HUD Issues Final Rule on Affirmatively Furthering Fair Housing

Published by Mark Shelburne on Monday, July 20, 2015 - 12:00am

On July 16, three weeks after release of the U.S. Supreme Court’s decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, the U.S. Department of Housing and Urban Development (HUD) published its final rule on affirmatively furthering fair housing (AFFH).

Some aspects of the rule are new (primarily the process, as described below), but the fundamental concept is not: the requirement to affirmatively further fair housing is a key provision of the Fair Housing Act, as codified in Title VIII of the Civil Rights Act of 1968 (42 U.S.C. 3608). As a condition of accepting HUD funding (including from the HOME Investment Partnerships Program, Community Development Block Grants, McKinney-Vento Homeless Assistance Grants and public housing programs), grantees must undertake “meaningful actions, in addition to combating discrimination, that overcome patterns of segregation and foster inclusive communities free from barriers that restrict access to opportunity based on protected characteristics.” The AFFH final rule replaces the existing requirement to conduct an analysis of impediments to fair housing (AI).

The final rule states that a jurisdiction’s “meaningful actions” must:

  • address significant disparities in housing needs and access to opportunity,
  • replace segregation with truly integrated and balanced living patterns, and
  • transform racially/ethnically concentrated areas of poverty into areas of opportunity.

While it is clear that there are many existing segregated communities in high poverty, and developing affordable housing in higher income areas can be difficult, what policies governments and public housing authorities should implement is not always clear. How does a covered agency or authority know specifically what to do? This is where the rule’s new aspects come into play. HUD replaced AI approach with a revamped, expanded process.

There were two motivating factors for making this change. First, a 2010 evaluation by the U.S. Government Accountability Office concluded it was unclear whether the AI approach was effective in identifying and addressing impediments to fair housing. Second, litigation brought against Westchester County, N.Y. brought national attention to the difficulties and shortcomings in the ways AFFH had been carried out.

The new process can be broken down into four steps. The first is HUD providing data to analyze, including a geospatial mapping tool. This resource is not yet finalized but anearlier version is available. Other relevant data also may be taken into account.

The second step is preparing an assessment of fair housing (AFH). HUD also has created an assessment tool, which is essentially a template to follow and series of questions to answer. (The version to be used by state-level agencies has not yet been released, but is likely to follow a similar outline.) Public participation and input is an important component. The result will be setting goals to overcome “factors that limit or deny fair housing choice or access to opportunity, or negatively impact fair housing or civil rights compliance.” One example of a goal could be changing zoning to allow more multifamily housing in affected communities.

The rule allows preparation of a joint or regional AFH, which may lead to greater cooperation and efficiencies. The different jurisdictions do not have to be contiguous or even in the same state.

The third step will be for HUD to review the AFH for completeness. HUD will have 60 days to review the AFH, but passing this milestone does not mean HUD has certified compliance with the AFFH obligation or other provisions of the Fair Housing Act.

Last, but definitely not least, the grantee must make these goals a part of its

  • consolidated plan (used for HOME, CDBG, and McKinney-Vento),
  • annual action plan,
  • public housing authority plan, and/or
  • Capital Fund plan.

A state’s qualified allocation plan also will need to consider AFFH where the allocating agency also receives HUD funding covered by the rule: “the duty applies to all of a [PJ]’s programs and activities related to housing and urban development.” These allocating agencies will need to consider some of the questions evaluated in the recent HUD QAP research, including where their low income housing tax credit (LIHTC) properties are located and the definitions of high-opportunity and blighted neighborhoods. Even where the LIHTC is administered by a separate agency, local governments and housing authorities may ask to have the state’s policies contribute to implementing their goals.

Although recent media attention has focused on race, keep in mind race is one of seven protected classes; the others are disability, color, religion, sex, familial status and national origin. The first of these is particularly noteworthy since it has been the subject of litigation under another federal law. The U.S. Department of Justice and private groups have cited the Americans with Disabilities Act in bringing claims against governments for discrimination against persons with disabilities (often referred to as Olmstead cases). Those advocating for the interests of this population may see the AFFH rule as another opportunity.

According to information from the National Low-Income Housing Coalition, 64 percent of all new consolidated plans are due in 2015, and another 10 percent are due in 2016. Because these plans are for five years, those grantees won’t be required to conduct an AFH until after 2020. Public housing authorities (PHAs) with more than 550 units (including vouchers) will have to submit an AFH with when their next 5-year plan is due after Jan. 1, 2018. PHAs with fewer than 500 units have another year. While we don’t have data on the effective dates of these plans, the first AFH submission for many PHAs will also occur in the 2020s.

For help implementing the rule, including training, geographic information, housing market analysis, policy evaluation/drafting, and other technical assistance, contact either me or your local Novogradac & Company affordable housing expert.