MANHATTAN (CN) - Westchester County got another shot at federal money withheld under a 5-year-old deal meant to increase affordable housing in the wealthy New York City suburb.
Finding that actions by the U.S. Department of Housing and Urban Development to further fair housing in the county were reviewable by a judge, the 2nd Circuit on Wednesday sent the matter back to U.S. District Court for the Southern District of New York.
Westchester County Executive Rob Astorino called the decision "a major victory for due process against an aggressively overreaching federal bureaucracy."
The county's problems with HUD began in 2006 when the Anti-Discrimination Center of Metro New York sued, alleging the county was receiving federal grants by filing false certifications with HUD on how it was promoting fair housing.
The nonprofit, which fights discrimination in housing, employment, education and public accommodations, claimed that the required annual certifications were false because the county had failed to take steps to overcome barriers to fair housing caused by racial discrimination and segregation.
Westchester, home to the tony communities of Harrison, Scarsdale and Larchmont, has nearly 970,000 residents. About 56 percent of the population is white; 23 percent is Hispanic and 16 percent is black, census records show.
HUD intervened in the lawsuit in 2009, securing a settlement under which the county agreed to pay $30 million to the federal government and take steps to increase fair and affordable housing. One measure required the county to develop 750 affordable rental and owner-occupied units that it would have to market to both Westchester residents and to minority households in New York City and surrounding counties.
The county also agreed to conduct new "analysis of impediments" reviews to determine how to overcome barriers to fairer housing - including zoning seen as exclusionary and source-of-income evaluations that snubbed renters who qualified for Section 8 housing subsidies.
Such reviews were part of the annual certifications for HUD grants that the 2006 lawsuit had accused the county of falsifying.
HUD subsequently rejected review after review that Westchester offered, and put county officials on notice that $7.4 million in grants for fiscal year 2011 were in jeopardy.
HUD held on to the grant money until 2013, then disbursed most of it elsewhere when the county failed to submit an acceptable zoning analysis and plan to overcome exclusionary zoning.
The county responded with a federal complaint against HUD, claiming the agency's rejections of the submitted plans violated provisions of federal law that barred HUD from interfering in local housing policies.
U.S. District Judge Denise Cote in Manhattan dismissed the suit, however, after finding that HUD's rejections were "committed to agency discretion by law" and not subject to judicial review.
The 2nd Circuit vacated that decision on Wednesday.
"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," Judge Pierre Leval wrote for the three-judge panel.
Only about $753,000 from the county's $7.4 million grant was not reallocated and is affected by the decision.
The money is part of HUD's Home Investment Partnership, which the agency's website describes as its largest block-grant program. Under the program, money goes to states and localities to use in conjunction with nonprofits to build, buy or rehabilitate rental or owner-occupied housing for low-income households.
The circuit used the rules governing the program to decide the question of judicial review.
Those rules are clearly laid out in federal statute, Leval noted, detailing them extensively in the 19-page decision.
"By reason of these provisions, this is not a case in which the statute is 'drawn in such broad terms that ... there is no law to apply,'" he wrote, citing a 2008 decision by the circuit.
"The statutory provisions ... contain meaningful standards constraining HUD's discretion and providing for judicial review," Leval added.
Judges Denny Chin and Susan Carney concurred in the decision, which remands the case to U.S. District Court.
Astorino, the Westchester County executive, said in a statement that the decision provided "vindication" for the county.
"A lot of people asked, why are we fighting HUD?" he said Wednesday. "Today's decision is a clear statement that the county was right to defend local zoning."
Astorino said HUD still was withholding 2013 and 2014 grants totaling more than $10 million, "which the county will pursue."
The HUD fight became an issue for Astorino in his 2014 Republican run for governor against Andrew Cuomo, the incumbent Democrat who won by more than 500,000 votes.
Cuomo criticized Astorino and the county for not abiding by the 2009 settlement.
Cuomo, who served as HUD secretary under President Bill Clinton, reportedly called violating the country's fair-housing laws "very, very serious."
Cuomo shares a home in New Castle, Westchester County, with TV chef and author Sandra Lee.
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