Dallas States Its Case on Federal Racial Segregation Charges

We spoke last week about the way city staff is dealing behind the scenes with a recent accusation of racial segregation by the federal government. Maybe we should talk, too, about the way they're dealing with it in court.

Late last month the U.S. Department of Housing and Urban Development (HUD) wound up a four-year investigation of complaints against the city and concluded that Dallas has been violating federal civil rights laws for at least a decade by using tens of millions per year in federal racial desegregation money to resegregate the city. HUD said Dallas had been packing subsidized housing into already segregated neighborhoods, making them even more segregated, meanwhile using other desegregation money to develop fancy condos for rich white people downtown. See also: Dallas' City Staff Has Two Stories Why HUD Complaint Is No Big Deal, Both Stupid

In its first official response to the complaints in court, City Hall pooh-poohed the HUD investigative report, saying, "the HUD letter contains no findings of fraud, rather only alleged regulatory non-compliance, as to disputed interpretations of regulations based on a disputed rendering of facts."


They're kind of saying, look, HUD never said we were actually breaking the law. They just said we were in non-compliance with some regulations. Kind of like: The cop never said I was breaking the law. He just said I was in non-compliance with the speed limit regulations.


The other side in the case before U.S. District Judge Reed O'Connor is not actually HUD, funnily enough, but a real estate developer, Curtis Lockey, who first accused the city of hanky-panky with HUD funds in a complaint to HUD. Now Lockey is in federal court trying to claim a reward for having reported a federal fraud but also trying to get HUD to enforce its own laws. He went back to court last Friday, after Dallas filed its pooh-pooh response, and called the city's claims "cynical and wrong" and an expression of desperation.

"The City downplays the HUD Letter as having 'merely concluded' that "the City is in noncompliance with the Civil Rights Act and fair housing laws.' This highlights the cavalier attitude toward federal civil rights laws by our Nation's ninth largest municipality."

I went back and looked at the HUD letter of findings dated November 22, 2013. It states right at the top that HUD thinks Dallas "is in non-compliance with Title VI" (the Civil Rights Act) and also points out at the top that Dallas has been legally certifying every year that is in compliance with the law. I don't know if that legal certification every year is actually sworn, but it's kind of like a federal loan document: Dallas signs on the dotted line to certain representations in order to qualify for a ton of federal money.

HUD is saying those certifications were false. Whether the certifications were knowingly and wittingly false and how that might affect things are another matter. All I know is that over the years I have seen some guys with some really expensive suits shipped off to the federal pokey for signing federal loan documents with statements on them that later proved to be untrue or just sort of exaggerated. My layman's impression is that generally speaking it's not nice to lie to Mother Federal.

This whole thing is in kind of a weird status right now. The HUD letter of findings about Dallas is not a lawsuit or a prosecution. It is, as the city asserts, a regulatory matter, since HUD is a regulatory and executive agency. That doesn't make it tiddlywinks, since HUD as an executive agency has the power to cut the city off from a rich stream of federal housing money if it finds Dallas has been cheating on the money.

But it makes sense that HUD would not hand out declaratory judgments, like saying, "We find Dallas guilty of fraud." They have to go to court and get a judge or a jury to say that. That's exactly what Lockey is trying to make happen by being in court himself, and it is exactly what has happened in the two most recent major cases of this sort. In both of those cases, private parties went to court first and more or less forced HUD to join them.

In this case, if anything, HUD is way out front of the process. The letter of findings was a powerful endorsement of Lockey's complaints. It also said in summary that Lockey was the only reason HUD found out about all this, which strengthens his claim for a reward.

No telling how the current court proceeding will wind up. One very weird aspect is this: The more this HUD complaint and the Lockey lawsuit work their ways into public awareness, the more they reflect on the Walker housing desegregation consent decree in the early 1990s. In the Walker case, the city was found guilty of conspiring with the Dallas Housing Authority to bring about racial segregation.

Walker was supposed to take care of it. Dallas promised to stop. Now in the wake of Lockey, I'm hearing people say, "So much for Walker."

So guess who the "special master" in the federal courts has been all these years since Walker, presumably in charge of making sure the provisions of the decree were still intact. Judge Reed O'Connor, the same guy now over Lockey.

If O'Connor lets Lockey proceed, does that mean he's admitting Walker is down the tubes? Is there any kind of conflict here?

The city's response is below, followed by Lockey's response to the city's response. This thing is fine wine: It just gets better.

City Response Indivative Ruling 12-17-2013 by Schutze

Lockey Response Indicative Ruling 12-20-2013 by Schutze