Developers Await ‘Disparate Impact’ Decision

Filed in Codes and Regulations, Legal, Multifamily by on April 2, 2015 0 Comments

scales of justiceNAHB members are awaiting a decision from the United States Supreme Court, which heard oral argument on Jan. 21 in Texas Department of Housing and Community Affairs (TDHCA) v. Inclusive Communities Project (ICP). At its heart, the issue in this case is whether disparate impact exists under the Fair Housing Act (FHA).

Disparate impact is a legal cause of action which is separate from an intentional discrimination claim. A plaintiff in a disparate impact suit does not need to prove the defendant’s discriminatory intent; rather, the plaintiff must only show that the defendant’s action has a discriminatory effect on a protected class.

In TDHCA v. ICP, ICP brought a disparate impact case claiming that TDHCA’s methodology resulted in more Low-Income Housing Tax Credits (LIHTC) allocated to low-income areas compared to higher-opportunity areas.

ICP claims that this resulted in disparate impact discrimination, because allocating more LIHTC credits to low-income areas meant that minorities could not have the opportunities that they would enjoy by living in wealthier communities.

Before the oral argument, many legal experts and commentators felt strongly that disparate impact would be invalidated by the Supreme Court, primarily because the text of the FHA does not clearly provide for it. However, after oral argument, it is difficult to predict how the court will rule.

Justice Antonin Scalia brought a surprise angle, focusing a number of his questions on 1988 amendments to the FHA, which was originally enacted in 1968, and whether the inclusion of those amendments supports the argument that disparate impact exists under the FHA.

Regardless of how the Supreme Court rules, there will be an impact on NAHB members. The Supreme Court does not announce when it will release its final ruling, but the decision will likely be issued before the end of June.

NAHB’s legal staff will provide an analysis of the ruling and its impact when the ruling is issued. For more information, email Devala Janardan.

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