Illegal housing discrimination can be very straightforward. If a landlord refuses to rent to a person because she is Muslim, that’s discrimination. If property manager shows an apartment to a heterosexual couple before a gay couple even though the gay couple applied first, that’s discrimination. If bank denies a black family a loan and approves a white family with the same credit rating, that’s discrimination.

Sometimes it’s not so cut and dry and practices that appear reasonable on the surface may result in a deeper level of harm. The Fair Housing Act prohibits practices that result in discrimination “regardless of whether there was an intent to discriminate.” The disparate impact rule provides legal recourse if a practice or policy is used without intentional discrimination, but has a disproportionate impact on people in a protected class. The protected classes of the Fair Housing Act are determined by race, color, national origin, religion, sex, disability, or familial status. Vermont has added age, marital status, sexual orientation, gender identity, receipt of public assistance, and denial of development permitting based on income of prospective residents as protected classes.

Here are a few situations where disparate impact may apply:

• A landlord requires that tenants prove they have full-time work – this can bar individuals who have disabilities, are receiving assistance, are elders, or are veterans. (However, a landlord can require proof of ability to pay.)
• A municipality adopts a policy that penalizes people who repeatedly call emergency services for assistance – this can cause eviction or other action for victims of domestic violence.
• Charging rent based on the number of occupants – this can adversely impact families with children, making housing unaffordable or more burdensome.
• A lender that will not give a loan for less than $100,000 – this can restrict the ability of a low-income family to buy a home and disproportionately impacts people with disabilities, female-headed households, and communities of color.
• Targeting minority borrowers for subprime loans – this “reverse redlining” during the foreclosure crisis adversely affected minorities when mortgage companies pushed risky loans in hopes of profiting from their higher interest rates and fees.

In 2015, the U.S. Supreme Court affirmed that housing policies that disproportionately negatively affect minorities are prohibited under federal law, even when those policies are not explicitly discriminatory. Exclusionary zoning was at the heart of the case that set this “disparate impact” standard. In Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc., the Supreme Court affirmed disparate impact while also limiting claims to protect against frivolous litigation.

It may seem a little obtuse, but the disparate impact rule and the related policy of affirmatively furthering fair housing are very important to ensuring fair and inclusive housing that is free from discrimination. Most importantly, the legal principle of disparate impact provides a way for people to have a voice when policies and practices limit their housing opportunities or even put them in danger. Although the burden of proof is on the plaintiff to show adverse effect in a disparate impact case, there have been many legal decisions that have resulted in policy change – especially related to subprime lending.

Increasing the housing supply is very important and easing regulation may be part of the solution, but it needs to be done with an eye towards inclusivity and with safeguards to ensure that planning and policy decisions don’t inadvertently harm those in protected classes. Exclusionary zoning – which can include such things as minimum parking requirements, prohibitions on accessory dwelling units, and large minimum lot sizes – can have a disparate impact leading to racial and economic segregation because people in protected classes tend to be of lower income. This can result in these people being effectively blocked from areas with better amenities, schools, and jobs.

HUD Seeks Comment on Affirmatively Furthering Fair Housing

Affirmatively Furthering Fair Housing (AFFH) requires that entities receiving HUD funding do more than simply not discriminate. Under the Fair Housing Act of 1968, any city or state that receives federal housing funds must work to undo patterns of racial segregation, as well as to take actions to promote fair housing choice and to foster inclusive communities.

Although part of original fair housing law, new AFFH rule was established in 2015 to provide cities, counties, states, and public housing agencies (PHAs) “with an effective planning approach to aid them in taking meaningful actions to overcome historic patterns of segregation, promote fair housing choice, and foster inclusive communities that are free from discrimination.” More recently, HUD concluded that the current regulations are too prescriptive and do not help program participants meet this obligation. This determination was based largely on problems with the assessment tools and comments received last year citing the complexity and the costs associated with completing the Assessments of Fair Housing (AFH). The state and insular area assessment tool was never completed and the local government tool was deemed unworkable because filers had trouble with the submissions and required what was perceived by HUD as excessive technical support. Similarly, the many of the public housing authority submissions were rejected and had to be revised and resubmitted.

HUD suspended local governments’ obligation to use the AFFH assessment tool in January of this year and a court ruling this week means that HUD can move forward with reconsidering and rewriting the AFFH rule. According to HUD, the main changes currently proposed are intended to 1) Minimize regulatory burden, 2) Create a process focused primarily on accomplishing positive results, rather than on performing an analysis of community characteristics, 3) Provide for greater local control. 4) Encourage actions that lead to greater housing supply, and 5) Use HUD resources more efficiently.

It’s not clear what enforcement mechanism would replace the assessment tools and how entities would be held accountable for ensuring fair housing. It would be unfortunate if AFFH was relegated to its pre-2015 status, when enforcement was lax.

HUD has closed the comment period on possible amendments to its disparate impact standard. The deadline for public comment on amendments to HUD’s Affirmatively Furthering Fair Housing (AFFH) regulations is Oct. 15, 2018. For background, a list of the questions that HUD would like to see addressed in the comments, and instructions for submitting comments online or by mail, go to https://www.regulations.gov/document?D=HUD-2018-0060-0001.