author: DOWD, District Judge.

text:
    Michele SOMMERVILLE, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    No. C84-1799A.
    United States District Court, N.D. Ohio, E.D.
    May 31, 1985.
    Thomas R. Pitts, Ben Sheere Co., Akron, Ohio, for plaintiff.
    Richard J. French, Asst. U.S. Atty., Cleveland, Ohio, for defendant.
   MEMORANDUM OPINION

DOWD, District Judge.

Plaintiff Michele Sommerville brings this action for judicial review of a final decision of the Secretary of the Department of Health and Human Services denying plaintiff’s application for surviving child’s insurance benefits under 42 U.S.C. § 402(d)(1).

Plaintiff filed her complaint in this case pursuant to 42 U.S.C. § 402(g) with this Court on May 30, 1984. Defendant filed her answer to plaintiff’s complaint on August 31, 1984. Plaintiff filed her motion for summary judgment on October 12, 1984, and defendant filed her motion for summary judgment on October 19, 1984. Pursuant to the Court’s order of May 30, 1984, assigning this case to United States Magistrate Charles R. Laurie, Magistrate Laurie issued his Report and Recommendation of this case on May 6, 1985, in which he recommended that plaintiff's motion for summary judgment be granted, defendant’s motion for summary judgment be denied, and that plaintiff be awarded a back payment of benefits from the time they were discontinued in February of 1983. The defendant has filed objections to the Magistrate’s report and recommendation, and plaintiff has filed her response thereto. In order to properly understand the current status of this case, a review of its procedural history is necessary.

PROCEEDINGS BELOW

Plaintiff filed an application for surviving child’s insurance benefits on behalf of her son, Dameon L. Sommerville, born July 5, 1980, on October 10, 1980. The application was denied upon initial review on December 26, 1980, but granted on June 1, 1981 after new evidence was submitted to .the defendant. This evidence caused the defendant to reverse its initial determination and grant benefits. On February 27, 1982, upon a request for reconsideration from the decedent wage earner’s ex-wife, the defendant reversed its ruling granting benefits and notified plaintiff accordingly. Subsequently, in May of 1982, plaintiff was notified that due to defendant’s decision reversing its ruling granting benefits, plaintiff had received an overpayment in the amount of $4,091.70, and was required to repay defendant that amount. Plaintiff requested reconsideration of the decision on July 2, 1982. On January 28, 1983, the defendant issued to plaintiff its decision upon plaintiff’s request for reconsideration, stating that plaintiff was without fault for the overpayment of benefits in the amount of $3,531.10, and therefore waived recovery of that amount. However, the defendant found that plaintiff did not meet the requirements for waiver for the overpayment of $560.60, and accordingly directed plaintiff to pay that amount to the defendant. On February 28, 1983, plaintiff filed her request for a hearing on that decision.

A hearing on the matter was held before an Administrative Law Judge (hereinafter “AU”) on June 8, 1983. Following that hearing, the AU issued his decision on August 31, 1983, in which he found that Dameon L. Sommerville is the child of the decedent wage earner under Ohio law and within the meaning of § 216(h)(2)(A) of the Social Security Act, and accordingly entitled to surviving child’s insurance benefits pursuant to the application filed on his behalf.

The AU based his decision upon the February 3, 1981 report of a referee from the Probate Division of the Summit County Court of Common Pleas, upon complaints for determinations of heirship and legitimization, consolidated for hearing because of common questions of law and fact. In his report, the referee found as follows: that the decedent wage earner died intestate; “that the decedent ... acknowledged [Dameon L. Sommerville] to be his own offspring at all times;” that Dameon L. Sommerville was the issue of the decedent wage earner and plaintiff; “that it would be in the best interests of said child to be recognized as the true and legitimate child of decedent as though born to him in lawful wedlock,” Tr. 105; and that accordingly, the child was entitled to participate in the distribution of the decedent wage earner’s estate pursuant to Ohio Rev.Code § 2105.06, and receive a one third distribution of the wage earner’s property. That report was adopted as an order of the Summit County Court of Common Pleas, Probate Division. Tr. 106.

On May 1, 1984, the Social Security Administration Office of Hearing and Appeals Council (hereinafter “Appeals Council”) reversed the decision of the AU. The specific issue upon which the Appeals Council focused was whether Dameon L. Sommerville had the status of a “child” of the insured under §§ 216(h)(2)(A) or 216(h)(3)(C) of the Social Security Act. The Appeals Council found that “[although the evidence indicates that the deceased wage earner was the biological father of the child, this is not sufficient to establish that Dameon Sommerville has the status of a ‘child’ under section 216(h) of the Social Security Act.”

The Appeals Council found that the evidence eliminated the possibility of the applicant’s entitlement to benefits under § 216(h)(2)(B) of the Social Security Act, 42 U.S.C. § 416(h)(2)(B), since no marriage had occurred between plaintiff and the decedent wage earner. The Appeals Council further found that the evidence eliminated the possibility of the applicant’s entitlement to benefits under § 216(h)(3)(C) of the Social Security Act, 42 U.S.C. § 416(h)(3)(C), since: (1) the decedent wage earner had not acknowledged in writing that the child was his; (2) there had been no judicial determination of paternity prior to the decedent wage earner’s death; and (3) the decedent wage earner, at the time of his death, had not been living with or contributing to the child’s support.

The Appeals Council then proceeded to consider whether Dameon L. Sommerville had the status of a “child” under § 216(h)(2)(A) of the Social Security Act, 42 U.S.C. § 416(h)(2)(A), i.e., whether under Ohio law Dameon L. Sommerville could take by intestate succession the insured’s personal property as the decedent wage earner’s “child.” The Appeals Council focused on Ohio Rev.Code § 2105.18, finding that section to provide only two means “whereby a child born out of wedlock may acquire rights of inheritance with respect to his father who died intestate.” The first means, the Appeals Council found, was intermarriage between the child’s parents, a means the Appeals Council found inapplicable to this case. The second means the Appeals Council recognized was a formal acknowledgement filed by the child’s father in probate court that the child was his, which the Appeals Council found the child’s father had not done.

The Appeals Council found that the order of the Summit County Probate Court finding Dameon L. Sommerville to be the child of the plaintiff and the decedent wage earner, and therefore entitled to participate in the distribution of his estate pursuant to Ohio Rev.Code § 2105.06, was inconsistent with Ohio law. In support of that conclusion, the Appeals Council cited Gray v. Richardson, 474 F.2d 1370 (6th Cir.1973), for its ruling that “[ajlthough the Secretary is not bound by the decision of a State trial court in a proceeding to which he was not a party, ... he is not free to ignore an adjudication of a state trial court where it is fair and consistent with the law as enunciated by the highest court of the State.” Id. at 1373. The Appeals Council found that the probate court order was not a declaration of an heir by the decedent wage earner under Ohio Rev.Code § 2105.15 or an acknowledgement of paternity under Ohio Rev.Code § 2105.18. Further, the Appeals Council found that while under § 2105.14 “a posthumous child [can] inherit as if born in the lifetime of the decedent, this child, if born during the insured’s lifetime, could inherit only if one of the specific legitimating acts had been satisfied.” Consequently, the Appeals Council found that under Ohio law, Dameon L. Sommerville “would not have the status of a child capable of taking intestate personal property” of Lamont D. Merriweather.

Based on its analysis, the Appeals Council then made the following findings, which resulted in the initiation of this action.

1. The wage earner, who died on June 13, 1980 domiciled in the State of Ohio, was fully insured at the time of death.
2. The claimant filed an application for child’s insurance benefits on her son’s behalf on October 10, 1980.
3. The child, Dameon L. Sommerville, was born on August 5, 1980, and is unmarried.
4. The claimant and the deceased wage earner were never married.
5. The child is not considered the “child” of the wage earner under either section 216(h)(2)(A) or 216(h)(3)(C) of the Social Security Act.
6. The child does not meet the dependency requirements set forth in sections 202(d)(3) of the Act or 404.361 of Regulations No. 4.
7. The claimant is without fault in causing an overpayment of $3,531.10 for the months February 1981 through February 1982 and recovery is deemed to be against equity and good conscience.
8. The claimant is not without fault with respect to the overpayment of $560.60 for the months March and April 1982.

Tr. 10.

In his report and recommendation, the Magistrate opined that Dameon L. Sommerville was entitled to surviving child insurance benefits under the Uniform Parentage Act, Ohio Rev.Code Chapter 3111, where the Summit County Common Pleas Court had determined that Dameon L. Sommerville was the child of the decedent wage earner. In his report, Magistrate Laurie wrote “that it is well within a Probate Court’s discretion to make a determination whether a parent child relationship exists, and such determination is dispositive.” The Magistrate thus concluded that he had “no alternative but to give comity to [the decision of the Summit County Common Pleas Probate Court].” The Magistrate further wrote that “once the parent and child relationship is established, as here, the child is justified in receiving surviving child’s insurance benefits under section 216(h)(2)(A), supra, the same as a child born in wedlock would receive.”

DISCUSSION AND LAW

Under 42 U.S.C. § 402(d)(1), a child of an individual who is entitled to old age or disability insurance benefits, or of an individual who dies fully or currently insured, is entitled to surviving child’s insurance benefits if the child files his application for the benefits, and at the time he files the application is unmarried and under the age of 18, or a full time student under the age of 22, or a full-time elementary or secondary school student under the age of 19, or is under a disability which began before he reached the age of 22, and was dependent upon such individual at the time of his death. The term child is defined in 42 U.S.C. § 416(e), which provides that the term “child” means the child or the legally adopted child of an individual.

While the Social Security Act does not provide the procedures for determining whether an applicant is the child of a fully or currently insured individual, 42 U.S.C. § 416(h)(2)(A) provides that for the purpose of determining whether an applicant is the child of such an individual, the Secretary should apply the law that would apply in determining “the devolution of intestate personal property” in the state in which the insured individual was domiciled at the time of his death. That section further provides that any status given to an individual, for the purpose of taking intestate personal property, as a parent or child under the appropriate state law, shall likewise be the status given the individual for the purpose of determining who is a parent or child under the Social Security Act.

The Ohio law determining intestate succession is set out in Ohio Rev.Code §§ 2105.06 and 2105.11. Under Ohio Rev. Code § 2105.17, children born out of wedlock are capable of inheriting or transmitting inheritance from and to their mother as if they were born in lawful wedlock. Children who are born out of wedlock cannot inherit through their natural father unless their father, pursuant to Ohio Rev. Code § 2105.18, applies for and is granted an acknowledgement of paternity by the probate court of the county in which he resides.

However, on June 29, 1982, the Uniform Parentage Act became effective in the State of Ohio. That Act, as the Magistrate has noted in detail, provides for equality for all children regardless of the marital status of their parents. Under the Act, the “parent and child relationship” means the legal relationship between a child and the child’s natural or adoptive parents, including the mother and child relationship and the father and child relationship. See Ohio Rev.Code § 3111.01(A). That section expressly provides that “the parent and child relationship extends equally to all children and all parents, regardless of the marital status of the parents.” Id. at (B). Further, under Chapter 3111, an action may be brought in juvenile court, to which the natural mother and alleged natural father shall be made parties, by or on behalf of the child prior to his twenty third birthday, in order to permit the juvenile court to determine “the existence or nonexistence of the father and child relationship.” See Ohio Rev.Code §§ 3111.04-3111.08. The Act provides that the decision of the court “is determinative for all purposes.” Ohio Rev.Code § 3111.13. The Magistrate clearly relied on the Uniform Parentage Act in writing his report and recommendation of this case.

On May 16, 1985, defendant filed her objections to the Magistrate’s report and recommendation. In a memorandum filed in support of her objections, defendant asserts that the Magistrate erred in relying upon the Uniform Parentage Act since it did not become effective until June 29, 1982, while the decedent wage earner died on June 13, 1980, and Dameon L. Sommerville was born August 5, 1980. Defendant argues that the probate court’s decision adopting the report of the referee was filed on April 6, 1981, that the Uniform Parentage Act was not in effect during the time period in question, and that the Act is not retroactive in application.

Defendant asserts that the Secretary could not ignore the decision of the probate court had it been consistent with state law, but states that the decision was not consistent with state law, citing White v. Randolph, 59 Ohio St.2d 6, 391 N.E.2d 333 (1979), appeal dismissed sub nom Jackson v. White for want of substantial federal question, 444 U.S. 1061, 100 S.Ct. 1000, 62 L.Ed.2d 743 (1980). Defendant argues that at the time of the decedent wage earner’s death, the only means by which an illegitimate child could acquire inheritance rights in Ohio was under Ohio Rev.Code § 2105.-18, which, as discussed supra, specifies certain procedures to be followed by a natural father in order to establish the fatherhood of his child. Defendant further points to Ohio Rev.Code § 2105.15, which, as noted supra, see footn. 4, permits an individual to file a written designation of heirship with a probate judge of his county. However, defendant argues, these provisions do not permit a child to “inherit based on a posthumous determination of paternity,” again citing White v. Randolph, supra. Defendant argues that the probate court decision is inconsistent with Ohio law as articulated by the Ohio Supreme Court where Dameon L. Sommerville’s father did not take steps to “legitimatize” Dameon in accordance with Ohio Rev.Code § 2105.18. Defendant argues that the Secretary is accordingly not required to follow the decision of the probate court, citing Gray v. Richardson, supra, and Murphy v. Harris, Unempl.Insur.Rep. (C.C.H.) ¶ 17,530 (Dec. 5, 1980). The Secretary thus requests that the Court overrule the report and recommendation of the Magistrate.

Plaintiff filed her brief in response to defendant’s objections on May 28,1985. In her brief, plaintiff argues that the Ohio legislature intended the Uniform Parentage Act to be applied prospectively and retrospectively, and that Magistrate Laurie correctly relied on that Act in determining that Dameon L. Sommerville was entitled to surviving child’s insurance benefits under § 216(h)(2)(A) of the Social Security Act, 42 U.S.C. § 416(h)(2)(A). Plaintiff argues that the case of Murphy v. Harris, cited by defendant, is inapposite to the case at bar.

Plaintiff argues that the record verifies decisions made by the Social Security Administration on June 1, 1981, Tr. 68, the AU, and Magistrate Laurie in support of plaintiff’s position that Dameon L. Sommerville is entitled to receiving surviving child insurance benefits from the decedent wage earner.

Questions similar to those raised by this cases were addressed by the Hon. Ann Aldrich of this Court in Davis v. Secretary of Health and Human Services, Case no. C83-2054, 2499-298 (C.C.H.) H 15906 (Oct. 24, 1984). In that case, Judge Aldrich addressed plaintiff’s argument that her right to benefits was not dependent upon 42 U.S.C. § 416(h)(3)(C)(ii) where the plaintiff was the decedent wage earner’s child and entitled to inherit by intestate succession under state law, and therefore entitled to benefits under 42 U.S.C. § 402(d)(1). Judge Aldrich noted that plaintiff’s position was premised upon Ohio Rev.Code Chapter 3111, the Uniform Parentage Act, effective June 29, 1982, a date subsequent to the birth of the child involved and to the date of the underlying application for benefits, but prior to the dates of the rulings of the AU and the Appeals Council rejecting plaintiff’s claim. Addressing the applicability of the Act, the Court noted that the circuits were divided on the issue, and that some have held “that the law in effect at the time of the wage earner’s death controls,” while “others look ... to the law as of the date of the application, ... and still others adopt ... the law in effect as of the date of decision,” id. at 299 [citations omitted]. The Court found the last of these three positions to be the most sound. Judge Aldrich wrote, “Such approach is consistent with the general rule that, absent some indication of the legislative intent to the contrary, cases are to be decided under the law as of the date of ruling unless to do so would work a manifest injustice, and reflective of the rule that in resolving social security disability claims amendments to the Act itself are given retroactive effect.” Id. [Citations omitted.]

Having found that Ohio Rev.Code Chapter 3111 was applicable, the Court then proceeded to consider plaintiff’s theory on its merits, finding no conflict between its conclusion that under Ohio Rev.Code “Chapter 3111, and particularly section 3111.01(B), once a child born out of wedlock is judicially determined to be the natural child of the father, such child may take by intestate succession under [Ohio Rev.Code §§ 2105.06 and 2105.11],” and Ohio Rev. Code § 2105.18. The Court stated that in its view, § 2105.18 and Chapter 3111 were complementary, the former provision “providing a vehicle for the natural father to voluntarily establish paternity, and the latter providing a vehicle for the child to establish paternity with or without the natural father’s acquiescence, both culminating in the same end result—legal recognition of the child’s standing in a parent-child relationship to the natural father, possessing all the legal rights which devolve from that relationship.” Id. at 300.

Noting that the AU had determined that the child in question was the natural child of the wage earner, and that the Appeals Council had incorporated that finding of fact in its decision, the Court held that once the parent—child relationship had been accepted by the Secretary, the child was entitled to the benefit of Ohio Rev.Code § 3111.01. That section, the Court wrote, “calls for [the child] to be recognized on an equal basis with children born in wedlock and, therefore, entitled to inherit by intestate succession.” Id. Accordingly, the Court granted such recognition and held that the child was entitled to surviving child’s insurance benefits under 42 U.S.C. §§ 402(d)(1) and 416(h)(2)(A). The Court found that the Secretary’s consideration of 42 U.S.C. § 416(h)(3)(C) was unnecessary since “[the child] would then be considered either as “the child” or “deemed to be” the child of the insured individual and excluded from the class which must satisfy the requirements of § 416(h)(3)(C) to establish entitlement.” Id.

Recognizing potential arguments with its conclusion, the Court wrote that its interpretation of the Social Security Act was not inconsistent with 42 U.S.C. § 416(h)(3)(C), “which does not grant entitlement to child’s insurance benefits based only upon parentage” since, “by reason of the fact that under the basic terms of the Act itself section 416(h)(3)(C) never comes into play if the deceased’s offspring is entitled to inherit by intestate succession under state law.” Id.

The Court also addressed the foreseeable argument that in a Social Security case, a fact-finding of parentage by the AU and/or the Appeals Council is insufficient without a decree entered in an action brought under Chapter 3111 in order for a child to be found entitled to benefits thereunder. Finding such an approach “duplicative and contrary to the remedial purposes of the Social Security law,” id. at 301, the Court wrote that proceedings under both the Uniform Parentage Act and under the Social Security Act are nonadversarial and “designed to produce the same end, a reliable determination, based upon adequate evidence, as to parentage____” Id. For that reason, the Court held that it saw no basis “for denying the decision of the AU the same respect, and the same legal effect, as would be given the same ruling by a state judicial officer.” Id.

The Court has reviewed the record before it, and finds that like the Davis case, the AU in this case, as noted, determined that Lamont J. Merriweather was the natural father of Dameon L. Sommerville, a fact recognized in the Appeals Council’s Decision. Borrowing the Court’s language in Davis, this Court finds that “once that parent-child relationship was accepted by the Secretary, [Dameon L. Sommerville] was entitled to the benefits of section 3Ill.01 of the Ohio Revised Code, which calls for him to be recognized on an equal basis with children born in wedlock____” The Court further finds that notwithstanding the fact that no decree has been entered in an action under Chapter 3111 involving the parties to the case at bar, the decision of the AU that the child Dameon L. Sommerville was the son of plaintiff and the decedent wage earner, LaMont D. Merriweather, was “a reliable determination, based upon adequate evidence, as to parentage.” The record reveals, in support of the ALJ’s decision, the affidavits of the plaintiff, the wage earner's mother, the wage earner’s sister, a friend of the wage earner, the mother of the plaintiff, and a friend and neighbor of the plaintiff all support the plaintiff’s allegations. Likewise, as noted supra, the Summit County Probate Court found Lamont D. Merriweather to be the natural father of Dameon L. Sommerville, based upon Merriweather’s acknowledgement of the child to be his own, and found the child entitled to participate in the distribution of Merriweather’s estate by intestate succession under Ohio law.

Therefore, consistent with, and for the reasons stated in, the opinion of the Court in Davis v. Secretary, supra, the Court finds that the defendant’s objections are without merit, and that Dameon L. Sommerville, pursuant to the finding of the ALJ, made subsequent to the effective date of the Ohio Uniform Parentage Act, was the child of the decedent wage earner, and therefore entitled to surviving child’s insurance benefits under 42 U.S.C. §§ 402(d)(1) and 42 U.S.C. § 416(h)(2)(A). Accordingly, the report and recommendation of Magistrate Charles R. Laurie is adopted, and the claimant is awarded surviving child’s insurance benefits under the Social Security Act, as well as all past due benefits since they were wrongfully discontinued in February of 1983.

IT IS SO ORDERED.

      . The Court notes that 42 U.S.C. § 416(h)(2)(B) applies where an applicant is the child of an insured individual but is not deemed to be the child of the insured individual under subparagraph (A). As discussed infra, subparagraph (A) provides that the Secretary should look to the applicable state law regarding intestate succession in order to determine who is a parent or child under the Social Security Act. Subparagraph (B) provides that a child of the insured individual, notwithstanding the child’s failure to be deemed as such under subparagraph (A),
      shall nevertheless be deemed to be the child of such insured individual if such insured individual and the mother or father, as the case may be, of such applicant went through a marriage ceremony resulting in a purported marriage between them which, but for a legal impediment ... would have been a valid marriage.

      . Under 42 U.S.C. § 416(h)(3)(C),
      (3) An applicant who is the son or daughter of a fully or currently insured individual, but who is not (and is not deemed to be) the child of such insured individual under paragraph (2) of this subsection, shall nevertheless be deemed to be the child of such insured individual if:
      (C) in the case of a deceased individual—
      (i) such insured individual—
      (I) had acknowledged in writing that the applicant is his or her son or daughter,
      (II) had been decreed by a court to be the mother or father of the applicant, or
      (III) had been ordered by a court to contribute to the support of the applicant because the applicant was his or her son or daughter, and such acknowledgement, court decree, or court order was made before the death of such insured individual, or
      (ii) such insured individual is shown by evidence satisfactory to the Secretary to have been the mother or father of the applicant, and such insured individual was living with or contributing to the support of the applicant at the time such insured individual died.

      . The decision of the Appeals Council is dated May 1, 1984. Ohio Rev.Code § 2105.18 was revised by the legislature effective June 29, 1982, and the first means recognized by the Secretary, intermarriage between the child's parents, was omitted from the new section. The Appeals Council apparently relied on the earlier version of § 2105.15.

      . Ohio Rev.Code § 2105.15 provides, in part, that:
      A person of sound mind and memory may appear before the probate judge of his county and in the presence of such judge and two disinterested persons of such person's acquaintance, file a written declaration declaring that, as his free and voluntary act, he did designate and appoint another, stating the name and place of residence of such person specifically, to stand toward him in the relation of an heir at law in the event of his death.

      . Ohio Rev.Code § 2105.14 provides as follows: Descendants of an intestate begotten before his death, but born thereafter, in all cases will inherit as if born in the lifetime of the intestate and surviving him; but in no other case can a person inherit unless living at the time of the death of the intestate.

      . Ohio Rev.Code § 2105.06 provides for the descent and distribution of the property of a person who dies intestate. Ohio Rev.Code § 2105.-11 provides that the intestate’s estate descends equally to his children.

      . See footnote 2, supra.

      . Explaining the reason for the different “qualifying criteria," the Court wrote
      that a diminishing number of states have not yet seen fit to cease punishing children because the parents were never married, and ... some means must be provided under federal laws for allowing the child to establish the indirect right to be supported by the parent, rather than the public, which less enlightened state law might not provide. [Footnote omitted].

        Id.


source: Caselaw Access Project

author: WILLIAM T. HART, District Judge.

license: Public Domain

text:
    Audrey PRICE, et al., Plaintiffs, v. Samuel PIERCE, etc., et al., Defendants.
    No. 83 C 6291.
    United States District Court, N.D. Illinois, E.D.
    June 25, 1985.

      Kathrine Bissell, Jerry Brask, Prairie State Legal Services, Geneva, Ill., Barnard H. Shapiro, Prairie State Legal Services, Rockford, Ill., Kevin Kane, Prairie State Legal Services, Waukegan, Ill., Karen Engelhard! Alf Sanford, Cook County Legal Assistance, River Forest, Ill., for plaintiffs.
    Dan K. Webb, U.S. Atty., William T. Clabault, Asst. U.S. Atty., Chicago, Ill., Shalom Brilliant, Civ. Div., Washington, D.C., Anthony J. Ciccone, Jr., U.S. Dept. of Housing and Urban Development, Washington, D.C., for Samuel Pierce.
    Richard T. Franch, Anton R. Valukas and Darryl M. Bradford, Jenner & Block, Chicago, Ill., for Illinois Housing Development Authority.
    Lawrence C. Rubin, Andrew B. David, Arvey, Hodes, Costello & Burman, Chicago, Ill., for Grandwood Gardens Associates.
    Jack B. Schmetterer, Elaine S. Fox, Loren J. Mallon, Gottlieb & Schwartz, Chicago, Ill., for Hawthorn Ridge Associates.
    Sanford Kahn, Richard Christoff, Sanford Kahn, Ltd., Chicago, Ill., for Vernon Hills Associates II, Trails Venture and Groves of Hidden Creek.
    John Powers Crowley, Robert M. Stephenson, Cotsirilos & Crowley, Ltd., Chicago, Ill., for Prairiebrook Venture.
   MEMORANDUM OPINION AND ORDER

WILLIAM T. HART, District Judge.

The Hope Fair Housing Center (“Hope”) and the six individually named plaintiffs brought this action against Secretary of Housing and Urban Development Samuel Pierce (the “Secretary”), the Illinois Housing Development Authority (“IHDA”), and the owners of six “Section 8” housing complexes located in this District (the “Developers”). Their complaint seeks “full utilization” of housing subsidies contractually allocated for use by low and moderate income families at the apartment complexes owned by the defendant Developers. Initially, the plaintiffs sought to enforce a policy of full utilization by invoking: (i) their Fifth and Fourteenth Amendment due process rights; (ii) an implied private right of action under the Housing Act of 1937, as amended (referred to as “Section 8”), 42 U.S.C. §§ 1437f et seq.; (iii) section 1983 as a remedy for violations of their rights under (i) and (ii); (iv) judicial review of the Secretary’s actions pursuant to the Administrative Procedure Act (“APA”), 5 U.S.C. § 706; (v) their rights as third party beneficiaries under contracts between the Secretary, IHDA and the Developers; and (vi) an implied right of action under the Illinois housing laws.

By order entered November 28, 1983, the Court dismissed the plaintiffs’ third party beneficiary claim and refused to recognize an implied private right of action under the Housing Act, but rejected the defendants’ assertion that the plaintiffs had no property right in Section 8 benefits sufficient to sustain their due process and § 1983 claims. Also in the November 23rd order, the Court reserved ruling on the defendants’ challenge to Hope’s standing as a plaintiff, pending the Seventh Circuit’s decision in a similar ease.

On April 4, 1984, this Court certified a class of plaintiffs who were financially eligible for Section 8 assistance and otherwise acceptable for tenancy at the defendant Developers’ apartment complexes but had been adversely affected by the alleged policy of underutilization. In addition, the Court, acting sua sponte, dismissed IHDA as a party defendant to the plaintiffs’ § 1983 and state law claims, based on the Supreme Court’s decision in Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). As a result of a series of motions to reconsider, clarify and join additional parties, on November 13, 1984 the plaintiffs filed a fourth amended complaint, which dismissed IHDA as a party defendant and joined IHDA officials A.D. Van Meter and James Kiley (together the “State defendants”) as defendants to their due process and § 1983/federal housing act claims.

Currently before the Court are the parties’ cross-motions for summary judgment on the claims advanced in the plaintiff’s four-count fourth amended complaint (denial of property without due process, violation of rights under the federal housing laws, judicial review of the Secretary’s actions, and violation of state housing laws).

STANDING

Initially, the State defendants’ challenge to the plaintiffs’ standing to maintain this action must be resolved. The State defendants maintain that the Seventh Circuit’s decision in Hope, Inc. v. County of DuPage, 738 F.2d 797 (7th Cir.1984), mandates a finding that neither Hope nor the individual plaintiffs have standing to maintain this action. In County of DuPage, the Seventh Circuit found that the plaintiffs lacked standing to challenge alleged County Board practices where they had failed to identify specific housing projects affected by the challenged practices, as required by Warth v. Seldin, 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). County of DuPage is no bar to the standing of the individual plaintiffs here, as they have alleged (and shown) that the challenged practice of “underutilization” affected the availability of housing at six specific apartment complexes where they are applicants for housing.

This Court reserved ruling on Hope’s asserted standing as a representative of its members and in its own right while the County of DuPage was being argued. The Seventh Circuit did not base its ruling on grounds which would differentiate Hope from the individual plaintiffs. Rather, the Seventh Circuit found that since Hope’s standing was no better than that of the individual plaintiffs, it too lacked standing. County of DuPage also refused to expand Hope’s representational standing beyond its members to include all those for whom Hope seeks housing. Here, Hope has presented the claim of particularized injury that was lacking in County of DuPage. Hence, Hope has standing both as a representative of its members (who are otherwise within the class as certified) and in its own right to maintain this action. See Havens Realty Co. v. Coleman, 455 U.S. 363, 378-79, 102 S.Ct. 1114, 1124, 71 L.Ed.2d 214 (1982).

DUE PROCESS CLAIMS

All defendants assert that in light of the Seventh Circuit’s recent decision in Eidson v. Pierce, 745 F.2d 453 (7th Cir.1984), the plaintiffs’ due process claims fail for want of a property right requiring due process protection. The State defendants go on to assert that Eidson also precludes the plaintiffs’ § 1983 claim, which is based upon a violation of purported rights established by the federal housing laws.

Eidson involved an effort by applicants for Section 8 housing at apartment complexes in Indiana and Wisconsin to secure hearings and a written explanation of the reasons for their rejection by project owners. As do the plaintiffs in this action, the Eidson plaintiffs argued that financially eligible applicants enjoy a property right to Section 8 benefits deserving due process protection. The Seventh Circuit flatly rejected their asserted property right.

The plaintiffs contend that this case is distinguishable from Eidson as it involves a challenge to the total amount of Section 8 housing available to all applicants rather than “the process used to allocate these limited and valuable benefits among a large number of eligible applicants” examined in Eidson. 745 F.2d at 457. However, a fair reading of Eidson does not support this distinction. This Court’s November 23rd order, which denied the defendants’ motion to dismiss the due process claim, recognized but rejected the tenant/applicant distinction adopted by the district courts in Eidson and Germain v. Recht-Goldin-Seigel Properties (consolidated on appeal with Eidson). In rejecting the tenant/applicant distinction, this Court relied upon Ressler v. Pierce, 692 F.2d 1212 (9th Cir.1982) and Davis v. Ball Memorial Hospital Ass’n, 640 F.2d 30 (7th Cir.1980). However, in Eidson the Seventh Circuit adopted the tenant/applicant distinction, rejected the rationale of Ressler and limited the reach of Davis. The relevant distinction mandated by Eidson is between tenant and applicant rather than the distinction suggested by the plaintiffs between procedural rights to preserve the existing amount of available housing for all applicants and procedures to allocate housing among applicants. Since the plaintiffs here are all applicants, their due process claims are foreclosed by Eidson.

SECTION 1983 CLAIM

Moreover, Eidson also defeats plaintiffs’ § 1983 claims based on the federal housing statute. The plaintiffs rely upon Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65 L.Ed.2d 555 (1980), for the proposition that “a federal statute creating enforceable rights may be enforced in a Section 1983 action,” despite the absence of any implied private right of action under the statute itself. However, the plaintiffs’ argument assumes its conclusion. The Seventh Circuit in Eidson found that “there is nothing to suggest that Congress intended potential tenants of Section 8 projects to have enforceable rights to Section 8 housing in particular projects.” 745 F.2d at 462.

The Supreme Court has recognized two exceptions to the application of § 1983 to federal statutes, one of which precludes plaintiffs’ § 1983 claim. No § 1983 claim may be based on a federal statute which fails to create “enforceable rights.” See Middlesex City Sewerage Authority v. Sea Clammers, 453 U.S. 1, 9, 101 S.Ct. 2615, 2620, 69 L.Ed.2d 435 (1981) (explaining Pennhurst State School & Hospital v. Halderman, 451 U.S. 1, 18, 101 S.Ct. 1531, 1540, 67 L.Ed.2d 694 (1981)). See also Gould, Inc. v. Wisconsin Dept. of Industry, Labor & Human Relations, 750 F.2d 608, 615-16 (7th Cir.1984); Polchowski v. Gorris, 714 F.2d 749, 750-51 (7th Cir.1983). Thus, the plaintiffs’ § 1983 claim rises or falls with its due process claim, as both assert 42 U.S.C. § 1437f to be the source of enforceable rights. Since Eidson has established that applicants (as opposed to tenants) for Section 8 housing have no “enforceable right” to benefits, see 745 F.2d 461 n. 6, that portion of the federal housing law provides no basis for a § 1983 claim. Accord Phelps v. Housing Authority of Woodruff, 742 F.2d 816, 820-22 (4th Cir.1984). But see Tedder v. Housing Authority of Paducah, 574 F.Supp. 240, 246-48 (W.D.Ky.1983).

STATE LAW CLAIMS

Due to the disposition of the plaintiffs’ due process and § 1983 claims, their pendent claims based on state housing statutes, must be dismissed. After the entry of summary judgment on Counts I and II, the only claim remaining against the defendant Developers is the plaintiffs’ claim under the state housing laws (Count IV). In the absence of benefits in the form of judicial economy, convenience or fairness to litigants, “federal courts should be reluctant” to adjudicate state law claims. Buethe v. Britt Airlines, Inc., 749 F.2d 1235, 1240 (7th Cir.1984) (quoting Smith v. No. 2 Galesburg Crown Finance Corp., 615 F.2d 407 (7th Cir.1980). Such a reluctance should be particularly pronounced where the state law claim involves an issue of first impression or an unsettled area of state law as is presented here. Buethe, 749 F.2d at 1240-41. In addition, the plaintiffs’ state law claim against the Developers is a pendent party claim not closely related to the remaining federal law claim against the Secretary. Compare Berstein v. Lind-Waldock & Co., 738 F.2d 179, 187-88 (7th Cir.1984) with Moore v. Marketplace Restaurant, Inc., 754 F.2d 1336, 1359-63 (7th Cir.1985). For these reasons, the plaintiffs’ state law claim is dismissed without prejudice.

ADMINISTRATIVE REVIEW CLAIMS

The plaintiffs’ remaining claims are that the Secretary has: (i) unlawfully withheld action which would compel the Developers and IHDA to fully utilize authorized Section 8 subsidies; and (ii) abused his discretion by approving proposed contact modifications which would reduce the number of authorized Section 8 units at five of the six apartment complexes involved in this action.

Section 706(1) of the APA, 5 U.S.C. § 706(1) empowers federal courts to “compel agency action unlawfully withheld” (emphasis added). Judicial review of claims of agency inaction is extremely limited. Illinois Bell Telephone Co. v. F.C.C., 740 F.2d 465, 475-76 (7th Cir.1984). Further, the Secretary enjoys considerable discretion in making enforcement decisions. See United States v. OCCI Co., 758 F.2d 1160, 1164-65 (7th Cir.1985) (foreclosure on federally insured mortgage for low and moderate income housing project). The Secretary argues that his failure to take action to remedy the underutilization at the five apartment complexes owned by the defendant Developers was not unlawful, as no applicable statute required full utilization.

The plaintiffs concede that the 1981 amendments to Section 8 do not apply to the apartment complexes here at issue. Although Congress mandated full utilization as part of the 1981 amendments, it provided that the full utilization requirement would apply only to contracts entered into on or after October 1, 1981. PL 97-35 §§ 325(1) and 371(b), 95 Stat. 406, 431 (Aug. 13, 1981). Plaintiffs’ attempt to construct a statutory requirement of full utilization from various other portions of Section 8 is unpersuasive. Thus, the Secretary’s failure to act was not unlawful and enforcement action cannot be compelled under 5 U.S.C § 706(1).

The Secretary’s approval of a reduction in the number of Section 8 assisted units at five of the six apartment complexes, however, stands on a different footing. Pursuant to 5 U.S.C. § 706(2)(A), this Court must review the Secretary’s decision to determine “whether the decision was based on a consideration of the relevant facts and whether there has been a clear error of judgment.” Citizens To Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 824, 28 L.Ed.2d 136 (1971). Nonetheless, this standard of review is also narrow and this Court may not “substitute its judgment for that of the agency.” Id. Even where an abuse of discretion is shown, the proper remedy is a remand to the Secretary rather than the substitution of this Court’s judgment for that of the Secretary. Flynn v. Schultz, 748 F.2d 1186, 1194 (7th Cir.1984). With this deferential standard in mind, the Court examines the record supporting the Secretary’s decision.

Under the Section 8 program, the Secretary is authorized to implement the program by entering into annual contributions contracts (“ACC”) with a “public housing agency,” pursuant to which such agency may enter into housing assistance payments (“HAP”) contracts with owners of dwelling units to assist eligible persons. IHDA is a public housing agency within the meaning of federal statute and is governed by federal regulations at 24 C.F.R. § 883.101, et seq. IHDA was established pursuant to Illinois state law. Ill.Rev.Stat. ch. 67½, ¶ 301 et seq. IHDA has provided “assisted mortgage financing” for each of the six developments in this action, pursuant to state statute. Ill.Rev.Stat. ch. 67½,, ¶ 307.2.

(1) Trails Venture

The Moorings, located in DuPage County, is owned by defendant Trails Venture, an Illinois limited partnership. In 1976, IHDA requested that the Department of Housing and Urban Development (“HUD”) increase the Section 8 subsidy allocation at the Moorings to 40% (86 units) of the dwelling units of that development. IHDA stated in part:

As always the Authority evaluates the economic housing needs of each community where a project is proposed and correspondingly requests the appropriate amount of housing subsidies required for the community to be served as determined by our housing need study ... It is our conclusion, after analyzing present housing cost and family income patterns, that 40% of the dwelling units should be assisted with Section 8 housing assistance payments in conformance with our housing needs study ... In view of the foregoing, it is imperative that the subsidy be available to allow us to assist very low, low and moderate income families in the spirit and intent of the congressional mandate enumerated through the Housing and Community Development Act of 1974.

On April 7, 1976, HUD approved the IHDA proposal for the Moorings. On May 4,1976, HUD and IHDA signed an ACC for the purpose of making Section 8 subsidies available for 86 units at the Moorings through execution of a HAP contract with the owner. On May 4, 1976, IHDA and defendant Trails Venture signed, and HUD subsequently approved, an Agreement to Enter Into HAP Contract, “for the purpose of making housing payments to enable eligible Lower-Income Families to occupy units in said project.”

In March, 1977, IHDA and Trails Venture signed a HAP contract, approved by HUD in May, 1977, providing in part that:

The Contract Units [§ 8 units] are to be leased by the owner to eligible lower-income families (“Families”) for use and occupancy by such families solely as private dwellings ... The HFA [IHDA] hereby agrees to make housing assistance payments on behalf of families for the contract units to enable such families to Decent, Safe and Sanitary Housing pursuant to Section 8 of the Act.

From the time of initial occupancy until September 1983, the Moorings rented no more than 43 apartments to eligible low income tenants. On August 26, 1983, IHDA and Trails Venture amended the contracts, reducing the available Section 8 allocation from 86 to 68 Section 8 units. HUD approved this change.

(2) Arrowhead Apartment Associates

Arrowhead Village, located in Cook County, is owned by defendant Arrowhead Apartment Associates, an Illinois limited partnership. Arrowhead Village was previously owned by defendant Groves of Hidden Creek, an Illinois limited partnership.

In 1976, IHDA by and through its Director, requested from HUD an increase in the Section 8 subsidy allocation at Arrowhead Village to 40% of the dwelling units at that development (80 units). IHDA made the identical representation quoted at page 11 of this opinion.

On February 12, 1976, HUD approved the IHDA proposal for Arrowhead. On June 30, 1976, HUD and IHDA signed an ACC for the purpose of making Section 8 subsidies available (80 units) at the Groves of Hidden Creek through execution of a HAP contract with the owner and HUD subsequently approved the agreement. On March 24, 1976, IHDA and Groves of Hidden Creek signed a HAP contract, approved by HUD in May, 1977, containing the identical provision quoted at page 179 of this opinion.

On April 19, 1982 in a letter to Arrowhead Village, HUD Area Manager Elmer Binford stated:

We are deeply concerned since our records indicate that of the 80 units under your Section 8 Contract, less than 50% (39 units) are currently under lease to eligible Section 8 tenants. Current regulations found in 24 CFR Part 883.-605(a) require that no more than 10% of assisted units be leased to ineligible tenants without prior HUD and State Agency (IHDA) approval. Failure to lease to eligible tenants is a violation of your Contract .and constitutes grounds for all available legal remedies, including specific performance of the Contract suspension or debarrent [sic] from HUD programs and reduction of the number of units under the Contract.
Within 10 days following your receipt of this letter, we request your written response to the charge made by Mr. Barnett and a justification of your failure to lease Section 8 units to eligible tenants. A copy of this letter is being forwarded to the Illinois Housing Development Authority.

On June 9, 1982, in a letter to Arrowhead Apartments, HUD area manager Elmer Binford stated:

Regarding the matter of your agency’s failure to lease Section 8 units to eligible tenants, your response completely ignores this issue. In addition, you have provided us a copy of a response to the Barnetts from Donnell D. Jenkins, Amdur Associates, Inc., Property Manager, that contains statements that contradict information contained on official HUD reports. Specifically, HUD Form 52684, Report on Program Utilization, which was filed on behalf of Arrowhead Apartments, by the Illinois Housing Development Authority indicates that as of January 13, 1981 only 39 of 80 units (50%) were leased to eligible tenants. Further information received by this office indicates that as of May, 1982, this situation has not improved. Any unauthorized policy of leasing to ineligible tenants above the allowable program limit results in the unlawful deprivation of Federally-funded rental assistance to eligible Section 8 applicants. This policy is especially disturbing since your agency acknowledges a very lengthy waiting list for Section 8 at Arrowhead.
As was indicated in our letter of April 19, 1982, failure to lease to eligible tenants is a violation of your Housing Assistance Payments contract and grounds for all available legal remedies. In addition, your unauthorized policy has the effect of depriving those eligible families of their constitutional right to participate in this Federally-funded program.

On June 15, 1982, in a letter to IHDA deputy Director, Peter Dwars, HUD Area Manager Elmer Binford stated:

Recently, it has come to our attention that IL06-H121-007, Arrowhead Village, has consistently violated Federal regulations by leasing Section 8 units to ineligible tenants in a percentage that exceeds statutory limits. We had requested that the owner of this project provide this office with some clarification of this unauthorized procedure. As the result of our request, we were informed by an IHDA employee that your agency would provide an adequate response.
In a June 15, 1981, letter from Mr. Delong, we were provided with a response that we feel is less than adequate. We concur in Mr. Delong’s analysis that this project is governed by regulations that were in effect prior to February 29,1980, however, we are not aware of any Federal regulations that allow a project owner to lease more than 20% of its Section 8 units to ineligible tenants. IL06-H121007 has consistently leased more than 50% of its Section 8 units to ineligible families.
We would appreciate your response to this matter inasmuch as our records show that this project is being managed in violation of Federal regulations.

From the time of initial occupancy until September, 1983, Arrowhead rented no more than 40 apartments to eligible low income tenants.

On August 26, 1983, IHDA and Arrowhead changed the contracts, reducing the available Section 8 allocation from 128 to 110 units. HUD approved the change.

(3) Hawthorn Ridge Associates

Hawthorn Ridge Apartments (“Hawthorn”), located in DuPage County, Illinois, is owned by defendant Hawthorn Ridge Associates, an Illinois limited partnership.

On December 11, 1975, and in January, 1976, IHDA requested from HUD an increase in the Section 8 subsidy allocation of Hawthorn to 40% of the dwelling units at that development (70 units). IHDA stated in part on January 7th:

This change is requested as a result of our recent analysis of the economic impact of market rate rents for new construction in light of present and projected recession and inflation trends. In our opinion, only a small minority of the families in the Village of Woodridge are able to afford dwelling units which are not 100% subsidized.

On December 23, 1975, HUD approved the IHDA proposal for Hawthorn. In December, 1975, HUD and IHDA signed an ACC for the purpose of making Section 8 subsidies available for 76 units at Hawthorn through execution of a HAP contract with the owner. In December, 1975, IHDA and Hawthorn Ridge Associates signed, and HUD subsequently approved, an agreement. On April 25, 1977, IHDA and Hawthorn Ridge Associates signed a HAP contract, approved by HUD in May 1977, providing in part that:

The Contract units [§ 8 units] are to be leased by the owner to eligible lower-income families (“Families”) for use and occupancy by such families solely as private dwellings” ... The HFA (IHDA] hereby agrees to make housing assistance payments on behalf of families for the contract units to enable such families to lease Decent, Safe and Sanitary Housing pursuant to Section 8 of the act.

From the time of initial occupancy to September, 1983, Hawthorn rented no more than approximately 35 apartments to eligible low income tenants. On August 26, 1983, with HUD approval, IHDA and Hawthorn Ridge Associates changed the contracts, reducing the available Section 8 allocation from 70 to 52 Section 8 units.

(4) Vernon Hills Associates II

Pebbleshire II, located in Cook County, is owned by defendant Vernon Hills Associates II, an Illinois limited partnership. On January 7, 1976, IHDA requested from HUD an increase in the Section 8 subsidy allocation at Pebbleshire II to 40% of the dwelling units at that development (58 units). IHDA supported its request with the statement quoted at page 179 of this opinion.

On September 20, 1976, HUD approved the IHDA proposal for Pebbleshire II. In July and September, 1976, HUD and IHDA signed an ACC for the purpose of making Section 8 subsidies available at Pebbleshire II through execution of a HAP contract with the owner. On September 22, 1976, IHDA and Vernon Hills Associates II signed, and HUD subsequently approved an agreement. On December 30, 1977, IHDA and Vernon Hills Associates II signed a HAP contract, approved by HUD on March 10, 1978 providing in part that:

The Contract Units [58 Units] are to be leased by the owner to eligible low-income families for use and occupancy by such families as private dwellings ... The HFA [IHDA] hereby agrees to make housing assistance payments on behalf of families for the contract units to enable such families to lease Decent, Safe and Sanitary Housing pursuant to Section 8 of the Act.

From the time of initial occupancy until September, 1983, Pebbleshire II rented no more than 29 apartments to eligible low income tenants. On August 26, 1983, IHDA and Vernon Hills Associates II changed the contracts, with HUD approval, reducing the available Section 8 allocation from 58 to 40 Section 8 units.

(5) PRAIRIEBROOK VENTURE

Prairiebrook, located in Lake County, is owned by defendant Prairiebrook Venture, an Illinois limited partnership. On October 30, 1975, HUD approved the Prairiebrook proposal to provide 320 units of housing, of which 128 units were to be subject to contract for Section 8 subsidies on behalf of lower income families. IHDA certified, according to federal regulations, that the authority had found a need for housing assistance for the number and size of the units applied in the subject development based upon its approved housing needs study.

On October 31, 1975, HUD and IHDA signed an ACC for the purpose of making Section 8 subsidies available at Prairie-brook through execution of a HAP contract with the owner. In September and October, 1975, IHDA and Prairiebrook Venture signed, and HUD subsequently approved an agreement. In 1977, IHDA and Prairie-brook Venture signed a HAP contract approved by HUD in May, 1977, providing in part that:

The Contract Units [§ 8 Units] are to be leased by the owner to eligible low-income families for use and occupancy by such families as private dwellings ... The HFA [IHDA] hereby agrees to make housing assistance payments on behalf of families for the contract units to enable such families to lease Decent, Safe and Sanitary Housing pursuant to Section 8 of the Act.

From the time of initial occupancy until September, 1983, Prairiebrook rented no more than 64 units to eligible low income tenants. On August 26, 1983, IHDA and Prairiebrook Venture changed the contracts, reducing the available Section 8 allocation from 128 to 110 units. HUD approved this change.

(6) Grandwood Gardens Associates

Grand Oaks, located in Lake County, is owned by defendant Grandwood Gardens Associates, an Illinois limited partnership. In 1976, IHDA requested from HUD an increase in the Section 8 subsidy allocation at Grand Oaks to 40% of the dwelling units at that development (60 units). IHDA supported its request by the identical representation quoted at page 179 of this opinion. On March 5, 1976, HUD approved the IHDA proposal for Grand Oaks “to provide 150 units of housing of which 60 units are to be the subject of a contract for the making of housing assistance payments on behalf of eligible lower-income families leasing such units.”

In May and July 1976, HUD and IHDA signed an ACC for the purpose of making Section 8 subsidies available at Grand Oaks through execution of a HAP contract with the owner. On March 17, 1976, IHDA and Grandwood Gardens signed, and HUD subsequently approved an agreement. In March and May, 1976, IHDA and Grand-wood Gardens Associates signed a HAP contract, approved by HUD in May, 1977, providing in part that:

The Contract Units [§ 8 Units] are to be leased by the owner to eligible low-income families for use and occupancy by such families as private dwellings ... The HFA [IHDA] hereby agrees to make housing assistance payments on behalf of families for the contract units to enable such families to lease Decent, Safe and Sanitary Housing pursuant to Section 8 of the Act.

From the time of initial occupancy until November 1, 1984, Grand Oaks rented no more than 30 units to eligible low income tenants, except for a period in which it received permission from IHDA to rent up to 36 units to Section 8 families.

On October 9, 1980, in a letter to IHDA, Amder Associates stated regarding Grand Oaks:

“Thank you for recognizing the occupancy problem existing at Grand Oaks, and for permitting us to increase our subsidized occupancy by six apartment units. We understand that this increase is to be a temporary measure. It is our intention to bring the subsidized occupancy back to the 20% design allocation as conditions permit.”

By letters dated July 27, 1983 and July 28,1983, IHDA, without any detailed statement of its reasons, requested that the Secretary transfer Section 8 authorizations for a total of ninety units from five of the involved apartment complexes (18 from each complex) in DuPage, Cook and Lake Counties to Grand Oaks in Lake County. The effect of the proposal would have been to make Grand Oak’s a 100% subsidized project and also to remove units from Du-Page and Cook Counties. The June 27th IHDA letter states that the reductions are proposed “to provide for the needed increase [at Grand Oaks].” The July 28th IHDA letter states that the reductions in assisted units at the five complexes are “contemplated if and only if the recaptured funding is assigned” to Grand Oaks.

Without any discussion, by letter dated August 31, 1983, the Secretary approved reductions of 18 units each in the Section 8 authorizations of the five apartment complexes, as requested by IHDA. Also on August 31, 1983, Chicago Area Manager Everett H. Rothschild wrote to IHDA approving the increase in Section 8 units at Grand Oaks and explaining that the increase was to be funded by the decreases at the other complexes (this approval was apparently not the final word). By letters dated September 30, 1983, IHDA notified each of the Developers except Grandwood Garden Associates of the Secretary’s approval, enclosing the approved contract amendments.

On September 15, 1983, the Lake County Department of Planning, Zoning and Environmental Quality advised HUD that the proposal to convert Grand Oaks to 100% Section 8 occupancy was “unacceptable” and “inconsistent with Lake County’s Housing Assistance Plan.” The County also complained that the project would become identified as a low income dwelling which would be inconsistent with the Section 8 program. On December 29, 1983, IHDA wrote the Secretary, urging approval of the Grand Oaks proposal and stating “the re-allocation strategy contemplated is attractive to us for the reason that it preserves the total number of subsidized units.” Although the record fails to disclose any direct communication between the Developers and the Secretary regarding IHDA’s proposal, IHDA’s letter of December 29th indicates that its proposal is “an acceptable allocation insofar as the owners are concerned.”

On March 19, 1984, the Secretary rejected the increase in the Section 8 authorization for Grand Oaks originating from the reductions approved on August 31, 1983. The Secretary stated that Grand Oaks was no longer eligible for “new construction” funds, such as those recaptured on August 31, 1983 and that recaptured Section 8 funds were required to be applied to elderly or handicapped housing projects under certain 1983 amendments to the federal housing laws. The Secretary also indicated that the August 31, 1983 reductions could be rescinded if certain conditions at the five complexes (including full utilization of the reduced level of assisted units and a promise that the “additional” units would be fully utilized) were satisfied.

In support of his actions, the Secretary presents generalized arguments as to the validity of regulations delegating authority to seek reductions in Section 8 units to state housing agencies. 24 C.F.R. § 883.-327. The Secretary points out that under these regulations state housing agencies have discretion to seek such reductions, subject to HUD approval. The Secretary notes that state housing agencies develop and finance “new construction” Section 8 projects. Consequently, they possess the expertise to properly allocate assisted units and the incentive to see that state funds expended to build these projects are well spent (through maximum utilization of federal Section 8 funds). Although the Secretary attempts to portray IHDA as the repository of discretion in these matters, HUD does not (and could not) simply “rubber stamp” all IHDA proposals.

This Court need not decide whether these generalized justifications for the Secretary’s reliance (at least in the first instance) upon recommendations by state housing agencies are or are not reasonable, for in this specific agency action they lend no support to the Secretary’s decision on this administrative record. The Secretary cannot profess his reliance upon IHDA’s expertise yet ignore the central purpose of IHDA’s proposal. In its letter of December 29, 1983, IHDA labelled the result of the Secretary’s decision to be “perverse” and “unacceptable to the Authority.” This is not to say that the Secretary must accept or reject IHDA proposals en toto. But here the Secretary eliminated ninety Section 8 assisted units from the DuPage, Cook and Lake Counties without any con-, sideration of the effect of such an action, including the availability of low income housing in those areas.

IHDA’s evaluation, upon which the Secretary assertedly relied, considered at most the effect of a transfer of these units from five complexes with a subsidized/market rate unit mix of roughly 40%/60% to a complex that would become a 100% subsidized housing project. IHDA contemplated transfer rather than a reduction. Hence IHDA’s effort, (none of which have been made a part of the record), along with any evaluation performed by HUD’s Chicago office during the month in which the reductions were pending prior to approval, assuming any were made (no such evaluations have been made a part of the record in this action), did not address the elimination of ninety assisted units from the market, which is the effect of the Secretary’s action.

The Secretary’s failure to consider this “relevant fact” alone requires that his action be vacated and remanded.

In a report by the Comptroller General of the United States to Congress dated April 27, 1981 entitled “Lenient Rules Abet The Occupancy Of Low Income Housing By Ineligible Tenants,” cites Chicago as an area with chronic problems of underutilization at “partially assisted” projects, such as those involved here. In his report, the Comptroller stated:

The occupancy of section 8 housing by ineligible households is a significant and costly problem. Although program rules allow some leeway for owners to rent units under section 8 assistance contracts to households ineligible to receive assistance, the rules are too lenient and some owners ignore them. Although ineligible tenants receive no direct subsidies, they do benefit from large, indirect financing subsidies and displace needy households.

In response to the investigation conducted by the Comptroller, the Secretary described the options available to him when owners fail to rent to eligible low-income tenants and underutilize the set aside units. In a letter to the General Accounting Office (“GAO”), dated October 22, 1980 (Appendix VII, to the April 27, 1981 Report) the Secretary stated as follows:

The new Section 8 Housing Assistance Payments (HAP) Contract has expanded the tools HUD may use to enforce owner compliance with the limitation on admission of market rate tenants. The owner’s failure to comply with this limitation is considered a default under the Contract. The options available to HUD (and the contract administrator) upon owner default include:
—reduction or suspension of housing assistance payments to the owner;
—denial of owner/agent participation in HUD programs until compliance is achieved, pursuant to the 2530 clearance process or temporary denial;
—reduction of the number of units under the Contract; and
—HUD assumption of control of project operations, including rent collection and payment of necessary expenses, through appointment of a receiver or obtainment of mortgagee-in-possession status.
While all these remedies are available, the most effective seems to be the reduction or suspension of assistance payments until the owner complies with the terms of the Contract. HUD assumption of control would be used only in the most extreme cases, where an owner has consistently and deliberately violated the terms of the Contract. The least attractive remedy is reduction of the number of units under the Contract since this may be what an owner is trying to achieve. However, this may be a remedy of last resort, (emphasis added).

The problem of how to provide and allocate scarce low-cost housing to low-income persons is one that challenges legislatures, governmental agencies, urban planners and developers. It is essential that decisions in this area by government officials be clear and consistent with announced policy. This is especially important with respect to housing decisions because of the limited scope of judicial review and relief available to persons aggrieved, such as the plaintiffs in this action. Without explanation, or other attempts to secure the Developers’ compliance, the Secretary implemented the “least attractive” “remedy of last resort” which he realized would operate to reward project owners for their past efforts to evade the obligations under the HAP contracts. Further, although Congress had chosen not to apply the 1981 full utilization policy retroactively, it had clearly demonstrated its preference for such a policy. In light of the admonitions of the GAO, the Secretary’s own response and the spirit of the 1981 amendments to Section 8, it was incumbent on the Secretary to consider carefully action which rewarded past underutilization and explain fully his reasons for approving the reductions.

Since the Secretary’s decision was clearly not based on considerations of all relevant factors, including the Secretary’s own policy and regulations and the prior administrative record which set forth the history of increased allocations and underutilization at each complex, the decisions to reduce subsidized units and to eliminate eligible units must be vacated, set aside and remanded for reconsideration.

IT IS THEREFORE ORDERED that:

(1) The non-federal defendants’ motion for summary judgment is granted. Judgment will enter on Counts I and II against the plaintiffs and in favor of James Kiley, A.D. Van Meter and the defendant Developers.

(2) Count IV of the fourth amended complaint is dismissed without prejudice.

(3) The Secretary’s motion for summary judgment is granted in part and denied in part. Judgment will enter in favor of the Secretary and against the plaintiffs on Count I of the fourth amended complaint and that portion of Count III directed to the Secretary’s enforcement policies.

(4) The plaintiffs’ motion for summary judgment is granted in part and denied in part. The Secretary’s decision as expressed in letters of August 31, 1983 and March 19, 1984 is vacated and remanded to the Secretary for further consideration.

      . The precise definition of the class is set forth at p. 11 of the April 4th order.

      . Under Illinois law “assisted mortgage financing” means a below market rate mortgage, insured or purchased, in combination with a program of rent supplements and other grants.

      . Although the Secretary did indicate that the units eliminated could be restored, the showing of full utilization and additional demand required for restoration decidedly alters to status quo ante. Prior to the reductions, no such showing was required to maintain existing authorization levels and the complexes had not fully utilized all authorized Section 8 subsidized units. Further, IHDA chose to transfer the unutilized units rather than push for an increase in utilization at the five apartment complexes. The Secretary's decision has deprived IHDA of its alternative option of vigorous contract enforcement, and indeed, of any choice in the matter.

      . On June 14, 1985, the plaintiffs requested (and were subsequently given) leave to file as an additional exhibit HUD Transmittal No. 4350.3 Chg-1, issued 3/7/85 (the "Handbook”) as an interpretation by the Secretary of the governing statutes and regulations. See Burroughs v. Hills, 741 F.2d 1525, 1529 (7th Cir.1984) (HUD Handbook is without binding force on court but is entitled to notice as an official interpretation of statutes or regulations with which it is not in conflict). A portion of this Handbook addresses the conditions upon which an apartment complex owner may lease apartments allocated under ACC and HAP contracts for Section 8 recipients to persons ineligible for Section 8 assistance (i.e., the extent of permissible underutilization). The Court does not rely upon this document for its holding, although it arguably provides yet another articulation of agency enforcement policy which is inconsistent with the Secretary's challenged actions. However, the Court notes that the Secretary’s attempts to explain away the Handbook provisions are notably unpersuasive (e.g., “provision stating that owners may rent ‘up to’ 20% of their contract units to ineligibles does not mean that these owners cannot rent more than 20% to ineligibles [as that is merely the point at which the state housing agency may initiate sanctions];” "the Handbook was never meant to suggest such a reading ... [and] the Handbook will be revised to clarify this matter.” Although Section 8 was a fledgling program with an uncertain future when the Developers signed the contracts at issue here, by the time the Secretary made the challenged reductions, Section 8 had become a successful and established program. Accordingly, the logic of the Secretary’s argument that he is bound to exercise his discretion as to contracts signed in the mid-1970’s differently than those signed after 1981 is not self-evident.