State & Local News Vol. 21, No. 2, Winter 1998 WASHINGTON'S LABYRINTHINE WAYS By Otto J. Hetzel Otto J. Hetzel is a professor of law emeritus at Wayne State University and practices law in Washington, D.C. Washington Has Quieted Down. Congress Takes Its Longest Adjournment in Three Decades After Enacting All Appropriation Bills. Congress adjourned November 13 and is not scheduled to return until January 27. Attorney General Reno, while proceeding with internal investigations of campaign financing issues, has declined to proceed with initiating independent counsel investigations of the President and Vice-President. The Senate Campaign Financing Hearings have ended and the House hearings, after identifying some conflicts between such counsels and the Justice Department, are in recess. The President after exercising his item veto power calculated to have "saved" $1.9 billion over five years, even found time to adopt a new "Buddy," a chocolate labrador. Fast track trade legislation lacked the votes and will be on the agenda next session, when Congress returns on January 27. House Rules No Longer Allow Witnesses to Bar TV Coverage. While a committee may still close a meeting to TV coverage, witnesses will no longer have that option under a recently adopted House rule change. If its public, its public, unless Congress wants to limit access to the testimony. Homeownership Rate Rises. Vice President Gore made the announcement that 66 percent of Americans now enjoy homeownership, the highest level ever in the country's history. HUD Inspector General Criticizes HUD 2020 Management Reform Plan. In-fighting has continued between HUD's inspector general (IG) and other Department officials, over their respective roles. The IG released a report that questioned the effectiveness of HUD's proposed Management Plan, one of the Secretary's bold new policy initiatives. She contends that it could compound HUD's current problems and prevent not create effective operation of its programs, particularly as experienced employees are lost through downsizing efforts. This has been a concern expressed by many in the housing industry as well. The IG noted that 774 experienced employees had accepted buyouts in September and more were expected in December. She commented that "not only is HUD losing significant staff expertise and managerial talent through downsizing, but many remaining staff members may be unfamiliar with their new positions" especially given the consolidations by function now planned. HUD responded denying her contentions that the targeted staff reductions do not necessarily relate to HUD's workload or mission and that an adequate cost/benefit analysis was not performed to determine whether the plan would simply substitute private contractors for existing employees. At the heart of the matter has been the potential overlap of HUD's proposed new Enforcement Center with some functions currently handled by the IG. Originally scheduled to be sited in New York, Secretary Cuomo announced that prior plans to move both HUD's new centralized Enforcement and Assessment Centers would be delayed and they would remain in D.C. until further evaluation. The move of the focus of enforcement efforts to New York City generated considerable adverse comments both from a number of affected staff and Congress. House Approves Federal Court Jurisdiction for Property Owners' Suits Opposing Property Takings by State and Local Governments. A sudden spurt in legislative activity involving property rights occurred at the end of the current legislative session and appears to have potential for rapid action in the upcoming term. It is likely to have profound affects on state zoning proceedings and environmental regulations if it proceeds. It has received Senate support from the chair of the Judiciary Committee, Orrin G. Hatch (RBUtah). Focusing on disputes regarding local zoning and other regulations on land use, over 200 House co-sponsors who support landowner property rights have received House Judiciary Committee approval of their approach to faster resolution of land-use regulation disputes through expansion of federal court jurisdiction. This would allow property owners to obtain immediate federal court jurisdiction. How much it would actually extend the effect of the Supreme Court's decision in City of Chicago v. International College of Surgeons, decided December 15, 1997, is not clear. In that case, the Court held that claims can be removed to federal district court that local government administrative action violated federal law, even when the complaint contains state law claims that provide for on-the-record review of the local government's administrative findings. The legislation would abrogate legal doctrines of abstention that allow federal courts to defer to state courts where state claims are involved. It would also provide for Federal Claims Court authority, where plaintiffs seek monetary damages, to invalidate federal laws and regulations and to enjoin federal regulatory actions. Such authority is currently available only in federal district courts. The legislation has pitted developers, including the National Association of Home Builders, against environmentalists, state attorney generals, and local governments. Opponents argue that it is inconsistent with other Republican policies to let local governments make more of their own decisions and concerns expressed about an activist federal judiciary. HUD Announces It Owes Former HUD-Insured Mortgage Holders $70 Million. The Federal Trade Commission and HUD have started an effort to publicize the availability of $700 refunds to Federal Housing Administration mortgage holders. At least 100,000 homeowners may be entitled to refunds of mortgage insurance issued since 1977. The refunds involve overcharges of up-front mortgage insurance fees where the homeowner paid off the mortgage in less than seven years. FHA insures about $400 billion in mortgages, adding 900,000 additional insureds each year. Most affected homeowners are not aware they are entitled to a refund. They have moved and efforts to find them have been unsuccessful. HUD is using the Internet along with toll-free lines to make those eligible aware of the funds due them. HUD is even trying to resuscitate the IRS, by obtaining its assistance in locating eligible persons. At the same time, HUD has taken steps to prevent scam artists from depriving owners of their full refunds. "Tracers" sometimes have charged a fee of from 10 to 30 percent to homeowners to notify them of their refunds. Any homeowner can call HUD directly and get the refund without any fee. HUD has identified over 300 websites that make questionable claims from such tracers and is working with the FTC to prevent misleading claims. Former HUD Secretary Cisneros Indicted for False Statements to FBI During Its Review of His Qualifications. A grand jury has issued eighteen felony counts against the former HUD Secretary for conspiracy, obstruction of justice, as well as for false statements. The sixty-six page indictment was the result of an independent counsel's several year investigation of Cisneros, triggered by claims he defaulted on support payments by his former mistress. She and two of his former aides in San Antonio, Texas, were also indicted for conspiracy and making false statements. The indictment contends the mis-statements involved the level of payments he had made to her in part to avoid having her disclose the true nature of their relationship during the confirmation process. The indictment claims that Cisneros continued to pay her even after he became housing secretary. In 1993 alone, this amounted to $73,000. The apparent reason for continuing the investigation and now the prosecution after he has left office has been attributed to efforts to punish lying to the FBI. Medlar, his admitted mistress, was initially given immunity to obtain her cooperation, but when she stopped doing so in 1996, she was subsequently indicted. Hamilton Securities $20 Million Contract to Administer Sales of Billions of HUD Mortgages Canceled over Allegations of Impropriety in Handling Bids. A major scandal appears to have surfaced this fall involving handling of HUD mortgage sales by Hamilton Securities which did not notify bidders that computer programs that were to have sorted out complicated bids for mortgages on various packages of properties did not operate properly. The computer error occurred in HUD's program for disposing of much of its inventory of properties that had to be repossessed from the original borrowers. The complicated bid process was to maximize the Department's return on the properties it was attempting to dispose of. The situation has been complicated by bid-rigging charges against the same firm and former HUD officials regarding the contract for handling the bids for sale of some $11 billion in defaulted mortgages. That matter is already the subject of an ongoing criminal investigation by federal officials initiated in 1994. The securities firm continued to receive almost $900,000 monthly until late October 1997. Just how significant the error was and whether any funds were actually lost to the government because of it have not yet been disclosed. Just think if this had occurred and HUD, not a private contractor, had been administering this disposal. Recalling Watergate on Anthony Ulasewicz's Death. He was a retired New York City detective working as an investigator for the White House from 1969 to 1972, who admitted before the Senate Watergate Committee to distributing a quarter million dollars in "support" money to Watergate burglars E. Howard Hunt and G. Gordon Liddy, and also to investigating the social life of prominent Democrats including Ted Kennedy. The phone booth he testified he used at National Airport to make arrangements for payments became an item of local renown. He may best be remembered for providing an unabashed comedic role in the Watergate hearings. Your correspondent State & Local Law News home page | Table of Contents