The Department of Housing and Urban Development (HUD) has announced a final rule to help communities that receive HUD funds meet their fair housing obligations in their use.  While the HUD rule has been under consideration for several years, the timing is propitious. It comes in the wake of the recent Supreme Court decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project in which the Court ruled that plaintiffs do not have to prove intent in pursuing claims under the Fair Housing Act, merely that an action has a "disparate impact" on a protected group.  The suit was originally brought against a government agency in charge of allocating affordable housing tax credits.

The final HUD rule aims to provide all HUD program participants with clear guidelines and data they can use to achieve fair housing goals.  It was developed in response to the recommendations of a 2010 Government Accountability Office report as well as requests from stakeholders and HUD program participants for clearer guidance, more technical assistance, better compliance and more meaningful outcomes.  It also incorporates feedback from what HUD terms "significant" input during the public comment phase.

Key features of the final rule include:

  • Clarification of existing fair housing obligations.
  • Publicly open data on fair housing and access to opportunity. HUD will provide publicly open data and mapping tools to aid community members and local leaders in setting local fair housing priorities and goals.
  •  A balanced approach to fair housing. Communities will be enabled to use local knowledge and decision making to determine the best strategies for meeting their obligations. This includes facilitating the ability to make place-based investments to revitalize distressed areas and obtaining information through community participation.
  •  Customized tools for local leaders. Recognizing that one size does not fit all grantees, HUD will be providing fair housing assessment tools specific to local jurisdictions, public housing authorities (PHAs), and states and Insular Areas.
  •  Collaboration is encouraged. Many fair housing priorities transcend a grantee's boundaries. The final rule encourages grantees to collaborate on fair housing assessments to advance regional fair housing priorities and goals.
  •  A phased-in approach. The final rule provides for additional time for communities to adopt this improved process for setting local fair housing priorities than originally proposed and more additional time will be provided for small grantees and recent regional collaborations.

In announcing the new rule HUD Secretary Julián Castro said, "As a former mayor, I know firsthand that strong communities are vital to the well-being and prosperity of families.  Unfortunately, too many Americans find their dreams limited by where they come from, and a ZIP code should never determine a child's future.  This important step will give local leaders the tools they need to provide all Americans with access to safe, affordable housing in communities that are rich with opportunity."

The Center for Responsible Lending praised the new rule.  Its executive vice president Nikitra Bailey said that when people live in communities of opportunity they are more likely to prosper and when they don't they often end up paying more for mortgages and basic financial services which cripples their ability to save, build wealth, and drains money that could be used to help them climb the economic ladder.  "Today's rule will help address a legacy of racial segregation tied to housing patterns that continue to contribute to growing economic inequality.  Coupled with the historic Supreme Court decision on disparate impact from just weeks ago, this is a hopeful sign for equality and justice in a housing sector that includes people of color, families with children, seniors and people with disabilities."