Texas Department Of Housing And Community Affairs v. The Inclusive Communities Project, Inc.

135 S.Ct. 2507 (2015)

Facts

The Federal Government provides low-income housing tax credits that are distributed to developers through designated state agencies. Federal law favors the distribution of these tax credits for the development of housing units in low-income areas. The Inclusive Communities Project, Inc. (P), is a Texas-based nonprofit corporation that assists low-income families in obtaining affordable housing. P brought this suit against the Department (D) and its officers. P brought a disparate-impact claim under §§804(a) and 805(a) of the FHA. P alleged the D has caused continued segregated housing patterns by its disproportionate allocation of the tax credits, granting too many credits for housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods. P contends that D must modify its selection criteria in order to encourage the construction of low-income housing in suburban communities. The District Court concluded that P had established a prima facie case of disparate impact. The evidence showed that approved tax credits for 49.7% of proposed non-elderly units in 0% to 9.9% Caucasian areas, but only approved 37.4% of proposed non-elderly units in 90% to 100% Caucasian areas. It found “92.29% of [low-income housing tax credit] units in the city of Dallas were located in census tracts with less than 50% Caucasian residents.” The District Court placed the burden on D to rebut P’s prima facie showing of disparate impact. D was to prove “that there are no other less discriminatory alternatives to advancing their proffered interests.” Eventually, the District Court ruled for P. While D’s appeal was pending, the Secretary of Housing and Urban Development (HUD) issued a regulation interpreting the FHA to encompass disparate-impact liability. The plaintiff “has the burden of proving that a challenged practice caused or predictably will cause a discriminatory effect.” If a statistical discrepancy is caused by factors other than the defendant’s policy, a plaintiff cannot establish a prima facie case, and there is no liability. After a plaintiff does establish a prima facie showing of disparate impact, the burden shifts to the defendant to “prove that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests.” If a defendant has satisfied its burden, a plaintiff may “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.” The Court of Appeals held that disparate-impact claims are cognizable under the FHA. The Court of Appeals reversed and remanded. Relying on HUD’s regulation, the Court of Appeals held that it was improper for the District Court to have placed the burden on the D to prove there were no less discriminatory alternatives for allocating low-income housing tax credits. It was suggested the District Court incorrectly relied on bare statistical evidence without engaging in any analysis about causation. It was also held that if the federal law providing for the distribution of low-income housing tax credits ties D’s hands to such an extent that it lacks a meaningful choice, then there is no disparate-impact liability. D filed a petition for a writ of certiorari on the question whether disparate-impact claims are cognizable under the FHA.