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How two recent decisions will profoundly impact fair-housing policy

 A Supreme Court ruling and a new HUD rule promise to have a seismic impact on fair-housing policy here and througout the country.

It was a question that fair-housing advocates weren’t sure they wanted answered. At least not by the current U.S. Supreme Court.

Can advocates use statistics to invalidate a rule or policy that has a disparate impact on minority groups even if there is no proof that government agencies or private entities intended to discriminate? It has been an important tool to force changes to discriminatory policies because showing their effect on minority populations is easier than proving that they were crafted with the intention of blocking housing integration.

Twice before cases that would have posed the question to the court — including a case out of St. Paul — were settled for fear they would give the court an opportunity to dismantle an important remedy under the 1968 Fair Housing Act. That is the landmark civil rights law that was signed by President Lyndon Johnson one week after the assassination of the Rev. Martin Luther King, Jr.

So on June 25 when a 5-4 court majority upheld the disparate-impact mechanism to enforce the Fair Housing Act, advocates were pleasantly surprised. Justice Anthony Kennedy joined the court’s four more-liberal justices and wrote the opinion in Texas Department of Housing v. Inclusive Communities Project.

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“The Court acknowledges the Fair Housing Act’s continuing role in moving the nation toward a more integrated society,” Kennedy wrote.

But the impact of the court’s decision, significant by itself, was amplified two weeks later with the release of a long-anticipated rule by the federal department of Housing and Urban Development (HUD). On July 8, HUD released its final rule on Affirmatively Furthering Fair Housing. Under the rule, agencies that receive and distribute federal housing dollars and low-income tax credits must act not just to prevent further segregation but must also work to integrate their communities by identifying and knocking down barriers to fair housing. Specifically, they must show what they are doing to place affordable housing in areas of big cities and suburbs that have mostly white populations. Underlying the rule is the standard that poor and minority residents should have the choice of moving to areas with lower crime, better schools and better economic prospects.

Combined, the court ruling and the new HUD rule are being touted as having the potential to change the way affordable housing is built. While HUD has said it wants to work with regions to do more to desegregate, it holds out the threat of cutting off billions in federal housing support to those that resist.

Gary Cunningham
Gary Cunningham

“Those two decisions together are probably the biggest civil rights decisions since Brown,” said Metropolitan Council member Gary Cunningham, in reference to the 1954 school desegregation case Brown v. Board of Education of Topeka. Cunningham, also the president of the Metropolitan Economic Development Association, which promotes entrepreneurship among people of color, said the court upheld the basis of the Fair Housing Act but the HUD rule creates an enforcement mechanism that has been missing for more than four decades.

“It’s pretty big stuff,” said Cunningham, who lives in Minneapolis. “It’s all about getting at issues of segregation. If we find communities are segregated based on race we need to take affirmative actions to address that.”

Cunningham is the chairman of the Met Council’s community development committee. On the day the new rule came out, the council was set to adopt the region’s amended housing policy. Instead, he pulled it back to the committee to “make sure we are in compliance and conformance with the new rule.”

The changes were relatively minor — acknowledging that the rule obligates the Met Council to affirmatively further fair housing. But the committee made one significant change to what was proposed by Met Council staff when it removed the last nine word of this sentence: “Other Council programs and policies, including the review of comprehensive plans, Livable Communities Act activities, and Housing Performance Scores, are not funded through HUD and are not directly accountable to the new rule.”

Steven Chavez
Steven Chavez

Met Council Member Steven Chavez said he isn’t sure if the statement is true, saying the reach of the HUD rule remains in flux. “The legal question in front of everybody is the extent to which the Met Council is obligated in every program, in any program, merely because of the implications of the HUD rule.”

In fact, the new rule appears to extend to housing programs funded by state and local governments if the agency also benefits from federal money. “The duty to affirmatively further fair housing extends to all of the program participant’s activities and programs relating to housing and urban development,” the HUD policy states.

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Complaints filed here

The Texas case is more than a legal abstraction for the Twin Cities. The facts of the Inclusive Communities case are similar to a pair of complaints filed with HUD against housing agencies here. Brought against the Met Council, the cities of Minneapolis and St. Paul and the Minnesota Housing Finance Agency, the complaints allege that the governments are exacerbating racial segregation in the way they allocate affordable housing resources.

That is, by placing most affordable housing in high-minority and low-income areas rather than in so-called high-opportunity areas they contribute to segregation. That is the claim by the Metropolitan Interfaith Council on Affordable Housing, several inner-city Minneapolis neighborhood groups, as well as the cities of Brooklyn Park, Brooklyn Center and Richfield.

Myron Orfield
Myron Orfield

HUD is currently investigating the complaints, though the Met Council has asserted that it is in compliance with the law. The person who has long advocated for using housing programs to integrate the region thinks the new rule makes it unlikely the council and the housing agencies will prevail. Myron Orfield, director of the Institute on Metropolitan Opportunity at the University of Minnesota Law School,  is an adviser in both HUD complaints and also consulted with the Texas plaintiffs in the Supreme Court case. His work on segregation patterns in the Twin Cities was cited in a New York Times editorial praising the ruling.

The facts in the Texas case are close to the facts in the complaint filed by Brooklyn Center, Brooklyn Park and Richfield that asserts they are given more affordable housing while whiter suburbs are given less. “If you replace ‘Dallas’ with ‘Minneapolis’ you wouldn’t have to change anything else,” Orfield said.

Orfield too was worried that the court would use the Texas case to dismantle legal remedies to discrimination. Instead he called Kennedy’s majority opinion “a muscular ruling.”

If anything, the ruling and the rule are vindications of Orfield’s work — something sure to irritate those in the affordable-housing community who are targets of stinging criticism, including his labeling of them as the “poverty housing industry.” To Orfield, the government agencies, affordable housing nonprofits and the for-profit developers concentrate projects in already impoverished neighborhood because they face less resistance and attract higher returns. That pattern, he asserts, is a reversal of the 1970s and 1980s when he said the Twin Cities was a model for fostering integration through a “fair-share” distribution of affordable housing throughout the region.

In the April complaint against Minneapolis, St. Paul and the state housing finance agency statistics compiled by Orfield’s institute paint this picture: One quarter of the Minneapolis census tracts that have the highest minority populations contain 49 percent of the low-income housing units. “In stark contrast,” the complaint stated, “the city’s whitest quartile of census tracts — which comprises 30 percent of the city’s total housing units — contain a mere 1.3 percent of the city’s low-income housing units.”

The first large affordable-housing project announced since the court ruling and the HUD rule were released does little to change the patterns, Orfield said. The plan to rehabilitate 26 historic buildings at Fort Snelling to create 190 units of low-income housing will also be in the range of some of the city’s poorest-performing schools, he said.

PPL weighs in

Paul Williams is the president and chief executive officer of Project for Pride in Living (PPL), which builds, renovates and manages affordable housing through the Twin Cities. He objects to Orfield questioning the motives of groups such as PPL that Williams says are doing much to help the region’s low-income residents.

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Paul Williams
Paul Williams

But he acknowledges the court case and the new HUD rule are significant and was pleased that the court upheld the disparate-impact remedy under fair housing. He also sees room in the HUD rule for the region to both expand housing opportunities in parts of the city and region that lack them as well as keep working to rebuild struggling urban neighborhoods.

“I’m fully supportive of increasing affordable housing in affluent areas, not just in the suburbs but in wealthier areas of the cities,” Williams said. “Where I get concerned is when we say we ought not do anything in disinvested areas.” Projects in urban areas are not just designed to bring affordable housing but to bring other redevelopment, Williams said. “We’re not only trying to rebuild the market but to keep those neighborhoods from bottoming out.”

Cunningham of the Met Council agrees with trying to balance those two goals. Much of the housing in inner-city neighborhoods that is considered affordable is that way because it is substandard — euphemistically termed “naturally occurring”  affordable housing. Cunningham said he wants the council to continue working to upgrade housing quality in those neighborhoods as well as provide choices in wealthier areas.

For Cunningham, solving that problem is an economic imperative. “Places that have done this well have set themselves up to be more economically competitive.”

Equity vs. choice?

The Met Council on Wednesday gave final approval to its updated Housing Policy Plan. But the remarks of council members reflected the debate that has been ongoing. Should the region focus housing dollars to help lift up impoverished neighborhoods — dubbed by some as “equity in place” — or should it do more to give low-income people choices to move elsewhere?

Gail Dorfman
Gail Dorfman

“The choices we have are too few,” said council member Gail Dorfman of St. Louis Park after speaking of the hundreds of people, including children, who received temporary shelter the night before in Hennepin County. Dorfman, the executive director of St. Stephen’s Human Services, a nonprofit agency working to end homelessness in Minneapolis and Hennepin County, said many are employed but can’t find housing.

“While many of our families want to go back to the neighborhood in north Minneapolis that they know, many would rather have other opportunities that they think are better for their children — in Hopkins, in Plymouth, in other communities — and they haven’t had those options,” she said.

Voting against the housing plan was council member Lona Schreiber of Brooklyn Park.

Lona Schreiber
Lona Schreiber

“I just feel there’s an inherent unfairness. Two communities specifically in my district have lower property values. They have a harder time competing with their neighboring communities,” Schreiber said. “They’ve done their share in this arena.”

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Orfield termed the recent changes to the Met Council’s housing policy “wimpy,” and said the way the council distributes housing allocations does little to affirmatively further fair housing.

“The goals that they’ve set are still oriented toward the central cities and amount to a disparate-impact violation,” Orfield said. One reason is the awarding of extra points to projects near existing transit lines such as light rail. Even the much-celebrated expansion of affordable housing along the Green Line has added housing in neighborhoods already suffering from high poverty and struggling schools.

Michael Allen
Relman, Dane & Colfax
Michael Allen

Michael Allen, the Washington, D.C., attorney who filed the two complaints on behalf of MICAH and other complainants, said it is incorrect to assume that all low-income people lack cars or can’t find their way to work even from suburbs.

“If their choice is to have better schools but live where it is harder to get to work, that’s where the choice part comes in,” Allen said.

Added Orfield: “None of this says anyone has to move. It says if you want to move you should have a better choice than between two impoverished neighborhoods.”

Is it social engineering?

Elsewhere in the nation the ruling is being portrayed by some as social engineering, that the federal government will force wealthy, white, single-family suburbs to accept low-income housing complexes. “Obama Wants to Pick the Clinton’s Neighbors,” was the headline on an op-ed in the Wall Street Journal in reference to enforcement actions by HUD against Westchester County, New York, where the former president and secretary of state share a house. Some congressional Republicans have pledged to go after HUD funding to block enforcement of the rule.

But Orfield said it doesn’t have to be about forcing suburbs to take low-income housing projects. Several mostly white suburbs have applied for affordable housing grants only to be rejected by the Met Council — mostly because of low-scores in transit access. He blames scoring systems that disfavor areas without good transit connections.

The Met Council operates the largest Section 8 voucher program in the state. Those can be used by voucher recipients to rent anywhere in the region, public or private. While they are used throughout the counties covered by the Met Council they have drawbacks. First, state law has been interpreted by courts to say landlords can refuse to rent to Section 8 beneficiaries. Second, experience has shown that many people use the vouchers in their current low-income neighborhood.

Elizabeth GliddenElizabeth Glidden

To get at the first issue, Minneapolis Council Member Elizabeth Glidden has proposed an ordinance that would make it illegal to discriminate against renters based on their status as Section 8 recipients — something that is already the law in many cities and states. And the Met Council has begun a “mobility counseling service” to help voucher holder rent in what it terms “high-opportunity areas.” The counseling, similar to successful programs elsewhere, includes recruiting landlords to take part, offering housing search assistance as well as pre-move and post-move counseling to ease the transition.

Allen said counseling and voucher programs are good. But an entity like the Met Council can’t just point to a few things it does to further integration if most of its actions do the opposite. “Your programs can’t make the problem worse,” Allen said.

The first measure of how the new rule will impact the Twin Cities could be apparent in a few months. That’s when Allen expects the HUD investigation into the complaint against the Met Council will be finished. 

“We asked for early conciliation to resolve the issues without HUD making a formal finding,” Allen said. “Hopefully we’ll be sitting down this fall to find a more-creative solution.”