A Significant Victory: State settles Maryland Housing discrimination complaint, hundreds of affordable homes promised

Affordable housing for the poor has long remained elusive in the Baltimore region's most prosperous communities—and under pressure from fair housing advocates, Maryland's housing department just took a step toward changing that.

On Sept. 20, the Maryland Board of Public Works approved $225,000 to settle a six-year-old discrimination complaint against the state's Department of Housing and Community Development. Under the so-called "Voluntary Compliance Agreement and Conciliation Agreement," the state agrees to help finance development of at least 1,500 low-income housing units across Baltimore City and Harford, Howard, Carroll, Anne Arundel, and Baltimore counties. The settlement restricts those units to communities with low crime, minimal poverty, and highly-ranked schools.

Baltimore Regional Housing Campaign (BRHC), a coalition of local fair housing advocates, filed the complaint with the U.S. Department of Housing and Urban Development in 2011, accusing the state housing agency of maintaining a policy that funneled low-income housing developments into poor, predominantly black communities.

The policy governed the state's distribution of the federal Low-Income Housing Tax Credit (LIHTC) to developers. Developers sell these credits to investors; the proceeds make it financially feasible to build or rehabilitate units affordable for households making up to 60 percent of the regional median income. The program has created nearly 3 million housing units across America since its 1987 launch. In recent years, the U.S. Government Accountability Office has criticized the Internal Revenue Service for a lack of oversight over the program.

For years, Maryland allowed county and municipal governments to reject developers' tax credit applications for units planned in their jurisdictions. In the 2011 complaint, BRHC claimed that suburban resistance to development of low-income housing in white areas led to a disproportionate concentration in poor black neighborhoods, particularly in Baltimore City. The complaint called the local veto an "institutional mechanism for local 'NIMBY' [not in my back yard] opposition to LIHTC housing without regard to the worthiness of the project." In 2013, Baltimore County passed a resolution rejecting an application for tax credits to build 50 low-income units in Rosedale after a neighborhood association complained that "burglaries, shootings, stabbings, drugs, vandalism, and other crimes go hand-in-hand with Section 8 occupants." In 2014, the state legislature spiked the veto, but BRHC did not drop the complaint.

Last month's settlement is the third significant victory in five years for local "housing mobility" advocates. In 2012, ACLU of Maryland reached a final settlement with HUD in a public housing segregation lawsuit. In Thompson v. HUD, former residents of city high-rise projects like Lexington Terrace sued the city and HUD for allegedly concentrating public housing in poor, racially isolated neighborhoods, and a federal judge found HUD liable. The 2012 settlement created 2,600 vouchers for former public housing residents to use across metropolitan Baltimore in so-called "communities of opportunity": areas that ranked high on job growth, proximity to transit, school test scores, poverty level, and crime rates. (A 1996 partial consent decree in Thompson v. HUD had already created 1,800 mobility vouchers.) In 2016, Baltimore County settled a fair housing complaint, agreeing to incentivize developers to create 1,000 affordable units in communities of opportunity.

ACLU of Maryland fair housing attorney Barbara Samuels served as co-counsel in the Baltimore County complaint, Thompson v. HUD, and the settlement agreed to by the state last month.

"BRHC shares with the state a common mission to expand the supply of the affordable housing to those in need," Samuels said in a prepared statement. "There's more work to be done, but we see this agreement as a promising step forward."

Samuels says the Baltimore Regional Housing Campaign's member organizations will divide $50,000 of the $225,000 paid by the state and the rest will cover attorneys' fees at ACLU of Maryland and Relman, Dane & Colfax, a Washington, D.C.-based civil rights firm. "This voluntary resolution with Maryland should be an example for every state and locality that runs affordable housing programs that our communities are stronger when quality affordable housing in high opportunity communities is offered to low income families of color," said Michael Allen of Relman, Dane & Colfax, who served as co-counsel on the complaint with Barbara Samuels.

The attorneys filed the complaint using a legal theory called "disparate impact," which rests not on intentional racial discrimination but on policies that disproportionately harm classes of people protected under civil rights law. A few years after the complaint was filed, the state of Texas—facing a lawsuit over their own low-income housing policies—went to the U.S. Supreme Court to challenge the legitimacy of disparate impact under the Fair Housing Act. In a five to four decision in June 2015, the Court preserved disparate impact. In the majority opinion, Justice Anthony Kennedy pointed to the Fair Housing Act's role in America's "historic commitment to creating an integrated society, writing that "much progress remains to be made in our nation's continuing struggle against racial isolation."

The state of Maryland did not admit any wrongdoing as part of the settlement. "For us, this conciliation agreement is a way to resolve that lawsuit in a way that is advancing what we've been doing for the past six years," said Department of Housing and Community Development assistant secretary Matthew Heckles.

The state had recently begun tweaking its 200-point scoring system in favor of communities of opportunity. In 2016, the housing agency began awarding 16 out of 200 total points for family developments in communities of opportunity—the same number of points it awards for revitalizing poor neighborhoods. Heckles said the state allocated nine out of 10 tax credits to community of opportunity projects across the state last year. A press release from the Baltimore Regional Housing Campaign, however, criticized the state for failing to "consistently increase" low-income housing production in the Baltimore region: "Last year the largest share of LIHTC was awarded to areas in Southern Maryland, the Eastern Shore and Western Maryland designated by the state as Communities of Opportunity, but where it is cheaper and easier to build."

The settlement institutionalizes changes to the tax credit allocation plan that favor family housing in communities of opportunity—for instance, it bars the state from reinstating a local veto. It also requires stronger revitalization plans for applications in poor neighborhoods and increases marketing of units to public housing authorities. Developments in communities of opportunity will also have new ways to earn the eight points the state offers for "transit-oriented development"—the Baltimore suburbs aren't exactly crawling with public transit—including Zipcar, ride-sharing programs, and other "alternative" ways of getting around.

In a prepared statement, HUD Assistant Secretary for Fair Housing and Equal Opportunity Anna Maria Farías pointed to "skyrocketing housing prices in the Baltimore region" to illustrate the need for more affordable housing.

HUD closed the complaint on Sept. 22. The settlement notes that HUD can deal with non-compliance using "any contractual statutory, administrative, or regulatory remedy available."

State officials are optimistic that they can make the 1,500 units materialize. In estimating a timeline for completing them, Maryland assistant housing secretary Matthew Heckles looked to the execution of the remedy in Thompson v. HUD.

"I think it would take in the neighborhood of seven years to accomplish our goals," Heckles said.