The Magazine

HUD’s Power Grab

The Obama administration plots a wholesale federal intrusion into local housing policy

Oct 14, 2013, Vol. 19, No. 06 • By TERRY EASTLAND
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Now, let us move from the Federal Register to a real place: prosperous Westchester County, just north of New York City, population 941,113, the fourth most racially and ethnically diverse county (out of 62) in the state of New York, where housing patterns historically have been driven by economics, with people living where they can afford to live, and “moving up” as they are able and want to.

In 2006, however, a “whistleblower” suit was filed against Westchester, alleging that since 2000 the county had received federal housing grants and thus was obligated to “affirmatively further fair housing” but hadn’t done so, thus rendering false the certifications the county made to Washington to receive those funds.

This false claims suit seemed weak, especially since none of the county’s submissions to HUD regarding its fair housing efforts during those years had been disapproved or rejected. Moreover, in 2005 HUD officials hailed the county for its grant-management practices. Eventually, the county, wanting a more reasonable party at the table, asked HUD to intervene, and it did. With Westchester admitting no wrongdoing, the parties settled in August 2009 on terms agreed to by Democrat Andrew Spano, then the county executive.

At the press conference announcing the settlement, HUD  deputy secretary Ron Sims hailed it as the “way forward” for AFFH. “[T]here has been a significant change in the Department of Housing and Urban Development,” he said. In retrospect, it’s apparent that the “change” would be fully expressed four years later in the new AFFH rule. “We’re going to ask [other jurisdictions] to pursue similar goals as well,” declared Sims.

Under the settlement, Westchester agreed to spend $51 million to build, in 31 mostly white communities and by the end of 2016, some 750 affordable-housing units, 650 of which would be located in municipalities with fewer than 3 percent African-American residents and fewer than 7 percent Hispanic residents. HUD sees the construction and location of those units as measures that will reduce patterns of racial and ethnic segregation and help overcome discrimination, of which, by the way, the county has not been accused, neither by the party that brought the false claims suit nor by the government. What the settlement will achieve, if nothing else, is the location of more minority renters and homeowners than otherwise might be the case in communities that currently have few minority residents.

Toward that end, the settlement requires the county to “affirmatively market affordable housing” not just within the county but also “in geographic areas with significant non-white populations outside, but contiguous with or within close proximity to, the county.” The county thus must spend some of its marketing budget for the benefit of people who don’t live in Westchester. The outside-county marketing represents a wider casting of the net, to increase the likelihood that applicant pools are more diverse than they might be otherwise.

One county official explained to me the way the pools are expected to work: “If you create a diverse pool of candidates [for the affordable-housing units] having a preponderance of blacks and Hispanics in it, then you’ll get a similarly diverse group of applicants when they pull balls out of bins in the lottery,” which is used by Westchester County (and endorsed by HUD), the point of a lottery being to ensure a random selection. But, this official added, “We all know that there are anomalies in the law of probability. So what happens if we have this pool that’s highly diverse but we randomly select a pool that’s not as diverse as HUD likes? That’s not our fault.”

It’s not, but were that to happen, the county might have to develop new, even more targeted marketing plans, which could discriminate against those lacking the “right” race or ethnicity, though finding a plaintiff, and bringing a case, would not seem an easy task.

A notable irony of the marketing and pool-making efforts is not lost on Westchester County officials. “A classic discriminatory practice in housing,” said one, “is where realtors ‘steer’ people from one neighborhood to another depending on where the realtor thinks they should live, based on race.” In its way, “HUD is trying to steer people to certain neighborhoods. Their social engineering is just another form of steering.”

And it may be steering in the wrong direction, from the standpoint of many of those whom it seeks to help. In an interview, Stuart Gerson, who represented the county in the false claims case, said, “The demand in Westchester [from minorities] has always been not just for better housing but that it be placed in or contiguous to the neighborhoods where minorities are living now​—​and not in the far suburban or semi-rural places where the federal government wants it.”

Not that the settlement units have failed to attract comers. As of this writing, 10 of the new affordable housing developments have effectively completed their marketing. They include 180 rental units and 60 houses. Of the 2,215 applicants for the rentals, 41.5 percent were black, 34.7 white, and roughly 24 percent were Hispanic. Of the 165 applicants for homes, 32.2 percent were black, 40.6 white, and 23.8 Hispanic. Finally, of the 122 units that have been built and are now occupied​—​105 rentals and 17 homes​—​60 of the occupants are white, 46 African American, 4 multiracial, and 8 declined to indicate their race. Twenty-two of the occupants said they were Hispanic.

And Westchester is ahead of schedule. Of the 750 units the county agreed to build, 300 were to have financing by the end of the year. Already some 395 have it. The number of units now occupied​—​122​—​also exceeds the year-end goal.

HUD, though, is hardly satisfied with Westchester’s effort. Indeed, the county and the agency have sharp differences. Last month county executive Robert Astorino, the Republican who defeated Spano in 2009 and is seeking reelection this fall, wrote a column in the Wall Street Journal with the provocative headline: “Washington’s Fair Housing Assault on Local Zoning.”

HUD wants​—​to use the language of the new AFFH rule​—​more “fair housing choice” for more minorities. Specifically, it wants more affordable housing units built in mostly white communities​—​some 5,000 more. For those additional units to be built, more land would have to be zoned to accommodate them. And that means localities, which under the New York state constitution are empowered to make zoning decisions, would have to change ones still in force and, going forward, make ones that otherwise they would not make, under common zoning practices, which place limits on the size, type, height, and density of buildings.

 HUD regards such limits as standing in the way of progress. For HUD, they are racially and ethnically “exclusionary” and must be opposed on that ground. Indeed, the department has told the county to sue localities over exclusionary zoning​—​which the county has declined to do. “Not a good way to build good will,” Astorino wryly observed, in an interview.

In February 2012, in response to a HUD request, the county analyzed all of its 853 local zoning districts for evidence of exclusionary practices based on race and ethnicity, and found none. Since then, it has made seven more such analyses, each time including consideration of more data, as requested by HUD. And each time the county has found no evidence of exclusionary practices, a conclusion supported by an independent authority. HUD, however, has disagreed with the county. And in 2011 it began cutting off housing grants. The total amount withheld through this year amounts to $17 million.

In the Journal, Astorino recounted how last month HUD “finally demanded​—​without presenting any facts​—​that the county accept its conclusion that there is exclusionary zoning in Westchester as a condition of releasing the funds.” The county declined, but neither will HUD withdraw its demand.

“Until we reach the conclusions they give us,” Astorino told me, “which have no relationship to actual facts, they will continue to deny our analysis .  .  . and continue to watch everything we do. And withhold money. It’s not about 750 units. That’s the starting point, not the ending point. It’s about changing the world.”

And so it is.

And what Westchester County has been experiencing in its dealings with HUD is what other housing grantees can expect once the new AFFH policy begins to be enforced. Will that enforcement effort also ignite state and local opposition? Will it lead jurisdictions to consider doing without federal housing money entirely—as is happening now in Westchester County? In three years we’ll find out.

Terry Eastland is an executive editor at The Weekly Standard.

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