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NHC Beyond 4 Walls Podcast

Supreme Court upholds disparate impact standard for housing discrimination

On Thursday, in a dramatic decision, the Supreme Court ruled 5-4 that disparate impact claims under the Fair Housing Act are within courts’ jurisdiction (the legal term is “cognizable”). The decision upholds many years of HUD practice in fair housing enforcement as articulated in a recent HUD regulation that interpreted the Fair Housing Act to include disparate impact (measured by observable outcomes), not just disparate treatment (measured by intent to discriminate). It also reinforces the need for all of us in the affordable housing and community development movement, public sector and private sector alike, to think carefully about how our policies affect people’s ability to choose where they live. Both the majority opinion and the dissents offer reminders of perhaps the key lesson in fair housing, that we must balance revitalization of distressed neighborhoods with creating options in high-opportunity places.
The case in question, Texas Department of Housing and Community Affairs et al v. Inclusive Communities Project, Inc., et al, was a suit against the Texas state agency that allocates Low Income Housing Tax Credits. The plaintiff, Inclusive Communities Project, argued that the concentration of affordable housing investments in low-income, primarily minority neighborhoods violated the Fair Housing Act. The Court’s ruling does not say whether or not there was a violation. It simply rules that lower courts can evaluate a claim based on disparate impact, which they must now do.

Communities across this country have had long-standing patterns of segregation by race, income, ethnicity, disability status and other characteristics. Unfortunately, these patterns have emerged from and been reinforced by government policy at local, state and federal levels, even as they played out in a multitude of individual household and business decisions. We know these patterns are as difficult to change as they are detrimental to the people living in these distressed neighborhoods and are costly to all of us both locally and at the state and federal levels. The Court’s decision reminds us that we cannot assume that segregation and its costs are behind us just because we do not see expressed discrimination.

NHC considers the issues of fair housing, community redevelopment, preservation to prevent displacement and the reframing of affordable housing as comprehensive community development to be central tenets of our work. It is integrated into our convenings, local, regional and federal policy work, research and communications efforts. The ruling will not end the discussion but further inform the work on community development and affordable housing going forward.

Part of the ruling’s effect will fall on private sector businesses: lenders, developers, real estate professionals and others. The work of addressing business practices and unexamined assumptions in housing is necessary but also costly. As all of the opinions of the case cautioned, we should not take fair housing law so far as to prevent the creation of the very shelter we hope all in America can enjoy.

On the practical level of creating and sustaining housing, stakeholders should draw a lesson expressed in both the majority opinion and the dissents, albeit in different language. Affordable housing must balance investment in distressed neighborhoods with creation of affordable housing in high-opportunity neighborhoods. That’s hard to do in practice, and it’s messy to measure. But it’s the only way with limited public resources that we can hope to make positive change.

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