BRADENTON, Fla. — Louisiana State Bond Commission and Department of Justice attorneys entered into a settlement of the government's housing discrimination lawsuit even though the commission's chairman claims it was not authorized by the full SBC.
Federal Judge Martin Feldman approved the settlement Thursday, and closed the case, filed in 2012, though it can be reopened at any time if there is a failure to abide by the terms of the agreement, according to the six-page settlement document filed with the U.S. District Court in the Eastern District of Louisiana.
The Bond Commission denied that it violated federal housing laws, but agreed to comply with the Fair Housing Act in the settlement. The Justice Department did not assess a fine, and each side will pay their own costs. The court document said the settlement would avoid "costly and protracted litigation."
But the action rankled the head of the Bond Commission
"I am shocked, I am appalled, that the attorney general did this without coming back to the Bond Commission," Louisiana Treasurer John Kennedy said Friday. "I would never have voted for a settlement that did not put an end to this case. I'm not at all pleased."
Kennedy said he is "happy with most of the terms of the settlement," but upset that the attorney general — on his owned — signed the document without bringing it back to the SBC for final approval. He told the attorneys representing the Bond Commission before the settlement was filed with the court that there was "no way" he would approve it.
"What the attorney general agreed to does not end this lawsuit," said Kennedy. "Lawyers are supposed to represent their clients. This [settlement] is clearly in favor of the U.S. Department of Justice.
"I don't know who the attorney general is working for here — the Department of Justice or the state of Louisiana."
The settlement requires the SBC to comply with the Fair Housing Act, which applies prospectively to any moratorium or policy that would prevent consideration of affordable housing projects in New Orleans, or any future "discriminatory action" that would "unlawfully delay, deny or prevent consideration of the funding of affordable housing in New Orleans for persons with disabilities."
The prohibition does not preclude the Bond Commission from acting on projects after evaluating "other relevant, non-discriminatory considerations and factors."
The lawsuit alleged that the commission violated the Fair Housing Act and the Americans with Disabilities Act by adopting a moratorium on affordable housing financing in 2009. The moratorium blocked financing for a proposed 40-unit affordable housing project known as the Esplanade in New Orleans for persons with disabilities.
Kennedy said his main concern about the settlement is that Louisiana has been through other cases with the Department of Justice, including those involving universities and prisons.
"Often you agree to the terms of the settlement but right before the court's jurisdiction ends, they file a motion and its open again," he said. "That's what I wanted to avoid here."
Steven Hartmann, spokesman for the Attorney General's office, claimed the Bond Commission authorized the settlement. "The Bond Commission's vote, authorizing our office to do so, occurred on July 17, 2014," he said.
But at that July 17 meeting, the SBC voted only to reopen negotiations after rejecting the terms of a settlement proposed earlier this year. The SBC went into executive session out of public earshot to discuss the terms on which they would offer to settle the case.
Kennedy said Friday that the commission has said in past open meetings that it was important for any settlement to end the potential for the case to be reopened in the future.
Though he was not sure if the SBC could take any action concerning the court-approved settlement, Kennedy said he will ask for the issue to be discussed in public at the Aug. 21 Bond Commission meeting.
The SBC has said previously that it did not violate housing laws when in 2009 it enacted a moratorium on approving bond financing for affordable housing projects pending a market study on low-income housing saturation in New Orleans.
That moratorium occurred when a nonprofit agency applied to the commission for approval to issue bonds in connection with a controversial $6.6 million redevelopment of a former 102-bed nursing home on Esplanade Avenue in New Orleans that was shut down after Hurricane Katrina in 2005. The housing was to be designated for low-income and homeless persons with disabilities
The Esplanade project was also stalled because of delays in city zoning approvals.
After more than a five-year delay, the SBC in February approved the issuance of $3.4 million of multifamily housing revenue bonds for the Esplanade project.
New Orleans was also a defendant in the federal suit, but it was dismissed from the litigation in April after approving its own settlement with the DOJ. The city was not assessed any financial penalties.
The city's settlement requires that New Orleans fund 350 new affordable housing units, or beds, for homeless persons with disabilities over the next three years. City officials also must go through specialty training about the Fair Housing Act and the Americans with Disabilities Act, as well as to report certain housing issues to the DOJ.
