Disparate Impact Challenge
U.S. Supreme Court Rules on Disparate Action
7-16-2015 | Many of you have been waiting on pins and needles on the ruling from the United States Supreme Court regarding the amicus brief NARPM participated in. As expected, in late June, almost the last day of the Court’s Session, the Supreme Court ruled. Unfortunately they ruled in favor of the plaintiff, Inclusive Communities Project, Inc. The fact that they waited until nearly the last day of their session says they too were trying to come to grips with this decision. Let me give a little background and then I’ll explain how it may affect us as property managers.
Disparate Impact is a theory developed by the Department of Housing and Urban Development (HUD) that states a housing provider or lender can inadvertently discriminate against a protected class, and not even be aware of it, through their normal business practices and be held liable for it. For example, if you choose to only rent to people with an education of a graduate degree or better, and statistically those people were all of one protected class or left out another protected class, you could be guilty of discrimination.
NARPM® Joins National Housing Industry Group in support of Disparate Impact Challenge with U.S. Supreme Court
1-13-2015 | For the third time in four years, the U.S. Supreme Court agreed to hear arguments in Texas Dept. of Housing and Community Affairs v. The Inclusive Communities Project, Inc., No. 13-1371 (Sup. Ct.), about whether the Fair Housing Act (FHAct) recognizes claims for “disparate impact” liability.
Disparate impact theory allows the use of statistical evidence to demonstrate that a particular policy or practice – although neutral on its face – has a harsher (or “disparate”) impact on classes of people protected by the FHAct. If so, liability can be imposed under the FHAct, even in the absence of evidence of an intent to discriminate.
The Inclusive Communities case came from the Fifth Circuit, which affirmed a decision that the Texas agency allocated low-income housing tax credits (LIHTCs) in a manner that, although consistent with IRS rules, concentrated LIHTC housing in neighborhoods with high minority populations, making it more difficult for those protected classes to find housing in non-minority areas.
NARPM® has been following the case and the Board of Directors thought it was important for NARPM® to weigh in on this important case. NARPM® had been participating in a coalition who decided to work together and provide property manager’s point of view. On behalf of NARPM® and a coalition of seven other housing industry groups, a Washington DC based legal firm, Nixon Peabody filed an amici curiae brief in support of the disparate impact challenge, pointing out the distortions that disparate impact liability causes. Among other things, the document explained that disparate impact makes it more difficult for housing providers to apply sensible rules and policies, by subjecting providers to potential liability when they impose neutral rules concerning matters such as tenant qualifications (including crime and drug screening and credit scoring) and make decisions about participating in rental assistance programs.
The brief also pointed out that the plain language of the FHAct does not allow for disparate impact liability and that new HUD regulations, which attempt to establish a nationwide standard for proving disparate impact liability, exceed HUD’s authority under the FHAct. The coalition of housing amici includes the National Multifamily Housing Council, the National Apartment Association, the National Leased Housing Association, the Council for Affordable and Rural Housing, the National Association of Residential Property Managers, the Public Housing Authorities Directors Association, the National Affordable Housing Management Association, and the National Association of Housing and Redevelopment Officials.
The Supreme Court has scheduled oral arguments in the Inclusive Communities case for January 21, 2015, and a final decision is expected by the end of the Court’s present term, before the end of June 2015.