No Less Discriminatory Alternatives: Evaluating Texas's Low-Income Housing Reform in light of the Supreme Court’s Decision on Disparate Impact Claims under the Fair Housing Act

Abstract

The first chapter of this thesis documents the case of Texas Department of Housing and Community Affairs (TDHCA), v. the Inclusive Communities Project (ICP). In this case, plaintiff ICP alleged that TDHCA disproportionately allocated low-income housing tax credits (LIHTCs) to minority census tracts in Texas, exacerbating the segregation of low-income minorities in the state. ICP claimed TDHCA’s practice violated the Fair Housing Act under disparate impact law, which finds discriminatory any government policy proved to disproportionately impact a minority group despite equally effective but less discriminatory policy alternatives. The District Court found TDHCA had violated the Act under disparate impact law, and ordered the Department to enact significant remedial policy reform to reduce the discriminatory impact of its LIHTC allocation policy. TDHCA appealed to the Supreme Court, asking the Court to determine whether such claims were cognizable under the Act. On the 25th of June 2015, the United States Supreme Court ruled that disparate impact claims are cognizable under the FHA. This decision has had and will have significant ramifications for housing policy in the United States. It places a legal obligation at the feet of state housing agencies to seek the least discriminatory housing policies permitted by federal and state law. The second chapter of this thesis details the importance of this newly-defined legal obligation with respect to persistent racial inequalities in this country. After the District Court’s decision, TDHCA duly enacted remedial policy. As the first state housing agency to enact such reform after ICP, TDHCA’s efforts are significant and will inform future reform of state LIHTC allocation policy. The third chapter of this thesis details TDHCA’s remedial measures, hypothesising that these measures should successfully reduce the discriminatory effect of TDHCA’s LIHTC allocation policy, but also that more reforms are needed. The fourth chapter of this thesis provides quantitative evidence confirming this hypothesis. In light of hypotheses and evidence presented in Chapters 1 through 4, Chapter 5 presents recommendations for further remedial reform of LIHTC policy, including racially-targeted LIHTC allocation policy measures designed to prevent segregation of low-income minorities. This thesis concludes that in light of new obligations placed on state housing agencies after ICP, TDHCA’s remedial reform is commendable but inadequate. Pursuit of the least discriminatory housing policy permissible under federal and state law will be extremely difficult; as such, race-neutral remedial reforms may not sufficient. It is my hope that both the success and shortcomings of TDHCA’s remedial policy as evaluated in this thesis will inform future reform of state LIHTC allocation policy in the United States.