PHA Didn't Properly Consult Site During Management Selection Process

Facts: In February 2009, the Chicago Housing Authority (CHA) initiated a nationwide request-for-proposal (RFP) to reduce the cost of management at Horner Housing Development by reducing the number of property management firms involved in the management of the complex.

Before issuing the RFP, CHA announced to the Central Advisory Council (CAC), which included Horner Housing Development's Local Advisory Council (LAC) president, its desire to reduce the number of management firms and to “bid out all management work.” Each month, CHA staff briefed CAC on the progress of the management search.

In February and March 2009, CHA conducted pre-proposal conferences with prospective bidders, but did not include the Horner Residents Council (HRC) in these conferences. Additionally, the HRC claims that during this time CHA conducted a bus tour of the properties, but did not notify it about the tours.

In April 2009, CHA received 14 bids for its traditional family units, and the bids were reviewed by an evaluation committee. The committee consisted not only of CHA officials, but also individuals elected by each CHA development's LAC to ensure that residents had input into the selection panel. Horner alleges that it was excluded from this process and was therefore never able to evaluate the merits of any proposal.

In July 2009, CHA's counsel orally informed Horner's counsel about the RFPs and asked the HRC to “negotiate” with CHA over the four finalists CHA selected. Horner refused because it claimed that it was improperly excluded from the management selection process. CHA sued Horner, asking the court to compel Horner to help it select a management firm from the four finalists. Horner claimed that CHA violated its rights when CHA solicited RFPs and narrowed the list of potential new firms to four, without the consultation or input of the HRC.

Decision: The federal district court ruled that CHA's procurement actions violated Horner's right to be consulted on the hiring of new management for its complex.

Reasoning: The court noted that a recent decree did not address the issue of an authority-wide procurement. Instead, the court stated, it dealt generally with the determination of those who would manage the Horner development and requires the CHA to provide the HRC with “access to all site plans, surveys, architectural drawings, RFPs, proposal materials, financial information and other documents received, compiled or maintained by the CHA.”

CHA is required to share documentation with Horner and consult with the HRC before making a decision regarding new management, the court concluded. However, the court also ruled that CHA is not required to include Horner in the drafting of the RFP or in the initial selection and screening of management firms. CHA should have provided the HRC with materials received from firms bidding on CHA's traditional housing units, not merely the four top firms.

CHA has not imposed any management firm upon Horner, the court noted. Instead, it has proposed four firms, which have already been through a preliminary screening process, for the HRC's consideration. However, the court added, Horner is well within its rights to evaluate each firm presented by the CHA and determine which firm is the best fit.

Therefore, the federal district court ordered CHA and Horner to have “meaningful consultation and discussion regarding the selection of management firms.” CHA and Horner should begin discussions with the four top-ranked firms selected by CHA, the court concluded.

• Horner Mothers Guild v. Chicago Housing Authority, November 2009