Cnty. of Westchester v. U.S. Dep't of Hous. & Urban Dev.

• Decision Date: 17 July 2015
• Docket Number: 15cv1992 (DLC).,Nos. 13cv2741 (DLC),s. 13cv2741 (DLC)
• Citation: 116 F.Supp.3d 251
• Parties: COUNTY OF WESTCHESTER, Plaintiff, v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ("HUD"), and Shaun L.S. Donovan, As Secretary of HUD, Defendants. County of Westchester, Plaintiff, v. United States Department of Housing and Urban Development ("HUD"), and Julian Castro, As Secretary of HUD, Defendants.
• Court: U.S. District Court — Southern District of New York

116 F.Supp.3d 251

COUNTY OF WESTCHESTER, Plaintiff,

v.UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ("HUD"), and Shaun L.S. Donovan, As Secretary of HUD, Defendants.

County of Westchester, Plaintiff,

v.United States Department of Housing and Urban Development ("HUD"), and Julian Castro, As Secretary of HUD, Defendants.

Nos. 13cv2741 (DLC)

15cv1992 (DLC).

United States District Court, S.D. New York.

Signed July 17, 2015.

Robert F. Meehan, Westchester County Attorney's Office, White Plains, NY, for Plaintiff.

Preet Bharara, David J. Kennedy, Lara K. Eshkenazi, Benjamin H. Torrance, United State Attorney's Office, Southern District of New York, New York, NY, for Defendants.

OPINION AND ORDER

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.

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. 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. §§ 12705(c)(1), 12711.² These two provisions only apply to the HOME 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. 668 F.Supp.2d at 562. In settling that litigation-in which the County stood to have damages assessed against it of over $150 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, 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. Anti–Discrimination 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. Anti–Discrimination 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. Anti–Discrimination 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 Opinion ") (vacating in part 2013 Opinion and remanding on issue of jurisdiction). The Court assumes familiarity with those Opinions. 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. 42 U.S.C. § 3601. 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." Texas Dep't of Hous. & Cmty. Affairs v. Inclusive Communities Project, Inc., ––– U.S. ––––, 135 S.Ct. 2507, 2521–22, 192 L.Ed.2d 514 (2015) (citation omitted).

B. Grant Programs

The three grant programs all require that jurisdictions make certain submissions to HUD to determine eligibility. Each program and its application process is described below. 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 Community Development Act of 1974. 42 U.S.C. §§ 5301 –5321 ("CDBG statute"). "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.

Jurisdictions applying for CDBG grants must certify that they have satisfied six criteria in order to be eligible. 42 U.S.C. § 5304(b). 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...