County settles HUD complaint over low-income housing

A low-income housing community proposed to be built outside Laurel, near Trap Pond, will get another shot before the Sussex County Planning & Zoning Commission after two years, now that the County has reached a $750,000 settlement with federal housing officials.

Sussex County government reached an agreement between itself and the U. S. Department of Justice and the federal Housing and Urban Development agency after the DoJ investigated a complaint to HUD alleging discrimination by the County based upon race, color or national origin, as well as violation of the Fair Housing Act. The agreement allows Diamond State Community Land Trust, the developers of the New Horizons community, to again come before Planning & Zoning to resubmit their plans for consideration, without an admission of wrongdoing on the part of the County.

“The Fair Housing Act guarantees that all Americans have the opportunity to live where they choose, regardless of the color of their skin,” said Thomas E. Perez, assistant attorney general for the Civil Rights Division of the DOJ, in a statement. “It is especially important that counties employ their land-use powers in a manner that does not obstruct housing choice, and we will take action when jurisdictions block housing because of the race or ethnicity of those that would live there.”

Legal counsel for the County, Stephanie L. Hansen of Young, Conway, Stargatt & Taylor LLP, explained that the County does not agree that the P&Z’s recommendation for denial of approvals for the project and the county council’s subsequent denial were done in a discriminatory manner.

“The County does not agree that they have done anything wrong,” she said, explaining the “without an admission of wrongdoing” portion of the decree. “They don’t agree that there was a violation of the Fair Housing Act... That’s why it took so long,” she said, for the parties to come to an agreement. “They stand by their denial,” she added.

In November 2010, the Diamond State Community Land Trust filed a suit in Superior Court against Sussex County Council over the council’s decision to uphold the Sussex County Planning & Zoning Commission’s recommendation for a denial of their application for the New Horizons subdivision.

They also filed a complaint with Department of Housing & Urban Development. The complaint filed with the State Division of Human Relations and HUD alleged that the County had violated the Fair Housing Act, the Civil Rights Act of 1964 and the Housing and Community Development Act of 1974 by “wrongfully denying the subdivision and denying equal housing opportunity to low- and moderate-income families of color, among others.”

That complaint was referred to the U.S. Attorney General in January of this year.

“Because the project complies with all applicable county code provisions, we are entitled to plan approval, just like any other property owner who submits a plan which complies with the code,” explained Van Temple, the then-executive director of Diamond State, in 2010, “and we are confident that the Superior Court will uphold our rights.”

Temple explained that, because of the impact of the denial upon low-income and disadvantaged households, Diamond State had also filed the fair-housing complaint with the state Division of Human Relations and the U.S. Department of Housing and Urban Development over the same actions.

“Both actions are taken to remove discriminatory and unreasonable obstacles to the American dream,” said Temple in 2010. “All persons deserve the opportunity to be homeowners in communities of their choice, whether they are working families or wealthy families. The reasons for denial are without merit, arbitrary, capricious and contrary to law.”

While the Sussex County Superior Court has yet to rule on the land-use complaints, explained Amy Walls — president of the board of directors for the Diamond State Community Land Trust — the settlement agreements with the U.S. Department of Justice and HUD are what the parties agreed upon this week. She noted that the lawsuit filed with the Superior Court was still going through the process of briefings, etc., and was expected to be dropped soon.

In addition to the monetary award of $750,000, which will be paid by the County’s insurance carrier, the County can choose to allow Diamond State to resubmit its subdivision plans before the P&Z. The County also agreed to name a fair-housing compliance officer and develop an affordable housing plan to “ensure equal housing opportunities continue to be promoted.”

County Public Information Officer Chip Guy explained that the compliance officer can be an existing County employee and does not have to be a new hire.

“We are pleased that we are able to come to this agreement and put the matter behind us for all parties involved — most of all for the taxpayers and residents of Sussex County.” said County Council President Michael H. Vincent in a statement. “The settlement avoids further litigation and investigatory proceedings by the DOJ and HUD, it ensures Diamond State can move forward with its plans, and it protects the taxpayers from paying anything toward the settlement of this complaint. That was among the most important priorities for the council throughout these discussions.”

Hansen said there was no insurance deductible the County was responsible for as a result of the settlement, and any increase in insurance premiums would be at the discretion of the County’s insurance carrier. She did say the County’s legal tab in this matter came to $400,832 over two years, including a $50,000 deductible in the Delaware Superior Court case.

In the summer of 2010, Planning & Zoning commissioners denied the application for New Horizons for reasons that included that it was offered as “moderately-priced housing” but not specifically within the County’s Moderately Priced Housing Ordinance.

Commissioners also offered that, had it been part of that ordinance, “It would most certainly have failed, since the County Council’s intent was to establish such subdivisions in areas in which spending on infrastructure is likely.”

The property is located in an “Investment Level 4” area, which is “unlikely to benefit from future mass-transit opportunities that are needed to compliment moderately-priced housing,” according to state designations.

Commissioners said the application was “inconsistent with the transportation element of the County’s Comprehensive Development Plan” and questioned it being offered as a cluster development, as well as the cost of the project.

“The cost of the project, estimated at $10 million, also suggests that this is really not an example of moderately-priced housing at all,” stated the minutes from the July 14 Planning & Zoning Commission meeting. They also stated that the landowner had previously sold larger homes in the area, which they said would “create an inconsistency, which leads to a conclusion that the subdivision will have an adverse effect on property values under Section 99-9(C)(12) of the Code.”

Planning & Zoning voted 3-1 to deny the subdivision application, with Commissioner Rodney Smith dissenting and Commissioner Michael Johnson not participating in the discussion or vote.

In October 2010, Sussex County Council upheld the Planning & Zoning Commission recommendation, with Councilman George Cole dissenting.

This week, Walls said the fact that an agreement was reached is “gratifying.”

“It means we can breathe a sigh of relief and we have an opportunity to build these affordable units in Sussex County. We have been working in New Castle and Kent, but our vision is to create these opportunities in Sussex, where there is a great need.” She also said the agreement “provides a path forward.”

Detailing some of the elements of the agreement, Walls said the County is not allowed to look at the specific guidelines upon which the subdivision’s denial was based, including access to public transportation.

“Access to public transportation is not applied to all developments in Level IV,” said Walls. “And the vast majority of subdivisions — when researched — we found were approved. The questions that were asked of us and the reasons for denial were not relevant and not posed to other developments. When we realized that was the case, we just wanted a fair shake. We wanted to be looked at just like any other development, according to the code. And we didn’t feel like we were.”

In the consent decree, it is stated that Diamond State is “not proposing the New Horizons development under the County’s Moderately Priced Housing Unit Program, and thus the requirements of criteria applicable to development proposals brought under that program do not apply.”

It also states that “Delaware State Strategies for Policies and Spending should not be used as a basis for denial if the project otherwise complies with the Sussex County code and, in particular, the subdivision code.”

Diamond State’s vision for the New Horizons subdivision is a 42-acre site in Laurel that would “make affordable home ownership possible for 50 working Sussex County families.”

According to Diamond State, that means families that earn no more than 80 percent of the area’s median income as calculated by HUD.

It would have a cluster design and average lot sizes of about 9,400 square feet, with homes of one or two stories and between 1,350 to 1,900 square feet in size. Several eco-friendly building options, such as water-permeable driveways, Energy Star efficiency and a community-wide renewable energy photovoltaic (PV) system are also part of the design.

Under the Community Land Trust model, Diamond State representatives explained, homeowners own the homes — which, according to their Web site, would range in sale price from $115,000 to $150,000 — and pay ground rent on the land, which enables the “land trust to price the house well below its market value, making homeownership affordable to working families who might not otherwise be able to own their own homes.”

For more information on the County’s original decision, including minutes from both the Planning & Zoning and county council meetings, visit The meeting before the P&Z was held in June 2010 and the county council’s meeting on the application was held in October of that same year.

For more information on the proposed consent decree, the complaint, or the summary of the case between U.S. Department of Justice and the County, visit and click on “case and matters,” then click on “housing and civil enforcement matters,” and then click on “United States v. Sussex County (D. Del.).”