A federal statute provided for federal grants to cities that desired to reclaim and rebuild inner-city areas for multi-family residential housing. The city of Owenoak applied for funding to build housing and received a grant of $ 2.5$ million. After the area was prepared for construction, however, the city council decided it would greatly benefit the inner-city dwellers if, in addition to housing, commercial property was built. Thus, the Council decided to use $ 1.5$ million for housing and to "borrow" the remaining $ 1$ million from the housing fund to build a commercial mall. The city resolution provided that $30 \%$ of the rental from the mall each year would go to a fund for maintenance of the housing and for funds to build additional housing. Construction had started on two high-rise residential buildings and the commercial mall when the federal court, at the request of the federal government, froze the construction accounts containing the proceeds from the grant. In a motion by the city to release the funds, the court would most likely:
A. Grant the motion, because the city's plan for a fund to build more residential housing substantially complies with the terms of the grant.
B. Grant the motion, because the doctrine of preservation of state sovereignty prevents the federal government from interfering with the state's discretion in this situation.
C. Deny the motion, because the federal government can control the expenditure of the funds since it provided the funds.
D. Deny the motion, since the doctrine of state sovereignty has no application in this situation since the action was by the city council and not the state legislature.
Choose A, B, C or D as your solution.
C