Both sides call the suit unprecedented. It was moved from Common Pleas Court last month at HUD's request.
Assistant U.S. Attorney David McComb, HUD's attorney on the case, said HUD was perfectly willing to fix the building, if only the city would find a way to get the squatters out.
"To date," HUD said in a motion filed recently in federal court, "the city has been unable or unwilling to provide that access."
The city says its inspectors first found the property unoccupied and in unsafe condition last Oct. 31. L&I inspectors reported that an exterior wall was bulging out dangerously. When the inspectors returned in late January, they found some evidence of makeshift repairs - made without obtaining required permits. They also discovered that a number of people had moved into the building.
In its complaint against HUD, the city says it has been unable to determine just how dangerous the building is because inspectors don't know how or what repairs were made.
Nor, said Norr, do city officials believe it is their job to get the occupants out of a building owned by HUD.
The city has asked the court to impose a fine of $300 per week against HUD for every week the problem has gone uncorrected. Norr said the city would not pursue the fines as long as HUD acted in good faith.
Acknowledging that the case was unusual, Norr said, "It's unfortunate that it had to be brought to court. All we want is to get the building fixed."
A pretrial conference is scheduled next month. McComb said he remained hopeful a compromise could be reached by then.
City land records show HUD purchased the property at a sheriff's sale a little more than a year ago.