On Nov. 13, a settlement was reached in the Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc. case, just a few weeks before the U.S. Supreme Court was scheduled to hear oral arguments. A court ruling would have affected apartment owners, managers and developers nationwide by determining the validity of the U.S. Department of Housing and Urban Development’s (HUD) “discriminatory effects rule”, published in February 2013. The rule calls into question some often used industry and business practices, such as resident screening.
The rule essentially codifies HUD’s long-held position that the Fair Housing Act applies not only to acts of intentional discrimination, but also actions and policies that have a disparate impact on a protected class, regardless of intent. In addition, it establishes uniform standards for determining when a real estate practice or policy violates the act.
NMHC/NAA weighed in on the case, joining other real estate groups in filing an amicus brief with the court that argued that the act does not recognize disparate impact claims. The brief also argued that disparate impact liability is a judge-made rule that improperly extends the scope of the Fair Housing Act and creates de facto protected classes.
The case involved a New Jersey township that created a plan for
redeveloping a blighted neighborhood occupied mostly by low- and
moderate-income minority households. Residents filed suit against the
township, arguing that the redevelopment lacked affordable housing and,
therefore, had a disparate impact on minorities.
Under the settlement, 44 new homes will be built by 2018, which will include 20 for homeowners who want to remain on the property. Those homeowners who chose to move out will be provided with relocation allowances.
It is important to note that on Nov. 19, the House Financial Services’ Oversight and Investigations Subcommittee will hold a hearing entitled “A General Overview of Disparate Impact Theory.” This hearing will review the legal and theoretical aspects of disparate impact and explore the consequences of its use in a variety of contexts, including in housing and lending policy.