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iStock_000040764222_LargeThe Department of Housing and Urban Development (HUD) wasted no time in finalizing the new affirmatively furthering fair housing rules the day after the U.S. Supreme Court upheld disparate impact claims under the Fair Housing Act in Texas Department of Housing Affairs v. Inclusive Communities Project, Inc. (see last week’s post for a summary of that case). Disparate impact results from governmental policies that may not have been intended to create segregation, but do in fact result in segregation. The Supreme Court’s ruling upholds the Fair Housing Act’s prohibition on discrimination caused by policies or practices that have an unjustified disparate impact because of race, color, religion, sex, familial status, national origin, or disability.

The new rule requires certain public entities (“entitlement jurisdictions” that receive federal funding for housing) that have, under previous HUD rules, been required to prepare an Analysis of Impediments to Fair Housing (AI) to prepare an Assessment of Fair Housing Report (AFH). The AFH meets standardized reporting requirements, and is drafted to assist program participants in reducing disparities in housing choice, and to provide access to housing opportunities, particularly for those with protected status.  The overall goal of the new reporting requirement is to expand economic opportunity and enhance quality of life.

These rules are a game changer for land use planning. HUD is proactively getting involved in the business of zoning for fair housing, not just financing units. HUD recognizes that fair housing issues may arise from factors such as zoning and land use, including the proposed location, design, and construction of housing; public services that may be offered in connection with housing (e.g., water, sanitation); and related issues. According to HUD, the AFH approach focuses primarily on assisting program participants in being better informed, and better able to set goals and priorities.  In particular HUD wants to ensure that the following conditions will be taken into consideration when making funding decisions in a particular jurisdiction - patterns of integration and segregation; racially or ethnically concentrated areas of poverty; disproportionate housing needs; and housing-related barriers in access to education, employment, and transportation, among others.

While local jurisdictions will remain in local control of land use decisions and adoption of zoning regulations under the new rules, entitlement jurisdictions are called on to provide a specific analysis of land use programs that may inhibit affirmatively further fair housing. In addition to HUD’s final rule, HUD’s Assessment Tool, adopted in 2014, and guidance to be issued in the near future, will assist recipients of federal funding to use that funding and, if necessary, adjust their land use and zoning laws in accordance with their existing legal obligation to affirmatively further fair housing.

Zoning and land use laws that are barriers to fair housing choice and access to opportunity can be quite varied and the determination of whether a barrier exists often depends on the factual circumstances in specific cases.  One example is zoning and land use laws that were intended to limit affordable housing in certain areas in order to restrict access by low-income minorities or persons with disabilities. The City of Black Jack took egregious zoning actions in the 1970s that prevented construction of low-income multifamily housing that had a racially discriminating effect and was found to violate the Fair Housing Act.  U.S. v. City of Black Jack, 508 F.2d 1179 (1974).  An example of a positive zoning action that would further fair housing would be the removal of such an ordinance. HUD intends to include additional examples in its guidance for its affirmatively furthering fair housing regulations.

Closer to home, Oregon’s 2015 legislature had a clear path to a remove a barrier to affirmatively furthering fair housing, but the Oregon Senate would not even take a public vote on House Bill 2564 to remove the constitutional ban on mandatory inclusionary zoning. Instead, the bill died in committee after having passed the House. Inclusionary zoning is a tool that requires new developments of housing to construct a particular percentage of new units for qualifying low-income home seekers. While the Oregon Senate failed to move forward, the State’s Draft Fair Housing Report 2016-2020 contains a finding that the state’s ban on inclusionary zoning “limits housing choice for persons of color and low income persons.” The AI included in the report states:

Disallowing inclusionary zoning as part of a community’s affordable housing toolkit limits the provision of affordable housing in general. In addition, limits on the use of inclusionary zoning may disproportionately affect members of protected classes to the extent that they have a greater need for affordable housing. This situation is called discriminatory effect or disparate impact.

With the fuel from the Supreme Court’s decision, as well as the new HUD regulations, Oregon’s leaders would be wise to avoid potential challenges and pick off low-hanging fruit like overturning the ban on inclusionary zoning.  Such action is an easy first step to remove barriers for protected classes and avoid disparate impact challenges.

iStock_000015829761_LargeAlthough not garnering the rallies and applause given to the U.S. Supreme Court’s recent decisions dealing with the Affordable Care Act or same-sex marriage, the Court’s ruling considering the scope of the Fair Housing Act is likely to have just as much impact in how neighborhoods develop and in the choices protected classes of people – such as those protected by race, disability and familial status - have about where to live.

In Texas Department of Housing Affairs v. Inclusive Communities, Inc., the Inclusive Communities Project (ICP), a non-profit organization that seeks to promote racial integration in Dallas, sued a state agency charged with allocating HUD-issued low income housing tax credits to developers who build low-income housing projects. The ICP accused the Texas agency of disproportionately allocating the tax credits to properties in poor areas in violation of the Fair Housing Act of 1968 that makes it illegal to refuse to sell, rent “or otherwise make unavailable” housing to anyone because of race, sex or other protected categories. Between 1995 and 2009, the state did not award tax credits for any family units in predominantly white census tracts, and instead awarded tax credits to locations “marked by the same ghetto conditions that the FHA was passed to remedy,” ICP’s pleading states. ICP did not allege intentional discrimination, but rather whether the fact that issuance of tax credits within solely high-poverty areas that results in a disparate impact on minorities is sufficient to show a violation of the FHA.

Justice Kennedy, writing for the majority, noted that while de jure racial segregation in housing has been unlawful for over a century, de facto segregation remains. Congress passed the Civil Rights Act of 1968 and amendments to the Fair Housing Act in 1988 (the Fair Housing Amendments Act or FHAA) as well as cases applying Title VII of the Civil Rights Act of 1964, which banned many acts of housing discrimination, as antidiscrimination laws that focus not just on the “mind-set of the actors” but also on the “consequences of the actions.” By its terms, the FHA and its amendments were enacted to provide for fair housing and to prohibit unfair discriminatory housing practices. The Court added: "These unlawful practices include zoning laws and other housing restrictions that function unfairly to exclude minorities from certain neighborhoods without any sufficient justification. Suits targeting such practices reside at the heartland of disparate-impact liability."

The Court emphasized at some length that the disparate impact test was not formulaic and must be applied flexibly and specifically expressed concern over the use of racial quotas. The test must require a “causal link” in a case such as the one before it, between the policy and discrimination so as to remove “artificial, arbitrary and unnecessary barriers” to housing. The Court concluded:

Much progress remains to be made in our Nation’s continuing struggle against racial isolation. In striving to achieve our “historic commitment to creating an integrated society,” we must remain wary of policies that reduce homeowners to nothing more than their race.

Justice Alito writing for the dissent, joined by Chief Justice Roberts, Justice Thomas and Justice Scalia, focused on the statutory language “because of race” and concluded that only intent or motive mattered. As a result, Congress intended to cover disparate treatment — not claims of disparate impact. Quoting from another case, Alito pointed out: “The Court acknowledges the risk that disparate impact may be used to ‘perpetuate race-based considerations rather than move beyond them.’”

This case highlights the equity associated with giving all individuals choices in selecting appropriate housing rather than focusing solely on their quantity. But calling HUD’s Section 8 program “Housing Choice” is entirely undermined if families really have no choice about where they are going to live. As importantly, it illustrates the link between affordable housing and land use planning. The land use choices that planners and housing advocates make that results in segregation can violate the Fair Housing Act even though it may be entirely inadvertent.

Many urban local governments in Oregon have adopted housing codes to regulate substandard housing. These local codes ensure that dwellings remain healthy and safe for habitation and authorize government planning or development managers to pursue enforcement remedies where nuisance conditions exist such as insufficient fire protection, lack of heating, unsanitary conditions or overcrowding. Enforcement activities include property inspections, mandatory abatement and improvements, and sometimes the evacuation or demolition of structures. Although often solely complaint driven and significantly hampered by budgetary constraints, these codes authorize local governments to pursue nuisance abatement programs as they deem appropriate.

American Electric Power Co., Inc. v. Connecticut, 131 S.Ct. 2527 (2011) involved Federal common law nuisance claims against the Tennessee Valley Authority and several private power companies emitting carbon dioxide and other greenhouse gasses, asking the federal courts to set caps and to reduce those amounts annually thereafter. The Supreme Court reversed the Second Circuit and determined that the Federal Clean Air Act displaced such claims.

The regulatory saga of the West Linn Corporate Park appears to be over – the US Supreme Court issued an order today declining to review the 9th Circuit’s decision in the case largely putting an end to the litigation that began in 2001.  The order leaves in place the 9th Circuit’s unpublished opinion that affirmed in part, reversed and remanded in part and dismissed in part a Federal district court opinion.  The only issues still alive appear to be the requirement for the District Court to reapportion some attorney’s fees.

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