Recent US Supreme Court Decision Impacts Affordable Housing Industry

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On June 25, the US Supreme Court upheld a decision that the Fair Housing Act ("Act") includes disparate impact claims. In Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., the Supreme Court extended the scope of claims under the Fair Housing Act to consider more than discriminatory intent. By allowing disparate impact claims to be made, a plaintiff can demonstrate a violation of the Act by establishing discriminatory effects of a policy rather than proving that a policy is motivated by discriminatory intent. Disparate impact claims typically invite statistical evidence into the courtroom to demonstrate objective, disproportionate impacts on a protected class.

Texas Department of Housing and Community Affairs arose out of a claim that the Department disproportionately allocated low-income housing tax credits to housing in predominantly African-American inner-city communities. The US District Court for the Northern District of Texas concluded that the plaintiff had shown disparate impact based upon two central statistics. First, from 1999 to 2008, 49.7 percent of proposed non-elderly units were approved in areas with a Caucasian population of less than 10 percent, but only 37.4 percent were approved in areas with a Caucasian population over 90 percent. In addition, the District Court found that approximately 92 percent of low-income tax credit units in Dallas were located in areas with a Caucasian population less than 50 percent. Combined, these statistics were sufficient to require proof by the Department that a less-discriminatory alternative could not achieve the same legitimate interests. Unconvinced by the Department's argument, the District Court issued a remedial order in favor of the plaintiff.

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