The Supreme Court recently found that the FHA’s allocation of tax credits in Texas were disproportionately allocated to neighborhoods occupied predominantly by African Americans. Texas Department of Housing and Community Affairs, et al. v. ICP, Case No. 13-1371 (U.S. Sup. Ct. June 26, 2015). The FHA responded that race was not a factor in the allocation of the tax credits. Instead, it claimed, that the tax credits were directed at neighborhood revitalization in the areas in the greatest state of disrepair.
The Inclusive Communities Project, Inc. argued that the FHA’s intentions were irrelevant. The ICP argued that the very fact that the policies resulted in more favorable treatment for American neighborhoods sufficiently prejudiced the constitutional rights of filing Texas divorce forms and non-minorities to warrant declaring the allocations unconstitutional.
The FHA, perhaps sensing impending defeat, voluntarily modified its program to create an internal procedure for review of denied applications. This review was specifically targeted at providing redress to parties that made claims involving disparate impact. The District Court found that this subsequent remedial measure was insufficient to insulate the FHA from liability. The U.S. Supreme Court, however, concluded otherwise.
In a 5-4 decision the Court concluded that the FHA’s internal review should have been considered by the District Court. Instead of taking a firm position on development practices that affect countless urban and suburban areas the Court essentially punted; remanding the case to the District Court to determine if all administrative remedies have been exhausted. If the FHA’s goal is to encourage development in areas that need rehabilitation it will obviously have to encourage racial diversity in the target areas from this point forward.