Housing advocates tell HUD that TX Disaster recovery plan fails to disclose how the money will be spent

After reviewing the Disaster Recovery Plan that the Texas Office of Rural Community Affairs (ORCA) submitted to HUD the Texas Low Income Housing Information Service, Texas Appleseed and Texas Rio Grande Legal Aid wrote HUD Secretary Shaun Donovan a letter pointing out that the ORCA plan did not really constitute a plan but was a mere promise to develop a plan.

Our concern is that the $1.3 billion be well spent and help the Texas families who have been waiting for housing assistance. The only way of assuring that happens is for the State of Texas to say what exactly it intends to do with the $1.3 billion, the type of assistance it proposes to provide and who is going to be eligible for help.

The ORCA plan does none of this. Therefore we have called on HUD to compel the State of Texas to publicly disclose this information through a revised plan and provide the public a reasonable opportunity to comment.

Here is our letter…

February 27, 2009

The Honorable Shaun Donovan
Secretary
United States Department of Housing and Urban Development
451 Seventh Street, S.W.
Washington, D.C. 20410

Administrative Complaint
Re: State of Texas Plan for Disaster Recovery after Hurricanes Ike and Dolly

Dear Secretary Donovan:

The signatories listed below are housing advocates for families with low and moderate incomes. Months after Hurricanes Ike and Dolly, tens of thousands of Texas families remain displaced or otherwise lack adequate housing.  Texas officials are well aware of our work on their behalf, including the matter that we present to you below.

At issue is how Texas will administer $1.3 billion in CDBG funds that HUD has currently allocated to Texas for disaster recovery.  The statute appropriating this money provides:

[t]hat prior to the obligation of funds each State shall submit a plan to the Secretary detailing the proposed use of all funds, including criteria for eligibility and how the use of these funds will address long term recovery and restoration of infrastructure[.]

H.R. 2638, Pub. L. 110-329 (2008).  On February 20, 2009, Texas attempted to comply with this statute by submitting a document to you entitled “Plan for Disaster Recovery” (Plan).  See http://www.orca.state.tx.us/pdfs/Action_Plan_for_HUD_Approval_2_20_09.pdf.  We raised several objections in our comments to prior drafts of the Plan.  Having studied the final Plan that Texas has submitted to you for approval, we believe that only one of our objections is necessary at this time: The Plan does not “detail the proposed use of all funds, including criteria for eligibility,” so HUD should not allow Texas to obligate any of the $1.3 billion until Texas revises its Plan to do so.  Of course, in accord with HUD regulations, we seek an opportunity to comment on any revised plan that Texas proposes to comply with the statute.  See 74 Fed. Reg. at 7250-51 (Feb. 13, 2009).

As now submitted, Texas’s Plan explicitly and repeatedly defers decision on how the disaster recovery money will be used.  E.g. Plan at 5 (The Plan “will allow local officials and experts to determine those priorities that most need to be addressed in their community.”).  The Plan simply sub-allocates the $1.3 billion among eleven regional Councils of Government (COGs), and leaves to the COGs all decisions as to what actions will be undertaken with the money, who will benefit, and what eligibility criteria will be applied.  The Plan does not include those decisions. This cannot comply with the text, structure, history, or purpose of the statute.

The statutory text requires the Plan to state a proposed “use” for “all” allocated funds including “eligibility criteria.”  Sub-allocation to units of local government cannot itself be a “use” of funds because sub-allocation alone provides no basis for determining “how the use of [the] funds will address long term recovery and restoration of infrastructure.”  Sub-allocation only renders this determination more difficult by multiplying levels of authority and decision making.  Moreover, if sub-allocation alone were a “use,” states could render the statute meaningless at will.  Accordingly, HUD regulations indicate that a Plan is only sufficient if it identifies which activities and which beneficiaries will receive funding.  See 74 Fed. Reg. at 7250, ¶ 5.b.  Texas’s Plan decides neither activities nor beneficiaries, so it fails to state proposed “uses” for the money as required by the statutory text.

Texas may argue that by requiring COGs to follow federal statutes and regulations in deciding how to use each sub-allocation, its Plan does identify activities and beneficiaries.  But of course all state agencies are bound by CDBG statutes and regulations regardless of whether any plan says so.  Congress plainly required plans to do more than restate the obvious.

Texas’s sub-allocation proposal is also inconsistent with the structure of the appropriations statute and regulations.  These laws require non-duplication of other benefits, a 50% floor for low and moderate income families, a 10% rental housing floor, affirmative efforts to promote non-discrimination, adherence to the three CDBG statutory objectives, and citizen participation in deciding how the funds will be spent.  Every one of these requirements would be jeopardized or eviscerated if Texas were allowed to begin obligating funds based only on a commitment to sub-allocate, without any indication of how the state or the disparate end-users can practically achieve compliance with these critical requirements.  Failure to comply with these requirements is not merely procedural; it has substantive consequences, particularly for low income households and populations protected under the Fair Housing Act.

As for legislative history, we emphasize that HUD’s decision as to the sufficiency of Texas’s Plan may influence the legislative history of the statute at issue.  See NLRB v. United Food & Commercial Workers Union, 484 U.S. 112, 125 (1987) (agency interpretation of a statute near the time of enactment is evidence of congressional intent).  The broad future implications of the decision before you, therefore, should not be discounted.

Finally, as a matter of policy all stakeholders want the money to be made available as quickly as possible.  But the speed with which HUD releases money to the states is not the critical issue, what is important is how fast funds reach the families and communities that they are intended to benefit.  Three years after Louisiana, Mississippi, Alabama, and Texas first received CDBG Disaster Recovery funds for Hurricanes Katrina and Rita, millions of dollars remain unspent, funds have been diverted to projects unrelated to the storm, and the desperate need for affordable housing in devastated areas of the Gulf Coast remains unmet.  Congress established specific criteria for these funds, and Congress’s policy choices merit respect, for without safeguards, taxpayer funds could be wasted, and public support for disaster recovery efforts would be undermined.

For all of these reasons, we urge you to deem Texas’s Plan insufficient to support obligation of CDBG funds at this time, and require revision and resubmission of the Plan after the abbreviated public comment provided in HUD’s current regulations.  We believe that if Texas were to work with us, an effective and efficient plan could be developed within a three or four weeks.

We would welcome an opportunity to discuss any of these matters further with you.  Our contact information is listed below.

Sincerely,

Texas Low-Income Housing Information Service
John Henneberger, Co-Director

Texas Appleseed
Madison Sloan, Staff Attorney

Texas RioGrande Legal Aid