The United States Supreme Court has agreed to accept a petition to consider the case Texas Department of Housing & Community Affairs (TDHCA) v. Inclusive Communities.
Background
Inclusive Communities successfully argued to the lower courts that TDHCA allocated low-income housing tax credits in a manner that concentrated LIHTC housing in minority communities, making it more difficult for minorities to obtain housing in non-minority areas.
The petition from TDHCA to the Supreme Court raises two questions:
- Does the Fair Housing Act protect against disparate impact (i.e., unintentional discrimination); and
- If it does, what is the standard that should be applied?
When the Court announced that it would accept the case, it indicated that it would only consider the first question.
Explanation of Disparate Impact
There is no question that the Fair Housing Act (FHA) prohibits intentional discrimination based on the seven federally protected characteristics (race, color, national origin, religion, sex, familial status and disability). Shortly after passage of the FHA, courts began to apply the Act to unintentional actions that had a discriminatory impact on protected characteristics. Examples range from zoning rules that impact minorities to unreasonable limits on the number of people than can occupy a unit, affecting families with children.
The Supreme Court was prepared to address the issue in each of the last two years (Magner v. Gallagher and Mt. Holly v. Mt. Holly Gardens Citizens in Action, Inc.). However, in both cases, the Department of Justice convinced the parties to settle, removing the cases from the Court’s docket.
There is virtually no chance that this case will be settled. Texas has indicated they will proceed with the case no matter what the Justice Department desire to settle may be. The fact that the Court will only address the first question (does the FHA cover disparate impact claims), does not bode well for the use of disparate impact in fair housing claims. Clearly the Court has serious questions about the use of disparate impact for fair housing purposes. In fact, historically the Court has frowned on any use of disparate impact – no matter what the area of law.
A decision on this case can be expected in the summer of 2015.