Court Finds Texas Housing Agency Guilty of Discrimination

A judge of a Dallas Federal District Court recently ruled that the largest program to create affordable housing in Texas violates fair housing law by disproportionately building apartments in poor minority neighborhoods while placing few projects in affluent areas that are mostly white.

Although the ruling came in response to a 2008 lawsuit that focused on Dallas, it could potentially have a sweeping impact on how Texas runs the program, which will disperse about $55 million in tax credits this year. The agency that oversees the money, the Texas Department of Housing and Community Affairs (TDHCA), has 60 days to submit a plan to correct the disparity, according to the order issued by U.S. District Court Judge Sidney Fitzwater.

The ruling represents a costly and stinging defeat to TDHCA, which has spent about $1.6 million to defend the lawsuit. The fair housing group in Dallas that filed the lawsuit, the Inclusive Communities Project, claimed that TDHCA deliberately used race as a factor when it made choices about how to allocate the money. The group found that in Dallas, 85 percent of tax credit-funded apartments were in areas where minorities made up at least 70 percent of the population.

Fitzwater stopped short of blaming the housing agency for the disparity. That was a key victory for TDHCA, which contended that it has little discretion over which projects win the federal subsidy.

In its legal defense, TDHCA emphasized that it dispenses money according to a complex set of scoring criteria that is mostly dictated by state and federal laws. Developers compete every year for a limited amount of tax credits, which allow them to raise money to cover construction costs.