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Dean Zarras Contributor

I write about big government's corrosive effects on civil society.

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OPINION 5/01/2013 @ 11:52AM 2,570 views

The 800-Pound HUD Gorilla

[Editors Note: Westchester County, NY is HUDs first "Grand Experiment" . Marin County is the second.]

They say the states are supposed to be the laboratories for legislative creativity.   We can watch what works and what doesn’t, emulate the best and avoid worst, and improve the lot of everyone.

But what happens when the mad scientist is the federal government, cramming an experiment down the throat of a particular state and county?  What if their process is textbook “arbitrary and capricious“, and yet they clearly aspire to go national with the results, regardless of efficacy?

Such is the saga going on in Westchester County New York, where County Executive Rob Astorino is embroiled in a nearly four-year-old legislative and financial nightmare brought on by his predecessor Andrew Spano.   Astorino, a Republican, defeated the three-term incumbent Democrat by an odds-crushing 16 points in November of 2009, and gained unprecedented voter support by vowing to challenge what became law very late in his campaign.   Astorino described the source of the problem, in his recent “State of the County” speech:

Westchester County Executive Rob Astorino

“If you think Albany is bad, wait until I tell you about Washington and the housing settlement.  A quick history:  The County was sued in 2006 under the False Claims Act of 1863.  The charge was that the County accepted Federal dollars from the department of Housing and Urban Development, but failed to study whether race is a factor in housing opportunities.  In 2009, former County Executive Andrew Spano and the Board of Legislators settled the case, and critically important, there was never a finding of wrong-doing on the part of the County, or an admission of guilt in the settlement.  Instead of going to court, the County and the Federal government both agreed to settle under the following terms:  The County would spend at least $51 million dollars to build 750 units of housing for lower income people in 31 so-called eligible or mostly white communities by the end of 2016.”

Combating this “mostly white” designation, by any means necessary, is apparently the crux of HUD’s mission.   To HUD’s way of thinking, surely these communities are “mostly white” only because of racial discrimination, or as Astorino went on to describe, zoning practices that they think have the net effect of being racially discriminatory:

“The Federal government has a very different agenda and vision for Westchester.   In fact, HUD calls us, its ‘Grand Experiment.’  That means Washington bureaucrats, who you will never see or meet, want the power to determine who will live where, and how each neighborhood will look.  Now what’s at stake is the fundamental right of our cities, towns and villages to plan and zone for themselves.  This ‘home rule’ is guaranteed by the New York State Constitution.  HUD thinks it can trample on Westchester, because it has the misguided notion that zoning and discrimination are the same thing.  They are not.  Zoning restricts what can be built, not who lives there.”

Indeed, Astorino has gone out of his way to distinguish true racial discrimination, which he rightfully says should be vigorously prosecuted.  Since 2010, HUD’s representatives have been asked to provide evidence of such discrimination.  But as anyone would have expected when asked to prove a negative, providing such evidence has not been possible.   No worries, HUD has continued undeterred.

As of April 2013, 305 units of “affordable housing” have been built, which is ahead of the year-end target of 300 units.  HUD remains unsatisfied.  A provision of the original settlement, “source of income legislation” has become their most recent focus.

“Source of income legislation” would state that no landlord can refuse to rent to a tenant on the basis of where they source their income from.   Therefore, a most obvious and typical form of credit underwriting on behalf of the landlord is declared null and void.  If your “income” is in fact a Section 8 housing voucher, that is not allowed to matter.   Critics will at this point chime in that Section 8 housing recipients are required to pay as much as 30% of the rent themselves.  Yet this is precisely the portion of the rent that many landlords experienced with Section 8 tenants find themselves getting stiffed on.

The details of this soap opera are legion and tedious.  Astorino is up for re-election this fall, running against the Democratic mayor Noam Bramson of the very prominent Westchester city, New Rochelle.  With the Chairman of the Westchester County Board of Legislators, Kenneth Jenkins also being a Democrat, the opportunities for political gamesmanship are equally legion and tedious.

However, the principles of fairness underlying the issue are so straightforward that even staunch Democrats are appalled.   After all, plenty of landlords,
property owners and town government officials, are Democrats.   And HUD ultimately wants Astorino to sue the latter to enact and enforce their directives.

For starters, the very verbiage of “affordable housing” is a completely bogus and disingenuous term.   By definition, any property at any price that is lawfully transferred from a seller to a buyer is “affordable” by the buyer, assuming the buyer is not committing some act of financial suicide.   A house that sits unsold for months or years is being deemed “unaffordable” by potential buyers.   Once it sells, it’s tautological that it was affordable to the buyer.  Assuming there’s a mortgage involved, that “affordability” was further verified by lenders, lenders whose credit assessment policies have now been cranked up to all-time-highs thanks to the financial crisis.

For a rental unit, where a lender may not be involved, source of income legislation says that the owner of the property can not consider this most basic starting point of underwriting, thus leaving them unable to make the most basic assessment of whether or not they are putting their property at risk.  Wasn’t government-warped underwriting policy at the root of the housing bubble?  In the end, “affordable”, when combined with “housing”, has more to do with politics interfering with free markets  – wealth redistribution — than it does anything else.

In Westchester’s case, it gets sillier still.   To the extent HUD is concerned with zoning policies that might cause housing to not be “affordable”, they have to reckon with a whole host of other government mandates that cause these zoning policies to exist in the first place.

A very significant portion of Westchester forms the watershed for New York City.  Because of this, many towns have understandably stringent rules on what types of construction can be performed, and where, including all kinds of regulations relating to managing storm and wastewater.   Acquiring building approvals can take years as contractors placate committee after committee and comply with study after study.   Contractors then build these costs into their prices.

Inter-related with the watershed issue is basic geology.   Ask many Westchester homeowners to plant a tree and they’ll ask not for a shovel but for a pick axe or a jackhammer.   A typical hole, if even possible, yields as much rock as dirt.   This doesn’t bode well for things that HUD officials take for granted in so much of the rest of the country, like public sewers and water systems.   Yes, in so many upper-crusty regions of Westchester, property owners are on septic tanks and wells.  This often necessitates low housing densities, as one person’s well needs to be far enough away from their neighbor’s septic tank, and so on.    In an age where the typical Westchester school district is trying to avoid bankruptcy looming from so many unfunded state mandates (another story altogether), the costs of running public water lines and sewers would be laughably high.   See also, “non-starter.”

Many Westchester residents also love their green space — green being the operative word, as many “greens” spearhead projects to move potentially buildable land into nature conservancies and the like.  Undeniably, it helps the watershed.

Also undeniably, all of the above helps to drive property values to nosebleed levels.  In my local paper, it’s not uncommon to see an article describing the plight of a property owner trying to build on their land, juxtaposed with another article about a charity’s effort to build a single “affordable housing unit”, the latter being stymied by the lack of available and “affordable” land.

Note HUD’s bait and switch.   Rather than focusing on why some people remain trapped in economic conditions that prevent them from moving to a more expensive address, HUD is seeking to intervene in the process that influences the prices — a process that other areas of government have established for very valid reasons, and that voters have validated and perpetuated for decades.

We should welcome the federal government analyzing how its own policies potentially cause prices to be higher than necessary, which harms everyone.  But to leap to charges of racial discrimination, to “play the race card” in effect, and then steamroll local government under some kind of “social justice” banner is plainly and simply outrageous.

In furthering its “Grand Experiment”, HUD is brazen enough to admit that the language of their 2009 settlement is just the beginning.   In a May 13, 2011 response to the County, HUD wrote:

“The Analysis of Impediments must address the County’s obligation to affirmatively further fair housing beyond the four corners of the Settlement.   A considerable part of the County’s plans to locate affordable housing includes strategies to provide at least 750 units consistent with the terms of the Settlement.  However the County must include a description of its strategies to develop, support the development of, or preserve affordable housing in areas of the County that are not included in the Settlement and for housing unitsbeyond those provided in the Settlement.“ 

In fact, as Astorino describes at length in the aforementioned speech, the most recent aspirations from HUD are not for 750 units in 31 communities, but potentially 10,768 across the entire County, at a projected cost of approximately $1 billion.

States and localities around the country reacted with horror to the now famous2005 Kelo vs. City of New London Connecticut “takings” case.    How should they react to the virtual taking of an entire county’s property, knowing that theirs may very well be next?

As all of the above only begins to describe, an epic battle is being engaged by federal, state and local officials, property rights and “home rule” defenders, environmental and green space proponents, “affordable housing” advocates, fiscal conservatives and “social justice” seekers, just to name a few of the myriad actors.   The best TV dramas have nothing on this story.  Unfortunately, this is a documentary.