Public Policy

7/22/02
VIA HAND DELIVERY
Rules Docket Clerk
Office of General Counsel
Room 10276
U.S. Department of Housing and Urban Development
451 Seventh Street, SW
Washington, DC 20410-0500

RE: Requirement of HUD Approval Before a Grantee May Undertake CDBG- Assisted Demolition of HUD-Owned Housing Units
Docket No. FR-4698-P-01

To Whom It May Concern:

The Lawyers' Committee for Civil Rights Under Law ("the Lawyers' Committee") is a nonpartisan, nonprofit organization, formed in 1963 at the request of President John F. Kennedy to involve the private bar in providing legal services to address racial discrimination. The Lawyers' Committee is committed to preventing the use of Community Development Block Grant ("CDBG") funds in a manner that discriminates against communities of color and to ensuring the continued availability of affordable housing to low- and moderate-income persons. Accordingly, we are concerned about the possible improper use of CDBG funds to demolish HUD-owned properties. Below are the Lawyers' Committee's specific comments regarding the proposed rulemaking regarding the requirement that a grantee obtain HUD approval before using CDBG funds to demolish HUD-owned housing units.

I. HUD Approval Is Necessary to Ensure that CDBG Funds Are Not Used Improperly To Target Communities of Color for Demolition of Affordable Housing.

The Lawyers' Committee believes that requiring HUD approval before CDBG funds can be utilized to demolish HUD-owned properties will help to ensure the existence of integrated housing opportunities and the continued supply of affordable housing for minority and low- and moderate-income communities. We continue to be concerned that grantees improperly use CDBG funds to demolish properties with the purpose and effect of further segregating communities of color. HUD oversight of the use of CDBG funds to demolish HUD-owned properties will hopefully ensure that grantees meet the requisite
Fair Housing Act and CDBG standards, specifically, that the funds are used to meet CDBG national objectives, such as removing blight and using the cleared property to benefit low- and moderate-income communities. Absent this oversight, the Lawyers' Committee believes that it will be more difficult for HUD to identify and prevent the improper use of CDBG funds, and therefore, HUD will be unable to stem the increase in segregated housing conditions and the unnecessary reduction of affordable housing. In addition, the adoption of this rule will eliminate a distinction between HUD-assisted properties, for which HUD approval is currently required, and HUD-owned properties, where CDBG grantees need not notify or seek approval from HUD.

Requiring HUD Approval Will Help to Protect the Federal Housing Administration ("FHA") Mortgage Insurance Program, Which Has Been Invaluable in Providing Home Ownership Opportunities to Minority Communities.

The Lawyers' Committee also believes that adoption of the proposed rule is critical to ensure the financial stability of the FHA mortgage insurance program, a program that has been invaluable in providing home ownership opportunities to minority and low-income communities. When HUD-owned properties are demolished, the FHA program suffers significant losses because a lien for the costs of demolition is often placed on the property. In addition, the demolition itself significantly decreases the value of HUD's property. While some of these losses may result from ineffective management of properties, the primary factor appears to be the result of the unnecessary demolition.

We support the requirement that grantees obtain HUD approval before using CDBG funds to demolish HUD-owned properties. Accordingly, we urge HUD to implement the proposed rule, which we believe will help to further fair housing and protect the financial security of the FHA mortgage insurance program. Should further explanation be required on any of the discussion points above, please feel free to contact Ms. Cheryl Ziegler, the Director of our Housing & Community Development Project. Ms. Ziegler may be reached directly at (202) 662- 8331.

We thank you for soliciting and reviewing our comments.

Sincerely,

Barbara R. Arnwine
Executive Director

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