| Housing |

Julian Castro, So-Called Debate Stud, Folded in Dallas When He Was at HUD

One snotty gotcha on a reality-TV debate, and now I am supposed to believe Beto O’Rourke is a Trumpian racist on immigration?
One snotty gotcha on a reality-TV debate, and now I am supposed to believe Beto O’Rourke is a Trumpian racist on immigration?
Michael Reynolds EPA
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A real debate, sure, I can see that, where we can watch opponents drill down on an issue, but an adolescent, reality-show put-down fight? Really? We’re going to choose our presidents that way? No, c’mon.

I can’t believe I’m supposed to take former San Antonio Mayor Julian Castro as a better choice for president than former Congressman Beto O’Rourke because Castro talked over him in a so-called TV debate. And please allow me to declare my own conflict here. Based on my experience with him here in Dallas, I have long believed that Castro is a shallow weakling and an empty suit.

That was one instance a long time ago, very early in Castro’s career as Barack Obama’s secretary of Housing and Urban Development. People grow. One instance may not be enough. I truly believe I am capable of having my mind changed. But I have to tell you, the snotty poseur thing in the debate did not change my mind one iota.

In 2014, Dallas was right on the verge of becoming a bad national poster child for housing discrimination and racial segregation, as it should have been. This had to do with a decades-old pattern by which the city had gulped down hundreds of millions of dollars in HUD money designated by law to reduce racial segregation and had used it instead to increase racial segregation in a heavily subsidized renovation of downtown.

This was not a theory or a flimsy accusation. Five years earlier two real estate developers who had been screwed by the city hired Relman, Dane and Colfax, a Washington law firm with a successful track record for suing HUD. Relman Dane was able to push HUD to carry out a serious internal investigation. One way they did it was by hiring their own credentialed experts to come up with data and conclusions that would stand up in court.

The basic scam worked like this. With a few carve-outs and exceptions, most of the billions of tax dollars HUD sluices out to communities across the country every year must be used to “affirmatively further fair housing” — a numbing bureaucratic phrase the courts have agreed means racial desegregation. The two real estate developers, Curtis Lockey and Craig MacKenzie, said Dallas City Hall loved their downtown office tower redo project and showered them with praise and money until city officials found out Lockey and MacKenzie intended to obey the law.

The law said the kind of federal bonds Lockey and MacKenzie had been awarded required them to make more than half the rental residential units in their completed project available at low-income rates and to holders of Section 8 federal housing vouchers. So that’s what they told the city they were going to do.

Lockey and MacKenzie collected audio recordings, emails and notes from meetings with city officials in which they were told they weren’t supposed to really obey that legal requirement. Indeed, Dallas and cities all over the country had always been able to dodge the law by getting HUD to grant them waivers, which HUD handed out like free hot dogs on Independence Day.

But things had changed. When Obama came into the White House following the 2008 George W. Bush financial collapse, his new administration created a number of financial instruments aimed at spurring recovery, one of which was the specific type of federal bond that the Lockey/MacKenzie project had been awarded. But with the new type of bonds, called Housing and Economic Recovery Act, or HERA bonds, came a whole new attitude and a much tougher policy on waivers. Specifically, the type of bonds Lockey and MacKenzie intended to use didn’t allow waivers.

The new rule was: If you take the money, you have to tote the load. Make the low-income units available or no deal. That was not at all what Dallas had in mind. With a crazily overbuilt and half-dead downtown on its hands, Dallas wanted to create something Dallas-like: a glitzy downtown residential district that would be home to fashionistas and fat cats, not Section 8 voucher-holders by any means. But there was no private investment money willing to take that chance, so City Hall felt it had to hold its nose and use government money to make it happen.

For the longest time, HUD could not have cared less. HUD may be the most quintessentially bureaucratic agency in Washington, a house divided against itself on policy and mission but fiercely united in self-preservation. According to the law, the investigation of the Lockey/MacKenzie complaint was supposed to reach its completion within 90 days. HUD took four years. The HUD investigators finished it mainly because Relman Dane kept dinging them with new evidence they couldn’t make go away.

Beto O'Rourke has a pretty good reputation for listening, but it's hard when someone is talking over you for effect.
Beto O'Rourke has a pretty good reputation for listening, but it's hard when someone is talking over you for effect.
Melissa Henning

Part of that evidence had to do with the way Dallas city officials reacted when they found out the new Obama HERA bonds required Lockey and MacKenzie to obey the law and make their heavily subsidized downtown apartment tower available to low-income families and Section 8 voucher-holders. The city couldn’t wash its hands of that money fast enough.

When HUD finally released its finding of “noncompliance” (numbing bureaucratic term, means law-breaking), one of several counts against the city had to do with the dumping of the HERA bonds: “The City did not use any of the HERA Bonds that were allocated to it. In April 2010, the City voted to return at least $75 million to the State for use by a group out of Austin, TX. The remainder of the bonds was allowed to expire.”

The other thing the city did was to sabotage the Lockey and MacKenzie project in order to make it go away, at a cost to private investors in the $10 million range. The city claimed Lockey and MacKenzie were underfunded and never had a good project, even though the city had enthusiastically supported the project initially. The HUD letter of noncompliance found that those claims by the city were not truthful.

So what does a big bad letter of noncompliance mean in the real world? Raids, indictments, city officials packed off to the big house? Not hardly. The worst HUD was requiring Dallas to do was admit that it had been falsely swearing every year to using its HUD money for the intended legal purposes and to start using the money the right way.

Some other considerations were implicit in the settlement, however, two of which were strictly local, a third very national. The first local issue would have been an admission by Dallas that it had deliberately practiced racial segregation. The other local one was an opportunity for Lockey and MacKenzie to be made whole for their losses. Lockey, the principal in the deal, was willing to recoup his losses by being offered new deals with the city.

The national issue was the big one. An admission of guilt by Dallas would have sent a serious message to the world of low-income federally subsidized housing all over America. For a city this size to get caught, to get nailed, to have to eat crow, to be required to explicitly admit that it had practiced racial segregation and promise not to do it anymore: All that would have been an absolutely shocking outcome to an industry that had survived for a half-century on sleazy whispers behind the hand, hypocritical promises, false swearing and racism.

Racism. That’s how it works in the 21st century — how it works on the big stage and the large scale. Forget the Gomers with their torches and their Confederate battle flags. They’re nobodies, angry because they can’t get a date.

The real machinery of racism is at the level of big government, big policy and the big lie. If Julian Castro was one ounce the big, tough guy he posed as being on that debate stage, he would have done something decisive about racism in housing at the national level when he had the chance at HUD. Instead, he folded.

At the request of then Dallas Mayor Mike Rawlings, Castro basically took four years of investigation, wadded it all up and tossed it in the circular file. He had been in office mere months when Rawlings approached him. In a brief statement, Castro said the Dallas probe had looked at the wrong things and left out key evidence. He said he didn’t agree with the settlement offer. Rawlings thanked him publicly.

Nobody knows why that happened. In preparing this column, I reached out to Castro’s presidential campaign. I filled out the required form to ask for comment, and I gave them three full days to reply. I heard back nothing, which I accept as a humbling but honest reflection of my own insignificance.

But give me a break. The Lockey and MacKenzie chapter was my one significant exposure to Castro's character and leadership style. He has been the mayor of a major city and a presidential cabinet appointee. On what else am I supposed to judge him?

In the debate, Castro interrupted O’Rourke to speak about a provision of federal law that makes it illegal for undocumented persons to enter the country. O’Rourke tried to give a longer, nuanced answer about comprehensive immigration reform, but Castro talked over him to make him look like an immigration bully, which is absurd.

That kind of fake attack is exactly what I would expect from a guy who folded when it was real. The idea being ballyhooed all over the news media, that Castro is a stud because he talked over O’Rourke, is something I would expect from Facebook, not the news media. Well, wait. Is there still a difference?

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