United States Court of Appeals for the Fifth Circuit
In this case, the Inclusive Communities Project (ICP) claimed that the Texas Department of Housing violated the Fair Housing Act (FHA) by allocating low-income housing tax credits in a discriminatory manner. Specifically, the ICP claimed the allocation program had a "disparate impact" on minorities because most of the projects that were awarded credits were in low-income areas. This in turn kept minorities from living in the higher-income majority areas.
At the District Court, the judge found that the ICP had proven the allocation program had a disparate impact on minorities. The Department of Housing appealed this decision to the Fifth Circuit.
On June 27, 2013, NAHB filed an amicus brief which showed the court the positive economic impacts of low-income housing tax credit projects. On March 24, 2014, the Fifth Circuit remanded the case to the District Court with instructions to use the disparate impact analysis developed by HUD in its February rule. The concurring opinion recognized that the analysis must take into account the positive impacts of Low-Income Housing Tax Credit projects. We are following this case at the District Court.
The Texas Department of Housing and Community Affairs filed a cert petition to the United States Supreme Court, and the court agreed to hear the case, limited to the following question: Are disparate impact claims cognizable under the FHA? NAHB filed a brief in support of petitioners, and provided a unique perspective focusing on the final HUD Rule, stating that however the court decides, it must not rely on federal agency rules to support its final decision. The court held oral argument in January 2015.
On June 25, 2015, the Supreme Court issued its opinion, ruling that disparate impact claims are cognizable under the FHA. At the same time, the court strongly hinted that municipalities, not private sector builders/developers, should be the focus of disparate impact claims. The court also noted that a statistical disparity, without more, should not be sufficient evidence to sustain a claim.