Will SCOTUS finally rule on “disparate-impact” housing theory?

by Walter Olson on September 6, 2013

Under the “disparate impact” theory of housing discrimination, private business decisions or local government policies not motivated by race are deemed unlawful anyway because they have a differential statistical impact on housing transactions by members of a given racial group. A mortgage lender’s policy of lending only to borrowers with high down payments or sterling credit ratings, for example, might be subject to attack on the grounds that it tended to screen out minority borrowers, even if such was not its intention, and was not justified by business necessity. The U.S. Supreme Court has never ruled on this theory; two years ago, in a case called Magner v. Gallagher, it was widely speculated that the Court would disapprove disparate-impact claims, a prospect the Obama administration (which is deeply invested in the theory) managed to dodge only by arranging to moot the case through settlement.

In the new Supreme Court case of Township of Mount Holly v. Mount Holly Gardens Citizens in Action, Inc., plaintiffs claim that it is illegal for a New Jersey township to slate a tract of development land for detached single-family housing because poorer persons are less likely to be able to afford such housing and minority persons are more likely to be poorer. The Obama administration is backing the claim. [earlier] The Cato Institute, along with the Pacific Legal Foundation and several other groups, has filed an amicus brief defending the township. Writes Ilya Shapiro at Cato at Liberty:

The Gardens’ residents can’t afford the new housing not because of their race but because of their poverty. While it’s a harsh truth that a disproportionate number of minorities live in poverty, claiming that making expensive products is racist and that these “racists” have an obligation to compensate the victims of poverty is absurd. The FHA was intended, in the words of Senator Walter Mondale, “to permit people who have the ability to do so to buy any house offered to the public if they can afford to buy it. It would not overcome the economic problem of those who could not afford to purchase the house of their choice.”

For following the law as it was written and attempting to improve a blighted neighborhood without resorting to eminent domain abuse, Mount Holly was rewarded with a decade’s worth of vexatious litigation — which the Supreme Court should now end once and for all.

More: Hans Bader, Examiner.

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PointOfLaw Forum
09.07.13 at 9:33 am

{ 5 comments }

1 Mike 09.06.13 at 9:51 am

Interesting how the very concept of zoning being a matter of local concern and jurisdiction has been eroded. State environmental laws (“little NEPAs”) and civil rights concerns are some of the tools used for this, but I think the real aim is for state and federal politicians to seize control of the zoning power, which they will employ in the service of their political friends and to the detriment of the local citizens actually affected by zoning.

2 CAptDMO 09.06.13 at 11:13 am

How many high rise, high density, “affordable” labor housing hives
have ultimately been reclaimed and removed (at great expense), citing eminent domain, as having a disparate impact on the welfare of surrounding communities they were intended to serve?

Why were they commonly referred to as “The Projects”?
What disparate impact did they allegedly address, typically by um… eminent domain?

3 Don 09.06.13 at 3:23 pm

Why do people continue to confuse equal treatment with equal results?

4 Hugo S. Cunningham 09.08.13 at 4:48 pm

One of the most compelling arguments against local zoning control derives from school financing based on *local* property taxes. A town of poor-to-middling residents would need *much* higher property tax rates to achieve the same per-pupil expenditure in their public schools as a wealthy town. For that same reason, residents of wealthy towns have an irresistible financial incentive to fight moderate-to-low-income family housing development tooth-and-nail.

Some States like Maine alleviate this problem by raising school funds by a uniform *State-wide* property tax. Another possibility is compensation: either (a) wealthy towns pay a hefty commutation tax to maintain their exclusivity, or (b) States concentrate their State-level education aid on poorer school districts that really need it. Promises in the #b category, however, tend to languish in competition with lobbyists from wealthier, better organized towns.

5 Mike 09.10.13 at 10:43 am

One of the most compelling arguments FOR local zoning is that the politicians who abuse the system by zoning inappropriately to benefit their political friends (e.g., by rezoning to allow a commercial use in a residential neighborhood) can be voted out of office by the angry citizens who are directly affected.
It will always be a temptation for politicians to abuse the zoning power, because the profits are so great for the developer, and thus the political contributions, or bribes, are sizable as well.
As the great Sonny Corleone observed in a different context: “There’s a lot of money in that white powder.”

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