By Tracy M. Evans, Esq., Associate, Saxon, Gilmore, Carraway & Gibbons, P.A.
Recently, the Supreme Court of the United States agreed to hear a case involving the low-income house tax credit (LIHTC) program in Texas. The central issue to be decided is whether disparate-impact claims are viable claims under the Fair Housing Act. This is the third time that the Supreme Court has agreed to hear this issue since 2012, but it will be the first time that the Supreme Court will weigh in on the issue, assuming the appeal proceeds, because the earlier cases were both settled prior to oral arguments.
The disparate-impact theory is a theory of liability asserted against policies that appear on their face to be neutral, but in practice have a discriminatory effect on a particular group based on race, sex, age, or disability.
The case currently before the Supreme Court, Texas Department of Housing and Community Affairs, et. al. v. The Inclusive Communities Project, Inc., Case No. 13-1371, was originally filed by the Inclusive Communities Project (ICP), a non-profit corporation that engages in advocacy activities to promote and enforce the policies underlying the Fair Housing Act and related civil rights laws. In its original complaint, ICP alleged that the Texas Department of Housing and Community Affairs discriminated based on race by disproportionately using funds awarded through the LIHTC program for the development of affordable housing in low-income, minority neighborhoods, and disproportionately denied the use of LIHTC funds for developments in predominately Caucasian neighborhoods.
Both the lower federal district court and the Fifth Circuit recognized the disparate-impact theory as applicable to the Fair Housing Act, and found in favor of ICP.
The Supreme Court’s decision on this matter stands to have a substantial impact, regardless of how the case is decided. If the Supreme Court rules against the ICP, this may be injurious to civil rights organizations that regularly employ the disparate-impact theory to fight against practices that have a discriminatory effect, even where there is no overt discrimination. Conversely, a ruling in favor of the ICP may impact how and where LIHTC funds are allocated, potentially requiring states to reevaluate and revise their policies for determining where affordable housing projects will be placed. There is concern that a ruling in favor of the ICP may result in an emphasis on building LIHTC projects in more affluent areas in order to avoid disparate-impact claims, rather than focusing on the areas more concentrated with minorities where the poverty level is higher.
Oral arguments are scheduled for January 21, 2015. Our firm plans to closely monitor any new developments in this case, and will report on any significant updates as well as the Supreme Court’s ruling.
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