HUD authority to withhold funds upheld; inadequacy of Government enforcement efforts exposed

Westchester Case

September 29, 2015 — A highly conservative panel of the U.S. Court of Appeals for the Second Circuit has affirmed a decision by the judge overseeing the Westchester consent decree that held that the U.S. Department of Housing and Urban Development (HUD) was within its authority to withhold federal funds from Westchester because Westchester had failed to conduct an adequate analysis of impediments to fair housing choice (AI). 

As the Circuit held in its September 25 decision, “Because exclusionary zoning can violate the [Fair Housing Act], and because HUD is required to further the policies of that statute, it was reasonable for HUD to require the County to include in its AI an analysis of its municipalities’ zoning laws” (internal footnotes omitted). Instead of a genuine analysis, Westchester had issued boilerplate recitations that none of its towns and villages had zoning ordinances that created barriers to fair housing choice. In rejecting this type of submission, and having evidence that the AI did not correspond to facts on the ground, HUD did not act arbitrarily or capriciously.

But here’s the interesting part

Other elements of the case reveal the deep inadequacy of the efforts of the Government (the U.S. Attorney and HUD) and of the Monitor (Jim Johnson) to enforce the consent decree itself.

Over the years, one of the excuses that the Government has had for not enforcing the consent decree in court is that it was doing so through the process of withholding funds. The court found that quite problematic: “To the extent HUD has identified the County’s failure to satisfy…independent consent‐decree requirements to support its rejection of County grant applications…HUD  may  well  have  overstepped the bounds of its statutory authority.” In other words, withhold funds for failing to meet obligations common to all grant recipients, but enforce court-ordered obligations specific to Westchester by going to the court whose order was being violated.

The decree’s analysis obligations are less important than its action obligations (see next section), but the analysis obligations (the subject of the case) do deserve some further attention. Under the decree, one set of obligations (set forth in paragraph 32) was for Westchester to undertake an AI satisfactory to HUD. The Circuit, quoting selectively from that paragraph, described the requirements as mirroring those that apply to all grant applicants.  In fact, they are broader and are set forth with greater specificity. [See Note 1, at the bottom of the page.] Importantly, these AI-related consent decree obligations were not limited to circumstances where Westchester was continuing to get federal funding.

In any event, the Circuit, in late-August, had the parties brief the question of whether Westchester was within its rights, years after the entry of the consent decree, to decide to no longer apply for federal housing funds on behalf of almost all of its towns and villages. In a September 4 filing, the U.S. Attorney responded that it did, but added, correctly, that the County “cannot abrogate its obligations under the consent decree by declining to accept funding in the future because the remedies required under the consent decree were crafted to address past noncompliance.”

But the Circuit ultimately wrote in its decision that it would “leave for future litigation the question of how HUD can enforce the consent decree against the County, now that the County no longer plans to seek additional federal funds.” That’s because the question of consent decree enforcement of an AI provision wasn’t before the Court: there has been no attempt to hold Westchester accountable for this failure under the decree.

The obvious questions: Why did the Government and the Monitor fail to enforce this obligation during the years that Westchester was still seeking federal funding? And why are the Government and the Monitor still failing to enforce this consent decree obligation (more than five years after the AI due date)? After all, the Government itself, in its September 4 filing, characterized Westchester as having been “extraordinarily delinquent in completing its belated AI, which remains unacceptable to HUD.” Sadly, this lack of enforcement is the rule, not the exception. [See Note 2.]

Westchester’s continuing violations of its “action” obligations

The back-and-forth about the withholding of funding has obscured something far more important: Westchester has gotten away with violating its core action obligations for more than six years now. As the Circuit pointed out, “many of the promises that Westchester made in the consent decree…are independent of the requirements for CPD grant eligibility” (this is why it has been so frustrating to hear HUD officials sometimes assure the public that HUD was not asking Westchester to do anything that it wasn’t asking every other jurisdiction to do — Westchester, uniquely, has additional remedial obligations that flow from its having defrauded American taxpayers in connection with its affirmatively furthering fair housing obligations and its willingness to allow residential segregation to persist).

In short, the core principle of the decree — that there be structural change to facilitate the construction of affordable housing with maximum desegregation potential — has been ignored (few people even know that the decree obligated Westchester to pursue the goal, in all of its housing policies and program, of eliminating residential segregation in the county because the Government and the Monitor have ignored that obligation, too). Instead, as explained in Cheating On Every Level, the Government and the Monitor looked to “count” units that did not require the overcoming of barriers of fair housing choice (and so wouldn’t ruffle any feathers).

Even though the Monitor found back at the beginning of April that the County “undertook no direct activities to address zoning impediments in 2014” and that the County violated its obligation under paragraph 7(j) of the consent decree to take all steps (including litigation) necessary to counter actions of a municipality that hinder the unit-building goals of the decree or fail to promote the unit-building goals of the decree, the U.S. Attorney has still not mounted any broad challenge to Westchester’s conduct.

The only Government goal in respect to paragraph 7(j) that is currently apparent is to get one project (Chappaqua Station) built, even though those units should not be counted

But, of course, the heart of the matter is not just a specific development: it is the zoning scheme that broadly limits affordable housing with maximum desegregation potential. The Government is still not doing anything about that — either in New Castle (of which Chappaqua is a part) or elsewhere.

Other requirements ignored

As ADC has previously noted, and in complete defiance of the court order, the Monitor and the U.S. Attorney continue to ignore a separate paragraph (7)(j) requirement: “The County shall initiate such legal action as appropriate to accomplish the purpose of this [consent decree] to AFFH.” 

This sentence cannot properly be treated as a nullity. Unlike the other (7)(j) requirements, this one is not tied to the development of any particular number of units. It was triggered as soon as the court order was entered by the existence of impediments to fair housing choice more generally (zoning barriers, of course, trigger all (7)(j) obligations). The County has an across-the-board policy, not tied to particular circumstances, that it won’t take any such action. 

If the Monitor and the U.S. Attorney were prepared to enforce the court order in a way that, as intended, would result in structural change, they would be bringing the other violation to the attention of the Court.

Finally, it should be clear that the changes that the Monitor has in mind are nothing like those substantial changes that were contemplated under the decree. He has been offering municipalities a terrific deal, one altogether contrary to the requirements of the consent decree. In effect, the deal is this: You can keep your residential neighborhoods restrictive (and, hence, keep them segregated); all I need you to do is to make some minimal changes to non-residential or marginally residential areas (like allowing housing on top of pizza parlors or where giant office buildings currently are) and I’ll sell it as sufficient progress.


Note 1 - It was Westchester, the civil rights defendant in a consent decree (not other any other jurisdiction), that was required to “commit to collecting data and undertaking other actions necessary to facilitate the implementation” of the consent decree. Consent Decree § 32(a). Other jurisdictions were not specifically directed to identify and analyze, among barriers to fair housing choice, “municipal resistance to the development of affordable housing.”  Consent Decree ¶ 32(b)(i). (The reason that the provision existed is that we (ADC) had been litigating a case where such municipal resistance — and Westchester’s refusal to identify it as a barrier, let alone combat that resistance — was at the heart of the problem.)  

Note 2 - It is true that one collateral aspect of the decree — Westchester’s obligation to pass a source-of-income discrimination bill (chock full of loopholes, with a five-year sunset date, and with no impact on zoning patterns) — did generate a successful effort on the part of the Government to force Westchester to comply.