As City Hall Nears Creating a New Housing Policy, Segregation Rears Its Head Again

It’s almost enough to make you think we had racial segregation in this town. First, three years ago, the U.S. Department of Housing and Urban Development (HUD) issued a finding that Dallas was violating federal law by using desegregation money to promote segregation.

The city denied it, of course, but then last week a city audit found that the city had sort of lost all the bookkeeping for the deseg money. If nothing else, we have our own way of doing business around here, do we not? That may bother me as much as the segregation.

Now, as the City Council prepares to consider a new citywide housing policy, an important authority on housing is about to suggest that the main thing Dallas needs to do is stop actively promoting and enforcing racial segregation.

In a letter to City Council member Scott Griggs, who is in charge of devising a new comprehensive housing policy for the council to consider this summer, veteran housing attorneys Michael M. Daniel and Laura B. Beshara gave a preview of the briefing the City Council housing committee will receive Monday from Inclusive Communities Project (ICP), a nonprofit housing advocacy organization.

In their letter, Daniel and Beshara ticked off a list of city policies designed, they say, to enforce racial segregation. They argue that City Hall allows residential developers to receive tax breaks, zoning incentives and direct subsidies, all ostensibly designed to foster desegregation, but combines those grants with other policies with an ultimate effect of excluding minorities from majority white areas.

Landlords in Dallas, for example, can say they are providing low-income subsidized housing when in fact they are charging the same market-rate rents they would charge anybody else. Even when people can afford their rents, Dallas landlords can and do refuse to rent to people who receive part of their income in government subsidies.

The effect of all that is the map. Poor black people and poor Latinos remain concentrated in ghettos, the borders of which are drawn at City Hall through the manipulation of fragmented housing policies. It’s segregation, enabled and enforced with public funds and public policy. But nobody calls it that.

The Daniel/Beshara letter is a jarring coda to a story I wrote last week about a city audit in which the city said it had more or less lost track of $29.9 million in recent housing expenditures for a one-year period. My point in that piece was that the city manager and other top officials are copied on every email that even touches on housing policy. It’s absurd for them to claim that the $29.9 million in effect must have fallen out of their pockets.

What makes much more sense is the picture Daniel and Beshara paint in their letter of explicit policies designed not only to further racial segregation in Dallas but to fraudulently use federal subsidies and other public funds to do so. When you’re up to things like that, of course you don’t want to leave a bunch of clean audit trails trailing behind you.

Densely footnoted, more a court brief than a communiqué, the Daniel/Beshara letter nevertheless is not without some heavy irony of its own. The letter draws heavily on evidence amassed by the U.S. Department of Housing and Urban Development (HUD) in its five-year investigation of a complaint against Dallas by developers Curtis Lockey and Craig MacKenzie.

When I started writing about Lockey and MacKenzie five years ago, Daniel was ardent that they couldn’t possibly have a legitimate drum to beat. Dallas had lots of affordable housing units downtown, Daniel told me. Lockey and MacKenzie were just two ticked off developers who lost their deal and were coming back to gouge the city in revenge. But now Daniel, without admitting it explicitly, is borrowing ammo from them.

Lockey and MacKenzie started out in 2008 with a deal to rehab the old LTV Tower Building on Pacific Avenue and turn it into condos and apartments. The city loved them and offered major subsidies, but the deal caved when the Bush recession hit. Later the pair picked up new public financing from some Obama urban bailout money. The deal was back on. City Hall was happy.
But a wrinkle emerged that the city had not foreseen. The Obama money carried a strict no-waivers obligation to provide real affordable housing, not make-believe affordable housing that only affluent people could afford. And there could be no discrimination against people who received federal housing funds as income.

All of a sudden City Hall was off this deal like a bowl of bad meat. Lockey and MacKenzie got the brush. They and their investors had to eat millions in equity.

Working through a savvy Washington law firm that had a lot of experience in this area, Lockey and MacKenzie went to HUD and complained. They told HUD that Dallas for years had been taking hundreds of millions of dollars in federal desegregation money and falsely swearing the money was used for the intended legal purpose. Instead, they said, Dallas used the money to bring about segregation and even pulled the rug from under developers who didn’t go along.

The D.C. law firm, Relman Dane & Colfax, was an important player in the drama, because no one in the 21st century ever states candidly or publicly that he intends to practice segregation. No one is that dumb. Instead, officials who want to enforce racial segregation do it with subtle manipulations of income qualifications and waivers and with the steering of some projects into already segregated areas.

The courts are all over that. Lawyers like Daniel, who won a key Supreme Court victory on the issue last year, have been successful in persuading the courts that the best evidence of segregation is segregation; no matter what a local government may claim it’s trying to do, if the outcome is segregation then what they’re up to is segregation.

But that means the law all winds up being an algorithm of code words. Only the top people in this area of the law — Daniel among them, along with the lawyers at Relman Dane — know how to work that algorithm.

In putting together Lockey and MacKenzie’s complaint to HUD, Relman Dane assembled expert testimony and evidence on income levels and geographic patterns of concentration that HUD found persuasive. In December 2013, HUD issued a “letter of noncompliance” reiterating the Lockey and MacKenzie evidence and finding Dallas guilty of breaking federal law.

In his letter to Griggs, Daniel cites both the HUD letter of noncompliance and a subsequent voluntary compliance agreement signed by the city, both of which were direct outcomes of the Lockey and MacKenzie complaint.

Daniel’s letter to Griggs reads sort of like a letter of recommendation for ICP, the nonprofit run by Daniel’s former law partner, Betsy Julian. Although Daniel does not suggest a role for ICP in future city of Dallas housing initiatives, Julian did say on the phone with me yesterday that ICP might play a role in certain counseling activities designed to help people move from areas of concentrated segregation to “areas of opportunity” — the code word for places that are not segregated.

On the phone, I invited both Julian and Daniel, who was in the room with Julian but barely audible in the background, to make some gracious gesture of acknowledgement toward the five-year struggle of Lockey and Mackenzie. Julian declined explicitly and Daniel, except for an occasional laugh, was silent. When I asked if they were chary of any association with Lockey and MacKenzie that might compromise their relationship with the city, Julian told me my question was “insulting.”

She did say, “I understand that they [Lockey and MacKenzie] have pointed to the issue of segregation, and we certainly agree that segregation in the city has been a problem for a long time. But what we don’t want to get into is a sidebar discussion about those individuals and their losses.”

I guess I’m bothered by a certain general line I get from people involved in this issue when they talk about Lockey and MacKenzie. It’s not from Daniel and Julian explicitly at the moment, because they are declining to say anything at all about Lockey and MacKenzie. But it certainly comes from City Hall and to some extent the community.

The line is that Lockey and MacKenzie are deprived of legitimacy in this issue because they’re in business, because they do this stuff for a living and because, yes, they’d like to get some of their millions back. It’s a curious argument in a city where so many people want to tell me how much they believe in free enterprise and how much they admire business persons.

Lockey and MacKenzie tried to obey the law. That’s all. They and their investors put millions of dollars on the table in the assumption that the law would be obeyed.

There’s a phrase I hear all the time in Dallas about people coming in from outside and not understanding “how we do things here.” I saw it in the battle over a major shipping and warehousing development in southern Dallas. I saw it and heard it in reference to the subsidized housing deals that brought a conviction for Dallas City Council member Don Hill, now battling Stage 4 cancer in a federal prison.

“How we do things here” is what the Mafia tells you when you arrive in Sicily to take possession of your late grandmother’s stone cottage. It’s not a friendly phrase.

The social outcome of desegregation that Julian, Daniel and Beshara are seeking in this new housing policy is of life-and-death importance to the future vitality of the city, and I can’t think of any people better qualified to help attain it.

But there is an even deeper and more ancient value in the rule of law itself, and that’s what Lockey and MacKenzie are fighting for. Oh, and their money, too. Should we ask them to let us keep that? You ask.