High Court Rules Against Texas in Housing Case

     WASHINGTON (CN) – Texas must face claims that it used low-income housing tax credits to segregate housing in Dallas, the Supreme Court ruled Thursday.
     Under the Section 8 Housing Choice Voucher program, developments receive low-income housing tax credits (LIHTC) that restrict them from using a prospective tenant’s Section 8 status as a basis to deny them housing.
     In a 2008 complaint, a nonprofit called the Inclusive Communities Project complained that the Texas Department of Housing and Community Affairs had disproportionately allocated LIHTC in neighborhoods with higher concentrations of minorities.
     Since such units are not available in predominantly white neighborhoods, the nonprofit said that the program perpetuated segregated housing patterns.
     The case ultimately advanced to trial where a federal judge found for Inclusive Communities on its claim of discriminatory impact under the Fair Housing Act.
     A three-judge panel with the 5th Circuit later agreed that the Fair Housing Act encompasses disparate-impact claims, but it reversed on the merits after finding that the lower court improperly put the burden on the state to deny discrimination.
     The Supreme Court took up the case to determine whether disparate-impact claims are cognizable under the Fair Housing Act.
     It affirmed 5-4 Thursday after looking at the history of the law’s passage on the heels of the assassination of Martin Luther King in 1968.
     “It is of crucial importance that the existence of disparate-impact liability is supported by amendments to the FHA that Congress enacted in 1988,” Justice Anthony Kennedy wrote for the majority.
     Knowing that all nine federal Courts of Appeals to have addressed the question had concluded the Fair Housing Act encompassed disparate-impact claims, Congress “rejected a proposed amendment that would have eliminated disparate-impact liability for certain zoning decisions,” the opinion states.
     Then the “amendments included three exemptions from liability that assume the existence of disparate-impact claims,” Kennedy wrote.
     “The most logical conclusion is that the three amendments were deemed necessary because Congress presupposed disparate impact under the FHA as it had been enacted in 1968,” the opinion continues.
     Kennedy also emphasized that “recognition of disparate-impact claims is consistent with the FHA’s central purpose.”
     Texas may not have prevailed with its argument, but Inclusive Communities still has its work cut out for it in proving disparate impact on remand, the court cautioned.
     “The FHA 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,” Kennedy wrote. “As HUD itself recognized in its recent rulemaking, disparate-impact liability “does not mandate that affordable housing be located in neighborhoods with any particular characteristic.”
     Justices Ruth Bader Ginsburg, Stephen Breyer, Sonio Sotomayor and Elena Kagan rounded out the majority.
     The remaining members of the court all joined a dissent by Justice Samuel Alito that accuses the majority of having made “a serious mistake.”
     “The Fair Housing Act does not create disparate-impact liability, nor do this court’s precedents,” Alito wrote. “And today’s decision will have unfortunate consequences for local government, private enterprise, and those living in poverty. Something has gone badly awry when a city can’t even make slumlords kill rats without fear of a lawsuit. Because Congress did not authorize any of this, I respectfully dissent.”
     Alito said lawsuits are certain to follow for the Texas Department of Housing and Community Affairs, no matter how it allocates credits to families in need.
     “If it gives credits for housing in lower income areas, many families – including many minority families – will obtain better housing,” he wrote. “That is a good thing. But if the department gives credits for housing in higher income areas, some of those families will be able to afford to move into more desirable neighborhoods. That is also a good thing. Either path, however, might trigger a disparate-impact suit.
     “This is not mere speculation,” Alito added, noting that Frazier Revitalization Inc. complained in this case “that giving credits to wealthy neighborhoods violates ‘the moral imperative to improve the substandard and inadequate affordable housing in many of our inner cities.'”
     Frazier’s “argument has special force because a city can build more housing where property is least expensive, thus benefiting more people,” Alito wrote.
     “No matter what the department decides, one of these respondents will be able to bring a disparate-impact case,” the dissent continues. “And if the department opts to compromise by dividing the credits, both respondents might be able to sue. Congress surely did not mean to put local governments in such a position.”
     After skewering the U.S. solicitor general’s reading of the statute, Alito said “the text of the FHA simply cannot be twisted to authorize disparate-impact claims.”
     “It is hard to imagine how Congress could have more clearly stated that the FHA prohibits only intentional discrimination than by forbidding acts done ‘because of race, color, religion, sex, familial status, or national origin,'” Alito added.
     The dissent also took little of the comfort that the majority found in the fact that Congress took action in 1968 to end housing discrimination. That move “says nothing about the means it devised to achieve that end,” Alito wrote.
     In terms of precedent, the majority read “far too much into Griggs v. Duke Power Co.,” Alito complained.
     That 1971 case involved black employees whose employer required a high school diploma or a qualifying grade on a standardized test as a condition for certain jobs.
     The Griggs court allowed the employees to recover under Title VII of the Civil Rights Act without proving that the employer’s conduct was motivated by a discriminatory intent.
     “Instead, the Court held that, unless it was proved that the requirements were ‘job related,’ the plaintiffs could recover by showing that the requirements ‘operated to render ineligible a markedly disproportionate number of Negroes,'” Alito wrote.
     In a separate opinion, Justice Clarence Thomas said that the Griggs foundation that the majority built its case on here “is full of sand.”
     “Whatever respect Griggs merits as a matter of stare decisis, I would not amplify its error by importing its disparate-impact scheme into yet another statute,” Thomas said.

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