The biggest federal housing subsidy program in Texas — which awarded $9.7 billion in tax credits from 1990 to 2011 — effectively has been reinforcing segregated housing, the U.S. Supreme Court found Thursday.
With Justice Anthony Kennedy writing the majority opinion, the high court ruled 5-4 against the state of Texas, which administers the federally backed subsidy program.
Under the Low-Income Tax Credit program, run by the Texas Department of Housing and Community Affairs, the state gives federal incentives to private developers to build or rehabilitate low-cost apartments, essentially engineering parts of a city's geography.
The Inclusive Communities Project, a nonprofit devoted to fair housing issues, sued the TDHCA in 2009, arguing that the state doled out tax credits in Dallas in a way that packed minorities into poor neighborhoods and spared white neighborhoods from development of low-income housing. The result is that neighborhoods throughout Dallas remain segregated, the project argued.
A 2012 examination of state data by The Texas Tribune and San Antonio-Express Newsfound that more than three-quarters of credits given out during a two-decade span subsidized the construction of apartments in neighborhoods mostly made up of poor blacks and Hispanics. Few units built with support from the tax credit program were in areas that are predominantly white.
At issue in the case was whether the federal Fair Housing Act directs officials to ensure that their actions do not have an unequal impact on a certain group, even if they didn't intend for it to occur.
The court decided it did not matter if the state housing department did not explicitly set out to discriminate based on race, color, religion, sex or national origin — the effect was enough to violate the law.
In representing the state, Texas Solicitor General Scott Keller said during oral arguments in January that the FHA only prohibits acts of intentional discrimination because nowhere in the law does it say otherwise.
The long-awaited decision marked an opportunity for the court to finally state its opinion on an issue that has been brought before the justices three separate times in the past two years. Two prior cases involving so-called disparate impact claims were settled just months before the court got to hear arguments.
Now, some in the housing industry worry that they’ll be required to make decisions based on race to avoid liability, a concern that resonated with a court traditionally wary of upholding race-conscious policies.