Court rules Texas Housing Tax Credit program violates Fair Housing Act

This morning a federal court ruled in a case filed by a Dallas fair housing organization that the way the State of Texas administers the Low Income Housing Tax Credit program has a disparate racial impact, violating §§ 3604(a) and 3605(a) of the Fair Housing Act (Civil Rights Act of 1968).

Judge Sidney Fitzwater, chief judge of the Federal District Court for North Texas issued the much-anticipated ruling in Inclusive Communities Project (ICP) vs. Texas Department of Housing and Community Affairs.

Judge Fitzwater ruled, “Following a summary judgment decision and a bench trial, and for the reasons that follow, the court finds that plaintiff [ICP] has proved its disparate impact claim under the FHA…”

While finding disparate impact and a violation of the Fair Housing Act, the ruling dismissed claims by ICP that the State’s actions constituted intentional discrimination.

Judge Fitzwater ruled that the State must take corrective action to remedy the disparate impact. The Court found, “Nor is there a basis for finding that TDHCA cannot allocate LIHTC in a manner that is objective, predictable, and transparent, follows federal and state law, and furthers the public interest, without disproportionately approving LIHTC in predominantly minority neighborhoods and disproportionately denying LIHTC in predominantly Caucasian neighborhoods.”

The court directed, “it is appropriate to afford TDHCA an opportunity to present a plan to remedy its violation of the FHA. Accordingly, TDHCA must submit a remedial plan that sets out how it will bring its allocation decisions into compliance with the FHA.”

“The court encourages the parties to work cooperatively in formulating a remedial plan so that as many potential objections as possible can be resolved before the plan is submitted to the court for consideration and approval.”

Judge Fitzwater gave the State of Texas 60 days to file a remedial plan.

President Ronald Reagan nominated Fitzwater to be a United States District Judge.

There is much wisdom in the judge’s ruling and in his order that the State of Texas and the fair housing groups work together to find a solution to this problem. The State of Texas reportedly spent $1 million to hire outside counsel to defend the State against the lawsuit. The case should have been settled by the State from at the start. Now that the Court has found what was clear to most everyone from the beginning, namely that the State needs to take effective action to create LIHTC housing outside of minority areas and in high opportunity areas, it is time to get on with it.

Here is the Court’s opinion.