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United States of America Ex Rel v. Westchester County

May 3, 2012


The opinion of the court was delivered by: Denise Cote, District Judge:


The United States ("Government") has objected to the Opinion of March 16, 2012 ("Opinion") issued by the Honorable Gabriel Gorenstein insofar as it sustained the objection of Westchester County ("County") to one portion of the Report and Recommendation of the Monitor James E. Johnson ("Monitor") dated November 14, 2011 ("Report"). At its essence, this dispute concerns whether the veto of legislation breached the duty to promote the legislation. For the following reasons, the Government's objection to the Opinion is well-founded, and the Monitor's Report is upheld in its entirety.


This litigation began six years ago. In 2006, the Anti-Discrimination Center of Metro New York, Inc., acting as a qui tam relator, sued the County for violation of the False Claims Act ("FCA"). The lawsuit asserted that the County had received money from the federal government after falsely certifying that it was affirmatively furthering fair housing. As described in the pertinent federal regulations, the task of affirmatively furthering fair housing ("AFFH") required the County to conduct an analysis of the impediments to fair housing choice and to take appropriate actions to overcome the effects of any such impediments.

Following the completion of discovery, partial summary judgment was entered against the County. United States ex rel. Anti-Discrimination Ctr. v. Westchester County, New York, 668 F.Supp.2d 548 (S.D.N.Y. 2009). This Court found, inter alia, that the County had not analyzed race in conducting its Analysis of Impediments ("AI"), and had thereby submitted false certifications to the Department of Housing and Urban Development ("HUD"). Id. at 561-63. Since the County had submitted false certifications to receive approximately $52 million from HUD, it was liable for over $150 million in damages pursuant to the treble damages provision of the FCA. A trial was scheduled to determine whether the violation had been willful.

On August 10, 2009, the Government intervened and elected to proceed with this action, filing its own complaint. The Government's complaint alleged violations of the FCA and of the Housing and Community Development Act. Simultaneously, the Government submitted an executed settlement of the litigation ("Settlement").

The Settlement provided for the County to pay the Government $30 million, with $21.6 million of that amount credited to the County's account with HUD for development of housing in accordance with the Stipulation. The County was also required to secure $30 million in additional funding for such housing development over six years.

The Settlement also provided for injunctive relief. Among other things, a Monitor was appointed and given authority, inter alia, to resolve disputes between the Government and the County, and to assess every two years, starting on December 31, 2011, the County's progress in fulfilling its obligations under the Settlement.

In the Settlement, the Country agreed to affirmatively further fair housing in a variety of ways. These included the development of 750 units of new affordable housing ("Affordable AFFH Units") over the course of seven years in areas with low black and Hispanic populations. Of particular significance to this dispute, the Settlement required the County to "promote, through the County Executive, legislation currently before the [County's] Board of Legislators to ban 'source--of-income' discrimination in housing," and to "incorporate" that undertaking in the Country's AI, which the County was required to submit to HUD. As the Monitor noted in his December 31, 2011 biennial report, legislation to ban source of income discrimination in housing (herein "source-of-income legislation") "if it were to become law, would prevent landlords from refusing to rent to tenants solely on the grounds that a person's income is derived from government programs such as Section 8, Social Security, or disability benefits." The County itself has noted that "Section 8 vouchers are a major source of assistance for low and very low income families and that reluctance by landlords to accept Section 8 continues to be a challenge." Westchester, 668 F.Supp.2d at 558 (quoting County's 2004 AI).

In addition, the Settlement required the Country to identify specific zoning practices within the County that hinder the development of Affordable AFFH Units. The Country agreed to establish a process for notifying the implicated municipalities of changes that must be made to such zoning practices and the consequences for a failure to make those changes.

At the time of the Settlement, the Country's Board of Legislators ("Board") had legislation before it that prohibited housing discrimination by landlords based on source of income. While the Board approved the Settlement, it did not approve the legislation before the end of its session in December 2009. Nonetheless, County Executive Andrew J. Spano ("Spano") had written to the Board in October 2009 urging the passage of the legislation and in November had written letters to five housing advocacy organizations urging them to advocate for passage of the legislation.

On January 19, 2010, source-of-income legislation was reintroduced in the Board's new legislative session. The Board held at least eight meetings on the proposed legislation, as well as public hearings. Spano's successor, County Executive Robert Astorino ("Astorino"), who took office on January 1, did not participate in any of the meetings or hearings. The Board's Committee on Legislation ("the Committee") submitted an amended version of the legislation to the Board on May 10. In a May 10 memorandum accompanying the proposed legislation, the Committee stated that source-of-income legislation "would prevent the growing trend of discrimination based upon a person's source of income, which creates an extreme hardship for individuals with lower incomes, including the disabled and the elderly, and for families transitioning from welfare to work." The Committee further stated that the proposed legislation "complies with the County's obligations in its fair housing contract with [HUD]."

On June 14, the Board passed the source-of-income legislation. Astorino vetoed it on June 25. That veto is at the heart of the dispute before this Court.

Through a letter of July 13, 2011, HUD notified the County that the County's revised AI did not meet the requirements of the Settlement since it did not incorporate the corrective actions which HUD had specified in a May 13 letter regarding "promotion of source-of-income legislation or plans to overcome exclusionary zoning practices." HUD therefore rejected the County's certification that it would affirmatively further fair housing, as well as the County's FY 2011 Annual Action Plan ("FY 2011 Plan"). As a consequence of HUD's disapproval of the FY 2011 Plan, the County ceased being a grantee of federal Community Planning and Development programs covered by the County's AI, effective May 1, 2011.*fn1

In response to the federal funding cut-off, the County invoked the dispute-resolution procedures in the Settlement and sought the Monitor's assistance on July 20 in resolving its dispute with HUD. The Government also invoked the dispute-resolution procedures of the Settlement in an August 18 letter. It identified two relevant issues as the Country's failure to promote legislation prohibiting discrimination on the basis of source-of-income and its failure to establish a process for addressing exclusionary zoning practices.

With respect to the County's obligation to promote source-of-income legislation, the Government requested in its August 18 letter that the Monitor resolve the following dispute between the parties:

Whether [the County] has fully complied with paragraph[s] 33(g) and 33(i) of the [Settlement], requiring the County, as part of its additional obligations to affirmatively further fair housing, to "promote, through the County Executive, legislation currently before the [BOL] to ban 'source-of-income' discrimination in housing," and to 'incorporate' that undertaking in the County's analysis of impediments to fair ...

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