July 13, 2015

Fair Housing and Community Development - The "Both/And" Approach

It's a monumental time for civil rights and issues of racial injustice, and fair affordable housing is central to both the debate and the solution. In the past year a #blacklivesmatter movement has grown out of the tragic deaths of unarmed black men by white police officers. Uprisings in several black, largely poor and highly segregated communities led to an astonishing military-style occupation of Ferguson, Missouri; to looting, fires and property destruction in Baltimore, Maryland; and to a white man, obsessed with these uprisings, to murder 9 black churchgoers in Charleston, South Carolina. It was an affront to many to have the victims’ funeral caravans driven in front of the South Carolina capitol, above which the Confederate flag has flown for over 50 years. Protesters demanded that the flag be taken down and late last week it was, in a scene reminiscent of South Africa’s removal of the apartheid flag. In the meantime, legislation providing for the funding of the federal government has become bogged down over a debate in the US Congress over the Confederate flag.

In the same few months, Harvard’s Raj Chetty published groundbreaking new evidence of the importance of place. His research underscores that the key determinant to economic mobility is the neighborhoods in which we are raised. Perhaps most importantly, Raj Chetty’s study found that each year of childhood is crucial—those spent in deeply distressed neighborhoods cement lifelong impacts of poverty, while each year spent in a higher-opportunity neighborhood increases the likelihood of higher earnings, improved health and other positive outcomes.

Altogether, these events shone a national spotlight on some of our country’s highly segregated, deeply distressed communities and on the decades of federal housing policy and disinvestment that contributed to and sustained them. These communities exist throughout the country and are at the core of Enterprise’s work. Millions of families, the vast majority of them people of color, find themselves trapped in communities with unfit housing, bad schools, few jobs and scarce community assets, often creating significant—at times even insurmountable—barriers to success.

With the new attention on these communities, investigative reporters began asking if America has given up on the dream of racial integration and the answer in some areas is yes. But in the last three weeks alone, historic actions by both the Supreme Court and the President, each with a strong mandate and urgency for undoing decades of entrenched segregation and poverty, remind us that we cannot give up on this dream, that in fact federal law - and our country’s values -  requires us to actively work towards creating integrated communities of opportunity. As President Obama said in his weekly address, “We can’t guarantee equal outcomes, but we do strive to give everyone an equal shot at opportunity.”

Enterprise agrees. We strongly support the Supreme Court’s decision and the Administration’s historic action and commend both for taking these bold and important steps to advance fair housing.

Disparate Impact

At the center of both the Supreme Court’s and the Administration’s actions is the Fair Housing Act (FHA), which prohibits discrimination in housing related activities and requires, through a duty to Affirmatively Further Fair Housing (AFFH), meaningful actions to be taken to overcome the legacy of segregation, unequal treatment and historic lack of access to opportunity in housing. In Inclusive Communities vs. Texas Department of Housing and Community Affairs, the Supreme Court examined the use of ‘disparate impact’ analysis for fair housing complaints, which considers the discriminatory effect of policies and actions regardless of the intent behind. The plaintiffs in the case claimed that the state of Texas, in its allocation of Low Income Housing Tax Credits (Housing Credits), directed affordable housing developments to distressed communities at the expense of directing them to higher opportunity neighborhoods.

In its ruling, the Supreme Court upheld disparate impact as a legal tool for proving housing discrimination. They said, as almost a dozen appellate courts before them did, that not only is overt discrimination in the housing market illegal, but so are seemingly neutral policies that have a disproportionately negative impact on protected classes. Justice Anthony Kennedy wrote in the Court’s majority opinion that “residential segregation by race was declared unconstitutional almost a century ago, but its vestiges remain today, intertwined with the country’s economic and social lives.”

Overcoming such entrenched segregation will be difficult and uncomfortable work in many communities. McKinney, Texas provides a recent illustration of the tensions and resistance. Beyond another story of a white police officer abusing his power with a black teenager, is one of a town strongly resisting integration. In 2009, Inclusive Communities (the same organization at the center of the Supreme Court case) sued the town of McKinney for violating the Fair Housing Act by placing all of its affordable housing on the east, predominantly black, side of town and refusing to place any on the west, predominantly white, side of town. Inclusive Communities proved that the town’s policy for siting affordable housing exclusively in the poorest and most isolated parts of town had a disparate impact on the majority black families who lived there.

To settle the case, the city of McKinney agreed to place a Housing Credit property on the west side of town, causing debate, outrage and tension - which spilled over to the incident at the pool started with a white woman shouting that the black teens should “go back to their Section 8 housing.”

Affirmatively Furthering Fair Housing

But the FHA states that avoiding intentional or unintentional discrimination is not enough. The law goes further and requires that communities take needed actions to overcome segregation and affirmatively further fair housing (AFFH), creating integrated communities. Until last week communities had no comprehensive guidance on how to do so, no tools to assist, and for some, not much of a motivation. When submitting planning documents to HUD for their federal funding, communities would certify that they have a document called an Analysis of Impediments outlining why people could not find affordable housing, and that they are taking actions to overcome these impediments. Approval was little more than a rubber stamp and many communities don’t update their Analysis of Impediments; a 2010 GAO report found that some grant recipients had none, while others’ were decades old.

HUD’s long-awaited Affirmatively Furthering Fair Housing rule, published last week, replaces this process with tools and guidance for  entities (states, jurisdictions, local governments) to assess fair housing issues in their communities with data provided by HUD, and with significant required input from the communities. Communities must use these and other tools to identify patterns of racially or ethnically concentrated areas of poverty within the jurisdiction and region, and look for significant disparities in access to opportunity, or disproportionate housing needs, for any protected class. The entities must then identify contributing factors and strategies to overcome them. Altogether, this information becomes the entities’ Assessment of Fair Housing (AFH) which must be approved by HUD in order for HUD program funding to be received by the communities.

The False Choice of the Fair Housing Debate

There is no doubt that we as a country must do more to improve the lives of families living in segregated, poor and deeply distressed communities. But does doing so mean using scarce federal resources only to assist these families with moving to higher opportunity neighborhoods? Or should those resources be used to comprehensively revitalize distressed communities? At Enterprise we believe it must be both. We strongly support distributing federal resources in a way that allows low-income people to make housing choices that are best for themselves and their families. This means preserving affordable housing where it exists today, revitalizing distressed communities, building affordable homes in neighborhoods of opportunity and creating and promoting options for mobility.

Both the Supreme Court ruling and the AFFH rule affirm this approach. While the Supreme Court rightly recognized the validity of disparate impact as a critical tool to fight indirect forms of housing discrimination like exclusionary zoning, predatory lending and redlining, it also places new limits on when and how such claims can be brought. Justice Kennedy wrote in the majority opinion that the Fair Housing Act has a “continuing role in moving the nation toward a more integrated society,” but it is not “an instrument to force housing authorities to reorder their priorities.” The Act does not “decree a particular vision of urban development…and it does not put housing authorities and private developers in a double bind of liability, subject to suit whether they choose to rejuvenate a city core or to promote new low income housing in suburban communities.”

The Court recognizes that local housing authorities and state allocating agencies must continue to provide housing that meets a diverse array of community needs taking into account a range of factors. In doing so, these agencies should not be punished for investing in communities that “have long been segregated.”

HUD’s AFFH rule also affirms this approach. The Administration responded positively to urging from Enterprise, our partners and the housing commissioners of several high cost cities to explicitly recognize the value of investing in distressed communities. The final Rule’s preamble notes that HUD recognizes the role of place-based strategies, “including economic development to improve conditions in high poverty neighborhoods, as well as preservation of the existing affordable housing stock, including HUD-assisted housing, to help respond to the overwhelming need for affordable housing.”

Concerted housing preservation and community revitalization efforts, “where such actions are designed to achieve fair housing outcomes such as increasing access to opportunity, such as high-performing schools, transportation and jobs,” are recognized as valid methods of affirmatively furthering fair housing. HUD also improved the proposed definition of affirmatively furthering fair housing from ‘ending racially or ethnically concentrated areas of poverty,” to a final definition that instead requires work towards “transforming…those areas into areas of opportunity.”

A Higher Bar for Housing and Community Development Decisions

Taken together, the AFFH rule and Supreme Court ruling set a much higher bar for the process that communities must use when making housing and community development decisions. The bar is raised not only for the use of HUD programs, but for all state and local decisions related to housing and community development, from zoning, to land use, to a state’s allocation of Housing Credits.

HUD states strongly that while zoning and land use are generally local matters, “when local zoning or land use practices violate the FHA or other Federal civil rights laws, they become a Federal concern.” Similarly, HUD notes in the rule’s preamble that HUD-funded and other Federally-funded housing and urban development activities are explicitly covered by the duty to affirmatively further fair housing. Because the Housing Credit is the largest producer of affordable housing in the country, its allocation has significant impact on the location and occupancy of new affordable housing units and play a key role in shaping local fair housing issues, according to the Rule. Program participants, including states, will be required in the Assessment of Fair Housing to analyze data on the location and occupancy of affordable Housing Credit units and to consider the impact of a the state’s Housing Credit allocation on fair housing issues in their jurisdiction.

Where We Go From Here

There’s no doubt that in coming years much more scrutiny will be given to where and how affordable housing is developed. Enterprise will continue to work closely with our partners of both community development practitioners and fair housing advocates to continue finding solutions that balance the need to provide more affordable housing in high-opportunity areas as well as the need to bring opportunity to distressed communities.

As Justice Kennedy noted in his majority opinion, “Much progress remains to be made in our Nation’s continuing struggle against racial isolation…The FHA must play an important part in avoiding the…grim prophecy that ‘[o]ur Nation is moving toward two societies, one black, one white-separate and unequal.’…The Court acknowledges the Fair Housing Act’s continuing role in moving the Nation toward a more integrated society.” Enterprise and our partners clearly have an important role to play in reaching this lofty goal as well.

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