Will New Housing Rules Really Reduce Racial Segregation?

After many places failed to enforce parts of the 1968 Fair Housing Act, the feds are trying again. But this time, they're offering agencies more help.
by | July 16, 2015

Activists concerned about housing discrimination have won two major victories in recent weeks. Whether this will do much to ease residential segregation, however, remains to be seen.

At the start of the summer, housing advocates nervously waited to find out whether the U.S. Supreme Court would abolish a legal tool to fight discrimination known as disparate impact. The disparate impact doctrine allows plaintiffs to claim discrimination in housing cases by showing minorities have suffered disproportionate harm from housing policies, as opposed to having to prove overt or intentional racism.

The case, Texas Department of Housing and Community Affairs v. The Inclusive Communities Protect Inc., could have brought disparate impact lawsuits to an end, and not just in housing. But in June, the court upheld the status quo.

"This ensured the survival of one of the most important tools we have to combat discrimination in the housing market," said Michelle Jawando, a vice president of the Center for American Progress (CAP), a liberal think tank.

The court's decision was quickly followed by a new rule from the U.S. Department of Housing and Urban Development (HUD). Under the new rule, jurisdictions accepting federal housing dollars not only have to avoid discrimination but work actively to reduce racial disparities in communities -- or "affirmatively further fair housing" (AFFH), in the language of the rule. That concept was part of the 1968 Fair Housing Act, but had never been enforced very seriously.

"AFFH was there in black and white the whole time, but it had never been interpreted or spelled out," said Solomon Greene, a senior fellow at the Urban Institute. "When you're using public money, you have to use it in a way that is creating more housing opportunities for protected groups."

What this means in practice is that HUD is going to provide extensive data to communities, highlighting racial differences in jobs, education and access to transportation in their areas. Local housing authorities or other agencies will have to hold public meetings to discuss their findings and then incorporate ideas for how to address segregation in their master plans every five years, or risk losing federal housing dollars.

The court decision and the new rule could together encourage more affordable housing to be built in middle class or affluent neighborhoods, as opposed to the standard pattern of building public housing in low-income areas, suggested Myron Orfield, a law professor at the University of Minnesota.

"It's the first time since the 1970s that there's been a good step forward legally in dealing with residential segregation," he said.

He's optimistic that developers will find ways to use federal housing dollars to build more in affluent areas that have traditionally been more or less off-limits.

"To the extent they can keep the dollars out of poorer neighborhoods, developers will find a way to use it in white neighborhoods," he said.

While Orfield applauded the program for offering incentives to plan and build in new ways, critics are concerned about its likelihood of being implemented. HUD's new rule is well-intentioned and addresses a real problem, but it's misguided, said Mark Calabria, director of financial regulation studies at the libertarian-leaning Cato Institute. He warned that it could raise costs for builders, nonprofits and communities in terms of compliance and litigation. He also suggested the new rule can be interpreted in subjective ways, meaning enforcement decisions could be made on a political basis.

"For decades, Chicago has been one of the most segregated cities in America," Calabria said. "Are we really going to believe this administration is going to withhold funding from Chicago?"

Supporters of the rule, meanwhile, worry that HUD may not do enough to make sure communities change their behavior.

"From the state agency perspective, we don't want to be segregating at all, but we also don't want to always be looking over our shoulder for litigation," said Jennifer Schwartz, assistant director for tax policy and advocacy at the National Council of State Housing Agencies.

Schwartz said state agencies share HUD's goals and don't want to act as any kind of impediment to the proposed change, but they're still waiting to see how things will play out. Program participants are required to provide data that HUD doesn't have. Schwartz said she's glad that HUD dropped a proposal that states or localities devote time and resource to digging up data they didn't have, either.

The fact that so many details are still being worked out undercuts the grandiose claims about the new rule that have been made from various observers. The New York Times editorialized that it would mean "the end of federally financed ghettos," while the New York Post complained it represented a "mad war to house the poor in U.S. suburbs." House Republicans would like to kill the rule by cutting off funding for its implementation, but are unlikely to succeed.

No one expects a single federal policy to undo decades of building that have reinforced what sociologists call the persistent geography of disadvantage. But rule backers are hopeful that, over time, it will help remove people's fortunes from the neighborhood where they live.

At any rate, it will certainly force communities to think and plan differently -- and more publicly.

"We believe firmly this data and this information gives us the opportunity to break the persistent discrimination we've seen over and over," said Jawando, the CAP vice president. "We all agree this is a huge step in the right direction."