Treasury and OCC Sued for Discriminatory Conduct in LIHTC Program

A lawsuit was recently filed alleging that the U.S. Department of Treasury and Office of the Comptroller of the Currency (OCC) perpetuated racial segregation in the City of Dallas in their administration of the LIHTC program. The lawsuit, filed by a group that assists low-income families eligible for Section 8 vouchers, claims that the agencies’ conduct violated their duty to affirmatively further fair housing under the Fair Housing Act.

Specifically, they claim that current LIHTC policies effectively foster poor, blighted, racially segregated neighborhoods in Dallas. The claims are based on the disparate impact theory of liability, in which the statistics are used show that racial minorities are harmed by the policies; no intentional discrimination has to be proven.

The group alleges that the defendants have condoned continued racial segregation through their LIHTC program administration. As a result, according to the lawsuit, LIHTC non-elderly units are disproportionately located in minority census tracts plagued by problems that include high rates of crime, poverty, and unemployment, as well as adverse environmental conditions.

Similar lawsuits have been filed against the Texas Department of Housing and Community Affairs (TDHCA), alleging a disparate impact theory under the Fair Housing Act arising from TDHCA’s allocation of LIHTCs in Dallas. In June 2014, TDHCA filed a petition for a writ of certiorari with the U.S. Supreme Court, asking the Court to determine if disparate impact claims are permitted under the Fair Housing Act. This came after a court found that TDHCA had discriminated, a decree significantly altering the Texas LIHTC program statewide was entered, and TDHCA appealed.