Texas Sized Bi-Partisan Cronyism in Galveston

This piece comes to us from Norman D. Pappous Councilman – City of Galveston; District 4 who reached out to me over the weekend.

According to Mr. Pappous the Feds and the State of Texas are leaning heavily on the City of Galveston to build public housing in a hurricane ravaged part of the city. This development will benefit a powerful builder with lots of sway in Washington and in Austin. The management fees the developer stands to gain over coming years are in the tens of millions. This is after the developer gets to build the developments, paid for by the taxpayer.

Below is the essay by Mr. Pappous.

By Norman D. Pappous Councilman – City of Galveston; District 4

The City of Galveston, TX is in the middle of a $250 million, bi-partisan, crony-capitalist trifecta. Taxpayer funds are being used to finance a housing project that is illegal, unethical, and unneeded. President Obama’s Department of Housing and Urban Development is administering FEMA disaster recovery funds like a political treasure chest for their political donors. This housing deal will create a decades long, multi-million dollar income stream for a large democratic donor and the “conservative” administration of Gov. Perry is not only supporting this, they are enforcing punitive actions should the City of Galveston not comply. But the outrage does not end there. The locations that HUD and the State of Texas demand the city build on probably violate the civil rights provisions of the Fair Housing Act.

Over the last few decades, landmark legal cases initiated by the NAACP and ACLU against HUD have resulted in court ordered remedies utilizing Section 8 tenant-based vouchers. The core concern of these cases was that HUD was involved in concentrating poverty levels thereby denying public housing residents the economic opportunity they are entitled to. Vouchers are the best tool HUD has to de-concentrate poverty and make certain that families can move to where economic opportunity exists. Some of the advantages vouchers have over public housing:

1. They keep property on the tax rolls (public housing is not on the tax rolls)

2. They allow for labor mobility (public housing does not transfer with the tenant)

3. They allow economically disadvantaged families to choose where they want to live

Galveston distributed housing vouchers to all our Public Housing tenants that were displaced due to Hurricane Ike. Galveston, with open arms and a large supply of Section-8 housing, welcomed back anyone that wanted to return. Fact: post-Ike, the City of Galveston has a lower overall population but it has a higher housing authority population. We now have, or will have by the end of 2013, more section-8 and tax credit units than we did pre-Ike. That was not good enough for HUD or housing advocates based in Austin, TX. Regardless of the fact that we have more subsidized housing (per-capita) than any other city in Texas, we are being told to build taxpayer funded developments to the tune of $250 million. The size of these developments goes far beyond Galveston’s needs. They will require attracting economically disadvantaged residents from elsewhere in order to bring them to full occupancy.

Is the City of Galveston suitable for economically disadvantaged families that are seeking economic opportunity? While Texas population has been increasing for decades; Galveston’s population has been decreasing. While Texas has experienced job growth for decades; Galveston has negative job growth. The negative job growth rate alone should disqualify the City of Galveston from becoming a suitable city to relocate economically disadvantaged families. But what is happening has nothing to do with the poor. It has to do with enriching the firm that will manage the $250 million development McCormack, Baron, Salazar. They will receive a multi-decade, multi-million dollar management contract without contributing one dollar of capital expense!

How (are) the Obama and Perry administrations getting away with it? Gangster style! Perry initially sought to distribute disaster relief funding in a manner that benefited his political cronies. Housing advocates stepped in and filed an administrative complaint with HUD. HUD turned around and told the state of Texas and the housing advocates to come to an agreement- an agreement now referred to as the “Conciliation Agreement.” The Conciliation Agreement detailed a new distribution method of disaster recovery funding for the State of Texas.

The Conciliation Agreement was signed by everyone involved except the City of Galveston. Out of hundreds of Texas municipalities receiving funding, which municipality is the only one to have a condition put on it in order to receive disaster recovery funding? The City of Galveston. Which city was the hardest hit by Hurricane Ike? The City of Galveston. Which city has the highest percentage of public housing pre and post Hurricane Ike? The City of Galveston.

Yet the local press implies those who want to stop the illegal and unneeded crony-capitalist housing deal are racists. In Chicago and Baltimore the NAACP and ACLU filed a lawsuit to stop the same thing that is going on here – the concentration of poverty. But for some reason, the observance of federal housing laws cease when $250 million is at stake for a major Democratic fundraiser.

Where is the supposed conservative administration of Governor Perry? Perry is absent from the fight because the Conciliation Agreement his administration signed states that the failure of the City of Galveston to rebuild its public housing on a one-for-one basis will result in Texas losing $3.2 Billion in disaster relief funding. The fact that the state is forcing Galveston to act in an illegal manner is immaterial to the state and the Feds because they hold the purse strings that Galveston so desperately needs.

At the center of the Argument is Cedar Terrace – the second worst census tract in the entire county to build public housing. This poverty level in this census tract is 61% – far, far above the guidelines set by HUD to ensure that public housing units are built in areas that do not concentrate poverty. Where is the worst census tract in the county? The census tract right next to this one.

In order to mitigate the poverty ratios, HUD is demanding that mixed income developments be built. For every public housing unit built, at least one market rate unit will be built. The benefit is not seen in the poverty ratios though ? and never will be because of simple math. The contract Galveston is being forced to comply with state that the market rate units can be rented to peoples requiring government subsidies – nullifying any market rate requirement. So much for the definition of mixed income development.

However the additional units will benefit McCormack, Baron, Salazar as they will be managing the units – the more they manage the more revenue they receive. This is where a simple fact betrays the true motivation of HUD. The Conciliation Agreement they claim to be enforcing never mentions mixed income units. But HUD has specifically mandated Galveston build mixed income developments. Why? The additional faux market-rate units do not mitigate the concentration of poverty. They do nothing to bring the development into compliance with the Fair Housing Act. But they do monetarily benefit McCormack Baron, Salazar.

I invite everyone to come to Galveston to see what I hope never becomes reality- a development built with taxpayer funds under the ruse of providing affordable housing. In reality the development is being built in the worst economic opportunity census tracts in the state for the benefit of a wealthy Democratic donor in St. Louis – aided by a self-professed “conservative” governor.

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