewall, Tr. 5/11/93 at 143-45. Ewall stated that it generally takes five years to “turn around” a maintenance department that is unionized or hired from civil service rolls. Id. at 154. He believed that the maintenance department had made “impressive strides in the 18 months they’ve been in place.” Id. at 176. It is difficult to maintain efficiently systems as old as those at CHA. Id. at 175. Vandalism continues to be a severe maintenance problem at CHA. Collins, Tr. 5/5/93 at 82-83.

c. Certificates of Occupancy and Housing Quality Standards Inspections

A Certificate of Occupancy is required by the City of Chester whenever an individual moves into a vacant apartment. Id. at 20. When Collins first arrived at CHA, approximately 600 units had a Certificate of Occupancy. Id. at 77. By the time of trial, between 1,120 to 1,150 units had a Certificate of Occupancy. Approximately 140 occupied units did not have a Certificate of Occupancy. Id. at 18-20.

CHA units are required to comply with federal Housing Quality Standards (“HQS”). Henderson, Tr. 5/6/93 at 92. In an HQS inspection, each unit is examined against a HQS checklist, but the federal standards are not as high as those required for the issuance of a Chester Certificate of Occupancy. Id. at 93. CHA/HUD had not even conducted HQS inspections since the HUD takeover, but *1266 planned to conduct HQS inspections by the end of this fiscal year. Id. at 93-94.

d. Fire Safety

Although Mr. Smith’s sampling method was questionable, his investigation demonstrated that at least some aspects of CHA’s fire prevention and warning systems were not adequate. Smith found some hard-wired alarm systems were inappropriately wired through circuit breakers; other detectors were broken or missing. Smith, Tr. 5/3/93 at 93-96, 98. However, there was no evidence that inappropriately wired systems were not functioning properly.

The majority of battery-operated detectors inspected by Smith did not operate; some of these detectors' had roaches inside. Some residents may have removed the batteries to prevent false alarms because of this situation. Id. at 96. Smith estimated that approximately 80-85% of the units in the small sample of units he investigated had missing or inoperative smoke detectors. Smith, Tr. 5/4/93 at 42. The apartments in Chester Towers had heat detectors instead of smoke detectors, and fire extinguishers at Chester Towers were in cabinets that could not be readily opened. Smith, Tr. 5/3/93 at 96-99. Some fire walls in basement and maintenance areas had holes in them. Id. at 103.

The CHA/HUD maintenance staff repairs smoke detectors on tenant request. Collins, Tr. 5/5/93 at 34. Of approximately 3,100 work orders in the three months prior to trial, only 23 were for broken, inoperable, or missing smoke detectors. Collins, Tr. 5/12/93 at 39. Collins has instructed his staff to replace or repair smoke detectors if they notice them missing or inoperative while working in a unit. Collins, Tr. 5/5/93 at 34-35. CHA/HUD relies on Chester housing inspectors to notify it if detectors are incorrectly located, but Collins did not know of any unit that had failed an inspection for that reason. Id. at 35-36. CHA/HUD was to inspect its smoke detectors within a month- and-a-half of trial during its HUD-mandated annual inspection. Id. at 36-37.

e. Lead-Based Paint

There was some lead-contaminated paint used at Lamokin Village and McCaffery Village. There was a lead abatement study recommending abatement at Lamokin Village on window sills, kitchen walls, closet shelf supports, interior door jams, baseboard quarter moldings, external handrails, lentils, entrance door headers, stair stringers and risers. Collins, Tr. 5/5/93 at 71. The study recommended testing or abatement at McCaffery Village on kitchen walls, stairwell walls, window sills, living room walls, closet shelves, exterior door casings, lentils, and handrails. Id.

Upon written notification accompanied by laboratory test results that a child under age 7 had an elevated lead blood level, CHA would either test the unit for lead or move the child’s family to a lead-free unit. Def. CHA Ex. 41. If CHA/HUD chose to test the unit and found lead, CHA/HUD would abate the lead in the unit with'in fourteen days. Id. At time of trial, CHA/HUD defined an elevated blood lead level as 20 micrograms per deciliter rather than 25 micrograms per deciliter required by HUD regulations. Watts, Tr. 5/12/93 at 124-25.

Collins stated that he had been notified of only two children with elevated blood lead levels. Collins, Tr. 5/5/93 at 82. The director of the City of Chester’s Lead Poisoning Prevention Program was aware of only one child with an elevated blood lead level living in a CHA unit. Odgen, Tr. 6/15/93 at 178.

The MROP proposals for Penn and Bennett include lead-based paint abatement. Watts, Tr. 5/12/93 at 107-07. The Comprehensive Grant (“Comp Grant”) funding for Lamokin and Bennett also includes funds for lead-based paint abatement; however, abatement may not be completed until 1997. Id. at 192-93.

As of trial, CHA/HUD had nearly completed testing vacant units at Lamokin Village and McCaffery Village for lead-based paint; CHA/HUD planned to complete testing at Lamokin Village, McCaffery Village, Penn, and Bennett by the end of 1993. Watts, Tr. 5/12/93 at 124, 127. There was no evidence *1267 of large amounts of flaking or peeling lead-based paint or large numbers of children with elevated blood lead levels; 3 on this record, it would not be necessary to move people out of units containing lead-based paint forthwith. Ewall, Tr. 5/11/93 at 164; Todd, Tr. 5/10/93 at 140-42, 178-80. The risk from lead-based paint could be managed until the units undergo modernization or reconstruction. Todd, Tr. 5/11/93 at 166.

f. Asbestos

Although there was asbestos in CHA buildings, most of the asbestos was located in boiler rooms, common building basements, or crawl spaces; only a small amount was present in residential areas. Todd, Tr. 5/11/93 at 154, 163. Most of the asbestos was not friable; the small amount of potentially friable asbestos on the ceilings of units at Chester Towers did not pose an immediate danger to residents. Id. at 159-60, 175-77. There was no evidence of asbestos in air samples; defendants’ expert believed that sampling would have detected insignificant asbestos .fiber levels. Id. at 173-74. The asbestos tiles present in some units did not pose an immediate threat to resident health. Id. at 174-75.

The asbestos at CHA did not require immediate removal. Id. at 159-60, 169-70, 172. CHA/HUD planned to conduct asbestos testing at Penn and Bennett as part of the MROP process. Watts, Tr. 5/12/93 at 101-02.

g. Overcrowding

In April, 1992, approximately 173 families were living in units that CHA/HUD considered too small for them. Brown, Tr. 5/6/93 at 132-37. CHA/HUD identified thirty-five “severely overcrowded families.” Cayford, Tr. 6/14/93 at 165-66. CHA considered a family to be “severely overcrowded” if the family needed two additional bedrooms according to standard guidelines suggested by HUD and adopted by CHA. Henderson, Tr. 5/6/93 at 74-75.

CHA/HUD changed its Section 8 Administrative Plan to give priority to severely overcrowded families; CHA then mailed letters informing the thirty-five severely overcrowded families of the availability of Section 8 certificates and encouraging them to apply. Cayford, Tr. 6/14/93 at 166-67. Section 8 certificates entitle families to appropriately sized units in subsidized housing. Id. at 167. “Overcrowded families” that were not “severely overcrowded” were not invited to apply for Section 8 certificates. Henderson, Tr. 5/6/93 at 86. Seventeen of the severely overcrowded families applied for Section 8 certificates. Cayford, Tr. 6/14/93 at 167. Four families failed to comply with verification requirements; thirteen families were issued Section 8 certificates. Id. CHA/HUD sent these thirteen families a list of potential landlords in the area. Id. at 167-68.

CHA/HUD has rehabilitated or is in the process of rehabilitating eight four-bedroom units for occupancy by severely overcrowded families. Id. at 168. Every family requiring four bedrooms has been offered a four-bedroom unit, but some families have chosen not to accept the units offered. Id.

At time of trial, seven families remained on CHA/HUD’s severely overcrowded list; two of these had applied for Section 8 certificates. Id. at 169. The families remaining on the severely overcrowded list and others considered severely overcrowded in the future will not be moved into larger units until completion of part of the modernization process. Id. at 169-70. CHA/HUD planned to create additional large units in the comprehensive modernization and reconstruction of CHA units. Henderson, Tr. 5/6/93 at 81.

4. Modernization Plans

In 1992, HUD approved CHA applications for funds to improve conditions at CHA. On September 17, 1992, HUD approved $5,011,-325 in Comp Grant funds, A.R. at 29713-14; in 1993, CHA/HUD received $5,800,000 in Comp Grant funds and was told that figure was an estimate of the amount it would receive for each of the next five years. Watts, *1268 Tr. 5/12/93 at 111. On September 24, 1992, HUD approved CHA’s MROP applications for $13,337,548 to renovate Penn and $22,-556,265 to renovate Bennett. A.R. at 28906-07, 28902-03. The remainder of a previous 1988 allocation will provide approximately $2,200,000 in addition to reconstruct Penn. Watts, Tr. 5/12/93 at 123.

Although plans for reconstruction of Penn and Bennett were not final at the time of trial, CHA/HUD clearly was planning “phased” reconstruction. Pis.’ Ex. 87 at 6, 10. Residents will be relocated within the development to vacate entirely one or more buildings; when the empty buildings have been reconstructed, tenants will be moved there and then vacant unrehabilitated buildings will be available for reconstruction. Nutt-Powell, Tr. 5/11/93 at 59-61. Replacing plumbing or wiring systems, or reconfiguring units by demolishing walls, cannot be performed while the buildings are occupied. Id. at 61. Using this phased approach, reconstruction at these developments is expected to take three-and-a-half to four-and-a-half years, id. at 59; Watts, Tr. 5/12/93 at 90-91; however, it is not possible to guarantee that the reconstruction will be completed even then. Nutt-Powell, Tr. 5/11/93 at 131.

Architecture and engineering (“A & E”) firms have been selected for the reconstruction efforts at Penn and Bennett. Watts, Tr. 5/12/93 at 78-79. Ella Thompson and Yvonne Carrington, presidents of the tenant associations at Penn and Bennett, participated in the selections of these firms and were satisfied with the firms selected. Id. at 70-79. At time of trial, CHA/HUD believed that HUD approval of the A & E contracts was imminent. Id. at 80. After approval of the A & E contracts and notice to the firms, the A & E firms were to complete research and prepare schematics within six months. Id. at 92. The schematic designs were to be approved approximately 45 days thereafter. Id. Actual preparations of plans, specifications, and bid documents was expected to take an additional 90 days, followed by a 45 day period for reviewing bids. Id. CHA HUD planned to put construction proposals out to bid within one year of the date of trial. Id.

CHA modernization plans for Lamokin Village include installation of a new heating system, new site lighting, major site work including storm water collection systems, upgrading kitchens, removal of asbestos in boiler rooms, and lead-based paint testing and abatement. Def. CHA Ex. 1 at 11. Plans for McCaffery Village include repair of sanitary and steam line leaks under the buildings, major site changes to control storm water, lead-based paint testing and abatement, increased exterior lighting, and site control through fencing and landscaping. Id. at 13. Plans for Chester Towers include repairs to heating systems and controls, improvements in site security, installation of smoke detectors, and phased replacement of bathrooms and kitchens. Id. at 8. There was no evidence that modernization at those developments would require those buildings to be vacant during the modernization process.

Assuming continuing yearly Comp Grant funding from HUD of $5.8 million per year, these funds will cover the costs of modernization for Lamokin and Chester Towers in six years and for McCaffery in seven years, Nutt-Powell, Tr. 5/11/93 at 83, but there is no certainty that the work will be completed within this time. Id. at 131. A few A & E contracts have been signed for the modernization of these projects; however, more contracts for design work will be necessary before CHA/HUD can spend funds on physical repairs and modernization. Id. at 182-83.

5. The ACC

The ACC is a contract between HUD and a PHA by which the PHA agrees to undertake certain obligations in return for HUD funding. Section 101 of the ACC states, “Each Project shall be undertaken in such a manner that it ... will be developed and administered to promote serviceability, efficiency, economy, and stability and to achieve the economic and social well-being and advancement of the tenants thereof.” Section 201 of the ACC between CHA and HUD requires CHA to:

at all times operate each project (1) solely for the purpose of providing decent, safe, and sanitary dwellings (including neces *1269 sary appurtenances thereto) within the financial reach of Families of Low Income, (2) in such manner as to' promote serviceability, efficiency, economy, and stability, and (3) in such manner as to achieve the economic and social well-being of the tenants thereof.

A.R. at 24240. Section 209 of the ACC states, “[CHA] shall at all times maintain each Project in good repair, order, and condition.” A.R. at 24243. Subsection 510(B) of the ACC states, “Nothing in this Contract contained shall be construed as creating or justifying any claim against the Government by any third party other than as provided in subsection (A) of this Sec. 510.” A.R. at 24286. Subsection 510(A) allows certain bondholders and the local housing authority to sue the Government to enforce the provisions of the ACC. Id.

Section 501 of the ACC states, “Upon the occurrence of a Substantial Default ... the Local Authority shall, at the option of the Government either (a) convey to the Government title to the Projects as then constituted ... or (b) deliver possession to the Government of the Projects as then constituted.” A.R. at 24280. Section 502 requires CHA to deliver possession of the projects on demand by the Government upon a substantial breach of the ACC. Id.

Subsection 503(A) of the ACC states that the Government, after acquiring title or possession of the projects under sections 501 or 502, shall reconvey or redeliver the projects to the local authority as soon as practicable either after the Government is satisfied that all substantial breaches or defaults under the ACC have been cured and the projects will be administered in accordance with the ACC, or after the termination of the obligation of the Government to make annual contributions to the local authority. Id.

B. DISCUSSION

1. Subsection 1437p(d)

Plaintiffs argue that CHA is liable under § 1437p for de facto demolition of CHA public housing units. Plaintiffs also argue that HUD is liable under 42 U.S.C. § 1437p for de facto demolition of CHA public housing units as the oversight agency charged with enforcing § 1437p. Subsection 1437p(d) states: “A public housing agency shall not take any action to demolish or dispose of a public housing project or a portion of a public housing project without obtaining the approval of the Secretary and satisfying the conditions specified in subsections (a) and (b) of this section.” Subsection 1437p(a) states in relevant part:

(a) ... The Secretary may not approve an application by a public housing agency for permission ... to demolish ... a public housing project or a portion of a public housing project unless the Secretary has determined that—

(1) ... the project or portion of the project is obsolete as to physical condition, location, or other factors, making it unusable for housing purposes, and no reasonable program of modifications is feasible to return the project to useful life; or in the case of an application proposing the demolition of only a portion of a project, the demolition will help to assure the useful life of the remaining portion of the project;

Subsection 1437p(b) states the conditions under which the Secretary of HUD may approve an application or furnish assistance for demolition. Subsection 1437p(b)(l) requires that the demolition application have been developed in consultation with affected tenants and tenant councils; tenant councils, the resident management corporation, and tenant cooperative of any portion of the project covered by the demolition application must have been given an opportunity to purchase the project or portion of the project covered by the application. Subsection 1437p(b)(2) requires that all tenants to be displaced by the proposed demolition be relocated to other decent, safe, sanitary, and affordable housing. Subsection 1437p(b)(3) requires a PHA to have developed a plan to provide an additional decent, safe, sanitary, and affordable dwelling unit for each dwelling unit to be demolished, and sets out various requirements that the plan must satisfy.

Plaintiffs’ liability claims under § 1437p present four issues: (1) whether a private right of action exists under § 1437p; (2) *1270 whether a claim of “de facto demolition” falls within the scope of § 1437p; and, assuming affirmative answers to (1) and (2), (3) whether such an action can be maintained against CHA alone or against CHA and/or HUD; and (4) whether unapproved de facto demolition ha