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New HUD Rule Undermines Efforts to Desegregate Our Communities

March 15, 2020
Neighborhood aerial view

The U.S. Department of Housing and Urban Development (HUD) sought comments on its proposed a regulation that decimates progress made within the 2015 Affirmatively Furthering Fair Housing Rule. The Inclusivity Institute, formed a little less than a year ago, is working to implement concrete strategies to reduce intense racial and economic segregation in our nation’s housing markets.

The proposed rule, however, requires far less adherence to basic fair housing principles than even the dated and ineffective Analysis of Impediments process. Regrettably, it may even exacerbate barriers to fair housing by simplistically assuming that a basic expansion in the supply of affordable housing benefits all members of a community or all households experiencing poverty equally.

If implemented, the rule will make our work more difficult by undercutting the level of quality, comprehensive planning that the 2015 AFFH rule provided by pushing regions to think proactively in confronting barriers to fair housing. Those incentives are lost in the proposed rule, meaning critical progress that needs to be made in breaking down extreme levels of segregation more difficult.

Read the Inclusivity Institute's specific comments below

March 16, 2020

Office of General Counsel, Rules Docket Clerk
Department of Housing and Urban Development
451 Seventh Street SW
Washington, DC 20410

Re: Docket No. FR-6123-P-02, RIN 2577-AA97

To Whom It May Concern: The Inclusivity Institute appreciates the opportunity to comment on the U.S. Department of Housing and Urban Development’s (HUD) proposed Affirmatively Furthering Fair Housing (AFFH) rule. The Institute, formed a little less than a year ago, is an organization comprised of distinguished scholars, leading affordable housing developers and policy experts working collectively to implement concrete strategies to reduce intense racial and economic segregation in our nation’s housing markets. This work is driven by our conviction that despite entrenched and extreme levels of segregation that persist and fuel deeply rooted inequalities, there are pragmatic policy and market-based solutions that can be readily deployed. We believe these solutions will make profound progress in creating more balanced and equitable living patterns.

These concrete strategies include helping families access mobility and make pro-integrative moves, expanding first-time homeownership opportunities, preventing gentrification from undermining balanced living patterns, and reducing exclusionary practices. The Institute is pursuing these strategies alongside dedicated community practitioners and agencies working to disrupt extreme levels of segregation. The 2015 AFFH rule provided a long-overdue incentive for local governments to work with these groups to analyze and confront patterns of segregation in a meaningful way.

Nearly fifty years after the Fair Housing Act was enacted, the 2015 AFFH rule represented landmark progress in fulfilling the Act’s intent not only to eliminate discrimination, but affirmatively overcome intentional and systemic segregation policies. During the decades prior to the issuance of that rule, jurisdictions were required to complete an Analysis of Impediments (AI) to fair housing which required significant amounts data, yet that failed to yield relevant analysis that could constructively inform future planning and priorities. It also did not achieve a great deal of accountability for those jurisdictions and public housing authorities (PHAs) as federal funding and did not require AI priorities to be directly tied to articulated federal block grant funding priorities.

HUD issued the 2015 AFFH rule after a thorough public engagement process, the 2015. It proved an important step forward towards fulfilling fair ho)using goals by defining what it means to affirmatively further fair housing, providing data and mapping tools to help jurisdictions analyze and plan through and Assessment of Fair Housing (AFH) process, requiring robust community engagement, and holding participants accountable via funding levers for tying funding priorities to progress in addressing identified priorities. The suspension of this rule in 2018 left communities with uncertainty and an option to divert back to the previous ineffective AI model. In those brief years the 2015 rule was in place, 32 of 49 AFH submissions were accepted by HUD with a commitment from department staff in working to help communities that had AFHs initially not accepted in making improvements.

Further, the rule required an AFH be completed prior to the Consolidated Plan (ConPlan) and the Public Housing Authority (PHA) plan ensured that there would be logical, direct correlations between priorities identified within the AFH and funding proposals laid out in the ConPlan and PHA plan. Prior to the 2015 AFFH rule’s enactment, the substantial gaps in coordinating between fair housing assessments and funding priorities which subsequently, led to less effective outcomes throughout the country.

HUD’s new proposed rule actually requires far less adherence to basic fair housing principles than even the dated and ineffective AI process. Regrettably, it may even exacerbate barriers to fair housing by simplistically assuming that a basic expansion in the supply of affordable housing benefits all members of a community or all households experiencing poverty equally. The sections below highlight the most critical areas of concern from the Institute’s perspective.

Expansion of Affordable Housing is Critical to Addressing Urgent Community Needs but it is Not a Proxy for Fair Housing

Perhaps the starkest illustration of HUD’s departure in approach from the 2015 rule is in replacing the rigorous AFH process with a new AFFH certification process that would merely require a jurisdiction to identify three goals that would relate to fair housing and how they plan to address them. Further, if the jurisdiction selects from a list of 16 “inherent barriers to fair housing choice,”[i] they would not need to provide such a plan. Of those barriers identified as inherent in the proposed rule, only one explicitly references a protected class – the “lack of a sufficient supply of decent, safe, and sanitary housing that is affordable and accessible to people with disabilities.”[ii] There are two more which are meaningful in broader strategies to confront concentrations of poverty and expand mobility by reducing source of income restrictions[iii], but the 13 remaining on that list do not relate in any direct way to affirmatively furthering fair housing. Instead, these remaining barriers relate solely to reducing regulatory barriers.

We believe many of those barriers identified are important to helping expand access to affordable housing and promoting new development generally, but that is not the mandate of the Fair Housing Act. It may, in fact, undermine some community-driven goals around preventing displacement. It is also telling that the detailed definition of affirmatively furthering fair housing from 2015 is deleted from the proposed rule, as is the detailed definition of segregation. This is ill-informed and promotes long-held theories that the removal of regulations alone is sufficient to adequately address fair housing concerns. The proposal even defines fair housing choice as the “opportunity and options to live where they choose, within their means, without unlawful discrimination...”[iv] Previous commissions from multiple administrations issued reports devoted to exploring this deregulation-focused approach without demonstrating any appreciable progress in the decades since in actually removing those barriers or significantly reducing extreme rates of segregation or concentrations of poverty. Supply-side solutions alone ignore the systemic fair housing issues that were consciously imposed and must be thoroughly examined and intentionally addressed.

In N.A.A.C.P. v. Secretary of HUD, the court noted that the Fair Housing Act’s legislative history “suggests an intent that HUD do more than simply not discriminate itself; it reflects the desire to have HUD use its grant programs to assist in ending discrimination and segregation, to the point where the supply of genuinely open housing increases.”[v] The Institute agrees that a jurisdiction cannot discuss fair housing solutions without more affordable housing being part of the equation, but the intentional analysis of impediments specific to fair housing is critical to developing plans to more effectively utilize subsidies and reduce disparate outcomes. Expanding the supply of affordable housing, and proactively furthering fair housing are efforts that should work in concert. They are not interchangeable goals. HUD must examine the stark inequities that persist and retreat from a misguided race-neutral view on the fair housing challenges our communities are facing.

The most recent report on rental housing from Harvard’s Joint Center for Housing Studies helps illustrate this point, finding that “(a)lthough cost burdens affect households of all races and ethnicities, minority renters are much more likely to be burdened than white renters. Black renters had the highest burden rate in 2018, at 55 percent, followed closely by Hispanic renters at 53 percent, and then by Asian/other renters at 45 percent. In contrast, the cost-burdened share of white renter households was 43 percent.”[vi] What is more, the Urban Institute from October of last year found that “(b)lack white homeownership gap is the highest it has been in 50 years.”[vii]

In compelling evidence illustrating some historical causes and effects of segregation that persist today, a study from the National Community Reinvestment Coalition found that when comparing redlining maps from the 1930s by the federal Home Owners’ Loan Corporation (HOLC) with current neighborhood income and race data, neighborhoods marked by HOLC as “high-risk or “Hazardous” eight decades ago are low-to-moderate income (LMI) today. Additionally, most of the HOLC graded “Hazardous” areas (nearly 64%) are minority neighborhoods now.[viii]

In treating affordable housing as a proxy for fair housing, the proposed rule encourages jurisdictions to ignore the profound effects racial segregation has upon not just housing equity, but many other forms of racial inequality as well. It ignores the role of our nation’s policies in excluding communities of color from fair and equal access to housing. In erasing the requirement to complete a fair housing-focused analysis that would allow for review by independent advocacy groups, for instance, critical opportunities are lost. Requiring Public Housing Agencies (PHAs) and jurisdictions to examine specific plans that are fair housing focused versus market-only supply priorities is powerful in reversing long-term trends in segregation and cost effective.

The Institute aims to assist jurisdictions and regions by providing deeper levels of analysis of these patterns and establish comprehensive, coherent strategies to solve intractable segregation challenges within years, versus generations. We have learned from the successes and challenges of previous demonstration programs, for instance, how to achieve more sustainable success while proving federal cost savings.

Take voucher portability, for example, instead of looking solely through a “regulatory removal” approach to mobility, we can build on what we have learned from analyzing mobility successes through a fair housing and equity lens.  We know that “in demonstration programs, the change in rent limits made subsidy costs somewhat higher, but it also made tenant placement more stable and raised average tenant incomes, thus saving the government money.”[ix]

Lax Standards Perpetuate Segregation; Better Data and Regional Planning Facilitate Results

Another key area of concern is the reduction in accountability for recipients of federal community development funding. This is reflected in the proposed rule’s removal of the 2015 AFFH provision requiring communities to provide thorough demographic spatial analysis limits planning that is responsive to problematic trends. It is also seen in the fact that HUD will no longer require goal setting by PHAs that play critical roles in addressing segregation as administrators of programs, such as public housing and Section 8. The decisions made by PHAs have an intense impact on the lives of participating families, including many members of protected classes and to remove their requirement to goal set in solutions to affirmatively further fair housing is yet another critical missed opportunity to utilize an important federal policy levers.

Another provision of central concern is the proposed rule’s recommendations regarding performance evaluations. Here HUD, proposed to develop a new “jurisdictional risk analysis” that would rank entitlement jurisdictions as to their effectiveness by examining three broad components, including fair housing claims that have been adjudicated, the supply of affordable housing and the supply of adequate affordable housing throughout the jurisdiction. The proposal provides a limited series of metrics, but critically, does not require examination of variations within those metrics by race. This, again, conflates fair housing choices with supply. The rating system would reward higher performing jurisdictions and potentially impose enforcement actions against low performers, but the ranking system is fundamentally flawed. Even in measuring adjudications, it would only count cases related to findings of civil rights violations brought forth by HUD or the U.S. Department of Justice. It is commonly understood, however, that not including private enforcement, would produce a vastly incomplete ranking of a given jurisdiction’s successes or failures in this regard. The relaxation of accountability contained throughout the proposed rule will hinder progress in achieving fair housing goals.

We urge HUD to return to a model that reflect the interests and goals of progress held by organizations like ours as well as practitioners, advocates, and representatives of local government that devoted to making meaningful and swift progress in reducing extreme segregation.  In conversations with community leaders throughout the country, we hear consensus on the importance of requiring regional plans. These plans work past boundaries and siloes to enhance progress with regards to reducing segregation and addressing racial inequities. This consensus recognizes that problems of segregation do not observe jurisdictional boundaries. Regional collaboration is essential to formulating more a coherent understanding of regional challenges and opportunities in the process of developing more effective strategies.

This is particularly prevalent in discussions around re-segregation cycles and the many cities confronting the suburbanization of poverty. Professor Greg Squires speaks to this challenge in noting that “(t)he broader process of suburban transition must be understood through a regional lens; without it, problems that are systemic and multijurisdictional in nature may appear to be limited and local.”[x]

Community Engagement is Essential to Producing Fairer, More Effective Outcomes

Finally, the Institute urges HUD to reinstate the robust community engagement process contained within the 2015 rule that required grantees to proactively seek input and inform their constituents about this process. Instead of continuing historic patterns imposing community development planning and priorities upon communities (particularly communities of color) without meaningful engagement, the 2015 AFFH rule ensured these voices would be heard and their feedback infused in future planning. This process builds trust in the process and buy in among community members in seeing these plans through to successful outcomes.

The success of these efforts is reflected in findings like that of New York University’s Furman Center. “We observed that engagement processes were stronger in the AFH process with respect to: the number of opportunities for public engagement; the inclusiveness of those opportunities; the provision of data allowing HUD to assess public engagement; documentation and consideration of public input; and cross-jurisdictional or cross-sector engagement”[xi]

HUD must move beyond a tunnel-vision focus on regulatory barriers when working to address fair housing as it denies decades of history that has led us to where we are now as a country. We must meaningfully engage communities who are impacted by segregation and make informed policy decisions based on comprehensive research focused on remediating segregation patterns. “Making choice real, we argue, sometimes requires interventions to strengthen the functioning of markets. And long-term housing integration will be successful only if it reflects the personal and collective preferences of Americans who live in and around our cities[xii]

We cannot expect to fulfill the promise of the Fair Housing Act if we overlook data and undermine community engagement that help reveal underlying trends and conditions that can be readily addressed if prioritized.

Progress Towards Inclusion

The Inclusivity Institute believes this is a critical time to explore new, innovative multi-sector strategies expand access to and preserve affordable housing. We will move forward in implementing programs and developing research that can help achieve considerable progress in addressing extreme levels of racial and economic segregation. The level of quality, comprehensive planning, however, that the 2015 AFFH rule provided by pushing regions to think proactively in confronting barriers to fair housing would benefit these efforts immensely. Those incentives are lost in the proposed rule. The dynamics of housing segregation are more complex than boiling it down to merely an issue of discrimination or merely the result of personal preferences. We must work to promote a more nuanced understanding of these issues by providing communities with critical tools and meaningful data to properly identify and challenge patterns of segregation and inequality in housing.

We appreciate the opportunity to comment and advocate for HUD to act on these recommendations.

Kathleen Lara Policy and Staff Director, Inclusivity Institute

Richard Sander Vice-Chair of the Inclusivity Institute Dukeminier Distinguished Professor of Law, University of California, Los Angeles

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