County of Westchester v. United States Department of Housing and Urban Development (HUD) et al
Filing
38
OPINION AND ORDER.....The defendants' April 17 motion for summary judgment is granted and the County's May 1 cross-motion is denied. The Clerk of Court shall enter judgment accordingly and close each of these cases. (Signed by Judge Denise L. Cote on 7/17/2015) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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COUNTY OF WESTCHESTER,
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Plaintiff,
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-v:
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UNITED STATES DEPARTMENT OF HOUSING AND :
URBAN DEVELOPMENT (“HUD”), and SHAUN
:
L.S. DONOVAN, AS SECRETARY OF HUD,
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Defendants.
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:
COUNTY OF WESTCHESTER,
:
:
Plaintiff,
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-v:
:
UNITED STATES DEPARTMENT OF HOUSING AND :
URBAN DEVELOPMENT (“HUD”), and JULIAN
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CASTRO, AS SECRETARY OF HUD,
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Defendants.
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APPEARANCES:
For Plaintiff:
Robert F. Meehan
Westchester County Attorney’s Office
148 Martine Avenue, 6th Floor
White Plains, NY 10601
OPINION
AND ORDER
13cv2741 (DLC)
15cv1992 (DLC)
For Defendants:
Preet Bharara
David J. Kennedy
Lara K. Eshkenazi
Benjamin H. Torrance
United State Attorney’s Office, Southern District of New York
86 Chambers Street, 3d Floor
New York, NY 10007
DENISE COTE, District Judge:
Plaintiff County of Westchester (“County”) brings these two
actions, pursuant to the Administrative Procedure Act, 5 U.S.C.
§§ 701-706 (“APA”), 42 U.S.C. §§ 12705(c)(1) and 12711, and the
Fifth Amendment of the U.S. Constitution, against defendants the
United States Department of Housing and Urban Development(“HUD”)
and HUD Secretary Julian Castro (“Secretary”), seeking review of
final administrative determinations by HUD to withhold from the
County funds from Community Planning and Development Formula
Grant Programs
(“CPD Funds”) for the 2011, 2013, and 2014
fiscal years (“FY2011,” “FY2013,” and “FY2014”). 1
For the
following reasons, these actions are dismissed and judgment is
entered in favor of the defendants.
The County’s first lawsuit, Westchester v. U.S. Dep’t of Hous.
& Urban Dev., 13cv2741 (DLC), addresses only the FY2011 CPD
Funds. Westchester v. U.S. Dep’t of Hous. & Urban Dev.,
15cv1992 (DLC), addresses FY2011, FY2013, and FY2014 CPD Funds.
FY2012 CPD Funds, which were once available to the County, have
already been reallocated to other jurisdictions.
1
2
HUD withheld the CPD Funds at issue here because, in HUD’s
view, the County failed to provide an accurate certification
that the funds would be administered in conformity with the Fair
Housing Act and to affirmatively further fair housing (“AFFH”),
as required by federal law (“Certifications”).
To AFFH, the
County was required to produce an “AI,” which must include an
analysis of impediments to fair housing choice in addition to
offering appropriate actions to overcome the effects of any
identified impediments.
HUD determined that the AIs which the
County produced to obtain the CPD Funds at issue here were not
acceptable under the standards mandated by the federal statutes
and regulations that govern the grant programs:
despite HUD’s
assistance, encouragement and guidance, the County refused to
provide an adequate assessment of the impediments which local
zoning ordinances presented to fair housing choice within the
County, and to adequately identify the actions it would take to
overcome the effects of any such impediments.
The defendants
have moved for summary judgment on the ground that their denial
of the CPD Funds was not arbitrary and capricious or otherwise
in violation of HUD’s grant of statutory authority.
For the
reasons, described below, that motion is granted.
Plaintiff has cross-moved for summary judgment on the
ground that HUD may not consider local zoning ordinances when
making a decision whether to grant or deny CPD Funds.
3
For this
proposition it relies on two statutory provisions under the HOME
Investment Partnerships Program (“HOME”), which is one of the
three CPD grant programs at issue here.
42 U.S.C. §§
These two provisions only apply to the HOME
12705(c)(1), 12711. 2
program, and in any event do not relieve the County of its
obligation to make accurate Certifications and to produce
adequate AIs in order to obtain CPD Funds.
The defendants have an alternative ground for summary
judgment premised on the County’s breach of its 2009 settlement
agreement with HUD, which concluded False Claims Act litigation
against the County.
In the course of that earlier litigation,
this Court determined that the County had filed seven false
Certifications between 2000 and 2006 that it would affirmatively
further fair housing.
Despite the requirements of federal law,
the County’s AIs, submitted in connection with those
Certifications, did not analyze race-based impediments to fair
housing.
Instead, the Certifications restricted their analysis
to impediments to affordable housing in the County.
Supp. 2d at 562.
668 F.
In settling that litigation -- in which the
County stood to have damages assessed against it of over $150
While the plaintiff’s complaints also bring claims under the
Due Process and Equal Protection Clauses of the Fifth Amendment,
the plaintiff has not moved for summary judgment on those
grounds or relied on them in opposition to the defendants’
motion. They are therefore considered abandoned.
2
4
million -- the County committed to providing an AI by December
2009 that was acceptable to HUD.
It did not do so.
It has
provided HUD with essentially three AIs since 2009 -- one in
2010, one in 2011 and a third in 2013 -- and HUD has found all
three to be inadequate.
This Opinion does not reach the
question of whether HUD can withhold CPD funds for the County’s
breach of the settlement agreement.
Before turning to the factual background and then the legal
analysis of the issues presented by these motions, it is
important to note HUD’s contention that there is particular
urgency surrounding this litigation.
The congressional
appropriation reserved for the FY2013 CPD Funds will, by law,
revert to the U.S. Treasury on September 30, 2015. 3
Before that
time, the funds may be reallocated to other communities.
According to HUD, without expeditious resolution of the issues
here, over $5 million in FY2013 CPD Funds will not be available
for use anywhere as Congress intended.
BACKGROUND
The facts and procedural history giving rise to this
dispute have been described in several previous Opinions issued
by this Court and the Second Circuit Court of Appeals.
See,
While the funds will remain available to the County for five
years should it qualify for them, there is little likelihood of
that happening. The County has withdrawn from consideration for
future CPD Funds in FY2015-2017.
3
5
e.g., United States ex rel. Anti–Discrimination Ctr. of Metro
N.Y., Inc. v. Westchester Cnty., 495 F. Supp. 2d 375 (S.D.N.Y.
2007) (“2007 Opinion”) (denying motion to dismiss False Claims
Act lawsuit against the County); United States ex rel. Anti–
Discrimination Ctr. of Metro N.Y., Inc. v. Westchester Cnty.,
668 F. Supp. 2d 548 (S.D.N.Y. 2009) (“2009 Opinion”) (finding
that County’s Certifications to obtain CPD Funds were false but
reserving on County’s scienter); U.S. ex rel. AntiDiscrimination Ctr. of Metro New York, Inc. v. Westchester
Cnty., N.Y., No. 06cv2860 (GWG), 2012 WL 917367 (S.D.N.Y. Mar.
16, 2012) (accepting in part and rejecting in part Monitor’s
2011 Report) (“Magistrate Judge Opinion”); U.S. ex rel. AntiDiscrimination Ctr. of Metro New York, Inc. v. Westchester
Cnty., N.Y., No. 06cv2860 (DLC), 2012 WL 1574819 (S.D.N.Y. May
3, 2012) (“2012 Opinion”) (adopting Monitor’s conclusions in
part and MJ’s opinions in part); United States ex rel. AntiDiscrimination Ctr. of Metro N.Y., Inc. v. Westchester Cnty.,
712 F.3d 761 (2d Cir. 2013) (“Appeal Opinion”) (affirming
holding that the County had breached promotion requirement);
Cnty. of Westchester v. U.S. Dep’t of Hous. & Urban Dev., No.
13cv2741 (DLC), 2013 WL 4400843 (S.D.N.Y. Aug. 14, 2013) (“2013
Opinion”) (dismissing APA claims for lack of jurisdiction and
statutory claim for pleading deficiency); Westchester v. U.S.
Dep’t of Hous. & Urban Dev., 778 F.3d 412 (2d Cir. 2015) (“2015
6
Opinion”) (vacating in part 2013 Opinion and remanding on issue
of jurisdiction).
Opinions.
The Court assumes familiarity with those
Only those facts necessary to the resolution of the
present motion are described below.
I. Statutory & Regulatory Framework
The CPD Funds at issue are allocated pursuant to three
different federal programs: the HOME program, the Community
Development Block Grant (“CDBG”) program, and the Emergency
Solutions Grant (“ESG”) program.
All three were enacted against
the backdrop of the Fair Housing Act (“FHA”), whose provisions
are incorporated by reference into the three grant programs’
authorizing statutes.
A. Fair Housing Act
The FHA was passed in 1968 to provide “for fair housing”
within the limits imposed by the Constitution.
3601.
42 U.S.C. §
The statute bans discrimination on the basis of “race,
color, religion, sex, familial status, or national origin” in
connection with the sale and rental of housing and other private
real estate transactions, subject to limitations imposed by the
statute.
42 U.S.C. §§ 3604, 3605.
“The FHA was enacted to
eradicate discriminatory [housing] practices . . . includ[ing]
zoning laws and other housing restrictions that function
unfairly to exclude minorities from certain neighborhoods
without any sufficient justification.”
7
Texas Dep’t of Hous. &
Cmty. Affairs v. Inclusive Communities Project, Inc., --- S. Ct.
---, 2015 WL 2473449, at *13 (U.S. June 25, 2015) (citation
omitted).
B. Grant Programs
The three grant programs all require that jurisdictions
make certain submissions to HUD to determine eligibility.
program and its application process is described below.
Each
Of
principal relevance here are the requirement that applicants
certify to HUD that they will “affirmatively further fair
housing,” including an “analysis of impediments”; for HOME
grants, the requirement that jurisdictions submit a “housing
strategy”; and, under the “consolidated plan” process
established by regulation, the requirement that jurisdictions
submit an “action plan.”
1. CDBG Program & the “Affirmatively Further Fair
Housing” Requirement
The CDBG program was established under the Housing and
Development Act of 1974.
statute”).
42 U.S.C. §§ 5301-5321 (“CDBG
“The primary objective” of the program is “providing
decent housing and a suitable living environment and expanding
economic opportunities, principally for persons of low and
moderate income.”
Id. § 5301(c).
The CDBG program works
against the backdrop of the FHA and incorporates by reference
standards applicable to fair housing.
8
Jurisdictions applying for CDBG grants must certify that
they have satisfied six criteria in order to be eligible.
U.S.C. § 5304(b).
42
Applicants must certify, inter alia, that
“the grant will be conducted and administered in conformity with
the Civil Rights Act of 1964 [42 U.S.C, § 2000a et seq.] 4 and the
Fair Housing Act [42 U.S.C. § 3601 et seq.], and the grantee
will affirmatively further fair housing.”
Id. § 5304(b)(2).
By
HUD regulation, the duty to affirmatively further fair housing
requires the grantee to “conduct an analysis to identify
impediments to fair housing choice within the jurisdiction, take
appropriate actions to overcome the effects of any impediments
identified through that analysis, and maintain records
reflecting the analysis and actions in this regard.”
24 C.F.R.
§ 570.601(a)(2) (emphasis added).
2. ESG Program
The ESG program was initially authorized as the “Emergency
Shelter Grants” program by the Stewart B. McKinney Homeless
Veterans Act of 1987; it was modified to its current form, and
name, by the Homeless Emergency Assistance and Rapid Transition
to Housing (HEARTH) Act of 2009.
Administered pursuant to 42
U.S.C. §§ 11371-11378, the purpose of the program is, among
Title II of the Civil Rights Act of 1964 promotes equal access
in public accommodation.
4
9
other things, “to provide funds for programs to assist the
homeless, with special emphasis on elderly persons, handicapped
persons, families with children, Native Americans, and
veterans.”
Id. § 11301.
The ESG program does not have any independent certification
requirements.
A grantee may only receive an ESG grant, however,
if it also receives a CDBG allocation.
Id. § 11373(a).
Functionally, therefore, eligibility for ESG hinges on proper
AFFH certification pursuant to 42 U.S.C. § 5304(b)(2).
3. HOME Program & the Housing Strategy
The final grant program at issue concerns HOME funds,
allocated under the Cranston-Gonzalez National Affordable
Housing Act of 1990, codified at 42 U.S.C. §§ 12701-12714,
12741-12756.
The statute states that its objective is to
“improve housing opportunities for all residents of the United
States, particularly members of disadvantaged minorities, on a
nondiscriminatory basis.”
Id. § 12702(3).
As with the CDBG
program, the HOME program is concerned with affordable housing,
but operates in conformity with the FHA and incorporates
standards relevant to fair housing.
In order to qualify for HOME funds, a jurisdiction must
“submit to [HUD] a comprehensive housing affordability strategy
in accordance with [42 U.S.C. § 12705].”
Id. § 12746(5).
Section 12705(b) sets out twenty criteria to be included in the
10
housing affordability strategy (“Housing Strategy”), two of
which are relevant for this Opinion.
Section 12705(b)(4)
requires grantees to
explain whether the cost of housing or the incentives
to develop, maintain, or improve affordable housing in
the jurisdiction are affected by public policies,
particularly by policies of the jurisdiction,
including tax policies affecting land and other
property, land use controls, zoning ordinances,
building codes, fees and charges, growth limits, and
policies that affect the return on residential
investment, and describe the jurisdiction's strategy
to remove or ameliorate negative effects, if any, of
such policies . . . .
Id.
Another of the twenty criteria, like the CDBG statute,
requires grantees to certify “that the jurisdiction will
affirmatively further fair housing.”
Id. § 12705(b)(15).
The definition of AFFH under the HOME statute is identical
to that under the CDBG statute.
24 C.F.R. § 91.225(a)(1).
The
AFFH certification is submitted as a component of the Housing
Strategy.
See id. §§ 91.200, 91.225.
“Certification,” in turn,
is defined as a “written assertion, based on supporting
evidence,” that will be deemed accurate “unless the Secretary
determines otherwise after inspecting the evidence and providing
due notice and opportunity for comment.”
42 U.S.C. § 12704(21).
HOME grantees must also submit “annual updates of the housing
strategy,” and the statutory scheme appears to treat these
annual updates as extensions of the initial Housing Strategy,
subject to ongoing approval or disapproval by the Secretary of
11
HUD.
42 U.S.C. § 12705(a)(2), (3).
Grantees thus must re-
certify each year that they are fulfilling the AFFH duty.
Section 12705(c)(1) governs HUD’s approval or rejection of
Housing Strategies.
It provides:
Not later than 60 days after receipt by the Secretary,
the housing strategy shall be approved unless the
Secretary determines before that date that (A) the
housing strategy is inconsistent with the purposes of
this Act, or (B) the information described in
subsection (b) of this section has not been provided
in a substantially complete manner. For the purpose
of the preceding sentence, the adoption or
continuation of a public policy identified pursuant to
subsection (b)(4) of this section shall not be a basis
for the Secretary’s disapproval of a housing strategy.
(Emphasis added.)
Finally, § 12711, which also appears in the same subchapter
of the U.S. Code, sets further limitations on HUD’s ability to
approve or reject a jurisdiction's application for grant
funding.
It provides:
Notwithstanding any other provision of this subchapter
or subchapter II of this chapter, the Secretary shall
not establish any criteria for allocating or denying
funds made available under programs administered by
the Secretary based on the adoption, continuation, or
discontinuation by a jurisdiction of any public
policy, regulation, or law that is (1) adopted,
continued, or discontinued in accordance with the
jurisdiction's duly established authority, and (2) not
in violation of any Federal law.
Id. § 12711.
12
4. Action Plans
By federal regulation, jurisdictions may streamline their
grant program submissions with a “consolidated plan,” by which
they may apply simultaneously for CDBG, ESG, and HOME funding,
as well as other funding programs (“Consolidated Plan”).
C.F.R. § 91.1.
24
Certain components of the plan -- including a
Housing Strategy -- may be submitted on a five-year basis, as
may the applicant’s AI; other components must be submitted
annually.
Id. § 91.15(b).
Among the required annual
submissions are “action plans.”
Action plans -- like those
submitted to HUD by the County -- include a jurisdiction’s
application for funding, any update to its Housing Strategy, and
its annual express certifications that it will AFFH.
Id. §§
91.220, .225; see 2009 Opinion, 668 F. Supp. 2d at 553.
Jurisdictions participating in a consortium that files a
consolidated plan must abide by the same requirements.
§§ 91.440, .445.
See id.
HUD is permitted to reject any “plan for which
a certification is rejected by HUD as inaccurate, after HUD has
inspected the evidence and provided due notice and opportunity
to the jurisdiction for comment.”
24 C.F.R. § 91.500.
C. The Statutory Lapse Date
The CPD funds are allocated to jurisdictions based on a
statutory formula.
If not disbursed to the earmarked
jurisdiction, these funds may be reallocated to other
13
jurisdictions until the statutory lapse date, i.e. the date on
which the federal appropriation for HUD funding expires.
Once the statutory lapse date passes, funds that have not
been reallocated remain available to the original jurisdiction
in an expired account for five fiscal years to satisfy
obligations incurred prior to the lapse date.
31 U.S.C. §
1552(a); see 2015 Opinion, 778 F.3d at 417 n.8.
This means
that, following the statutory lapse date, funds that were
statutorily allocated to the applicant and not reallocated to
other jurisdictions can only be distributed to the applicant.
31 U.S.C. § 1553(a); 2015 Opinion, 778 F.3d at 417 n.8.
They
revert to the Treasury upon the expiration of the five-year
deadline.
31 U.S.C. § 1552(b).
II. The 2006 False Claims Act Litigation and 2009 Settlement
This litigation has its genesis in False Claims Act
litigation filed against the County in 2006.
After this Court
determined that the County had falsely certified to HUD that it
was affirmatively furthering fair housing, the County entered
into a settlement (“Settlement”) with HUD in 2009.
Between that
time and today, HUD and the County have sparred over the extent
of the County’s compliance with federal law and the Settlement,
and the County’s entitlement to federal housing and community
development funds.
After the False Claims Act litigation and
Settlement are described, the Opinion will describe the
14
principal milestones in the County’s interaction with HUD in the
years since the County settled the False Claims Act litigation.
A. False Claims Act Lawsuit
In 2006, the Anti-Discrimination Center of Metro New York,
Inc., acting as a qui tam relator, sued the County for violation
of the False Claims Act, 31 U.S.C. 3729 et seq. (“FCA”).
The
lawsuit asserted that the County had received over $52 million
from the federal government for housing and community
development after falsely certifying, from 2000 through 2006,
that it was affirmatively furthering fair housing.
The County
had submitted those Certifications to HUD on behalf of itself
and a consortium of all but five of the municipal entities in
Westchester County. 5
The County submitted Consolidated Plans
every five years, including a Housing Strategy and an AI.
It
submitted annual Action Plans in which it annually certified
that it would AFFH.
In rejecting the County’s motion to dismiss the FCA
lawsuit, the Court held that a grantee that certifies to the
federal government that it will AFFH as a condition to its
receipt of federal funds must analyze the existence and impact
of race discrimination on housing opportunities and choice in
The municipalities of Mount Pleasant, Mount Vernon, New
Rochelle, White Plains, and Yonkers do not belong to the
Consortium.
5
15
its jurisdiction.
2007 Opinion, 495 F. Supp. 2d at 376.
Following the close of discovery, the plaintiff in the FCA
lawsuit brought a motion for partial summary judgment,
contending that there was no genuine issue that the County
knowingly submitted seven false annual Certifications that it
would AFFH.
According to the qui tam relator, the
Certifications were false because the County had failed to
analyze impediments to fair housing choice within the County in
terms of race.
In opposing the motion, the County continued to
dispute that it was required to analyze race when analyzing
impediments to fair housing choice, but also took the position
that it had determined that racial segregation and
discrimination were not significant barriers to fair housing
choice within the County.
2009 Opinion, 668 F. Supp. 2d at 551.
Accordingly, when it disbursed HUD funds, the County had not
deemed any municipalities within the Consortium to have failed
to AFFH, nor had it deemed any municipalities to be impeding the
County’s ability to do so. 6
Id. at 559.
The Cooperation Agreement between the County and municipalities
participating in the Consortium provided that “the County is
prohibited from expending [CDBG] funds for activities in or in
support of any local government that does not affirmatively
further fair housing within its jurisdiction or that impedes the
County’s action to comply with its fair housing certifications.”
6
16
In the 2009 Opinion, this Court ruled that the County’s
certifications to HUD were false as a matter of law.
562.
Id. at
The Opinion found that the 2000 and 2004 AIs submitted by
the County to HUD were devoted entirely to the lack of
affordable housing in the County and related obstacles.
The
record contained “no evidence that either of the County’s AIs
during the false claims period analyzed race-based impediments
to fair housing.”
Id.
The Opinion observed that while
federal law does not require the County to find evidence of
racial discrimination or segregation where none exists, federal
law does require that to obtain the HUD funds at issue . . .,
the County had to maintain records of its analysis of whether
race created an impediment to fair housing.”
Id. at 563.
Because the County never performed the required analysis of
race-based impediments to fair housing, it of course “never
created a contemporaneous record of how its management of the
HUD-acquired funds or any other ‘appropriate’ steps it could
take would overcome the effect” of any impediments that did
exist.
Id. at 565.
The Opinion observed that the
statutory and regulatory framework . . . impose[d] no
duty on the County to undertake any particular course
of action to overcome an impediment to fair housing .
. ., [but did] require the recipient of the federal
funds to certify that it will take “appropriate”
actions to overcome the effect of the impediments to
fair housing choice that its analysis has identified.
Id.
17
While the 2009 Opinion found that the County’s
Certifications were false, it denied summary judgment on the
issue of the County’s “knowing” submission of false claims.
at 567.
Id.
Before the issue of the County’s scienter could be
tried, the United States filed a notice of intervention in the
lawsuit and its own complaint against the County to recover
under the FCA the damages it had sustained, as well as
associated penalties due to the County knowingly presenting
false claims to obtain federal funding for housing and community
development.
Simultaneously, on August 10, 2009, the United
States and the County entered into a thirty-eight page
Stipulation and Order of Settlement and Dismissal
(“Settlement”).
Because of the treble damages provision of the
FCA, had the County not settled the litigation, it was at risk
of being found liable for over $150 million in damages.
B. Settlement of FCA Litigation
The Settlement acknowledged that the County receives
federal funding from the CDBG, ESG and HOME programs, among
others.
It required the County to pay $8.4 million to the
federal government and $2.5 million to the relator.
In
addition, the County was required to pay $21.6 million into the
County’s account with HUD.
The Settlement provided that
HUD shall make those funds available to the County for
the development of new affordable housing units that
will AFFH in the County, provided that the County’s
18
use and expenditure of the funds, and any program
income earned from the use of the funds, as defined by
24 C.F.R. § 570.500(a), shall be subject to the
requirements of the CDBG program
and other terms and conditions of the Settlement.
Those other
terms included the County’s duty to ensure the development of at
least 750 new affordable housing units within seven years of the
Settlement.
The Settlement described the criteria, including
race-related criteria, for the placement of the new housing
units.
In addition, the County was required to add $30 million
in County funds to this development effort.
It also agreed that
“[i]n the event that a municipality does not take actions needed
to promote” or “undertakes actions that hinder” development of
the 750 housing units, it would “use all available means as
appropriate to address such action or inaction, including, but
not limited to, taking legal action.”
Another significant component of the Settlement was the
appointment of a Monitor “for so long as the County’s
obligations” under the Settlement “remain unsatisfied.”
James
E. Johnson of Debevoise & Plimpton LLP has been serving as the
Monitor since August 2009.
The Settlement provided that the
Monitor would conduct compliance assessments every two years “to
determine whether the County has taken all possible actions
under” the Settlement, “including, but not limited to . . ., if
necessary, taking legal action.”
19
The Settlement included several other important components.
Of particular interest to the current litigation are the
following.
The County explicitly acknowledged the importance of
the obligation to AFFH, and committed to adopting a policy
statement to that effect.
It also promised to complete within
120 days an “AI within its jurisdiction that complies with the
guidance in HUD’s Fair Housing Planning Guide . . . .
The AI
must be deemed acceptable by HUD.”
Besides
(Emphasis added.)
identifying and analyzing the “impediments to fair housing
within its jurisdiction, including impediments based on race or
municipal resistance to the development of affordable housing,”
the County agreed that its AI would identify and analyze “the
appropriate actions the County will take to address and overcome
the effects of those impediments.”
In this respect, the
Settlement closely tracks the language of HUD’s regulations
defining the AFFH duty.
See, e.g., 24 C.F.R. § 91.225(a)(1).
The County made several other critical commitments in the
Settlement, one of which became the subject of litigation in the
ensuing years.
The County agreed that it would “promote,
through the County Executive, legislation currently before the
Board of Legislators to ban ‘source-of-income’ discrimination in
housing.”
20
III. The County’s AIs and HUD’s Rejections: 2009 to 2013
The County has never provided an AI to HUD that HUD deemed
acceptable, despite its explicit commitment in the Settlement to
do so.
Since the Settlement, HUD has withheld funds from the
County and in some instances reallocated funds initially
earmarked for the County to other jurisdictions.
The
description of the ensuing years of application and rejection is
organized around the AIs the County has submitted to HUD.
The
final AI and its two supplements, submitted to HUD in 2013,
preceded the two HUD letters that are the principal focus of the
County’s summary judgment motion:
the letters of August 9, 2013
and July 18, 2014.
A. 2010
In 2010, the County submitted a late and incomplete AI.
Pursuant to the schedule set forth in the Settlement, the
County’s Settlement-compliant AI was due December 8, 2009.
The
County requested an extension to January 20, 2010, which HUD
granted, and then another extension to September 30, 2010.
granted an extension to June 30, 2010.
HUD
Five days before that
deadline, the County asked for an extension to July 31, 2010.
HUD consented to an extension to July 23, 2010.
The County submitted a revised AI to HUD on July 23, 2010.
HUD rejected the County’s AFFH certification on December 21,
2010.
HUD observed that the AI “provides data and identifies
21
many issues central to furthering fair housing choice,” but
failed “to make any material link between those impediments and
the actions the County will take to overcome them.”
In its
detailed six-page letter, HUD described five actions the County
could take to make its AI acceptable, including identifying the
steps it would take to overcome exclusionary zoning practices.
HUD notified the County that it would take formal action on the
CPD Funds if the County did not submit an acceptable AI by April
1, 2011.
Following its December 21 rejection of the AI, HUD
contacted the County on several occasions to offer technical
assistance with the required analysis.
B. 2011
In 2011, after the United States Attorney’s Office notified
the County that it would bring an enforcement action, the County
submitted another AI.
In response to the AI, HUD listed six
restrictive zoning practices that the County’s future
submissions should address.
When the County submitted another
AI, HUD deemed that submission inadequate as well.
then took their disputes to the Monitor.
The parties
A more detailed
description of these events follows.
1. April 13, 2011 AI
On March 24, 2011, one week before its AI was due, the
County asked for an extension to May 1, 2011 to submit a revised
AI.
HUD denied the request, noting the County’s delays in
22
responding to HUD’s offers of assistance and its delays more
generally.
HUD warned that it would request that the United
States Attorney seek enforcement of the Settlement or pursue
administrative remedies if an acceptable AI were not received.
The County did not submit an AI on April 1, and on April 6, the
United States Attorney advised the County it would act to
enforce the Settlement by April 14.
The County submitted an AI on April 13, 2011.
On April 28,
HUD refused to approve the new AI, referring once again to the
County’s commitment in the Settlement to complete an AI
acceptable to HUD.
HUD advised the County that its rejection
applied to CPD programs covered by the County’s FY2011 Action
Plan.
On May 13, 2011, HUD explained the reasons for the April 28
rejection of the AI, which it characterized as “substantially
incomplete and unacceptable to HUD.”
In the nine-page letter,
HUD identified seven major deficiencies.
Among other things,
HUD explained, the County had not adequately examined the
availability of family rental housing, barriers related to
patterns of racial and ethnic segregation, exclusionary zoning,
and the location of affordable housing.
In connection with
exclusionary zoning analyses, the letter identified six zoning
practices the County needed to address: (1) restrictions that
limit or prohibit multifamily housing; (2) restrictions on the
23
size of a development; (3) restrictions directed at Section 8 or
other affordable housing; 7 (4) restrictions that directly or
indirectly limit the number of bedrooms in a unit; (5)
restrictions on lot size or other density requirements that
encourage single family housing or restrict multifamily housing;
and (6) restrictions on townhouse development (collectively,
“Restrictive Practices”).
The letter noted the connection
between the location of affordable housing and patterns of
racial segregation, explaining that the County’s discussion of
affordable housing “[did] not adequately address how it will
reduce segregation.”
Over three days in June, HUD provided the
County with technical assistance for a further revision of its
AI.
2.
July 11, 2011 AI
On July 11, 2011, the County submitted another revised AI.
HUD rejected that AI on July 13, 2011.
HUD found that the
revision did not meet the Settlement’s requirements and did not
incorporate the corrective actions identified in HUD’s May 2011
letter.
In particular, HUD pointed to the AI’s failure to
address deficiencies in the “promotion of source-of-income
legislation [and its] plans to overcome exclusionary zoning
Section 8 refers to an FHA program providing low income housing
assistance in the form of vouchers. See Salute v. Stratford
Greens Garden Apartments, 136 F.3d 293, 296 (2d Cir. 1998).
7
24
practices.”
Monitor.
Both parties subsequently sought review before the
In its submission to the Monitor, the County committed
to identifying specific zoning practices that may have
“exclusionary impacts,” and, as a last resort, to bringing legal
action against a municipality when a particular project is
blocked or hindered by its exclusionary zoning ordinance.
U.S.
ex rel. Anti-Discrimination Ctr. of Metro New York, Inc. v.
Westchester Cnty., N.Y., No. 06cv2860 (DLC), 2011 WL 7563042, at
*6, *8 (S.D.N.Y. Nov. 14, 2011) (“Monitor’s 2011 Report”).
On November 17, 2011, the Monitor issued a report
concluding that the County was “in breach of its obligation
[under the Settlement] to promote certain ‘Source of Income’
legislation.”
It also concluded that, “under the terms of the
Settlement, the County should analyze zoning ordinances in
connection with the AI,” and found that completion of such
analysis would be “appropriate” by February 29, 2012.
*1.
Id. at
The Monitor explicitly endorsed the six Restrictive
Practices HUD listed in the May 2011 letter, whose impact on
racial disparities the County should, “at a minimum,” assess.
Id. at *7.
The Monitor also concluded that the County had to
identify the types of zoning practices that would lead the
County to pursue legal action, if not remedied by the
municipality, and the circumstances that would warrant its use
of litigation.
Id. at *9.
The Monitor did not, however,
25
address the propriety of HUD’s rejection of the AI or the
adequacy of the County’s AFFH certification because such issues
were not “properly joined.”
Id. at *1.
C. 2012
In 2012, the parties litigated the findings in the
Monitor’s report.
Ultimately, the Monitor’s findings were
adopted by the Court.
In addition, the County submitted a
document in response to HUD’s demand that it address the
Restrictive Practices.
HUD rejected that document, explaining
its reasons for doing so in detail.
HUD reminded the County
again that it was in jeopardy of losing its FY2011 CPD Funds.
Following litigation, the County was required to provide the
Monitor with data that was relevant to an analysis of the zoning
ordinances in the municipalities within the County.
These and
other events are described below.
1. Response to Monitor’s 2011 Report
The County objected to some of the conclusions in the
Monitor’s 2011 Report and appealed the Monitor’s decision to the
Magistrate Judge, who accepted all but one of the Monitor’s
findings in a decision in March of 2012.
The County did not
object to the Monitor’s recommendation that the County analyze
the impact of each of the Restrictive Practices in connection
with its analysis of zoning ordinances.
It did object, however,
to a disclosure of its strategy to overcome exclusionary zoning
26
practices, including identifying the types of practices that
would prompt legal action.
Magistrate Judge’s Opinion, 2012 WL
917367, at *9.
The Magistrate Judge ruled that the Monitor was permitted
under the Settlement to require an analysis of zoning
ordinances, and that it could further require the County to
“identify the types of zoning practices that would, if not
remedied by the municipality, lead the County to pursue legal
action” and to “‘specify’ a strategy that it intends to employ
to overcome exclusionary zoning practices” in the AI.
Id.
The
Magistrate Judge also noted that the County’s AI “must contain
certain information and analyses, comply with HUD's Fair Housing
Planning Guide, and ‘be deemed acceptable by HUD.’”
Id. at *10.
The Magistrate Judge found, however, that the County Executive’s
veto of source-of-income legislation did not constitute a
violation of the Settlement.
Id. at *6.
The County did not
appeal from any of the Magistrate Judge’s rulings, including his
finding that the County had an obligation to analyze local
zoning ordinances and identify when it would bring litigation to
challenge them.
HUD did appeal, however, objecting to the
Magistrate Judge’s ruling regarding the County Executive’s veto
of source-of-income legislation.
In May of 2012, this Court granted HUD’s objection to the
Magistrate Judge’s ruling and adopted the sections of the
27
Monitor’s 2011 Report regarding the source-of-income
legislation; it adopted the remainder of the Magistrate Judge’s
Report and Recommendation.
*11.
2012 Opinion, 2012 WL 1574819, at
That decision was later affirmed by the Court of Appeals.
Appeal Decision, 712 F.3d at 771 (2d Cir. 2013).
2.
2012 Zoning Submission
As the litigation was pending in the District Court over
that portion of the 2011 Monitor’s Report devoted to source-ofincome legislation, the County submitted to HUD on February 29,
2012, a Zoning Submission (“First Zoning Submission”).
The
First Zoning Submission collected zoning ordinances adopted by
forty-three local jurisdictions in the County, and included a
subsection for each addressing the Restrictive Practices
identified by HUD.
On April 20, 2012, HUD notified the County of its intent to
reject the FY2012 Action Plan’s AFFH certification and of its
continuing disapproval of the FY2011 Action Plan.
In a second
letter that day, HUD explained to the County that the First
Zoning Submission did not comply with the Monitor’s directives
and that the County had again failed to develop a strategy to
overcome exclusionary zoning practices.
HUD reiterated that
that failure was “one of the bases for HUD’s disapproval of the
County’s FY2011 Annual Action Plan and rejection of the County’s
certification that it will affirmatively further fair housing.”
28
The twelve-page letter laid out HUD’s analysis of the
illegality of exclusionary zoning, citing this Circuit’s
decision in Huntington Branch, N.A.A.C.P. v. Town of Huntington,
844 F.2d 926 (2d Cir. 1988), 8 and the New York Court of Appeals’s
decision in Berenson v. Town of New Castle, 38 N.Y.2d 102
(1975). 9
HUD noted that the First Zoning Submission did not
examine whether any of the restrictions imposed by a local
jurisdiction’s zoning ordinances “are having exclusionary
impacts.”
HUD also explained why it did not accept the
Submission’s conclusion that the County’s “analysis has not
identified specific local zoning practices that have
Huntington and its progeny set out two ways in which zoning
laws, though facially neutral, may be discriminatory under the
Fair Housing Act. A zoning ordinance may perpetuate segregation
by restricting multifamily, townhouse, or two-family housing to
districts with a disproportionately large minority population,
or by disparately impacting minorities by restricting the
development of housing types disproportionately used by minority
residents. 844 F.2d at 937. This method of analysis as applied
to zoning laws was most recently upheld by the Supreme Court in
Texas Dep’t of Hous. & Cmty. Affairs, 2015 WL 2473449. Under
Huntington, once there has been a prima facie showing of
discriminatory effect, the burden shifts and the municipality
must present “bona fide and legitimate justifications for its
action with no less discriminatory alternatives available.”
Huntington, 844 F.2d at 939.
8
Berenson establishes the framework for evaluating zoning
ordinances under state law. Under Berenson, a municipality must
first provide a properly balanced and well-ordered plan for the
community. 38 N.Y.2d at 110. Then, municipalities just
consider, weigh, and balance both local and regional housing
needs due to the effect that zoning ordinances may have on areas
outside the municipality. Id.
9
29
exclusionary impacts.”
HUD observed that the conclusion was not
supported by either data or an appropriate methodology and not
based on applicable legal principles.
The letter also listed
four steps, drawn from the Monitor’s 2011 Report, that the
County should take to develop a clear strategy to address
exclusionary zoning practices.
It is noteworthy that HUD’s criticism in 2012 of the
County’s conclusion -- that local zoning ordinances did not have
an exclusionary impact -- is echoed in HUD’s correspondence in
2013 and 2014.
HUD has consistently asserted that the County’s
conclusion was unsupported by data or any appropriate
methodology.
Meanwhile, on March 15, 2012, the County submitted its
proposed Action Plan and Certification for FY2012 CPD funds.
On
April 20, 2012, HUD notified the County that it intended to
reject the County’s FY2012 Certification due to the failure of
the County’s revised AI to “sufficiently address deficiencies
regarding promotion of source-of-income legislation or plans to
overcome exclusionary zoning practices, which were required
pursuant to the terms” of the Settlement.
The letter reminded
the County that the Settlement “vests authority for approval of
the AI exclusively in HUD.”
On April 27, HUD provided the County with a formal notice
of disapproval of its FY2012 Action Plan.
30
Noting that the
County “has been on notice about [AI] deficiencies now for
years,” HUD stated its expectation “that the County will
substantively comply with the requirements HUD has set forth for
its AI.”
HUD listed those requirements, noting that fulfilling
them would permit HUD to approve the FY2011 and 2012 annual
Action Plans and allow the grants for those years to go forward.
The County never responded to this letter.
In a letter of May 14, 2012, the Monitor noted numerous
deficiencies in the County’s Zoning Submission and requested a
revised AI and Housing Strategy, as well as certain documents
and communications relating to the Submission.
The County
responded on July 6, 2012, with a Second Zoning Submission
containing its own legal analysis and a report by the Land Use
Law Center (“LULC Report”).
3. 2012 Motion to Compel
The United States Attorney then filed a motion to compel
the County to provide a response to the Monitor’s information
requests of May 14, 2012.
At a conference with the Court on
July 25, the County confirmed its intent to comply with its
obligations under the Settlement and acknowledged that there was
a difference between an analysis of affordable housing and one
of fair housing.
The County was ordered to respond to the
Monitor’s outstanding requests for information by the deadlines
to which the parties agreed during a conference in the
31
courthouse.
The Court also established a dispute resolution
process for any future objections by the County to requests for
information.
The County supplied a Third Zoning Submission and provided
additional information to the Monitor on eight dates between
July 31 and October 5, 2012.
In response to requests from the
Monitor, the County filed a Fourth Zoning Submission in November
2012.
D. 2013
Early in 2013, HUD formally rejected the County’s 2012
Zoning Submissions.
In response to HUD’s notice that it was
reallocating FY2011 Funds, the County simultaneously filed suit
to challenge the decision and submitted its first revised AI
since 2011.
HUD found the revised AI inadequate, as it did two
additional Zoning Submissions subsequently submitted to
supplement the AI.
HUD provided the County yet another detailed
explanation of what would be required to make its AI adequate.
Amid this, the Monitor released its first report analyzing fair
housing patterns in the County.
These events are described in
more detail below.
1. Rejection of 2012 Zoning Submissions
In a ten-page letter of March 13, 2013, HUD explained in
detail why the County’s Zoning Submissions of 2012 remained
inadequate.
It emphasized the County’s failure to “conduct a
32
proper analysis of exclusionary zoning” as well as its
continuing failure “to develop a strategy to overcome
exclusionary zoning practices.”
HUD concluded that the County’s
prior submissions, taken together, “fail to meet the
Settlement’s requirements for an acceptable AI” and its “refusal
to meet the Settlement’s requirements stand[] as an obstacle to
HUD’s approval of the County’s FY2011 and FY2012 Annual Action
Plans.”
On March 15, the County submitted its FY2013 Action Plan to
HUD.
HUD responded in a letter of April 19, described below.
2. April 24, 2013 AI
On March 25, 2013, HUD advised the County that it intended
to reallocate roughly $7.4 million in FY2011 CDBG, HOME and ESG
funding. 10
HUD explained that the County had not provided a
satisfactory certification that it would comply with its
obligation to AFFH as part of its FY2011 annual Action Plan.
HUD warned that to avoid permanent loss of the funds, the County
must provide by April 25, inter alia, “a satisfactory zoning
analysis and plan to overcome exclusionary zoning practices.”
(Emphasis in original.)
The breakdown was roughly $5.4 million in CDBG funds, $1.7
million in HOME funds, and $400,000 is ESG funds.
10
33
By letter of April 4, the County argued that it had
complied with all of HUD’s procedural requirements.
It argued
that “[b]ased upon the analysis already conducted by the County,
and the test set forth in the [LULC Report], the County . . .
determined that there was no exclusionary zoning within
Westchester County under Berenson.”
Focusing exclusively on its
statutory obligations, the County contended that it had
satisfied each of them and was entitled to receive CPD funds.
The County argued that “HUD cannot condition the disbursement of
CPD funds upon a ‘Huntington analysis’ of local zoning” because
the “relevant question is whether the municipalities receiving
CPD funds can satisfy their obligation to AFFH generally at the
time that the FY2011 CPD funds are expended.”
It added that
HUD’s actions are in violation of § 12711 of Title 42.
In a letter of April 16, HUD reaffirmed that the April 25
deadline for receipt of substantive assurances would be
enforced.
Otherwise, HUD would begin the process of
reallocating the FY2011 funds to other eligible jurisdictions.
HUD reminded the County that it had not submitted a revised AI
since July 2011.
In recapping HUD’s analysis of the
deficiencies in the County submissions, HUD referred again to
the Settlement’s explicit requirement that the County submit an
AI acceptable to HUD.
34
On April 19, HUD notified the County that it intended to
reject the County’s certification to AFFH submitted with its
FY2013 Action Plan.
In response, on April 24, the County
submitted an updated AI.
This was the first revision that the
County had made to its AI since 2011.
The April 2013 AI retained the revisions made in July 2011
and incorporated the data and information in the County’s 2012
submissions to HUD and the Monitor.
It also provided an update
to Chapter 12, “Current Impediments and Fair Housing Action
Plan,” in response to HUD’s March 2013 letter.
In all, the
April 2013 AI contained 236 pages over twelve chapters.
included voluminous appendices as well.
It
Among these were the
County’s previous zoning submissions, and, as Appendix 51, the
County’s Sixth Zoning Submission. 11
The Sixth Zoning Submission consists of 31 separate
analyses -- one per eligible municipality.
It purports to be an
analysis of the disparate impact on minorities of each
municipality’s zoning ordinances.
Each analysis ranges in
length from seven to over twenty pages and includes “a narrative
analysis” of the data provided in the analysis; a map of the
The County has not updated the text of the AI proper since
April 2013: Subsequent revisions have been to the attached
Zoning Submission, and these have been styled as “supplements”
to the AI.
11
35
municipality; and three tables showing comparative population
data accounting for race, type of housing, and minimum lot size.
Each also discusses the presence of the Restrictive Practices
identified by HUD in its May 2011 Letter by evaluating relevant
ordinances with reference to those practices.
Each analysis
ended with the statement “Therefore, the County has concluded
that [the municipality’s] zoning ordinance does not show a
separate or segregative impact on minorities and does not pose
an impediment to AFFH with respect to race.”
On April 26, HUD notified the County that HUD was
disapproving its FY2013 Action Plan because the AI constituted
“insufficient evidence to support the accuracy of the County’s
FY2013 AFFH certification.”
In a letter of May 10, HUD provided
the County the specific reasons for HUD’s disapproval of the
FY2013 Action Plan.
It reminded the County that its FY2012
Action Plan had previously been disapproved as “substantially
incomplete” and that the deficiencies identified then had not
been remedied.
It also committed that it would approve the
annual Action Plans for FY2011, 2012 and 2013 if the County
provided eight specific assurances.
In a multi-page attachment,
HUD described in detail the deficiencies in the County’s most
recent AI, and required any revision or resubmission of the
FY2013 Action Plan to be made by June 10, 2013.
36
2.
Supplemental AI Submissions
The County made no submission on June 10, but on June 13 it
provided a Seventh Zoning Submission, consisting of revised
zoning analyses for five local jurisdictions.
The County
indicated that, if the revised analyses were acceptable to HUD,
it would conduct such an analysis with respect to the remaining
twenty-six municipalities.
On July 12, having reviewed the
Seventh Zoning Submission, HUD again rejected the County’s
FY2013 Certification.
HUD offered to make resources available
to assist the County in finalizing its zoning analysis and
strategy, however, “as long as progress is being made.”
On July
23, the County provided HUD with an Eighth Zoning Submission,
consisting of revised analyses of ten jurisdictions, including
the five from the Seventh Zoning Submission but with further
revisions.
The County offered again to conduct similar analyses
of the remaining municipalities provided the methodology was
acceptable.
3.
Monitor’s 2013 Report
The Monitor has issued two reports analyzing the zoning
ordinances in the municipalities within the County.
They were
issued on July 31, 2013 and September 8, 2014 (“Monitor’s 2013
Report” and “Monitor’s 2014 Report”).
The Monitor has also
requested relevant data from the municipalities, many of which
37
have complied with those requests, and engaged in discussions
with several municipalities about fair housing issues.
In response to the County’s assertion that there is no
evidence of exclusionary zoning in any of 31 municipalities in
the County, the Monitor undertook his own analysis. 12
The
Monitor’s 2013 Report analyzed each jurisdiction’s zoning
regulations and gave each jurisdiction an opportunity to respond
to the accuracy of his findings.
The Monitor concludes that the
regulations in 24 of the 31 “are not exclusionary,” but that the
zoning codes in seven required a “more searching analysis.”
These seven municipalities had zoning codes that did not provide
meaningful opportunities for affordable housing and, “when
viewed in the light of applicable state and federal law, [were]
exclusionary.”
Therefore, the Monitor concluded, the County’s
assertion that exclusionary zoning is absent from the County “is
strongly contradicted by its own data.”
The Monitor did not
find that any particular zoning ordinance actually had a
segregative effect, but concluded that a Huntington analysis was
required.
The Monitor directed the County to, among other
things, “identify the steps it will take to ensure that the
municipalities make provision for affordable housing, including,
The Monitor engaged experts from the Pratt Graduate Center for
Planning and the Environment to assist him. They are John
Shapiro, Brian Kintish, and Alix Fellman.
12
38
but not limited to, modification of certain zoning regulations .
. . .”
The final version of the Monitor’s 2013 Report was
issued on September 13, 2013, but did not differ in any material
respect.
The release of Monitor’s 2013 Report had concrete effects.
At least six of the seven municipalities it identified as
problematic entered into a dialogue with the Monitor about
possible changes to their zoning ordinances.
Ultimately,
Mamaroneck, Ossining, and Pound Ridge chose to amend to their
zoning ordinances to make them less exclusionary.
4. August 9, 2013 Letter from HUD
HUD responded to the County’s July 23 submission on August
9, 2013 (“August 2013 Letter”).
This letter, which the County
contends is one of the most significant to this litigation,
concluded that the County’s July 23 Zoning Submission
“demonstrate[d] meaningful progress” but that it continued to
fail “in critical aspects previously identified by HUD.”
After
describing the analysis in the July 23 Zoning Submission which
HUD found appropriate, it took issue with the County’s continued
assertion that local zoning ordinances “do not have a disparate
impact on minorities.”
HUD found the conclusion not supported
by the available data or an adequate disparate impact analysis.
Observing that the County acknowledged that Restrictive
Practices exist in these municipalities and that they have the
39
effect of limiting the availability of affordable housing, HUD
criticized the County for its refusal to acknowledge “any
connection between zoning restrictions” that affect affordable
housing and those that affect fair housing.
Accordingly, HUD
continued to find that the County’s AI was unacceptable.
Because time was of the essence for reallocation of the
FY2011 funds, HUD required the County to provide evidence that
it was capable of conducting an adequate disparate impact
analysis by August 15 with respect to one of three
municipalities recently identified by the Monitor as having
exclusionary zoning practices. 13
It also required the County to
sign and submit, by August 15, four “special assurances.”
These
assurances were (1) an acknowledgement that the County had “an
ongoing duty to [AFFH] that includes compliance with the 2009
Settlement”; (2) that the County would “adopt[] and
incorporate[] by reference into its [AI] the findings of the
[Monitor’s 2013 Report] and will comply with [the Monitor’s]
recommendations and information requests”; (3) that the County
would submit a final Zoning Submission by October 15 consistent
In the Monitor’s 2013 Report, the Monitor found that seven
jurisdictions -- Croton-on-Hudson, Harrison, Lewisboro,
Mamaroneck, Ossining, Pelham Manor, and Pound Ridge -- had
exclusionary zoning practices. The August 2013 Letter’s request
was with respect to three of these: Lewisboro, Ossining, and
Pound Ridge.
13
40
with the content of HUD’s August 2013 Letter, and incorporate
that Submission into the AI; and (4) that the County would
“adopt[], incorporate[] by reference, and commit[] to
implementation of” a HUD-prescribed “Strategy on Exclusionary
Zoning.”
The County did not give the requested assurances.
Instead,
by a letter of August 13, the County rejected HUD’s critiques,
insisted that its analyses were “extensive, well documented and
complete,” and objected to HUD’s requested assurances as
unreasonable demands.
The County proposed as an alternative
that HUD provide the CPD Funds to New York State to administer
on the County’s behalf.
As HUD had previously explained to the
County, however, HUD believed it only had statutory authority to
do that with respect to ESG funds.
Accordingly, in a letter of
August 16, HUD explained that it would be reallocating the
FY2011 Funds.
On August 19, HUD made available the roughly
$400,000 in FY2011 ESG funds to the State of New York.
5.
County’s 2013 Lawsuit
Having been informed again on April 16 that HUD intended to
reallocate FY2011 CPD Funds, the County took two actions on
April 24, 2013.
It submitted the revised AI to HUD, as
described above, and filed a complaint in this Court.
The
complaint challenged HUD’s denial of FY2011 Funds in its April
16, 2013 letter, bringing three claims under the APA and one
41
claim under 42 U.S.C. § 12711. 14
The first APA claim sought an
injunction under 5 U.S.C. § 705; the second two alleged that
HUD’s denial was arbitrary and capricious for imposing a more
stringent standard on the County than similarly situated
applicants and for failure to comply with the Settlement.
On April 26, 2013, the Court denied the County’s
application for a temporary restraining order and declined to
grant the County’s application for a preliminary injunction.
In
an Opinion of August 13, 2013, this Court determined it lacked
subject matter jurisdiction over the County’s three APA claims
and that the County failed to adequately plead that HUD breached
§ 12711 by conditioning funding on implementing source-of-income
legislation; the Court accordingly dismissed all four claims.
2013 Opinion, 2013 WL 4400843, at *4-5.
The County appealed
this decision and sought a preliminary injunction from the Court
of Appeals for the Second Circuit.
The Court of Appeals denied
the County’s motion for a preliminary injunction on September
25, 2013, and, as described further below, held on February 18,
2015 that subject matter jurisdiction exists as to those FY2011
funds that had not yet been reallocated.
The § 12711 claim is moot. It alleged that HUD had improperly
conditioned receipt of the funds on implementing source-ofincome legislation.
14
42
E. 2014
In 2014, HUD notified the County that its FY2012 Funds
would be reallocated, but outlined specific steps -- including
four special assurances -- that the County could give to prevent
reallocation.
HUD also rejected the County’s FY2014 Action
Plan, and the Monitor released a report that built upon his 2013
Report.
These events are described in more detail below.
1. Special Assurances
On April 23, 2014, noting that the County had never
provided the assurances requested two years earlier (on April
27, 2012), HUD advised the County that it intended to reallocate
the FY2012 CPD Funds. 15
HUD also recounted that, because of “the
County’s inaction and refusal to design its own solution, HUD
[had] provided the County with a roadmap to coming into
compliance with the Settlement and its AFFH obligations.”
HUD
observed that the County
has not provided a productive alternative way to come
into compliance with the Settlement Agreement and its
AFFH obligation. Instead, the County has steadfastly
refused to revise its [AI] to include an adequate
analysis of restrictive zoning practices and a
strategy to overcome exclusionary zoning.
HUD reminded the County that the Settlement required the
County to submit an AI “deemed acceptable by HUD.”
The FY2012 funds included approximately $4 million in CDBG
Funds, $800,000 in HOME Funds, and $500,000 in ESG Funds.
15
43
Despite a long record of unfulfilled requests, HUD gave the
County yet another opportunity to delay reallocation.
If the
County agreed by May 7, 2014 to provide four “special
assurances” attached to the letter, the FY2012 and 2013 Action
Plans would be approved and the funds awarded “upon timely
satisfaction of all submission requirements.”
Otherwise, the
FY2012 CPD Funds would be reallocated.
The four special assurances (“Assurances”) were largely
duplicative of those outlined two years earlier.
The fourth
required the County to commit to implementation of an attached
one-page strategy to overcome exclusionary zoning practices
(“Strategy”).
The Strategy involved three steps: identifying
municipalities with Restrictive Practices that may potentially
have discriminatory exclusionary effects; communicating with the
municipality to seek removal or reduction of unjustifiable
restrictions with potentially discriminatory exclusionary
effects; and, after exhausting efforts to obtain cooperation,
engaging in enforcement activities, which might include filing
litigation or making a referral to the U.S. Department of
Justice.
The County did not give the Assurances by May 7, 2014.
As
described below, HUD relied again on the Country’s refusal to
provide these Assurances and to adopt the Strategy to overcome
exclusionary zoning practices when it rejected the Country’s
44
FY2014 Action Plan.
On May 9, 2014 the County informed HUD that
it would not be seeking requalification under the CPD programs
for the FY2015-17 cycle.
2. Efforts by Board of Legislators
During May 2014, Robert Kaplowitz (“Kaplowitz”), Chairman
of the County’s Board of Legislators (“BoL”), sought to postpone
the reallocation of FY2012 funds by proposing that the BoL
pursue the enactment of legislation that would provide the
Assurances to HUD.
HUD agreed to postpone any irrevocable
action on the FY2012 Funds until June 9, 2014.
The parties have
pointed to no evidence that the County ever provided HUD with
the Assurances it sought, whether through legislation or
otherwise.
On May 30, 2014, HUD advised the County that it continued
to disapprove the County’s AI and subsequent Zoning Submissions.
HUD cited the County’s failure to provide an adequate plan to
overcome exclusionary zoning practices, as previously enumerated
in the May 2011 letter describing the six Restrictive Practices
the County was required to address.
Shortly thereafter, on June 5, the County submitted its
FY2014 Action Plan to HUD.
The FY2014 Action Plan was a 62-page
document with ten sections and hundreds of pages of appendices.
Each of the ten sections is addressed to specific statutory and
regulatory requirements.
Most significantly, Section A contains
45
the County’s grant application, as well as its express AFFH
Certification.
The AFFH Certification is signed by the County
Executive, with the signature dated June 2, 2014.
3. HUD Rejection of FY2014 Action Plan
On June 27, 2014, HUD notified the County of its intent to
reject the FY2014 Action Plan’s AFFH Certification.
It
explained that the County had failed to take the steps outlined
in HUD’s April 23, 2014 letter to gain approval for the FY2012
and FY2013 Action Plans and that the inadequacy of the AI would,
without prompt action by the County, result in the rejection of
the FY2014 Action Plan as well.
HUD offered the County “an
additional opportunity to provide evidentiary support for its
AFFH certification” before a final decision, and required the
County to submit by July 8 a written response and specific
evidence to support the 2014 AFFH Certification.
Having received no response from the County, on July 18,
2014, HUD formally rejected the AFFH Certification in the FY2014
Action Plan as “inaccurate.”
It disapproved the Action Plan in
its entirety as “substantially incomplete.”
The letter
explained once again that HUD was taking this action because the
County had failed to provide “an adequate” AI and had, moreover,
had given the Department “no assurance that it plans to come
into compliance with its AFFH obligations.”
It once again
attached the Assurances and Strategy and gave the County until
46
September 1, 2014, to submit them to HUD.
The County did not
comply.
5. Monitor’s 2014 Report
Besides seeking a delay in the reallocation of funds in May
2014, Kaplowitz also sought help from the Monitor.
He requested
that the Monitor prepare a Huntington analysis of the 31
eligible municipalities’ zoning ordinances to aid the County in
completing its AI.
While the Monitor’s earlier report had
highlighted the steps that the County needed to undertake to
comply with the law, the Monitor had not himself conducted that
evaluation of the zoning ordinances under the Huntington
standard.
In response to this request for assistance, the
Monitor described his proposed methodology to the parties on May
27, 2014, and requested any objection to that methodology by
June 5.
The County promptly objected to the methodology.
On September 8, 2014, the Monitor issued his 2014 Report.
The Report, an extension of the Monitor’s 2013 Report, analyzed
at length the discriminatory impact of each municipality’s
zoning code on the County’s minority residents.
It concluded
that there was prima facie evidence that six municipalities -Harrison, Larchmont, Lewisboro, North Castle, Pelham Manor, and
47
Rye Brook -- had zoning codes that are presumptively
exclusionary under federal law. 16
F. 2015
1.
Ruling Regarding Judicial Review
On February 18, 2015, the Second Circuit affirmed the 2013
Opinion’s dismissal of the County’s claims but only “insofar as
they seek relief with respect to already reallocated funds.”
2015 Opinion, 778 F.3d at 417.
Because reallocated funds are
unavailable to the County, any claims to those funds are moot.
This includes all of the FY2011 Funds administered under the
CDBG and ESG programs.
With respect to the approximately
$753,000 in HOME funds that had not been reallocated, however,
the Second Circuit found that the County’s claims were subject
to judicial review and remanded the case.
The Second Circuit
did not reach the question of whether judicial review was
available under the CDBG and ESG programs.
2. FY2013-2014 Reallocation
As noted above, on May 9, 2014, the County notified HUD
that it did not intend to requalify as a CDBG urban county for
the FY2015 to FY2017 period.
On February 3, 2015, HUD advised
the County that its failure to receive a grant for FY2012 (due
The Monitor noted the “considerable progress” made by
Mamaroneck, Pound Ridge, and Ossining since the Monitor’s 2013
Report.
16
48
to the County’s failure to take satisfactory remedial action and
the reallocation of the funds) had resulted in the termination
of its qualification as an urban county.
Until the County
requalifies as a CDBG urban county and as a HOME participating
jurisdiction, the letter explained, it would not receive FY2015
Funds or any future funds.
The termination also affected the
remainder of the County’s FY2013 and FY2014 Funds, and HUD
advised the County that it would proceed to reallocate them as
well.
The ESG Funds would be reallocated to the State for use
within the County pursuant to federal regulation.
2. Reallocation Status
Given the County’s decision to not seek to qualify to
receive CPD Funds for FY2015 or thereafter, the funds that
remain at stake in this litigation are those for essentially two
years.
As reflected in the chart below, some of the FY2011
Funds were reallocated, and some were essentially lost for use
in community development programs. 17
The FY2012 Funds were
reallocated to other jurisdictions.
Therefore, it is primarily
the fate of the FY2013 and FY2014 Funds that remains undecided.
All but $752,844 of the HOME Funds had been reallocated by
September 30, 2013, at which point the remainder reverted to an
expired account. No other jurisdiction, therefore, can receive
these funds. The County will not receive the funds unless they
submit to HUD an AI deemed adequate by September 30, 2018, at
which point they will revert to the federal Treasury.
17
49
HUD must grant the FY2013 Funds by September 30, 2015, however,
or they cannot be reallocated to another jurisdiction and will
effectively be lost for use in housing and community development
programs. 18
2015 Opinion, 778 F.3d at 417 n.8.
The statutory
lapse date is September 30, 2016 for the FY2014 funds.
The
table below summarizes the current status of the CPD Funds.
Funds
2011
CDBG
ESG
HOME
2012
CDBG
ESG
HOME
2013
CDBG
ESG
HOME
2014
CDBG
ESG
HOME
Reallocation Notice
March 25, 2013
April 23, 2013
February 3, 2015
February 3, 2015
Lapse Date
Committed
September 30, 2013
Yes
Yes
In Part
September 30, 2014
Yes
Yes
Yes
September 30, 2015
No
No
No
September 30, 2016
No
No
No
The reallocation process varies with each program.
In
total, the County stood to receive approximately $10,113,000 of
CDBG and HOME funds in FY2013 and FY2014.
Those funds have been
added to total FY2015 allocations for eligible grantees.
Thus,
the County’s FY2013 CDBG Funds are in the process of being
As HUD explained at the March 27, 2015 hearing, the
reallocation process is an intricate and time-consuming process.
Accordingly, while the lapse date is September 30, the time
actually required for reallocation spans months.
18
50
reallocated to Yonkers and Mount Vernon, which apply
independently of the County for CPD Funds, to New York City, and
to dozens of other municipalities in the region.
The FY2013 and
FY2014 HOME funds -- approximately $1,822,000 -- are in the
process of being reallocated to approximately 588 municipalities
nationwide.
The $623,682 in FY2013 and FY2014 ESG Funds are in
the process of being reallocated to the State of New York.
Beginning the reallocation process, however, does not
commit funds to grantees.
To receive reallocated HOME funds as
part of their FY2015 grant, each municipality must submit its
annual Action Plan to HUD for review and approval; HUD must
complete its review within 45 days.
The right to the funds
passes to the grantee when a grant agreement is entered
following that approval.
Grant funds must be distributed
pursuant to a valid agreement by September 30 for a jurisdiction
other than the County to receive the funds.
In light of an
injunction that has been entered, which is described below, HUD
has halted the obligation of the County’s CPD funds pending
further judicial action. 19
Given that HUD must approve or reject Action Plans within 45
days of submission, in the event the injunction is lifted, it is
unclear from the parties’ submissions whether applicants who
filed Action Plans more than 45 days earlier will have lost the
opportunity to receive CPD Funds.
19
51
3. 2015 Lawsuit
On March 17, the County filed a second lawsuit claiming
that HUD’s denial of its AFFH Certifications violated the APA,
42 U.S.C. § 12711, and the Equal Protection and Due Processes
Clauses of the Fifth Amendment. 20
On March 19, the County filed
a motion for a preliminary injunction.
That motion was denied
on March 27, and an expedited briefing schedule for this summary
judgment motion practice was set.
judgment on April 17.
HUD moved for summary
The County opposed that motion, and
cross-moved for summary judgment on May 1.
Briefing was fully
submitted on May 22.
The County appealed this Court’s denial of the preliminary
injunction ruling.
On April 20, the Second Circuit granted an
injunction pending appeal, ordering that HUD not obligate (or
otherwise reassign or alienate) the County’s entitlement FY20132014 CPD Funds pending resolution by the Court of Appeals of the
appeal.
4.
Monitor’s May 2015 Report
Most recently, on May 8, 2015, the Monitor filed a Report
regarding implementation of the Settlement.
The Monitor found
that the County had breached the portions of the Settlement
This complaint, 15cv1992 (DLC), and the 2013 lawsuit, 13cv2741
(DLC), were consolidated on April 15, 2015.
20
52
requiring that the County have “financing in place” for 450
affordable housing units by December 31, 2014, because the
County’s legislation providing funding included conditions that
were not met until after the deadline.
The Monitor also found
that the County has not discharged its duties to pursue all
available means to overcome municipal resistance to the
Settlement’s affordable housing objectives.
On June 16, the County filed its objections to the
Monitor’s 2015 Report.
The issue is sub judice before the
Magistrate Judge.
DISCUSSION
When a court is called upon to review agency action under
the Administrative Procedure Act (“APA”), the question presented
“is a legal one which the district court can resolve on the
agency record . . . on a motion for summary judgment.”
Univ.
Med. Ctr. of S. Nevada v. Shalala, 173 F.3d 438, 440 n.3 (D.C.
Cir. 1999); see also Am. Bioscience, Inc. v. Thompson, 269 F.3d
1077, 1083 (D.C. Cir. 2001).
The Court of Appeals having
decided that the County is entitled to judicial review of HUD’s
decision to deny funding to the County under the HOME statute,
the first question to address is whether the County is also
entitled to judicial review of the decisions to withhold funding
53
under the CDBG and ESG statutes. 21
Finding that judicial review
is available to the County, the Opinion will then address
whether HUD acted within its discretion and whether the County’s
reliance on two provisions of the HOME statute alters a
conclusion that HUD acted lawfully.
I. Subject Matter Jurisdiction
The Second Circuit held in the 2015 Opinion that judicial
review was available over the agency’s denial of HOME Funds.
778 F.3d at 419-20.
Finding that reallocation of CDBG and ESG
funds rendered that portion of the appeal moot, however, it did
not reach the issue of whether a decision denying funds under
the CDBG or ESG programs is similarly reviewable.
Id. at 417.
While different statutes govern these programs, the requirements
and language used overlap.
Given the similarities among the
statutes, HUD’s decision to deny funding under the CDBG and ESG
statutes appears also to be reviewable. 22
Under the APA, a party aggrieved by agency action is
generally “entitled to judicial review thereof.”
5 U.S.C. §
702; see Conyers v. Rossides, 558 F.3d 137, 143 (2d Cir.
Any dispute regarding HUD’s decisions to withhold FY2012 CPD
Funds and FY2013 lead paint reduction funds are moot because the
funds have been reallocated.
21
Both the County and HUD urge this Court to reach the merits of
the APA challenge even in the event it concludes that HUD’s
decisions are not subject to judicial review.
22
54
2009) (noting the “strong presumption that Congress intends
judicial review of administrative action”).
But, judicial
review is not available “to the extent that . . . agency action
is committed to agency discretion by law.”
701(a)(2).
5 U.S.C. §
This exception to judicial review, however, “applies
only in those rare instances where statutes are drawn in such
broad terms that in a given case there is no law to
apply.”
Sharkey v. Quarantillo, 541 F.3d 75, 91 (2d Cir.
2008) (citation omitted).
The Second Circuit concluded that several provisions of the
HOME statute limit HUD’s ability to approve or reject a
jurisdiction’s application for grant funding.
As a consequence
the statute was not “drawn in such broad terms” that there is no
law to apply on judicial review.
(citation omitted).
2015 Opinion, 778 F.3d at 420
The CDBG and ESG statutes contain
sufficiently comparable provisions to dictate the same finding.
For instance, the CDBG statute provides six criteria that
applicants must satisfy in order to receive a grant, including
that the grant “be conducted and administered in conformity with
. . . the Fair Housing Act,” including the AFFH certification
requirement.
42 U.S.C. § 5304(b).
And while the ESG statute
does not contain any separate eligibility criteria, it states
that ESG grants shall be allocated in accordance with the
55
allocation of CDBG grants under § 5304(b); it may, therefore,
fairly be evaluated by the CDBG criteria.
The Second Circuit also held that the references to the
Secretary’s exercise of discretion in the HOME statute, and in
the agency regulations as well, did not “negate” the statutory
provisions that impose limitations on that agency discretion.
778 F.3d at 421.
Thus, the reference in the HOME statute to
conditions being met to the “satisfact[ion] [of] the Secretary”
was insufficient to divest the court of jurisdiction.
U.S.C. § 12708; 2015 Opinion, 778 F.3d at 421.
See 42
A similar
reference to the Secretary’s discretion, and the requirement
that the grantee’s certification satisfy the Secretary, appears
in the CDBG statute.
See 42 U.S.C. § 5304(b).
For the reasons
explained by the Court of Appeals, this recognition of agency
does not exclude review.
Defendants argue that judicial review of CDBG and ESG
grants is precluded because those statutes are distinguishable
from the HOME statute.
Among other things, the CDBG statute
allows a recipient of CDBG payments to file a petition in the
Court of Appeals for review of HUD’s decision to terminate,
reduce, or limit those payments.
Id. § 5311(c).
Defendants
argue that the specific grant of a right to review a HUD
decision in that one set of circumstances implies that judicial
56
review is unavailable here, where the decision at stake is one
to grant funds under § 5304.
These arguments have some force.
Nevertheless, given the
similarities between the HOME statute on the one hand and the
CDBG and ESG statutes on the other, the thrust and reasoning in
the Second Circuit’s decision in 2015 Opinion, and the basic
presumption that judicial review exists under the APA, this
Court concludes that HUD’s decision to deny CDBG and ESG funds
also appears to be reviewable by this Court.
II. Application of Arbitrary and Capricious Standard
The County moves for summary judgment on the ground that
HUD’s August 9, 2013 and July 18, 2014 decisions to withhold CPD
Funds were arbitrary and capricious.
Although the complaints it
filed to begin these two consolidated actions are more broadly
worded, the County’s motion (as well as its opposition to HUD’s
own motion for summary judgment) rests almost exclusively on its
argument that HUD exceeded its statutory authority under 42
U.S.C. §§ 12705(c)(1) and 12711 when it denied funding.
The
County asserts that these two statutes forbid HUD from
withholding funds because of its desire to change local zoning
ordinances.
The County’s reliance on those two statutes, which
are contained in the HOME statute only, are addressed at the end
of this Opinion.
57
HUD also moves for summary judgment.
It contends that its
decisions to reject the County’s AIs and AFFH Certifications
were neither arbitrary and capricious nor contrary to its
statutory grant of authority.
The parties agree that the
appropriate standard of any court review of the actions taken by
HUD here is the arbitrary and capricious standard.
See, e.g.,
Guertin v. United States, 743 F.3d 382, 385-86 (2d Cir. 2014).
The APA permits a court to “compel agency action unlawfully
withheld” and set aside an agency’s determination if it is
“arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.”
5 U.S.C. § 706(2)(A).
In reviewing
agency action, a court may not “substitute its judgment for that
of the agency.”
Judulang v. Holder, 132 S. Ct. 476, 483 (2011)
(citation omitted).
The scope of review under this standard is
narrow because, among other reasons, “a court must be reluctant
to reverse results supported by a weight of considered and
carefully articulated expert opinion.”
Fund for Animals v.
Kempthorne, 538 F.3d 124, 132 (2d Cir. 2008) (citation omitted).
“Nevertheless, [the court’s] inquiry must be searching and
careful . . . [and] [t]he record must show that the agency
examined the relevant data and articulated a satisfactory
explanation for its action.”
Nat. Res. Def. Council v. EPA, 658
F.3d 200, 215 (2d Cir. 2011) (citation omitted).
58
In addition, agency action is arbitrary and capricious
if the agency has relied on factors which Congress has
not intended it to consider, entirely failed to
consider an important aspect of the problem, offered
an explanation for its decision that runs counter to
the evidence before the agency, or is so implausible
that it could not be ascribed to a difference in view
or the product of agency expertise.
Id. (citation omitted).
See also Guertin, 743 F.3d at 385-86;
Bechtel v. Admin. Review Bd., 710 F.3d 443, 446 (2d Cir. 2013)
Moreover, although a court may “uphold a decision of less than
ideal clarity if the agency’s path may reasonably be discerned,
[the court] may not supply a reasoned basis for the agency’s
action that the agency itself has not given.”
Nat. Res. Def.
Council, 658 F.3d at 215 (citation omitted).
A. Statutory Framework
The CDBG and HOME statutes each require that grantees
certify that they will AFFH.
Recipients of CDBG funds are
required to certify that, inter alia, “the grant will be
conducted and administered in conformity with the Civil Rights
Act of 1964 and the Fair Housing Act, and the grantee will
affirmatively further fair housing”; recipients of HOME funds
are required to certify that “the jurisdiction will
affirmatively further fair housing.”
12705(b)(15).
42 U.S.C. §§ 5304(b)(2),
The HOME statute explicitly requires that
Certifications be “based on supporting evidence” and that a
59
review of such evidence may be grounds for HUD finding a
Certification inaccurate.
Id.
§ 12704(21).
The duty to AFFH encompasses the duties to “conduct an
analysis of impediments to fair housing choice within the area,
take appropriate actions to overcome the effects of any
impediments identified through that analysis, and maintain
records reflecting the analysis and actions in this regard.”
24
C.F.R. §§ 91.225(a)(1) (HOME); id. § 570.601(a)(2) (CDBG).
These obligations require the grantee to analyze the impact of
race on housing opportunities and choice in its jurisdiction,
including any impediments erected by race discrimination or
segregation.
668 F. Supp. 2d at 552.
Therefore, to receive
CDBG and HOME Funds, applicants must submit the required
Certification supported by the required AI.
B. HUD Letters
The two HUD letters to which the County principally objects
are the letters of August 9, 2013 (“2013 HUD Letter”) and the
letter of July 18, 2014 (“2014 HUD Letter”).
Although each of
these letters has been described above, for ease of reference,
they are described again here.
In the 2013 HUD Letter, HUD rejected the County’s 2013 AI,
submitted on April 24, 2013, as well as its Seventh and Eighth
Zoning Submissions (“AI Supplements”), which the County
submitted on June 13 and July 23, 2013, and which were addressed
60
to zoning ordinances in, respectively, five and ten
municipalities.
The 2013 HUD Letter advised the County that it
would move forward with the process of reallocating FY2011 CPD
Funds absent sufficient evidence to support the County’s
Certification to affirmatively further fair housing.
The 2013 HUD Letter recounted reasons HUD had found the
County’s submissions since 2010 to be deficient, as well as the
steps HUD and the Monitor had taken to assist the County.
It
described the Monitor’s requests for data from the County and
his use of that data to produce his own report on the zoning
practices within the County.
HUD recited the Monitor’s
conclusion that “the data shows that zoning restrictions in some
of the seven municipalities may serve to perpetuate segregative
housing patterns and may have a disparate impact on racial and
ethnic minorities, and therefore may violate federal law,” and
the Monitor’s finding that “the County’s conclusion that
exclusionary zoning does not exist anywhere in Westchester
County is not supported by its own data.”
HUD explained that, with the County’s adoption of sourceof-income legislation, the “only issue holding up the
acceptability of the County’s AI is the inadequacy of its plans
to overcome exclusionary zoning practices.”
61
Acknowledging that
the County had made progress in its analysis of existing zoning
ordinances, 23 HUD objected that
the County continues to assert that local zoning
ordinances do not have a disparate impact on
minorities and that the County “has concluded that
[the municipality’s] zoning ordinance does not show a
disparate or segregative impact on minorities and does
not include provisions that can be identified as
impediments to AFFH with respect to race or ethnicity.
Explaining the reason for its objection, HUD stated that the
County’s
conclusions are simply not supported by the available
data and do not reflect an adequate disparate impact
analysis. As the County itself acknowledges,
Restrictive Practices exist in these municipalities
that have the effect of limiting the availability of
affordable housing. Such limitations may in fact have
an exclusionary effect based on race, national origin,
or familial status, which the data supports. The
refusal to acknowledge any connection between zoning
restrictions that affect the availability and location
of affordable housing and fair housing protections
directly challenges the Court’s rulings on the matter
and the Settlement itself. HUD therefore cannot
accept the County’s Zoning Submission. Thus, the
County’s AI remains unacceptable.
(Emphasis added.)
For instance, HUD pointed out that the 2013 AI acknowledged
that the percentage of the single-race Black population and of
the Hispanic population is lower in ten municipalities than in
the County as a whole. The County had also identified changes
that each municipality might undertake to its zoning ordinance
in order to increase the supply of affordable and multifamily
housing.
23
62
Noting that “[t]ime is of the essence due to the
reallocation process and potential lapse of the fiscal year 2011
formula grant funding,” HUD required
special assurances and evidence that the County is
capable of conducting an adequate disparate impact
analysis. In order to provide sufficient evidence to
support the certification to [AFFH], the County must
provide the attached special assurances and
demonstrate that it can complete an amended
exclusionary zoning analysis for a single municipality
by
August 15, 2013.
HUD then described five specific amendments
the County had to make to its zoning analysis of one of three
specified municipalities, if it wished HUD to stop moving
forward with the reallocation of the FY2011 CPD Funds.
HUD
again attached to its letter the Assurances and Strategy on
exclusionary zoning which it had previously provided to the
County.
The 2014 HUD Letter, dated July 18, is shorter.
upon two prior letters from 2014.
It built
On April 23, 2014, HUD
advised the County that the FY2011 CPD Funds had been
reallocated or expired, and that HUD intended to proceed with
reallocation of the FY2012 CPD Funds due to the County’s
“steadfast[] refus[al] to revise its [AI] to include an adequate
analysis of restrictive zoning practices and a strategy to
overcome exclusionary zoning.”
It noted that the Settlement
63
required the County to submit an AI “deemed acceptable by HUD.” 24
On June 27, HUD notified the County that it intended to reject
the County’s Certification with its FY2014 Action Plan because
its AI remained inadequate.
In the wake of the County’s refusal
respond to HUD’s requests, the 2014 HUD Letter advised the
County that “HUD is rejecting the County’ AFFH certification as
inaccurate and . . . is disapproving the County’s FY 2014 Action
Plan as substantially incomplete . . . because the County has
failed to provide an adequate” AI and “and has given the
Department no assurance that it plans to come into compliance
with its AFFH obligations.”
The 2014 HUD Letter again attached
the Assurances and Strategy.
C. Review of HUD Decisions
There is no basis on this administrative record to find
that HUD has acted arbitrarily or capriciously.
contrary.
Quite the
HUD has acted with clarity and patience, repeatedly
explaining its grounds for rejecting inadequate AIs and offering
both guidance and assistance.
Over and over again, HUD has
given the County opportunities to amend its AIs, roadmaps to
assist it in doing so, and additional time to demonstrate a
willingness to comply with federal law.
In its reply memorandum, the County for the first time cites
this letter as the “final rejection” of its FY2012-2013
Certifications.
24
64
Nor has HUD acted precipitously.
HUD’s desire to give the
CPD Funds to the County led it to design creative ways for the
County to demonstrate a willingness to provide an adequate AI.
HUD created a list of Assurances and a Strategy that, if adopted
by the County, would cause HUD to suspend the reallocation
process while the County revised its AI.
HUD’s commitment to
its mission and to the residents of Westchester County has so
extended the time for the County to produce an acceptable AI
that, when coupled with the County’s litigation strategy, there
is now a real risk that some CPD Funds will be lost to CPD
programs altogether.
If the FY2013 CDBG and HOME Funds are not
obligated to other jurisdictions by September 30, 2015, there is
virtually no likelihood that those funds will ever be used as
intended for housing and community development projects. 25
Measured against the standards for assessing agency action,
the record demonstrates that HUD has relied on factors that
Congress intended it to consider, that it has not ignored any
important aspect of the problem, that it has offered
explanations for its decision grounded in the evidentiary record
before the agency, and that its decision is a well-supported
While the CPD Funds could, theoretically, still be given to
the County if it submitted an adequate AI in the next five
years, the County has been unwilling for the last six years to
submit an adequate AI, and it has indicated that it no longer
intends to seek CPD Funds.
25
65
product of its own expertise.
Council, 658 F.3d at 215.
See, e.g., Nat. Res. Def.
It should now be beyond dispute that
the Fair Housing Act, as well as the CDBG, HOME, and ESG
statutes, require an applicant to analyze impediments erected by
race discrimination and segregation to fair housing choice if it
seeks to qualify for federal assistance under these programs.
It is also well established that discriminatory zoning practices
are an essential component of any such analysis.
See, e.g.,
Texas Dep't of Hous. & Cmty. Affairs, 2015 WL 2473449, at *17;
Fair Hous. in Huntington Comm. Inc. v. Town of Huntington, N.Y.,
316 F.3d 357, 366 (2d Cir. 2003); LeBlanc-Sternberg v. Fletcher,
67 F.3d 412, 424 (2d Cir. 1995).
As the Supreme Court recently
reminded us, the central purpose of the FHA is the eradication
of discriminatory practices in housing.
Texas Dep't of Hous. &
Cmty. Affairs, 2015 WL 2473449, at *17.
“These unlawful
practices include zoning laws.”
Id.
Moreover, the County does not point to any aspect of the
problem that HUD has ignored and this Court’s review of the
record has uncovered none.
Finally, HUD’s reason for rejecting
the County’s AI is firmly rooted in its expertise.
Not only are HUD’s reasons for rejecting the County’s AI
firmly rooted in its expertise, they are not challenged by the
County in this motion practice.
The County’s bald assertions in
its 2013 AI and AI Supplements that the zoning ordinances for
66
the municipalities it examined do not show a disparate or
segregative impact on minorities and that they cannot be
identified as impediments to fair housing are, as HUD pointed
out, not supported by the data.
Indeed, HUD concluded they are
at odds with the available data.
And at no point did the County
undertake an adequate disparate impact analysis to support its
counterintuitive and conclusory assertions.
When HUD rejected the County’s AIs it was not, of course,
writing on a clean slate.
For at least seven years preceding
2007, the County submitted false Certifications to HUD.
During
the FCA litigation, the County adamantly argued that it was not
required to consider race when analyzing impediments to fair
housing choice.
Despite the requirement in the Settlement that
the County promote source-of-income legislation, the County
resisted that requirement for years and only complied after
years of litigation.
Despite the requirement in the Settlement
that the County produce an AI “acceptable” to HUD by December
2009, the County has never produced one acceptable to HUD.
It
took until July 2010 to produce any post-Settlement AI, and only
in 2013 did the County submit a substantially revised AI that
incorporated data the Monitor had required the County to
provide.
Against this long history of recalcitrance by the County,
HUD has acted with great restraint and has labored, year after
67
year, to assist the County so that it could lawfully receive
federal funds.
There is, in short, no basis to find that HUD
has acted arbitrarily or capriciously in issuing the 2013 or
2014 HUD Letters.
The County makes no serious attempt to refute HUD’s
substantive criticism of its AIs and Certifications.
The County
does argue, however, that HUD did not actually challenge the
methodology or factual content of the County’s analysis within
its 2013 AI and AI Supplements since it only required the County
to change the AI’s conclusions.
This is wrong.
Conclusions are
right or wrong because of how they are reached, and HUD
consistently cited the County’s failure to draw conclusions that
were supported by the available data.
HUD’s critique of the
2013 AI went to the heart of the certification process and the
law’s requirement that a recipient of federal funds honestly and
accurately certify that it would affirmatively further fair
housing.
In short, the administrative record provides ample support
for HUD’s rejections of the County’s AFFH Certifications and
AIs.
Those decisions were the product of expertise, experience,
and reasonable judgment.
They were not arbitrary and
capricious. 26
In reaching this conclusion, the Court has not considered the
Monitor’s 2014 or 2015 Reports to be part of the administrative
26
68
III. Sections 12711 and 12705(c)(1)
As noted, the County does not assert that its conclusion in
its 2013 AI and AI Supplements -- that the municipal zoning
ordinances it examined do not show a disparate or segregative
impact on minorities or serve as impediments to AFFH -- was
supported by either its data or an adequate methodology.
Instead, the County argues that HUD’s decisions were based on
factors that HUD is not statutorily permitted to consider.
In
this way, the County contends, HUD “relied on factors which
Congress had not intended it to consider,” Bechtel, 710 F.3d at
446 (citation omitted), and acted “in excess of statutory
jurisdiction, authority, or limitations,” 5 U.S.C. § 706(2)(C).
The County relies exclusively on two of the statutory provisions
underlying the HOME grant program -- §§ 12711 and 12705(c)(1) -to support its contention.
According to the County, the two statutory provisions
prohibit HUD from intruding in local public policy generally,
and specifically in zoning practice.
The County argues that HUD
therefore acted illegally by denying the County millions of
dollars in CPD Funds when it demanded that the County (1)
provide HUD with the Assurances listed in the 2013 HUD Letter,
and (2) compel changes to local zoning ordinances.
record since they post-dated the HUD decisions challenged by the
County in this litigation.
69
The County’s argument fails for several reasons.
Most
prominently, the County ignores that HUD rejected its AIs and
Certifications because the AIs did not have an adequate
analysis, and because this deficient analysis led the County to
consistently draw conclusions that could not be supported by the
County’s own data.
The County also misconstrues the two
provisions of the HOME statute.
Accordingly, the County’s
reliance on these two provisions fails to demonstrate the HUD
acted beyond its authority in denying the County the CPD Funds.
A. Section 12711
The first statute on which the County relies is 42 U.S.C. §
12711.
The principles of statutory construction that will be
applied here are well established.
“Statutory construction is a holistic endeavor,” Field Day,
LLC v. County of Suffolk, 463 F.3d 167, 177 (2d Cir. 2006)
(citation omitted), and courts accordingly must “construe
statutes, not isolated provisions.” King v. Burwell, --- S. Ct.
---, 2015 WL 2473448, at *8 (U.S. June 25, 2015).
“In
interpreting statutes, [a court] reads statutory language in
light of the surrounding language and framework of the statute.”
Field Day, 463 F.3d at 177; see also Robinson v. Shell Oil Co.,
519 U.S. 337, 341 (1997); Cnty. of Nassau, N.Y. v. Leavitt, 524
F.3d 408, 414 (2d Cir. 2008).
70
Section 12711 is a provision of the HOME program.
As
described above, the purposes of the HOME program include
“improv[ing] housing opportunities for all residents of the
United States, particularly members of disadvantaged minorities,
on a nondiscriminatory basis.”
42 U.S.C. § 12702(3).
Eligibility for the HOME program hinges on submission of “a
comprehensive housing affordability strategy” in accordance with
42 U.S.C. § 12705, which includes an AFFH certification
requirement.
Id. § 12705(b)(15).
As the Court of Appeals
explained, however, there are limitations on HUD’s authority to
approve or reject a jurisdiction’s application for grant
funding.
2015 Opinion, 778 F.3d at 420.
Section 12711, entitled “Protection of State and local
authority”, in particular restricts HUD’s decision-making.
It
states that:
Notwithstanding any other provision of this subchapter
or subchapter II of this chapter, 27 the Secretary shall
not establish any criteria for allocating or denying
funds made available under programs administered by
the Secretary based on the adoption, continuation, or
discontinuation by a jurisdiction of any public
policy, regulation, or law that is . . . not in
violation of any Federal law.
The first clause of § 12711 refers to “this subchapter” and to
“subchapter II of this chapter.” The subchapter in which §
12711 appears contains the general requirements for approval of
grants under the HOME program. 42 U.S.C. §§ 12705-12714.
Subchapter II of the statute in which § 12711 appears contains
provisions relating to other affordable housing programs and
model programs that are not at issue here. Id. §§ 12721-12740.
27
71
42 U.S.C. § 12711 (emphasis added).
The parties agree that a
zoning ordinance is a jurisdiction’s “public policy, regulation,
or law.”
Id.
The County appears to argue that HUD violated § 12711 in
making two separate categories of demands on the County in the
HUD 2013 Letter of August 9.
First, it argues that HUD violated
this statute when it demanded that the County change its
conclusions in its AI Supplements about the exclusionary impact
of municipal ordinances.
Second, it argues that HUD violated
this statute when it demanded that the County identify in its AI
the steps it will take to cause municipalities to change their
exclusionary zoning regulations, including the circumstances
that would prompt the County to take legal action to effect such
change.
As described above, in its 2013 Letter HUD reviewed the
County’s AI Supplements, found them wanting, and notified the
County that, absent a satisfactory response by August 15, 2013,
it would move forward with the process of reallocating FY2011
CPD Funds.
Each of the two arguments the County makes about the
ways in which this letter violated the law will be examined in
turn.
72
1. Changing Conclusions in AI Supplement
The County first argues that HUD’s demand that it change
its conclusion about the exclusionary impact of zoning
ordinances violated § 12711.
To place this argument in context,
it is necessary to examine precisely what the County said in its
AI Supplement, and HUD’s statements in the 2013 Letter.
In its AI Supplement, the County concluded for each and
every municipality that its “zoning ordinance . . . does not
have a disparate impact on minorities” and that the “six
restrictive practices do not have a disparate impact on
minorities.”
Each analysis ended with this statement:
“Therefore, the County has concluded that [the municipality’s]
zoning ordinance does not show a separate or segregative impact
on minorities and does not pose an impediment to AFFH with
respect to race.”
In the August 9 letter, HUD stated:
While progress has been made, the County continues to
assert that local zoning ordinances do not have a
disparate impact on minorities and that the County
“has concluded that [the municipality’s] zoning
ordinance does not show a disparate or segregative
impact on minorities and does not include provisions
that can be identified as impediments to AFFH with
respect to race or ethnicity.” These conclusions are
simply not supported by the available data and do not
reflect an adequate disparate impact analysis. As the
County itself acknowledges, Restrictive Practices
exist in these municipalities that have the effect of
limiting the availability of affordable housing. Such
limitations may in fact have an exclusionary effect
based on race, national origin, or familial status,
73
which the data supports. The refusal to acknowledge
any connection between zoning restrictions that affect
the availability and location of affordable housing
and fair housing protections directly challenges the
Court’s rulings on the matter and the Settlement
itself. HUD therefore cannot accept the County’s
Zoning Submission. Thus, the County’s AI remains
unacceptable.
(Emphasis added.)
Because “[t]ime is of the essence due to the reallocation
process,” HUD required the County to “demonstrate that it can
complete an amended exclusionary zoning analysis” for at least
one of three selected municipalities by August 15.
identified five required amendments.
HUD
Two of them appear to be
of particular importance to the County’s argument.
The third identified amendment required the County to
“Strike unsupported conclusions that the identified Restrictive
Practices in the subject municipality do not have a disparate
impact or segregative impact based on race or national origin.”
(Emphasis added.)
The fourth required that the County
State that the existence of each Restrictive Practice
may have the effect of excluding potential residents
of the subject municipality based on race, national
origin, and in the case of restrictions on the number
of bedrooms in a unit, based on familial status (the
presence of children under the age of 18). Where
Restrictive Practices have the potential effect of
reducing the availability of affordable housing
opportunities in a community with relatively low
populations of Black and Hispanic households, and
where demographically Black and Hispanic Households
have greater affordable housing needs, the County must
acknowledge that such practices are potentially
discriminatory based on race, national origin and,
74
therefore, are a cause for concern. Where a
Restrictive Practice may have the effect of reducing
the availability and affordability of housing suitable
for families with children, the County must similarly
acknowledge such practice is potentially
discriminatory on the basis of familial status.
(Emphasis added.)
The County has failed to show that these demands for
amendments to the AI violated § 112711.
None of the required
amendments denies HOME Funds to the County based on the
“adoption, continuation or discontinuation” by any municipality
of its zoning ordinance.
See 42 U.S.C. § 12711.
These demands
do not hinge on whether a municipality changes its zoning
ordinance or not.
What the demands do hinge on is the integrity
of the County’s Certification that it would AFFH.
HUD required
the County to strike “unsupported” conclusions, “acknowledge”
that practices are “potentially” discriminatory, and “state”
that certain practices “may” have exclusionary effects.
Moreover, all of these amendment demands are made against a
backdrop of the County’s assertion in its AI Supplement that
there was no disparate impact from municipal zoning ordinances.
HUD determined that assertion to be at odds with the available
data and unsupported by any adequate analysis.
Challenges to
zoning practices “reside at the heartland of disparate-impact
[fair housing] liability.”
Texas Dep’t of Hous. & Cmty.
Affairs, 2015 WL 2473449, at *17.
75
It would run counter to the
purposes of the HOME statute to force HUD to accept just any
analysis of impediments to fair housing, including zoning
ordinances, no matter how unreliable, unsupported,
methodologically unsound, or poorly reasoned.
To construe §
12711 this way would gut the AFFH certification requirement.
The HOME statute itself requires that a certification be
accurate and be based on “supporting evidence.”
12704(21).
42 U.S.C. §
After all, the furthering of fair housing begins
with and depends upon an accurate assessment of any impediments
to fair housing choice.
2. Efforts to Change Zoning Ordinances
The County argues that HUD also violated § 12711 when it
required the County to identify the steps it would take to cause
municipalities to change their zoning ordinances.
This argument
also fails.
In its 2013 Letter, HUD required the County to demonstrate
that it could produce an acceptable AI not only by amending its
zoning analysis for a single selected municipality by August 15,
but also by providing four Assurances by that date.
The
County’s argument that HUD’s demand for such an assurance
violated the law appears to rest on the second requested
Assurance.
The second Assurance asks the County to state, in pertinent
part, that the County “adopts and incorporates into its [AI] the
76
findings of the [Monitor’s 2013 Report] and will comply with his
recommendations.”
As identified by the County, 28 the Monitor’s
recommendations that are at issue here relate, in essence, to
two requests for information.
The first requests the County to
identify the steps it will take to cause municipalities to
change exclusionary zoning ordinances. 29
The second requests the
County to identify circumstances under which the County would
take legal action to challenge zoning. 30
At bottom, therefore,
HUD’s request for this Assurance required the County, if it
wished to demonstrate an ability to produce an acceptable AI and
delay the reallocation of FY2011 Funds, to make a disclosure to
HUD of the steps it would take to change exclusionary municipal
ordinances.
Before addressing whether HUD’s demand for this Assurance
violates § 12711, two observations are in order.
First, the
The County’s memorandum in support of its motion for summary
judgment identifies pages 23 to 24 and page 52 of the Monitor’s
2013 Report as the passages containing the directives allegedly
violative of § 12711.
28
For example, the Monitor directed the County “to identify the
steps it will take to ensure that the municipalities make
provision for affordable housing, including, but not limited to,
modification of certain zoning regulations.”
29
For example, the Monitor -- citing the Settlement and the
Magistrate Judge’s 2012 Opinion -- noted that the County is
required to take steps to ensure its efforts to address the need
for affordable housing are not impeded, which “may take” the
form of “taking legal action” against municipalities.
30
77
County’s failure to provide the requested Assurance was not the
reason HUD denied HOME Funds to the County.
HUD denied HOME
funds to the County because it failed to file an AI acceptable
to HUD.
HUD’s request for Assurances was made in the context of
a failed AI process, and the imminent reallocation of FY2011 CPD
Funds.
The second, and related, point is that HUD could not
lawfully distribute CPD Funds to the County, under the Home
program or the CDBG program, without a Certification by the
County that it would AFFH, supported by an adequate AI.
And,
there is no showing that the County ever submitted such a
Certification to HUD.
The very first requirement for an
accurate and acceptable AI is for the County to conduct an
analysis of any impediments to fair housing choice within the
County.
See 24 C.F.R. § 91.225(a)(1).
Section 12711 does not
abrogate the duty of an applicant to file an honest, complete,
and acceptable Housing Strategy, including an accurate
Certification that a jurisdiction will AFFH.
As already
explained, there is no evidence in this administrative record
that the County complied with this threshold requirement for
receiving federal housing and community development funds.
Therefore, the County has not demonstrated an entitlement to
federal funds, wholly apart from any demand made by HUD that the
78
County identify the steps it would take to combat exclusionary
zoning ordinances.
Because of the foregoing, it is not even necessary to
determine whether HUD’s request for an Assurance violated §
12711.
Put simply, even if it did, the County would not be
entitled to the HOME Funds.
But, HUD’s request for the
Assurance did not violate § 12711.
HUD’s demand that the County identify steps it would take
to cause a municipality to change an exclusionary zoning
ordinance did not condition HOME funding on the “adoption,
continuation, or discontinuation” of any jurisdiction’s zoning
ordinance. 31
42 U.S.C. § 12711.
Whether a jurisdiction
continued to have, in HUD’s view, an exclusionary zoning
ordinance did not prevent the County from receiving HOME Funds.
HUD’s demand for the Assurance from the County appears to
arise from both the requirement that a recipient of CPD Funds
take appropriate actions to overcome the effects of any
impediment to fair housing that its analysis of impediments has
identified, see 24 C.F.R. § 91.225(a)(1), and from the County’s
recalcitrance in submitting an acceptable AI, despite the
commitments it made in the Settlement and the assistance given
Of course, the County does not have the power to write zoning
ordinances, which are controlled by local zoning boards.
31
79
to it by the Monitor.
HUD’s demand was made against the
backdrop of years of delay and the statutory deadlines inherent
in the reallocation process.
As HUD explained in its 2013
Letter, if it were to delay reallocation further, and thereby
risk losing the opportunity to give the Funds to qualifying
jurisdictions, it needed Assurances that the County could submit
an acceptable AI.
HUD did not demand that any zoning ordinance
actually be changed.
It is noteworthy that the Assurance required by HUD asked
for little more than the County had already committed to give in
the Settlement.
In the Settlement, the County agreed to submit
an AI acceptable to HUD that, inter alia, identified “the
appropriate actions the County will take to address and overcome
the effects” of identified impediments to fair housing. 32
It
also agreed, in the context of the 750 units it was required to
build, to pursue legal actions against municipalities if they
were necessary.
In sum, the County has shown no right to HOME
Funds due to any alleged violation by HUD of § 12711.
HUD argues that the County’s actions place it squarely within
the exception in § 12711 for public policies that are “in
violation of any Federal law,” and that the County’s
Certifications that it would AFFH are such violations. HUD
argues as well that the exception for violations of federal law
applies because there is prima facie evidence of exclusionary
zoning in several municipalities. This Opinion declines to
reach either of those issues.
32
80
B.
Section 12705
The second statutory provision upon which the County relies
is § 12705 of the HOME program.
arguments here as well.
The County presents two
The County relies first on an exclusion
within § 12705 related to consideration of issues of affordable
housing.
It also asserts that HUD was required to approve the
County’s Housing Strategy since it was “substantially complete”,
as required by this statute.
in turn.
These arguments will be addressed
Neither succeeds in rendering HUD’s denial of HOME
funds contrary to law.
1.
Subsection (c)(1)
Subsection (c)(1) of § 12705 requires the Secretary to
approve an applicant’s “housing strategy” unless it is
inconsistent with the purposes of the HOME statute or not
“substantially complete”, with one exception.
Subsection
12705(c)(1) adds that “the adoption or continuation of a public
policy identified pursuant to subsection (b)(4) of this section
shall not be a basis for the Secretary’s disapproval of a
housing strategy.”
42 U.S.C. § 12705(c)(1).
Subsection (b) lists twenty different components of a
housing strategy.
One of those components is the certification
that the jurisdiction will affirmatively further fair housing.
Id. at (b)(15).
Section 12705(b)(4), which the Secretary may
81
not use as a basis for disapproving a housing strategy, requires
a grantee to
explain whether the cost of housing or the incentives
to develop, maintain, or improve affordable housing in
the jurisdiction are affected by public policies,
particularly by policies of the jurisdiction,
including tax policies affecting land and other
property, land use controls, zoning ordinances,
building codes, fees and charges, growth limits, and
policies that affect the return on residential
investment, and describe the jurisdiction's strategy
to remove or ameliorate negative effects, if any, of
such policies.
Id. § 12705(b)(4) (emphasis added).
The legislative history of § 12705(c)(1) reveals that it
was intended to limit HUD’s fund-conditioning authority with
respect to “affordability” policies, not “fair housing” ones.
The Senate Report explained that
The intent of the Committee bill is to give state and
local governments more effective tools for achieving
housing affordability -- not to give HUD new authority
to intervene in state and local decision-making. That
is why the Committee bill does not permit HUD to
disapprove a housing strategy because of HUD's
disagreement with any policies identified under
section 105(b)(4) . . . .
S. Rep. No. 101-316, at 40 (1990), reprinted in 1990
U.S.C.C.A.N. 5763, 5806 (emphasis added).
The Report gives
“rent control or stabilization” as an example of its concern
over “controversial policies.”
Id.
By contrast, the Senate
Report describes in broad terms the independent obligation of a
jurisdiction to AFFH and the legislative intent to require
82
jurisdictions to “affirmatively carry out activities that reduce
or eliminate discriminatory impact in housing on the basis of
race, creed, national origin, gender or disability.”
Id. at
5807.
Thus, the direction to the Secretary in § 12705 on which
the County relies is irrelevant to the Secretary’s exercise of
his discretion here.
Subsection (b)(4) relates to issues of
affordable housing.
As this Court has observed, fair housing
and affordable housing are readily distinguishable in this
context.
See 2009 Opinion, 668 F. Supp. 2d at 562 (“A review of
the 2000 and 2004 AIs demonstrates that they were conducted
through the lens of affordable housing, rather than fair housing
and its focus on protected classes such as race.”).
HUD’s
denial was based on issues related to fair housing -- in
particular, the County’s conclusory and unsupported assertion
that zoning ordinances did not have a disparate impact on
minorities.
Because HUD did not deny the County’s application
because of a failure to explain the impact of local zoning on
the cost of housing, HUD did not violate §§ 12705(c)(1) and
(b)(4).
2. “Substantially Complete”
The County advances one final argument.
It argues that its
AI was “substantially complete” and that that was all that was
required for its approval under the HOME statute.
83
Under the HOME statute, HUD must approve an otherwise
acceptable Housing Strategy within 60 days of receipt so long as
it is “substantially complete.”
Section 12705 states that
The Secretary shall review the housing strategy upon
receipt. Not later than 60 days after receipt by the
Secretary, the housing strategy shall be approved
unless the Secretary determines before that date that
(A) the housing strategy is inconsistent with the
purposes of this Act, or (B) the information described
in subsection (b) of this section has not been
provided in a substantially complete manner.
42 U.S.C § 12705(c)(1) (emphasis added).
The corresponding
regulations permit HUD to “disapprove a plan or a portion of a
plan if it is . . . substantially incomplete,” and provide as an
example of such a plan one “for which a certification is
rejected by HUD as inaccurate, after HUD has inspected the
evidence and provided due notice and opportunity to the
jurisdiction for comment.”
24 C.F.R. § 91.500(b).
As described earlier in this Opinion, HUD repeatedly
advised the County that it was rejecting its Certifications.
It
gave the County notice of its intent to do so and an opportunity
to be heard and to cure identified defects in the AIs.
It
thoroughly examined the County’s submissions and the available
evidence before taking those steps.
This was a sufficient basis
for HUD’s conclusion that the County’s Housing Strategy was not
substantially complete, and HUD regularly informed the County
that it had reached that conclusion.
84
According to the County, HUD acknowledged that its Housing
Strategy contained all twenty of the requirements for HOME fund
eligibility.
The County points out that an acceptable AI was
only one of many statutory components of a Housing Strategy, and
notes that its AI included an analysis of impediments and
actions it would take to address those impediments.
The County’s argument fails.
It was not a violation of §
12705(c)(1) or an abuse of its discretion for HUD to determine
(as it repeatedly advised the County that it had) that the
County’s Housing Strategy was not substantially complete.
HUD
regulations provide that the inaccuracy of a Certification is
grounds for finding a Housing Strategy “substantially
incomplete.”
See 24 C.F.R. § 91.500(b).
As already discussed,
HUD acted well within its discretion in determining that the
County’s AI was inadequate and its AFFH Certification was
therefore inaccurate.
Accordingly, neither of the HOME
statute’s provisions on which the County relies provides a basis
for denying HUD’s motion for summary judgment.
C. Application of § 12705 and § 12711 to CDBG and ESG
Grants
Sections 12705(c)(1) and 12711 appear in the provisions
governing the HOME program.
HUD sensibly argues that, even if
these provisions impose limitations on HUD’s discretion with
respect to the HOME program, they do not apply to the CDBG and
85
ESG programs because those programs are administered pursuant to
different statutes.
HUD is correct.
The County offers few arguments on this point.
Its
position is that, because AFFH Certifications are required for
all three CPD programs and those programs are applied for in the
same Consolidated Plan, the regulations defining AFFH
Certification absorb the protections of §§ 12705(c) and 12711.
According to the County, imposing different standards on
different programs would be “absurd” and Congress’s localityprotective purpose in passing the HOME statute simply must be
shared by the CDBG statute.
But, any limitations imposed on HUD’s discretion to approve
or deny a Housing Strategy do not limit HUD’s discretion to
reject AFFH Certifications under the CDBG or ESG programs.
Indeed, there is a separate AFFH certification requirement in
the CDBG statute, 42 U.S.C. § 5301(b)(2), from the certification
requirement in the HOME statute, id. § 91.225(a)(1).
Put
another way, it is unremarkable that Congress imposed certain
limits on HUD’s discretion with respect to HOME funds but not
CDBG or ESG funds.
Sections 12705(c) and 12711 of the HOME program, therefore,
apply to the HOME program alone.
As a consequence, the County
has presented virtually no challenge to HUD’s decision under the
CDBG and ESG programs.
For the reasons described above, the
86
County’s only substantive arguments rest on the two provisions
of the HOME statute and neither provision applies here.
IV. The Settlement
Having determined that HUD acted within its discretion
and lawfully when it denied CPD Funds to the County, it is
unnecessary to determine whether HUD was also entitled to
withhold CPD Funds from the County because the County
violated the Settlement.
CONCLUSION
The defendants’ April 17 motion for summary judgment is
granted and the County’s May 1 cross-motion is denied.
The
Clerk of Court shall enter judgment accordingly and close each
of these cases.
Dated:
New York, New York
July 17, 2015
__________________________________
DENISE COTE
United States District Judge
87
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