In ongoing litigation that began in 2006, when the Anti-Discrimination Center of Metro New York, Inc. (“ADC”) sued Westchester County as a qui tam relator under the False Claims Act (“FCA”), ADC claimed that the County received more than $52 million from the federal government for housing and community development after falsely certifying that it affirmatively furthered fair housing (“AFFH”). The Court granted partial summary judgment to ADC and ruled that the County’s AFFH certifications to HUD were false as a matter of law. The Government intervened after the 2009 Opinion was issued but before the remaining issues in the case were tried, and the County entered into a Consent Decree with the Government on August 10, 2009. Pursuant to the Consent Decree the County was required to submit an acceptable AI, providing an assessment of conditions, both public and private, affecting fair housing choice for all protected classes, as well as a model zoning ordinance. Following eight failed AI zoning submissions, the Second Circuit held that HUD was within its statutory authority to reject the County’s post-2009 AI submissions for their failure adequately to analyze the impediments that municipal zoning laws presented to fair housing choice. The County’s flawed 2013 analysis of local zoning codes prompted HUD and the Chair of the County’s Board of Legislators to request that the Monitor conduct his own analysis.
In this case, the court sought to determine whether the Consent Decree was breached. The court held that HUD’s rejection of the County’s AI was neither arbitrary nor capricious, as it was reasonable for HUD to require the County to include in its AI an analysis of its municipalities’ zoning laws. Furthermore, the court found that the HUD reasonably relied on detailed reports from the monitor, which examined the relevant laws and analyzed empirical data, and which refuted the County’s conclusion that no municipality had ordinances that were exclusionary under state or federal law.
The court next found that the AI requirement remained an enforceable provision of the Settlement even though the County took the position that it no longer sought the federal funds that required an AI. The court determined that the Consent Decree did not condition preparation of an AI on the County’s future applications for federal funding, but instead explicitly linked the AI to the County’s earlier deficient AIs and to other independent and ongoing commitments it made in the Decree. The implementation plan and an “acceptable” AI would also assist the County to take the several other remedial actions to which the County obligated itself, such as the duty to ensure the development of 750 new affordable housing units, to create and fund public campaigns to educate County residents about the benefits of diversity, and to market affordable housing in nonwhite areas. Thus, the court held that the County’s commitment in the Consent Decree to submit an AI acceptable to HUD stood entirely independent from the County’s current decision to refrain from submitting HUD grant applications.
The County also argued that the changed circumstances doctrine relieved it of its obligation to submit an acceptable AI to HUD. The court disagreed, finding that the broad purposes of the AI and the AFH were identical, since both involved analyzing and addressing barriers to fair housing choice with a focus on protected characteristics including race and ethnicity. Moreover, the County’s announcement that it would no longer seek federal funding preceded the regulatory change in 2015 on which the County’s changed circumstances doctrine argument hinged. Accordingly, the court held the County breached of the Consent Decree by failing to submit an AI that is acceptable to HUD.
USA ex rel Anti-Discrimination Center of Metro NY, Inc. v Westchester County, 2016 WL 3945679 (SDNY 7/18/2016)