December 21, 2016

Bryan Greene
General Deputy Assistant Secretary
for Fair Housing and Equal Opportunity

Clifford Taffet
General Deputy Assistant Secretary for Community
Planning and Development

Jemine A. Bryon
General Deputy Assistant Secretary for Public and
Indian Housing
U.S. Department of Housing and Urban Development
451 7th Street S.W.
Washington, DC 20410

Garry L. Sweeney
Regional Director, FHEO
801 Cherry Street, Unit #45
Suite 2500
Fort Worth, TX 76102

SUBJECT: Conciliation Agreement (Case No. 06-0410-8 (Title VIII) and Case No. 06-10-0410-9
(Section 109)

Dear Mr. Greene, Ms. Byron, and Mr. Taffet:

We write to ask HUD to take swift and aggressive action to ensure that the Galveston Housing
Authority (GHA) complies with its obligation to rebuild public housing destroyed by Hurricane
Ike in 2008. The GHA is in violation of several Agreements including a May 25, 2010
FHEO Conciliation Agreement as well as an explicit Agreement entered into with the support
and concurrence of FHEO, CPD and PIH dated September 28, 2012 between the GHA, the City
of Galveston, GHA tenants represented by Lone Star Legal Aid, the Galveston County
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Coordinating Organizations1, and our organizations regarding reconstruction of public housing

in Galveston. This latter agreement affirmed that the City and GHA would rebuild public
housing units lost as a result of Hurricane Ike, with 145 units of public housing developed as
mixed-income multifamily housing, and the remaining 388 units developed as scattered site
units in high opportunity areas of Galveston Island. This agreement was endorsed by HUD in
an October 29, 2013 letter; signed by the Assistant Secretaries for CPD, PIH, and FHEO, stating
that this plan would affirmatively further fair housing in Galveston; and submitted in support
of the award of Low-Income Housing Tax Credits for the first phase of the plan to rebuild
specified in the agreement.

This was not the first time HUD had been forced to intervene because of non-compliance and
resistanceon the part of the City and GHAto rebuilding public housing in Galveston:

The initial fair housing complaint our organizations filed against the State of Texas in
late 2009 was based, among other things, on the ongoing overt race-based opposition to
rebuilding public housing in Galveston. Opponents of rebuilding made explicit, vulgar,
racist comments in a variety of public forums,2 and clearly influenced the decisions of
elected City officials and GHA leadership, which had previously committed to
rebuilding public housing.
The May 25, 2010 Conciliation Agreement approved by HUD contained specific
provisions requiring that all family and elderly public housing units be rebuilt in the
City of Galveston in a manner that affirmatively furthers fair housing and dedicating
sufficient funding to do so.
On July 1, 2012, HUD sent a letter to the then Mayor of Galveston, Lewis Rosen (who
was elected based on his opposition to rebuilding public housing). Signed by the
Assistant Secretaries for CPD, PIH and FHEO, the letter reminded Mayor Rosen that
$586 million in CDBG-DR funds had been allocated to the City of Galveston in
addition to annual formula allocations and that city actions that impede or limit the

1
GCCO is a coalition of community organizations including the NAACP, LULAC, and Gulf Coast Interfaith.
2
Among such comments were the following: [t]he perception of this island is a bunch of poor Black people who
want to live with or near poverty?; One of the only positive aspects of Hurricane Ike was that we have an
opportunity to clean up our island.; those "type" of people will not attempt to better themselves or adjust to
have a better make it safer, cleaner and a place where people will want to visit.; Enough already, this is our chance
to reduce the public housing on the island. As it is, you can find a drug dealer on most every street. Why invite
more?; I would much prefer Galveston to be viewed as a middle class to upscale living environment that draws
friendly families and savvy shoppers to its beaches and establishments; Public housing and living "on the dole"
are family traditions for many people in Galveston; teenagers living in the public housing joyride at all hours
with boomboxes blaring.; if these people are going to live on the dole, they should live where we elect to send
them.; not public housing which on this Island is full of crack dealers and the like.; absolutely not!!! We have
enough roaches!!!; public housing consist [sic] of lazy drug dealing thugs; Who wants to vacation in the
ghetto.; What I do not support is using the tax dollars of hard working people who bust their butts everyday to
make ends meet so that the people who do nothing to help themselves can sit back and relax on the front porch
drinking 40 oz., and playing cards and dominoes all day.; how ill we ever attract families and tourists if the
island is nothing but section 8?; We can never rebuild a great city with this garbage added back.; Galveston
was a dump before Ike and will be a dump after Ike if it is not cleaned up and the people removed that are
sucking the life out of the island.) http://www.petitiononline.com/mod_perl/signed.cgi?NoToGHA&1251 (last
accessed October 23, 2009) (emphasis added)

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 3

building of 569 replacement units will likely lead to adverse consequences for its CDBG,
HOME, and Disaster Recovery funding. Actions or inactions that violate civil rights or
fair housing laws may also result in further legal or administrative action by HUD or
other federal or state government agencies. The letter also referenced a July 12, 2011
letter from HUD to the City that explained the Citys rebuilding responsibilities and
potential consequences of failing to carry out those obligations.3 A moratorium was
placed on the further expenditure of CDBG-DR funds in Galveston until the public
housing situation was resolved.
On July 23, 2012, City and GHA officials met with HUD Secretary Shaun Donovan and
agreed to enter into negotiations with GLO and other parties in order to work towards
lifting the moratorium on CDBG-DR expenditures.
The City of Galveston and GHA negotiated, and the City Council approved, the
September 28, 2013 Plan for Rebuilding agreement setting out the numbers of
multifamily and scattered site public housing units and agreeing that [t]he City and
GHA will act in compliance with all applicable laws and will not unreasonably delay
or withhold required approvals. GLO and HUD allowed CDBG-DR expenditures to
resume in Galveston.
Representatives of CPD, FHEO, and PIH met with GHA, the City of Galveston, and our
organizations in Texas in April 2016 to address ongoing non-compliance and delays
caused by GHA. HUD released a letter on April 27, 2016 outlining the financing of the
remaining units: 128 TPVs and 287 public housing units.4 This letter was again signed by
the Assistant Secretary for FHEO and the Principal Deputy Assistant Secretaries for CPD
and PIH, and reiterates HUDs commitment to the implementation of the Conciliation
Agreement.

Almost nine years after Hurricane Ike destroyed 569 units of family public housing, and four
years after HUD, under the leadership of Secretary Donovan, told Galveston, the GHA and
particularly Buddy Herz, the current head of the GHA Board, that fair housing principles must
be following in rebuilding public housing, only 145 of those units are under construction. The
GHA continues to obstruct further rebuilding both intentionally and through its demonstrated
inability or unwillingness to administer its programs to rebuild public housing units in
Galveston. This obstructive attitude and failure to rebuild is part of a long and well-
documented history of intentional racial discrimination in Galveston, dating back to the 1990s
when HUD made a finding of racial discrimination against the GHA and the Department of
Justice and private litigants brought an action against the GHA for illegal discrimination.5

Since the GHA entered, as HUD directed, into a specific Agreement to build these public
housing units, the Texas General Land Office (GLO) has provided extensive technical assistance

3
These letters were accompanied by ongoing meetings and conversations between HUD and GHA/City of
Galveston.
4
April 27, 2016 letter to Dr. Ken Wisian, Ph.d, GLO, Mona Perguson, GHA, and Michael Allan from
5
We note that Mr. Herz was also Chair of the Housing Authority Board during the period when HUD found that
GHA had violated Title VI and fair housing requirements by selling off land in integrated low-poverty areas of the
island and concentrating public housing in racially segregated, high poverty, and distressed areas.

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 4

to GHA, including contracting with a grant administrator for GHA and undertaking the
contracting and development of the remaining unbuilt units, based on GHAs assertions that it
could not rebuild the units itself.

Among the longstanding and severe management problems and administrative and financial
deficiencies at GHA including its failure to comply with fair housing and civil rights
requirements as mandated by its Annual Contributions Contract are the following:
The findings of HUDs February 3-7, 2014 monitoring visit noted that GHA had been
unable to provide despite repeated requests from GLO documents explaining the
expenditure of $18 million in insurance proceeds for public housing destroyed by
Hurricane Ike sufficient to demonstrate that there was no duplication of benefits.6
HUDs Management Review Report on its November 2-6, 2015 monitoring visit
identified specific deficiencies in GHAs management, administrative, and financial
controls including insufficient financial policies and procedures to ensure sufficient
internal controls, GHAs financial data did not match its subrecipient grant agreement
or information reported to HUD, could not document personnel costs it had charged to
the CDBG-DR grant, and a year after the initial finding, GHA still could not document
its expenditure of $18 million in insurance proceeds sufficiently to support a
determination of duplication of benefits.7
GLO was only able to establish a duplication of benefits amount in August 2016, and
had to conduct its own analysis in order to do so. GLO also found that GHA had set
aside over $7 million of the insurance proceeds in escrow accounts without sufficient
policies and controls to ensure that those funds were used for allowable costs.8
On December 7, 2015, HUD convened a conference call to discuss the implementation of
a PBV program, memorialized in a January 20, 2016 letter from to .
GLO also found that GHA had set aside $360,830.57 to fund staff salaries and operating
expenses related to rebuilding. In April, GHA claimed that it did not have funds to
travel to Austin to meet with GLO, our organizations, and with HUD representatives
coming in from headquarters. When GLO and HUD agreed to move the meeting to
Houston, a 30 to 45 minute drive from Galveston, GHA claimed it could not afford that
travel. It is unclear whether GHAs management issues are so severe that it did not
know about the existence of an account containing over $360,000, or whether GHA was
deliberately obstructing and delaying any step towards completing the rebuilding of
Galveston public housing.

At the request of GHA and the City of Galveston, the September 2012 Agreement included the
option for scattered site units to be funded with Project-Based Vouchers (PBV) instead of being
rebuilt as hard public housing units. However, GHA has repeatedly refused to cooperate with
GLO, including holding a 2012 Tenant Protection Voucher request in abeyance for two years,
resulting in the loss of 114 vouchers. It was only through its inquiry to HUD regarding the

6
January 29, 2015 Management Review Report.
7
Februrary 26, 2016 Management Review Report.
8
August 31, 2016 GLO Monitoring Review for Contract #13-320-000-7621

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 5

status of the voucher request in late 2014 that GLO discovered the voucher request had been
withdrawn by GHA. HUDs January 20, 2016 letter informed GHA that it was eligible for 128
PBVs, and instructed GHA to modify its 2012 funding application and comply with PBV
voucher regulations.

GLO has moved ahead with obtaining builders for the 97 scattered site units that will be
subsidized with Project Based Vouchers (PBV). However, GHA has applied for only 30 of the
128 vouchers it is entitled to the number necessary to fund replacement units in its
multifamily developments and has refused to apply for the remaining vouchers that will be
applied to the 97 replacement units being built by GLO. GHA has also refused to apply for a
waiver of the competitive PBV process in order to apply the 97 vouchers specifically to the
replacement units, which it agreed to do in an April 2016 meeting with HUD, GLO, and our
organizations. The reasons given for these actions are conflicting, clearly pretextual, and
designed to obstruct rebuilding Galveston public housing.

GHA Board members and staff are on record referring to public housing residents as trash
and comparing the GHA obligation to provide 388 units of scattered site public housing with
Cabrini Green, the now-demolished public housing high rise building in Chicago. Taken
together, GHAs inactions and public statements are evidence of its discriminatory racial bias
and GHAs violations of the Fair Housing Act and Title VI of the Civil Rights Act of 1964. GHA
is also not in compliance with the May 2010 Conciliation Agreement or the September 2012
Agreement that it executed with Texas Appleseed and Texas Low Income Housing Information
Service.

According to its FY 2017 Annual Plan, GHA has a combined Public Housing and Housing
Choice Voucher waiting list of 6573 households, 81% of whom are extremely low income.
Seventy-eight percent of the households on the waiting list are Black, 62% percent are families
with children, and 19% of households include a person with a disability.9 The wait list mirrors
the pre-Hurricane demographics of Galveston public housing tenants, who were 72% Black,
31% persons with disabilities, and of whom 80% (of both public housing and HCV tenants) had
incomes less than 30% of Area Median Income.10 The failure to rebuild public housing in
Galveston has a significant and negative disparate impact based on race and on other persons in
classes protected by the Fair Housing Act.

GHA is in breach of the following agreements, contracts, certifications, and federal laws and
regulations:

9
GHA has made numerous other verbal representations about this size of its waitlist, including claims that there is
no need for rebuild public housing in Galveston.

10
A PICTURE OF SUBSIDIZED HOUSEHOLDS 2000, using the Data Query Tool. Available:
http://www.huduser.org/picture2000/

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 6

1. The March 13, 2009 Settlement Agreement resolving a complaint by its tenants that GHA
had failed to comply with federal regulations governing the demolition or disposition of
public housing units when it sought to demolish 569 units immediately after Hurricane
Ike. That agreement guaranteed the one-for-one replacement of 569 multifamily
housing units destroyed by Hurricane Ike in the same bedroom size configuration. The
settlement also included the provision that GHA shall immediately commence seeking
funding from HUD for replacement as well as pursuing non-HUD funding. GHA has
not done so.

2. Its contractual and regulatory obligations flowing from the May 25, 2010 Conciliation
Agreement between the State of Texas, our organizations, and HUD. That agreement
provided funding specifically for one-for-one replacement of all family and elderly
public housing units damaged or destroyed in Hurricane Ike, as well as additional
funding, with a specific reservation of funding for Galveston public housing
replacement, from a set-aside for Harris, Galveston, and Orange counties for one-for-one
replacement of public housing units in a manner that affirmatively furthers fair
housing and in compliance with the States Phase I Analysis of Impediments to Fair
Housing for disaster-affected areas of the state. GHA has not done so.

In addition to the standard civil rights and fair housing certifications to the State of
Texas and HUD that rendered the City of Galveston and GHA eligible for CDBG-DR
funds, the State of Texass contracts with its subrecipients for CDBG-DR funds
incorporate the May 2010 Conciliation Agreement by reference. Section 1.03 of the
States Subrecipient Contract includes the following language:

Subrecipient shall be deemed to have read and understood and agrees to abide by all guidance
documents applicable to the CDBG-DR program including but not limited to:
. . . (3) the Conciliation Agreement between: the Texas Low Income Housing Information
Service and Texas Appleseed, and the State of Texas, by and through the Texas
Department of Rural Affairs and the Texas Department of Housing and Community
Affairs, as approved by HUD in its letter dated May 26, 2010 to the Office of the
Attorney General of Texas. (emphasis added)
GHA has not done so.

3. The March 11, 2011 State of Texas Phase I Analysis of Impediments to Fair Housing
Choice included the following action step addressing Impediment 5, that all public
housing units damaged or destroyed by Hurricane Ike would be rebuilt in a manner
that affirmatively furthers fair housing. The 2011 Phase I AI also required GHA and
the City of Galveston to fill out and submit to the State for approval a Fair Housing
Activities Statement Texas (FHAST) form and carry out the actions committed to as a
condition of eligibility for Round 2 CDBG-DR funds. GHA and the City of Galveston
both submitted FHAST forms in which they committed to rebuild, on a one-for-one

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 7

basis, all family and elderly public housing units damaged or destroyed by Hurricane
Ike in a manner that affirmatively furthers fair housing. GHA has not done so.

4. The September 29, 2012 Agreement approved by City Council, which was signed as a
result of HUD intervention with the City and GHA, laid out the plan for rebuilding both
multifamily and scattered site units and committed GHA and the City to act in
compliance with all applicable laws and . . .not unreasonably delay or withhold required
approvals. GHA has not done so.

5. GHAs Annual Contributions Contracts, including Paragraph 15 requiring compliance

with federal civil rights and equal opportunity requirements, including the Fair Housing
Act and Title VI of the Civil Rights Act of 1964, and provisions of the ACC related to
record keeping and financial accountability. GHAs actions instead evince intentional
racial discrimination established though years of delay, inaction, and intentional
discrimination.

Both GHA and the City of Galveston must make certain certifications in order to be eligible for
the allocation of grant funds.11 Since at least 2009, GHA and the City have repeatedly and
knowingly failed to comply with certifications they have made to HUD in order to obtain
federal funds, apparently in the expectation that if they could simply put off rebuilding public
housing until they had already spent hundreds of millions of CDBG-DR dollars on
infrastructure, they would never have to comply with their civil rights obligations.

Their actions to obstruct and delay the rebuilding of hurricane-destroyed public housing also
constitute intentional discrimination based on race, color, and national origin under Title VI of

11
See, eg. 42 U.S.C. 5302 (The Secretary is authorized to make grants to States, units of general local
government, and Indian tribes to carry out activities in accordance with the provisions of this
chapter.); 42 U.S.C. 5304 (a) Statement of objectives and projected use of funds by grantee
prerequisite to receipt of grant; publication of proposals by grantees; notice and comment; citizen
participation plan (1) Prior to the receipt in any fiscal year of a grant . . .the grantee shall have prepared
a final statement of community development objectives and projected use of funds and shall have provided
the Secretary with the certifications required in subsection (b) of this section and, where appropriate,
subsection (c) of this section.; 42 U.S.C. 5304(b) Any grant . . . shall be made only if the grantee
certifies to the satisfaction of the Secretary that-- the grantee is in full compliance with the requirements of
subsection (a)(2)(A), (B), and (C) of this section and has made the final statement available to the public;
(emphasis added) These statutory requirements have been codified, see 24 C.F.R. 91.325(a) and 24
C.F.R. 91.325(b)(4)(ii) (applicants must certify that they are affirmatively furthering fair housing and
primarily benefiting LMI persons, among other requirements); 24 C.F.R. 91.5 (certifications must be
assertions based on supporting evidence); 24 C.F.R. 91.500(a) and 24 C.F.R. 91.5 (HUD will
review the plan in which certifications must appear, and has the authority to inspect the evidence on which
certifications are based); 24 C.F.R. 570.485(c) (HUD may determine that a certification is not
satisfactory to the Secretary based on evidence); 24 C.F.R. 91.500(b) (HUD may disapprove any
plan or portion thereof that is substantially incomplete, contains a certification that is not
satisfactory to the Secretary within the meaning of 24 CFR 570.485(c), or is inconsistent with the
purposes of the Cranston-Gonzalez National Affordable Housing Act, 42 USC 12703); 24 C.F.R.
570.485(c) (HUD may require a state to submit further assurances as the Secretary deems necessary to
find the grantees certification satisfactory.)

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 8

the Civil Rights Act of 1964, intentional discrimination based on race and other status covered
by the Fair Housing Act.

HUDs Office of Public and Indian Housing must require that GHA cooperate with GLO and
implement its commitments to HUD. Given GHAs history of discrimination and resistance to
civil rights compliance and desegregation, and its clear inability or unwillingness to administer
its programs in a way that does not substantively breach its ACC and constitute longstanding
and severe management problems, we request that HUD appoint an administrative receiver to
carry out GHAs responsibilities to rebuild, one-for-one and in a manner that affirmatively
furthers fair housing, public housing units destroyed by Hurricane Ike in 2008. Eight years after
the hurricane, and despite repeated interventions by HUD and GLO, only a fraction of the
required units have been rebuilt.. As a result of these failures by the City and GHA, GLO and
HUD have been unable to close out Texas CDBG-DR grant for the 2008 hurricanes.12

We request that HUD require that the GHA:

1. By January 10, 2017:

a. Submit a complete application to HUD and/or amend any funding application
already submitted to apply for all the Tenant Protection Vouchers for which it is
eligible and meet any other requirements in order to administer PBVs pursuant
to 24 CFR 983;
b. Submit to HUD an application for waiver of the PBV process in order to directly
assign 97 PBVs to the 97 units to be constructed by GLO;
c. Submit to HUD a development proposal pursuant to 24 CFR 905.600 Subpart F
and all other necessary applications and documentation necessary to enable GLO
to issue a NOFA for the remaining scattered site units.
2. Prepare and supply to HUD, GLO, and Texas Appleseed and Texas Low Income
Housing Information Service a list of any and all actions GHA will carry out to
implement the Conciliation and other rebuilding agreements and an expedited timeline
for carrying out those responsibilities, and provide the parties with copies of monthly
submissions to HUD, the City of Galveston, or any other entity and any other
documentation necessary to verify that GHA is carrying out those actions;
3. Submit a biweekly report to HUD, GLO, and Complainants of GHAs activities related
to public housing rebuilding completed;
4. The City of Galveston must comply with all agreements it has previously signed, and
take all necessary steps to implement those agreements, including, as is within the
Mayors power, appointing a new chair and new members to the GHA Board.
5. If these steps have not been completed by January 10, 2017, we ask that HUD impose an
administrative receiver on GHA who will be empowered to carry out GHAs obligations
identified above.

12
We note that the Houston Housing Authority and the City of Houston present another barrier, also based on
resistance to desegregation and civil rights compliance, to closing out these grants.

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The type of actions we request have been undertaken by HUD before, most notably in situations
involving the Orange County Housing Authority, Vidor site, Texas, the Lafayette Housing
Authority, Louisiana, and the Beaumont Housing Authority, Texas. In each of those instances,
HUD took over housing authorities that had proven themselves incapable of responding to
pervasive and obvious racial discrimination and complying with their civil rights and
programmatic obligations. Should GHA fail promptly to come into compliance with those
obligations, HUD should not hesitate to take similar action.

Sincerely,

John Henneberger, Co-Director Madison Sloan

Texas Low Income Housing Information Service Texas Appleseed

CC:
Tonya Robinson, Acting General Counsel
Timothy Smyth
Michael Maurer, DOJ
Stanley Gimont
Michael Allen, Relman Dane & Colfax
Pete Phillips, GLO

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