By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
Easy. The same way coal-powered generating plants and deep-water off-shore rigs and unemployment insurance departments got away with flouting federal regulations for a long time. There used to be a different sheriff in the White House. I refer to the guy who rides his dirt-bike around Dallas now.
Every year on every HUD-financed downtown housing project, Dallas applied for waivers from the federal guidelines for downtown projects. And got them. And before I blame all of that too much on Mr. Dirt Bike, the downtown Dallas waivers actually go back to the Clinton years when Andrew Cuomo was Secretary of HUD.
So doesn't that let Dallas City Hall off the hook? They asked for waivers. They got them. End of story? No, Morning Glory. Not the end at all. Fee fi fo fum. There's a new sheriff in town, and here he comes.
In September of last year Westchester County, Connecticut, settled a lawsuit by agreeing to spend $50 million on new "fair housing" units—the penalty for years of false claims to HUD that it was affirmatively furthering fair housing. The judge in that case said it didn't make any difference that Westchester's applications for funds had been approved by HUD over the years, because the applications were based on false claims.
In their complaint to HUD, Lockey and MacKenzie claim that Dallas is guilty of "a longstanding pattern of discriminatory practices that deliberately relegate low- and moderate-income families to live in existing predominantly minority low-/moderate-income neighborhoods, particularly in the Southern Sector, and a failure to encourage creation of a wide spectrum of housing opportunities."
They want HUD to look at all of Dallas' past waiver requests downtown as evidence of a larger pattern of false claims, whether HUD granted the specific waivers or not. And under the new sheriff, HUD may be quite open to that idea. Even enthusiastic.
Ron Sims, deputy secretary of HUD, hailed the outcome in Westchester County: "This is consistent with the president's desire to see a fully integrated society," he said. "Until now, we tended to lay dormant. This is historic, because we are going to hold people's feet to the fire."
In fact, Sims himself helped broker the conciliation agreement in Westchester. Michael Allen, an attorney with Relman and Dane in Washington who represented the plaintiffs, told me the suit had been in litigation for three and a half years until HUD stepped in last year and kicked it up a notch.
Allen says the Westchester case "signals HUD's strong interest in enforcing these affirmatively furthering obligations in a way they had not been before." But how would HUD do that?
Simple, Allen says. HUD's got the money. In the Westchester case HUD was willing to tell the county that the obligation to meet the fair and affordable housing standards was serious—especially the requirement to "affirmatively further" those standards—and that HUD was ready to say "no more money" to people who skirt their obligations under HUD rules.
But a bigger shoe fell more recently, closer to home. On May 25 HUD Secretary Shaun Donovan announced a settlement with the State of Texas enabling the state's $1.7 billion dollar hurricane relief program to go forward, only after Texas agreed to spend $152 million on fair housing and radically revamp its efforts to meet federal fair housing guidelines. The program had been stalled for six months after HUD objected to the way Texas Governor Rick Perry intended to spend HUD money.
Allen, the attorney for the plaintiffs in Westchester, also represented the plaintiffs who forced Perry to bow his neck on the hurricane money. Allen also represents Lockey and MacKenzie in the downtown Dallas matter.
In the meantime, HUD's new willingness to use its own clout is making it far easier for citizens to make their local governments obey HUD regs. In the Westchester case, which started pre-Obama, the plaintiffs had to stay in federal court for years to force a settlement. In the Texas hurricane relief case, there was no court case and things moved fast.
Two advocacy groups in Austin complained directly to HUD about the hurricane relief program. HUD called state officials and told them to come to the table or face a cut-off of funding.
The direct complaint to HUD is the path Lockey and MacKenzie have taken here. So are they fair housing angels? On the one hand, they do describe themselves as "social democrats" (small d) who believe that diversity makes communities smarter and more vibrant.
But they also claim to have lost up to $30 million in the LTV Tower deal. They believe they were cheated out of that money—that Dallas City Hall faked its own financials and cut corners illegally to kill their deal.
The Westchester and Texas hurricane money settlements involve a principle that Lockey and MacKenzie obviously hope will come into play in downtown Dallas as well. Sometimes called qui tam in the law, it winds up meaning that the people who start the ball rolling are acting in the government's interest and deserve a cut of whatever the government gets in the settlement.
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