Pittsburgh requests dismissal of lawsuit aimed at redevelopment money

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The city of Pittsburgh late Monday asked a federal judge to dismiss a lawsuit aimed at changing the way it spends the redevelopment money it gets from the Department of Housing and Urban Development.

In the motion authored by attorney John Hansberry, of Pepper Hamilton, the city argued that the four community groups aren't whistleblowing "relators" bringing to light inside information, and thus their allegations shouldn't be considered under the False Claims Act.

"The relators are not insiders or whistleblowers; they are limited interest groups," Mr. Hansberry wrote. They read media reports of a city council debate and "obtained and reviewed publicly available documents that were submitted to HUD," and then filed their lawsuit, he wrote.

The lawsuit -- filed in late 2012 by the Northside Coalition for Fair Housing, Hill District Consensus Group, Fair Housing Partnership of Greater Pittsburgh and Freedom Unlimited -- deals with the city's use of Community Development Block Grant funding from HUD. It was unsealed in February after the Department of Justice opted not to join with the four groups, as it has the option to do when litigants allege fraud against the government.

CDBG is for cities "to develop viable communities by providing decent housing, a suitable environment, and expanded economic opportunities, principally for low- and moderate-income persons," Mr. Hansberry wrote. The plaintiff groups "believed that some CDBG funds were spent on ineligible activities, like repaving roads," and that both the city's efforts to get citizen input and its reporting to HUD were inadequate, he wrote.

"The allegation related to the ineligible expenses was reported in the media two years before the complaint was filed in this case," Mr. Hansberry wrote, noting a council debate spurred by Councilman Ricky Burgess in 2010, and extensive media coverage thereafter.

HUD, he added, "did not take action or prosecute" based on the city's reports of its CDBG spending.

"We've brought considerable additional information to the federal government," said attorney Don Driscoll, who represents the four community groups. "We disagree that the fact that some of this information had already gone to HUD is significant."

He sued the city and former Mayor Luke Ravenstahl, and said in February that he hoped to enter into discussions with new Mayor Bill Peduto on settlement terms.

Mr. Peduto at that time expressed some interest in exploring "new policies ... to ensure CDBG funding is used as it is intended."

The hoped-for dialogue "hasn't occurred," said Mr. Driscoll. "We've asked to meet on a number of occasions. ... This [motion to dismiss] is the response they've made, and that's unfortunate."

The city expects around $13 million in CDBG funds this year.

The False Claims Act allows those who detect fraud against the government to sue as private "relators" representing a federal agency's interest, and then to receive a percentage of any money recovered.

Rich Lord: rlord@post-gazette.com or 412-263-1542. Twitter: @richelord. First Published April 29, 2014 9:23 AM

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