A lawsuit was recently filed alleging that the U.S. Department of Treasury (Treasury) and Office of Comptroller of the Currency (OCC) perpetuated racial segregation in the City of Dallas in their administration of the Low Income Housing Tax Credit (LIHTC) program. The plaintiff alleges that the agencies’ conduct violated their duty to affirmatively further fair housing under the Fair Housing Act.

The plaintiff, Inclusive Communities Project, is a group that assists low-income families eligible for Section 8 vouchers. They claim that current LIHTC policies effectively foster poor, blighted, racially segregated neighborhoods in Dallas. The claims are based on the disparate impact theory of liability, in which the plaintiff uses statistics to show that racial minorities are harmed by the policies; no intentional discrimination has to be proven.

The plaintiff argues that the manner in which Treasury regulates the LIHTC program and the OCC regulates national banks that invest in such projects violates the Fair Housing Act. The plaintiff alleges that the defendants have condoned continued racial segregation through their LIHTC program administration. As a result, according to the lawsuit, LIHTC non-elderly units are disproportionately located in minority census tracts plagued by problems that include high rates of crime, poverty, and unemployment, as well as adverse environmental conditions.