Almost totally obscured by the Obamacare and same-sex marriage decisions, a Supreme Court opinion in a Fair Housing Act (FHA) case could have a dramatic impact on American life and on urban economics.
The Fair Housing Act case seemed fairly simple and straightforward at the beginning.
Under the FHA, the federal government provides tax credits to developers of low-income housing. In Texas the tax credits are distributed by the Department of Housing and Community Affairs (DHCA).
The Inclusive Communities Project, Inc. (ICP) filed a disparate-impact lawsuit claiming that the Texas DHCA had, in the words of the Court, “continued segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods.”
A disparate impact legal argument takes into account the effect of an action, not the intent of the person taking the action. In other words, an action may have the effect of racial discrimination even though it was not intended to do so.
The introduction of disparate impact arguments adds a layer of complexity to discrimination cases, since it is often difficult to establish a clear chain of causality between action and impact.
The Appellate Court, in fact, had rejected the original decision of the District Court in the Texas case because the statistical work was so sketchy. The Supreme Court’s opinion cites the earlier ruling, writing that, “…Appellate Court Judge Jones stated that on remand the District Court should reexamine whether the ICP had made out a prima facie case of disparate impact. She suggested the District Court incorrectly relied on bare statistical evidence without engaging in any analysis about causality.”
The U. S. Supreme Court ruled that disparate impact claims could be judged by the federal courts under the Fair Housing Act. In the Texas case that meant that the judgment of the Appeals Court was affirmed — meaning, essentially, that the disparate impact argument was acceptable legally, but that the plaintiffs had not satisfactorily proved liability for that effect.
The few media organizations that paid any attention to the Supreme Court decision in this case focused on the court’s acceptance of disparate impact claims. The problem with that view is that it ignores several important aspects of the case, the first of which is that the plaintiffs didn’t win, at least not yet. They were successful in getting their disparate impact argument considered, but didn’t prove that the tax credits issued in Texas were discriminatory.
The statistics introduced in the case indicate that from 1999 to 2008, the Texas Department of Housing and Community Affairs approved 49.7 percent of the proposed tax credits for housing in areas whose population was less than 10 percent Caucasian. During the same period, the Department approved 37.4 percent of proposed tax credits for housing in areas whose population was over 90 percent Caucasian.
In other words, the Texas housing authorities approved more low-income housing projects in the inner cities than in suburbia. And that, as the Supreme Court opinion points out, is what this case is all about. The plaintiffs believe that housing subsidies should be used to move black families into suburban white enclaves rather than to rebuild and replace decayed urban housing. The same statistics could be used, though, to argue that urban renewal funds are being drained to underwrite a social engineering experiment.
Is it better to move some people to suburbia and by doing so hasten the urban decay that is undermining our cities? If so, how do we deal with the people, the schools, and the municipal bankruptcies left behind?
As Justice Kennedy noted in the majority opinion in the Texas case, “It would be paradoxical to construe the FHA (Fair Housing Act) to impose onerous costs on actors who encourage revitalizing dilapidated housing in our Nation’s cities merely because some other priority might seem preferable.”
The Supreme Court was asked to rule only on the admissibility of disparate impact arguments and it did so. Its broader review and opinion in the case, though, reveal how ill-equipped the courts are to resolve the underlying racial and economic issues. They may as easily make things worse. Justice Thomas, for example, in concurring with the dissenting opinion in the Texas case, noted that previous court decisions had contributed to the “white flight” from cities, “in turn causing the racial imbalances that make it difficult to avoid disparate impact from housing development decisions.”
What is clear is that the courts cannot and should not do the job of our elected representatives. Congress should revisit the Fair Housing Act to ensure that it reflects the best thinking we as a nation can apply to the housing, racial, and economic problems besetting our cities.
James McCusker is a Bothell economist, educator and consultant. He also writes a column for the monthly Herald Business Journal.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
