After more than three years of clashing with the federal government, Westchester County may finally have to pay a price for its failures to comply with a residential desegregation court order: $7.4 million.

The U.S. Department of Housing and Urban Development sent County Executive Rob Astorino notice this week that he has one month to come up with a plan to comply with three major requirements of a settlement reached in 2009 or Westchester will permanently lose millions in grants from the Housing and Urban Development agency in Washington. Those requirements involve both a ban on discrimination based on income and ending exclusionary zoning.

"In light of the fact that the County has been on notice about these deficiencies for years, HUD cannot at this point simply accept general promises of future performance," Vincent Hom, a regional HUD administrator, wrote in a letter to Astorino. He said that the "County's conduct has left us with no choice but to initiate this action."

The actual stripping of funds – they have been frozen for years -- would be an unprecedented move for an agency long criticized for its failures to enforce federal housing law. But Mirza Orriols, acting HUD regional administrator for New York and New Jersey, said the warning about the funding was not the result of HUD being "fed up" with the county's lack of compliance with a nearly 4-year-old court order. Rather, the agency acted out of concern that it would lose the funds to the U.S. Treasury if they are not spent by September and needs time to reallocate them.

"We're not in the business of recapturing funds. We are in the business of providing our grantees...the funding to provide services," Orriols said Wednesday. "We are hoping that we can get all the documents and that funds can be released for Westchester County."

Critics say the agency's decision to not pursue a more aggressive remedy — a contempt order that could expose the county to huge financial penalties — is consistent with its long history of inaction around civil rights issues. A federal judge, they note, ruled more than a year ago that the county is in "unambiguous breach" of the settlement meant to end decades of residential segregation in the county.

"None of this has anything to do with enforcing the consent decree," said Craig Gurian, whose non-profit Anti-Discrimination Center brought the lawsuit that ended in the landmark settlement. "What's unprecedented is that there is a civil rights federal court order in place and the government is choosing not to enforce it."

And surprisingly, the pressure for HUD to act more assertively to gain compliance with the court order isn't coming just from advocates. One of Westchester County's top elected officials said it's time for a more aggressive enforcement of the settlement.

"The county executive believes he doesn't have to follow the law," Westchester County Chairman Kenneth Jenkins said.

Orriols said HUD is ready to help Astorino meet the terms of the settlement. But its warning about revoking the millions in grants did little to change Astorino's stance.

"The County's position is that it is in full compliance," Ned McCormack, the county's communications director, wrote in a news release. "HUD's most recent letter of March 25th is just one more example of the federal government trying to bully Westchester to do things that go far beyond the terms of the settlement and dismantle local zoning."

Astorino's spokesperson declined an interview request with the county executive. Orriols said the county has not responded directly to HUD since receiving the letter.

A ProPublica investigation published late last year showed that despite the county being out of compliance on several key settlement provisions, the federal government has been reluctant to press for consequences.

The landmark settlement was reached after a federal judge ruled that Westchester County defrauded the government when it accepted HUD dollars tied to residential integration but took actions that either ignored racial considerations or directly contributed to segregation.

The settlement required the county to produce a HUD-approved plan to reduce barriers to fair housing, called an analysis of impediments. HUD has rejected the county's analysis several times, which is what led to HUD's initial freezing of the grants.

Under the settlement, the county also had to identify exclusionary zoning in its whitest municipalities and come up with strategies — including legal action if necessary — to challenge that zoning. The zoning issue is at the heart of the settlement, because it would change the very structure of communities that have passed development rules that have worked to keep people of color out.

Astorino has repeatedly pushed back, saying that despite the mandate in the settlement, he refuses to dismantle local zoning.

As a result, the county produced several zoning analyses that conclude not a single incident of exclusionary zoning exists in the county. Both HUD and the federal monitor charged with overseeing the settlement have repeatedly rejected this conclusion, most recently in a March 13 letter.

The monitor, James Johnson, commissioned an outside group to study the county's zoning. He said he is sharing that report with the Westchester municipalities and then will determine steps to move the county towards compliance.

The settlement also required Westchester to promote and pass a law barring discrimination against people who pay their rent with vouchers, called source-of-income legislation. The Board of Legislators passed the legislation only to have Astorino veto it.

When the county and the federal government ended up in court over the issue, federal judge Denise Cote ruled last May that Westchester was in "unambiguous breach" of the settlement. Still, Astorino refused to reintroduce the law, saying he would await the outcome of an appeal to the 2nd U.S. Circuit Court of Appeals.

In August, the U.S. Attorney's Office said it would move to hold Westchester in contempt over the source-of-income issue, marking the first and only time the federal government has ever publicly threatened contempt charges against the county for any of what it regards as the county's continuing settlement breaches.

Astorino hastily responded, releasing a letter to Johnson saying "he was left with no choice" but to ask the board of legislators to reintroduce the legislation. He did so in a two-line letter to the board.

The Democratically controlled board, however, has sparred with Republican Astorino on a number of issues, including the settlement. The board declined to reintroduce the legislation.

Jenkins said legislators spent more than two years working to get the legislation Astorino vetoed passed and were not going to put something forth that he would veto once again. Some have accused Jenkins and others Democrats on the board of not doing their part to truly implement the settlement.

The settlement was unpopular with many of the liberal county's voters and contributed to the ouster of the Democrat county executive just a few months after he signed it. As a consequence, according to critics of the settlement's handling, the current board has largely been content with letting Astorino battle it out with the federal government.

Jenkins is seeking Astorino's job in the next election but denies that the he is playing politics.

"As a person that's an advocate for fair and affordable housing, it is very frustrating to me," he said. "If the county executive has something in mind, he needs to start with it. My goal is to get source-of-income law passed and not to be constantly fighting in court."

Astorino has refused to come up with his own legislation. He said he is waiting for the appellate court to rule, even though both Judge Cote and the appellate court denied his request for a stay.

Nearly a year after a federal judge ordered the county to reintroduce the income discrimination law, nothing has happened. Though the federal government announced it might take away funds, it has thus far declined to ask the court to enforce its own order.

"The government has continually seen the actual enforcement of all of the provisions of the consent decree as too explosive," Gurian said. "And so it hasn't had the backbone to do it. It has instead been more interested in window-dressing solutions."

Orriols said that HUD continues to work with the monitor and the Department of Justice to figure out the best way to realize the full aims of the settlement. She would not say what it would take for HUD to seek court intervention.

"Let's see what happens with the end of the month," she said.