1. Disparate Impact Ruling
The top news story of the year, agreed industry leaders, is the U.S. Supreme Court’s much-awaited decision in the Texas Department of Housing and Community Affairs (TDHCA) v. Inclusive Community Project case in June.
The Supreme Court in a 5-4 ruling determined that actions with a discriminatory effect are unlawful under the Fair Housing Act, regardless of intent.
“The Supreme Court stood up for fair housing and reaffirmed that every family should have equal access to neighborhoods of opportunity in suburbs or cities,” said Bart Mitchell, president and CEO of The Community Builders.
In addition to the Supreme Court ruling, just weeks later HUD issued its final rule on affirmatively furthering fair housing.
“Clearly this has been boiling for awhile, but the decision, states reaction to it (particularly allocating agencies), and HUD’s focus on encouraging LIHTC development in higher-income communities with actions like the use of small difficult development areas rather than difficult development areas has the potential to have a major impact on our industry,” said Richard Gerwitz, managing director at Citi Community Capital. “There are so many aspects to this issue for affordable housing residents, advocates, developers, state and local governments, and other interested parties that I feel it will consume us for some time to come.”
Eileen Fitzgerald, president of Stewards of Affordable Housing for the Future, agreed, saying the disparate impact ruling will have policy and practice ramifications for years to come.
For the LIHTC industry, the court decision raises big questions about where housing tax credit developments should be located. Will the decision push states to award credits in more predominantly white neighborhoods?
“There is debate on how big this effect will be, but there will be some impact,” said Sean Thomas, chief of staff at Ohio Housing Finance Agency. “Every state will need to more closely evaluate how their policies comply with the Supreme Court ruling and federal fair housing policies.”