How Dallas City Hall Put Us Back Behind a 25-Year-Old Eight-Ball on Segregation

A scathing federal report on housing policy in Dallas, unveiled this week after two City Council members demanded copies from the city attorney, has stirred local debate about federal desegregation law. But that debate raises two questions.

See also: The Feds Say Dallas City Hall Has Promoted Racial Segregation in Housing Projects for Years

No matter how anybody feels about desegregation, did Dallas defraud the U.S. Department of Housing and Urban Development on a massive scale by misspending federal de-seg dollars? HUD says yes.

And, wait a minute. Is somebody actually claiming that bad behavior by City Hall has caused the city to become more segregated? Yes. A study by an expert witness in the federal investigation (see below) showed that segregation in Dallas was trending downward -- getting better -- from 1980 to 2000 but began to trend upward again from 2000 to 2010. That period happens to coincide with the years in the federal probe.

At that time the city's housing and economic development operations were under the direction of A.C. Gonzalez, now the acting city manager and the leading candidate for the permanent post.

Here is a caution: The expert witness, a sociology professor in New York, was paid for his study and testimony by two real estate developers angry with the city over a failed deal. They were the original whistle-blowers to HUD. So it's fair to wonder if there may have been a thumb on the scale.

But here's a caution to the caution: The specific behavior cited by Professor Andrew Beveridge as the cause of the city's recent re-segregation -- the steering of low-income subsidized housing into minority neighborhoods -- was well-known for years to community leaders in those areas, who complained repeatedly that City Hall was social-engineering their parts of town into permanent poverty.

"We had our own report which said basically this same thing," said City Councilman Scott Griggs of Oak Cliff. He was referring to an August 2011 report from the mayor's Southern Dallas Housing Task Force that showed a dramatic uptick in the share of subsidized housing steered into southern Dallas beginning in 2000 (see even more below).

The city's own report showed that from 1990 to 1991, almost 10,000 low-income tax-credit housing units were created, of which exactly half went into the city's southern sector and half went north. But in the 2000 to 2010 span, another 10,000 units were created, 80 percent of which went south and only 20 percent north.

The complaint made four years ago to HUD by the two developers, Curtis Lockey and Craig MacKenzie, was that the division of Dallas in 2000 into two cities, one white and the other of color, was no accident. In fact it was official policy.

The HUD report says: "The complainant specifically alleges that the city arbitrarily created a boundary that divided the city into two sectors. The Northern Sector is predominantly non-minority and includes the downtown business district. The Southern sector is predominantly minority."

Now here is where the pea gets shuffled between the shells. HUD says the city took $75 million in HUD money that it received in the form of loan guarantees for low-income housing and split it up 50/50 between the two sectors. So we're on a little bit thin ice in drawing lines that divide the city between people of color and people of non-color, but at least the city split the money up evenly between them. But hold on. That's not the end of the story.

According to the complaint -- which HUD has now endorsed and found valid after a four-year investigation -- the city adopted policies by which the HUD money sent to southern Dallas had to be used for what the law said it was for, namely, low-income housing. But the HUD money sent north, most of which went into downtown, did not have to be used for what the law said it was for. And it wasn't.

HUD found that the city used an entire package of policies and procedures to thwart low-income housing downtown: the granting of waivers, lax monitoring and enforcement, a blind eye and even permission to developers to stop providing the low-income units their contracts and the law required them to provide, even after HUD had warned Dallas on multiple occasions not to let people get away with that any more.

The pattern of behavior HUD claims it found at Dallas City Hall expands beyond even that. In one especially telling chapter, the city deliberately forfeited $150 million in federal housing and economic recovery act bonds it had already received -- sent the money back -- after officials discovered that use of the bonds would open the door to more low-income housing downtown.

Lockey and McKenzie allege that City Council member Angela Hunt, who had say-so over their deal because it was in her district, spoke on the phone with Dallas housing director Jerry Killingsworth while he was meeting with the developers, after which, they say, Killingsworth told them, "Angela doesn't want you to have those bonds."

Hunt says the Lockey and MacKenzie account is a lie. She says there was no such conversation. "I don't even know what HERA bonds are."

Killingsworth refused to comment. "Not interested in talking," he said before hanging up.

The fact is that the city first granted $102 million in HERA bond financing to Lockey's and MacKenzie's project at 1600 Pacific Ave. After the developers told the city the bonds required a high percentage of low-income units, a requirement they intended to meet, the city withdrew the bonds from their project. Then the city informed the state entity administering the bond fund that it was sending back all of its HERA money for low-income housing, a total of $150 million.

Hunt says her concerns were based on information given to her by staff portraying the Lockey/MacKenzie venture as shaky financially and creating too great a concentration of low-income housing in one building, even though it was the ratio required by federal law. The HUD investigation found that the City Council gave its support to other projects with finances at least as speculative as Lockey and MacKenzie's and with even greater concentrations of low-income housing in one building.

In the HUD investigative report, the tit-for-tat about whether Hunt spoke to Killingsworth and what she thought of the developers' finances all becomes irrelevant. In the end, it's a question of "Look around. What do you see?" For HUD, one thing counts in Hunt's district and in the city at large: The facts on the ground.

Calling Dallas, "The 52nd most segregated city in the country," HUD says one key census tract downtown that got a ton of HUD money is 74 percent white, "in contrast to the city of Dallas, which has a minority population of over 67 percent."

Dallas made the facts on the ground come out the way it wanted, HUD says, "by using methods of administration which have the effect of subjecting persons to discrimination based on race and national origin."

I asked Griggs if he saw parallels or connections between the HUD finding and the 18-year prison sentence meted out three years ago to Dallas City Council member Don Hill for corruption involving low-income housing supported by tax credits under a different program. He said the parallel he sees is to a much older and bigger court decision, the landmark 1992 Walker consent decree that ended a bitter decade-long fight over housing segregation in Dallas.

"The HUD allegations are at this point closer to Walker than to Don Hill," he said. "Walker essentially was about the city of Dallas Housing Department conspiring with the Dallas Housing Authority to segregate housing. This [the recent HUD report] is saying, if you read it, the city of Dallas Housing Department conspired with the Economic Development Department to segregate housing. So I think the parallel is strongest with Walker."

Which raises the question: If the Walker consent decree two decades ago was supposed to get us past this hump, what happened? How could we back where we started? Stay tuned.

Beveridge Report by Schutze

Southern Dallas Housing Task Force August 4 by Schutze

KEEP THE DALLAS OBSERVER FREE... Since we started the Dallas Observer, it has been defined as the free, independent voice of Dallas, and we'd like to keep it that way. With local media under siege, it's more important than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" program, allowing us to keep offering readers access to our incisive coverage of local news, food and culture with no paywalls.
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