The competition was funded using part of the $4.3 billion HUD allocated for disaster assistance and mitigation in Texas after Hurricane Harvey caused widespread damage along parts of the Gulf Coast. 

“The department finds that the design and operation of the competition discriminated on the basis of race and national origin,” the letter from Christina Lewis, HUD’s regional director, states. “GLO utilized two scoring criteria that substantially and predictably disadvantaged minority residents, with particularly disparate outcomes for Black residents.”

There is still another $1 billion allocated for a second round of the competition that has not yet been held, according to HUD. The agency wants GLO to agree to a voluntary resolution that would “address the discriminatory outcomes of the competition as well as adopt enhanced fair housing planning and monitoring metrics.” Otherwise, HUD will refer the matter to the U.S. Justice Dept., the letter states. 

In Harris County, home to Houston, County Judge Lina Hidalgo said in a statement that vulnerable communities have been left behind in flood mitigation efforts, and that the county would continue to invest in shovel-ready flood mitigation projects. Hidalgo added that she was grateful for HUD’s intervention.

“It’s not complicated: Harris County was ground zero for the heartbreaking impacts of Hurricane Harvey, and continues to be exceedingly vulnerable,” Hidalgo said. “The share of mitigation funds we receive from the federal government should reflect that reality.”

A GLO spokesperson said in a statement that the office administered its competition in accordance with HUD guidance and a HUD-approved plan, and that more than two-thirds of Texans benefiting from the program identified as Hispanic. They claimed HUD is “politicizing mitigation.”

“The GLO is considering all options, including legal action against HUD, to release this iron-fisted grip on mitigation funding and restore the pipeline of funds to communities,” the spokesperson said.

HUD identified two main problems with the way GLO ran the competition. First, GLO split the $1-billion pot into two $500-million pieces, one to go toward projects in the 20 counties and 10 zip codes HUD identified as the most impacted and distressed (MID) areas, and one for another 29 counties GLO had identified as MID areas. HUD rules require that at least half of the funds benefit low- or moderate-income people, and that at least half of the funds benefit MID areas. HUD says that the MID area it identified included about 88% of the competition area’s residents, but that residents of areas selected by GLO were less likely to have low- or moderate-income and more likely to be White non-Hispanic people. As a result, for every dollar that White non-Hispanic residents of the area could benefit from, Hispanic residents could only benefit from 84 cents, and Black residents just 72 cents, HUD says. 

The second issue HUD identified was the way GLO scored the jurisdictions applying for funding, which benefited smaller communities that HUD says were more likely to be home to more White non-Hispanic residents. GLO gave higher scores based on the proportion of a community a jurisdiction said its project would benefit. In one case identified by the letter, the city of Iola, with a population of just 379, received a 10 out of 10 score because the city’s proposal would benefit all its residents. But an application for a project in Houston was scored at less than one point because, while it would have benefited 8,845 people, that’s just a small piece of the city’s population of 2.3 million. Also, funding was capped at $100 million per project, limiting the scope of work for larger communities like Houston and Harris County, HUD says. Further, applicants were limited to claiming project beneficiaries in just one watershed per project, benefiting small communities located entirely within one watershed and preventing those like Houston that span multiple watersheds from achieving a positive score on the metric. 

Harris County accounts for 51% of the competition's eligible population, but projects in the county received just 9% of the money, HUD says. Projects proposed by the county itself and Houston were denied funding. Other large jurisdictions including Jefferson and Nueces counties also received no money. GLO denied 66 of the 67 applications from jurisdictions with populations over 100,000. 

Houston Mayor Sylvester Turner said in a statement that he agrees with HUD’s findings and that the city is still asking for a proportional share of the flood mitigation funds.

“When hurricanes come, and extreme weather events happen, they are not looking for a Democratic or Republican city or neighborhood,” Turner said. “In Hurricane Harvey, it did not matter if you lived in a poor or affluent community or Democratic or Republican neighborhood.”

Other sources have provided funding for flood mitigation projects in the area. Harris County voters approved a $2.5-billion bond program in 2018 to fund hundreds of projects. The U.S. Army Corps of Engineers is working with GLO on several projects along the Gulf Coast, including a proposed $29-billion project to build protections including barriers and gates across navigation channels to defend parts of the Gulf Coast against storm surge.

David Wheaton, advocacy director of Texas Housers, one of the groups that filed the complaint with HUD, said they had publicly raised objections to GLO’s competition throughout the process, but that the “pleas fell on deaf ears.” After the awards were announced and didn’t include money for communities battered by Hurricane Harvey like Houston, Port Arthur, Beaumont and Corpus Christi, Texas Housers and Northeast Action Collective filed a civil rights complaint with HUD.

HUD is also continuing to investigate alleged violations of the Fair Housing Act raised by the groups.