Suddenly, Dallas Says HUD Segregation Investigation Is a Blessing

For six years we have talked about an accusation that Dallas practiced deliberate racial segregation in redeveloping downtown. In the last six months we have talked about City Hall's absolute defiance of that charge. So, imagine my surprise when assistant city manager Theresa O'Donnell told me the city is no longer disputing the lion's share of the charge.

Amazingly candid and specific in her remarks, O'Donnell said the city intends to comply fully with demands about to be put before it by the federal government. She said the federal investigation leading up to those demands uncovered fundamental weaknesses in the city's approach to housing. She even said the findings would present the city with "a tremendous opportunity" to carry out steps toward reform that, "I don't know we would have taken had this not occurred."

Why is that surprising? Between 2001 and 2010, Dallas collected approximately $300 million in U.S. Department of Housing and Urban Development grants, all of which carried a requirement for affordable housing. A great deal of that money was spent rehabbing towers downtown. In 2010 the Observer began asking the city for the number of affordable units actually available downtown. Our repeated requests for a simple number were repeatedly ignored.

Alvaro Diaz-Rubio

Details

Email the author at jim.schutze@dallasobserver.com

In 2010 two downtown tower developers, Curtis Lockey and Craig MacKenzie, charged that that the absence of affordable units downtown was not an unfortunate accident but the reprehensible deliberate outcome of collusion. Going first to state and then to federal authorities, Lockey and MacKenzie presented reams of evidence to show that city officials had colluded to kill their own tower rehab deal, eventually costing them $30 million, after they had proposed to include the amount of affordable units legally required by HUD.

In other words, Lockey and MacKenzie said city staff and elected officials were colluding to make sure none of the tower projects downtown would include the required ratio of affordable units. Anybody who failed to go along with the collusion was to be cut off at the knees. Sounds like a scene from a gangster movie, doesn't it?

City Hall came back at them hard and personally. At that time, the off-the-record, not-for-attribution advice I got from top City Hall managers and members of the City Council, some of whom I trusted on other issues, was that Lockey and MacKenzie were a couple of ill-tempered fly-by-nights out for vengeance. Their tower redevelopment deal was a flimflam, I was told. Thank goodness City Hall saw through it and killed it in the nick of time, protecting taxpayer funds!

HUD never bought it. Based on evidence brought to HUD by Lockey and MacKenzie, the agency launched what became a four-year federal investigation.

In December 2013 HUD published a report finding Dallas at fault on virtually all of Lockey and MacKenzie's substantive civil allegations. The legal heart of the HUD allegation involved massive multi-year misappropriation of federal funds and all kinds of official false swearing and collusion along the way. The moral and political heart was an accusation of a conspiracy up and down the chain of command to increase racial segregation citywide, including collusion by civic leaders, white and black. Only in Dallas, eh?

The city's reflexive response was strident defiance. Last February instead of offering a plan to remediate past wrongs, then acting City Attorney Warren Ernst fired off a 59-page letter accusing HUD of deliberately ignoring exculpatory evidence, of being complicit itself in racial segregation and of letting lots of other cities get away with worse — basically the "I didn't do nuthin' and those other guys did it, too" defense.

Ernst was proud of the letter. When the council interviewed him for the permanent position of city attorney, which he won, he put his HUD letter in his list of achievements. The council applauded.

Right now we are weeks or days away from delivery of HUD's formal response to the Ernst letter. It will be in the form of a particular kind of document that HUD, with typical federal whimsy, calls a "Voluntary Compliance Agreement." Needless to say, it will not be voluntary, nor will it be an agreement. The "VCA," as it's called in the trade, is a list of edicts. Dallas will have to carry out each and every one of them if it does not want to forfeit federal aid in the future and, more important, if it hopes to shed the ugly charge of practicing deliberate racial segregation.

What O'Donnell told me, previous defiance notwithstanding, is that Dallas is not going to argue with almost any of it. Dallas will seek to satisfy all of HUD's demands, she said, with one caveat. She pointed to one area where the city might balk. More on that in a moment.

Mainly, the city will do as it's told and say thank you. "I think the letter [HUD's findings] and the VCA [when it arrives] have uncovered some underlying weaknesses," she said. "This City Council is clearly headed in a new direction than past administrations."

O'Donnell pointed specifically to the city's longstanding practice of crowding affordable housing into already heavily segregated areas where poverty and crime are problems. "We can't put people in an island of poverty," she said.

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20 comments
charlie.w.ingram
charlie.w.ingram

That'll kill Downtown development. Time to pay some HUD bribes!

fuzzyn
fuzzyn

Comment on prior Schutze article from an insider that needs to be vetted (Does Council know about this???):


"bigbexardaddy8 days ago"


"Killingworth told to resign May 7, 2013 during lunch hour with Ryan Evans, Suhm. Around130 in rage he started sending emails announcing retirement. He was expendable when his arrogance,incompetence finally got HUD's attention, including IG. Project Reconnect 2 indictments and hundreds of thousands ordered repaid so far. All programs all years being examined.

JK, Zavitkowsky, Evans, Suhm smug, over-confident, and got where they are by being smart enough and willing to do, say anything. Orgs and corps missing JK and worried about possible KarlZ, Evans departure are those enriched by the current no bid, no rfp, no competitive application system"


Based on the insider comment above, it appears the HUD Inspector General (IG) is auditing City Programs and has already found bad things that City Hall has already had to pay back. I would think this is why Mary Suhm is at City Hall still working. She has to go through all the programs with the HUD IG. 


I wonder if this is going to turn criminal? 


DavidRoot
DavidRoot

"A federal district court in Dallas has already ruled that Lockey and MacKenzie are not entitled to qui tam money because they were not the first to call the government's attention to the Dallas fraud."

Who does the federal district court credit with breaking the news?

DavidRoot
DavidRoot

Someone on another article posted a comment, something like, "Why should rich communities have to take on the burden of lower income families when they already pay the majority of taxes? They've done their part."

This is the attitude that started Dallas on this road, I wonder what it will take to change people's minds.

maxim2
maxim2

Mayor Rawlings should have kept his mouth shut until he learned the facts versus spouten off political BS.

maxim2
maxim2

We know Killingsworth, Zavitkovsky, Gonzalez, Suhm, Hunt, and other council members are responsible for this but dont forget about Mayor Rawlings disputing this publicly when this all came out last December:

"Rawlings also took issue with the agency’s findings. The letter from HUD’s Fort Worth office included “several incorrect statements and characterizations” and used “selective data to bolster incorrect assumptions,” the mayor wrote."

http://www.dallasnews.com/news/metro/20140110-dallas-defends-housing-practices-after-hud-discrimination-claim.ece

holmantx
holmantx topcommenter

Fair and balanced, just like Fox.

However, HUD does not get to set the fine.

No matter if they rig the VCA after the finding to sidestep you in order to better target the award damages to the whistleblowers.

Which is what they are doing.

Let the judge do that.

The City at least deserves some impartiality in that regard.

mrbusyb
mrbusyb

Stirring up coals in what has long been the political powder of central Dallas is going to tempt wealthy white folks to move on to the next better deal in Las Colinas.   Right or wrong, we choose the paths we take.  Take responsibility.


ozonelarryb
ozonelarryb

Can't wait for the Bush, Robberson spin on city hall's folding. Bet it'll be, "we had documentation, but the dog ate it." "It's just a conspiracy to embarrass city officials."

Vote for your choice.

El_Rey_in_Dallas
El_Rey_in_Dallas

Issuing a letter is one thing to a city that perpetually gets itself involved in these kinds of messes. They need an unforgettable reminder that they screwed up. They need a good paddling, not just a slap on the wrist. A $100 million judgement against the city will remind city staff, the city council, and the taxpayers why we can't keep doing business as usual. 

Also, fire the staff that participated in the collusion, then publish the names of the council-members who colluded with staff.

spinelli1234
spinelli1234

Spinning perspective is apparently not just a "City of Dallas" tool, as your cartoon clearly shows. You neglected to show that big WELFARE hole all the gold is falling into at an alarming rate.

gm0622
gm0622

Ehh, Jim, I maybe getting forgetful. Weren't you the first one that made these fraud claims public? Protecting the public gives you a warm feeling; so does pissing in your pants. 

Claim your share if you can.

longball18
longball18

So let me get this right: Dallas was exposed by this partnership, Dallas is now thankful for seeing the error in their ways, Dallas now wants to shit on them again?


Does that pretty much cover it? What else would you expect from City Hall?

86753099
86753099

So I wonder how unhappy black children feel when their own City Government discriminates against them by putting them on an "island of poverty" away from opportunity and in the middle of absolute misery?

fuzzyn
fuzzyn

@DavidRoot


Great question, per the article it has to be Lockey & MacKenzie. HUD said so............guess that is why its on appeal...........

86753099
86753099

Rawlings is just a politician that didn't give a shit about the poor people his colleagues were ripping off. Rather, this politician just started defending his political organization without knowing the facts. Dumb move.

 
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