ICP Responds to Texas LIHTC Program's Remediation Plan

In the May issue of the Insider, we highlighted a federal court ruling that held that the Texas Department of Housing and Community Affairs (TDHCA) unintentionally discriminated in its allocation of low-income housing tax credits (LIHTCs) [“In the News: Court Rules Texas LIHTC Program Violates Fair Housing Act,” p. 8]. The case was filed by The Inclusive Communities Project (ICP), a Dallas fair housing organization, which alleged that the TDHCA intentionally steered subsidized apartments away from affluent white neighborhoods and into poor minority areas.

The original complaint alleged that the TDHCA intentionally discriminates based on race by disproportionately approving LIHTC projects in predominantly minority neighborhoods and disproportionately denying LIHTC in predominantly Caucasian neighborhoods [Inclusive Communities Project v. TDHCA, March 2012].

According to the ICP, while 19 percent of all renter-occupied units in Dallas are in predominately white census tracts, only 2.9 percent of the TDHCA's LIHTC units are in these neighborhoods. And while 51 percent of all renter-occupied units in the city are in minority-concentrated census tracts, 85 percent of the TDHCA's LIHTC units in Dallas are in these neighborhoods where minorities make up at least 70 percent of the population.

TDHCA Introduces Remediation Plan

Two months later, in response to the ruling, the TDHCA submitted its plan to U.S. District Court Chief Judge Sidney Fitzwater. The plan would increase the number of points that developers can win for building in affluent areas, with the most points awarded to projects where schools and economic conditions are best. The plan also tightens requirements for winning extra funding to build in highly impoverished neighborhoods, a provision that was designed to spur economic growth in poor areas.

ICP's Counter-Response Urges More Action

The ICP recently released a summary of its position on the TDHCA's proposed plan. In it, the group said that the state should dedicate a portion of the money for apartments in desirable neighborhoods, a practice the department already uses to increase funding for other types of projects such as those in rural areas.

The group also said the department should revamp the point values for each category on which projects are scored. State law prescribes the order of the top-ranking criteria, but it doesn't specify an amount for each one. Inclusive Communities proposed new values that would narrow the point spread and lessen the weight of criteria that favor projects in blighted areas.

Most notably, the change would reduce the heavy importance of support from neighborhood associations, a factor that pushes development away from affluent areas that can be quick to organize against low-cost apartments.

In addition to these broad points, the ICP objected to a number of the provisions, including those related to the following:

• The inclusion of applications for elderly units in the plan's strengthened definition of “high-opportunity areas” and allowing elderly units to be eligible for a 130 percent basis boost.

• The addition of the remedial balance and the Revitalization Index for awarding tax credits; and

• The strengthening of incentives for properties in revitalization areas.

The ICP added that the plan fails to address several issues, including:

• The 4 percent LIHTC program;

• The threshold criteria for the 4 percent and 9 percent programs;

• The housing finance agency's discretion in awarding credits; and

• Making it clear that the remedial plan covers only the five-county remedial area.