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Facts: In 1987, HUD awarded the City of Kalamazoo a grant under the Housing Development Grant Program for the construction of a private 150-unit multifamily rental housing development, with 60 units to be reserved for 20 years for occupancy by low-income families. Under the HUD grant program, which Congress ended in 1991, development owners had to repay the funds to the grantee—in this case, Kalamazoo. In 1987, a private developer executed a promissory note of $3.2 million in favor of the city and a second mortgage on the development securing repayment of the promissory note.
