On July 8, 2015, the Department of Housing & Urban Development (HUD) issued a final rule on the procedures that must be followed by localities with regard to affirmatively furthering fair housing. The rule directs HUD program participants to take significant actions to integrate all zip codes in a particular locality. The rule refines the prior approach by replacing the analysis of impediments (AI) with a fair housing assessment of localities, and was issued almost immediately after the Supreme Court held that the Fair Housing Act allows “disparate impact” claims.
The rule indicates that HUD will provide states, local governments, public housing agencies, and the general public, with local and regional data on integrated and segregated living patterns, racially or ethnically concentrated areas of poverty, the location of certain publicly supported housing, access to key community assets, and disproportionate housing needs based on federally protected fair housing classes.
The approach proposed by HUD in 2013, and adopted in this final rule, with revisions, requires the use of an Assessment Tool, providing data to program participants related to certain key fair housing issues, and institutes a process in which HUD reviews the assessments, prioritization, and goal setting of program participants. While the final rule states that specific outcomes of the planning process are not mandated, HUD has shown through prior actions that if it does not agree with local decision-making, federal funds will be withheld.
Legal Authority
HUD is relying on Section 808(d) of the Fair Housing Act for legislative authority to take this action. This section of the Act requires all executive branch departments and agencies administering housing and urban development programs to administer the programs in a way that “affirmatively” furthers fair housing. This essentially means that in addition to prohibiting discrimination, the programs must encourage integration.
Major Provisions of the Rule
- Replace the AI with a standardized Assessment of Fair Housing (AFH) through which program participants identify and evaluate fair housing issues, and factors contributing to fair housing issues;
- Improve fair housing assessment, planning, and decision making by HUD providing data that program participants must use in their assessments of fair housing;
- Incorporate – explicitly – fair housing planning into existing planning processes, the local consolidated plan, and the PHA Plan;
- Encourage and facilitate regional approaches to address fair housing issues; and
- Provide an opportunity for the public, including individuals historically excluded because of characteristics protected by the FHA, to provide input regarding fair housing issues, goals, priorities, and the most appropriate uses of HUD funds and other investments, through a requirement to conduct community participation as an integral part of the new assessment process.
HUD believes that the rule has the potential for substantial benefit not only for program participants but also for the communities being served. HUD also believes that the new system will provide better data and greater clarity to participants, which will improve the planning process.
This requirement is likely to pose particular challenges for cities in the Northeast and Midwest that have the highest levels of segregation. These include Detroit, Milwaukee, New York and Newark, NJ. In many of these cities, the segregation of less-wealth minority families is entrenched.
Despite the rule being final, this HUD initiative is by no means a done deal. Conservative members of Congress have denounced the plan and are moving to deny funding for its implementation. It is also possible that some localities will follow the example of Westchester County, NY, and give up federal funding rather than comply with HUDs directives. On the other hand, some local governments, like the Chicago suburb of Oak Park, have already implemented plans that are likely to comply with HUD requirements.
Local governments that receive federal funding are required to amend their plans at least once every five years. For some localities, the new rules may not need to be addressed until 2020. While the rules apply to governmental jurisdictions, it will impact the development community, since local decision-making and planning will dictate the location of affordable housing projects.