Civil Rights Groups Sue Ben Carson, HUD For Allegedly Aiding Affordable Housing Segregation

By Kenrya Rankin Oct 24, 2017

On the same day that a study revealed that affordable housing availability has fallen more than 60 percent, a coalition of civil rights organizations launched a lawsuit against the Department of Housing and Urban Development (HUD) for stalling a rule that would help families with low incomes secure affordable housing.

In August, HUD announced that it would suspend the Small Area Fair Market Rent Final Rule, which aims to use more localized rental standards so that people with vouchers that help cover their rent can afford to live in areas that are not poverty-stricken.

The NAACP Legal Defense and Educational Fund, the Lawyers’ Committee for Civil Rights Under Law, Public Citizen’s Litigation Group, the Poverty and Race Research Action Council and law firm Relman, Dane & Colfax PLLC filed the lawsuit on behalf of the plaintiffs with the U.S. District Court for the District of Columbia yesterday (October 23). The lawsuit explains the suspended rule as such:

A primary objective of the [Housing Choice Voucher, HCV] program is to permit low-income families to settle throughout metropolitan areas, thereby avoiding the high concentrations of poverty and racial segregation that have been linked to significant adverse health, educational, and economic outcomes for children and adults.

In operation, however, the HCV program has not provided this meaningful choice to participating families, in large part because of how HUD calculates a voucher’s worth. HUD historically has calculated FMRs based on the average rent for entire metropolitan regions, without regard for the stark differences in housing costs from neighborhood to neighborhood within such regions. In low-rent (and low-opportunity) neighborhoods, these crudely calculated FMRs exceed what the market would bear, providing some landlords with a substantial windfall at taxpayer expense. Conversely, those same FMRs are too low for HCV households to use their vouchers in higher-rent neighborhoods with better schools, employment options, transportation and other opportunities.

The Small Area FMR Rule, which HUD adopted in 2016 after years of community input and careful study and analysis, is a major step toward correcting this problem. The rule requires the public housing agencies (PHAs) that administer the HCV program locally to set voucher values in 24 metropolitan areas based on the prevailing private market rents for each distinct zip code within those regions. This revised methodology recognizes the existence of very different local rental markets within each metropolitan area and calibrates vouchers more finely to the amount needed to live in various neighborhoods. It thus enables voucher holders to access a wider range of housing, outside of voucher-concentrated, racially-segregated areas.

The coalition argues in the lawsuit that suspending the rule until October 2019 is “unlawful” and that it holds the more than thousands of people who participate in the HCV program (commonly called Section 8) in a system that “has perpetuated, rather than ameliorated, racial segregation and concentrations of residential poverty.”

“The delay of this rule will have a segregative effect, denying these primarily African-American families who would want to move out of their neighborhoods the chance to do so,” Ajmel Quereshi, senior counsel with the NAACP Legal Defense and Educational Fund told The Intercept. “This case is about more than just housing. Of course, they hope to live in a higher-quality residences, but it’s really about people who want to move to better and safer neighborhoods, but they can’t because of the value of their voucher. It’s about schools and transportation and doctor visits and grocery stores that people want to be able to access to support their families.”

The suit includes fair housing organization Open Communities Alliance and two voucher holders, Crystal Carter and Tiara Moore, as plaintiffs, and names both HUD and HUD secretary Ben Carson as defendants. HUD spokesperson Brian Sullivan told The Intercept that holding the rule does not signal a change in policy, and referred to a blog post that says this is not a rollback of the program, but a delay “informed by research.”

From the blog entry:

As many readers of this column know, a handful of [public housing agencies] are currently operating a Small Area FMR Demonstration. We now have some preliminary results from a just-published interim evaluation that provides information on administrative processes and costs as well as some initial estimates of program impacts such as changes to the availability of affordable units, average housing assistant payments and tenant rent burden. We are looking forward to a final report on this demonstration next summer that will have an additional year of data as well as the results from tenant and landlord interviews.

The suit was filed the same day that mortgage financier Freddie Mac reported that an examination of its government-backed home loans revealed a more than 60 percent drop in the nation’s stock of apartments designated as affordable for very low-income families (defined as households with incomes at less than 50 percent of the area median income) between 2010 and 2016. The study compared rent increases on specific units and found that 11.2 percent of the 100,000 rental units available nationwide had this affordability rating the first time they were financed. When the same units were refinanced or sold, that percentage dropped to just 4.3 percent.

“We have a rapidly diminishing supply of affordable housing, with rent growth outstripping income growth in most major metro areas,” David Brickman, executive vice president and head of Freddie Mac Multifamily, told The Washington Post.

A 2012 study from the National Low Income Housing Coalition found that Black households made up 45 percent of voucher holders. Whites are 35 percent, and Latinxs represented 16 percent.