AUSTIN, Texas -- A federal district court recently dismissed an ongoing fair housing lawsuit by Inclusive Communities Project, Inc. (ICP), alleging the Texas Department of Housing and Community Affairs (TDHCA) violated the Fair Housing Act by awarding too many federal tax credits to minority communities.

In 2008, ICP, a non-profit organization dedicated to racial and economic integration of communities in the Dallas area, sued TDHCA, which administers low-income housing tax credits within Texas to developers based on federal and state statutes. ICP alleged TDHCA disproportionately granted the tax credits to developments within minority neighborhoods and perpetuating segregation and violating the Fair Housing Act.

The ICP attempted to show TDHCA engaged in intentional racial discrimination based on disparate impact: a discriminatory policy that affects a specific class.

Although, the district court held that ICP failed to prove its intentional discrimination claims, the court nevertheless ruled in favor of ICP on its disparate-impact claim. TDHCA appealed to the U.S. Supreme Court, arguing that its policy of awarding tax credits was race-neutral and that the district court used the wrong standard to evaluate disparate impact claims.

In June 2015, in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., the Supreme Court held that “disparate-impact claims are cognizable under the Fair Housing Act.” The Supreme Court upheld the principle of disparate impact under the Fair Housing Act., laid out guidelines and sent case back to the original district court in Dallas to review the evidence using the court’s principles.

At the time, Texas Attorney General Ken Paxton issued a statement: “The [Obama] administration’s interpretation of federal housing law is overreaching and misguided, and I am disappointed with the Supreme Court’s ruling. This case, however, is far from over.”

In the statement, Paxton argued that TDHCA acted to revitalize neighborhoods and provide fair housing when it distributed federal tax credits.

In the most recent decision Aug. 26, the district court applied the “robust causality” requirement that was mandated by the Supreme Court and held that ICP had not met the court’s heightened standard.

In his opinion, Federal District Judge Sidney A. Fitzgerald stated that a successful claim must be based on the Supreme Court’s criteria and identify a specific policy or policies that had a discriminatory effect.

The district court dismissed ICP’s disparate-impact claim and found that ICP failed to prove that any policy or practice of TDHCA caused a racial disparity in the distribution of tax credits.

It is not known if ICP will appeal. In a press statement, ICP stated: “As ICP and our attorneys review the district court’s Aug. 26,decision in ICP v. TDHCA and consider our next steps, we will continue our efforts to ensure low income families of color are able to exercise their fair housing rights and have access to housing outside of high poverty, under-resourced, segregated areas of the Dallas Metroplex.”

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The Texas Department of Housing & Community Affairs
221 E 11th St
Austin, TX 78701

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