City Hall

Email Hints at HUD Infighting Over Dallas Desegregation Case

Did I just have a Hillary moment? Not sure. But I am sure of this: I have stumbled into some very persuasive evidence that HUD Secretary Julian Castro, shortly after his appointment by the president a year ago, cut HUD’s enforcement division off at the knees in a deal to bail out Dallas.

Here is the full tick-tock on my possible Hillaryesque moment. Since 2010, Sara Pratt has been the HUD deputy assistant secretary for enforcement and programs in the Office of Fair Housing and Equal Opportunity. She was the hammer over a four-year federal investigation that found Dallas guilty of misusing tens of millions of federal dollars in a plot to keep downtown Dallas racially segregated.

In sworn federal court documents, an email from Pratt two years ago written on a private AOL email account appears to have warned a lawyer that some kind of dirty deal was afoot.

“Better get that complaint withdrawn,” the Pratt email, dated two months after Castro took office, told Michael Allen of the Relman, Dane and Colfax law firm in D.C. 
Allen represents Curtis Lockey, one of two developers who claim Dallas deep-sixed their downtown tower redevelopment deal and cost them millions because they were going to have minorities in their building.

This is a little complicated, but I think we can get there. Lockey and Craig McKenzie brought a bundle of actions against Dallas after the city cut off funding for their deal six years ago. They were going to take 1600 Pacific, a 28-story 1961 Harwood K. Smith-designed building known as LTV Tower, and turn it into apartments.

Lockey and McKenzie were going to make about half of the units “affordable,” because federal housing bonds and other federal funding in the deal required it. In HUD’s four-year probe, federal investigators amassed evidence that Dallas city officials were alarmed when they saw the number of affordable units in the project. HUD investigators found that city officials pulled the pins from under the deal, sabotaged it, while making on-the-record crypto-racist statements about why.

Keep your shirt on. I’ll get to Hillary in a second.

The original Lockey and McKenzie complaint and HUD’s initial response to it, now enshrined in thick court files, show that Lockey and MacKenzie were accusing Dallas of “Title VIII” Fair Housing Law violations.

Title VIII is a tough law. Under Title VIII, if HUD finds violations, it can give the accused violator only a month to clear them. If that doesn’t get done in 30 days, HUD must by law turn the matter over to the Justice Department for prosecution.

HUD operates under a whole family of federal laws, and most of the rest of them are more lenient. Under the other laws, HUD can talk to the accused party. The accused party can talk back. They could schmooze for years. But not under Title VIII. If it’s a Title VIII violation, things have to happen on a timetable.

There’s another difference with Title VIII. Two years ago, when HUD found Dallas guilty of violations, the letter of findings included a bunch of laws HUD said Dallas had broken. But only one of those laws — Title VIII — offered any kind of payday for Lockey and McKenzie. On all the others, the government would have said, “Thanks for telling us. You’re fine citizens.” Given them a clap on the back. That’s it.

But under Title VIII, Lockey and MacKenzie could recoup their losses and potentially even much more according to federal whistleblower laws. So the Title VIII violations were always the treasure-chest at the end of the rainbow for Lockey and MacKenzie.

Lockey says in a sworn statement that when Pratt used her private email to get in touch with his lawyer, she was tipping off his side that a “dirty ugly political deal” was about to get done between Castro and Dallas Mayor Mike Rawlings. The reason she would warn Allen to withdraw the Title VIII claims against Dallas was this: The investigation of Dallas was Pratt’s work product. That was her division’s deal.
If top HUD officials under Castro shot her findings down, which she knew they were about to do, they would effectively make it either impossible or at least very improbable for Lockey and MacKenzie to recover anything on any of the key elements in the complaint. Dallas would say, “Hey, HUD admits they had that all wrong.”

By taking the Title VIII element out of the complaint, they could shelter it for future use in other litigation. HUD couldn’t shoot it down if it wasn’t there. So on Pratt’s advice, they took it out.

Hillary? Not quite yet. A little patience, please.

So why is a HUD official warning a private lawyer outside of HUD about something HUD is about to do? Well, that’s a whole huge backstory for which I’ll give you the thumbnail version.

HUD is divided into two houses. Fair Housing and Equal Opportunity, Pratt’s side, is the muscle. FHEO goes after people for breaking the law and practicing segregation and other forms of illegal discrimination.

The other side, Community Planning and Development (CPD) is the juice side: they hand out all that “community development block grant” money and other free do-with-it-as-you-may federal sluice cash that cities like Dallas use for political patronage, art museums for the left-handed and so on.

Communities love CPD. Who wouldn’t? They tend to hate or at least fear and worry about FHEO. When communities have an FHEO problem, they tend to go to their friends at CPD and ask for help. And they tend to get it.

According to sworn documents in a lawsuit brought by Craig MacKenzie against HUD, the two sides of HUD were at war over the Dallas case almost from the beginning. In the court file is the text of a letter — though not the letter itself — sent by a powerful Washington civil rights group in 2014 to HUD Secretary Shaun Donovan complaining that the CPD half of HUD was sabotaging the FHEO complaint against Dallas, even advising Dallas through back channels not to settle with FHEO.

Shortly after that letter was sent, the two top officials in CPD left their jobs. One of them was subsequently hired by Dallas as a consultant.

OK, OK, some kind of alphabet soup in Washington is warring against some other kind of alphabet soup in Washington. What about Hillary? I understand.

Here’s the deal: I only learned about all this stuff fairly recently when McKenzie brought his own lawsuit against HUD accusing it of violating the law by deep-sixing its own Dallas letter of findings. The federal judge in that case is taking McKenzie’s suit at least seriously enough to require HUD to produce a ton of “discovery” material, which should be due any day now.

That suit seeks, among other things, to have the settlement between HUD and Dallas annulled. It was in those filings that I saw the Pratt email and associated remarks warning Lockey to pull out his Title VIII complaint before the HUD CPD people chopped it off.

I got Pratt’s cell number. I called. She answered. She said she knew who I was but could not talk to me unless I made a formal request for comment through the HUD department of commentology, whatever it’s called.

So I did. I sent them an email saying: “I have a question for Deputy Assistant Secretary Sara K. Pratt, as follows: Curtis Lockey … has informed the court that in days before HUD agreed on a [settlement] with the City of Dallas … you sent his attorneys at Relman Dane an email on a private email account urging them to withdraw their Title VIII complaint. Can you tell me if this is true?”

I never heard back from Pratt. I wrote the HUD commentologists back the next day and asked if they could at least comment enough to tell me if they got my email. I did hear back from Deputy Assistant Secretary for Public Affairs Jereon M. Brown who said, “Jim, thanks for bringing this matter to our attention. HUD does not endorse employees using private email to conduct official business. Rest assured, we will inquire into the situation and take appropriate action if necessary.”

Oh, snap! It’s the private email thing. That’s the only part they’re worried about! And that’s my Hillary part. OK, OK, I know it’s not that great, like I personally slapped the cuffs on Hillary or anything. But I was asking this stuff just as the Hillary email affair was igniting. At the same time I was also reporting rumors that Castro, who succeeded Donovan at HUD, might be Hillary’s running mate.

Weak? Look, I never promised you a Pulitzer. I’m just saying the private email account was the only part of this to which HUD showed any sensitivity.

Two weeks ago the Toledo Fair Housing Center in Ohio, with which Pratt has a longstanding close relationship, reported on its Facebook page that Pratt was a day away from announcing her retirement. At the end of last week I asked Brown if she was gone, and he wrote back immediately, “Jim, Ms. Pratt is a HUD Employee. Her status has not changed.” I called her cell again, but she did not pick up.

President Obama has stated and Castro has echoed that HUD is really, really serious now about fair housing, and nobody’s going to get away with jack any more. Fine. All I know is that I see an increasingly persuasive dot pattern here, and when I connect those dots I see Castro tossing Pratt’s work in the dumpster almost his first day in office in order to let Dallas off the hook. And I don’t see this going away.

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Jim Schutze has been the city columnist for the Dallas Observer since 1998. He has been a recipient of the Association of Alternative Newsweeklies’ national award for best commentary and Lincoln University’s national Unity Award for writing on civil rights and racial issues. In 2011 he was admitted to the Texas Institute of Letters.
Contact: Jim Schutze