After the U.S. Supreme Court ruled that the disparate impact standard applied to the Fair Housing Act, the case was sent back to the District Court for reconsideration. The District Court reconsidered the case and on August 26, 2016 ruled in favor of TDHCA and entered judgment in favor of TDHCA. ICP did not appeal this decision.
ICP v. TDHCA
The Inclusive Communities Project (ICP) helps minority families participating in the Housing Choice Voucher program to find housing outside minority areas with high poverty, high crime, high distress, low opportunity, and low performing schools.
However, there is not much affordable housing outside of minority areas. Low Income Housing Tax Credit (LIHTC) units are the main source of affordable housing. As of 2008, after 20 years of the LIHTC program, 92.29% of LIHTCs are in areas with more than 50% minority residents.
TDHCA increases this segregation by choosing to approve applications for LIHTC units in minority areas and deny applications in Caucasian areas.
TDHCA's actions make it more difficult and more expensive for ICP to find housing for its clients outside of minority areas. In 2008 ICP filed a lawsuit against the Texas Department of Housing and Community Affairs to remedy these effects.
The journey to the U.S. Supreme Court began when Judge Fitzwater ruled in March of 2012 that TDHCA violated the Fair Housing Act and he ruled that there was in fact a disparate impact of segregation in the tax credit housing in the City of Dallas. Memorandum Opinion and Order
What is Fair Housing?
Fair housing is the right to choose housing free from unlawful discrimination. Federal, state and local fair housing laws protect people from discrimination in housing transactions such as rentals, sales, lending, and insurance. A protected class is a group of people with a shared characteristic whom fair housing laws protect against illegal discrimination. The protected classes for the federal Fair Housing Act are the following: race, color, religion, national origin, sex, disability, and familial status.
Limiting LIHTC housing to predominately minority areas of slum, blight and distress significantly reduces the availability of affordable housing in viable, decent, opportunity neighborhoods for voucher holders.
What is Disparate Impact?
Disparate impact is racial discrimination that occurs when the effect of a neutral policy or practice is the functional equivalent of intentional discrimination. Disparate impact proves discrimination without having to prove intentional discrimination.
Disparate impact is an objective test based on evidence. Many Judges think intentional discrimination requires an additional subjective judgment (by the judge) of a subjective state of mind (of the decision makers, such as a state agency or lenders).
Why is this case a debate about whether or not proof of intent to maintain racial segregation is necessary to show a violation of the Fair Housing Act? The issue is whether or not the judge or the jury needs to rely on subjective judgments about the personal state of mind of the people causing the segregation. While much of the objective evidence is the same whether or not intent is part of the case, in a disparate impact case there is no subjective delving into personal motives or thoughts. An intentional segregation case requires both the inquiry into the subjective values and intent of the persons causing the segregation and the subjective judgment by the court as to why those persons are causing the racial segregation.
The existence of harmful and discriminatory effects is the starting point for any Fair Housing case. This is true for discriminatory intent and for discriminatory effects cases.
The existence of additional evidence is required for both discriminatory intent cases and for discriminatory effect cases involving racial segregation. This evidence includes whether there is a legally acceptable cause for the segregation. If there is no such legitimate cause, then there is a violation in either type of case - intent or effect.
If there is a legitimate reason for causing the racial segregation, then the next step is to look at whether there were other ways to accomplish the same goal but which would not be as discriminatory or as segregationist. If there are such other ways which were not used, there can be a violation in either type of case - intent or effect.
The next step is required only in intent cases. The judge or the jury looks at all of the evidence, including that of the personal thoughts and intent of the persons causing the segregation, and then makes a subjective judgment about whether those thoughts and intent included maintaining racial segregation. There is no such inquiry in a discriminatory impact racial segregation case.
The evidence to support a Fair Housing Act violation based on the discriminatory impact model must show that the racial segregation is the functional equivalent of that which would be done by intentional segregation. This objective model of proof can take into account the actions and effects caused by decisions of many government officials and employees over the entire period during which the segregation is maintained. But there is no need to seek out the personal bias of these various officials and employees. The objective evidence shows that the racial segregation continued despite the lack of justification and the availability of less discriminatory alternatives.
This explanation focuses on racial segregation keeping minorities out of White neighborhoods by keeping low income rental housing out of white neighborhoods. While this may also keep some poor white families out of those neighborhoods, the segregation will keep many more poor minority families out of safe and decent neighborhoods. The Fair Housing Act and this issue also affect the cost and availability of home loans, whether minority homeowners can get home insurance, and other housing related activities. It is an important fight.
The LIHTC program is a federal program that is administered by the states. The IRS allocates housing tax credits to state agencies, then the state awards the tax credits to developers through a competitive process. TDHCA allocates Texas’ housing tax credits using a Qualified Allocation Plan (QAP) with a point scoring system. The QAP is written by TDHCA and generally changes every year. TDHCA also has the discretion to award tax credits without adhering to the point system. Final funding decisions on all HTC applications are made by TDHCA's Governing Board.
TDHCA Perpetuating Racial Segregation in Housing
TDHCA approves applications for LIHTCs in minority areas and denies applications for LIHTCs in non-minority areas.
This creates a concentration of low income housing in minority areas with high poverty, high crime, high distress, and low opportunity. Some argue that building LIHTC projects is a way to revitalize disadvantaged neighborhoods, but large infusions of Tax Credit housing alone do not correlate with revitalizing neighborhoods.
The following analysis of the Hatcher Square neighborhood in Dallas explores the effects of high concentrations of tax credits. Despite eight allocations of tax credits for projects in the service area and the millions of dollars spent on these facilities, it remains an industrially impacted area with declining total populations, rising poverty rates, increasing unemployment, diminishing or non-existent neighborhood facilities such as grocery stores, and high rates of criminal victimization.
This cycle creates a racially segregated system of LIHTC projects in the Dallas area.
Why is this important to ICP?
ICP assists low-income, predominately African-American families who are eligible for the Dallas Housing Authority’s Housing Choice Voucher program in finding affordable housing in predominately Caucasian, suburban neighborhoods. ICP works to place families in neighborhoods free of harmful conditions into areas of higher opportunity. Because under the LIHTC program a development that receives tax credits cannot refuse housing solely because a person is using a Housing Choice Voucher, it is important to ICP where the developments are located in the Dallas metropolitan area.
There are less discriminatory alternatives that serve all of TDHCA’s legitimate purposes without causing the disparate impact. If there is a less discriminatory alternative, why would the State not choose such an alternative? Refusing to use the less discriminatory alternatives represents the functional equivalent of intentional discrimination. The state gave no reason for not using such alternatives.
ICP v. US Department of Treasury and Office of the Comptroller of the Currency
In August 2014, ICP filed suit against the United States Department of the Treasury (Treasury) and the Office of the Comptroller of Currency (OCC). ICP alleges that Treasury and OCC violated their duty to affirmatively further fair housing by knowingly, consistently, and repeatedly allowing and approving investments in LIHTC units that intentionally perpetuates racial segregation. Treasury administers the LIHTC program, and OCC administers the program that prohibits national bank ownership of LIHTC projects unless those investments are designed primarily to promote the public welfare, including the welfare of low and moderate-income communities or families (such as by providing housing, services, or jobs). Neither Treasury nor OCC have any regulations related to the perpetuation or elimination of racial segregation. ICP v Treasury and OCC Complaint
San Antonio Express: Affluent Areas May See More Low-Cost Housing - An analysis by the San Antonio Express-News showed the segregation in LIHTC units was evident statewide.
The Texas Tribune: Interactive Low-Income Tax Credit Housing Map - The interactive map shows the racially segregated location of LIHTCs (with complex name, total number of units, and how much money the complex received) in Texas with the neighborhood percent white population.
KERA: Low Income Housing in High-Income Frisco is Breaking Stereotypes - The Inclusive Communities Project supported the North Court Villas development in the suburb of Frisco. These units provide a choice in housing for low income families who do not want to be sent into high poverty areas marked by slum and blight.
Huffington Post: Fair Housing Means Integration
Supreme Court Documents:
Amicus briefs in support of disparate impact:
Amicus briefs in support of TDHCA: