Oakland Co. cited for discriminatory block grants

Mike Martindale
The Detroit News
Oakland County seal

Pontiac – Oakland County officials are smarting from a federal finding that county programs don't do enough to promote affordable housing for low and moderate-income residents, especially renters.

At issue is the sizable expenditure of Community Development Block Grant funds and HOME Investment programs – about $7 million annually and more than $300 million since 1975  – and whether they meet requirements that no person is denied assistance from the U.S. Department of Housing and Urban Development because of race or national origin.

In an April 2018 ”Findings of Noncompliance” letter from HUD’s Office of Fair Housing and Equal Opportunity, the agency said Oakland County needs “to closely analyze all of its housing and community development programs to determine if, and to what extent, they may contribute to the perpetuation of racial segregation in the county and in the region, thus (constituting) impediments to fair housing choice.”

“Were puzzled and perplexed by their findings,” Oakland County Deputy Executive Tim Meyer said Tuesday. “We can’t figure out what is driving this. It’s now part of an ongoing public discussion.”

County Corporation Counsel Keith J. Lerminiaux said the HUD letter is “wrong on the facts and also wrong on the law.” He said by law, CDBG funds – which account for about $5 million of this year’s $7 million -- can't be used in rent situations and that the county refers renters to other available resources.

“We’ve partnered with HUD for 45 years and have had an excellent relationship,” Lerminiaux said. “The expenditure of every dollar of HUD funds have been approved in advance and also after the fact. It appears that a branch of HUD doesn’t feel we are doing enough for renters, as opposed to making funds available for home owners.

“Our policy has always been to encourage investment and improvements in home ownership in communities because it has a trickle-down effect – from building supplies to the jobs provided to contractors who do the work,” he said. “Now HUD Fair Housing want to change the rules.

“It’s like playing baseball and three strikes you are out and someone stepping in and saying, ‘now it's two strikes‘ (and you’re out).”

Lerminiaux said HUD's findings were based on “faulty assumptions and skewered statistics.” He said that in 2016, for example, 15.7 percent of low and moderate income households in CDBG communities were African American, while 24 percent of the households that received CDBG funds were African American.

“We plan to formally rebut all their allegations but have no plans of changing our current policy and certainly not apologizing for anything we have done.”

Lerminiaux said the county has to file a rebuttal document by July 1 and an action plan for the coming year by Aug. 15.

Calls to HUD officials were not returned Tuesday.

Interest-free loans are made on a first-come, first served basis, depending on eligibility and priority, according to Karry Rieth, manager of the county’s Community & Home Improvement Division.

She said the dispute will not have any impact on projects that were approved last year but it's unclear what may happen going forward.

Lerminiaux provided The News with copies of HUD letters from 2013 to 2017, all of which enthusiastically approved Oakland County’s plans for  expenditure of HUD dollars.

The most recent is an Oct. 19, 2017, letter from Keith Hernandez, director of HUD's Office of Community Planning and Development to Karry Rieth, manager of the county's Community and Home Improvement Division.

The letter approved a fiscal year 2017 plan for more than $7.5 million in federal funding, concluding: “We would like to commend Oakland County on your successful completion of this year’s Annual Plan.

“We believe that the goals and objectives developed through this process provide the foundation for the formulation of new partnerships at all levels of government … these partnerships are invaluable to you and address the problems of affordable housing, homelessness and economic opportunities for all citizens, particularly for very low-income, low-income and moderate-income persons,” Hernandez continued.

“HUD FHEO (Office of Fair Housing and Equal Opportunity) received our annual reports," Lerminiaux said. "If they had a concern about Oakland County’s programs, it should have timely expressed them.”

According to Lerminiaux and documents reviewed by The News, the FHEO branch became involved after the nonprofit Fair Housing Center of Metropolitan Detroit alleged in June 2015 that Oakland County was involved in the “denial of housing and making housing unavailable; discrimination in the terms and conditions of housing; perpetuation of segregation; failure to affirmatively further fair housing.”

The complaint  alleged violations occurred at nonspecific areas “throughout” Oakland County because of “race, color and national origin.”

HUD dismissed the complaint in October 2016, saying it was not timely but the FHEO branch said it would conduct a comprehensive compliance review of Oakland County’s alleged failure “to initiate a substantive analysis of Impediments to Fair Housing Choices since 2004.”

Margaret Brown, executive director of Fair Housing Center of Metropolitan Detroit, was out of town and unavailable for comment Tuesday.

Thomas Silverstein, a Washington, D.C.-based attorney who worked with Brown and her group on the issue, said criticisms of Oakland County for not using HOME partnership funds for rental housing are justified because the county recorded “zero percent investment” in rental housing between 1992 and 2018. During the same time, Silverstein said, Wayne County used 12 percent of its funds toward rental housing and Macomb County 9 percent over the same period.

“(Wayne and Macomb) spend less than average but much more than Oakland County,” Silverstein said. “The contrast with Detroit – 83 percent of funds – is striking.”

Silverstein said CDBG funds can’t be used for new rental construction but can be used for rental rehabilitation and pre-development costs for new construction. HOME funds are “routinely used for new rental construction, often as gap financing in low-income house tax credit developments.”

Oakland County’s annual plans for HUD funds traditionally garner bipartisan support from its Republican-dominated Board of Commissioners. Commissioner Dave Woodward, D-Royal Oak, said he believes the funds “provide a lifeline” for some low-income residents wanting to improve their homes and also for communities seeking to maintain property values.

“Everyone who wants to live in Oakland County should be given the opportunity to do it,” said Woodward. “Do we need more affordable housing, including for our senior citizens who find they need to downsize to survive? Certainly.

“Funds for housing are shrinking and this is a problem not just locally or statewide but nationally,” he said. “More needs to be done.”


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