Federal Court Gives Westchester a Victory in County's Fight over Affordable Housing

A Federal Appeals court has rejected claims by the Department of Housing and Urban Development that HUD’s actions are not reviewable by the courts, a decision that represents a victory for Westchester County in its affordable housing fight.

“The Second Circuit’s ruling is a major victory for due process against an aggressively overreaching federal bureaucracy,” said Westchester County Executive Rob Astorino in a statement. “Just like everyone else, HUD has to follow the law. In this case, HUD was making up its own rules. That’s not right and the court has now made it very clear that actions by HUD are subject to judicial review.”

Hud and the county reached a settlement in 2009 over the creation of affordable housing units, but Westchester officials soon argued that HUD was changing the terms of the deal by requiring more units. As a result, HUD has been withholding millions of dollars in Community Development Block Grants as a form of punishment.

Related:

• Gov. Cuomo, Congresswoman Lowey Announce Deal to End Hold Up of $5 Mil. in Housing Funds to Westchester
• Astorino, Feds Continue Dispute Over Housing, Block Grants
• Astorino Says HUD Does ‘Extortion,’ Seeks Lawsuit & Hearing
• Astorino, Legislators Seek to Stop HUD from Withholding Funds
• Westchester County Exec Blasts HUD for Changing Terms of Affordable Housing Settlement

Westchester sued HUD, and the federal agency argued in part that its actions were not reviewable by the courts. In the Wednesday decision, the U.S. Court of Appeals for the Second Circuit rejected that argument, setting up a future court case between HUD and the county.

Astorino said that “HUD acted in an arbitrary and capricious manner” when it began withholding federal funds from the county in 2011. The appeals court vacated a lower court ruling and held that HUD’s actions are “subject to judicial review.”

Michael Kaplowitz, Chairman of the County Board of Legislators, said in a statement that while the decision is a victory for the county, now is the time to move toward finally resolving the litigation.

“While we have achieved a notable victory, now is the time to negotiate from strength,” said Kaplowitz in statement. “This decision provides a perfect opportunity for all parties in this matter to sit down and reach an end-game settlement to the issues of both the 2009 Housing Settlement and the loss of Community Development Block Grant (CDBG) monies. Public policy can best be served here by all parties negotiating rather than litigating their differences.”

From a press release from Astorino about the decision:

The case now goes back to U.S. District Court and Judge Denise Cote.

In terms of recovering the money, the county’s options are limited. Of the more than $7 million withheld by HUD in 2011, all but about $750,000 have been reallocated by the agency to other jurisdictions. The court ruled that once HUD reallocated the funds, the county’s claim to them became moot. HUD is still withholding 2013 and 2014 grants of more than $10 million, which the county will pursue.

Under the terms of the affordable housing settlement reached by former County Executive Andrew Spano and HUD in 2009, Westchester County agreed to spend “at least” $51.6 million to ensure the development of 750 fair and affordable housing units (rental and home ownership) and to market the units not just to Westchester residents, but to minority households in surrounding counties, including New York City, as well.

Five years into the settlement, the county is in full compliance. The county finished 2014 with 454 units with financing (450 was the benchmark) and 406 units with building permits (350 was the benchmark). All 31 communities have identified potential sites and 223 units are occupied.

The court ruling states in part, “We conclude that the statutes governing HUD’s administration of the relevant grants provide meaningful standards constraining HUD’s exercise of discretion and that HUD’s actions are thus subject to judicial review... The agency’s adoption of regulations that might appear to give the agency unfettered discretion does not act to nullify the meaningful standards which exist in the statue.”

Central to the county’s case was overreach by HUD. HUD had hoped to pressure the county to dismantle local zoning by withholding the federal grants. Astorino resisted, saying such actions went beyond not only the terms of the settlement but also violated the home rule provisions of the New York State Constitution. In a critical part of the decision, the appeals court noted that HUD did not have the right to reject the county’s housing strategy or withhold funding on the basis of “land use controls [and] zoning ordinances … that may affect the development of affordable housing in the jurisdiction.”

“A lot of people asked, why are we fighting HUD?” Astorino added. “Today’s decision is a clear statement that the county was right to defend local zoning.”

Subscribe to a free email newsletter and news alerts:

BEDFORD-KATONAH • BRONXVILLE-EASTCHESTER-TUCKAHOE • CHAPPAQUA-MOUNT KISCO • HARRISON • LARCHMONT-MAMARONECK • NANUET • NEW CITY • NEW ROCHELLE • NYACK-PIERMONT • OSSINING-CROTON • PEARL RIVER • PEEKSKILL-CORTLANDT • PELHAM • PORT CHESTER • PLEASANTVILLE-BRIARCLIFF • RIVERTOWNS • RYE • SCARSDALE • SOUTHEST-BREWSTER • TARRYTOWN-SLEEPY HOLLOW • WHITE PLAINS • YORKTOWN-SOMERS