Economically exclusionary housing practices undermine the protections for minority groups in the federal Fair Housing Act and similar housing discrimination statutes at the state and federal levels. Those exclusionary practices effectively prevent an adequate supply of housing for low- and moderate-income people and result in greatly increased housing costs. Because most members of minority groups are on the lower end of the income and wealth spectrums, those practices have a disproportionate, adverse impact on minority group members. 

Major reform of land use regulations is needed, in order to combat exclusionary zoning and other economically exclusionary housing practices. There is an emerging consensus to that effect among housing policy experts, economists, and even Presidents of the United States—across the political spectrum. (For more about that virtual consensus, please click on EMERGING CONSENSUS ON REGULATORY BARRIERS TO HOUSING AFFORDABILITY.)

Economically exclusionary housing practices are difficult to control under existing fair housing  law. One major, recent study found that the percentage of families in America’s metropolitan areas who lived in predominantly “rich” or “poor” neighborhoods more than doubled between 1970 and 2012—reaching 34% for large metros and almost 22% for smaller metros. During the same period, residential isolation by race (especially of blacks from whites) diminished substantially, and fairly steadily.

The relative success of efforts to reduce racial isolation in housing during that period suggest that strong legal prohibitions on such discrimination—such as Federal Fair Housing Act , which became law in 1968—are important. However, fair housing laws generally do not address economically exclusionary housing practices directly. For example, the Federal Fair Housing Act bans economic discrimination based on race, color, religion, sex, handicap, familial status, and national origin—but not  economic exclusion, unless it is proven to impact minority group members disproportionately in the specific case at hand. That kind of disparate impact can be difficult to establish.  

EHI issued a report in December 2019 containing its initial recommendations for a new statute that would ban economically exclusionary housing practices across the board, as well as all other discriminatory housing practices. Such a statute could be enacted by any state—or by the federal government (in a slightly different form). A city or other locality could enact an ordinance having the same basic requirements within its boundaries. To access EHI's report, please click on TOWARD A COMPREHENSIVE BAN ON EXCLUSIONARY HOUSING PRACTICES

 The U.S. Supreme Court decided on June 25, 2015, that the federal Fair Housing Act (“FHA,” 42 U.S.C. § 3601 et seq.,) prohibits housing practices that have a disproportionately adverse effect on members of minority groups—if those practices do not have a justifiable purpose and properly limited scope. Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project (ICP), No. 13–1371 (June 25, 2015).

In a 5-4 decision, the Court held that discriminatory intent is irrelevant to whether such a “disparate impact” violation exists. The Court also explained what a litigant must show in order to prove, or defend against, an alleged violation. The Court’s decision applies both to government officials and private persons.

The FHA’s prohibition on practices that have such a “disparate impact” is an important basis for challenging exclusionary housing policies, because those policies often have much greater adverse impacts on minority group members than on the overall population. As the Court stated:

These unlawful practices include zoning laws and other housing restrictions that function unfairly to exclude minorities from certain neighborhoods without any sufficient justification. Suits targeting such practices reside at the heartland of disparate-impact liability.

(Slip op. at 17) The Court’s opinion, authored by Justice Kennedy, clarified the elements of a disparate impact housing violation, which had been stated somewhat differently by certain lower courts. The Supreme Court essentially adopted the statement of those elements in the recent rule issued by the U. S. Department of Housing and Urban Development (HUD), regarding such cases. Implementation of the Fair Housing Act’s Discriminatory Effects Standard: Final Rule, 78 Fed. Reg. 11460 (2013) (codified at 24 CFR §100.500).

HUD’s formulation involves the same kind of burden-shifting approach the Court has formulated for other anti-discrimination laws, such as Title VII of the Civil Rights Act of 1964 (equal employment opportunity). Thus, a person complaining of alleged housing discrimination (“plaintiff”) has the initial burden of proving “that a challenged practice caused or predictably will cause a discriminatory effect.” 24 CFR §100.500(c)(1) (2014).

If a plaintiff makes that showing, the burden shifts to the defendant to prove “that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests.” Id., §100.500(c)(2). If the defendant makes its showing, the plaintiff still can “prevail upon proving that the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect.” Id., §100.500(c)(3).

To see the Supreme Court decision and/or HUD rule in their entirety, click on the hyperlinks above. For further information, please contact EHI.