WASHINGTON, D.C. — The U.S. Department of Housing and Urban Development (HUD) answered a complaint filed by the City of Huntington alleging the department didn't comply with regulations and is attempting to assess penalties on the city.
In its answer, which was filed May 23 in the U.S. District Court for the District of Columbia, HUD denies that the Housing Development Corporation (HDC) was or is a qualified Community Housing Development Organization (CHDO) under HUD regulations.
According to a June 6 order, HUD has until June 27 to file a motion for summary judgment and the city has until Aug. 12 to file its opposition to a motion for summary judgment and a cross-motion for summary judgment. The parties then have about a month each to file replies to the cross-motions.
Huntington wanted to develop the Fairfield West area and entered into an agreement with HDC in 2012 to prepare a redevelopment plan and implement that plan. The city then approved it and bought several parcels of land to construct new affordable rental housing.
The city claims HDC set about performing the agreement and acquired eight parcels for a total of $293,951. Three of the lots totaled $34,152 and were not timely used for affordable housing, so the city and HDC agree that those funds should be returned.
The agreement between the city and HDC was amended twice to include two two-family duplexes for a total of $658,876.06, according to the suit.
The city entered into another agreement with HDC in 2015 for construction of a 40-unit apartment complex for a total of $1,498,224.
During the entire process, the city worked closely with CHDO and the Huntington Urban Renewal Authority (HURA). In August 2016, the HUD Field Office recommended an extension of time to allow the city to draw down funds for the project to bring it to completion and HUD took nearly a year to respond to the request, but it did not specifically grant or deny the request.
In July 2017, the city received a letter from John E. Tolbert III, the director of the Office of Community Planning and Development, who claimed that HDC was not an eligible CHDO; that the amendments were executed prior to the completion of environmental reviews; that the city had expended funds before it had a written agreement; that the city had used HOME funds to purchase property from HURA; that funds committed prior to Oct. 1, 2013, were disallowed; that the city had only timely committed a portion of the HOME funds; and that HUD had the authority to de-obligate the $965,114 from the city's HOME account, according to the suit.
The city claims it sent a letter back refuting the claims, but HUD did not respond to the letter. The city then had outside counsel send two letters to HUD.
HUD sent a letter on in October repeating the same assertions from its July 2017 letter and also said it would impose an additional penalty on the city. It alleged that the city failed to meet its 24-month commitment targets for Fiscal Years 2012 through 2015.
In December, HUD de-obligated a total of $965,114 from the city's HOME funds, according to the suit.
"These reductions, if allowed to stand, are catastrophic to the city's HOME program, and to its efforts to mitigate the affordable housing crisis it suffers," the complaint states.
The city is seeking an injunction order preventing HUD from defunding the city's HOME funds and an order restoring any de-obligated funds. The city is represented by Charles H. Carpenter of Carpenter Law Firm and Otto Hetzel.
HUD is represented by U.S. Attorney Jessie K. Liu and Daniel F. Van Horn.
U.S. District Court for the District of Columbia Case number: 1:19-cv-00741