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

Categories: Schutze

1600pacific.jpg
A rendering of the project that led federal housing officials to Dallas.
Elected officials and city staff in Dallas colluded over a decade to break federal housing and civil rights laws and promote and worsen racial segregation across the city, the U.S. Department of Housing and Urban Development (HUD) has found, dealing City Hall a scathing, and potentially costly, blow after a four-year investigation into the city's housing practices.

The charge sounds flat when they say it: "The Department concludes that (Dallas) is in noncompliance with Title VI of the 1964 Civil Rights Act," HUD wrote in a "letter of findings" dated November 22, 2013.

But the charge is monumental. The HUD accusation is that Dallas city staff have colluded with elected officials to achieve the same kind of government-sponsored racial segregation that was supposed to have been wiped away by the 1990 Walker Consent Decree at the end of a long, bitter federal court battle.

Even the short-term implications are daunting. If Dallas can't or won't quickly come up with a settlement acceptable to HUD, the repercussions could include immediate loss of major federal funding and serious exposure to litigation. The city could lose $100 million in federal aid it counts on to fund its current five-year program dealing with housing, homelessness, public services, public improvements and economic development. It faces fraud charges and damages of at least $250 million in "false claims" litigation for misspending federal money over the last 10 years.

But the larger and longer range implication has to do with what this finding will say to the rest of the country -- that this is a city that deliberately defrauds the government and flouts the law in order to confine people in neighborhoods separated by racial boundaries.

The four-year investigation was inspired by the claims of a real estate developer, Curtis Lockey, who told HUD the city had inflicted $74 million in actual damages on him by killing his development deal in a downtown tower. His claim, now specifically cited and supported by the HUD findings, was that the city killed his 2009 deal to re-do the tower at 1600 Pacific as part of a conspiracy to keep poor people, minorities and disabled people out of downtown.

Since Lockey and an associate, Craig MacKenzie, turned rogue four years ago and began accusing the city of corrupt practices, city officials have painted them as crackpots who are angry and vindictive over a deal gone sour. But the HUD report paints them as whistle-blowers, canaries in a much bigger and deeper coal mine of wrongdoing that would never have been unearthed but for their decision to go public.

Lockey and MacKenzie, now supported by HUD, accuse the city of conspiring to kill their 1600 Pacific project in order to stop it from being available to poor renters who receive federal rent subsidies. The HUD letter quotes the city's director of economic development, Karl Zavitkovsky, as saying the city didn't want any Section 8 voucher recipients in the building at all.

The problem with that position is that it flies in the face of federal law requiring projects that use HUD money to make at least 51 percent of their units affordable. The same laws require cities that receive HUD money to affirmatively bring about desegregation and to sign an annual certification swearing they are doing so.

Dallas officials have been signing that certification on a regular basis for decades while promoting policies and even deed restrictions that flout the law, according to the HUD investigation, a behavior that falls under the doctrine of "false claims" in federal law. In some instances false claims can be treated as criminal matters.

In their lawsuit, Lockey and MacKenzie accuse city staff of conspiring to rescind support already given them for $102 million in federal Housing and Economic Recovery Act (HERA) bonds. Those bonds would have guaranteed the economic viability of their project, but with a proviso: Use of the bonds would have required that the project be accessible to Section 8 voucher holders, a requirement that would have superseded all other policies and restrictions.

Not only did Lockey and McKenzie lose their HERA bonds when the city pulled the rug from under them, but the city of Dallas, in an action I can't find reported anywhere in the media at the time, soon after voluntarily forfeited all of the HERA bond money it had coming, a total of $150 million that would have gone to support affordable housing.

The HUD letter pays close attention to this chapter. The obvious question is why Dallas would first accept, then voluntarily spurn, $150 million in federal support for a need that city official had conceded was urgent: affordable workforce housing downtown. The HUD letter doesn't spell it out, but it puts the bones on the table for a reader to assemble: First Dallas wants the money. Then Dallas finds out the money is a portal to bring Section 8 housing into downtown. Then Dallas gives the money back.

In the HUD letter, the city is quoted as arguing that all of its decisions about Lockey and MacKenzie were based on what it believed was the shaky quality of their finances. HUD dismisses that argument, saying its investigators found that the city endorsed deals at least as speculative or worse by other developers within a protected ring favored by City Hall. It names Hamilton Properties and Prescott Realty as two whose finances should have barred them from doing business with the city if Lockey and MacKenzie's finances were truly a bar.

The much more important issue for the city is what the Lockey and MacKanzie complaint says about the city itself, and the authority with which the complaint says it. For example, in preparing their complaint to HUD, Lockey and MacKenzie hired the Washington law firm of Relman, Dane and Colfax, attorneys for the plaintiffs in a similar successful complaint against Westchester County, New York, and in a $1.7 billion settlement of similar claims against the state of Texas over expenditure of relief funds for Hurricane Ike in 2008.

Relman Dane, in turn, hired Andrew Beveridge, a professor at Queens College, New York, one of the nation's top experts on statistical studies of racial segregation and the impact of public policies on segregation.

Beveridge's report on Dallas is a big story in and of itself, one I will get back to later this week. He found that while segregation was decreasing in Dallas over several prior decades, it increased in Dallas during the 10-year period when Lockey and MacKenzie were duking it out with City Hall over racial steering.

Until now, city staff has been able to blow all of this off and keep the City Council quiet by painting Lockey and MacKenzie as irritating gadflies. The staff's new challenge will be to persuade the council that the U.S. Department of Housing and Urban Development is also an irritating gadfly.

The next gadfly may be the U.S. Department of Justice, if it decides to join Lockey and MacKenzie in their false claims suit against the city -- a decision that seems possible given the nature of the accusations against Dallas in the HUD letter.

HUD Letter of Findings of Non-Compliance


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78 comments
Obummer
Obummer

Yo first fix da city streets. Duh.

jobe3
jobe3

I am wondering if Inclusive Communities Project in Dallas is going to represent the City of Dallas in this litigation against HUD and others? It seems, ICP's relationship with City Hall changed 180 degrees after Julian/ICP/Daniels became trustee over the 30 million dollar Walker Trust Fund!

This really needs to be investigated and reported on!

lzippitydoo
lzippitydoo

A big BS here! Too many with their hands out that are not deserving of any funds - much less, a gift from the fed that doesnt have to be repaid. They would have been dollars down the drain as these so-called developers eould not even qualify for a used car loan at your local bank!  Everytime a minority gets turned down for a subsidy like this - you hear racial slighting, whether these guys had the level of experience required on a complex project like this or not.

Next, do you want newly updated and renovated downtown residential buildings to be HAP or rent-subsidized projects. Not only would it bring down the area but it doesnt make sense as we are trying to improve the downtown personna! This housing is needed - just not here.

These guys are just looking for a payout from the city even though they are not entitled to it!

holmantx
holmantx topcommenter

Elected officials are most comfortable making lofty and, at times, misty-eyed goals while "staff" typically falls short in the execution of it.  

Results? (gulp?)

What if every social program, large and small,  from Washington D.C. to Tucumcarie were means-tested or sunsetted if they did not affect the cold numbers? (gasp!)

City government - government at every level - is just not used to being held statistically accountable.  Come on!?! Are you nuts?  Don't we get any points for tryin' here?  Jeez.

This dust up is confined to an intramural firefight amongst statists (big government proponents).

"Why, this could cost us millions!  Billions!  The elderly and the children will be hurt the most."

"Yeah but yer racist!"

"Wha . . . but my heart is pure!"

"Well, your numbers aren't."

"A lawyer with his briefcase can steal more than a hundred men with guns" Mario Puzo (b. 1920), U.S. novelist. Oft-repeated dictum of Don Corleone, in The Godfather, bk. 1, ch. 1 (1969).

I'm starting to warm up to the Disparate Impact thingy.  If only for entertainment value.



ryan762
ryan762

This is all well and good, but without an expensive consultant's report paid for by the city, I don't know what to think.

Lorlee
Lorlee

The City used Community Block Grant money to guarantee several of the other projects downtown -- and insisted that there were low income units (a requirement).  I served on the CDBG Board and kept asking where those units were and never really got an answer.  Not surprised this is coming home to roost.

holmantx
holmantx topcommenter

"War Is A Racket" - Major General Smedley Butler USMC, 1935.  He was referring to the monied interests who profit from it.

This is off the scale.

spieckerman
spieckerman

I'm virulently opposed to anything that smacks of racism or segregation. But let's keep it 100: this "report" was fomented by a developer who lost out on a sweet, taxpayer-subsidized deal, a law firm with a history of shaking-down municipalities, a HUD needing to justify its existence and an administration always eager to take a pot-shot at a southern city. 

Subsidizing rich real estate developers is exactly the wrong way to help the poor in need of housing - it's cronyism at its worst (and how the Obamas' Rasputin, Valerie Jarrett, became a slumlord millionaire in Chicago). 

Low income people should receive rent vouchers to find housing in the free market. No low income person is entitled to live in the most expensive neighborhoods - only a safe neighborhood. Which, of course, also requires more aggressive law enforcement in lower income neighborhoods - which would be something worth subsidizing.

RoscoeJ.
RoscoeJ.

Now, can they do something about the Park Cities?

JimSX
JimSX topcommenter

I should have said: cue racist Greek chorus.

parisrec
parisrec

Apropos of nothing: " Compassion is not the only imaginable response to misfortune suffered by  other people..those whom fate has destined for annihilation easily can appear disgusting to others and be removed beyond the pale of human relations. If one person's disaster benefits somebody else, an urge  appears to persuade oneself, and others, that the disaster was morally justified."      Stanislaw Ossowski--esteemed polish philosopher--1947


d-may
d-may

Wait... There were people that DIDN'T know that Dallas does this?

All cities do this. 

jmckee3
jmckee3

One thing that I'm not really following...

If you told me the city was trying to squash any section 8 housing in Uptown I would say, yeah, probably, but it's not like downtown is some wealthy urban utopia or going to become one anytime soon not to mention it is currently missing many of the amenities to really make it work for low income families. like say a full grocery store.

To me this sounds more like preventing a high density low income high rise which have horrendous records in favor of lower density integrated development. This has vertical ghetto written all over it.

ttttttttttt
ttttttttttt

this is terrible--the same people who were being discriminated against are going to be the ones who are punished with the loss of federal aid. A vicious cycle in which the bottom class will remain at the bottom. Not surprising, but it is sickening nonetheless.

WylieH
WylieH

This looks bad.  The Feds say the City screwed the developer, and they want the City to provide him with "relief consistent with the evidence."  That sounds expensive.

They also want the City to develop a 10-year plan to bring the unincorporated portions of Dallas County (basically a large area to the east of Wilmer and Hutchins) up to first world standards with drinking water, sewers, paved roads, street lights, etc.  That sounds expensive.

They also want the City to start following existing Federal laws, but City staff always seems to have a problem with others trying to tell them what to do.

This will be interesting.

Rumpunch1
Rumpunch1

I have an actual question for the people who have read the HUD document closer than me or have experience in these matters. 

Does a low-income discrimination charge automatically produce a Civil Rights Act violation since minorities and disabled statistically have a greater chance of being low income?  Does statistics indirectly make the poor one of the protected classes?

oakclifftownie
oakclifftownie

To Whom it may Concern At HUD

Oh Wow we had no idea this was going on . And want to agree this is a bad thing 

That said you might know we have a recent departure in the City Managers Office . And  its been nothing but Chaos .

So If we could get a Mulligan on this it would be great  .

Thanks 

Dallas City Hall .


holmantx
holmantx topcommenter

The City's screwed.

Andrew Beveridge's statistical studies are based upon Disparate Impact.

That means Relman, Dane and Colfax don't need to prove intent or instances of it.  All they have to show is that, statistically, "disparate impact" has occurred. 

Most cities in the country have had a real problem with developers criminally abusing the LIHTC (Low Income Housing Tax Credit is a dollar-for-dollar tax credit) program, bribing elected officials, and flipping real estate multiple times before they jam it into these (public) funding conduits.

It's not like Dallas has NOT had a real problem with these crooks, both on the elected side and the private side.

I think the only reason the former Mayor Pro Tem got caught and sent to jail was because another developer got cut out of the public trough, and blew the whistle.

Now comes another very successful angle - if your project gets dumped you go to an excellent legal conduit set up by a law firm and their expert witness who only have to prove . . . Disparate Impact.

It looks like this law firm, their client, and the expert witness will go away if you give them a billion dollars.


If not, grab the popcorn because this one will be protracted.

Then we lose (or the taxpayer will).



jmckee3
jmckee3

In a week and partial defense of the city high-density, low-income residential towers have a pretty miserable track record. Like all issues around poverty the reasons are very complicated and it can be easy to jump to unfair conclusions but they have largely turned out poorly.

Lorlee
Lorlee

@lzippitydoo Is there evidence these developers were minority -- I don't believe so.  So unless you have some facts, perhaps you need to consider your comments more wisely.  Several of the other projects downtown got the subsidy (white guys) and part of the deal was that there was to be moderate income apartments.  And that didn't happen. (I have facts, I was on CDBG at the time).

 

ruddski
ruddski

Could you maybe name one "evangelical" in Dallas government?

jeb1970
jeb1970

Sounds like you need to speak to your congress person, cuz these laws have been on the books since 1964, created by JFK, MLk, and later enacted by LBJ, after the Dallas assassination of JFK! Wow, that revelation just made my hair stand on my arm!

JFK, back from the grave, to avenge his assassination by using his laws, on the very city that blew his head off!

On another matter:

Doesnt the DOJ have to get involved in this matter now, given their client HUD has made these findings known to the public and to the DOJ? It would seem like major corruption for them to not prosecute matters they have full knowledge of..........it could lead to political parties not prosecuting their own, or trading matters for causes/agendas/etc........

itchyjack
itchyjack

@spieckerman Give us a break - 'every' development of note is taxpayer subsidized; and every major law firm in the U.S. either sits on the side of the table going up against a municipality or fortune 500 firm, or the side for it.  As for HUD trying to 'nail' a southern city - is that really the best your little red book (website) could come up with?

dmtrousd
dmtrousd

People will use the comments section to either support or criticize federal public housing, but that's not the issue, as is described in this piece. The issue is that Dallas is alleged to have fraudulently spent HUD money, in clear violation of HUD's statutory requirement to reduce segregation. One can agree or disagree with the law, but the City of Dallas must abide by it.

ruddski
ruddski

Interesting. I re-read the comments, and I couldn't find anything racist, much less a chorus. Tell you what, Jim, why not cite, say three comments that are to you "racist" so we can see what you're talking about.

pnd2131
pnd2131

@jmckee3 Have you tried to rent a place downtown? I am looking there currently and the prices are just as bad as Uptown.

dmtrousd
dmtrousd

To be clear, these developments aren't designed to simply be a public housing project 100% full of poor minorities. The article cites the "at least 51%" clause. I've lived in nice apartments that had some section VIII tenants; many people have and just didn't know it.

That all comes from a push to move away from racially segregated "projects," something that HUD now alleges Dallas to have been doing: actively promoting segregation, a clear violation of Federal law.

ryan762
ryan762

@jmckee3 I would think that the early stages in the redevelopment of an area would be when you want to set the proper "tone". With all the city-sponsored efforts over the years to push to remake downtown into the next hot place for all the young, single urban professionals, the last thing you'd want is for people to think of it as a place for poor people and minorities.

Plus, if it was just LTV Tower, maybe the case could be made that it was a specific objection and not related to affordable housing efforts overall, but the LTV Tower deal was just the straw that exposed years of this same kind of effort to keep as much of the affordable housing on the south side of the Trinity as possible.

WylieH
WylieH

@txt A bad situation, but what can the Feds do if they can't trust the City to disburse the money properly?  I wonder if there is any method whereby the Federal government could channel the funds to Dallas via an alternate conduit (the state of Texas, or a not-for-profit entity)? 

holmantx
holmantx topcommenter

@WylieH

How do they force any municipality to provide city services outside their incorporated limits?

One reason why people live in the unincorporated areas of Dallas County (and all the other 16 counties in the NCTCOG region), is to avoid those pesky city property taxes.  They rely upon the sheriff's departments. 

Where's a trucker to park his rig, if not in his front yard (ha!).  

They use well water  or coops on wells, and employ "individual sanitation disposal units" (septic tanks) and propane.

better'n drinking out of the spigot in Dallas w/all their ingredients, for our own good.

No city should be too large for a man to walk out of in a morning. Cyril Connolly (1903–74), British critic. The Unquiet Grave, pt. 1 (1944; rev. 1951)

JimSX
JimSX topcommenter

@Rumpunch1

See HolmanTx below. He's right. Disparate impact is now the law. You can talk all day about how all you wanted to do was make everybody happy. In Dallas, you can talk all day about how the black leadership didn't want to integrate downtown and wanted to siphon as much housing subsidy as it could get into South Dallas.  Don't matter. The test is what it looks like on the ground when you're done doing.  But in this case, you add the additional very big wrinkle of taking hundreds of millions of dollars in DE-segregation money -- that's DE, capital D, capital E -- certifying every year that you are spending it to DE-segregate the city, and then winding up with more segregation on the ground and a whole bunch of specific decisions and even policies that produced that outcome. That's like Mom gave you a fiver and told you go to the store and buy her some butter, so you went to the store and came home with no butter but two pocketfuls of Mars bars. Mom is not happy. 

ruddski
ruddski

"We were completely out of touch and this is all news to us" seems to be what passes for stellar leadership these days.

wcvemail
wcvemail

@jmckee3 True, most dramatically proven when Chicago tore down the massive Cabrini Green towers. Dallas and other cities could actually triple-win by taking HUD money to disperse low-income citizens throughout the jurisdictions. They win first because they get HUD money, without having to sell muni bonds and such. Second win is actually reducing ghettos while minimizing NIMBY protests from other neighborhoods. Third win is engendering a progressive (small 'p'), scientific approach to reducing pockets of poverty, making national news, which is good for business as well as fell-good citizenry, etc.

ruddski
ruddski

Very well-trained crickets, Jim.

observerlibtard
observerlibtard

Don't like Lake Highlands getting severely degraded by Section 8 apartments? YOU A RAYCISS

Aren't able to see the countless ways Section 8 Divershitty has benefited Forest-635-Skillman-Audelia (etc)? YOU A RAYCISS

Pretty soon the goofy naive white hipster liberal "progessive" do-gooder white-guilters won't have anywhere to run from the logical end-results of their naive idiotic social engineering policies.

Biglar
Biglar

@WylieH @txt They could let us keep the money we pay in taxes for HUD by disbanding the entire agency.  HUD is completely worthless anyway.

Gangy
Gangy

@WylieH @txt The State of Texas!  Have you forgotten whose hands we are in?!


barronstalls
barronstalls

@WylieH @txt Then the "not-for-profit", would quietly become "for-profit", if you catch my drift??? 

WylieH
WylieH

@holmantx I was wondering the same thing... I'm guessing that the City would have to annex those areas.  

holmantx
holmantx topcommenter

@JimSX @Rumpunch1 

does Fair Housing allow discrimination against all segments who do not need subsidized housing?

It is conceivable that, despite management's best ability, a market can become saturated with too much subsidized product, causing mgt to reach deeper into the barrel or blocking those who do not qualify.

everlastingphelps
everlastingphelps topcommenter

@wcvemail @jmckee3 Of course, the loss is that criminality follows Section 8 money like a plague, so the drops in Dallas crime overall (which came from low-section 8 areas getting better while high-section 8 hellholes stayed the same) will evaporate in short order.

dmtrousd
dmtrousd

Minorities have lived in Lake Highlands for many, many years. The area around NW Hway and Skillman/Abrams, known as Little Egypt, was settled by freed blacks in 1865 and later. People gotta live somewhere.

jeb1970
jeb1970

You mean the Walker Trust Fund?

WylieH
WylieH

@Gangy @txt Forgot for a moment... but, yeah, State of Texas wouldn't work.  Maybe Austin or Houston could agree to oversee the system in return for an administrative fee.

holmantx
holmantx topcommenter

@barronstalls @holmantx 

every city takes their fair share.  

even if they don't have a use for it, or a place to spend it.  They just make it up.

It's why we are $17 trillion in debt.

No program ever goes away.

And the City is not projecting a need for 30k subsidized housing units downtown.

barronstalls
barronstalls

@holmantx Problem: Dallas' own documentation states a need of 30,000 additional affordable units! Furthermore, if you dont want to abide by the federal requirements, just dont take the federal dollars. Instead, Dallas took every damn federal dollar it could get it hands on, then lied about the uses. 

Wham bam, thank you Mam!! 

everlastingphelps
everlastingphelps topcommenter

@Gangy @everlastingphelps @barronstalls @wcvemail @jmckee3Sure seems like there's a bunch of criminal activity going down at Dallas City Hall.  I don't think those are poor folks.

Not all criminals are poor, the same way not all poor people are criminals.  However, I'm sure that the vast majority of the city hall criminals claim "humble" backgrounds.

everlastingphelps
everlastingphelps topcommenter

@barronstalls @everlastingphelps @wcvemail @jmckee3  How about because they grow up in a decent area, they get a decent education and don't have to resort to crime. Oh, thats to "progressive" for your thinking?!?

The problem with that is that it rarely happens.  Moving poor people to a rich area doesn't make them rich.  The children don't do better in the schools (and often do worse because they can't keep up with the other students) and they learn criminality from their parents, not from "the neighborhood."  Unless you are talking about a mass adoption program, transplanting children along with their criminal parents to a new area is not going to save them from the criminality cycle.

You can't just give people middle-class trappings and make them middle-class.  The middle-class has what they have because they act middle-class, not the other way around.  To think otherwise is magical "if I hope hard enough it will happen on its own" thinking.

everlastingphelps
everlastingphelps topcommenter

@wcvemail @everlastingphelps @jmckee3 

If there were two high-crime clusters per sq mile, instead of per duplex unit, then those criminals wouldn't be committing more crimes per day or year than they would back in the duplex, would they?

No, because the high-crime areas are saturated when it comes to opportunity and victims.  Put them in a situation where there are more opportunities (less people on guard because the neighborhood is "good") and more potential victims (because the police are concentrated in the "bad" areas) and they can do much more harm in a new area than in the same old area.

everlastingphelps
everlastingphelps topcommenter

@barronstalls @wcvemail @everlastingphelps @jmckee3  Or better yet, if the "projects" were dispersed in decent areas with opportunity, maybe the crooks would not need to be crooks!?!?

That assumes that poverty causes crime, when in reality, it's more often that criminality causes poverty.

wcvemail
wcvemail

@everlastingphelps @wcvemail @jmckee3 I'm not sure that one would follow the other. If the Section 8 folks, with presumed bring-their-own-criminality, were truly dispersed throughout the city, then the same crime stats would simply be dispersed as well. If there were two high-crime clusters per sq mile, instead of per duplex unit, then those criminals wouldn't be committing more crimes per day or year than they would back in the duplex, would they?

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