No Bias in Texas’ Low-Income Housing Credits

     DALLAS (CN) — A federal judge Friday dismissed a closely followed housing discrimination lawsuit against Texas, remanded by the U.S. Supreme Court last year, finding the state’s discretion in awarding housing credits is not discriminatory.
     U.S. District Judge Sidney Fitzwater threw out the lawsuit filed in 2008 by the Dallas-based Inclusive Communities Project, which alleged violations of the Fair Housing Act and the Equal Protection Clause of the Fourteenth Amendment.
     The nonprofit said the state’s Low Income Housing Tax Credit program perpetuates and exacerbates racial segregation in Dallas and other large cities, as new projects were all going up in poor and minority areas.
     It cited a study by the Texas Department of Housing and Community Affairs that found a disproportionate allocation of credits to areas of “above average minority concentration and below average income levels.”
     The trial judge ruled for the Inclusive Communities Project on its claim of disparate impact under the Fair Housing Act but rejected the other claims.
     On appeal, a three-judge panel of the Fifth Circuit agreed that the Fair Housing Act covers such disparate impact claims, but reversed, finding the trial judge improperly placed the burden on Texas to disprove discrimination.
     The Supreme Court affirmed and remanded last year by 5-4 vote.
     Writing for the majority, Justice Anthony Kennedy said that “recognition of disparate-impact claims is consistent with the FHA’s central purpose.”
     Kennedy warned the plaintiff that it had to clear a high bar of “robust causality” to prove disparate impact on remand, citing recent U.S. Department of Housing and Urban Development rules stating that disparate impact liability “does not mandate that affordable housing be located in neighborhoods with any particular characteristic.”
     Citing the heightened standard in his Friday ruling, Judge Fitzwater wrote that the plaintiff must prove a “specific, facially neutral policy” by Texas that caused a disparate impact.
     “By relying simply on TDHCA’s exercise of discretion in awarding tax credits, ICP has not isolated and identified the specific practice that caused the disparity in the location of low-income housing,” the 32-page opinion states. “ICP has pointed to the ‘cumulative effects’ of TSHCA’s decision-making process over a multi-year period. ICP cannot rely on this generalized policy of discretion to prove disparate impact. Identification of a specific policy or practice is also essential for determining how to remedy the disparate impact.”
     The plaintiff failed to identify any offending policy where there is a remedy that is constitutionally sound, Fitzwater said.
     “Here, ICP has not identified any barriers to housing that the court can remove,” the opinion states. “Although ICP complains of TDHCA’s exercise of discretion in housing decisions, it does not ask the court to prohibit TDHCA from using its discretion; rather, it asks the court to require that TDHCA exercise its discretion in a specific way: to desegregate housing.”
     Fitzwater said the plaintiff is “actually complaining about disparate treatment,” not disparate impact.
     He said the purpose of disparate impact liability is to find and remove policies that result in unintended discrimination, and that the plaintiff is complaining about the state’s “discretion, not the existence of the discretion.”
     Texas Attorney General Ken Paxton cheered the dismissal, saying the plaintiff failed to meet the Supreme Court’s heightened requirement of “robust causality.”
     “The district court previously rejected ICP’s claim that TDHCA engaged in intentional racial discrimination,” Paxton’s office said in a statement Friday. “Today’s ruling rejects ICP’s disparate-impact claim, finding that ICP failed to prove that any policy or practice of TDHCA caused a racial disparity in the distribution of tax credits.”

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