HUD Backs Costa Mesa Ban on Alien Funding : Law: In a long-awaited ruling, local officials are told that grant money can be withheld from charity groups that knowingly provide services to illegal immigrants.

Cities may withhold federal grant money from programs that serve illegal aliens without violating discrimination law, the Department of Housing and Urban Development said Thursday in a letter to the city of Costa Mesa.

In a long-awaited ruling that could have broad impact on illegal immigrants and attempts to regulate them, HUD lawyers agreed that Costa Mesa can deny funds to charities and other groups unless they pledge to not knowingly serve illegal aliens.

The city had passed such a law last August but subsequently voted to suspend it when federal authorities questioned whether it might violate federal anti-discrimination law.

“In line with our review of the case, we do not conclude that the city’s prohibition on the use of city funds for illegal aliens is in violation of the Constitution or other federal law,” HUD general counsel Frank Keating wrote in an opinion sent Thursday to city officials through the office of Rep. C. Christopher Cox (R-Newport Beach).

Keating also added that federal regulations do not appear to preclude HUD from adopting a similar policy agencywide.

“In discussions on this subject, the question has been raised as to whether HUD could, without clearly articulated congressional direction, issue regulations which prohibit illegal aliens from receiving block grant assistance. In our view, HUD may properly and in accord with constitutional principals issue” such a regulation, the lawyer wrote.

HUD officials could not be reached Thursday to determine if such a policy is under consideration.

“It’s a really backward step,” said Evelyn Colon-Becktell, chairwoman of the Orange County Coalition for Immigrant Rights. “It’s outrageous. Outrageous that we would do something like this. I could see this having a ripple effect on other cities, and it could be really devastating to the immigrant population.”

With HUD’s ruling, several Costa Mesa council members said they will seek to have the city’s original funding policy reinstituted.

“I have asked to have it put on the next council agenda,” said Councilman Orville Amburgey, who originally proposed the policy. “I think HUD’s decision confirms what we have said all along. They quite clearly feel that our policy is valid and agree that in this day and age when there is such a demand for funding that we should not be dispersing those funds to illegals.”

According to the measure, the city “will not consent to support individuals or agencies who employ, provide assistance to, house, feed, or in any other fashion, support illegal aliens.”

The sole programs exempted were medical and dental services provided to illegal aliens.

The city’s anti-alien funding policy, believed to be the first of its kind in the state and possibly the nation, had attracted national attention and provoked a storm of protest from immigrant-rights groups and service providers.

Opponents of the policy predicted that such attempts to drive away illegal aliens would radically alter the way nonprofit groups operate.

It was also feared that some groups might discriminate against Latino-looking people rather than set up complicated and time-consuming screening procedures.

Nativo Lopez, director of the Santa Ana immigrants-rights group Hermandad Mexicana Nacional, pointed out that a recently released federal report found widespread discrimination against undocumented workers by employers, who now are obligated, under penalty of sanctions, to make sure their employees have legal working papers.

“If employer sanctions can’t work, what makes them think that social service agencies can do any better a job in ascertaining the legal status of their client population?” he said. “We’re going to see discrimination increase geometrically. . . . It’s a very, very significant ruling.”

Costa Mesa Councilwoman Sandra L. Genis said: “I would hate to see us getting into a situation where we’re going to focus on people’s ethnicity. You know they’re not going to ask somebody like me with light hair and fair skin to provide proof of citizenship. They’re going to focus on the Hispanics, and I think it could come down to a means of intimidating them.”

However, other city officials contend that the policy is supported by the community.

“That’s the feeling I get from talking to them in an official capacity and from conversations I have with people,” said Councilman Ed Glasgow. “I have not had one person say we were wrong in the original statement.”

Many service providers have said they would forgo city funds rather than accept terms of the policy if made mandatory.

This year, the city is dispensing $279,900 in HUD Community Development Block Grant and general revenue sharing funds to 35 public service agencies.

Groups range from the Harbor Area Boys and Girls Club to the Easter Seal Society and the South Coast Institute for Applied Gerontology.

“I really don’t see how we can sign a contract that includes” the policy, said Shirley Cohen, executive director of Feedback Foundation, which provides meals to needy seniors in Costa Mesa and other areas of the county.

City officials have conceded that the policy, if reinstated, would be difficult to enforce. The original policy did not outline just what measures an agency should take to ensure that it not serve illegal aliens.

The council also could not determine if the policy should apply to all groups that receive city funding, which could include such diverse groups as the South Coast Repertory and Boys and Girls Clubs.

Times staff writers Maria Newman and Mary Ann Perez contributed to this report.