I am struggling to make sense of the news that Westchester County was sued for lying on an affordable housing grant application and settled with the agreement to:
[S]pend more than $50 million of its own money, in addition to other funds, to build or acquire 750 homes or apartments, 630 of which must be provided in towns and villages where black residents constitute 3 percent or less of the population and Hispanic residents make up less than 7 percent. The 120 other spaces must meet different criteria for cost and ethnic concentration.
If anyone can figure this out, please let me know.
First, the facts, at least as they appear. This is Westchester County:
The white and Asian population of Westchester is wealthy and is concentrated in the Scarsdale-Larchmont pocket and the Bedford-Pound Ridge chunk north of Connecticut’s Fairfield County. The black and Hispanic population is less wealthy and is concentrated along the Hudson River and New Haven Line corridors.
The wealthy sections of Westchester County have historically maintained their property values by, among other things, applying minimum lot size restrictions.
Now for the original allegation:
The lawsuit, filed under the federal False Claims Act, argued that when Westchester applied for federal Community Development Block Grants for affordable housing and other projects, county officials treated part of the application as boilerplate — lying when they claimed to have complied with mandates to encourage fair housing.
“Lying” seems a strong word; if you read the District Court verdict, it seems more accurate to say that HUD asks for a certain set of analyses and Westchester just didn’t bother with one. You can break this into two segments:
- Westchester filled out its forms falsly, meaning not only that it said something wrong but that there was some level of materiality to the error (although the plaintiffs do not have to prove that an accurate form would have received a different decision);
- Westchester used the funds it received inappropriately.
The key issue seems to be the word “fair.”
Westchester took the Federal government’s money and built affordable housing. Actually, it took the Federal government’s money and asked each town if the town would like affordable housing. Some towns said yes, they would like some construction work on the government’s nickel. Others said thanks but no thanks, and unlike Sarah Palin, they meant it. If you have read this far, you can probably guess something about the demographics of each response group.
I don’t quite understand the idea of building “affordable” housing. Affordability is not an inherent feature of a dwelling; you cannot build it the way you can build a green house or a tall house or a house with a swimming pool. Houses in San Diego were more affordable in 1992, less affordable in 2005, and somewhere in between today, all without changing their features. The same house in Minot, North Dakota and Jupiter Island, Florida will have a very different price. By building any new houses in a market you expand the supply of houses and reduce the price of each house, and some house will always be the most affordable. Ultimately, each house needs to find a clearing price that creates an occupant.
Even accepting that some people seem to disagree with me on this, Westchester actually built the houses it said it would build, and the houses it built filled the parameters of the types of houses it said it would build. The sin was that the new affordable houses ended up pretty much where the old affordable houses were, and therefore did not change the demographic arrangement of the county. And in the eyes of HUD and the plaintiffs, that is not “fair.”
Brown v. Board was a landmark case for a variety of reasons, but its core observation that segregation entails inherent inequality might have been a bit overly broad. No party alleged that there was some sort of de facto restriction on any group acquiring property in any town – the towns did not function as New York coops, deciding that some skin colors cannot be accomodated in communal elevators. Any black or Hispanic was and is free to buy in Pound Ridge on exactly the same terms as any white or Asian. The segregation was purely a function of a completely different variable: wealth.
Is that unfair? Or unjust? Is it good social policy for HUD to want a specific sort of integration? Why is it appropriate – indeed, required – to try to distribute people in a particular arrangement within a county and not within a state? Would a proposal to build a public housing project in Bronx County (50.7% Hispanic, 34.5% black) get rerouted to Ontario County (95% white) to try to make the distribution of population in any given area more reflective of the state or nation as a whole?
Not to mention that according to the plaintiff’s counsel, “income level has very little impact on the degree of residential racial segregation experienced by African-Americans.” If the barriers to ownership in any particular neighborhood are eliminated and incomes are controlled and residential segregation persists, are we going about things the right way?
The punishment for Westchester will create one of two things: either the county will discriminate on the basis of race to ensure that the 750 new units are occupied in the agreed fashion – which you would hope would breach both the letter and spirit of any sense of fair housing – or the units will simply be built in unwelcoming towns and be left as a peculiar tax to the local construction industry. It would seem to make much more sense, if HUD actually believes it would have given Westchester a different answer knowing what Westchester was up to, to simply require Westchester to return the money along with some monetary penalty and let HUD put it wherever it could get the most units. An ill-conceived application seems to have run up against ill-conceived rules to create an ill-conceived settlement.
Thanks to Rortybomb, a bit of LA architectural analysis:
I left Westchester a few months ago. To think my taxes would have gone up had I stayed in Port Chester due to the sewer plant upgrades and now this would have left me penniless. I cannot phatom to think that the rest of the county would not contribute to the imposed taxes to clean a body of water that the entire tristate area benefits from and then pay taxes so lower income people can afford housing in a community that is already flooded with lower income, the lowest in the county is mind boggling. I cannot believe that the politicians allow such ridiculous law suits to happen is a sin. My father came to this country penniless without any working knowledge of the english language in the 50′s. He learned to read and write english, held a steady job working lots of OT so his kids could go to private catholic school and managed to own 3 homes before he died. To think this is the way some people are going about obtaining homes in upscale communities is a sin.
Re: Increasing the stock of “affordable” housing
Affordable is determined by the income of the tenant compared to the area median household income versus the cost of housing in the area housing market. The rent on the housing is restricted to a percentage of the borrower’s income, which is supposed to be offset by the grant reducing the developer’s cost of capital in building the project. Why it is a surprise to anyone that this structure promotes concentrating lower income households in an area is beyond me.
I see a lot of conduit bond deals that involve this kind of funding. Part of the reason for the background study is that the developments generally require funding from various sources and are not necessarily feasible.
My point was that there is nothing intrinsic about the house that defines it as “affordable”. Affordability is a function of external events. If the government gives you (and only you) $100mm, all of a sudden the entire country consists of affordable housing for you. But the structures have not changed.
Building “affordable” housing is not particularly different from just giving people subsidies to go get housing on their own, except that by running the project through a HUD process there are dozens of additional levels of graft.
Unlike health care, construction lends itself well to market forces
I understood your argument… It is just HUD does not define it that way. You are being a lot more precise – they say affordable housing, and really it is just a wage subsidy.
It has always struck me that providing the incentive to developers up-front and then capping their future income from the project leads to concentration of low-income families because to maximize what they get out of the project (or to minimize costs, depending on the type of entity undertaking the development), they build in the cheapest places. But I could be wrong. It could just be a NIMBY problem.
Sorry, I mean percentage of tenant’s income, not borrowers.
“Any black or Hispanic was and is free to buy in Pound Ridge on exactly the same terms as any white or Asian. The segregation was purely a function of a completely different variable: wealth.”
That just isn’t true in practice. The lending and housing markets demonstratedly discriminate against black people, even after you control for wealth. The segregation is a function of wealth and ethnicity.
At the most you can argue that the affordable housing initiatives are a bad alternative to measures to end housing discrimination.
Which sector of the housing industry do you think would do the discriminating?
Do you think Citibank would deny a black family the chance to get a mortgage on a house in Pound Ridge? That certainly used to happen, but the good side of a FICO-based model is there isn’t a lot of discretion on the part of the guy sitting across the desk. Plus, I don’t remember a lot of mortgages getting rejected in 2000-2006, for any reason.
Do you think a realtor would refuse to work with a black family? Perhaps there are bigoted individuals, but 3% says someone takes the assignment. Do you think the seller would turn down an offer because he doesn’t want to sell to a black family? He is leaving, after all.
There is enormous segregation by wealth; if there were not, it would be impossible to speak of wealthy neighborhoods. The question is whether this is wrong and, if so, whether the government should intervene.
“Which sector of the housing industry do you think would do the discriminating?”
You should be looking this stuff up, not asking. The first source I can find in a quick Google search is this:
http://www.huduser.org/Publications/pdf/Phase1_Executive_Summary.pdf
A choice quote:
“White homebuyers were consistently favored over blacks in 17.0 percent of tests. Specifically, white homebuyers were more likely to be able to inspect available homes and to be shown homes in more predominantly white neighborhoods than comparable blacks. Whites also received more information and assistance with financing as well as more encouragement than comparable black homebuyers. Discrimination against African American homebuyers declined quite substantially between 1989 and 2000, but was not eliminated. The overall incidence of consistent white-favored treatment dropped by 12.0 percentage points, from 29.0 percent in 1989 to 17.0 percent in 2000. However, geographic steering rose, suggesting that whites and blacks are increasingly likely to be recommended and shown homes in different neighborhoods.”
Why are you asking me all these rhetorical-sounding questions about this? You can just look it up. Just two minutes in Google got me this:
http://www.huduser.org/publications/hsgfin/hds_phase1.html
This is a study from 2000. Choice quote from the Executive Summary:
“African American homebuyers—like renters—continue to
face discrimination in metropolitan housing markets nationwide. White homebuyers were consistently favored over blacks in 17.0 percent of tests. Specifically, white homebuyers were more likely to be able to inspect available homes and to be shown homes in more predominantly white neighborhoods than comparable blacks. Whites also received more information and assistance with financing as well as more encouragement than comparable black homebuyers. Discrimination against African American homebuyers declined quite substantially between 1989 and 2000, but was not eliminated. The overall incidence of consistent white favored treatment dropped by 12.0 percentage points, from 29.0 percent in 1989 to 17.0 percent in 2000. However, geographic steering rose, suggesting that whites and blacks are increasingly likely to be recommended and shown homes in different neighborhoods.”
Even if realtors take black families, they will steer them toward different properties than white ones, and won’t provide service at the same level as they do for white customers. Lenders disproportionately steer them toward high-cost loan products, as opposed to economically comparable whites.
I mean, there’s a serious question to be asked here whether “affordable housing” initiatives can actually be effective in reducing housing discrimination by race and ethnicity. There isn’t a serious question to be asked as to whether that discrminiation exists.
Is the commenting broken? I get no indication whether my comments are being accepted by the system.
Sorry; the links must have set off some sort of spam filter. I think WordPress tends to assume that all links point to Russian Viagra sites, which, going by the rest of the messages in the spam folder, is a decent approximation.
Luis, your comments above on the continued existence of racial discrimination are well-put, and I don’t think we are as far apart on the issue of national housing segregation as it might appear.
However, the houses being discussed look a lot like this. And my sense is that someone looking to buy a house in this price range is not going to be steered into a largely black area, if for no more noble reason than that there are no largely black areas in metro NY that have this housing stock. And I similarly suspect that someone looking to buy a house in this price range is generally able to compare financing options.
We are talking about outlier areas. The common theme of the Bedford housing market is not resistance to different colors, it is focus on wealth.
I thought a long time before posting this because, while I think that you bring up good points, I completely and totally disagree with you. Given that you are very careful and thoughtful, I wanted to be the same so it took me a little while to compose my thoughts on the matter.
I think that my criticism boils down to three things:
1. It is a big deal if someone lies by omission
2. Affordable housing is important and does not always behave well in the free market
3. To pretend that housing has nothing to do with race is blind of the entire history of the American housing market.
Let’s start with the last point first because I think it is the most important. You point to the map in the NYT and highlight that blacks and Latinos tend to live in the poor areas while whites and Asians live in the wealthy ones as if this just happened out of thin air. Yet, until 1968, it was legal in the United States to discriminate based on race (actually, I believe that there was a two-year grace period in the Fair Housing Act, so it was really 1970). Further, the U.S. government was not only complicit in allowing private discrimination, but they actively participated in segregationist policies in both the placement of public housing and in subsidizing loans in all-white areas (see Hirsch 1983 and Sugrue 1996 for the former and Jackson 1985 for the latter). Thus, in the post-war era, the government provided massive subsidies for homeownership opportunities that were entirely closed to blacks. Thus, at a time when a substantial proportion of Americans were able to leverage their income for housing wealth, this source was closed to blacks who were often living in over-crowded and substandard apartments.
Block grants, and the obligation to “affirmatively further fair housing” (what Westchester said that it was doing when it wasn’t) isn’t just an ancillary policy appended to the program. It is a fundamental piece of the program itself to provide restitution for the awful behavior of the government for its role in creating segregated living situations in the first place. And, although you argue that applying the Brown decision to other areas goes too far, is de facto racial segregation with the corresponding difference in school funding and programs better than the de jure segregation?
On the point about affordable housing — I disagree that the free market would handle this in a way that is ammenable to “good policy.” Developers and landlords have an incentive to get as much value from their property as possible. In the period 2000-2006 (which I pick because you highlight in your comment to Bond Girl), the fact that landlords could gain more by selling than renting meant that rents were sky-rocketing or people were being displaced because of an inflated bubble caused by Wall Street derivatives. If their housing costs were increasing at 5% in real terms per year and wages were (at best) stagnant, then this is a real problem for families. Of course, the market might right itself, but in the meantime those families are making sacrifices that could mean delayed or no college attendance, food scarcity, or other resources that could actually help people advance their position in society. Many of these families, because of the racial discrimination in the past, had less of an opportunity to gain wealth and so intergenerational wealth transfers are not an option to buffer against bad times while the free-market works itself out. Sure, rents may eventually come down (they are now), but it’s okay if you starved or couldn’t make rent in the intervening years, maybe we could have the government move them to cheap land because they are homeless.
Finally, you say that ““Lying” seems a strong word; if you read the District Court verdict, it seems more accurate to say that HUD asks for a certain set of analyses and Westchester just didn’t bother with one.” Except that in the verdict, the District Court notes that they were warned multiple times that they needed to include it, that they submitted annual reports not including it (i.e., they didn’t just “not do one” once, they didn’t do it every year for at least eight years), and this wasn’t just some analysis. Part of the agreement to get this money is that they would perform the analysis to “affirmatively further fair housing.” Now, you can argue whether affirmatively furthering fair housing is good policy — based on your post you seem to think that it is while I, provided the history above, think that it is — but to say that they simply ignored it means that they held the entire process in a certain amount of contempt (in a moral, not legal sense). If you agree to provide me with financing for a project and I agree to do certain things as part of that project, then neglect to do them, that is lying.
I am sure that you have thoughtful responses and I look forward to hearing them.
I agree absolutely that there is a terrible history of racism in American housing. Banks frequently refused to lend to blacks, often prevented blacks from living in what were considered “white” areas, and the threat of violence from white neighbors discouraged those few black families otherwise prepared to jump through society’s hoops.
If your argument is that the legacy of racism has left black families with less wealth on average than white families, I take your point, but that has no more bearing on the current market for houses than it does on the current market for cars or refrigerators.
I remain unconvinced that the challenges facing a buyer in Westchester in this decade stem, even in modest part, from race. It is an extremely expensive area for anyone, but anyone with the wealth to live there can do so. I think it’s important to separate this sort of housing market from the continuing discrimination of a NY cooperative where other people actually vote on whether a potential buyer can live somewhere.
As for “affordable housing,” suppose there were absolutely no government program for housing in Westchester. What would happen? If prices appreciated for other reasons – say, a growth in commuter jobs to NY, frothy lending standards, etc – lower-income people would begin to move away, to Yonkers and across the border into Bronx County. And then what?
The jobs that the people previously held in Westchester would need to pay more to get the workers to come back, and the housing market in Yonkers or Bronx would improve. People would develop more housing in Yonkers or Bronx, because the best use of the land would not be selling single-family houses. You can see this phenomenon in all sorts of places that for some geographic reason become islands of extreme relative wealth: Jackson County in Wyoming, Aspen, Caribbean islands with beaches and Caribbean islands without beaches, etc.
I would rather see the aid go directly to improving the housing stock in Yonkers, where land can be acquired comparatively cheaply, than Bedford, where the land costs the government far more.
Your point about contempt is very good, except that Westchester really did build the units that they said they’d build. If there is something “unfair” about the siting decisions, they lied in certification; if there is nothing “unfair”, then the construction did further fair housing and they merely made a technical error. You cannot address the gravity of the mistake without first coming to a conclusion about whether “fair” means “an equal opportunity to buy given the wealth to buy” or “some demographically determined outcome.” If it is an outcome-based concern, all Bronx fair housing dollars should be built in Ontario County.
oops, I forgot to hit reply on the same thread, i responded below. Sorry!
“If your argument is that the legacy of racism has left black families with less wealth on average than white families, I take your point, but that has no more bearing on the current market for houses than it does on the current market for cars or refrigerators.”
One of the most pernicious aspects of the institutionalized racism in the United States is not necessarily what it did to individual black families, but what it did to areas that were predominantly black. While individual families that faced discrimination have less wealth to transfer, the other lasting effect is that housing deteriorated where most blacks lived. Even the black middle class who were/are able to afford to buy don’t see the same return to their investment as similarly situated whites because they largely live in areas that were neglected. If more concentration of people with high social needs (that are correlated with income) are placed in those same communities, then even now we will continue to perpetuate discrimination that was only made possible by past discrimination.
In this way housing is different than a car or a refrigerator. Where you live determines the kind of schools you have access to, the kinds of social networks you can develop (for good or bad), and is the single most important investment for future wealth for most Americans. If I buy a car it has nothing to do with anything except how well and safely it gets me from point A to point B, or a refrigerator whether my food stays cold and the cost of doing so.
“I would rather see the aid go directly to improving the housing stock in Yonkers, where land can be acquired comparatively cheaply, than Bedford, where the land costs the government far more.”
For the reasons I argue above (i.e., a house is not like a car or refrigerator), I disagree; however, I acknowledge that this is an important matter of discussion for policy and could be persuaded that, in the end, more housing units is better and more “fair” for people than having fewer units that are more equitably distributed.
“Your point about contempt is very good, except that Westchester really did build the units that they said they’d build. If there is something “unfair” about the siting decisions, they lied in certification; if there is nothing “unfair”, then the construction did further fair housing and they merely made a technical error.”
But they were told, under the interpretation of the law, fair housing meant that it had to consider the impact for protected classes under the Fair Housing Act and it’s later amendments. The decision notes that the statute explicitly requires “an analysis of impediments to fair housing choice, not to affordable housing” (fn. 5) point out that one of the County’s own letters acknowledged this fact. It went on to mention race specifically, (quoting from the letter sent by someone in the county planning department) “As you know, the Planning department has prepared several reports that address affordable housing, which should not be confused with the Fair Housing Plan. The goals of the Fair Housing Plan are: 1) to analyze barriers to housing that are based on race, religion, sex, disabilities, familial status, or national origin…” (p. 15, emphasis omitted).
As I mentioned, I think that there is a legitimate policy debate to be had about whether creating more affordable housing is more “fair” than requiring that fair housing not further segregate or discriminate based on the protected classes of the Fair Housing Act. But, given that the County acknowledged that this was the law, by not doing so they either: a) wanted to create a test-case to prove your point as a matter of constitutional law — in which case not creating the plan based on race and arguing instead that the creation of more affordable housing is, at the end of the day, more “fair” would give them the chance to argue to the federal courts, or b) held in contempt (again, moral not legal) their obligation to do something that they said they would do. Seeing as how they are settling this case, I don’t see how it is realistically a). Of course, they might simply have decided that the fight wasn’t worth it to them anymore, but I doubt that is the case.
You make good points about Westchester’s behavior and their likely knowledge of the rules governing the HUD grant. You have convinced me.
I remain a little more confused about your arguments on neighborhoods. You observe – and I agree – that the history of institutional racism has left many predominately black neighborhoods with less valuable land. Some reasons might be poor siting of transport, underinvestment in education, location of objectionable industries and pollution, etc.
What I do not follow is why it makes sense to build housing specifically for minority occupants in other neighborhoods as opposed to trying to fix the substandard conditions in the neighborhoods our society neglected in the first place.
It could be that you believe that areas with concentrations of black people will inherently be at a disadvantage in receiving assistance, and therefore the best way to ensure continued attention is to split up the black population (a reverse tipping-point argument). I don’t think that’s the right answer, and that’s what I was trying to address with the example of moving people from Bronx County to Ontario County.
“What I do not follow is why it makes sense to build housing specifically for minority occupants in other neighborhoods as opposed to trying to fix the substandard conditions in the neighborhoods our society neglected in the first place. ”
There are two reasons. One simply deals with the political realities of the politics, not just in Westchester County but in many metropolitan areas. That is that I just don’t believe that residents elsewhere would politically support spending the money that it would take to make the improvements you suggest. This is a bad reason — though it is borne of watching the ways that these battles play out all the way from national politics (e.g., the way that wingnut conservatives played–and continue to play–up fears about a black, urban President).
The second is more conceptual. Public housing projects have a stigma. This is exactly why people in the wealthier areas in Westchester don’t want them. Since black areas are already less desired by white (which contributes further to the depressing effect of race on housing wealth), placing more of a stigma on an area is likely to exacerbate that effect.
In the end of the day, I think that you have convinced me that the most effective strategy is actually investing to improve areas that have faced racial discrimination. I think that, with proper protections to make sure that current residents aren’t entirely displaced, a more concentrated plan to improve predominantly minority neighborhoods is a worthwhile policy aim. I’m not sure that, in the short run, affirmatively integrating areas should be abandoned; but, I would like to see a long-range plan that invests real resources in disadvantaged areas (with particular attention paid to racial composition) as the better policy.
[...] America. Twenty-some-odd years ago, the economically diverse, but generally affluent, suburbs in Westchester and Long Island represented the success of the Reagan Revolution…But the New York suburbs led [...]