Case 3:08-cv-00546-D

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Filed 03/28/08

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U.S. DISTRICT COURT

----_FILED IN THE UNITED STATES DIST ~~'ffl~ISTRfCT OF TEXAS NORTHERN DISTRICT OF EXAS

DALLAS DIVISION

MAR £ 8 t:uud

The Inclusive Communities Project, Inc., *

Plaintiff,

*

v.

*

*

The Texas Department of

*

Housing and Community Affairs, and

*

Michael Gerber,

*

Leslie Bingham-Escarefio,

*

Tomas Cardenas,

*

C. Kent Conine,

*

Dionicio Vidal (Sonny) Flores,

*

Juan Sanchez Munoz, and

*

Gloria L. Ray in their official capacities, *

Defendants.

*

*

CLERK, V.S. D
·~----~~~h'-----
Civil Action No.

Introduction

COMPLAINT

l.The State of Texas admits that its Low Income Housing Tax Credit program

perpetuates racial segregation in Dallas and other large urban areas. The State admits that the

segregation is a result of prior and current funding decisions. The admission is set out in the

following statement.1

The Department's funding allocations, as well as the allocations under the Bond Review Board's (BRB) Bond Program should promote racial integration, however, the continued failure of these entities to evaluate the implications of prior and current funding decisions permits the Department and the BRB to disproportionately allocate federal low income housing tax credit funds and the tax-exempt bond funds to developments located in impacted areas (above average

1 The "Department" referred to in the finding is the Texas Department of Housing and Community Affairs. The state's distribution ofthe credits is governed by the Department's Qualified Allocation Plan referred to as the QAP. The Bond Review Board is the State entity charged with the operation of the State's Private Activity Bond program. These tax-exempt bonds are often used in conjunction with Low Income Housing Tax Credits for affordable housing development.

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minority concentration and below average income levels).
Furthermore, QAP provisions requiring multiple notifications to state and local political officials and neighborhood organizations are feared to enable "Not-InMy-Backyard" (NIMBY) opposition to developments that are proposed in nonimpacted areas (above average minority concentration and below average income levels).
The vast majority of low income housing tax credits and tax-exempt bonds that fund developments in the Dallas, Fort Worth, Austin and Houston metropolitan areas have been placed in impacted areas.

The Department's funding decisions arise directly out of the QAP. In recent years, the QAP has continued to place low income individuals in impacted areas, further adding to the concentration problem in most cities today. House Committee On Urban Affairs Texas House of Representatives, "Interim Report 2006 A Report to the House of Representatives 801h Texas Legislature", December 6, 2006, Robert Talton, Chairman, Findings page 48.
2. Despite this admission, the entity operating the State's Low Income Housing Tax
Credit program, the Texas Department of Housing and Community Affairs ("TDHCA"), has not
taken the actions necessary to remedy the segregation. Instead, TDHCA continues to perpetuate
the concentration ofTDHCA's Low Income Housing Tax Credit assisted housing in low-income
minority areas.
3. The Inclusive Communities Project, Inc. ("ICP") is a Dallas based fair housing and
civil rights organization. ICP focuses on the issue of racial segregation and policies and practices
that operate to exclude low income families from higher opportunity, predominately White or
non-minority areas of the Dallas metropolitan area. The term "White" and the term "non-
minority" are used in this complaint to refer to the 2000 U.S. Census category for persons of the
White race who are also not Hispanic or Latino. In furtherance ofiCP's mission, ICP assists
Black or African American Dallas Housing Authority Section 8 families in finding housing

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opportunities in the suburban communities in the Dallas area. The assistance includes efforts to make units in Low Income Housing Tax Credit assisted properties available for ICP's clients. The Low Income Housing Tax Credit projects cannot refuse to rent to Section 8 tenants because the tenants are on the Section 8 voucher program. Texas Government Code 2306.269(b). TDHCA's failure to correct the disproportionate allocation of housing tax credits to low income minority areas directly interferes with ICP's ability to find housing for its clients in the higher opportunity, predominately White areas of the Dallas metropolitan area.
4. ICP seeks injunctive relief for defendants' segregation of Low Income Housing Tax Credit assisted developments into low income and minority concentrated locations in the Dallas metropolitan area.
Jurisdiction 5. This Court has jurisdiction under 28 U.S.C. §§ 1331, 1343, and 42 U.S.C. § 3613(a). The Inclusive Communities Project, Inc - plaintiff. 6. The plaintifflnclusive Communities Project ("ICP") is a fair housing focused nonprofit organization which works with families seeking to obtain and retain housing in predominately non-minority areas of the Dallas metropolitan area. This is part ofiCP's work to break down barriers to the creation of racially and economically inclusive communities. Specifically, ICP works with Black or African American families participating in the Section 8 Housing Choice Voucher program (the "Section 8 program") administered by the Dallas Housing Authority ("DHA"). ICP assists DHA Section 8 program families who choose to lease dwelling units in non-minority areas with counseling and financial assistance. ICP's office is located in the City of Dallas, Dallas County, Texas.

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Defendants 7. TDHCA is a corporate and political body established by the laws of the State of Texas. TDHCA is responsible for administering the federal Low Income Housing Tax Credit program in the state of Texas. The references to TDHCA in this complaint also include the actions ofthe Executive Director and the TDHCA board members in their official capacity. 8. Mr. Michael Gerber is the current Executive Director ofTDHCA. Mr. Gerber is named as a defendant in this suit solely in his official capacity. 9. Ms. Leslie Bingham-Escarefio, Mr. Tomas Cardenas, P.E., Mr. C. Kent Conine, Chair, Mr. Dionicio Vidal (Sonny) Flores, Dr. Juan Sanchez Mufioz, and Ms. Gloria L. Ray are the current members of the TDHCA Board. These individuals are named as defendants in this suit solely in their official capacity. The board members are responsible for adopting the Qualified Allocation Plan, setting TDHCA policy concerning the Low Income Housing Tax Credit program, and for making the decisions on which applications receive Low Income Housing Tax Credits. The Low Income Housing Tax Credit program. 10. The Low Income Housing Tax Credit Program receives authority from the U.S. Treasury Department to provide tax credits to offset federal income taxes for investors in low income multifamily rental housing. The developers of the housing sell the credits to syndicators or investors. The sale of the tax credits provides the capital for the construction of the housing. The targeted beneficiaries of the program are very low and extremely low income families. The program was created in 1986 and is governed by the Internal Revenue Code, 26 U.S.C. § 42. While the amount of tax credits varies annually, Texas received an allocation of approximately

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$43 million in Low Income Housing Tax Credits in 2007. TDHCA approves approximately 6,000 to 7,000 additional units for Low Income Housing Tax Credits every year. TDHCA reports that there were at least 127,000 units in its Low Income Housing Tax Credit inventory as of May 2007. TDHCA is the only entity in the state with the authority to allocate tax credits under this program. TDHCA's procedures and standards for the allocation and distribution ofthe tax credits are contained in TDHCA's annual Qualified Allocation Plan (QAP).
11. TDHCA's annual QAP contains a complex set of requirements for establishing threshold eligibility and applying selection criteria to applications for housing tax credits. Under Texas law TDHCA's final decisions allocating tax credits are made as an exercise ofTDHCA's discretion. TDHCA's discretion can take into account numerous factors not included in the QAP's threshold eligibility or selection criteria. QAP 50.10(a). TDHCA's practice is to use its discretion in making the housing tax credit allocation decisions.
TDHCA uses race and ethnicity as one factor in its decision whether to award Low Income Housing Tax credits and this factor is a cause of the segregation and other discrimination.
12. The objective circumstantial evidence shows that the pattern found by the House Committee on Urban Affairs- TDHCA's placement of the vast majority of urban low income housing tax credit housing in minority concentrated areas- is the result ofTDHCA decisions which take into account the race and ethnicity of the residents of the area in which the project is to be located and which take into account the race and ethnicity of the probable residents of the project. Those decisions are made in a manner that causes racial and ethnic segregation in the tax credit program in violation of the constitutional and statutory prohibitions against racial and ethnic segregation.

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13. The House Committee On Urban Affairs Texas House of Representatives found that TDHCA disproportionately allocated urban area Low Income Housing Tax Credit funds to developments located in minority concentrated areas. House Committee On Urban Affairs Texas House of Representatives, "Interim Report 2006 A Report to the House of Representatives 80th Texas Legislature", December 6, 2006, Robert Talton, Chairman, Findings page 48. The distribution ofthe existing TDHCA Low Income Housing Tax Credit project unit inventory is disproportionately concentrated in minority areas as compared to the distribution of all renter occupied housing.
14. Texas has a segregated LIHTC housing program according to a U.S. Department of Housing and Urban Development report. Over 60% ofLIHTC units in Texas are in U.S. Census tracts where more than 50% of the population is minority according to the report. Only Connecticut, California, New Mexico, Washington, D.C., and Hawaii are listed in the report with higher percentages ofLIHTC units in census tracts with 50% or greater minority population than Texas. The state wide pattern is duplicated in the Dallas area. The report states that in the Dallas PMSA, 65% of the LIHTC units are in 50% or greater minority census tracts. Office of Economic Affairs, U.S. Department of Housing and Urban Development, Office of Policy Development and Research, "Updating the Low-Income Housing Tax Credit (LIHTC) Database Projects Placed in Service Through 2003, "(2006) pages 76-78, 130.
15. Only 14.5% ofTDHCA's Low Income Housing Tax Credit non-elderly units are located in 70% to 100% White census tracts throughout the State. Forty-eight percent, 48%, are located in 0% to 30% White Census tracts. The distribution ofTDHCA's Low Income Housing Tax Credit project unit inventory in the City of Dallas and in Dallas County is more concentrated

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in minority areas than the state wide distribution and shows that race was at least one factor in the allocation of the tax credits.
16. While 19% of all renter occupied units in the City of Dallas are located in predominantly White 70% to 100% White census tracts, only 2.9% ofTDHCA's Low Income Housing Tax Credit units in the City are in those 70% to 100% White census tracts. A corresponding disparate distribution is found in the City of Dallas minority concentrated census tracts. While only 51% of all renter occupied units in the City are in minority concentrated census tracts with a population of from 0% to 30% White, 85% ofTDHCA's Low Income Housing Tax Credit units in the City are in those 0% to 30% White census tracts. While 14% of all renter occupied units in Dallas County are located in 70% to 100% White census tracts, only 2.8% of TDHCA's tax credit units in Dallas County are in 70% to 100% White census tracts. While only 38% of all renter occupied units in Dallas County are in 0% to 30% White census tracts, 71% of TDHCA's tax credit units in Dallas County are in 0% to 30% White census tracts.
17. TDHCA is less likely to deny tax credits for a project in a predominantly White area ifthe population eligible for and likely to reside in that project is disproportionately White. Rural areas with a predominantly White population and a predominantly White eligible population are one example of areas where TDHCA will approve housing tax credits for projects in White areas. There are 29 Low Income Housing Tax Credit family - non-elderly - projects with a total of 1,439 units for which TDHCA has racial and ethnic occupancy data and which are in 90% or greater White census tracts in the State. The population in these TDHCA Low Income Housing Tax Credit projects in 90% or greater White census tracts is only 8% Hispanic or Latino and 6% Black or African American according to the data in TDHCA's 2007 Housing Sponsor Report and

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07-Propertylnventory Report. All but two of the projects and 409 of the units are in small towns with less than 30,000 population. The population in these small towns averages 88% White.
18. An example ofTDHCA awarding Low Income Housing Tax Credits in a predominantly White area where minority residents are unlikely to use the tax credit supported units is the town of Vidor. TDHCA has approved two Low Income Housing Tax Credit projects in the all White town of Vidor, one in 1994 and another in 2006. Vidor has a 2000 U.S. Census population of 11,440. The 2000 Census reports eight Black or African Americans in Vidor. There are no Blacks or African Americans in the TDHCA Vidor LIHTC project that was approved in 1994. There is no occupancy reported for the project approved in 2006. The likelihood of many Black or African American families seeking occupancy at either of these Low Income Housing Tax Credit projects in Vidor is small given the modem history of opposition to Blacks living in Vidor's low income housing. Federal attempts to desegregate the public housing in Vidor during the 1990s were met with and defeated by overt racial hostility and resistance by the Ku Klux Klan. State ofTex. v. Knights ofKu Klux Klan, 58 F.3d 1075, 1077 (5th Cir. 1995).
19. Elderly projects are another example ofTDHCA approving Low Income Housing Tax Credits for units in predominantly White areas for which the probable residents are also predominantly White. The state wide population occupying Low Income Housing Tax Credit units for elderly tenants in 90% or greater White census tracts is only 1% Hispanic or Latino and is less than 1% Black or African American according to the data in TDHCA's 2007 Housing Sponsor Report and other reports.
20. TDHCA disproportionately refuses to approve Low Income Housing Tax Credit funding for non-elderly projects in predominantly White census tracts compared to its approval

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rate for predominantly White elderly projects in predominantly White census tracts. From 1999 through 2006, TDHCA awarded tax credits for approximately 67% of the elderly units in applications for 90% or greater White census tracts. TDHCA awarded tax credits for only 32% of the non-elderly units in applications for 90% or greater White census tracts during the same period.
21. TDHCA disproportionately refuses to approve Low Income Housing Tax Credit funding for non-elderly projects in predominantly White census tracts compared to its approval rate for non-elderly projects in minority census tracts. From 1999 through 2006 TDHCA awarded tax credits for only 32% of the Non-elderly units in all applications for 90% or greater White census tracts. During the same period, TDHCA awarded tax credits for approximately 47% of the non-elderly units in all applications for 0% to 10% White census tracts. Approximately 2% of all approved non-elderly units were in 90% or greater White census tracts. Approximately 27% of all approved non-elderly units were in 0 to 10% White census tracts.
22. The Low Income Housing Tax Credit projects are racially and ethnically segregated by occupancy characteristics as well as by location. The total population in the units in TDHCA's Low Income Housing Tax Credit projects located in 90% or greater White census tracts is only 5% Hispanic or Latino and 4% Black or African Americanly occupied according to the data in TDHCA's 2007 Housing Sponsor Report. The units in TDHCA's Low Income Housing Tax Credit projects in the non-White, 0 to 10% White, census tracts are 88% Black and Hispanic occupied - 40% Hispanic or Latino and 48% Black or African American - according to the data in TDHCA's 2007 Housing Sponsor Report.
23. The facts concerning the geographical distribution and occupancy ofTDHCA's Low

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Income Housing Tax Credit projects as well as the results ofthe applications for the tax credits are based on TDHCA and other government reports. State law requires TDHCA to collect Fair Housing Sponsor Reports from the owners of the Low Income Housing Tax Credit assisted projects. Tex. Gov't. Code 2306.0624. However, the TDHCA reports are collected and maintained in a manner that inhibits and obstructs the accurate portrayal of the racial effects of TDHCA's decisions. TDHCA does not collect the information from all owners. Plaintiff has attempted to correct the information to the extent possible and practical.
The use of race as a factor subjects minority tenants to slum and blighted conditions.
24. TDHCA's use of race as a factor in its decisions to allocate Low Income Housing Tax Credits subjects the minority residents of those units in the City of Dallas to severe conditions of slum and blight. The Low Income Housing Tax Credit projects in the City of Dallas are located in minority neighborhoods with high crime and high poverty rates and that are blighted by industrial uses and obnoxious facilities such as illegal landfills. These neighborhoods are also subjected to unequal zoning and are already used for low-income housing as shown by the number of Section 8 Housing Choice Vouchers in those tracts.
25. There are 115 Low Income Housing Tax Credit projects listed in the TDHCA inventory in the City of Dallas. Thirty-two ofthe projects are located in tracts with heavy industrial zoning. Twenty-seven of the projects are located in tracts with other industrial zoning. Two Low Income Housing Tax Credit projects, the Villas of Sorrento at 3130 Stag Road and the Oakwood Place Apartments at 4950 Wadsworth are adjacent to the large illegal City demolition landfill known as the Curry site. There are five Low Income Housing Tax Credit projects within a half mile radius of the Deepwood Dump, the largest illegal dumpsite in the State of Texas.

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26. Fifteen percent, 15%, ofthe Low Income Housing Tax Credit projects in the City of Dallas are in U.S. Census tracts with poverty rates equal to or greater than 40%. This is twice the national average of 7.6% of all Low Income Housing Tax Credit units that are located in 40% or greater poverty census tracts. Thirty-six of the Dallas Low Income Housing Tax Credit projects are in census tracts with poverty rates equal to or greater than 30%. The average poverty rate for the Dallas census tracts with Low Income Housing Tax Credit projects is 28.44%. The Dallas PMSA average poverty rate is 11%. The average median family income for the Dallas Low Income Housing Tax Credit census tracts is $29,641 which is 53% of the Dallas PMSA $55,854 median family income. Fifty-three ofthe housing tax credit projects in the City of Dallas are located in census tracts where the median family income is equal to half or less than half of the Dallas PMSA median family income. These low income and high poverty locations deny the Low Income Housing Tax Credit residents an equal opportunity for a safe environment, quality education, and adequate public and private services.
27. TDHCA's use of race as a factor in its decisions to award Low Income Housing Tax Credits denies safe housing to the Dallas residents of Low Income Housing Tax Credit units. The average violent 2004 crime rate by census tract for tracts with Low Income Housing Tax Credit projects was 137 crimes per 1,000 persons. The city-wide rate was 35 crimes per 1,000 persons. There were nine Low Income Housing Tax Credit projects in census tracts with violent crime rates greater than 200. There were 14 Low Income Housing Tax Credit projects in census tracts with violent crime rates greater than 100. There were 37 Low Income Housing Tax Credit projects in census tracts with crime rates higher than the City average.
28. TDHCA's use of race as a factor in its decisions to award Low Income Housing Tax

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Credits causes the Low Income Housing Tax Credit affordable housing opportunities in the Dallas area to be disproportionately located in the slum and blighted neighborhoods in the City of Dallas. The Low Income Housing Tax Credit units in the City ofDallas are 79% of all Low Income Housing Tax Credit units in Dallas County and 64% of all Low Income Housing Tax Credit units in Collin, Dallas, and Denton counties.
ICP Standing. 29. ICP seeks to create and obtain affordable housing opportunities in non-minority concentrated areas for persons eligible for low rent public housing and to provide the counseling and other forms of assistance to Black families seeking to use their DHA Section 8 voucher to move into low-poverty, non-minority concentrated areas throughout the Dallas metropolitan area. ICP provides mobility counseling and mobility assistance to Black Section 8 families seeking housing opportunities in non-minority concentrated and non-poverty concentrated parts of the Dallas metropolitan area. 30. The counseling assistance provided by ICP to Black DHA Section 8 participants includes pre-move family counseling and related financial assistance to assist the families who want to make and sustain a desegregative housing move. The mobility assistance includes negotiating with landlords as necessary to obtain units in the eligible areas at rents that are affordable by the Section 8 families and eligible for the Section 8 subsidy. The financial assistance provided to these families by ICP includes the payment of application fees, security deposits and utility deposits to assist families moving into housing that provides desegregative housing opportunities in non-minority, non-poverty concentrated areas, where such assistance is necessary to make the desegregative move possible. ICP also makes landlord incentive bonus

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payments to landlords who agree to participate in DHA's Section 8 program and provide desegregative housing opportunities in non-minority, non-poverty concentrated areas when such incentives are necessary to secure housing for the Section 8 families. Section 8 families may also receive ICP assistance in the form of a contribution to their reasonable moving expenses in order to make a move in an eligible area.
31. ICP's clients are Black or African American families participating in the DHA's Section 8 Housing Choice Voucher Program.
32. The Low Income Housing Tax Credit units are important to ICP in its provision of integrated housing opportunities for its clients. The Low Income Housing Tax Credit projects cannot refuse to rent to an applicant based on the applicant's status as a Section 8 participant. A large percentage of non-tax credit projects in White, high opportunity areas do refuse to rent to Section 8 families. ICP's survey of383 apartments in the predominantly White suburbs in the Dallas metropolitan area found only 70 that would accept Section 8 families. Twenty-six of those 70 were tax credit projects.
33. The Low Income Housing Tax Credit projects that take DHA Section 8 voucher participants are a significant source of units used in the DHA Section 8 program. However, the large majority of those tax credit projects are currently segregated in minority areas in the City of Dallas. The DHA March 2006 Section 8 occupancy report showed that:
A. 20% or 3,348 of the 16,190 DHA March 2006 Section 8 voucher households were in Low Income Housing Tax Credit units.
B. Only 80 of the 3,348, 2%, were in 70% or more White census tracts. C. Over 2,375 of the 3,348, 71%, were in 0 to 30% White tracts.

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34. Since the Low Income Housing Tax Credit units cannot refuse to accept Section 8 and the units usually rent for amounts less than Section 8 maximum rents, it is possible for ICP to obtain these units for its clients using fewer person hours of assistance and at a lower out of pocket cost. But most of the Low Income Housing Tax Credit units are in minority areas and thus are not eligible for ICP's assistance. As a result, ICP must rely on the private market in the predominantly White areas. The private market in those areas is reluctant to accept Section 8 and does so only at a higher cost to ICP and its clients. The lack of Low Income Housing Tax Credit units in White areas injures ICP in its capacity providing assistance to minority clients seeking housing in those areas.
35. There is a higher probability that economic and racial integration can be achieved in Low Income Housing Tax Credit projects. Because the tax credit projects can also rent to higher income tenants who are not Section 8 participants, there is a higher probability of economic and racial integration than in traditional project based subsidy program units. Tax credit projects are thus more likely to offer ICP's clients a housing opportunity that is affordable and integrated. ICP can obtain tax credit units for its clients at a lower cost in ICP resources because the tax credit projects cannot discriminate against Section 8 and the rents are likely to be less than the maximum rents for the Section 8 program.
36. By denying financial assistance for units that would located in non-minority areas and thus making standard quality, non-luxury rental housing unavailable in non-minority areas, TDHCA's Low Income Housing Tax Credit decisions to award or deny the credits have directly and adversely affected ICP by:
A. reducing the number of units that ICP can use to help its clients find housing in non-

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minority concentrated market areas, B. increasing the amount of time per client that ICP must spend in order to help its clients
find and retain modest rental housing in non-minority concentrated areas, C. increasing the amount of financial assistance that ICP must spend because of the
higher rents and other costs in the non-Low Income Housing Tax Credit units in order to help its clients find and retain modest rental housing in non-minority concentrated market areas, and
D. discouraging families with which ICP works from choosing dwelling units in market areas that offer racially integrated housing because of the cost factors involved in such a choice.
Claims for relief. 37. Defendants' actions make dwellings unavailable because of race, color, and national origin in violation of 42 U.S.C. § 3604(a). 38. Defendants' actions make financial assistance for constructing dwellings unavailable because of race, color, and national origin in violation of 42 U.S.C. § 3605(a). 39. Defendants' actions using race and ethnicity as one factor in their decisions concerning the allocation of Low Income Housing Tax Credits violates the l41h Amendment to the U.S. Constitution and is actionable under 42 U.S.C. § 1983. 40. Defendants' actions using race and ethnicity as one factor in their decisions concerning the allocation of Low Income Housing Tax Credits violates 42 U.S.C. § 1982 that requires the defendants to give all citizens of the United States the same right as is enjoyed by White citizens to, lease real property. Prayer for relief. Plaintiff requests the following relief:

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A. Injunctive relief requiring defendants to allocate Low Income Housing Tax Credits in the Dallas metropolitan area in a manner that creates as many Low Income Housing Tax Credit assisted units in non-minority census tracts as exist in minority census tracts. This relief shall not also prohibit the approval of units in minority census tracts if:
(i) the defendants' approval rates for Low Income Housing Tax Credit units in minority census tracts in the Dallas metropolitan area does not exceed the approval rate for Low Income Housing Tax Credit units in non-minority census tracts, and
(ii) the approved projects in the minority census tracts do not contain a higher percentage of low income residents than the percentage of low income residents in the projects approved in the non-minority census tracts.
B. Injunctive relief enjoining the defendants from causing or perpetuating racial and ethnic segregation in the Low Income Housing Tax Credit program by denying Low Income Housing Tax Credits to units in the Dallas metropolitan area when such denial is made by taking the race and ethnicity of the residents of the area in which the project is to be located and the race and ethnicity of the probable residents of the project into account.
C. Injunctive relief enjoining the defendants from approving financial assistance in the form of Low Income Housing Tax Credits to applications in the Dallas metropolitan area unless the site and neighborhoods in which the units will be located meet the following conditions:
(i) The site and neighborhood must be suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of Title VI of the Civil Rights Act of 1964 and Title VIII of the Civil Rights Act of 1968.
(ii) The site must promote greater choice of housing opportunities and avoid undue

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concentration of assisted persons in areas containing a high proportion of low-income persons. (iii) The site must be free from adverse environmental conditions, natural or manmade,
such as instability, flooding, septic tank back-ups, sewage hazards or mudslides; harmful air pollution, smoke or dust; excessive noise, vehicular traffic, nearby industrial zoning and industrial uses, rodent or vermin infestation; or fire hazards. The neighborhood must not be one which is seriously detrimental to family life or in which substandard dwellings or other undesirable elements such as high crime rates predominate, unless there is actively in progress a concerted program to remedy the undesirable conditions and those conditions will be eliminated before the housing is occupied.
(iv) The housing must be accessible to social, recreational, educational, commercial, and health facilities and services, and other municipal facilities and services that are at least equivalent to those typically found in neighborhoods consisting largely of similar unassisted standard housing.
D. Injunctive relief prohibiting defendants from administering the Low Income Housing Tax Credit program in a manner that causes or perpetuates racial and ethnic segregation.
E. Injunctive relief requiring defendants to comply with and implement reporting and monitoring requirements, including those imposed by state law, that demonstrate compliance with the obligation to make Low Income Housing Tax Credit units available in a manner that does not perpetuate segregation and in a manner that reduces the probability of future violations.
F. an award of litigation expenses, attorney fees, and court costs, and G. any other appropriate relief.

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Respectfully Submitted~ .

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Michael M. Daniel

State Bar No. 05360500

DANIEL & BESHARA, P.C.

3301 Elm Street

Dallas, Texas 75226-1637

214-939-9230

Fax 214-741-3596

E-mail: daniel.michael@att.net

Attorney for Plaintiff

Laura B. Beshara State Bar No. 02261750 DANIEL & BESHARA, P.C. 3301 Elm Street Dallas, Texas 75226-1637 214-939-9230 Fax 214-741-3596 E-mail: laurabeshara@swbell.net Attorney for Plaintiff

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O u F\ Case 3:08-cv-00546-D Document 1 Filed 03/28/08

~ ( ) 44 (Rev. 12107)

CIVIL COVER SHEET

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·· The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service ofpleadings or other papers as required by law, except as provided by local rules ofcourt This form, approved by the Judicial Conference ofthe United States in September 1974, is reqUired for the use ofthe Clerk of Court for the purpose of mitiating the civil docket sheet (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)

1888 CV • 5 4 6 I. (a) PLAINTIFFS'
Inclusive Communities Project,

DEFENDANTS

(b) County ofResidence of First Listed Plaintiff ..;D;;..a;o;,;.lla=s-------
(EXCEPT IN U.S. PLAINTIFF CASES)

(C) Attorney's (Finn Name, Address, and Telephone Number)
Daniel & Beshara, P.C.
3301 Elm Street Dallas, TX 75226 214 939-9230 II. BASIS OF JURISDICTION (Place an "X" in One Box Only)

0 I U.S. Government Plaintiff

1!'1 3 Federal Question
(U.S. Govermnent Not a Party)

Attorneys (If Known)

III. CITIZENSHIP OF PRI

(For Diversity Cases Only)

PTF

Citizen of This State

01 0 I

ce an "X" in One Box for Plaintiff

and One Box for Defendant)

PTF DEF

Incorporated or Principal Place

0 4 04

of Business In This State

0 2 U.S. Government Defendant

0 4 Diversity (Indicate Citizenship of Parties in Item III)

Citizen of Another State

0 2 0 3

0 2 Incorporated and Principal Place of Business In Another State
0 3 Foreign Nation

0 5 05 0 6 06

_.,. IV NATURE OF SUIT .(Place an "X' in One Box Only)

ILL,

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0 110 Insurance

PERSONAL INJURY

PERSONAL INJURY 0 610 Agriculture

0 422 Appeal28 USC 158

0

0 120 Marine 0 130 Miller Act

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0 362 Personal Injury- 0 620 Other Food & Drug

0 423 Withdrawal

0

0 315 Airplane Product

Med. Malpractice 0 625 Drug Related Seizure

28 usc 157

0

0 140 Negotiable Instrument

Liability

0 365 Personal Injury -

of Property 21 USC 881

0

0 150 Recovery of Overpayment 0 320 Assault, Libel &

Product Liability 0 630 Liquor Laws

0

& Enforcement ofJudgment

Slander

0 368 Asbestos Personal 0 640 RR & Truck

0 820 Copyrights

0

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0 330 Federal Employers'

Injury Product

0 650 Airline Regs.

0 830 Patent

0 \52 Recovery of Defaulted

Liability

Liability

0 660 Occupational

0 840 Trademark

0

Student Loans

0 340 Marine

PERSONAL PROPERTY

Safety/Health

0

(ExcL Veterans)

0 345 Marine Product

0 370 Other Fraud

0 690 Other

0

0 153 Recovery of Overpayment

Liability

0 371 Truth in Lending . ·c\h,;,,,; TiAtiOlttcb·,

lA'

0

ofVeteran's Benefits

0 350 Motor Vehicle

0 380 Other Personal

0 710 Fair Labor Standards

0 861 HIA (!395ft)

0 160 Stockholders' Suits

0 355 Motor Vehicle

Property Damage

Act

0 862 Black Lung (923)

0

0 190 Other Contract

Product Liability

0 385 Property Damage 0 720 Labor/Mgmt. Relations 0 863 DIWC/DIWW (405(g))

0 195 Contract Product Liability 0 360 Other Personal

0 196 Franchise

Jnjrny

Product Liability

0 730 Labor/Mgmt.Reporting 0 864 SSID Title XVI

0

& Disclosure Act

0 865 RSI (405(g))

0

PROi>ER:'l'Y ...

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0 210 Land Condemnation

0 441 Voting

· 0 740 Railway Labor Act 0 510 Motions to Vacate 0 790 Other Labor Litigation

""':FE~:Tu·~,sy: ·i 0 0 870 Taxes (U.S. Plaintiff 0

0 220 Foreclosure 0 230 Rent Lease & Ejectment 0 240 Torts to Land

0 442 Employment ~ 443 Housing/
Accommodations

Sentence Habeas Corpus:
0 530 General

0 79I EmpL Ret. Inc.
Security Act

or Defendant)

0

0 871 IRS-Third Party

0

26 usc 7609

0 245 Tort Product Liability 0 444 Welfare

0 535 Death Penalty

GRA'·

0

0 290 All Other Real Property 0 445 Amer. w/Disabilities - 0 540 Mandamus & Other 0 462 Naturalization Application

Employment

0 550 Civil Rights

0 463 Habeas Corpus -

0 446 Amer. w/Disabilities - 0 555 Prison Condition

Alien Detainee

0

Other

0 465 Other Imruigration

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Actions

, :Eill!J'fG'<,i'.•/11
400 State Reapportionment 410 Antitrust 430 Banks and Banking 450 Commerce 460 Deportation 470 Racketeer Influenced and
Corrupt Organizations 480 Consumer Credit 490 Cable/Sat TV 810 Selective Service 850 Securities/Commodities/
Exchange 875 Customer Challenge
12 usc 3410
890 Other Statutory Actions 891 Agricultural Acts 892 Econoruic Stabilization Act 893 Environmental Matters 894 Energy Allocation Act 895 Freedom oflnformation
Act 900Appeal of Fee Determination
Under Equal Access to Justice 950 Constitutionality of State Statutes

V. ORIGIN
"'111'1 Original
/" · Proceeding

(Place an "X" in One Box Only)

0 2 Removed from

0 3 Remanded from

State Court

Appellate Court

0 4 Reinstated or 0
Reopened

5 T~oraen~sffrerdreisdtnfrcotm

0 6 Multidistrict
Litigation

Appeal to District

0

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Gla1m o Kac1a1 discnmination 1n housing tax credit program

a

VII. REQUESTED IN COMPLAINT:

0 CHECK IF THIS IS A CLASS ACTION
UNDER F.R.C.P. 23

DEMAND $

CHECK YES only if demanded in complaint:

JURY DEMAND:

0 Yes Qf No

VIII. RELATED CASE(S) PENDING OR CLOSED (See instructions): JUDGE

DOCKET NUMBER

DATE FOR OFFICE USE ONLY

SIGNATURE OF ATTORNEY OF RECORD
~~l--<Y LP-~- 'jo~

- - - - - - - - - - - - - RECEIPT#

AMOUNT

- - - - - - - APPLYING IFP

JUDGE

MAG. JUDGE- - - - - - - -

 
 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES

§

PROJECT, INC.,

§

§

Plaintiff, §

§ Civil Action No. 3:08-CV-0546-D

VS.

§

§

THE TEXAS DEPARTMENT OF

§

HOUSING AND COMMUNITY

§

AFFAIRS, et al.,

§

§

Defendants. §

MEMORANDUM OPINION AND ORDER

The questions presented by defendants’ motion to dismiss are

whether plaintiff has standing and whether it must join two

additional parties-defendant. Concluding that plaintiff has

standing and that it need not join additional parties, the court

denies defendants’ motion.

I

Plaintiff The Inclusive Communities Project, Inc. (“ICP”)

seeks injunctive relief against defendant the Texas Department of

Housing and Community Affairs (“TDHCA”)——a state entity that

administers a federal program that promotes investment in low-

income housing developments——and TDHCA’s Executive Director and board members, in their official capacities,1 under the Fair

Housing Act (“FHA”), 42 U.S.C. §§ 3601-3619, and 42 U.S.C. §§ 1982

1Unless the context indicates that TDHCA refers only to the Department itself, the court will refer to all defendants, collectively, as TDHCA.

and 1983. According to the complaint, ICP is a Dallas-based, notfor-profit organization that seeks to eliminate barriers to racial and socioeconomic integration in housing. To further this goal, ICP helps low-income African-American families eligible for the Dallas Housing Authority’s Section 8 Housing Choice Voucher program (“Section 8”) secure rental housing in predominantly Caucasian, suburban areas of Dallas. ICP provides its clients with moverelated counseling and financial assistance, including payment of application fees, deposits, and reasonable moving expenses, and may negotiate with landlords on their behalf.
TDHCA is the state entity responsible for administering the federal Low Income Housing Tax Credit (“LIHTC”) program in Texas. The LIHTC program is designed to encourage investment in lowincome, multifamily rental housing by providing a tax credit that offsets an investor’s federal income taxes. See I.R.C. § 42 (discussing “low-income housing credit”). Developers finance construction of a project by selling the credits. TDHCA administers varying amounts of LIHTC funds each year——$43 million in 2007––and has the authority to approve or deny tax credit applications for proposed housing developments. In evaluating applications, TDHCA follows an annual Qualified Allocation Plan (“QAP”) that prescribes complex requirements relating to threshold eligibility and selection criteria. See id. § 42(m) (requiring allocation of tax credits according to a “qualified allocation
- 2 -

plan”). ICP avers that despite the QAP’s requirements, TDHCA is
permitted under Texas law to exercise discretion in making final decisions regarding tax credit allocation and that TDHCA takes into account race and ethnicity, both of the geographical area that surrounds a proposed development and of its probable residents. ICP alleges that TDHCA perpetuates housing segregation by disproportionately allocating tax credits for proposed developments in low-income, predominantly minority areas and denying tax credits for proposed developments in higher-income, predominantly Caucasian areas. ICP contends that this practice makes it more difficult for low-income minority families to obtain rental housing in neighborhoods not plagued with high crime, widespread poverty, and industrial uses.
ICP avers that TDHCA’s consideration of race in allocating tax credits violates two provisions of the FHA, the Fourteenth Amendment (actionable through 42 U.S.C. § 1983), and 42 U.S.C. § 1982. ICP seeks broad equitable relief, including an injunction that prohibits TDHCA from using race or ethnicity as a factor in allocating tax credits; an injunction that requires TDHCA to allocate tax credits in a manner that creates as many LIHTC units in predominantly Caucasian areas as in minority-concentrated areas; and an injunction that prohibits TDHCA from allocating tax credits for proposed developments in areas with undesirable conditions,
- 3 -

including high crime and industrial uses. TDHCA moves under Fed. R. Civ. P. 12(b)(1) to dismiss ICP’s
claims for lack of standing based on failure to establish injuryin-fact. TDHCA also moves under Rule 12(b)(7) to dismiss this suit for failure to join as defendants the Internal Revenue Service (“IRS”) and the City of Dallas (“City”).
II Because standing is a prerequisite to the exercise of federal jurisdiction, the court considers this issue first and evaluates each of ICP’s claims in turn. See Cole v. Gen. Motors Corp., 484 F.3d 717, 721 (5th Cir. 2007).
A The doctrine of standing addresses the question of who may properly bring suit in federal court. It “involves both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise.” Warth v. Seldin, 422 U.S. 490, 498 (1975). To satisfy the case-or-controversy requirement of Article III of the Constitution, the plaintiff must show that it has “suffered ‘injury in fact,’ that the injury is ‘fairly traceable’ to the actions of the defendant, and that the injury will likely be redressed by a favorable decision.” Bennett v. Spear, 520 U.S. 154, 162 (1997) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). An injury in fact must be “concrete and . . . actual or imminent, not conjectural or
- 4 -

hypothetical.” Lujan, 504 U.S. at 560 (internal quotation marks and citations omitted).2 Moreover, “the injury must affect the
plaintiff in a personal and individual way.” Id. at 560 n.1.
In its prudential dimension, standing encompasses “several
judicially self-imposed limits on the exercise of federal
jurisdiction.” Allen v. Wright, 468 U.S. 737, 751 (1984). These
include:
whether a plaintiff’s grievance arguably falls within the zone of interests protected by the statutory provision invoked in the suit, whether the complaint raises abstract questions or a generalized grievance more properly addressed by the legislative branch, and whether the plaintiff is asserting his or her own legal rights and interests rather than the legal rights and interests of third parties.
Ass’n of Cmty. Orgs. for Reform Now v. Fowler, 178 F.3d 350, 363
(5th Cir. 1999). Congress may, however, “by legislation, expand
standing to the full extent permitted by Art. III,” thus
proscribing the judicial cognizance of prudential standing
considerations. Gladstone, Realtors v. Vill. of Bellwood, 441 U.S.
91, 100 (1979); accord Bennett, 520 U.S. at 162.
As the party seeking to invoke federal jurisdiction, ICP bears
the burden of proving its standing. Lujan, 504 U.S. at 561.
Because TDHCA filed its motion to dismiss without supporting
2This tripartite test applies to all plaintiffs in federal court, whether individual or organizational. Ass’n of Cmty. Orgs. for Reform Now v. Fowler, 178 F.3d 350, 356 (5th Cir. 1999).
- 5 -

evidence, its attack on the court’s jurisdiction is considered facial, rather than factual, and the court must presume that the allegations of ICP’s complaint are true. See Garcia v. Boyar & Miller, P.C., 2007 WL 2428572, at *2 (N.D. Tex. Aug. 28, 2007) (Fitzwater, J.) (citing Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. May 1981)). Further, “[t]he court must deny the motion if the allegations are sufficient to allege jurisdiction.” Id. On a motion to dismiss for lack of standing, “‘general factual allegations of injury resulting from the defendant’s conduct may suffice’” because the court presumes that “‘general allegations embrace those specific facts that are necessary to support the claim.’” Bennett, 520 U.S. at 168 (quoting Lujan, 504 U.S. at 561)).
B ICP and TDHCA dispute whether ICP has sufficiently alleged injury in fact.3 ICP pleads injury in that TDHCA’s allocation of tax credits increases the time and money that ICP must spend to help its clients secure affordable, integrated housing. According to ICP, the landlords of LIHTC projects, unlike other landlords, cannot refuse to rent to Section 8 participants. Because TDHCA’s
3ICP asserts standing only on the basis of its own alleged injury. It does not allege that it has associational standing to sue on behalf of its clients in the absence of injury to itself. Therefore, the court does not consider this question. See, e.g., Tex. Democratic Party v. Benkiser, 459 F.3d 582, 587-88 (5th Cir. 2006) (discussing requirements for associational standing).
- 6 -

tax credit allocation has allegedly resulted in fewer LIHTC units in predominantly Caucasian areas, ICP asserts that its staff must spend more time locating housing in these areas for its Section 8 clients. Further, it must provide them with greater financial assistance due to higher rents and must sometimes make “landlord incentive bonus payments” to landlords who agree to accept Section 8 tenants. P. Compl. ¶ 30.
TDHCA counters that ICP does not allege any cognizable injury. It posits that ICP’s alleged injury is merely an indirect consequence of putative injury to its clients. TDHCA maintains that such indirect injury is insufficient to support standing.
C The court first evaluates ICP’s standing under the FHA. ICP alleges that TDHCA’s tax credit allocation violates the FHA because it makes both dwellings and financial assistance for constructing dwellings unavailable because of race. See 42 U.S.C. § 3604(a) (making it unlawful to “make unavailable” a dwelling to “any person because of race”); id. § 3605(a) (making it unlawful to “discriminate against any person in making available [a residential real estate-related] transaction” because of race). The FHA affords a cause of action to an “aggrieved person,” id. § 3613(a)(1)(A), and defines this term as any person who “claims to have been injured by a discriminatory housing practice” or who “believes that such person will be injured by a
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discriminatory housing practice that is about to occur,” id. § 3602(i). Through these provisions, Congress has abrogated prudential standing under the FHA, thus extending standing to the limits of Article III. See Lincoln v. Case, 340 F.3d 283, 289 (5th Cir. 2003) (“The Supreme Court has held that the sole requirement for standing under the FHA is the Article III minima.”) (citing Havens Realty Corp. v. Coleman, 455 U.S. 363, 372 (1982)). On its FHA claims, therefore, ICP will have standing if it can establish injury in fact, causation, and redressability——without regard to any prudential limitations.
1 Havens Realty involved a claim of injury similar to that presented in the instant case. A fair housing organization, Housing Opportunities Made Equal (“HOME”), contended that the defendant realty corporation had engaged in racial steering, a practice of guiding racial and ethnic groups to neighborhoods occupied predominantly by those same groups. Havens Realty, 455 U.S. at 366-67. HOME alleged that this practice frustrated “its efforts to assist equal access in housing through counseling and other referral services” and required it to “devote significant resources to identify and counteract the defendant’s racially discriminatory steering practices.” Id. at 379. The Supreme Court held that these allegations were sufficient to establish standing. Id. It reasoned:
- 8 -

If, as broadly alleged, petitioners’ steering

practices have perceptibly impaired HOME’s

ability to provide counseling and referral

services for low- and moderate-income

homeseekers, there can be no question that the

organization has suffered injury in fact.

Such concrete and demonstrable injury to the

organization’s activities——with the consequent

drain

on

the

organization’s

resources——constitutes far more than simply a

setback to the organization’s abstract social

interests, see Sierra Club v. Morton, 405 U.S.

[727], 739 [(1972) (holding that environmental

organization could not establish standing

based only on a mere “bona fide special

interest” in the subject matter of the suit)].

Id.; see also Fair Housing of Marin v. Combs, 285 F.3d 899, 904-05

(9th Cir. 2002) (holding that fair housing organization had

standing under FHA based on frustration of mission and diversion of

resources, and collecting similar cases).

The gravamen of the allegations in Havens Realty and of those

in the instant case are analogous. Like the Havens Realty

organization, ICP alleges that the challenged unlawful conduct has

a segregative effect that frustrates its mission of promoting equal

housing opportunities and requires it to spend more time and money

in performing its activities than it otherwise would. These are

more concrete allegations than a mere intangible setback to ICP’s

general interest in desegregation. Moreover, going a step beyond

the Havens Realty organization, ICP pleads specific facts that

support its claim of a drain on resources: that higher rents and

reluctant landlords make it more difficult to place its Section 8

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clients in non-LIHTC housing.4 Therefore, ICP has established
injury at the pleadings stage.5
This conclusion is not altered by TDHCA’s contention that
ICP’s alleged injury is insufficient to establish standing because
it is indirect. It is true that the injury is indirect in that
TDHCA’s alleged discrimination is directed not against ICP but
against African-Americans, such as ICP’s clients. Stated another
way, the right to be free from discrimination based on race belongs
to ICP’s clients rather than to ICP. But the indirectness of ICP’s
injury does not render it irrelevant under the FHA. Rather,
4The Fifth Circuit has held that an organization may not “bootstrap standing” by claiming a drain on its resources as a result of costs incurred for the particular lawsuit in which it claims standing. See Ass’n for Retarded Citizens of Dallas v. Dallas County Mental Health and Mental Retardation Ctr. Bd. of Trustees, 19 F.3d 241, 244 (5th Cir. 1994). ICP does not allege standing based on the costs of the instant lawsuit, and in its brief it specifically disclaims reliance on them.
5At a later stage of this litigation, of course, ICP must adduce evidence that shows a drain on its resources resulting from TDHCA’s tax credit allocation. See Fowler, 178 F.3d at 360 (holding that organization failed to establish standing where there was no summary judgment evidence of any “concrete or identifiable resources that [it] could reallocate to other uses” if the defendant ceased its putatively unlawful conduct); La. ACORN Fair Housing v. LeBlanc, 211 F.3d 298, 305 (5th Cir. 2000) (holding that organization failed to establish standing where there was no evidence at trial that it was required to put any “specific projects” on hold or “re-double efforts” in response to the defendant’s conduct); cf. Lujan, 504 U.S. at 561 (“[E]ach element [of standing] must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.”).
- 10 -

because under that statute Congress has abrogated the prudential
standing rules, ICP “may have standing to seek relief on the basis
of the legal rights and interests of others”——so-called “third
party standing.” Warth, 422 U.S. at 501; see also Gladstone,
Realtors, 441 U.S. at 103 n.9 (interpreting the FHA) (“[A]s long as
the plaintiff suffers actual injury as a result of the defendant’s
conduct, he is permitted to prove that the rights of another were
infringed.”); Havens Realty, 455 U.S. at 375-78 (holding that
individual plaintiffs had standing under FHA based on alleged
“indirect” injury of being deprived of living in an integrated
community due to defendant’s racial steering of other persons), id.
at 375 (“The distinction [between “third-party” and “first-party”
standing] is of little significance” under the FHA.).6
2
To satisfy the causation element of standing, ICP must
establish that its putative injury is fairly traceable to TDHCA’s
allocation of tax credits. The injury must not be the result of
6TDHCA cites two cases to argue that ICP’s indirect injury does not support standing. Both cases, however, are factually distinguishable. See Audler v. CBC Innovis, Inc., 519 F.3d 239, 347-48 (5th Cir. 2008) (discussing the standing of a class representative under the “juridical link” doctrine); Garzes v. Lopez, 281 Fed. Appx. 323, 325-26 (5th Cir. June 9, 2008) (per curiam) (applying rule that constituent of corporation does not have standing based on economic harm that is merely a consequence of injury to corporation). Moreover, although these cases state the general rule that a litigant must assert his own rights rather than the rights of others, this rule has been abrogated under the FHA and, as will be discussed below, does not bar ICP’s claims under §§ 1982 and 1983.
- 11 -

the independent action of some third party not before the court. Lujan, 504 U.S. at 560. ICP alleges that TDHCA’s disproportionate denial of tax credit applications for proposed developments in predominantly Caucasian areas causes a relative scarcity of LIHTC units there that makes it more difficult and expensive for ICP to secure integrative housing for its clients. ICP cites numerous statistics related to the location and occupancy of LIHTC developments that purportedly demonstrate that they are disproportionately located in census tracts with above-average minority populations. See, e.g., P. Compl. ¶ 16 (“While 19% of all renter occupied units in the City of Dallas are located in predominantly [Caucasian] 70% to 100% [Caucasian] census tracts, only 2.9% of TDHCA’s [LIHTC] units in the City are in those 70% to 100% [Caucasian] census tracts.”). ICP also alleges that a committee of the Texas House of Representatives found that TDHCA’s tax credit allocation compounded housing segregation.
Assumed true, ICP’s allegations permit the reasonable inference that, absent TDHCA’s consideration of race in tax credit allocation, there is a substantial probability that more LIHTC units would be available in predominantly Caucasian areas. This, in turn, would make it easier for ICP to secure housing for its clients in these areas. Cf. Warth, 422 U.S. at 504 (involving challenge to zoning regulations that allegedly excluded persons of low or moderate income) (“Petitioners must allege facts from which
- 12 -

it reasonably could be inferred that, absent the respondents’ restrictive zoning practices, there is a substantial probability that they would have been able to purchase or lease in [the city].”). Because no facts alleged suggest the existence of any independent, race-neutral reasons why TDHCA would disproportionately deny tax credit applications for proposed developments in Caucasian neighborhoods, it is fair and not merely speculative to trace this imbalance to the alleged consideration of race. Cf. Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 42-43 (1976) (challenge to IRS regulations that allegedly encouraged hospitals to deny services to indigents) (“It is purely speculative whether the denials of service specified in the complaint fairly can be traced to petitioners’ ‘encouragement’ or instead result from decisions made by the hospitals without regard to the tax implications.”). Further, although granting tax credits for a proposed development may not guarantee that it ultimately will be constructed, the court reasonably may infer that an increase in tax credits allocated for proposed developments in predominantly Caucasian areas would over time increase the number of LIHTC units available in these areas. Therefore, the court holds that ICP sufficiently alleged the causation element of standing.
- 13 -

3 Finally, ICP must establish that it is likely, as opposed to merely speculative, that its injury will be redressed by a favorable decision. See Lujan, 504 U.S. at 561. Clearly, the broad relief that ICP requests, e.g., an injunction that requires TDHCA to allocate tax credits so as to create as many LIHTC units in areas predominantly Caucasian as there are in areas that are predominantly minority, would redress the injury. As suggested in the foregoing causation analysis, however, even more moderate relief——enjoining TDHCA from considering race——would likely lead to more LIHTC units in predominantly Caucasian areas. Therefore, ICP has established the redressability element of standing.
D Having determined that ICP has standing under the FHA, the court now turns to ICP’s claims under 42 U.S.C. §§ 1982 and 1983. ICP maintains that TDHCA’s consideration of race violates § 1982 by denying non-Caucasian citizens an equal right to lease real property and violates the Fourteenth Amendment to the U.S. Constitution by denying non-Caucasian citizens the equal protection of the laws. See § 1982 (declaring that all citizens of the United States “shall have the same right . . . as is enjoyed by white citizens” to lease real property, inter alia); § 1983 (providing cause of action for violation of constitutional and other federal rights).
- 14 -

The foregoing analysis of constitutional standing also applies to ICP’s §§ 1982 and 1983 claims: ICP has sufficiently alleged increased resource costs that are both fairly traceable to TDHCA’s alleged discriminatory tax credit allocation and judicially redressable. The critical question, however, is whether the prudential rule against asserting the rights of others——inapplicable under the FHA——bars ICP’s standing under these statutes. See Fowler, 178 F.3d at 363; Singleton v. Wulff, 428 U.S. 106, 114 (1976) (“‘Ordinarily, one may not claim standing in this Court to vindicate the constitutional rights of some third party.’” (quoting Barrows v. Jackson, 346 U.S. 249, 255 (1953))).
ICP’s §§ 1982 and 1983 claims implicate its African-American clients’ right to be free of race discrimination in housing opportunities. The limitation on “third-party standing” is not a constitutional mandate, however, but is merely a “salutary rule of self-restraint.” Craig v. Boren, 429 U.S. 190, 193 (1976) (internal quotation marks omitted). As such, courts have carved out exceptions to the rule where its justifications lack force. See Singleton, 428 U.S. at 114 (“Like any general rule, however, [the rule against third-party standing] should not be applied where its underlying justifications are absent.”); Deerfield Med. Ctr. v. City of Deerfield Beach, 661 F.2d 328, 333 (Former 5th Cir. 1981) (“In cases where these justifications are inapplicable, the general rule should be excepted, and assertion of third party rights
- 15 -

permitted.”); see generally Erwin Chemerinsky, Federal Jurisdiction § 2.3.4 (4th ed. 2003). Consideration of these justifications leads the court to conclude that prudential standing does not bar ICP from asserting its clients’ rights under §§ 1982 and 1983.
1 The Supreme Court in Singleton discussed the two principles that animate the rule against third-party standing. See Singleton, 428 U.S. at 113-16. First, the rule prevents courts from unnecessary or undesired adjudication of rights. Two “factual elements” help resolve this question in a particular case: the relationship between the litigant and the third party and the third party’s ability to assert his own right. Id. at 114-16. If the litigant and the third party have a close relationship and the litigant is a part of the third party’s exercise of the right, then the court’s “construction of the right is not unnecessary in the sense that the right’s enjoyment will be unaffected by the outcome of the suit.” Id. at 114-15. Moreover, if a genuine obstacle prevents the third party from asserting the right, then his absence from court “loses its tendency to suggest that his right is not truly at stake, or truly important to him.” Id. at 116. Second, the rule against third-party standing tends to ensure that the most effective advocate for the right is before the court, which relies on the vigorous argument of litigants. Generally, “third parties themselves . . . will be the best proponents of
- 16 -

their own rights.” Id. at 114. This will not always be the case, however. Rather, “the relationship between the litigant and the third party may be such that the former is fully, or very nearly, as effective a proponent of the right as the latter.” Id. at 115.
2 In the instant case, precluding ICP from asserting under §§ 1982 and 1983 its African-American clients’ rights would not serve the purposes of the prudential rule against third-party standing. Taken as true, ICP’s allegations indicate that it has a close, essentially representative relationship with its clients. It acts like their agent in locating integrated rental housing, and, at times, negotiating housing terms. ICP is therefore an integral part of its clients’ exercise of their equal housing-related rights. For this reason, the outcome of ICP’s suit will not leave unaffected its clients’ enjoyment of their rights. Rather, a decision in ICP’s favor would increase its clients’ ability to access equal housing opportunities. Further, although ICP, rather than a client, is the litigant before the court, the representative, advocacy-based relationship between them makes this logical and obviates any implication that ICP’s clients do not wish to assert their rights. Therefore, the court’s consideration of ICP’s §§ 1982 and 1983 claims will not be an unnecessary or undesired adjudication of rights. Moreover, ICP’s relationship with its clients as well as its
- 17 -

own organizational purpose suggest that it would be as effective as its clients in advocating their rights. ICP’s mission is to achieve housing desegregation, eliminating the obstacles that confront African-Americans and other minorities in their pursuit of equal housing opportunities. The instant lawsuit is completely consistent with this mission and with ICP’s advocacy-based relationship with its clients. Under these circumstances, ICP can be expected to be a vigorous proponent of its clients’ rights. Cf. Hudson Valley Freedom Theater, Inc. v. Heimbach, 671 F.2d 702, 706 (2d Cir. 1982) (holding that not-for-profit theatrical corporation organized to reflect cultural interests of African-American and Hispanic communities had standing under § 1983, inter alia, as the most effective party to challenge denial of grant funds as discrimination based on race of its patrons) (“When a corporation meets the constitutional test of standing . . . prudential considerations should not prohibit its asserting that defendants, on racial grounds, are frustrating specific acts of the sort which the corporation was founded to accomplish.”); City of Evanston v. Baird & Wagner, Inc., 1990 WL 186575, at *4 (N.D. Ill. Nov. 15, 1990) (holding that fair housing organization established constitutional and prudential standing under § 1982 to challenge racial steering practices). But see Saunders v. Gen. Servs. Corp., 659 F. Supp. 1042, 1054 (E.D. Va. 1986).
- 18 -

III The court now turns to TDHCA’s motion to dismiss for failure to comply with Rule 19.
A Rule 19 seeks to ensure that lawsuits are disposed of fairly and completely. Pulitzer-Polster v. Pulitzer, 784 F.2d 1305, 1308 (5th Cir. 1986) (citing Rule 19 Advisory Committee’s note). To this end, it establishes a two-part process to identify persons who are needed for just adjudication of the action. First, it provides that certain persons are required to be joined as parties, if feasible. These include persons who are subject to service of process and whose joinder will not deprive the court of subject matter jurisdiction if “in that person’s absence, the court cannot afford complete relief among existing parties.” Rule 19(a)(1). This is a “highly practical, fact-based decision.” PulitzerPolster, 784 F.2d at 1309. Second, if joinder is not feasible, the court must decide whether that person is indispensable. Specifically, considering certain non-exhaustive factors, the court “must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed.” Rule 19(b).
B ICP and TDHCA dispute whether the IRS and the City are parties required to be joined, if feasible, under Rule 19(a) in order for
- 19 -

the court to provide complete relief to ICP, and whether failure to join them warrants dismissal. As to the IRS, TDHCA posits that the Tax Code provides certain incentives for developers of LIHTC housing to select low-cost land, which is primarily located in minority neighborhoods. TDHCA maintains that because developers select the land before submitting tax credit applications, it has no control over their decisions to build in predominantly minority areas. Therefore, TDHCA contends that the court cannot afford complete relief without amending the Tax Code to remove these incentives, requiring the joinder of the IRS.
ICP counters that joinder of the IRS is not necessary for complete relief. ICP argues that its claims are aimed at TDHCA’s disproportionate approval of tax credits for proposed developments in minority neighborhoods compared to those in Caucasian neighborhoods, that this imbalanced approval rate can be remedied without any change to the Tax Code, and that recent amendments to the Tax Code have diminished certain incentives that TDHCA cites.
TDHCA also maintains that the City must be joined if the court is to afford complete relief. It posits that it cannot provide final approval for a tax credit application unless the developer obtains a resolution from the City approving the project and receives permission from the zoning authority to build in the desired area, and that the Dallas City Council recently enforced a moratorium on new LIHTC developments.
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ICP disputes this contention. It points out that the Dallas City Council is no longer enforcing the moratorium, and it maintains that there is adequate zoned land in Caucasian neighborhoods on which to build LIHTC units, arguing that the distribution of all rental units throughout Dallas is less segregated than that of LIHTC units.
C The court holds that ICP’s claims should not be dismissed for failure to join the IRS or the City because neither is a party required to be joined if feasible under Rule 19(a) for the court to afford complete relief. The gravamen of ICP’s complaint is that TDHCA is unlawfully discriminating based on race in tax credit allocation——not merely that there are fewer LIHTC units in Caucasian neighborhoods. Assuming that ICP proves its claims, the court will be able to afford meaningful relief——enjoining TDHCA from considering race——without the presence of either the IRS or the City. See Rule 19 Advisory Committee’s note (explaining that “complete relief” is relief that is not “partial” or “hollow”). The court is not persuaded that an injunction against the consideration of race would be rendered meaningless or hollow either by tax incentives favoring land in minority neighborhoods or by the City’s consistently blocking the construction of LIHTC housing in Caucasian neighborhoods. TDHCA does not dispute that, despite contrary tax incentives, there have been some LIHTC
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developments constructed in predominantly Caucasian areas, and it
presents no evidence to suggest that the City will employ either
its approval or zoning power so as to consistently exclude LIHTC
housing from these areas.7
Because the court concludes that it will be able to afford
complete relief in the absence of the IRS and the City, it does not
reach the Rule 19(b) inquiry. Even assuming, however, that the IRS
and the City are parties required to be joined if feasible, TDHCA
has submitted no argument or evidence on whether they can be joined
or, if not, on the equitable Rule 19(b) factors the court should
consider to decide whether the action should proceed in their
absence. Cf. Imperial v. Castruita, 418 F.Supp.2d 1174, 1178 (C.D.
Cal. 2006) (declining to dismiss action for nonjoinder where
defendant did not present any evidence that certain persons were
required to be joined under Rule 19(a) and, even if so, they
“failed to even argue, much less prove, that [the persons] cannot
7Although TDHCA maintains that the Dallas City Council recently enforced a moratorium against new LIHTC developments in the City, it presents no evidence to support this assertion or to contradict ICP’s proof that the Dallas City Council is now “willing to review applications on all tax credit transactions individually, based upon supply and demand in the project’s submarket.” P. App. 51 (quoting Dallas City Council Res. Jan. 23, 2008).
TDHCA also argues that the City must be joined because it offers bond programs that are a source of funding for low-income housing projects in addition to the tax credits available to developers. ICP’s allegations, however, focus on TDHCA’s alleged disproportionate approval of developers’ tax credit applications, and the court can remedy this, if proved, without involving the City’s bond programs.
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be joined in the action”). Federal courts are reluctant to grant

motions to dismiss based on nonjoinder, and the court declines to

do so here. See Teacher Retirement Sys. of Tex. v. Reilly Mortgage

Group, Inc., 154 F.R.D. 156, 159 (W.D. Tex. 1994) (citing 7 Charles

A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1609

(1986)).

*

*

*

Accordingly, for the reasons explained, the court denies

defendants’ June 27, 2008 motion to dismiss.

SO ORDERED.

December 11, 2008.

_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE

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 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES

§

PROJECT, INC.,

§

§

Plaintiff, §

§ Civil Action No. 3:08-CV-0546-D

VS.

§

§

THE TEXAS DEPARTMENT OF

§

HOUSING AND COMMUNITY

§

AFFAIRS, et al.,

§

§

Defendants. §

MEMORANDUM OPINION AND ORDER

In this action alleging that defendant Texas Department of

Housing and Community Affairs (“TDHCA”) perpetuates racial

segregation and discrimination through the allocation of Low Income

Housing Tax Credits (“LIHTC”), the court must decide whether

plaintiff The Inclusive Communities Project, Inc. (“ICP”) has

standing and whether it has established prima facie cases under the

Fair Housing Act (“FHA”), 42 U.S.C. §§ 3604(a) and 3605(a), the

Fourteenth Amendment (actionable under 42 U.S.C. § 1983), and 42

U.S.C. § 1982. Concluding that ICP has demonstrated its standing

beyond peradventure, has established a prima facie case for each of

its claims, and has adduced evidence that would enable a reasonable

jury to find in its favor on each of its claims, the court grants

ICP’s motion for partial summary judgment and denies defendants’

motions for judgment on the pleadings and for summary judgment.1
I
The background facts and procedural history of this case are
set out in the court’s prior memorandum opinion and order. See
Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty.
Affairs, 2008 WL 5191935, at *1 (N.D. Tex. Dec. 11, 2008)
(Fitzwater, C.J.) (“ICP I”). The court therefore adds to ICP I the
facts and procedural history pertinent to the court’s present
decision.
ICP is a Dallas-based non-profit organization that assists
low-income persons in finding affordable housing and seeks racial
and socioeconomic integration in Dallas housing. In particular,
ICP works with African-American families who are eligible for the
Dallas Housing Authority’s Section 8 Housing Choice Voucher program
(“Section 8”). ICP assists Section 8 participants in obtaining apartments in predominately Caucasian,2 suburban neighborhoods3 by
1Also pending is ICP’s November 9, 2009 motion for leave to file supplemental appendix. The proposed appendix addresses a counterclaim——immunity under the Eleventh Amendment——subsequently withdrawn on November 20, 2009. Accordingly, the court denies ICP’s motion as moot.
2Throughout this memorandum opinion and order, the court uses the term “Caucasian” to refer to the 2000 U.S. Census category for white persons who are neither Hispanic nor Latino.
3ICP encourages its clients to obtain housing in areas that meet the criteria for “Walker Target Area Tracts,” defined in the Settlement Stipulation and Order in Walker v. U.S. Department of Housing and Urban Development, No. 3:85-CV-1210-R, at 4 (N.D. Tex. Mar. 8, 2001) (Buchmeyer, C.J.). A qualifying census tract
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offering counseling, assisting in negotiations with landlords, and providing financial assistance (for example, security deposits). At times, ICP must provide “landlord incentive bonus payments” to landlords to secure housing for Section 8 participants.
TDHCA4 is the state entity that administers the federal LIHTC program, granting tax credits under 26 U.S.C. § 42 to low-income housing developers to encourage investment in low-income, multifamily rental housing. Developers can sell their tax credits to finance housing construction. The tax credits are allocated according to the federal statute, which requires the state agency to act according to an annual “Qualified Allocation Plan” (“QAP”)
developed by the agency. See 26 U.S.C. § 42(m); 10 Tex. Admin.
Code § 50.1 et seq. (2010) (setting forth QAP developed by TDHCA).
TDHCA receives applications for proposed developments and has the sole authority to approve or deny tax credits for those
“according to the most recent decennial census, (i) has a black population at or below the average black population of the City of Dallas, (ii) has no public housing, and (iii) has a poverty rate at or below the average for the City of Dallas.” Id. In addition, ICP looks for neighborhoods that (1) have a poverty population of 10% or less; (2) have a median family income of at least 80% of the 2000 U.S. Census Dallas Primary Metropolitan Statistical Area median family income; and (3) are in a public elementary school attendance zone for an elementary school that has either “Recognized” or “Exemplary” status.
4Unless the context otherwise requires, the term “TDHCA” includes TDHCA and its Executive Director and board members in their official capacities.
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developments.5 The agency receives more applications than it can fund, and the exact amount of tax credits allocated to Texas varies each year (for example, $43 million in tax credits was allocated to Texas in 2007). Any developer who receives LIHTC must accept as tenants otherwise-eligible Section 8 participants who use Section 8 vouchers to help pay rent. See 26 U.S.C. § 42(h)(6)(B)(iv). According to ICP, Section 8 participants struggle to obtain housing in non-LIHTC developments.
ICP alleges that TDHCA has disproportionately approved tax credits for low-income housing in minority neighborhoods and has denied applications for non-elderly6 low-income housing in predominately Caucasian neighborhoods; that 92% percent of all LIHTC units in the city of Dallas are in census tracts where more than one-half of the population is minority; that TDHCA has discretion in determining which proposed projects receive tax credits, and that TDHCA improperly takes race into account (both of the neighborhood and of potential residents), perpetuating racial segregation in Dallas housing; that defendants made housing and
5According to Texas regulations, “Developments will be ineligible if the Development is located on a site that is determined to be unacceptable by the [TDHCA]. This determination will be made at the sole discretion of the [TDHCA] . . . .” 10 Tex. Admin. Code § 50.6(j) (2010).
6The distinction between elderly and non-elderly units is salient because the potential tenants of non-elderly LIHTC units are more likely to be minority than the potential tenants of elderly LIHTC units.
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financial assistance for housing construction unavailable because of race, in violation of the FHA; and that defendants used race as a factor in their allocation of tax credits, in violation of the Fourteenth Amendment, actionable under § 1983, and § 1982, which requires that defendants give all United States citizens the same right to lease property as Caucasian citizens. ICP requests broad equitable relief, including, inter alia, an injunction requiring TDHCA to create as many LIHTC units in non-minority census tracts as in minority census tracts; forbidding TDHCA from considering the racial composition of the area or potential residents; and enjoining TDHCA from perpetuating racial segregation.
ICP moves for partial summary judgment, asking the court to hold that ICP has standing to bring its claims, that it has established a prima facie case of racial discrimination based on a pattern of racial segregation in LIHTC units, and that, under the circumstantial evidence framework of Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252 (1977), defendants’ actions have a greater effect on non-Caucasians than on Caucasians. Defendants move for judgment on the pleadings and for summary judgment, asserting that ICP lacks standing and that it is not entitled to relief on the merits.
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II The court begins by summarizing the standards under which the parties’ motions are to be decided.
A Defendants move under Rule 12(c) for judgment on the pleadings. A Rule 12(c) motion “is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts.” Hebert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990) (per curiam) (internal citations omitted). The motion “should be granted only if there is no issue of material fact and if the pleadings show that the moving party is entitled to prevail as a matter of law.” Greenberg v. Gen. Mills Fun Grp., Inc., 478 F.2d 254, 256 (5th Cir. 1973) (per curiam). The standard for deciding a motion under Rule 12(c) is the same as the one for deciding a motion to dismiss under Rule 12(b)(6). See Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 313 n.8 (5th Cir. 2002) (“A number of courts have held that the standard to be applied in a Rule 12(c) motion is identical to that used in a Rule 12(b)(6) motion.” (footnote and internal quotation marks omitted)).
B ICP and defendants both move for summary judgment. Their summary judgment burdens depend on whether they are moving for
- 6 -

summary judgment on a claim for which they will have the burden of proof at trial.
ICP moves for summary judgment on claims for which it will bear the burden of proof at trial. To be entitled to summary judgment, ICP “must establish ‘beyond peradventure all of the essential elements of the claim[.]’” Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878 F. Supp. 943, 962 (N.D. Tex. 1995) (Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)). “The court has noted that the ‘beyond peradventure’ standard is ‘heavy.’” Carolina Cas. Ins. Co. v. Sowell, 603 F.Supp.2d 914, 923-24 (N.D. Tex. 2009) (Fitzwater, C.J.) (quoting Cont’l Cas. Co. v. St. Paul Fire & Marine Ins. Co., 2007 WL 2403656, at *10 (N.D. Tex. Aug. 23, 2007) (Fitzwater, J.)).
Defendants move for summary judgment on claims for which they will not bear the burden of proof at trial.7 They need only point to the absence of evidence of an essential element of ICP’s claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once defendants do so, ICP must go beyond its pleadings and designate specific facts showing there is a genuine issue for trial. See id. at 324; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
7Insofar as defendants move for summary judgment on matters for which they bear the burden of proof at trial (e.g., in the content of ICP’s FHA claim, the burden of proving that TDHCA’s actions were in furtherance of a compelling government interest), they must satisfy the beyond-peradventure standard to obtain summary judgment. See infra note 18.
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1994) (en banc) (per curiam). An issue is genuine if the evidence is such that a reasonable jury could return a verdict in ICP’s favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). ICP’s failure to produce proof as to any essential element of a claim renders all other facts immaterial. See Trugreen Landcare, L.L.C. v. Scott, 512 F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.). Summary judgment is mandatory if ICP fails to meet this burden. See Little, 37 F.3d at 1076.
III A
ICP and defendants both bring motions that require that the court decide whether ICP has standing to bring suit. In ICP I the court held that it does. See ICP I, 2008 WL 5191935, at *6, *9 (denying defendants’ motion to dismiss ICP’s claim for lack of standing). Defendants’ Rule 12(c) and summary judgment motions essentially urge the court to reconsider the analysis of ICP I, which the court declines to do. But because ICP now moves for summary judgment establishing that it has standing, the court will decide the question under the summary judgment standard.
To determine whether ICP had standing in the context of a motion to dismiss, the court presumed that the allegations of ICP’s complaint were true. See ICP I, 2008 WL 5191935, at *3 (citing Garcia v. Boyar & Miller, P.C., 2007 WL 2428572, at *2 (N.D. Tex. Aug. 28, 2007) (Fitzwater, J.)). But at the summary judgment
- 8 -

stage, “each element [of standing] must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). The court therefore will consider evidence offered by ICP to support its summary judgment motion on standing.
B The doctrine of standing “involves both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise.” Warth v. Seldin, 422 U.S. 490, 498 (1975). To satisfy the requirements of Article III of the Constitution, ICP must show, at an “‘irreducible constitutional minimum,’” that it has “suffered ‘injury in fact,’ that the injury is ‘fairly traceable’ to the actions of the defendant[s], and that the injury will likely be redressed by a favorable decision.” Bennett v. Spear, 520 U.S. 154, 162 (1997) (quoting Lujan, 504 U.S. at 560-61). The injury in fact, moreover, must be “concrete and . . . actual or imminent, not conjectural or hypothetical,” and “the injury must affect the plaintiff in a personal and individual way.” Lujan, 504 U.S. at 560 & 561 n.1 (citations omitted). Only Article III standing is required to bring a claim under the FHA. See ICP I, 2008 WL 5191935, at *3 (quoting Lincoln v. Case, 340 F.3d 283, 289 (5th Cir. 2003) (“The Supreme Court has
- 9 -

held that the sole requirement for standing under the FHA is the

Article III minima.”)). But ICP also asserts claims under 42

U.S.C. §§ 1982 and 1983, for which there are prudential limitations

on standing. See ICP I, 2008 WL 5191935, at *6 (“The critical

question, however, is whether the prudential rule against asserting

the rights of others——inapplicable under the FHA——bars ICP’s

standing under these statutes.”).

Under the prudential

limitations, “[o]rdinarily, one may not claim standing . . . to

vindicate the constitutional rights of some third party.”

Singleton v. Wulff, 428 U.S. 106, 114 (1976) (quoting Barrows v.

Jackson, 346 U.S. 249, 255 (1953)). In ICP I the court held that

precluding ICP from asserting its §§ 1982 and 1983 claims would not

serve the purposes of the prudential rule against third-party

standing. See ICP I, 2008 WL 5191935, at *7. Because the court is

not reconsidering that holding (and the parties do not urge the

court to do so), it will only consider at the summary judgment

stage whether ICP has established beyond peradventure that it has

Article III standing.

C

1

To satisfy Article III standing, ICP must first establish

injury in fact. In ICP I the court cited Havens Realty Corp. v.

Coleman, 455 U.S. 363 (1982), in which the Supreme Court held if

“[defendants’] steering practices have perceptibly impaired [a fair

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housing organization’s] ability to provide counseling and referral

services for low- and moderate-income homeseekers, there can be no

question that the organization has suffered injury in fact.” Id.

at 379. The Court pointed specifically to the “consequent drain on

the organization’s resources” as evidence of that injury. Id. ICP

seeks to place its clients in Walker Target Area Tracts, see supra

note 3, or other high-opportunity (predominately Caucasian) areas.

To place Section 8 participants in LIHTC housing, ICP spent an

average of $491.00 per capita. To place clients in non-LIHTC

housing, ICP expended an average of $993.00 per capita. ICP’s

average cost to secure non-LIHTC housing is much greater than the

cost to obtain LIHTC housing because ICP often must pay non-LIHTC

landlords bonus payments to convince them to participate in Section

8 or to lower the rent, and it must make a larger security deposit.

This cost difference is even greater than these numbers reflect,

because ICP must expend more time and effort to find non-LIHTC

units that will even accept Section 8 vouchers. ICP has presented

evidence that 86.6% of LIHTC developments informed ICP they would

accept Section 8 vouchers, while only 11.9% of non-LIHTC

developments would accept them.

ICP has thus presented

uncontroverted summary judgment evidence that the unavailability of

LIHTC units in Walker Target Area Tracts drains the organization’s

resources. This demonstrates that ICP suffered injury in fact due

to TDHCA’s allegedly disproportionate denial of tax credits for

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developments in those areas. 2
To establish causation, ICP presents evidence that TDHCA disproportionately denies tax credits to proposed developments in Caucasian neighborhoods, making it more difficult for ICP to find Section 8-participating housing in those areas.8 Because TDHCA is the sole entity with authority to award tax credits to developers, its decisions directly affect the availability and geographical distribution of low-income housing. Moreover, TDHCA need not be the sole cause of injury to be liable for that injury. See, e.g., Gautreaux v. Romney, 448 F.2d 731, 739 (7th Cir. 1971) (holding that defendant played “significant” role in Chicago’s racially discriminatory housing system). The court held in ICP I that it could reasonably infer that “an increase in tax credits allocated for proposed developments in predominately Caucasian areas would over time increase the number of LIHTC units available in these areas.” ICP I, 2008 WL 5191935, at *5. If ICP is injured by the existing distribution of low-income housing, and TDHCA’s actions directly and significantly affect that distribution, it follows that ICP has established causation.
Defendants argue that TDHCA does not solely control the location of low-income housing in Dallas because the developers choose where to locate housing. But this argument misconstrues the
8See supra § III(C)(1). - 12 -

nature of ICP’s claims. ICP does not complain of the distribution of low-income housing in general; ICP challenges the allegedly discriminatory actions of TDHCA in disproportionately denying tax credits to proposed developments in Caucasian neighborhoods. TDHCA does control the approval or denial of applications actually submitted.
Defendants also point to Jaimes v. Toledo Metropolitan Housing Authority, 758 F.2d 1086 (6th Cir. 1985). In Jaimes the court held that plaintiffs (potential low-income housing tenants) could not establish causation sufficient for standing even though they were excluded from Toledo’s suburbs, where there was no public housing. See id. at 1096. But in Jaimes the court noted that, even if defendants had sought to build such public housing, it was “still a matter of speculation and conjecture as to whether [] third party, non-defendant [suburban town governments] would grant approval for construction of units that plaintiffs could afford, qualify for, or be eligible to obtain.” Id. The court also emphasized that plaintiffs had pointed to “no specific proposed project, location or site that might have been approved[.]” Id.; see also id. at 1096-97 (“[C]ourts have looked to a particular project or housing site which may have been affected by particular actions or failures to act on the part of government entities or officials.”).
In the present case, no government agencies other than TDHCA
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have the authority to grant or deny tax credits. Although TDHCA must follow the mandates of § 42, it has final discretion in allocating tax credits. In addition, ICP presents evidence that proposed developments in Caucasian areas were disproportionately denied tax credits. The direct actions of TDHCA in denying those tax credits, for reasons to be analyzed below, to actual proposed developments distinguishes this case from the more hypothetical injury presented in Jaimes.
Defendants point to this sentence in ICP I: “Because no facts alleged suggest the existence of any independent, race-neutral reasons why TDHCA would disproportionately deny tax credit applications for proposed developments in Caucasian neighborhoods, it is fair and not merely speculative to trace this imbalance to the alleged consideration of race.” ICP I, 2008 WL 5191935, at *5. Defendants argue that § 42’s stated preference for development in low-income areas is a race-neutral explanation for the disproportionate denial of tax credit applications of proposed developments in predominately Caucasian neighborhoods. They assert that this race-neutral reason indicates that ICP cannot prove causation. But defendants’ race-neutral explanation, and whether it is pretextual, goes to the merits of ICP’s claim, not to standing. ICP has demonstrated beyond peradventure that TDHCA’s approval or denial of tax credits to developers directly affects the distribution of low-income housing in Dallas, which injures
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ICP. The court holds that ICP has established the element of causation.
3 The third element is whether the injury to ICP will likely be redressed by a favorable decision. As discussed in ICP I, the broad equitable remedies available to this court would redress the alleged injury. See ICP I, 2008 WL 5191935, at *6. The court need not address any further evidence because its analysis in ICP I is sufficient. Accordingly, the court holds ICP has established standing beyond peradventure, and it grants ICP summary judgment in this respect. The court denies defendants’ Rule 12(c) motion and motion for summary judgment to the extent they seek dismissal based on ICP’s alleged lack of standing.
IV The court now turns to ICP’s contention in its motion for partial summary judgment that it has established prima facie cases of discrimination under the FHA, § 1982, and § 1983.
A As a threshold matter, the court notes that, in some instances, the existence of a prima facie case is not relevant. See Arismendez v. Nightingale Home Health Care, Inc., 493 F.3d 602, 607 (5th Cir. 2007) (“Because this case was fully tried on the merits, the McDonnell Douglas burden-shifting framework drops from
- 15 -

the case . . . . [T]he sufficiency of the prima facie case as such is no longer relevant.” (internal quotation marks and citations omitted)); Kanida v. Gulf Coast Med. Pers. LP, 363 F.3d 568, 575 (5th Cir. 2004) (noting that while prima facie case is irrelevant after trial on the merits, it is applicable in context of motions for judgment as a matter of law and summary judgment). The Supreme Court has held that “[w]here the defendant has done everything that would be required of him if the plaintiff had properly made out a prima facie case, whether the plaintiff really did so is no longer relevant.” U.S. Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711, 715 (1983). But to evaluate the parties’ summary judgment motions in this case, the court will consider ICP’s motion for partial summary judgment as it relates to whether ICP has established prima facie cases. Under Fed. R. Civ. P. 56(d)(1), “the court should, to the extent practicable, determine what material facts are not genuinely at issue.” If ICP can establish a prima facie case in support of its FHA claim, the burden shifts to defendants to prove that TDHCA’s actions furthered a compelling government interest. Moreover, the question whether ICP has established a prima facie case of intentional discrimination under §§ 1982 and 1983 is relevant to other disputed issues in defendants’ motions, such as whether defendants’ justification for TDHCA’s actions is pretextual. The existence of the prima facie case, together with evidence that defendants’ proffered explanation
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for its challenged conduct is pretextual, is sufficient to find
intentional discrimination. See Reeves v. Sanderson Plumbing
Prods., Inc., 530 U.S. 133, 147 (2000). Additionally, the strength
of the prima facie case can be relevant in determining whether defendants’ proffered explanation for their actions is in fact
pretextual. See, e.g., Prejean v. Radiology Assocs. of Sw. La.
Inc., 342 Fed. Appx. 946, 950 (5th Cir. 2009) (per curiam).
Therefore, the court will evaluate ICP’s prima facie cases to decide defendants’ motion for summary judgment. Because defendants essentially do not contest ICP’s prima facie cases, the court will analyze this question in the context of ICP’s partial summary judgment motion instead of considering it in the context of defendants’ Rule 12(c) or summary judgment motions.
B The court first turns to ICP’s FHA claim. The FHA prohibits
discrimination in the provision of housing. See 42 U.S.C. §§ 3604(a) and 3605(a).9 “A plaintiff seeking recovery under [the FHA] may proceed under either a theory of disparate treatment or
9Section 3604(a) makes it unlawful, inter alia, to “make unavailable or deny, a dwelling to any person because of race[.]” 42 U.S.C. § 3604(a). Section 3605(a) makes it unlawful for “any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race[.]” § 3605(a). A residential real estate-related transaction includes providing financial assistance for the construction of a dwelling. See § 3605(b).
- 17 -

disparate impact.”10 Arbor Bend Villas Hous., L.P. v. Tarrant Cnty. Hous. Fin. Corp., 2005 WL 548104, at *12 (N.D. Tex. Mar. 9, 2005) (Means, J.); see also Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926, 934 (2d Cir. 1988), aff’d, 488 U.S. 15 (1988) (per curiam) (“The [FHA’s] stated purpose to end discrimination requires a discriminatory effect standard; an intent requirement would strip the statute of all impact on de facto segregation.”).
C ICP maintains in its motion for partial summary judgment that it has established beyond peradventure a prima facie case of racial discrimination under the FHA. To establish a prima facie case of discriminatory impact (also referred to as discriminatory effect), ICP must show “adverse impact on a particular minority group” or “harm to the community generally by the perpetuation of segregation.” Huntington Branch, 844 F.2d at 937; see also Arbor Bend, 2005 WL 548104, at *12. ICP need not show that TDHCA acted with discriminatory intent or motive. See Arbor Bend, 2005 WL
10The court addresses only ICP’s discriminatory impact claim under the FHA. ICP did not specifically plead in its complaint or request summary judgment on an intentional discrimination claim under the FHA. Defendants did not respond in their answer to an intentional discrimination claim brought under the FHA. The court will thus examine ICP’s intentional discrimination claim under 42 U.S.C. §§ 1982 and 1983.
- 18 -

548104, at *12. ICP’s prima facie burden is not a heavy one.11 See
Tex. Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 253 (1981).
ICP need only provide evidence that raises an inference of
discrimination because “we presume these acts, if otherwise
unexplained, are more likely than not based on the consideration of
impermissible factors.” See id. at 254 (citations omitted). If
ICP establishes its prima facie case of discriminatory effect,
discrimination is presumed. See id.
ICP has established that its clients are African-Americans,
members of a protected class, who rely on government assistance
with housing, and that TDHCA has disproportionately approved tax
credits for non-elderly developments in minority neighborhoods and,
conversely, has disproportionately denied tax credits for non-
elderly housing in predominately Caucasian neighborhoods.
11In determining whether a plaintiff has established a prima facie case of discrimination under the FHA, some courts have utilized factors set forth by the Seventh Circuit in Metropolitan Housing Development Corp. v. Village of Arlington Heights, 558 F.2d 1283 (7th Cir. 1977). See Huntington Branch, NAACP v. Town of Huntington, 668 F. Supp. 762, 785-87 (E.D.N.Y. 1987) (considering (1) strength of plaintiff’s showing of discriminatory effect, (2) whether there is some evidence of discriminatory intent, (3) defendant’s interest in taking action complained of, and (4) whether plaintiff seeks to compel defendant to provide housing or restrain defendant from interfering with other property owners), rev’d, 844 F.2d 926 (2d Cir. 1988). But these factors are not properly part of plaintiff’s prima facie case; instead, they should be considered as part of the “final determination on the merits.” Huntington Branch, 844 F.2d at 935-36 (“[T]reating the four factors as steps necessary to make out a prima facie case places too onerous a burden on [plaintiffs].”). Accordingly, the court will not consider the Village of Arlington Heights factors when deciding whether ICP has demonstrated a prima facie case.
- 19 -

According to ICP’s evidence, from 1999-2008, TDHCA approved tax credits for 49.7%12 of proposed non-elderly units in 0% to 9.9%
Caucasian areas, but only approved 37.4% of proposed non-elderly units in 90% to 100% Caucasian areas.13 ICP also analyzed data
produced by defendants in discovery that indicates that 92.29% of
LIHTC units in the city of Dallas were located in census tracts
with less than 50% Caucasian residents.
ICP’s evidence is supported by the “Talton Report,” a report
of the House Committee on Urban Affairs prepared for the House of
Representatives, 80th Texas Legislature, which found that TDHCA
“disproportionately allocate[s] federal low income housing tax
credit funds . . . to developments located in [areas with above
average minority concentrations].” P. Oct. 2, 2009 App. 95. The
Talton Report notes that, as of 2006, 77% of LIHTC units in the
city of Dallas were in above-average minority areas, leading to
“concentration problems.” Id. A study by the U.S. Department of
Housing and Urban Development (“HUD”) reached a similar conclusion.
See id. at 435, 486 (reporting that, from 1995-2006, 67% of LIHTC
12“Statistical analysis is admissible to establish disparate impact.” Budnick v. Town of Carefree, 518 F.3d 1109, 1118 (9th Cir. 2008). The disparate impact analysis will “of necessity, rely heavily on statistical proof.” Owens v. Nationwide Mut. Ins. Co., 2005 WL 1837959, at *13 (N.D. Tex. Aug. 2, 2005) (Sanders, J.).
13Although the table that contains this information is presented as part of Dr. Thompson’s report, he did not compile this information, and none of defendants’ objections to his report applies. Further, defendants have not objected to the reliability of this data.
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units in Texas were in greater than 50% minority areas, as opposed to 47% of all units; similarly, 69% of all LIHTC units in the city of Dallas were in greater than 50% minority areas, as opposed to 45% of all units).
This evidence establishes that TDHCA disproportionately approves applications for non-elderly LIHTC units in minority neighborhoods, leading to a concentration of such units in these areas. This concentration increases the burden on ICP as it seeks to place African-American Section 8 clients in LIHTC housing in predominately Caucasian neighborhoods. Other courts have held that actions that cause disproportionate harm to African-Americans and produce a segregative impact on the entire community create a strong prima facie case. See, e.g., Huntington Branch, 844 F.2d at 938 (holding that failure to re-zone Caucasian neighborhood for LIHTC apartments perpetuated segregation and had adverse impact on Section 8 participants who were disproportionately minorities); Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 558 F.2d 1283, 1288 (7th Cir. 1977) (same); United States v. Yonkers Bd. of Educ., 837 F.2d 1181, 1219-20 (2d Cir. 1987) (holding that city perpetuated racial segregation in housing, in violation of FHA, where 96.6% of subsidized housing was in areas with 40% or greater minority population); see also Dews v. Town of Sunnyvale, 109 F.Supp.2d 526, 565-68 (N.D. Tex. 2000) (Buchmeyer, C.J.). Because ICP has adduced evidence that is uncontested, it has established
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beyond peradventure its prima facie case of discrimination under the FHA.14 See St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 510 n.3 (1993) (noting that prima facie case can be established as a matter of law where plaintiff’s facts are uncontested). The court therefore grants partial summary judgment holding that ICP has made a prima facie showing that defendants violated the FHA.
D The court turns next to ICP’s intentional discrimination claim brought under 42 U.S.C. §§ 1982 and 1983. ICP may use direct or circumstantial evidence to establish its prima facie case of intentional discrimination under §§ 1982 and 1983. See Vill. of Arlington Heights, 429 U.S. at 266. ICP has presented no direct evidence of discrimination, so the burden-shifting method of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), applies. See Arbor Bend, 2005 WL 548104, at *6.
E ICP moves for summary judgment establishing its prima facie case of discrimination under § 1982 and the Fourteenth Amendment,
14ICP also requests that the court grant summary judgment holding that defendants’ actions bear more heavily on minorities than on Caucasians, one factor in the Village of Arlington Heights circumstantial evidence framework. Although the court has authority to enter a partial summary judgment determining that material facts are not genuinely at issue, see Rule 56(d), it declines to do so as to this single circumstantial-evidence factor.
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actionable under § 1983.15
Section 1982 “prohibits ‘all racial discrimination, private as
well as public,’ with respect to property rights.” Evans v. Tubbe,
657 F.2d 661, 663 n.2 (5th Cir. Unit A Sept. 1981) (quoting Jones
v. Alfred H. Mayer Co., 392 U.S. 409, 413 (1968)). “To state a
claim under § 1983, a plaintiff must (1) allege a violation of
rights secured by the Constitution or laws of the United States and
(2) demonstrate that the alleged deprivation was committed by a
person acting under color of state law.” Moore v. Dallas Indep.
Sch. Dist., 557 F.Supp.2d 755, 761 (N.D. Tex. 2008) (Fitzwater,
C.J.) (quoting Leffall v. Dallas Indep. Sch. Dist., 28 F.3d 521,
525 (5th Cir. 1994)), aff’d, 370 Fed. Appx. 455 (5th Cir. 2010).
ICP alleges that defendants have violated the Equal Protection
Clause of the Fourteenth Amendment, which prohibits intentional
racial segregation in government-assisted housing. See, e.g.,
Banks v. Dallas Hous. Auth., 119 F.Supp.2d 636, 638 n.3 (N.D. Tex.
2000) (Kaplan, J.).
To prove claims under § 1982 and the Equal Protection Clause,
15The court uses the term “prima facie” to mean the establishment of a legally mandatory, rebuttable presumption in the McDonnell Douglas framework, recognizing that in the more general sense, “prima facie” is a phrase used to describe the plaintiff’s burden of producing enough evidence to permit the trier of fact to infer the fact at issue. See Burdine, 450 U.S. at 254 n.7; see also Askin v. Firestone Tire & Rubber Co., 600 F. Supp. 751, 755 (D. Ky. 1985) (“Even though the prima facie case may have been enough to shift the burden of production to the defendant, it is not necessarily enough to entitle the plaintiff to submit his or her case to the jury.”).
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ICP must demonstrate discriminatory intent, not merely discriminatory effect. See City of Cuyahoga Falls v. Buckeye Cmty. Hope Found., 538 U.S 188, 195 (2003) (quoting Vill. of Arlington Heights, 429 U.S. at 265 (“Proof of racially discriminatory intent or purpose is required to show a violation of the Equal Protection Clause.”)); see also Hanson v. Veterans Admin., 800 F.2d 1381, 1386 (5th Cir. 1986) (noting that although FHA claim requires only showing of discriminatory effect, § 1982 claim requires finding of intentional racial discrimination); Dews, 109 F.Supp.2d at 570 (“In contrast to claims brought under the [FHA], plaintiffs suing under §§ 1981, 1982, 1983 and 2000d must prove discriminatory intent.”).
ICP need only present enough evidence to give rise to an inference of discrimination. See Kennedy v. City of Zanesville, 505 F.Supp.2d 456, 493 (S.D. Ohio 2007). The prima facie case is not inflexible, and the specific facts required to be proved may vary depending on the factual situation. See id. at 493-94. “It is relatively easy . . . for a plaintiff to establish a prima facie case[.]16 Arbor Bend, 2005 WL 548104, at *7 (quoting Britt v. Grocers Supply Co., 978 F.2d 1441, 1450 (5th Cir. 1992)).
16When a summary judgment motion on a discrimination claim is evaluated in the McDonnell Douglas framework, summary judgment is most appropriate at the pretext stage, not when addressing the plaintiff’s prima facie case or the defendant’s burden of producing evidence of a legitimate, nondiscriminatory reason. See Arbor Bend, 2005 WL 548104, at *7. It is thus relatively easy for ICP to establish a prima facie case and for TDHCA to meet its burden of production. See id.
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F ICP has presented enough evidence to give rise to an inference that TDHCA discriminated on the basis of race. Evidence that may give rise to an inference of discrimination includes statistical proof, comparative evidence, proof of a suspect sequence of events, or evidence of a subjective decisionmaking process. See Kennedy, 505 F.Supp.2d at 493-94. First, ICP has presented statistical and comparative evidence that may give rise to an inference of discriminatory intent. ICP alleges that TDHCA is more likely to approve LIHTC developments in Caucasian neighborhoods if the likely tenants are Caucasian. ICP highlights the fact that, in Caucasian neighborhoods, elderly LIHTC housing is approved more often than non-elderly LIHTC housing, and elderly residents are more likely to be Caucasian. According to TDHCA data, from 1999 to 2008, TDHCA approved tax credits for 70.2% of the proposed elderly units in 90% or greater Caucasian census tracts. TDHCA approved just 37.4% of proposed non-elderly units in the same tracts. ICP also presents evidence of a suspect sequence of events, and that TDHCA employs a subjective decisionmaking process. ICP relies on evidence that, from 1991-1993, TDHCA considered as one of its LIHTC selection criteria whether a development would provide desegregated housing opportunities. In 1994, TDHCA eliminated this criterion despite the concern about segregation in Dallas housing
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widely noted at the time due to the contemporaneous Dallas housing desegregation case. See Walker v. City of Mesquite, No. 3:85-CV1210-R (N.D. Tex. Filed June 25, 1985) (Buchmeyer, C.J.). ICP suggests that the “repeal” of TDHCA’s written desegregation preference in favor of TDHCA’s discretion is related directly to TDHCA’s intentional discrimination. P. Oct. 22, 2009 Br. 18.
For direct evidence of intent, ICP relies on contemporary statements made by TDHCA officials in board meetings as indications that race influenced defendants’ actions. For example, at a February 2003 board meeting, TDHCA board member Shadrick Bogany (“Bogany”) stated: “I’m tired of [these projects] being put in minority communities all the time.”17 P. Oct. 2, 2009 App. 871. Later in the board meeting, he repeated, “And you know, it’s just——it’s amazing to me how we constantly concentrate these all over——in just the minority communities.” Id. at 873. Bogany also protested at a later meeting that the board was creating a “taxcredit city” in a minority neighborhood in Houston. He argued that the TDHCA should not approve a proposed development because the minority neighborhood already contained 17 LIHTC developments, and that the next QAP needed to address the concentration issue. He pointed to the underdevelopment and lack of retail in the area, and
17ICP points to other statements by board members, but the court’s review indicates that they refer to the over-saturation of LIHTC units in some areas in Dallas; they express no concern that is specific to minority areas.
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noted that the city representatives arguing for the development were not from the area. “[C]ontemporary statements by members of the decisionmaking body, minutes of its meetings, or reports” may be “highly relevant” in establishing discriminatory intent. Vill. of Arlington Heights, 429 U.S. at 267-68. Although Bogany’s statements are not admissions of racial discrimination, the totality of the evidence presented by ICP gives rise to an inference of discriminatory intent.
The court holds that ICP has presented enough evidence to establish beyond peradventure an inference of discriminatory intent. The court thus grants ICP summary judgment as to its prima facie case under §§ 1982 and 1983.
V The court now turns to the remaining parts of defendants’ Rule 12(c) motion and motion for summary judgment.
A In their Rule 12(c) motion and motion for summary judgment, defendants request that the court hold that there is no genuine issue of material fact that their actions serve a compelling government interest, as required for ICP’s FHA claim,18 and that ICP
18Although defendants’ motion for summary judgment is styled a “no evidence” motion, under the applicable law, once ICP demonstrated a prima facie case of discrimination, the burden shifted to defendants to prove that their actions serve a compelling government interest. See AHF Cmty. Dev., LLC v. City of Dallas, 633 F.Supp.2d 287, 304 (N.D. Tex. 2009) (Fitzwater, C.J.). Therefore, to be entitled to summary judgment as to ICP’s FHA
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has presented no evidence that defendants’ actions are pretextual, as required for ICP’s §§ 1982 and 1983 claims. Because, as explained below, the court holds that there are genuine issues of material fact as to whether defendants’ reason is pretextual and as to whether TDHCA’s actions serve a compelling government interest, the court denies defendants’ Rule 12(c) motion for judgment on the pleadings. The court must go beyond the pleadings and consider the evidence. The court will, however, consider defendants’ arguments made in support of their Rule 12(c) motion in deciding their summary judgment motion.
B The court considers first defendants’ motion for summary judgment as to ICP’s FHA claim. Because ICP has established its prima facie case of discriminatory impact under the FHA, the burden shifts to defendants to prove that TDHCA’s actions were in furtherance of a compelling government interest. See AHF Cmty. Dev., LLC v. City of Dallas, 633 F.Supp.2d 287, 304 (N.D. Tex. 2009) (Fitzwater, C.J.); see also Arbor Bend, 2005 WL 548104, at *12; Huntington Branch, 844 F.2d at 939. This interest must be bona fide and legitimate, and there must be no less discriminatory alternatives. See Huntington Branch, 844 F.2d at 939 (holding that “[t]he McDonnell Douglas test, however, is an intent-based standard
claim, defendants must establish beyond peradventure that their actions further a compelling government interest.
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for disparate treatment cases inapposite to the disparate impact claim asserted here. No circuit, in an impact case, has required plaintiffs to prove that defendants’ justifications were pretextual.”).
Defendants concede for purposes of their summary judgment motion that ICP has established a prima facie case, and they maintain that their actions further a compelling government interest. Defendants argue that the concentration of LIHTC developments in inner-city areas serves a compelling government interest; that 26 U.S.C. § 42, the statute that establishes lowincome housing tax credits, compels defendants to locate developments in the most impoverished areas; that it is impossible for defendants to comply with § 42 and achieve ICP’s request that 50% of LIHTC developments be located in the suburbs; and that to the extent they conflict, § 42 controls over the FHA and § 1982.
To determine whether defendants’ justification rises to the level of a compelling government interest, the court will consider “(1) whether [TDHCA’s actions] in fact further[] the governmental interest asserted; (2) whether the public interest served by [TDHCA’s actions] is constitutionally permissible and is substantial enough to outweigh the private detriment caused by it; and (3) whether less drastic means are available whereby the stated governmental interest may be attained.” See Arbor Bend, 2005 WL 548104, at *12 (internal quotation marks omitted). The court holds
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that TDHCA has not established beyond peradventure that its actions
furthered a compelling government interest.
Defendants have failed to establish that TDHCA cannot comply
with § 42 in a way that has less discriminatory impact on the
community. They offer as their justification TDHCA’s compliance
with § 42(m)(1)(B)(ii), which provides that a qualified allocation
plan gives preference to projects serving lowest-income tenants and
projects that are located in qualified census tracts (areas
designated by HUD as low-income). Defendants have failed to
establish without genuine dispute that TDHCA cannot comply with
both § 42 and the FHA. Defendants in fact acknowledge that there
is no conflict between § 42 and the FHA. The court therefore
denies defendants’ motion for summary judgment as to ICP’s FHA
claim. See, e.g., Huntington Branch, 844 F.2d at 941 (holding that
defendant town violated the FHA, reversing district court, and
entering judgment for plaintiff NAACP).19
19In Arbor Bend the plaintiff housing development filed an application with the defendant housing finance corporation seeking to become a participant in a tax-credit low-income housing program. Arbor Bend, 2005 WL 548104, at *1. The defendant denied the plaintiff’s application for funding. See id. at *3. The plaintiff sued, alleging that the defendant’s decision not to fund the development was motivated by race and familial status of the likely tenants. See id. The court held that, regardless of the plaintiff’s establishment of a prima facie case of discrimination, the defendant’s actions furthered the compelling government interest of not increasing the burden on already-overcrowded schools in the area. See id. at *12. The court thus granted defendant’s motion for summary judgment. See id. at *17.
But in Dews Chief Judge Buchmeyer held that the defendant town’s justifications for its zoning plan, which had a
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C The court now considers defendants’ motion for summary judgment as to ICP’s §§ 1982 and 1983 claims. Because ICP has established its prima facie case of discriminatory effect under McDonnell Douglas, the burden shifts to defendants to articulate a
legitimate, nondiscriminatory reason for their actions. See St.
Mary’s Honor Ctr., 509 U.S. at 506-07 (addressing racial discrimination claim under Title VII). Defendants’ burden is one of production, not proof, and involves no credibility assessments. See, e.g., West v. Nabors Drilling USA, Inc., 330 F.3d 379, 385 (5th Cir. 2003) (age discrimination case). “It is important to note, however, that although the McDonnell Douglas presumption
shifts the burden of production to the defendant[s], ‘[t]he ultimate burden of persuading the trier of fact that the defendant[s] intentionally discriminated against the plaintiff remains at all times with the plaintiff.’” St. Mary’s Honor Ctr.,
509 U.S. at 507 (quoting Burdine, 450 U.S. at 253) (emphasis in
original); see also Simms v. First Gibraltar Bank, 83 F.3d 1546,
discriminatory effect, were not bona fide, legitimate, or the least discriminatory means of accomplishing zoning objectives. Dews, 109 F.Supp.2d at 568-69. The defendant maintained that its “one-unitper-acre” zoning was necessary to protect public health and comply with regional obligations of environmental protection, transportation, air quality, and agricultural protection. See id. Chief Judge Buchmeyer found that this justification was pretextual and that less discriminatory zoning plans were available. See id. He held that the plaintiff had established liability under the FHA. See id. at 569.
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1559 (5th Cir. 1996) (holding that plaintiff did not present sufficient evidence of discrimination to find a violation of the FHA). “It is relatively easy . . . for a defendant to articulate a legitimate, non-discriminatory reason for his decision.” Arbor Bend, 2005 WL 548104, at *7 (quoting Britt, 978 F.2d at 1450).
Once defendants have produced a nondiscriminatory reason, the burden shifts back to ICP to prove that defendants’ proffered reason is pretextual, which is circumstantial evidence of discrimination. See West, 330 F.3d at 385 (“It is permissible for the trier of fact to infer the ultimate fact of discrimination from the falsity of the employer’s explanation.” (internal quotation marks omitted)); St. Mary’s Honor Ctr., 509 U.S. at 511 (Title VII case) (holding that “rejection of the defendant’s proffered reasons will permit the trier of fact to infer the ultimate fact of intentional discrimination . . . . But the [appellate court’s] holding that rejection of the defendant’s proffered reasons compels judgment for the plaintiff” is incorrect). “[P]laintiffs must present evidence that would allow a rational factfinder to make a reasonable inference that race was a determinative reason for the housing decision.” Jim Sowell Constr. Co. v. City of Coppell, 61 F.Supp.2d 542, 546 (N.D. Tex. 1999) (Fitzwater, J.) (citing Simms, 83 F.3d at 1556). But the Supreme Court has held that “discrimination may well be the most likely alternative explanation” for defendants’ actions once the plaintiff offers
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evidence that defendants’ reason is pretextual. See Reeves, 530
U.S. at 148 (“[A] plaintiff’s prima facie case, combined with
sufficient evidence to find that the employer’s asserted
justification is false, may permit the trier of fact to conclude
that the employer unlawfully discriminated.”); see also Russell v.
McKinney Hosp. Venture, 235 F.3d 219, 223 (5th Cir. 2000). The
Court cautioned, however, that there are instances where although
plaintiff has established a prima facie case of discrimination and
offered evidence that defendants’ justification is false, no
rational factfinder could conclude that defendants’ actions were
discriminatory. See Reeves, 530 U.S. at 148.
D
Defendants offer a nondiscriminatory reason for their actions
by pointing to the statute establishing low-income housing tax credits, 26 U.S.C. § 42.20 They argue that the statute specifically
encourages awarding tax credits to developments in the most impoverished neighborhoods, which are often minority areas.21 In
20See also supra § V(B). 21Defendants suggest that this case should be resolved under principles of statutory construction. Because they maintain that they are simply following the mandates of § 42, they argue that their actions must be legal, even if they violate the FHA or § 1982, because § 42 is the most recent and specific statute. The court declines to evaluate this case on this basis. First, ICP alleges violations of statutes and of the Fourteenth Amendment. Second, the FHA, § 1982, and § 42 are not in direct tension, and it is not clear that TDHCA could not comply with the three statutes. Nothing in § 42 requires that entities like TDHCA act in a discriminatory manner or in violation of the
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other words, they maintain that the concentration of LIHTC units in
minority areas is the direct result of the mandate of § 42, which
requires that defendants give preference to developments “serving
the lowest income tenants” and “located in ‘qualified census tracts.’” Ds. Oct. 2, 2009 Br. 13.22 Because defendants have
produced a nondiscriminatory reason for their actions, the court
need not make any credibility assessment of this proffered reason
at this time. See Kretchmer v. Eveden, Inc., 374 Fed. Appx. 493,
495 (5th Cir. 2010) (per curiam). The court holds that defendants
have met their burden of production as to the second step of
McDonnell Douglas.
E
The court now turns to the third step and holds that ICP has
presented sufficient evidence that defendants’ proffered reason is
pretextual to require a trial. See, e.g., Britt, 978 F.2d at 1450
(age discrimination case) (“In the context of summary judgment
. . ., the question is not whether the plaintiff proves pretext,
FHA or § 1982. “The courts are not at liberty to pick and choose among congressional enactments, and when two statutes are capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective.” Morton v. Mancari, 417 U.S. 535, 551 (1974). Therefore, the jury must decide whether defendants’ actions violated the FHA, § 1982, and § 1983, even if they demonstrate that TDHCA followed § 42.
22In particular, §§ 42(d)(5)(B)(i) and (ii) specifically allow a proposed development in a “qualified census tract” (a low-income area) to receive 130% of the tax credits a LIHTC development not in such an area would receive.
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but rather whether the plaintiff raises a genuine issue of fact regarding pretext.”). The following examples are illustrative.23
First, ICP has produced evidence that only 34% of all LIHTC units are in qualified census tracts, and that only 39.8% of all LIHTC units in qualified census tracts received the 130% bonus. Under TDHCA’s QAP, applications are awarded points if they meet desirable selection criteria, and can receive over 200 points. See 10 Tex. Admin. Code § 50.9. A proposed location in a qualified census tract earns an application just one point, equal to the bonus given to developments with a gazebo. See 10 Tex. Admin. Code §§ 50.9(i)(25) and (h)(4)(A)(ii)(III). Thus ICP has presented evidence that TDHCA’s primary justification, that its actions are required by § 42, is relevant to only 34% of TDHCA’s developments.
Second, ICP points again to the evidence of discriminatory intent discussed supra at § IV(F). Circumstantial evidence of discriminatory intent allows a jury to make a reasonable inference that race was a determinative reason for the housing decision. See Vill. of Arlington Heights, 429 U.S. at 266-68; Jim Sowell Constr. Co., 61 F.Supp.2d at 546-47 (listing non-exhaustive guiding factors, including (1) the discriminatory effect of the official action, (2) the historical background of the decision, (3) the
23When this court denies rather than grants summary judgment, it typically does not set out in detail the evidence that creates a genuine issue of material fact. See, e.g., Swicegood v. Med. Protective Co., 2003 WL 22234928, at *17 n.25 (N.D. Tex. Sept. 19, 2003) (Fitzwater, J.).
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specific sequence of events leading up to the challenged decision, (4) departures from the normal procedure, (5) departures from the normal substantive factors, and (6) the legislative or administrative history of the decision). ICP has presented evidence of the discriminatory effect of TDHCA’s tax credit allocation. ICP has also produced minutes from TDHCA board meetings in which tax credits for minority-area developments were approved even though the areas had a high concentration of lowincome housing developments and despite some board members’ objections.
Considering all of this evidence together, the court holds that ICP has raised a genuine issue of material fact as to the pretextual nature of defendants’ proferred justification. ICP has presented some evidence that defendants’ QAP and actual practices do not corroborate their contention that building in qualified census tracts is a true priority. Instead, the disproportionate approval of units in Caucasian areas when the likely tenants are Caucasian allows a reasonable jury to infer that defendants’ reason is pretextual. Because there are genuine issues of material fact, the court denies defendants’ motion for summary judgment as to ICP’s §§ 1982 and 1983 claims.
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*

*

*

ICP’s October 2, 2009 motion for partial summary judgment is

granted. Defendants’ October 2, 2009 motion for judgment on the

pleadings and their October 2, 2009 motion for summary judgment are

denied. ICP’s November 9, 2009 motion for leave to file

supplemental appendix is denied as moot.

SO ORDERED.

September 28, 2010.

_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE

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 Case 3:08-cv-00546-D Document 146 Filed 08/25/11 Page 1 of 12 PageID 5443

IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

The Inclusive Communities Project, Inc., *

Plaintiff,

*

v.

*

*

The Texas Department of

*

Housing and Community Affairs, and

*

Michael Gerber,

*

Leslie Bingham-Escareño,

*

Tomas Cardenas,

*

C. Kent Conine,

*

Dionicio Vidal (Sonny) Flores,

*

Juan Sanchez Muñoz, and

*

Gloria L. Ray in their official capacities, *

Defendants.

*

*

Civil Action No. 3:08-CV-0546-D

PRETRIAL ORDER

LR 16.4.a. a summary of the claims and defenses of each party.

ICP’s summary of its claims.

ICP alleges that TDHCA has disproportionately approved tax credits for low-income

housing in minority neighborhoods and has denied applications for non-elderly low-income

housing in predominately Caucasian neighborhoods; that 92% percent of all LIHTC units in the

city of Dallas are in census tracts where more than one-half of the population is minority; that

TDHCA has discretion in determining which proposed projects receive tax credits, and that

TDHCA improperly takes race into account (both of the neighborhood and of potential

residents), perpetuating racial segregation in Dallas housing; that defendants made housing and

financial assistance for housing construction unavailable because of race, in violation of the Fair

Housing Act; and that defendants used race as a factor in their allocation of tax credits, in

1
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Case 3:08-cv-00546-D Document 146 Filed 08/25/11 Page 2 of 12 PageID 5444
violation of the Fourteenth Amendment, actionable under § 1983, and § 1982, which requires that defendants give all United States citizens the same right to lease property as Caucasian citizens.
ICP requests broad equitable relief. ICP recognizes that in the event TDHCA is found liable, the defendants should be given the opportunity to propose a remedial plan for consideration.
ICP objects to defendants’ attempt in its summary of defenses to reurge the 11th Amendment immunity issue that defendants have withdrawn from consideration. ICP suggests that the Court decide the issue on the briefing and Appendix previously submitted by the parties.
Defendants’ summary of defenses. The Texas Department of Housing and Community Affairs (“TDHCA”) and several of its current or former board members and its Executive Director, each sued only in their official capacities (the “Individual Defendants”) (TDHCA and the Individual Defendants, may sometimes hereinafter be collectively referred to as the “Defendants”), contend as follows: The Defendants have not discriminated on the basis of the race either of the likely tenant population nor that of the surrounding community in their allocation of credits under the Low Income Housing Tax Credit (“LIHTC”) program established under Section 42 of the Internal Revenue Code, 26 U.S.C. § 42. Plaintiff ICP has not proved, nor will it be able to prove at trial, that Defendants, in their administration of the LIHTC program have violated either §§ 3604(a) or 3605(a) of the Fair Housing Act, 42 U.S.C. §§ 3604(a), 3605(a). Nor has ICP proved, nor will it be able to prove at trial, that Defendants have violated the Fourteenth Amendment of the United States Constitution, actionable under 42 U.S.C. § 1983, or the requirements of 42 U.S.C. § 1982.
2
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Case 3:08-cv-00546-D Document 146 Filed 08/25/11 Page 3 of 12 PageID 5445
Section 42 of the Internal Revenue Code directs each state’s housing credit agency (in this case for the State of the Texas, the TDHCA) to establish a Qualified Allocation Plan (a “QAP”) for the allocation of LIHTC credits which, among other matters, must -
(i) set[] forth selection criteria to be used to determine housing priorities of the housing credit agency which are appropriate to local conditions,
(ii) give[] preference in allocating housing credit dollar amounts among selected projects to-
(I) projects serving the lowest income tenants, (II) projects obligated to serve qualified tenants for the longest periods, and (III) projects which are located in qualified census tracts (as defined in subsection (d)(5)(C)) and the development of which contributes to a concerted community revitalization plan. 26 U.S.C. §42(m)(1)(B). In Texas the Legislature has authorized and directed the TDHCA to propose on an annual basis a QAP, after an opportunity for public review and comment, for approval by the Governor. That authority has been set forth in the provisions of the Texas Government Code (the “Code”), has been amended from time to time since the inception of the LIHTC program in 1986, and is currently found in the provisions of Subchapter DD of Chapter 2506 of the Code. Plaintiff, Inclusive Communities Project, Inc. (“ICP”), does not challenge either TDHCA’s QAPs or the state and federal legislative choices reflected in those plans. Further, ICP has expressly stated that it does not base its complaints upon the provisions of 42 U.S.C. § 3608(d) which generally obligate federal agencies in their housing programs to affirmatively
3
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further fair housing goals. Considering these two important clarifications by ICP in its briefing before this Court,
ICP is left with its claim that the TDHCA has the discretion to allocate, and in the exercise of its discretion, is legally required to allocate more LIHTC credits to units or projects in predominately white areas, and in particular, in predominately white areas in the Dallas metropolitan area in which ICP operates. Contrary to ICP’s assertions, however, TDHCA does not have unlimited discretion in the making of its LIHTC allocations. First, by the nature of the program, the Defendants do not select the location of nor directly make available any housing to the populations for whom the housing is developed. Each of those functions or activities are in the hands of private developers, and are also subject to a variety of local governmental restrictions or involvement, such as zoning or land use regulations. Second, the decisions on which projects will be allocated LIHTC credits are currently made, and have been since at least 2001, under an objective point system set forth in each year’s QAP, but subject to various provisions of the Code setting for factors which must be given priority and following under applicable opinions of the Texas Attorney General. Moreover, the current version of the statutes governing TDHCA’s decisions date back to 2001, following a period in which ostensibly greater discretion led to allegations of corruption and actual convictions for criminal misconduct. The current legislative policy favors governmental interests of accountability, transparency and predictability in the application of the policies of both the Federal and State legislation governing the LIHTC program.
Despite the Court’s opinion on the partial summary judgment motions to the contrary, Defendants continue to contest that ICP has met its prima facie burdens under the causes of
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action asserted. The statistics, when critically viewed under appropriate statistical analysis do not establish a disparate impact nor a discriminatory intent and do not support ICP’s claims under the Fair Housing Act, the Fourteenth Amendment or 42 U.S.C. § 1982. In this regard, Defendants reassert their challenges to ICP’s experts under Daubert, which this Court did not resolve in ruling upon the partial summary judgment motions.
Defendants contend that the proof at trial will establish, among other matters, that over 130 LIHTC projects have been approved and are currently in service in Walker Target Area Tracts. Walker Target Area Tracts are the census tracts in which ICP is mandated by the various settlements in the Walker Litigation to attempt to place its clients. Those tracts are deemed by the applicable orders in the Walker Litigation to be predominately white for the remedial purposes of that litigation. Moreover, and in contrast, ICP has alleged that only 27 projects in that same area [and no projects were specifically identified as impermissibly denied in any other region] were denied for racial reasons, and that, indeed, only 7 of those were denied in the period following the 2001 amendments to the State Legislation, with none allegedly denied since 2006. Defendants will also show that each QAP makes changes and that as either the Federal or State legislation has been amended, especially in recent years, the QAPs, and hence the point scoring provisions for the application for LIHTC credits, have increasing favored developments in what ICP contends are high opportunity areas and have attempted to curtail further development of LIHTC projects in areas of high concentration.
With respect to ICP’s claim under the FHA, the evidence will show that, because the demand for LIHTCs so greatly exceeds the supply, the TDHCA does not make housing unavailable by denying an application for LIHTCs. Instead, the evidence will show, the TDHCA
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makes available the greatest amount of housing it can by awarding the greatest number of LIHTCs that TDHCA is authorized to award in each year. ICP’s chief complaint is actually that the TDHCA does not make housing available in the locations ICP and its clients prefer. The evidence will show that the TDHCA makes housing available without any consideration of the race of ICP’s clients or any other person who utilizes government-sponsored programs. Wherever LIHTC supported housing developments are located, people of any race are welcome to reside in such developments. Accordingly, the TDHCA does not make housing unavailable, be it based on race or otherwise.
Assuming for the sake of argument that ICP will satisfy its prima facie burden, ICP will not be able to sustain its claims because no discriminatory impact or intent has been proved, and in any event, the Defendants’ actions have met compelling governmental interests and were implemented without pretext.
Additionally, Defendants contend that the applicable 2 year statutes of limitation bar any claims for liability for allocation decisions made more than 2 years before the filing of this suit. Thus, any conduct prior to that 2 year period cannot be used as a basis for the mandatory, injunctive relief sought by ICP.
Finally, TDHCA is immune from suit under the 11th Amendment to the United States Constitution.
LR 16.4.b. a statement of stipulated facts. None. LR 16.4.c. a list of contested issues of fact. ICP’s list of contested issues of fact.
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The only contested issues of fact for trial are: Whether the circumstantial evidence of discriminatory intent establishes by a preponderance of the evidence that race was a determinative reason for the housing decisions by TDHCA that resulted in the present racially segregated pattern of the location of LIHTC units. Whether the defendants’ proffered reason or reasons for the racially segregated pattern of the location of LIHTC units are pretextual. Whether, if the defendants assert a compelling governmental interest as a defense, the defendants’ evidence establishes the facts necessary to support the elements of that defense: (1) whether TDHCA’s actions in fact further the governmental interest asserted; (2) whether the public interest served by TDHCA’s actions is constitutionally permissible and is substantial enough to outweigh the private detriment caused by it; and (3) whether less drastic means are available whereby the stated governmental interest may be attained. This issue also involves a determination of law. ICP objects to the defendants’ attempt to make the fact issues determined as a matter of law in the summary judgment proceedings contested issues of fact. ICP objects to the defendants attempt to raise a new defense, statute of limitations, as a contested issue of fact. Defendants’ list of contested issues of fact. 1. Whether the statistical proof and other evidence relied upon by the Court in its September 28, 2010 Memorandum Opinion finding that ICP had met its prima facie burdens under the causes of action asserted were accurate and support that determination? 2. Whether Defendants otherwise made unavailable or denied a dwelling to any
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Case 3:08-cv-00546-D Document 146 Filed 08/25/11 Page 8 of 12 PageID 5450
person because of race as prohibited by 42 U.S.C. § 3604(a)? 3. Whether Defendants discriminated against any person in making available a
real-estate related transaction because of race as prohibited by 42 U.S.C. §3605(a)? 4. Whether Defendants allocations of LIHTC credits has either adversely affected a
particular minority group or harmed the community generally by the perpetuation of segregation?
5. In the event the Court determines any of issues 1, 2 or 3 in favor of Plaintiff, ICP, whether Defendants acted under a compelling governmental interest?
6. Whether Defendants have a. violated any rights of ICP which are secured by the Constitution or laws of the United States; and b. demonstrated that any such deprivation of rights was committed by Defendants acting under color of state law, as prohibited by 42 U.S.C. § 1982 and the Fourteenth Amendment to the United States Constitution and actionable under 42 U.S.C. § 1983? 7. Whether in connection with the issues set forth in item 4, above, Defendants acted with discriminatory intent? 8. In the event the Court determines any of issues 5 or 6 in favor Plaintiff, ICP, then whether Defendants’ explanations regarding the reasons for such actions were pretextual? 9. In the event the Court determines any of issues 1 through 7 in favor of Plaintiff, ICP, then whether any such actions giving rise to those findings occurred on or after March 28, 2006 [2 years before the filing date]?
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LR 16.4.d. a list of contested issues of law. ICP’s list of contested issues of law. Whether facts established by the evidence show a violation of the Fair Housing Act, 42 U.S.C. § 3604(a) and § 3605, a violation of the Fourteenth Amendment, actionable under 42 U.S.C. § 1983, and a violation of 42 U.S.C. § 1982. Defendants’ list of contested issues of law. 1. Whether Defendants have rebutted the prima facie finding by this Court in its September 28, 2010 Order (see Order at fn. 15)? 2. Whether, if Plaintiff has met its prima facie burdens, Defendants have established a compelling governmental interest for the actions they have taken? 3. Whether, if Plaintiff has met its prima facie burdens, Plaintiff has proven that Defendants’ explanations for the actions they have taken were pretextual? 4. Whether Plaintiff has proven that Defendants have taken race into account in the decisions to allocate LIHTC credits in violation of Sections 3604(a) and 3605(a) of the Fair Housing Act or the Fourteenth Amendment to the United States Constitution, as made actionable by 42 U.S.C. § 1983, or under 42 U.S.C. § 1982? 5. Even if Plaintiff has established a prima facie case of discrimination and offered evidence that Defendants’ justification is false, whether this Court, as a rational fact finder can conclude from the evidence adduced at trial that Defendants’ actions were discriminatory (see September 28, 2010 Order at 33).? 6. Whether Plaintiff’s causes of action, or parts of them, are barred by the two year states of limitation imposed by 42 U.S.C. § 3613(a) and applicable two year statute of limitations
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under Texas law as applied to Plaintiff’s claims under the Fourteenth Amendment to the United States Constitution, as made actionable by 42 U.S.C. § 1983, or under 42 U.S.C. § 1982 (as raised in Defendants’ Answer)?
7. Whether TDHCA is immune from suit under the 11th Amendment to the United States Constitution?
8. Whether the remedy proposed by Plaintiff for Defendants alleged violations is sufficiently and narrowly tailored to meet the alleged violations?
9. Whether the remedy proposed by Plaintiff for Defendants’ alleged violations is an impermissible and unconstitutional race conscious remedy?
10. Defendants contend that they only withdrew the immunity defense in connection with their summary judgment motion and that the applicable statutes of limitations were pled in Defendants’ Answer.
LR 16.4.e. an estimate of length of trial. ICP’s estimate of length of trial ICP estimates that the testimony of its witnesses including expert witnesses can be completed in two days. Additional time could be necessary depending on the objections to ICP’s evidence that require testimony to resolve. Defendants’ estimate of length of trial. Defendants believe that their case can be presented in two to two and one-half days, inclusive of anticipated cross examination of Defendants’ witnesses by Plaintiff. LR 16.4.f. a list of additional matters that might aid in the disposition of the case. ICP’s statement of additional matters that might aid in the disposition of the case.

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Some of ICP’s exhibits are summary exhibits that involve TDHCA or other government data including U.S. Census information. ICP is willing to meet with defendants’ counsel and provide the predicate testimony that would be used for these exhibits and answer predicate related questions concerning these exhibits. This could expedite the consideration of the admissibility of the exhibits.
Defendant’s statement of additional matters that might aid in the disposition of the case. Defendants acknowledge Plaintiff’s offer regarding interviews of its witnesses on matters predicate to the admissibility of certain documents. Defendants will make a similar offer to Plaintiff should it so desire. Defendants believe the parties can fruitfully discuss further the possibility of stipulations as to both facts and certain documents to avoid duplication. Defendants also believe that an early pretrial conference may be useful in resolving any issues as to the order of proof given the Court’s findings in its September 28, 2010 Order. Defendants also seek a ruling on their renewed Daubert motion to be filed today. SO ORDERED. August 25, 2011.
_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE

For Plaintiff:
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Respectfully Submitted,
/s/ Michael M. Daniel Michael M. Daniel State Bar No. 05360500 DANIEL & BESHARA, P.C.

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Case 3:08-cv-00546-D Document 146 Filed 08/25/11 Page 12 of 12 PageID 5454

For Defendants:

3301 Elm Street Dallas, Texas 75226-1637 214-939-9230 Fax 214-741-3596 E-mail: daniel.michael@att.net Attorney for Plaintiff
Laura B. Beshara State Bar No. 02261750 DANIEL & BESHARA, P.C. 3301 Elm Street Dallas, Texas 75226-1637 214-939-9230 Fax 214-741-3596 E-mail: laurabeshara@swbell.net Attorney for Plaintiff
By: G. Tomas Rhodus Texas State Bar No. 16824500 William B. Chaney Texas State Bar No. 04108500 David C. Gair Texas State Bar No. 24059792
LOOPER REED & McGRAW, P.C. 1601 Elm Street, Suite 4600 Dallas, Texas 75201 214.954.4135 (Phone) 214.953.1331 (Fax) E-mail: trhodus@lrmlaw.com E-mail: wchaney@lrmlaw.com E-mail: dgair@lrmlaw.com ATTORNEYS FOR DEFENDANTS

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 Case 3:08-cv-00546-D Document 171 Filed 02/14/12 Page 1 of 2 PageID 6838

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

ORDER

This case was tried to the court from August 29, 2011 until September 1, 2011, and the

parties submitted post-trial briefs and arguments through December 21, 2011. On November 7,

2011, after the trial was completed, the Supreme Court granted certiorari in Gallagher v. Magner,

619 F.3d 823 (8th Cir. 2010), cert. granted, 132 S.Ct. 548 (U.S. Nov. 7, 2011) (No. 10-

1032). Magner presents two questions: “Are disparate impact claims cognizable under the Fair

Housing Act?” and “If such claims are cognizable, should they be analyzed under the burden

shifting approach used by three circuits, under the balancing test used by four circuits, under a

hybrid approach used by two circuits, or by some other test?” Petition for Writ of Certiorari at

i, Magner v. Gallagher, No. 10-1032 (Feb. 14, 2011), 2011 WL 549171. Oral argument is set

for February 29, 2012.

The court has concluded that it should defer its decision in this case until Magner is decided.

After the Supreme Court’s opinion is filed, this court will decide whether to establish a supplemental

Case 3:08-cv-00546-D Document 171 Filed 02/14/12 Page 2 of 2 PageID 6839 schedule for briefing in the present case.
SO ORDERED. February 14, 2012.
_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE
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 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

MEMORANDUM OPINION AND ORDER

This lawsuit challenging the Texas Department of Housing and Community Affairs’

(“TDHCA’s”) allocation of Low Income Housing Tax Credits (“LIHTC”) in the Dallas

metropolitan area requires the court to decide whether plaintiff has proved that TDHCA

intentionally discriminated based on race, in violation of the Equal Protection Clause of the

Fourteenth Amendment and 42 U.S.C. § 1982, or that TDHCA’s allocation decisions had a

disparate racial impact, in violation of §§ 3604(a) and 3605(a) of the Fair Housing Act

(“FHA”). Following a summary judgment decision and a bench trial, and for the reasons that

follow,1 the court finds that plaintiff has proved its disparate impact claim under the FHA,

1The court sets out in this memorandum opinion and order its findings of fact and conclusions of law. See Fed. R. Civ. P. 52(a)(1). Although the court has carefully considered the trial testimony and exhibits, this memorandum opinion and order has been written to comply with the level of detail required in this circuit for findings of fact and conclusions of law. See, e.g., Century Marine Inc. v. United States, 153 F.3d 225, 231 (5th Cir. 1998) (discussing standards). The court has not set out its findings and conclusions in

but it otherwise finds in favor of defendants. I A
This is an action by plaintiff The Inclusive Communities Project, Inc. (“ICP”) against defendants TDHCA and its Executive Director and board members in their official capacities under the FHA, the Fourteenth Amendment (actionable under 42 U.S.C. § 1983), and 42 U.S.C. § 1982. ICP is a non-profit organization that seeks racial and socioeconomic integration in the Dallas metropolitan area. In particular, ICP assists low-income, predominately African-American families who are eligible for the Dallas Housing Authority’s Section 8 Housing Choice Voucher program (“Section 8”) in finding affordable housing in predominately Caucasian,2 suburban neighborhoods. Because under the LIHTC program a development that receives tax credits cannot refuse housing solely because a person is using a Section 8 voucher, it is important to ICP where the developments are located in the Dallas metropolitan area.
This lawsuit arises from TDHCA’s allocation of LIHTC in the Dallas metropolitan area. Under § 42 of the Internal Revenue Code (“I.R.C.”), the government provides tax
punctilious detail, slavishly traced the claims issue by issue and witness by witness, or indulged in exegetics, parsing or declaiming every fact and each nuance and hypothesis. It has instead written a memorandum opinion and order that contains findings and conclusions that provide a clear understanding of the basis for the court's decision. See id.
2In this memorandum opinion and order, the term “Caucasian” means white persons who are neither Hispanic nor Latino.
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credits that a state distributes to developers through a designated state agency. See id.
TDHCA is the agency designated by the Texas Legislature to administer the program in
Texas. See Tex. Gov’t Code Ann. § 2306.053(b)(10) (West 2008) (“The department may .
. . administer federal housing, community affairs, or community development programs,
including the low income housing tax credit program.”). Developers apply to TDHCA for
tax credits, which can be sold to finance construction of a housing project.
TDHCA issues two types of LIHTC: 4% tax credits3 and 9% tax credits. The 9% tax
credits are distributed on an annual cycle and are generally oversubscribed. Certain federal
and state laws dictate, at least in part, the manner in which TDHCA can select the
applications that will receive 9% tax credits. First, I.R.C. § 42 requires that the designated
state agency adopt a “Qualified Allocation Plan” (“QAP”) that prescribes the “selection
criteria.” See id. at § 42(m)(1)(A)-(B).4 The QAP must include, inter alia, certain selection
criteria, see id. at § 42(m)(1)(C),5 and preferences, see id. at § 42(m)(1)(B);6 otherwise,
3It appears that the actual name of 4% tax credits is “Tax-Exempt Bond.” See Tr. 2:12 (referring to P. Ex. 125 at 60 and noting that the term “Tax-Exempt Bond Developments” is “4% tax credits.”); P. Ex. 1 at 19; P. Ex. 125 at 28. The court will use the terms “4% tax credit” and “4% tax credits” because the parties and TDHCA appear to do so. See P. Ex. 490 at 17 (“[T]he non-competitive, or the 4 percent credits, as you’ll normally hear us refer to them in the Board meetings . . . [are] allocated with private activity bonds.”); see also, e.g., Tr. 4:11-15.
4ICP also calls the selection criteria the 9% point scoring and ranking system. This may result from the fact that Texas law obligates TDHCA to score and rank applications against selection criteria that prioritize certain criteria. See Tex. Gov’t Code Ann. § 2306.6710(b) (West 2001).
5I.R.C. § 42(m)(1)(C) provides, in relevant part:
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“zero” housing credit dollars will be provided, see id. at § 42(m)(1)(A). Second, the Texas
Government Code regulates how TDHCA administers the LIHTC program. The Code
requires TDHCA to adopt annually a QAP and corresponding manual. Id. at § 2306.67022.7
The selection criteria set forth in a qualified allocation plan must include— (i) project location, (ii) housing needs characteristics, (iii) project characteristics, including whether the project includes the use of existing housing as part of a community revitalization plan, (iv) sponsor characteristics, (v) tenant populations with special housing needs, (vi) public housing waiting lists, (vii) tenant populations of individuals with children, (viii) projects intended for eventual tenant ownership, (ix) the energy efficiency of the project, and (x) the historic nature of the project.
Id.
6I.R.C. § 42(m)(1)(B) provides, in relevant part:
[T]he term “qualified allocation plan” means any plan— . . . which . . . gives preference in allocating housing credit dollar amounts among selected projects to-(I) projects serving the lowest income tenants, (II) projects obligated to serve qualified tenants for the longest periods, and (III) projects which are located in qualified census tracts (as defined in subsection (d)(5)(C)) and the development of which contributes to a concerted community revitalization plan[.]
Id.
7Section 2306.67022 was amended in 2011. It now requires TDHCA to adopt a QAP and corresponding manual only biennially, with the discretion to do so annually. See Tex. Gov’t Code Ann. § 2306.67022 (West 2011). The court refers to the 2001 version, instead of the 2011 amended version, because the parties rely on the 2001 version. And the court
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It also sets out how TDHCA is to evaluate applications. TDHCA must first “determine
whether the application satisfies the threshold criteria” in the QAP. Id. at § 2306.6710(a).
Applications that meet the threshold criteria are then “score[d] and rank[ed]” by “a point
system” that “prioritizes in descending order” ten listed statutory criteria (also called “above-
the-line criteria”), which directly affects TDHCA’s discretion in creating the “selection
criteria” in each QAP. Id. at § 2306.6710(b).8 The Texas Attorney General has interpreted
is primarily relying on the statute to provide a basic understanding of the Texas LIHTC program during the period that preceded the filing of this lawsuit. As of the date of this memorandum opinion and order, it appears that it is still the TDHCA’s practice to adopt a QAP annually. See Ds. Dec. 7, 2011 Br. 13 (“The TDHCA administers its LIHTC program through a unique, legislatively-mandated QAP re-written each year.”).
8The ten statutory criteria are:
(A) financial feasibility of the development based on the supporting financial data required in the application that will include a project underwriting pro forma from the permanent or construction lender; (B) quantifiable community participation with respect to the development, evaluated on the basis of written statements from any neighborhood organizations on record with the state or county in which the development is to be located and whose boundaries contain the proposed development site; (C) the income levels of tenants of the development; (D) the size and quality of the units; (E) the commitment of development funding by local political subdivisions; (F) the level of community support for the application, evaluated on the basis of written statements from the state representative or the state senator that represents the district containing the proposed development site; (G) the rent levels of the units; (H) the cost of the development by square foot; (I) the services to be provided to tenants of the development;
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this provision to obligate TDHCA to “use a point system that prioritizes the [statutory] criteria in that specific order.” Tex. Att’y Gen. Op. No. GA-0208, 2004 WL 1434796, at *4 (2004). Although the Texas Government Code does not mandate the points to be accorded each statutory criterion, “the statute must be construed to require [TDHCA] to assign more points to the first criterion than to the second, and so on, in order to effectuate the mandate that the scoring system ‘prioritiz[e the criteria] in descending order.’” Id. (quoting Tex. Gov’t Code Ann. § 2306.6710(b)(1) (West 2004)). And while TDHCA can consider other criteria and preferences (also called “below-the-line” criteria), it “lacks discretionary authority to intersperse other factors into the ranking system that will have greater points than” the statutory criteria. Id. at *6 (citation and internal quotation omitted). Once TDHCA adopts a QAP, it submits the plan to the Governor, who can “approve, reject, or modify and approve” it. Tex. Gov’t Code Ann. § 2306.6724(b)-(c) (West 2001). Once approved, TDHCA staff review the applications in accordance with the QAP, underwrite applications in order “to determine the financial feasibility of the development and an appropriate level of housing tax credits,” id. at § 2306.6710(b)(1)(A) & (d), and submit their recommendations to TDHCA. See id. at § 2306.6724(e). TDHCA then reviews the staff recommendations and
and (J) whether, at the time the complete application is submitted or at any time within the two-year period preceding the date of submission, the proposed development site is located in an area declared to be a disaster under Section 418.014[.] Tex. Gov’t Code Ann. § 2306.6710(b) (West 2007).
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issues final commitments in accordance with the QAP. See id. at § 2306.6724(e)-(f). The 4% tax credit, on the other hand, is a non-competitive program, available to
applicants on a year-round basis. See P. Ex. 1 at 19, 46. The federal government provides states private activity bonds, see I.R.C. §§ 42 and 142, that are distributed in Texas by several issuers, including TDHCA. Developers can apply to TDHCA for a 4% tax credit to be allocated in addition to a bond, particularly the multifamily housing bond. In awarding the tax credit, TDHCA “reviews the application for threshold, eligibility and then the development is underwritten.” P. Ex. 1 at 20; see also Tex. Gov’t Code Ann. § 2306.67021 (West 2001) (providing that, with the exception of § 2306.6703 regarding eligibility, subchapter 2306 DD (i.e., from § 2306.6701-.6723) “does not apply to the allocation of housing tax credits to developments financed through the private activity bond program”). In particular, applications for the 4% tax credit are not subject to scoring under the selection criteria. See P. Ex. 125 at 64 (the 2008 QAP, for example, relieves 4% tax credit applications or “Tax-Exempt Bond Developments” from certain sections of the QAP, including § 50.9(I) regarding “Selection Criteria.”); see also Tr. 4:12 (“[4% applications] do[] [not] go through a competitive scoring model where the Board makes a decision on a particular group of projects at any given time.”) If a developer seeks a multifamily bond allocation from TDHCA, it applies to TDHCA, which reviews the application and submits it to the Bond Review Board (“BRB”), a separate agency, for the final determination of whether to issue an underlying bond.
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B ICP alleges that, despite federal and state laws governing the QAP, TDHCA is permitted under Texas law to exercise discretion in making final decisions regarding the allocation of both 4% and 9% tax credits. It maintains that TDHCA uses this discretion to make housing and financial assistance for housing construction unavailable because of race, in violation of §§ 3604(a) and 3605(a) of the FHA. ICP also alleges that TDHCA has used race as a factor in allocating tax credits under the LIHTC program, in violation of the Fourteenth Amendment and of § 1982, which requires that defendants give all United States citizens the same right to lease property as Caucasian citizens. In a prior opinion in this case, the court addressed the parties’ cross-motions for summary judgment. See Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 749 F.Supp.2d 486 (N.D. Tex. 2010) (Fitzwater, C.J.) (“ICP II”). It held that ICP was entitled to partial summary judgment establishing the prima facie case component of its claims under the FHA, § 1982, and the Fourteenth Amendment (actionable through § 1983). Id. at 500 (FHA) and 502 (§ 1982 and Fourteenth Amendment (actionable through § 1983)). Because ICP had met this burden, defendants were obligated with respect to ICP’s FHA claim (which was limited to a disparate impact claim, id. at 498 n.10) to prove that TDHCA’s actions were in furtherance of a compelling government interest that was bona fide and legitimate, and that there were no less discriminatory alternatives. Id. at 503. The court held that defendants had not met their summary judgment burden of establishing that TDHCA’s actions furthered a compelling government interest. In particular, they did not
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establish that TDHCA could not comply with both I.R.C. § 42 and the FHA. Id. at 504.
Concerning ICP’s intentional discrimination claims under § 1982 and the Fourteenth
Amendment (§ 1983), the court held that defendants had met their burden of producing
evidence of a nondiscriminatory reason for their actions, id. at 506, but that ICP had
“presented sufficient evidence that defendants’ proffered reason is pretextual to require a
trial.” Id.
The parties presented this case in a bench trial that commenced on August 29, 2011
and concluded on September 1, 2011. The court granted the parties’ requests that they
present their closing arguments by written submissions. The final submissions were filed on
December 21, 2011.9
9The parties have lodged numerous objections to the testimony and exhibits. Many objections are immaterial because the court did not rely on the evidence in question when making its decisions on the merits, or the court relied on the evidence for a limited purpose that is unaffected by whether the objection is well taken. In a bench trial, it is permissible for the court to hear evidence that it later determines is inadmissible or immaterial to its decisions on the merits. See Harris v. Rivera, 454 U.S. 339, 346 (1981) (holding that, in a bench trial, the court is presumed capable of hearing otherwise inadmissible evidence and disregarding that evidence when making decisions). Regarding the evidence on which the court did rely in reaching its decision, the principal objections appear to challenge the relevance of certain evidence and the qualifications of certain witnesses to give expert testimony. The court overrules the relevance objections that are related to the evidence on which the court has relied in reaching its decision. The court concludes that the evidence is relevant, within the meaning of Fed. R. Evid. 401, to whether defendants’ actions violated the FHA, the Fourteenth Amendment, and/or § 1982. To the extent the parties challenge the admissibility of witnesses who were offered as experts, the court holds that the party offering the testimony has either satisfied the requirements for expert testimony under Fed. R. Evid. 702 or that the witness was testifying based on personal knowledge as a fact witness rather than offering scientific, technical, or other specialized knowledge.
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II The court considers together ICP’s claims for intentional discrimination under the Equal Protection Clause of the Fourteenth Amendment (actionable under § 1983) and § 1982.
A The Equal Protection Clause of the Fourteenth Amendment “prohibits intentional racial segregation in government-assisted housing.” ICP II, 749 F.Supp.2d at 501 (citing Banks v. Dall. Hous. Auth., 119 F.Supp.2d 636, 638 n. 3 (N.D. Tex. 2000) (Kaplan, J.)). “To state a claim under § 1983, a plaintiff must (1) allege a violation of rights secured by the Constitution or laws of the United States and (2) demonstrate that the alleged deprivation was committed by a person acting under color of state law.” Id. (quoting Moore v. Dall. Indep. Sch. Dist., 557 F.Supp.2d 755, 761 (N.D. Tex. 2008) (Fitzwater, C.J.), aff’d, 370 Fed. Appx. 455 (5th Cir. 2010)). Section 1982 “prohibits all racial discrimination, private as well as public, with respect to property rights.” Id. (quoting Evans v. Tubbe, 657 F.2d 661, 663 n. 2 (5th Cir. Unit A Sept. 1981)) (internal quotation marks omitted). “To prove claims under § 1982 and the Equal Protection Clause, ICP must demonstrate discriminatory intent, not merely discriminatory effect.” Id. (citing City of Cuyahoga Falls v. Buckeye Cmty. Hope Found., 538 U.S. 188, 195 (2003)); see also Hanson v. Veterans Admin., 800 F.2d 1381, 1386 (5th Cir. 1986) (noting that although FHA claim requires only showing of discriminatory effect, § 1982 claim requires finding of intentional racial discrimination). ICP has not introduced direct evidence of intentional discrimination. Discriminatory intent can be proved, however, by circumstantial evidence. See Vill. of Arlington Heights v.
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Metro. Hous. Dep’t, 429 U.S. 252, 266-68 (1977); Jim Sowell Constr. Co. v. City of Coppell, 61 F.Supp.2d 542, 546-47 (N.D. Tex. 1999) (Fitzwater, J.) (listing non-exhaustive guiding factors, including (1) the discriminatory effect of the official action, (2) the historical background of the decision, (3) the specific sequence of events leading up to the challenged decision, (4) departures from the normal procedure, (5) departures from the normal substantive factors, and (6) the legislative or administrative history of the decision). When a plaintiff does not present direct evidence of discrimination, the burden-shifting method of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), applies. ICP II, 749 F.Supp.2d at 500. The court granted partial summary judgment in ICP II, holding that ICP had established a prima facie case of discriminatory intent. Id. at 502. The court recognizes that the “McDonnell Douglas formula . . . is applicable only in a directed verdict or summary judgment situation, and is not the proper vehicle for evaluating a case that has been fully tried on the merits.” Kanida v. Gulf Coast Med. Pers. LP, 363 F.3d 568, 575 (5th Cir. 2004) (internal quotation marks omitted) (quoting Powell v. Rockwell Int’l Corp., 788 F.2d 279, 285 (5th Cir. 1986)). But the court as trier of fact can consider ICP’s prima facie showing, and defendants’ explanation for their challenged conduct, when deciding whether ICP has proved intentional discrimination. “The existence of the prima facie case, together with evidence that defendants’ proffered explanation for its challenged conduct is pretextual, is sufficient to find intentional discrimination.” ICP II, 749 F.Supp.2d at 498 (citing Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 147 (2000)). And “the strength of the prima facie case can be relevant in determining whether defendants’ proffered explanation
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for their actions is in fact pretextual.” Id. (citing Prejean v. Radiology Assocs. of Sw. La. Inc., 342 Fed. Appx. 946, 950 (5th Cir. 2009) (per curiam)).
B ICP alleges that TDHCA intentionally discriminates based on race by disproportionately approving LIHTC in predominantly minority neighborhoods and disproportionately denying LIHTC in predominantly Caucasian neighborhoods. As noted, ICP has not offered direct evidence of discriminatory intent; instead, it relies on circumstantial proof, including evidence that TDHCA’s justifications for the discriminatory impact of its LIHTC decisions are pretextual. ICP failed to prove by a preponderance of the evidence that TDHCA intentionally discriminates based on race in its LIHTC decisions. Without discussing the trial evidence in punctilious detail, see supra note 1, the court finds that TDHCA offered evidence of its obligation to create the selection criteria of each QAP in accordance with governing federal and state law. TDHCA also introduced proof that its staff are responsible for initially scoring applications according to the QAP and presenting recommendations for TDHCA’s approval or denial. Multiple witnesses credibly testified that, in making decisions, TDHCA does not act with intent to discriminate. Moreover, ICP did not prove that TDHCA intentionally discriminates when exercising its limited discretion. ICP asserts that TDHCA can in its discretion ignore the selection criteria made mandatory by the Texas Legislature by issuing forward commitments to 9% tax credit applications and by approving 4% tax credit applications, and that this discretion
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is used to intentionally discriminate. The court finds that TDHCA offered credible evidence
of nondiscriminatory reasons for approving or denying every application that ICP alleges was
improperly approved or denied.10 For example, ICP maintains that TDHCA intentionally
discriminated in denying a 4% tax credit to the Primrose at Stonebrook project located in a
majority Caucasian area. The court finds that TDHCA denied this application because the
proposed project consisted of only three-bedroom units, and that in 2004 TDHCA was using
its limited 4% tax credit allocations for projects that had a mix of different size units so that,
among other reasons, single mothers could afford units in the development.11
ICP also failed to prove that TDHCA withheld its discretionary authority with the
intent to perpetuate a disparate impact. In fact, there are several instances when the TDHCA
Board attempted to use its limited discretion to deconcentrate LIHTC developments in high-
minority areas and encourage development in “high opportunity areas” preferred by ICP and
10Although the court finds below, see infra § III(C), that TDHCA could have used its discretion to issue forward commitments in order to decrease the disparate impact of its decisions, ICP did not prove by a preponderance of the evidence that TDHCA intentionally discriminates on the basis of race when deciding whether to make a forward commitment.
11The court finds that other challenged examples were also approved or denied for nondiscriminatory reasons. For instance, the Chaparral Townhomes project was a 9% tax credit applicant that scored well enough to receive LIHTC, but TDHCA denied the application because the developer was a former TDHCA board member who had in the past received four LIHTC allocations. In response to recent criminal charges against a former TDHCA board member and pressure from the Texas Legislature to spread tax credits among developers, TDHCA determined that it should avoid the appearance of impropriety and adhere to the Legislature’s request by not awarding tax credits to a former board member who had received LIHTC on four prior occasions. The credits were given instead to a developer who had never received LIHTC.
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other organizations. For example, in 2003, TDHCA board member Shadrick Bogany stated during a Board meeting that he was “tired” of the Board’s approving LIHTC projects in a manner that led to the concentration of LIHTC projects in high-minority areas. Shortly thereafter, the Texas Legislature responded to concerns about the concentration of LIHTC in high-minority areas by amending the statutes that governed the LIHTC program, and those changes were implemented by TDHCA in the 2004 QAP. The new rules sought to deconcentrate housing by imposing certain limitations on LIHTC project concentrations, such as the one mile/one year rule, the one mile/three year rule, and the twice per capita rule. The one mile/one year rule prevents TDHCA from approving two LIHTC projects within one linear mile of each other within the same allocation year in counties with populations exceeding one million. The one mile/three year rule prevents TDHCA from approving an LIHTC project that is within one linear mile of the same type of LIHTC project built within three years preceding the new project application, unless the local government votes specifically to allow the construction. And the twice per capita rule requires developers who propose a project in a municipality or county that contains more than twice the state average of units per capita supported by LIHTC to obtain a resolution from the municipality or county approving the new development.
Moreover, TDHCA independently took steps to deconcentrate LIHTC projects in high-minority areas. After ICP’s President testified before TDHCA in 2004 and requested that, as part of the selection criteria, TDHCA give four additional points to projects that further fair housing goals, TDHCA changed the 2005 QAP to include the granting of points
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to projects in “high opportunity areas,” and it increased from four to seven the requested points for certain “high opportunity area” categories.12 These changes, along with evidence of other TDHCA attempts to deconcentrate LIHTC projects in high-minority areas, demonstrate that TDHCA did not intentionally discriminate by withholding its discretionary authority to perpetuate a discriminatory impact. And there are other examples of how TDHCA attempted to address the concentration issue, such as the 130% basis boost given for projects in high opportunity areas. See Ds. Nov. 9, 2011 Br. 23-28 (addressing trial evidence regarding several examples).
ICP has failed to prove that TDHCA used the inclusive capture rate13 to intentionally discriminate by steering developers to propose LIHTC projects in high-minority areas. The inclusive capture rate is not part of the 9% selection criteria, but is instead used during the underwriting process to ensure that projects are financially feasible.14 The inclusive capture rate is calculated by comparing the supply of units in a given area to tenant demand for lowincome housing in the area. ICP alleges that the use of the inclusive capture rate leads to concentrations of LIHTC projects in high-minority areas because that is where a
12In response to a complaint to the Governor by Representative Robert Talton that granting seven points for developments in certain high opportunity areas encouraged development in high-income areas rather than low-income areas where the housing was needed, the Governor rejected the 2005 QAP. After TDHCA lowered the seven point categories to four points, the Governor approved the QAP.
13TDHCA no longer uses the term “inclusive capture rate.” It renamed and simplified the formula.
14A project will not be allocated LIHTC until it passes the underwriting analysis. - 15 -

disproportionate number of low-income housing tenants live; thus if a developer wants to increase the chances of passing the underwriting analysis, it will propose a project in a highminority area. The court finds that TDHCA uses the inclusive capture rate to measure the financial feasibility of a proposed development, not to intentionally discriminate based on race. Financial feasibility is of great concern to TDHCA because LIHTC allocated to projects that fail are largely lost; those lost credits in most instances cannot be allocated to other projects. Thus if a LIHTC project fails, Texas loses low-income housing units that would otherwise have been constructed and available.
Finally, ICP failed to prove that TDHCA’s justifications for the prima facie showing of disparate impact are pretextual. Again, the court need not explain its reasoning for rejecting each of ICP’s arguments. See supra note 1. These two are illustrative.
ICP posits that one of TDHCA’s asserted justifications for the disparate impact—that TDHCA does not control the locations of LIHTC projects because developers choose them—is pretextual because TDHCA, through the use of the inclusive capture rate, steers developers to propose projects in high-minority neighborhoods. According to ICP, the inclusive capture rate has this effect because the rate TDHCA requires for a project to pass the underwriting analysis effectively dictates that a high number of low-income tenants must live in the area of the proposed development. As the court has already discussed, however, TDHCA uses the inclusive capture rate during the underwriting process as a measurement of a project’s financial feasibility. ICP has therefore failed to prove that TDHCA’s
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justification that developers choose the LIHTC sites is pretextual.15 ICP also maintains that TDHCA’s justification that developers choose project sites
is pretextual because TDHCA uses a less demanding inclusive capture rate for elderly projects, which typically have fewer minority residents, than for non-elderly projects, which typically have more minority residents. ICP contends that this results in steering only nonelderly projects into high-minority areas. The court finds from the credible evidence, however, that TDHCA used different rates because, inter alia, the turnover rate in elderly units is much lower than in non-elderly units, thus requiring a lower inclusive capture rate to ensure the financial feasibility of the project. Accordingly, the court finds that TDHCA’s justification that developers choose project sites is not pretextual.
Because ICP has failed to prove by a preponderance of the evidence that TDHCA intentionally discriminates on the basis of race when allocating LIHTC, the court finds that it has failed to prove its intentional discrimination claims under the Fourteenth Amendment (actionable under § 1983) and § 1982.
15TDHCA does influence the locations of the LIHTC projects by selecting which projects are awarded LIHTC. To the extent TDHCA’s contention that developers choose the location of LIHTC projects is not in all respects precise, this inaccuracy does not belie an attempt by TDHCA to conceal discriminatory intent.
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III ICP also alleges that defendants are liable under §§ 3604(a) and 3605(a) of the FHA based on a claim for disparate impact.
A “The [FHA] prohibits discrimination in the provision of housing.” Artisan/Am. Corp. v. City of Alvin, Tex., 588 F.3d 291, 295 (5th Cir. 2009). Section 3604(a) of the FHA makes it unlawful, inter alia, to “make unavailable or deny, a dwelling to any person because of race[.]” Section 3605(a) provides that it is unlawful, inter alia, “for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race[.]” A “residential real estate-related transaction” includes providing financial assistance for the construction of a dwelling. Id. § 3605(b). In ICP II the court held that ICP was entitled to summary judgment establishing that it had made a prima facie showing of disparate impact. See ICP II, 749 F.Supp.2d at 499500. In particular, the court relied on evidence that, “from 1999–2008, TDHCA approved tax credits for 49.7% of proposed non-elderly units in 0% to 9.9% Caucasian areas, but only approved 37.4% of proposed non-elderly units in 90% to 100% Caucasian areas.” Id. at 499.16 Because ICP has made this showing, the burden has shifted to defendants to prove by
16The court relied on other evidence as well, including the “Talton Report,” a report of the House Committee on Urban Affairs prepared for the House of Representatives, 80th
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a preponderance of the evidence that their actions were in furtherance of a legitimate
governmental interest. See Huntington Branch, NAACP v. Town of Huntington, 844 F.2d
926, 939 (2d Cir. 1988) (citing Resident Advisory Board v. Rizzo, 564 F.2d 126, 149 (3d Cir.
1977)), aff’d in part, 488 U.S. 15 (1988); Rizzo, 564 F.2d at 149.17 To meet this burden,
Texas Legislature, and a study by the U.S. Department of Housing and Urban Development. See ICP II, 749 F.Supp.2d at 500.
17The Fifth Circuit has not yet adopted a standard and proof regime for FHA-based disparate impact claims. The circuits that have done so have adopted at least three different standards and proof regimes. In ICP II this court essentially followed the approach of the Second Circuit in Huntington Branch, 844 F.2d 926, although, unlike Huntington Branch, the court did not engage in a process of balancing factors identified in Metropolitan Housing Development Corp. v. Village of Arlington Heights, 558 F.2d 1283 (7th Cir. 1977). See ICP II, 749 F.Supp.2d at 503. The approach taken in ICP II was consistent with that found in other decisions of this court. See, e.g., AHF Cmty. Dev., LLC v. City of Dallas, 633 F.Supp.2d 287, 304 (N.D. Tex. 2009) (Fitzwater, C.J.) (“Once the plaintiff has made out a prima facie case of discriminatory effect . . . the burden shifts to the defendant to prove a compelling government interest.”) (internal quotation omitted) (citing Dews v. Town of Sunnyvale, Tex., 109 F.Supp.2d 526, 532 (N.D. Tex. 2000) (Buchmeyer, C.J.)).
It appeared that the Supreme Court might clarify this unsettled area of the law. After this case was tried, and while the parties were making post-trial submissions, the Court granted certiorari in Gallagher v. Magner, 619 F.3d 823 (8th Cir. 2010), cert. granted, 132 S.Ct. 548 (U.S. Nov. 7, 2011) (No. 10-1032), and cert. dism’d, ___ S.Ct. ____, 2012 WL 469885 (U.S. Feb. 14, 2012), to decide two questions: “Are disparate impact claims cognizable under the Fair Housing Act?” and “If such claims are cognizable, should they be analyzed under the burden shifting approach used by three circuits, under the balancing test used by four circuits, under a hybrid approach used by two circuits, or by some other test?” Petition for Writ of Certiorari at i, Magner v. Gallagher, 2011 WL 549171 (Feb. 14, 2011) (No. 10-1032). On February 14, 2012 this court entered an order deferring its decision in this case until Magner was decided. Feb. 14, 2012 Order at 1. But the Supreme Court dismissed the petition the same day this court entered its order. Magner v. Gallagher, ___ S.Ct. ____, 2012 WL 469885 (Feb. 14, 2012).
Absent controlling authority of the Supreme Court or the Fifth Circuit, the court will apply the law of the case, as set out in ICP II, and allocate to defendants the burden of proof regarding ICP’s disparate impact claim because ICP has satisfied its burden of establishing a prima facie case. The court will not, however, require that defendants prove a compelling
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defendants must prove two essential elements. First, they must prove that their interest is
bona fide and legitimate. Second, they must prove there are no less discriminatory
alternatives, meaning that “no alternative course of action could be adopted that would
enable that interest to be served with less discriminatory impact.” See Dews v. Town of
Sunnyvale, Tex., 109 F.Supp.2d 526, 565, 568 (N.D. Tex. 2000) (Buchmeyer, C.J.); see also
Huntington Branch, 844 F.2d at 939; Rizzo, 564 F.2d at 149. “[In] the end there must be a
weighing of the adverse impact against the defendant’s justification.” Huntington Branch,
844 F.2d at 936; see also Gashi v. Grubb & Ellis Prop. Mgmt. Servs., Inc., 801 F.Supp.2d
12, 16 (D. Conn. 2011) (“After the defendant presents a legitimate justification, the court
must weigh the defendant’s justification against the degree of adverse effect shown by the
plaintiff.”).18
governmental interest rather than a legitimate governmental interest, despite the use of the compelling standard in ICP II. See ICP II, 749 F.Supp.2d at 503; see also AHF Cmty. Dev., 633 F.Supp.2d at 304 (“Once the plaintiff has made out a prima facie case of discriminatory effect . . . the burden shifts to the defendant to prove a compelling government interest.”) (internal quotation omitted). Because defendants maintain that the court should apply a legitimate governmental interest standard absent Fifth Circuit precedent that requires the higher compelling governmental interest, and because the result of today’s case is the same under the legitimate governmental interest standard, the court opts to decide the claim under the lower standard.
18Some courts balance objectives in order to determine whether a discriminatory impact violates the FHA. See, e.g., Vill. of Arlington Heights, 558 F.2d at 1290 (examining “(1) how strong is the plaintiff's showing of discriminatory effect; (2) is there some evidence of discriminatory intent, though not enough to satisfy the constitutional standard of Washington v. Davis; (3) what is the defendant's interest in taking the action complained of; and (4) does the plaintiff seek to compel the defendant to affirmatively provide housing for members of minority groups or merely to restrain the defendant from interfering with individual property owners who wish to provide such housing”). This court has not adopted
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B
1
Defendants assert that they acted in furtherance of a compelling, or at least legitimate,
governmental interest: the awarding of tax credits in an objective, transparent, predictable,
and race-neutral manner, in accordance with federal and state law.19 Defendants point out that
the Texas Legislature, likely in response to the indictment and conviction of a TDHCA board
this approach. See Langlois v. Abington Hous. Auth., 207 F.3d 43, 51 (1st Cir. 2000) (rejecting balancing approach adopted by Village of Arlington Heights because “we do not think that the courts’ job is to ‘balance’ objectives, with individual judges deciding which seem to them more worthy” and “to have federal judges make such policy choices is essentially to impose on them the job of making decisions that are properly made by Congress or its executive-branch delegates; and the balancing approach is in tension with the course taken by the Supreme Court and Congress under Title VII where a standard of justification is constructed and applied”) (emphasis in original).
19As one of their asserted interests, defendants contend that they seek to award tax credits in a race-neutral manner. But a disparate impact claim does not require proof of discriminatory intent. See, e.g., Homebuilders Ass’n of Miss. v. City of Brandon, Miss., 640 F.Supp.2d 835, 841 (S.D. Miss. 2009); Arbor Bend Villas Hous., L.P. v. Tarrant Cnty. Hous. Fin. Corp., 2005 WL 548104, at *12 (N.D. Tex. Mar. 9, 2005) (Means, J.). And although facially neutral, a policy or practice can still violate the FHA because of its discriminatory impact. See Homebuilders Ass’n, 640 F.Supp.2d at 841 (“[A] discriminatory effect claim challenges neutral policies that create statistical disparities which are equivalent to intentional discrimination”.); Luckett v. Town of Bentonia, 2007 WL 1673570, at *6 (S.D. Miss. June 7, 2007) (“To succeed on [an FHA disparate impact claim], the plaintiff must identify a policy or practice that is facially neutral in its treatment of different groups but that in fact falls more harshly on one group than another and cannot be justified by business necessity.”) (citing Int’l Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n.15 (1977)); Owens v. Nationwide Mut. Ins. Co., 2005 WL 1837959, at *13 (N.D. Tex. Aug. 2, 2005) (Sanders, J.) (“To establish a [prima facie] case supporting a disparate impact or effect claim related to the discriminatory provision of insurance under § 3604 [of the FHA], a plaintiff must prove that a specific facially neutral policy or practice created statistical disparities so great as to be ‘functionally equivalent to intentional discrimination,’ thereby disadvantaging members of a protected group.”) (citing cases).
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member for bribery in connection with the LIHTC program, amended the Texas Government Code in 2001 and 2003 to provide the now-existing mandatory statutory requirements for the issuance of tax credits under the LIHTC program. According to TDHCA, these amendments were adopted for the purpose of creating an objective and transparent system, and TDHCA acts with these goals in mind. Although defendants rely principally on the foregoing interests, they also posit that the public interest is served by ensuring that tax credits are awarded to developments that will provide quality, sustainable housing for low-income individuals, and by providing the public an opportunity to participate in creating the QAP in an open and transparent manner, thereby enabling the LIHTC program to represent different policy viewpoints, in compliance with public expectations.
Defendants also maintain that, because of the strict requirements of federal and state law, TDHCA has only limited discretion, found in its ability (1) to modify strictly the belowthe-line criteria, and not the statutory above-the-line criteria, and (2) to “forward commit” by awarding tax credits from the following year’s allocation of tax credits to a 9% tax credit application that would not otherwise succeed due to its low score under the selection criteria.20 According to defendants, forward commitments have been used sparingly, with
20To the extent defendants are arguing that their discretion is limited because they do not select the location of their projects, defendants are misconstruing the issue in this case. As the court noted in ICP II, “ICP does not complain of the distribution of low-income housing in general; ICP challenges the allegedly discriminatory actions of TDHCA in disproportionately denying tax credits to proposed developments in Caucasian neighborhoods. TDHCA does control the approval or denial of applications actually submitted.” ICP II, 749 F.Supp.2d at 496.
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only three made in 2003 to 2007 in the region that includes Dallas. Defendants also maintain
that this discretion cannot be used in a manner that subverts federal and state law; otherwise,
it would render meaningless the intent of the Legislature in creating an objective, transparent,
and predictable system.
Defendants also note TDHCA’s actions in response to the Housing and Economic
Recovery Act of 2008 (“HERA”). Before the enactment of HERA, states were limited to
awarding 30% basis boosts only to developments located in qualified census tracts or
difficult development areas. But after HERA, states were permitted to choose the
developments to receive the boost. TDHCA exercised this authority in the 2009 QAP to
target developments in “high opportunity areas.” A “high opportunity area” is defined as:
an area that includes: (A) existing major bus transfer centers and/or regional or local commuter rail transportation stations that are accessible to all residents including Persons with Disabilities; or (B) a census tract which has an [Area Median Gross Income (“AMGI”)] that is higher than the AMGI of the county or place in which the census tract is located; or (C) a school attendance zone that has an academic rating of “Exemplary” or “Recognized” rating (as determined by the Texas Education Agency) as of the first day of the Application Submission Acceptance Period; or (D) a census tract that has no greater than 10% poverty population according to the most recent census data (these census tracts are designated in the 2010 Housing Tax Credit Site Demographic Characteristics Report).
P. Ex. 127 at 6-7. Defendants suggest that this change “is likely to have a positive effect in
increasing the number of LIHTC developments in [high opportunity areas].” See Ds. Dec.
21, 2011 Reply Br. 3.
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In addressing the second prong—which requires proof of no less discriminatory alternatives—defendants assert that “[t]here is no alternative that would serve the interest[s] with less discriminatory effect than the racially-neutral objective scoring system that is now in effect (and has been since 2003).” Ds. Dec. 21, 2011 Reply Br. 6. They criticize ICP’s requested relief of establishing a set-aside for projects in high opportunity areas, suggesting that this remedy cannot qualify as a less discriminatory alternative because it would conflict with governing law and contravene Regents of University of California v. Bakke, 438 U.S. 265 (1978).
Defendants next compare the justification against the resulting harm. They assert that ICP’s claim of injury is diminished by evidence that over 5,600 affordable, Section 8 housing units, although not necessarily LIHTC units, are available; a significant number of LIHTC units are located in Walker Target Area Tracts;21 developments in high opportunity neighborhoods have suffered high vacancy rates, such as 9.5% and 14.28%; and if the court were to broaden its comparison of approval rates from 0% to 9.9% and 90% to 100% Caucasian areas, as relied upon in its summary judgment opinion, see ICP II, 749 F.Supp.2d at 499-500, it would better illustrate the alleged impact, since TDHCA approved tax credits for 42.5% of proposed non-elderly units in 0% to 19.9% Caucasian areas and 50.0% for 80%
21The term “Walker Target Area Tracts” is defined in the Settlement Stipulation and Order in Walker v. U.S. Department of Housing and Urban Development, No. 3:85-CV1210-R, at 4 (N.D. Tex. Mar. 8, 2001) (Buchmeyer, C.J.). A qualifying census tract “according to the most recent decennial census, (i) has a black population at or below the average black population of the City of Dallas, (ii) has no public housing, and (iii) has a poverty rate at or below the average for the City of Dallas.” Id.
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to 100% Caucasian areas, and approved tax credits for 39.8% of the 0% to 29.9% and 48.6% for 70% to 100% Caucasian areas. Thus they argue that the harm to ICP cannot outweigh the substantial interests served by TDHCA.
2 ICP contends that defendants are presenting only interests that are furthered by the application of the Texas Legislature’s mandatory statutory requirements, in particular the selection criteria that apply only to the 9% tax credits. It asserts that the action that must be justified is the disproportionate approval of tax credits for non-elderly developments in minority neighborhoods, the issue giving rise to the FHA discriminatory impact claim. ICP also posits that the Texas Legislature’s mandatory selection criteria cannot be the cause of the discriminatory impact because the impact did not significantly increase after the implementation of the framework in 2003, and the 4% tax credits, which are not subject to the mandatory selection criteria, nonetheless contribute to the discriminatory impact. Last, ICP argues that defendants have not presented evidence regarding whether there are less discriminatory alternatives and, therefore, have failed to satisfy their burden.
C The court will assume that defendants’ proffered interests are bona fide and legitimate. See Huntington Branch, 844 F.2d at 939 (deciding to consider second prong first “[f]or analytical ease”). The court will therefore focus on whether defendants have met their burden of proving the second of the two essential elements: that there are no other less discriminatory alternatives to advancing their proffered interests, i.e., that “no alternative
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course of action could be adopted that would enable that interest to be served with less discriminatory impact.” Dews, 109 F.Supp.2d at 532.
Defendants have not presented arguments regarding the second element. Instead, they rely on the conclusory assertion that “[t]here is no alternative that would serve the interest[s] with less discriminatory effect.” Ds. Dec. 21, 2011 Reply Br. 6. They then criticize ICP’s requested set-aside remedy. But even assuming that defendants’ criticism of this remedy is correct, the fact that one possible alternative course of action is not viable does not prove that there are no other less discriminatory alternatives that could be adopted that would enable the interest to be served with less discriminatory impact.
Defendants have also failed to prove by a preponderance of the evidence that allocating tax credits in a nondiscriminatory and nonsegregative manner would impair any of the asserted interests. Cf. Huntington Branch, 844 F.2d at 940 (noting that two of town’s reasons for refusing to rezone plaintiff’s site were that it was inconsistent with defendant’s housing assistance plan and zoning ordinance, and rejecting these interests because the town simply relied on the existence of the plan and zoning ordinance without presenting evidence indicating why building the project would impair the interests sought to be advanced by the plan and zoning ordinance). Nor is there a basis for finding that TDHCA cannot allocate LIHTC in a manner that is objective, predictable, and transparent, follows federal and state law, and furthers the public interest, without disproportionately approving LIHTC in predominantly minority neighborhoods and disproportionately denying LIHTC in
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predominantly Caucasian neighborhoods.22
TDHCA also retains certain limited types of discretion that can be relied on to address
the discriminatory impact. Defendants have not proved that, in using this discretion,
TDHCA has adopted the least discriminatory alternative to further the legitimate
governmental interest. Regarding the selection criteria of each QAP, which applies only to
the 9% tax credits, defendants maintain that TDHCA has discretion only in modifying below-
the-line criteria. They posit that this discretion is limited in that the points accorded to
below-the-line criteria cannot exceed the lowest-ranked statutory above-the-line criterion,
and the Governor must approve of the QAP. Although TDHCA contends that it has added
certain below-the-line criteria with the purpose of affirmatively furthering fair housing goals
(e.g., providing a score enhancement for projects located in a “high opportunity area,” see
Ds. Nov. 9, 2011 Br. 25), defendants have not proved that these criteria are the least
discriminatory alternatives, and that TDHCA cannot add other below-the-line criteria that will effectively reduce the discriminatory impact while still furthering its interests.23 For
22Similarly, at the summary judgment stage, the court held in ICP II that defendants’ proffered compelling governmental interest—adherence to I.R.C. § 42—was insufficient because “[d]efendants . . . failed to establish that TDHCA cannot comply with § 42 in a way that has less discriminatory impact on the community” and that “TDHCA cannot comply with both § 42 and the FHA.” ICP II, 749 F.Supp.2d at 504.
23The “Talton Report,” a report of the House Committee on Urban Affairs prepared for the House of Representatives, 80th Texas Legislature, also concluded that TDHCA and the BRB“disproportionately allocate federal [LIHTC] funds and the tax-exempt bond funds to developments located in impacted areas (above average minority concentration and below average income levels)” and similarly recommended that TDHCA, BRB, and the legislature, among other things, “consider adding provisions to the QAP and the bond rules that give
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example, in the 2010 QAP, an application could receive four points under the “Development
Location” below-the-line criterion if its proposed development site was located within one
of six geographical areas: (1) “an Economically Distressed Area; a Colonia; or a Difficult
Development Area”;24 (2) a county that has received an award within the last three years
significant point scoring and/or set-aside of credits for affirmatively furthering assimilation outside of impacted areas.” P. Ex. 1 at 48-49.
24An “Economically Distressed Area” is defined as:
an Area in which: (A) Water supply or sewer services are inadequate to meet minimal needs of residential users as defined by Texas Water Development Board rules; (B) Financial resources are inadequate to provide water supply or sewer services that will satisfy those needs; and (C) An established residential subdivision was located on June 1, 1989, as determined by the Texas Water Development Board.
P. Ex. 127 at 6. A “Colonia” is defined as:
A geographic Area that is located in a county some part of which is within 150 miles of the international border of this state, that consists of 11 or more dwellings that are located in close proximity to each other in an area that may be described as a community or neighborhood, and that: (§2306.581) (A) Has a majority population composed of individuals and families of low-income and very low income, based on the federal Office of Management and Budget poverty index, and meets the qualifications of an economically distressed Area under §17.921, Texas Water Code; or (B) Has the physical and economic characteristics of a colonia, as determined by the Department.
Id. at 5. A “Difficult Development Area” is an area “specifically designated by the Secretary of HUD at the time of Application submission.” Id. at 52.
- 28 -

from the Texas Department of Agriculture’s Rural Municipal Finance Program or Real Estate Development and Infrastructure Program; (3) “a census tract which has a median family income . . . that is higher than the median family income for the county in which the census tract is located”; (4) “an elementary school attendance zone of an elementary school that has an academic rating of ‘Exemplary’ or ‘Recognized,’ or comparable rating” and “[t]he . . . Development will serve families with children”; (5) a “census tract . . . which . . . has no greater than 10% poverty population” and “the development will expand affordable housing opportunities for low-income families with children outside of poverty areas”; and (6) “an Urban Core.”25 P. Ex. 127 at 52-53. In other words, the “Development Location” criterion is a “menu option” where an applicant need only fulfill one of the six to receive the four points; fulfilling more than one would still result in four points. Thus even assuming that the third, fourth, and fifth options could reduce the asserted discriminatory impact, as suggested

25An “Urban Core” is defined as

[a] compact and contiguous geographical area that is located in a Metropolitan Statistical Area within the city limits of a city with a population of no less than 150,000 composed of adjacent block groups in which at least 90% of the land not in public ownership is zoned to accommodate a mix of medium or high density residential and commercial uses and at least 50% of such land is actually being used for such purposes based on high density residential structures and/or commercial structures already constructed.

P. Ex. 127 at 12.

- 29 -

by defendants,26 an applicant could instead opt for the first one, which covers “Economically
Distressed” locations and could further exacerbate the discriminatory impact. Further, even
if an applicant satisfied the third, fourth, or fifth option, it could receive four points at most
because the QAP does not permit the award of four points for each option. Similar to how
TDHCA made the below-the-line criterion “Developments in Census Tracts with No Other
Existing Same Type Developments Supported by Tax Credits” its own criterion worth six
points, TDHCA can further reduce the discriminatory impact by converting the types of
development locations suggested to reduce the discriminatory impact into its own scoring
items.27
Moreover, although defendants maintain that TDHCA’s discretion in creating the
selection criteria is limited to adopting below-the-line criteria, it appears that this discretion
is actually broader. It appears to extend to the authority to choose the number of points to
26This is based on defendants’ underlying assumption that “there’s a known association between race and income and poverty levels in Texas,” as Mary Whiteside, Ph.D. testified at trial and stated in her initial and second reports. See, e.g., Tr. 2:161; Ds. Ex. 224 at 1-4; Ds. Ex. 225 at 4. ICP raised numerous objections against the use of her testimony and reports. See, e.g., P. Nov. 9, 2011 at 20-22; Tr. 2:162. Because the court relies on her testimony and expert reports to support ICP’s disparate impact claim (i.e., to suggest that the evidence supports the existence of less discriminatory alternatives), it need not resolve ICP’s objections before relying on this evidence in this context.
27To the extent defendants argue that TDHCA’s discretion in reducing the discriminatory impact is restricted by the requirement of gubernatorial approval of QAP changes, and they rely on a specific instance when the Governor in fact rejected a QAP change, there is no evidence that the Governor would decline to approve a change necessary for TDHCA to comply with a federal court order directing defendants to remedy a violation of the FHA.
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be accorded each above- and below-the-line criterion, so long as the priority of statutory above-the-line criteria is maintained and the Governor approves. This suggests that TDHCA can accord more points to below-the-line criteria that reduce the discriminatory impact, as long as the points do not exceed the lowest above-the-line criterion, while still furthering TDHCA’s interests. For example, given that the lowest above-the-line criterion, “Declared Disaster Areas,” was worth seven points in the 2010 QAP, below-the-line critiera that assisted in reducing the discriminatory impact could have been allotted six points while respecting the priority of the statutory above-the-line criteria. A proposed development that falls within the guidelines of one of the “Development Location[s]” that could reduce the discriminatory impact is worth only four points. See P. Ex. 127 at 52-53. In comparison, the “Community Revitalization” below-the-line criterion awards six points. See id. at 51. To satisfy the “Community Revitalization” criterion, the proposed development must “use . . . an Existing Residential Development” and “propose[] any Rehabilitation or any Reconstruction that is part of a Community Revitalization Plan.” Id. Because “Rehabilitation, (which includes reconstruction) or Adaptive Reuse” serves as its own belowthe-line criterion separate from the “Community Revitalization” criterion and is worth three points, an applicant fulfilling the “Community Revitalization” criterion appears to be eligible for a total of nine points. See id. Given the trial evidence of the connection between race and income, communities seeking revitalization are potentially high-minority areas. Thus the criteria “Community Revitalization” and “Rehabilitation (which includes reconstruction) or Adaptive Reuse” may exacerbate the discriminatory impact, especially since the
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“Development Location” criterion is only worth four points and barely offsets nine points. Additionally, despite questioning from ICP concerning how more points could be allocated to above-the-line statutory criteria so that below-the-line criteria (in particular, criteria that would reduce the discriminatory impact) could also be given more points and result in greater weight in comparison to total points available, defendants do not address this area of discretion. Thus defendants have failed to prove that TDHCA has adopted the least discriminatory alternative that will still advance its interests.
Defendants have also failed to prove that forward commitments could not have been used in a less discriminatory manner while still advancing TDHCA’s legitimate governmental interests.28 Defendants contend that forward commitments are sparingly used and suggest that this is so because TDHCA must be careful not to use them in a way that would thwart legislative intent that the system be objective, transparent, and predictable. The fact that this authority is granted to TDHCA and that it has used it in certain circumstances suggests that it can be applied while still advancing TDHCA’s interests. And even if it is sparingly used, this does not address the disputed issue whether forward commitments have been used in the least discriminatory manner. For example, Fairway Crossing, one of the three applications that defendants state received a forward commitment from 2003 to 2007,
28Defendants maintain that Governor Rick Perry (“Governor Perry”) modified the 2012 QAP to eliminate forward commitments. Assuming arguendo that this is true, defendants have still failed to prove that, during the time when forward commitments were available, TDHCA approved them in the least discriminatory manner, while still advancing its proffered interests.
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is alleged by ICP to be located in a 0% to 9.9% Caucasian area. See P. Ex. 157 at 3. Although defendants assert that “[t]his project scored high enough to be awarded credits,” see Ds. Nov. 9, 2011 Br. at 10 n.8, it is not necessary for the development to score well under the selection criteria for it to be awarded a forward commitment. And it remains unclear whether a forward commitment to another application that year could have reduced the discriminatory impact while advancing TDHCA’s interests.
Although TDHCA selected “high opportunity areas” to be the recipient of the 30% basis boost, the definition of “high opportunity areas” suggests that further steps can be taken to reduce the discriminatory impact while still promoting TDHCA’s legitimate governmental interests. A high opportunity area includes an area that has a major bus or rail station, a census tract with a higher AMGI than the tract’s county or place, a school attendance zone with an academic rating of “Exemplary” or “Recognized,” or a census tract with no greater than 10% poverty rate. See P. Ex. 127 at 6-7. As an example, were TDHCA to require an applicant to meet all four criteria rather than just one to receive a basis boost, this would appear to reduce the discriminatory impact.
TDHCA also has discretion under at least one QAP that can be used to reduce the discriminatory impact of LIHTC. Section 50.10(a)(2) of the 2008 QAP authorized TDHCA, in considering staff recommendations for both 4% and 9% tax credits, to “not rely solely on the number of points scored by an Application” under the QAP and to “take into account, as it deem[ed] appropriate,” certain listed discretionary factors, including location, proximity to other low-income housing developments, and other good causes as determined by
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TDHCA.29 See P. Ex. 125 at 60-61; Ds. Ex. 14 at 60-61; see also Tr. 2:10, 12.30 This
29It is unclear whether Governor Perry eliminated this authority in the 2012 QAP. See Ds. Dec. 7, 2011 Br. 6-7 (noting that Governor Perry eliminated TDHCA’s ability to “waive internal rules,” without clarifying which internal rules). Even assuming that Governor Perry eliminated this area of discretion, the court concludes, at it does supra at note 28, that defendants have failed to prove that TDHCA used this discretion, when it was available, in the least discriminatory manner, while still advancing its proffered interests.
30Section 55.10(a)(2) of the 2008 QAP provided, in relevant part:
In making a determination to allocate tax credits, the Board shall be authorized to not rely solely on the number of points scored by an Application. It shall in addition, be entitled to take into account, as it deems appropriate, the discretionary factors listed in this paragraph. . . . If the Board disapproves or fails to act upon an Application, the Department shall issue to the Applicant a written notice stating the reason(s) for the Board's disapproval or failure to act. In making tax credit decisions . . . , the Board, in its discretion, may evaluate, consider and apply any one or more of the following discretionary factors: . . . (A) The Developer market study; (B) The location; (C) The compliance history of the Developer; (D) The financial feasibility; (E) The appropriateness of the Development’s size and configuration in relation to the housing needs of the community in which the Development is located; (F) The Development’s proximity to other low-income housing Developments; (G) The availability of adequate public facilities and services; (H) The anticipated impact on local school districts; (I) Zoning and other land use considerations; (J) Any matter considered by the Board to be relevant to the approval decision and in furtherance of the Department’s purposes; and (K) Other good cause as determined by the Board.
P. Ex. 125 at 60-61; Ds. Ex. 14 at 60-61.
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suggests that, despite an application’s score under the selection critiera, TDHCA was
authorized under the 2008 QAP to take into account factors such as “location” of
developments or “other good causes” in the award of tax credits. Because defendants have
not addressed whether TDHCA used the least discriminatory means while still furthering its
interests in exercising this discretion, the question remains whether it has been used in a manner that would reduce the discriminatory impact.31
Accordingly, because defendants have failed to meet their burden of proving that there
are no less discriminatory alternatives, meaning that no alternative course of action could be
adopted that would enable TDHCA’s interest to be served with less discriminatory impact,
the court finds in favor of ICP on its discriminatory impact claim under the FHA.
31Although ICP contends that the allocation of 4% tax credits also results in a discriminatory impact, defendants do not address whether TDHCA has adopted the least discriminatory alternative to further its legitimate governmental interests as to the 4% tax credits. Defendants stress their limited discretion in changing the mandatory selection when the 4% tax credits are not bound to scoring under that criteria. Four percent tax credits are non-competitive and reviewed solely for “threshold, eligibility, and then . . . underwrit[ing],” P. Ex. 1 at 20. And unlike the mandatory selection criteria, it does not appear that the Texas Government Code similarly limits TDHCA’s discretion in choosing the threshold criteria. Cf. Tex. Gov’t Code Ann. § 2306.6702(a)(15) (West 2003) (defining “Threshold criteria” as “criteria used to determine whether the development satisfies the minimum level of acceptability for consideration established in the department's qualified allocation plan”); id. at § 2306.6710(a) (requiring TDHCA to “determine whether the application satisfies the threshold criteria required by the board in the qualified allocation plan”). This leaves TDHCA greater discretion in adding criteria that could reduce the discriminatory impact.
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IV The court considers next defendants’ contention that ICP’s FHA claim is barred by the statute of limitations. A complaint under the FHA is timely when it is filed within two years after the occurrence or termination of an alleged discriminatory housing practice. See 42 U.S.C. § 3613(a)(1)(A). If a plaintiff challenges “an unlawful practice that continues into the limitations period, the complaint is timely if filed within [two years] of the last asserted occurrence of that practice.” Havens Realty Corp. v. Coleman, 455 U.S. 363, 380-81 (1982) (emphasis added); § 3613(a)(1)(A); see also Pecan Acres Ltd. P’ship I v. City of Lake Charles, 54 Fed. Appx. 592, 2002 WL 31730433, at *1 (5th Cir. 2002) (per curiam). ICP’s FHA claim is founded on an unlawful practice: TDHCA’s disproportionate approval of tax credits for non-elderly developments in minority neighborhoods, and, conversely, its disproportionate denial of tax credits for non-elderly housing in predominantly Caucasian neighborhoods. ICP has presented evidence from 1999 to 2008 to support this unlawful practice. Thus even assuming that the violation terminated in 2008, it is clear that ICP’s lawsuit was timely filed on March 28, 2008. Defendants have failed to prove their limitations defense by a preponderance of the evidence.
V Finally, TDHCA relies on the affirmative defense of Eleventh Amendment immunity. TDHCA asserts that it is an arm of the State of Texas and is therefore entitled to Eleventh Amendment immunity.
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TDHCA bears the burden of proving that it is entitled to Eleventh Amendment
immunity. See Skelton v. Camp, 234 F.3d 292, 297-98 (5th Cir. 2000). Such immunity is
proper if “a suit is really against the state itself.” Id. at 297 (citing Laje v. R.E. Thomason
Gen. Hosp., 665 F.2d 724, 727 (5th Cir. 1982)). To make this determination courts weigh
numerous factors, such as:
(1) whether state statutes and case law characterize the agency as an arm of the state; (2) the source of funds for the entity; (3) the degree of local autonomy the entity enjoys; (4) whether the entity is concerned primarily with local, as opposed to statewide, problems; (5) whether the entity has authority to sue and be sued in its own name; and (6) whether the entity has the right to hold and use property.
Vogt v. Bd. of Comm’rs Orleans Levee Dist., 294 F.3d 684, 689 (5th Cir. 2002) (citations
omitted). “The most significant factor in assessing an entity’s status is whether a judgment
against it will be paid with state funds.” Id. (brackets and citations omitted).
The Fifth Circuit has previously held that a predecessor agency of TDHCA—the
Texas Housing Agency—is not an arm of the state. See Tex. Dep’t of Hous. & Cmty. Affairs
v. Verex Assur., Inc., 68 F.3d 922, 926-28 (5th Cir. 1995), overruled on other grounds by Mullins v. TestAmerica, Inc., 564 F.3d 386, 413 n.19 (5th Cir. 2009).32 TDHCA does not
specifically address any of the Vogt factors or argue that the factors relied upon in Verex
should be assessed differently. Thus much of the analysis in Verex is uncontested. For
32Although the analysis in Vogt and Verex is not identical, the Fifth Circuit relies on many of the same factors when determining whether an agency is an arm of the state for the purposes of Eleventh Amendment immunity. Compare Vogt, 294 F.3d at 692-96 with Verex, 68 F.3d at 926-28.
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example, TDHCA can sue and be sued in its own name, see Tex. Gov’t Code Ann. § 2306.053(b), has the right to hold and use property, see § 2306.174, and is funded primarily by the federal government and by borrowing private capital that is not debt against the State of Texas, see P. Ex. 162 at 78-83; P. Ex. 381 at 13. Moreover, TDHCA’s funds, excluding appropriations for the Texas Legislature, are maintained outside of the state treasury. See Tex. Gov’t Code Ann. § 2306.071. Even though two factors weigh in TDHCA’s favor (TDHCA is concerned with statewide problems rather than local problems and does not have local autonomy), the court finds that these factors do not outweigh the ones that favor finding that TDHCA is not an arm of the state. See Verex, 68 F.3d at 928 (holding that even though Texas Housing Agency was concerned with statewide rather than local issues, it was not an arm of the state). The court therefore finds that TDHCA has not met its burden of proving that it is entitled to Eleventh Amendment immunity.
VI As ICP recognizes in the Pretrial Order, it is appropriate to afford TDHCA an opportunity to present a plan to remedy its violation of the FHA. Accordingly, TDHCA must submit a remedial plan that sets out how it will bring its allocation decisions into compliance with the FHA. This remedial plan need be no “more intrusive than is necessary to remedy proved [FHA] violations.” Rizzo, 564 F.2d at 149 (holding that Supreme Court’s admonitions that federal equitable belief be carefully tailored to proven constitutional violations is “no less forceful” when applied to statutory violations). The court encourages the parties to work cooperatively in formulating a remedial plan so that as many potential
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objections as possible can be resolved before the plan is submitted to the court for consideration and approval.
* * * For the reasons explained, the court finds in favor of ICP on its disparate impact claim under the FHA and otherwise finds in favor of defendants. Within 60 days of the date this memorandum opinion and order is filed, defendants must file their remedial plan. ICP may submit objections within 30 days after the remedial plan is filed. If objections are filed, the court will establish any necessary additional procedures by separate order. SO ORDERED. March 20, 2012.
_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE
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 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

MEMORANDUM OPINION AND ORDER

Frazier Revitalization Inc. (“FRI”) moves to intervene in this action as of right or

permissively. For the reasons that follow, the court grants the motion.

I

This action is the subject of two prior opinions;1 therefore, the background facts and

procedural history need not be discussed at length. On March 20, 2012 the court found in

favor of plaintiff The Inclusive Communities Project, Inc. (“ICP”) on its disparate impact

claim under §§ 3604(a) and 3605(a) of the Fair Housing Act (“FHA”). See Inclusive Cmtys.

Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, ___ F.Supp.2d ____, 2012 WL 953696,

at *1 (N.D. Tex. Mar. 20, 2012) (Fitzwater, C.J.). The court directed that defendant Texas

1See Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, ___ F.Supp.2d ____, 2012 WL 953696 (N.D. Tex. Mar. 20, 2012) (Fitzwater, C.J.); Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 749 F.Supp.2d 486 (N.D. Tex. 2010) (Fitzwater, C.J.).

Department of Housing and Community Affairs (“TDHCA”) submit a remedial plan, and it permitted ICP to present objections to TDHCA’s proposal. See id. at *13. On April 30, 2012, before TDHCA filed the remedial plan, FRI filed the instant motion to intervene under Fed. R. Civ. P. 24(a)(2) and (b)(2). FRI seeks intervention to assist in developing a remedy for the FHA violation and, if necessary, to assert objections and pursue an appeal of the court-ordered remedy. ICP opposes FRI’s motion. The court concludes that FRI has established that it is entitled to intervene as of right under Rule 24(a)(2).2
II A party is entitled to an intervention of right under Rule 24(a)(2) if (1) the motion to intervene is timely, (2) the interest asserted by the potential intervenor is related to the action, (3) that interest may be impaired or impeded by the action, and (4) that interest is not adequately represented by the existing parties. See, e.g., In re Lease Oil Antitrust Litig., 570 F.3d 244, 247 (5th Cir. 2009); Sierra Club v. Espy, 18 F.3d 1202, 1204-05 (5th Cir. 1994) (citing New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F2d 452, 463 (5th Cir. 1984) (en banc)).
2Because the court holds that FRI is entitled to intervene as of right, it need not reach the question whether FRI should be allowed to intervene permissively under Rule 24(b)(2).
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III The first element—timeliness—is determined by examining (1) the length of time between the potential intervenor’s learning that its interest is no longer protected by the existing parties and its motion to intervene, (2) the extent of prejudice to the existing parties from allowing late intervention, (3) the extent of prejudice to the potential intervenor if the motion is denied, and (4) any unusual circumstances. See, e.g., Lease Oil Antitrust Litig., 570 F.3d at 247-48.
A Regarding the first element, although ICP asserts that FRI should have learned of this lawsuit based on publicity that commenced in 2008 and from TDHCA reports and documents, the first element of timeliness focuses on when the intervenor “became aware that its interests would no longer be protected by the original parties,” not “the date on which the would-be intervenor became aware of the pendency of the action.” Sierra Club, 18 F.3d at 1206 (citing Stallworth v. Monsanto Co., 558 F.2d 257, 264 (5th Cir. 1977)). The earliest FRI could have learned that its interest was no longer protected by TDHCA was on March 20, 2012, when the court issued its decision and TDHCA transitioned from defending its allocation of Low Income Housing Tax Credits (“LIHTC”) to presenting a remedial plan to address the disparate impact violation of the FHA: a plan that could impair LIHTC applications by FRI. See Inclusive Cmtys. Project, 2012 WL 953696, at *13. FRI moved to intervene 41 days later, which is not unreasonable. Cf. Edwards v. City of Hous., 78 F.3d 983, 1000-01 (5th Cir. 1996) (en banc) (collecting cases in support of proposition that delays
- 3 -

of 37 and 47 days were not unreasonable). B
Concerning the second element—the extent of prejudice to the existing parties from allowing late intervention—the court holds that the existing parties will not suffer prejudice on this basis. TDHCA does not oppose FRI’s intervention, and ICP does not present any meritorious grounds for finding prejudice. FRI moved to intervene soon after it became aware that its interest was no longer protected and before TDHCA filed its remedial plan. Cf. John Doe # 1 v. Glickman, 256 F.3d 371, 378 (5th Cir. 2001) (finding no prejudice under this element because potential intervenor filed motion approximately one month after it became aware of stake, which was before trial and final judgment). And while ICP asserts that FRI is attempting to relitigate issues decided at trial, “no prejudice can come from [this] because an [intervenor] must accept the proceedings as [it] finds them.” Id. (quoting Sierra Club, 18 F.3d at 1206 n.3) (internal quotation marks omitted).
C As to the third element—the extent of prejudice to the potential intervenor if the motion is denied—the court concludes that FRI will incur prejudice if intervention is denied. As a nonparty, FRI will be affected by the court-ordered remedy when TDHCA implements it against LIHTC applicants, but FRI will not be able to participate in developing the remedy or to appeal the ruling. See id. at 379 (citing Edwards, 78 F.3d at 1002-03); see also Lease Oil Antitrust Litig., 570 F.3d at 249-50 (“Intervening in the existing federal lawsuit is the most efficient, and most certain, way for [the potential intervenor] to pursue its claim.”).
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D The fourth element of timeliness—the presence of any unusual circumstances—does not warrant denying FRI’s motion.
IV The second element for assessing a motion to intervene as of right considers whether the interest asserted by FRI is related to this lawsuit. FRI has a direct, substantial, legally protectable interest in the subject of this action, which involves the allocation of LIHTC. FRI is authorized to apply for LIHTC from TDHCA. Cf. Edwards, 78 F.3d at 1004 (holding that potential interference with promotion opportunities could justify intervention, and that vested interest in promotion was not required) (quoting Black Fire Fighters Ass’n of Dall. v. City of Dall., Tex., 19 F.3d 992, 994 (5th Cir. 1994); Howard v. McLucas, 782 F.2d 956, 959 (11th Cir. 1986)); Sierra Club, 18 F.3d at 1207 (“[T]he ‘interest’ test is primarily a practical guide to disposing of lawsuits by involving as many apparently concerned persons as is compatible with efficiency and due process[.]”) (quoting Ceres Gulf v. Cooper, 957 F.2d 1199, 1203 n.10 (5th Cir. 1992)).
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V The third factor assesses whether FRI’s interest may be impaired or impeded by the action. FRI’s interest may be impaired by this lawsuit because, if FRI is denied leave to intervene, it will be bound by the court-ordered remedy once TDHCA implements it, and this may impair FRI’s ability to obtain LIHTC for its projects. See, e.g., Edwards, 78 F.3d at 1005; Sierra Club, 18 F.3d at 1207. Although ICP contends that FRI is not impacted because FRI’s 2012 LIHTC application will likely receive an award, FRI’s interest is considerably broader than a single application in a single application cycle; FRI seeks a court-ordered remedy that will not unnecessarily hinder the award of LIHTC to developments that revitalize low-income areas, even if located in predominately minority areas.
VI The fourth element evaluates whether FRI’s interest is adequately represented by the existing parties. Contrary to ICP’s contentions, FRI is not adequately represented by the existing parties. TDHCA is a governmental agency that must represent the general public interest, not the private interests of FRI. See John Doe #1, 256 F.3d at 381. And, as ICP and FRI recognize, they are asserting competing claims to the distribution of LIHTC.
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* * * Accordingly, for the reasons explained, the court grants FRI’s April 30, 2012 motion to intervene. SO ORDERED. June 12, 2012.
_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE
- 7 -

 
 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

MEMORANDUM OPINION AND ORDER

Having found in favor of plaintiff The Inclusive Communities Project, Inc. (“ICP”)

on its disparate impact claim under §§ 3604(a) and 3605(a) of the Fair Housing Act (“FHA”),

the court now addresses the appropriate remedy for awarding Low Income Housing Tax

Credits (“LIHTC”) in the Dallas metropolitan area.

I

As directed, defendants Texas Department of Housing and Community Affairs and

its Executive Director and board members in their official capacities (collectively,

(“TDHCA”), have submitted a proposed remedial plan (“Plan”). According to TDHCA,

operating under the constraints of federal and state law, the Plan does the following:

focuses on: (1) according proposed developments located in defined high opportunity areas the greatest incentives allowed by state law; and, (2) according developments in Qualified Census Tracts (QCTs) that are part of true concerted revitalization plans co-equal incentives in order to provide the preference created by Internal Revenue Code §42(m). It is envisioned that the revitalization incentive will set a very high threshold, making it unlikely to yield a number of successful applicants in QCTs such that would perpetuate any discriminatory patterns found to have occurred unintentionally. Ds. Plan 4. The Plan contains the following twelve-points: 1. TDHCA states that Governor Perry, in approving the 2012 Qualified Allocation Plan (“QAP”), determined that forward commitments were not desirable and that waivers should only be granted when “necessary to further a purpose or policy enunciated in Tex. Gov’t Code, Chapter 2306.” Id. 2. TDHCA proposes to further strengthen the definition of a high opportunity area (“HOA”) by adopting the following “Opportunity Index”:
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Points Population Served

Poverty Factor

Income Factor

School Quality Factor

7

General

<15% for all Top quartile of median

Exemplary or

individuals household income for county recognized

or top quartile for

Metropolitan Statistical Area

(“MSA”)

5

General

<15% for all Top 2 quartiles of median Exemplary or

individuals household income for county recognized

or top 2 quartiles for MSA

5

Any

<15% for all individuals

Top quartile of median

Exemplary or

household income for county recognized

or top quartile for MSA

3

Any

<15% for all individuals

Top quartile of median

n/a

household income for county

or top quartile for MSA

1

Any

<15% for all individuals

Top 2 quartiles of median n/a household income for county or top 2 quartiles for MSA

Id. at 6-7. TDHCA also suggests adding certain below-the-line criteria, which it maintains are
“indicative of educational quality and opportunity or lack of affordable housing.” Id. at 7. Moreover, it offers to remove all other “Development Location” options in the below-the-line criterion unless the option is required by statute so that it will maintain high incentives to target HOAs.

- 3 -

3. TDHCA proposes to continue including a 130% basis boost for applications proposing development sites located in HOAs.
4. In order to effectuate the preference in I.R.C. § 42(m) for developments located in QCTs and which contribute to a concerted community revitalization plan, TDHCA proposes the following “Revitalization Index”:

Points 7
3
2

Population Served
Any
Any
Any

Criteria
The proposed development site is located in a QCT in which there is in effect a concerted revitalization plan consistent with the elements described in § 5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $25,000 per unit in the proposed development.
The proposed development site is located in a QCT in which there is in effect a concerted revitalization plan consistent with the elements described in § 5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $10,000 per unit but are less than $25,000 per unit
The proposed development site is not located in a QCT but there is in effect a concerted revitalization plan consistent with the elements described in § 5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $10,000 per unit.

Id. at 10-11. 5. TDHCA offers to continue including criteria for disqualifying proposed sites
that have undesirable features. It also proposes to require an applicant to obtain pre-

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clearance if the proposed development is located at or within 1000 feet of certain negative site features.
6. In line with the “Revitalization Index,” TDHCA proposes to strengthen the requirements to establish a concerted revitalization plan in order to insure that “true community revitalization is occurring.” Id. at 15.
7. TDHCA proposes to promulgate by rule a fair housing choice disclosure to advise prospective tenants of alternative housing and fair housing rights. TDHCA also proposes to maintain a website with relevant information.
8. TDHCA proposes to conduct an annual analysis, which will be made public, of the “effects of its prior QAP to determine if that QAP . . . contribut[es] to a disparate impact[,]” in order to “take appropriate and lawfully permitted measures to amend the next and subsequent QAPs . . . to avoid [the] present and potentially developing disparate impact.” Id. at 18.
9. TDHCA proposes adding a mechanism to challenge the grounds for public comments that could lead to the negative scoring of 9% applications or constitute opposition to proposed 4% developments. Additionally, applications in HOAs receiving statements of support or neutrality from a neighborhood organization that previously opposed a development, causing it to lose points, will receive two additional points. TDHCA must also amend its debarment rules so that if any applicant attempts to create opposition to an application, they will be subject to debarment.
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10. TDHCA proposes that “[i]n the event of a tie in scoring, the tie breaker will be a preference for the developments that are located the greatest distance from the nearest development that is assisted by either 4% or 9% [LIHTCs].” Id. at 20.
11. TDHCA proposes to “continue to make available on its website proposed and final QAPs with comments and responses, applications, underwriting reports, application and award logs, scoring logs by subject, inventories, and appeal materials.” Id. at 20. It also proposes to “post market studies, Phase I Environmental Site Assessments and property condition assessments on its website.” Id.
12. TDHCA acknowledges that it is subject to statutory constraints, including “adherence to the Texas Administrative Procedures Act; the Texas General Appropriations Act; Chapter 2306 of the Texas Government Code; and adherence to various federal requirements regarding the administration of other sources of funding impacting [TDHCA’s] ability to address such matters.” Id. at 20.
ICP and intervenor Frazier Revitalization Inc. (“FRI”) object to components of the Plan.1
1On August 3, 2012 FRI filed a motion for leave to file supplement to objections to defendants’ proposed remedial plan, which the court has granted today. Although the court has considered the supplement to objections and brief in adopting the remedial plan, because nothing in them changes the reasoning or decisions of this memorandum opinion and order, the court will not separately discuss the supplement to objections and brief.
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II “Once a right and a violation have been shown, the scope of a district court’s equitable powers to remedy past wrongs is broad, for breadth and flexibility are inherent in equitable remedies.” Swann v. Charlotte-Mecklenburg Bd. of Educ., 402 U.S. 1, 15 (1971). This power, however, is not plenary and may be exercised only on the basis of the violation. See, e.g., Dayton v. Bd. of Educ. v. Brinkman, 433 U.S. 406, 419-20 (1977); Swann, 402 U.S. at 16. The scope of the remedy must be tailored to fit “the nature of the violation” and cannot be “broader than that necessary to remove the violation and its effects.” Resident Advisory Bd. v. Rizzo, 564 F.2d 126, 145 (3d Cir. 1977) (quoting Brinkman, 433 U.S. at 419). “A remedy is justifiable only insofar as it advances the ultimate objective of alleviating the initial constitutional violation.” Freeman v. Pitts, 503 U.S. 467, 489 (1992). Moreover, “the federal courts in devising a remedy must take into account the interests of state and local authorities in managing their own affairs, consistent with the Constitution.” Spallone v. United States, 493 U.S. 265, 276 (1990) (quoting Milliken v. Bradley, 433 U.S. 267, 280-81 (1977)). It is within the court’s authority to “order[] such affirmative action as may be appropriate” in order to remedy a FHA violation. 42 U.S.C. § 3613(c)(1). “Appropriate relief for violations of the [FHA] is to be determined on a case-by-case basis with relief tailored in each instance to the needs of the particular situation.” United States v. Jamestown Center-in-the-Grove Apartments, 557 F.2d 1079, 1080 (5th Cir. 1977) (citations omitted). “Relief should be aimed toward twin goals insuring that no future violations of the [FHA]
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occur and removing any lingering effects of past discrimination.” See id. (collecting cases).
III
A
As proposed by TDHCA, the court adopts by judgment filed today the following
remedy for TDHCA’s violation of the FHA. Pending further order of this court, TDHCA
must apply the following remedy as to the Dallas metropolitan area in accordance with
TDHCA’s proposal:2
1. include in the QAP the additional below-the-line criteria provided by the
“Opportunity Index”;
2. include in the QAP the additional below-the-line criteria regarding the quality
of public education and anti-concentration, and remove all other “Development
2Although TDHCA functions on a statewide basis, its obligation under this remedy extends only to the Dallas metropolitan area because ICP’s disparate impact claim is founded solely on that region. See Brinkman, 433 U.S. at 420 (“[O]nly if there has been a systemwide impact may there be a systemwide remedy.”); see also Horne v. Glores, 557 U.S. 433, 129 S.Ct. 2579, 2607 (2009) (because violation was proved only as to single district, vacating statewide injunction to extent it extended beyond district on grounds that “a statewide injunction . . . intruded deeply into the State’s budgetary processes” and “obscured accountability for the drastic remedy” since the state legislature or state courts have the authority to decide this issue and not the lower court). The court concludes that the remedy ordered by this court does not apply statewide. Cf. Ds. Plan 19 (“[TDHCA] will endeavor to apply the principles and objectives in this Plan on a statewide basis.”). This does not bar TDHCA from following its usual processes to apply this remedy to areas outside of the Dallas metropolitan area. The court, however, cannot order a statewide remedy, which would circumvent TDHCA’s usual processes, because it must be careful to minimize federal intrusion and to decree a remedy only to the extent it will cure the violation. See, e.g., Brinkman, 433 U.S. at 420; Jamestown, 557 F.2d at 1081; United States v. W. Peachtree Tenth Corp., 437 F.2d 221, 228-29 (5th Cir. 1971).
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Location” criteria set forth; 3. continue to provide a 130% basis boost for developments in HOAs; 4. continue to include in the QAP criteria for disqualifying proposed
development sites that have undesirable features and incorporate the more robust process to identify and address other potentially undesirable site features; 5. promulgate by rule a fair housing choice disclosure for prospective tenants and maintain a website providing information as to tax-credit assisted properties; 6. conduct an annual disparate impact analysis; 7. provide a mechanism to challenge public comments that cause proposed developments to receive negative points and include in the QAP the additional two-point below-the-line criterion regarding support or neutrality from a neighborhood organization that previously opposed a development and an associated debarment rule; and 8. in the event of a tie in scoring a 9% application, adopt a tie breaker in favor of an application proposing development in an HOA.
B TDHCA must also submit an annual report to the court so that the court can evaluate whether, during the reporting period, TDHCA has “insur[ed] that no future violations of the [FHA] occur[red] and remov[ed] any lingering effects of past discrimination.” See id. No later than 90 days after the date the judgment is filed, the parties must confer
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regarding what information the report should contain. No later than 120 days after the date the judgment is filed, the parties must make a joint submission to the court stating (1) whether they agree to the contents of the report, and, if they do not agree in all respects to the contents, (2) their specific agreements and disagreements and their reasons for disagreement. The court will then issue an order prescribing the contents of the annual report.
Each calendar year, no later than 120 days after the TDHCA Board of Directors (“Board”) issues final commitments for allocations of LIHTC, TDHCA must file the annual report with the clerk of court.3 Within 30 days of the date TDHCA files the annual report, any other party may comment on the report by filing the comments with the clerk of court and serving all other parties. TDHCA may file a reply to a comment no later than 30 days after the comment is filed. TDHCA may include in an annual report, and another party may include in a comment, a request to modify a provision of the remedial plan. The request must set forth why the provision is no longer necessary or is insufficient to “insur[e] that no future violations of the [FHA] occur and remov[e] any lingering effects of past discrimination.” Id.; see also Brown v. Plata, ___ U.S. ___, 131 S.Ct. 1910, 1946 (2011) (quoting N.Y. State Ass’n for Retarded Children v. Carey, 706 F.2d 956, 967 (2d Cir. 1983)) (“The power of a court of equity to modify a decree of injunctive relief is long-established, broad, and flexible.”).
3Based on Tex. Gov’t Code Ann. § 2306.6724(f) (West 2008), the court anticipates that the 120-day deadline will occur 120 days after July 31 of the calendar year in question. If that date falls on a day when the clerk’s office is closed, the report will be due the next day that the office is open.
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For the reasons explained infra at § VII, the annual reporting procedure shall remain in effect during the period during which the court retains jurisdiction over this case.
IV The court turns first to the proper interpretation of § 42(m)(1)(B)(ii)(III) of the Internal Revenue Code (“I.R.C.”), 26 U.S.C. § 42(m)(1)(B)(ii)(III). FRI objects to the Plan, contending that it violates § 42(m)(1)(B)(ii) by failing to give preference to developments that contribute to a concerted community revitalization plan. FRI Objs. 3. And in the Plan, TDHCA may be interpreting § 42(m)(1)(B)(ii) to impose a project selection preference. See Ds. Plan 15 (stating that “Consistent with § 42(m) of the Internal Revenue Code, the 2012 QAP offers incentives for applications in qualified census tracts and for applications in areas where the housing is a necessary component of a community revitalization plan.”).
A FRI contends that the Plan violates § 42(m)(1)(B)(ii) because it does not give preference to developments that are located in QCTs and that contribute to a concerted community revitalization plan. FRI maintains that the Plan fails in several respects to give preference to such projects. First, FRI argues that the most recent QAP already gives preference to developments to be located in an HOA rather than to developments focused on revitalization, and that the Plan only strengthens that preference. FRI contends that this preference is in part demonstrated by the fact that, following the most recent QAP, TDHCA provided data showing the “virtual curtailment of QCT [applications].” FRI Objs. 6 (quoting
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Ds. Plan 9).4 Second, FRI argues that TDHCA does not give preference to revitalization developments because, in order to curtail revitalization development, it has intentionally established “high thresholds” that must be met for revitalization developments to qualify for available additional points. Third, FRI argues that TDHCA’s proposed remedy alters the scoring system by making additional points available to HOA developments without making similar points available to revitalization developments, and this demonstrates that revitalization developments are not given preference by the QAP. In summary, FRI’s objections are based on concerns that the Plan will significantly decrease the number of revitalization projects that are awarded LIHTC, and FRI contends that such a plan fails to give preference to revitalization projects, in violation of § 42(m)(1)(B)(ii).
B In Inclusive Communities Project, Inc. v. Texas Department of Housing and Community Affairs, 749 F.Supp.2d 486 (N.D. Tex. 2010) (Fitzwater, C.J.), the court held that TDHCA had failed to demonstrate that it could not comply with both the FHA and § 42. Id. at 506 n.21. FRI argues that, despite this conclusion, § 42 governs the allocation of LIHTC and the Plan cannot require that TDHCA violate § 42, which FRI maintains the Plan does. The court agrees with FRI that the remedy in this case must comply with both the FHA and § 42. But the court holds that the Plan can comply with the FHA without violating §
4TDHCA itself expressed a concern that these data were not consistent with the expressed preferences of Congress set forth in § 42. This concern was at least one reason why TDHCA included the revitalization index in its proposed remedy.
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42(m)(1)(B)(ii)(III). This conclusion follows from a correct interpretation of I.R.C. § 42. 1
The “first step in interpreting a statute is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case.” Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997). The court’s “inquiry must cease if the statutory language is unambiguous and ‘the statutory scheme is coherent and consistent.’” Id. (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240 (1989); Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253-254 (1992)). “Unless exceptional circumstances dictate otherwise, ‘[w]hen [the court] find[s] the terms of a statute unambiguous, judicial inquiry is complete.’” Burlington N. R.R. Co. v. Okla. Tax Comm’n, 481 U.S. 454, 461 (1987) (quoting Rubin v. United States, 449 U.S. 424, 430 (1981)). “The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.” Robinson, 519 U.S. at 341 (citing Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 477 (1992); McCarthy v. Bronson, 500 U.S. 136, 139 (1991)).
2 LIHTC are a type of general business credit. See I.R.C. § 38(b)(5). Section 42 sets forth the eligibility requirements for those seeking LIHTC, the method for calculating the amount of the credit, and the requirements of state housing agencies, such as TDHCA, in allocating their state’s LIHTC. One such requirement is that state housing agencies must allocate all LIHTC dollar amounts pursuant to a QAP. See I.R.C. § 42(m)(1)(A)(i). Under
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I.R.C. § 42(m)(1)(B), a QAP
means any plan— (i) which sets forth selection criteria to be used to determine housing priorities of the housing credit agency which are appropriate to local conditions, (ii) which also gives preference in allocating housing credit dollar amounts among selected projects to—
(I) projects serving the lowest income tenants, (II) projects obligated to serve qualified tenants for the longest periods, and (III) projects which are located in qualified census tracts (as defined in subsection (d)(5)(C)) and the development of which contributes to a concerted community revitalization plan, and (iii) which provides a procedure that the agency (or an agent or other private contractor of such agency) will follow in monitoring for noncompliance with the provisions of this section and in notifying the Internal Revenue Service of such noncompliance which such agency becomes aware of and in monitoring for noncompliance with habitability standards through regular site visits.
I.R.C. § 42(m)(1)(B).
Both Frazier and TDHCA interpret § 42(m)(1)(B)(ii)(III) as requiring TDHCA to give
preference to projects located in QCTs that contribute to a concerted community
revitalization plan by providing such projects with additional points in the QAP’s
competitive scoring system. But § 42(m)(1)(B)(ii)(III) requires that the QAP “give[]
preference in allocating housing credit dollar amounts among selected projects to— . . .
projects which are located in qualified census tracts (as defined in subsection (d)(5)(C)) and
the development of which contributes to a concerted community revitalization plan[.]” Id.
at § 42(m)(1)(B)(ii)(III) (emphasis added). The dictionary definition of “selected” is
“[s]ingled out in preference: chosen.” Webster’s II New Riverside University Dictionary
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1057 (1984).5 Because “selected” is in the past tense, the statute mandates that the preference given to QCTs in allocating LIHTC dollar amounts occur after the projects have been selected. In other words, § 42(m)(1)(B)(ii)(III) does not require that the QAP award additional points so that projects located in QCTs and the development of which contribute to a concerted community revitalization plan are preferred over other projects.6 Instead, § 42(m)(1)(B)(ii)(III) provides that, after projects have been selected, projects located in QCTs, and the development of which contributes to a concerted community revitalization plan, must be given preference in allocating LIHTC dollar amounts among the projects that have already been selected.
This interpretation of § 42(m)(1)(B)(ii)(III) is supported by § 42(m)(1)(C), which specifies selection criteria that a QAP must include. One selection criterion is the “project characteristics, including whether the project includes the use of existing housing as part of a community revitalization plan.” Id. at § 42(m)(1)(C)(iii).7 The inclusion of this criterion as one of several criteria confirms that Congress only intended revitalization projects that include the use of existing housing as part of a community revitalization plan to be one factor
5“When a term goes undefined in a statute, [it is given] its ordinary meaning.” Taniguchi v. Kan Pacific Saipan, Ltd., ___ U.S. ___, 132 S. Ct. 1997, 2002 (2012) (citing Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 187 (1995)) (using dictionaries to aid statutory interpretation).
6Subject, at least, to the requirements of the FHA, a QAP can award additional points to revitalization projects, but § 42(m)(1)(B)(ii)(III) does not require that the QAP do so.
7This is the only mandatory criterion related to revitalization, and TDHCA’s 2012-13 QAP complies with this requirement.
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in the selection process, not a dispositive or preferred one. Congress could have, but did not, require that a QAP effectively prefer revitalization projects in QCTs by including that requirement in § 42(m)(1)(C). Accordingly, under a correct interpretation of the statute, the preference mandated by § 42(m)(1)(B)(ii)(III) comes into play after projects are selected and when LIHTC dollar amounts are being allocated among selected projects.8
The court recognizes that, due to the LIHTC selection system adopted in the state of Texas and implemented in the Texas QAP, only in rare circumstances will proposed developments in QCTs benefit from the preference set forth in § 42(m)(1)(B)(ii). This is because TDHCA only selects projects for which it has sufficient LIHTC to allocate.9 When a developer applies for LIHTC, TDHCA staff (“Staff”) first ensures that the application satisfies the threshold criteria set forth in the QAP. See Tex. Gov’t Code Ann. § 2306.6710(a) (West 2008). The Staff then scores and ranks the applications that meet the threshold criteria according to the detailed scoring system that the QAP prescribes. See id. § 2306.6710(b). Beginning with the highest scoring applications, the Staff underwrites enough projects to ensure that all LIHTC will be allocated, including by underwriting projects that the Board places on the waiting list. See id. § 2306.6710(d). After the Staff
8FRI also relies on § 42(d)(5)(B)(i) and (ii) as evidence of Congressional intent to give preference during the selection process to developments in QCTs. The court disagrees. These provisions make eligible for additional tax deductions (by increasing the property’s basis) developments in QCTs that have been selected to receive LIHTC. See id.
9The court notes that TDHCA’s scoring and ranking system only applies to 9% LIHTC. Applicants seeking 4% LIHTC are not subject to the scoring and ranking process that the court describes in this section.
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makes its recommendations, the Board selects the projects that will receive a LIHTC commitment notice. If all of the available LIHTC are committed, the Board creates a waiting list that identifies which applicants will receive any additional LIHTC that become available. If an applicant who receives a commitment notice complies with the remaining obligations in the QAP, it will receive its LIHTC allocation. Therefore, under the QAP, every project that the Board selects is typically allocated LIHTC, meaning there is no opportunity for TDHCA to grant projects located in QCTs a “preference in allocating housing credit dollar amounts among selected projects,” since every project selected by the Board is allocated the full amount of available LIHTC.
The court’s interpretation of § 42(m)(1)(B)(ii)(III) does not necessarily nullify in Texas the preference that the I.R.C. mandates. Although Texas’ method for distributing LIHTC rarely,10 if ever, would require that the preference mandated by § 42(m)(1)(B)(ii)(III) affect the distribution of LIHTC among the selected projects, § 42 governs every state’s housing agency. A state could adopt a system in which it selected more proposed developments to receive LIHTC than it had available credits. If that were the case, the state agency would be required to give preference to projects covered by § 42(m)(1)(B)(ii)(III). Such projects would be funded preferentially. Texas, however, has adopted a system in
10The court notes that if TDHCA selected more projects than it could allocate LIHTC to, it would be required to allocate the LIHTC dollar amounts in accordance with § 42(m)(1)(B)(ii)(III).
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which projects are not selected if they are unlikely to receive LIHTC.11
Because the TDHCA Plan only changes how projects are selected and does not alter
how LIHTC dollar amounts are allocated “among selected projects,” TDHCA’s proposed
remedy does not violate § 42(m)(1)(B)(ii)(III). Accordingly, the court holds that FRI’s
objections lack force.12
V
The court now turns to the TDHCA Plan and the parties’ objections.
A
TDHCA begins its proposal with a statement regarding its discretion, as it pertains to
forward commitments and waivers:
In approving the 2012 QAP, Governor Perry determined that the continuation of the ability to make awards of forward commitments was not desirable and that in exercising its discretion to waive any aspect of the QAP the Board should only grant waivers when doing so was necessary to further a purpose or policy enunciated in Tex. Gov’t. Code, Chapter 2306.
Ds. Plan 5. In other words, TDHCA does not propose a remedy; instead, it describes the
11The court has no occasion in this case to determine whether, because Texas law and the QAP effectively foreclose TDHCA from having to consider the preference mandated by § 42(m)(1)(B)(ii)(III), Texas law is in tension with the I.R.C., but, to the extent that they are in tension, federal law is paramount.
12Because FRI’s objections are based on an incorrect interpretation of § 42(m)(1)(B)(ii)(III), the court need not reach FRI’s argument that the Plan is so vague that FRI and its experts have not had a meaningful opportunity to evaluate the proposed remedy. Even if FRI’s experts were given additional time, FRI could not demonstrate that the remedy violates § 42(m)(1)(B)(ii)(III) because FRI only challenges how LIHTC developments are selected rather than how LIHTC dollar amounts are allocated among selected projects.
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nature of the QAP as it now stands. ICP contends that “TDHCA can and should use its discretion to remedy the violation.” P. Obj. 13. In particular, it proposes that TDHCA use “its discretion in making allocation decisions that accomplish the remedial purpose of the plan.” Id.
It is within the court’s authority to “order[] such affirmative action as may be appropriate” in order to remedy a FHA violation. 42 U.S.C. § 3613(c)(1). The court declines at this time, however, to require that the QAP be amended to authorize TDHCA to award forward commitments and waivers. Such a mandate would interfere with Texas’ regulation of its own affairs. See, e.g., Spallone, 493 U.S. at 276 (“[T]he federal courts in devising a remedy must take into account the interests of state and local authorities in managing their own affairs, consistent with the Constitution.”) (alteration in original) (quoting Milliken, 433 U.S. at 280-81). And although the court is authorized to impose such a requirement—even one that interferes with Texas’ regulation of its own affairs—if necessary to remedy the FHA violation, it is presently unclear whether such a remedy would have this effect. See Rizzo, 564 F.2d at 145 (prohibiting remedies that are “broader than that necessary to remove the violation and its effects”). As stated above, the court retains the authority to approve amendments to the remedial plan after receiving TDHCA’s report and the parties’ proposals. The court can determine later whether it is necessary to empower TDHCA to award forward commitments and waivers to remedy the disparate impact.
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B TDHCA proposes to further strengthen the definition of an HOA. It posits that, in the 2012 QAP, HOA was defined to require “a development [to] be in a census tract that has BOTH a low incidence of poverty AND an above median income as well as . . . located in an area served by either recognized elementary schools or having a significant and accessible element of public transportation.” Ds. Plan 5-6. It now proposes “to strengthen the criteria for locating developments within HOAs” by adopting the following “Opportunity Index”:

Points Population Poverty Factor Served

Income Factor

School Quality Factor

7

General

<15% for all Top quartile of median

Exemplary or

individuals household income for

recognized

county or top quartile for

MSA

5

General

<15% for all Top 2 quartiles of median Exemplary or

individuals household income for

recognized

county or top 2 quartiles for

MSA

5

Any

<15% for all individuals

Top quartile of median household income for county or top quartile for MSA

Exemplary or recognized

3

Any

<15% for all Top quartile of median

n/a

individuals household income for

county or top quartile for

MSA

1

Any

<15% for all individuals

Top 2 quartiles of median n/a household income for county or top 2 quartiles for MSA

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Id. at 6. In the first line, a proposed project located in such a census tract will receive the
highest number of points a below-the-line criterion may receive—here, 7 points. An
application located in an area that does not meet the stringent requirements of the first line
may still receive points, to a lesser degree, if it satisfies the requirements of another line.
ICP does not object to the definition of HOAs or to the “Opportunity Index” to the
extent that it provides “the highest value possible for below the line points for family units
located in [HOAs].” P. Obj. 3. It posits that, to the extent the “Opportunity Index” offers
1 to 3 points, it is insubstantial and is “unlikely to have any remedial effect” because “[t]hese
are minor points and have not worked to boost 9% program point totals in the past.” Id. at
16. In support, ICP cites the Talton Report for the proposition that “the use of preference
points for higher income areas has a ‘tendency to create more local opposition’ and have only
a ‘limited effect on a development’s completed score.’” Id. at 17. It also “object[s] to the
inclusion of applications for elderly units” in the “Opportunity Index” because “additional
points for the elderly restricted units . . . will not have any remedial effects and should not be part of the remedial plan.”13 P. Obj. 16; P. App. 3.
13ICP also objects to including points in the “Opportunity Index” for proposed development sites in QCTs for which there is a concerted revitalization plan. It appears, however, that these points are not offered in the “Opportunity Index” but in the “Revitalization Index,” which the court discusses infra at § V(E).
ICP also contends that this proposal is insufficient because a “proposed plan that only adds below the line criteria and points to the current system will not bring the allocation process into compliance.” P. Obj. 21. ICP asserts that the points should be revalued so that the HOA criterion will have a higher value in comparison to the other criteria. The court addresses this infra at § VI.
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The court adopts the TDHCA Plan’s proposed “Opportunity Index,” and overrules
ICP’s objections. As stated supra at § V(A), the court is authorized to adopt amendments
to the remedial plan after receiving TDHCA’s report and the parties’ proposals. The court
can determine later whether it is necessary to increase certain points offered in the
“Opportunity Index”14or to limit the index only to elderly units in order to reduce the
disparate impact.
C
TDHCA proposes the addition of the following below-the-line criteria, which it
asserts are “indicative of educational quality and opportunity or lack of affordable housing”:
a. Location within the attendance zone of a public school with an academic rating of “Recognized” or “Exemplary” (or comparable rating) by the Texas Education Agency (up to 3 points):
A. 1 points if it is both an elementary school, and either a middle school or high school; or B. 3 points if it is an elementary school, a middle school, and a high school. b. A municipality or, if outside of the boundaries of any municipality, a county that has never received a competitive tax credit allocation. The application must also comply with all other anti-concentration provisions (2 points for general use/family or supportive housing; 1 point for elderly).
Ds. Plan 7-8. TDHCA also offers to remove all other “Development Location” options in
the below-the-line criterion, unless required by statute, in order to preserve high incentives
14Moreover, while ICP maintains that the proposed 1 to 3 points are insubstantial, its argument and evidence do not demonstrate that 1 or 3 points will not reduce the disparate impact, albeit perhaps by a lesser extent.
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to target HOAs. ICP does not object to these proposals. Accordingly, the court adopts them as part of the remedy.
D TDHCA next states that, because the 2012 QAP offers a 130% basis boost for proposed development sites located in HOAs, it will continue to do so. ICP supports this proposal but asserts that the basis boost should be limited to non-elderly units because “[t]he provision of the 130% basis boost for elderly and supportive housing will not remedy the violation of disproportionately allocating non-elderly units to locations in predominantly minority areas.” P. Obj. 14. For the reasons stated supra at § V(B), the court overrules ICP’s objection.
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E TDHCA next proposes the adoption of the following “Revitalization Index”:

Points 7
3
2

Population Served Any
Any
Any

Criteria
The proposed development site is located in a QCT in which there is in effect a concerted revitalization plan consistent with the elements described in § 5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $25,000 per unit in the proposed development.
The proposed development site is located in a QCT in which there is in effect a concerted revitalization plan consistent with the elements described in § 5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $10,000 per unit but are less than $25,000 per unit
The proposed development site is not located in a QCT but there is in effect a concerted revitalization plan consistent with the elements described in § 5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $10,000 per unit.

Ds. Plan 10-11. According to TDHCA, the failure to grant the same preference provided to HOAs by the “Opportunity Index” to revitalization projects in QCTs is inconsistent with the preference for revitalization projects set forth in I.R.C. § 42(m).
ICP objects to the inclusion of the “Revitalization Index” for several reasons. First, it argues that, even according to TDHCA, the purpose of the “Revitalization Index” is not to remedy the FHA violation but to comply with § 42(m). ICP therefore maintains that the

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inclusion of the “Revitalization Index” in the remedy is improper because it makes the remedy broader than necessary to address the violation. The court has already held that § 42(m)(1)(B)(ii)(III) does not require TDHCA to give preference to revitalization projects in QCTs when selecting which projects will receive LIHTC; thus TDHCA need not include the “Revitalization Index” in the scoring system to comply with § 42(m). If the “Revitalization Index” need not be included to comply with the I.R.C., there is no reason for the court to make it part of the FHA remedy. TDHCA, in fact, does not argue that the “Revitalization Index” is a necessary component of a plan to ameliorate the FHA violation, and ICP contends that the “Revitalization Index” may actually undercut the remedy that the court imposes. Because the “Revitalization Index” is not required by the I.R.C. and there has been no showing that it is a necessary component of a plan to remedy the FHA violation, its inclusion is impermissible because it will make the court’s remedy broader than necessary. See Rizzo, 564 F.2d at 145 (holding that scope of remedy must be tailored to fit “the nature of the violation” and cannot be “broader than that necessary to remove the violation and its effects”).15 Accordingly, the court declines to include the “Revitalization Index” in the remedy.16
15Because the court is not including the “Revitalization Index” in the remedy, it need not address ICP’s other arguments related to the “Revitalization Index.”
16As discussed supra at note 2, this does not preclude TDHCA from following its usual processes to include the “Revitalization Index” in the QAP.
- 25 -

F TDHCA proposes to strengthen the criteria for disqualifying proposed development sites that have undesirable features. It states that the 2012 QAP “included criteria for disqualifying proposed sites that have undesirable features,” such as “developments located adjacent to or within 300 feet of junkyards.” Ds. Plan 11-12. And it represents that it “will continue to include the same or similar criteria in its QAPs.” Id. at 13. ICP does not object to this component of the Plan, stating that “[r]estricting the availability of such sites may have a remedial effect.” P. Obj. 23. The court adopts this proposal as part of the remedy. TDHCA also proposes to “incorporate a more robust process to identify and address other potentially undesirable site features” by requiring “an applicant proposing development of multifamily housing with tax credits [to] disclose to [TDHCA] and . . . obtain [TDHCA’s] written notification of pre-clearance if the site involves any negative site features,” such as “significant or recurring flooding,” “ at . . . or within 1000 feet of the proposed site.” Ds. Plan 13. TDHCA will then determine whether to issue or withhold preclearance by reviewing the matters disclosed and conducting a site inspection, if necessary. ICP argues that “the use of a 1,000 feet distance as the primary measure for the ineligibility of a site under the criteria” is an inadequate measure of risk. P. App. 3. ICP maintains, instead, that “[t]he analysis should be on whether the condition poses such risk.” P. Obj. 23-24. For the reasons stated supra at § V(B), the court overrules ICP’s objection.
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G TDHCA next proposes strengthening the requirements for establishing a concerted revitalization plan in order to ensure that “true community revitalization is occurring.” Ds. Plan 15. Under the proposal, TDHCA can determine at a public meeting that a plan substantively and meaningfully demonstrates a revitalization effort, even if one or more factors have not been met. TDHCA includes this in the remedial plan in an attempt to be consistent with its view of the requirements of I.R.C. § 42(m). ICP objects to including these enhancements as part of the remedial plan. For the reasons stated supra at § IV, TDHCA has no legal obligation under § 42(m) to give a preference to revitalization developments when selecting which projects will receive LIHTC. Because TDHCA does not contend that this proposal is necessary to remedy the FHA violation, the court concludes that the proposed revitalization enhancement is “broader than that necessary to remove the violation and its effects.” Rizzo, 564 F.2d at 145. Accordingly, the court declines to include in the remedy the point enhancements for developments that are part of a concerted community revitalization effort in the remedy.17
17As discussed supra at notes 2 and 16, this does not preclude TDHCA from following its usual processes to include such enhancements in the QAP.
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H TDHCA proposes to “promulgate by rule a fair housing disclosure . . ., advising prospective tenants in writing of a website or other method of contact where they can obtain information about alternative housing and their rights under fair housing laws.” Ds. Plan 18. Under the Plan, this disclosure must be provided to prospective tenants before they can enter into a lease. TDHCA also proposes to “maintain a website providing relevant information and identifying tax credit assisted properties.” Id. ICP posits that the disclosure and website “will not affect TDHCA’s allocation decisions and will not contribute to bringing those decisions into compliance with the [FHA].” P. Obj. 24. But it acknowledges that “some form of . . . notice that would be tailored for use in the Dallas remedial area would be appropriate once there are more tax credit units in Caucasian areas.” Id. ICP suggests that the parties together determine the content of the notice. The court disagrees with ICP’s position that the disclosure and website will not reduce the disparate impact. Such initiatives could increase demand by tenants for developments located in HOAs, which could, in turn, encourage developers to propose such developments, and which then could result in increased approval rates for non-elderly developments located in predominantly Caucasian neighborhoods. The court adopts TDHCA’s proposal. The content of the disclosure will be subject to periodic review as are the other provisions of the Plan.
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I
TDHCA proposes to “annually conduct an analysis of the effects of its prior QAP to
determine if that QAP . . . contribut[es] to disparate impact.” Ds. Plan 18. ICP does not
object to an annual disparate impact analysis, and the court adopts the proposal as an
efficacious method of monitoring whether the court-ordered remedy is ensuring that no
future violations of the FHA occur and removing any lingering effects of past discrimination.
See Jamestown, 557 F.2d at 1080 (collecting cases).18
J
TDHCA proposes adding a mechanism to challenge the grounds for public comments
that could lead to the negative scoring of 9% applications or constitute opposition to
proposed 4% developments. Under the proposal, a party challenging a comment must state
the basis for the challenge. The commenting party must then provide support for the
18ICP contests the use of “over-concentration” in TDHCA’s heading, which states: “Annual analysis of effectiveness of plan and continued development and enhancement of a policy of avoidance of over-concentration of [LIHTC].” Ds. Plan 18. ICP asserts that “[a]ny analysis using . . . concentration and over-concentration will not assist in bringing TDHCA’s allocation decisions into compliance with the [FHA].” P. Obj. 22. Instead, ICP maintains that the analysis should focus, not on concentration, but on disparate racial impact.
Although the heading refers to the “over-concentration” of LIHTC, the content of TDHCA’s proposal demonstrates that its focus is on disparate impact, given that TDHCA intends to examine the extent that its changes reduce the disparate impact and whether it is necessary to adopt additional changes. Moreover, after the court receives the annual report and any requested modifications to the remedial plan, it will review under court-approved procedures all relevant evidence to determine whether the remedial plan should be amended. If information as to over-concentration is relevant, TDHCA can present it for court consideration.
ICP also requests that the annual report be used to request the court for modifications to the remedial plan. The court has established these procedures supra at § III.
- 29 -

accuracy of its comment. A fact finder from TDHCA will make a final determination on the validity of the challenge. ICP does not object to this proposal. Because this proposal could offer an applicant proposing a development located in an HOA a manner to challenge negative comments, the court adopts the proposal.
TDHCA also proposes that applications in HOAs receiving statements of support or neutrality from a neighborhood organization that previously opposed a development (thus causing it to lose points) receive two additional points. ICP objects to including these points in the remedy but does not justify its opposition. Because this proposal could assist an applicant proposing a development in an HOA, the court adopts it as part of the remedy.
Finally, TDHCA proposes to amend its debarment rules so that if an applicant attempts to create opposition to an application, it will be subject to debarment. ICP objects to including new debarment rules in the remedy, arguing that debarment and the actions that could lead to it are not related, and therefore not tailored, to the FHA violation. The court disagrees, concluding that the proposed debarment rule could decrease impediments to applications for developments in HOAs.
K TDHCA proposes that “[i]n the event of a tie in scoring, the tie breaker will be a preference for the developments that are located the greatest distance from the nearest development that is assisted by either 4% or 9% credits.” Ds. Plan 20. ICP objects to this proposal. Similar to its argument above, ICP asserts that “[t]he use of distance alone is a TDHCA concentration policy,” which does not address the disparate impact violation. P.
- 30 -

Obj. 31. Instead, it posits that the tie breaker should be in favor of “[a]n application for a family unit development in [an HOA] which would be consistent with . . . the [FHA].” Id. at 31-32. The court adopts ICP’s proposal, concluding that it appears better tailored to reducing the disparate impact.
L TDHCA proposes to “continue to make available on its website proposed and final QAPs with comments and responses, applications, underwriting reports, application and award logs, scoring logs by subject, inventories, and appeal materials.” Ds. Plan 20. It also proposes to “post market studies, Phase I Environmental Site Assessments and property condition assessments on its website.” Id. ICP does not object to this proposal, and it posits that the website could also offer “other documents necessary to monitor compliance with the Court ordered plan.” P. Obj. 25. The parties do not address, and the court cannot determine, how this proposal is intended to ensure that no future violations of the FHA occur or to remove any lingering effects of past discrimination. See Jamestown, 557 F.2d at 1080 (collecting cases). Accordingly, the court declines to include this proposal, concluding that it is outside the scope of the court’s remedial power. See Rizzo, 564 F.2d at 145.19
19TDHCA is not precluded from implementing this proposal after following its usual processes. See supra at notes 2, 16, and 17.
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M Finally, TDHCA states that it is subject to statutory constraints, including “adherence to the Texas Administrative Procedures Act; the Texas General Appropriations Act; Chapter 2306 of the Texas Government Code; and adherence to various federal requirements regarding the administration of other sources of funding impacting [TDHCA’s] ability to address such matters.” Ds. Plan 20. ICP interprets this to be a proposal “that [the] court order[] compliance with state and federal law,” asserts that this proposal has no “connection to the [FHA] violation or the appropriate remedy,” and posits that “there is no basis for a Court order to require compliance with state and federal laws governing the general administration of the program.” P. Obj. 32. TDHCA does not appear to be offering a proposal. Instead, TDHCA’s statement appears to reflect its position that it is subject to statutory restrictions derived from state and federal law. But 42 U.S.C. § 3615 states that “any law of a State, a political subdivision, or other such jurisdiction that purports to require or permit any action that would be a discriminatory housing practice under this subchapter shall to that extent be invalid.” Id. And TDHCA does not specify the federal laws on which it relies. The court therefore declines to include this proposal in the remedial plan.
VI The court now turns to ICP’s proposals. ICP asserts that “TDHCA has proposed no changes in the 4% program allocation and decision process.” P. Obj. 33. The court recognizes that the Plan does not address 4% LIHTC specifically, but ICP’s objection does
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not identify a specific deficiency in the remedial plan that results from this omission. There are distinctions between 4% and 9% LIHTC in that 4% LIHTC are available to all who qualify. Additionally, parts of the remedial plan would have the effect of promoting 4% LIHTC in predominantly Caucasian areas (e.g., criteria for disqualifying proposed sites with undesirable features). Accordingly, the court will consider the adequacy of the remedial plan in relation to 4% LIHTC as part of its annual review process.
ICP next contends that, although TDHCA suggests one change to its threshold criteria—the exclusion of proposed development sites that have undesirable features—TDHCA should propose additional amendments to the threshold criteria in order to mitigate the disparate impact. ICP also proposes revaluing points to increase the weight of below-the-line criteria, especially criteria that would reduce the disparate impact. The court agrees that these changes could reduce the disparate impact, but it is unclear whether their adoption is necessary to reduce the disparate impact. The court will instead consider these proposals as part of its annual review process.
ICP also asserts that the use of TDHCA’s discretion should be included in the remedial plan. The court has already declined to accept this argument.
VII In the judgment filed today, the court implements the remedial plan adopted in this memorandum opinion and order and retains jurisdiction over this case for a period of five years after the first annual report is filed. Although no party moves for a temporal limit on the court-ordered remedy, the court concludes that one is necessary. See, e.g., Ueno v.
- 33 -

Napolitano, 2007 WL 1395517, at *6 (E.D.N.Y. May 11, 2007), rec. adopted, (E.D.N.Y. May 11, 2007) (although plaintiffs did not state a time-limit for injunctive relief, adopting a three-year limitation period because otherwise, “the court would be overseeing the defendants’ rental activities for the rest of their lives”). The court, in its discretion, adopts a five-year limitation period. Cf. United States v. Real Estate One, Inc., 433 F. Supp. 1140, 1156 (E.D. Mich. 1977) (ordering that defendants provide annual reports detailing manner in which they had complied with judgment and directing that “[t]he reporting aspects of the injunction may terminate after five (5) full years of substantial compliance with the terms hereof”). The court finds that such a period will be sufficient to “insur[e] that no future violations of the [FHA] occur and remov[e] any lingering effects of past discrimination.” See Jamestown, 557 F.2d at 1080 (collecting cases); see also Ueno, 2007 WL 1395517, at *6 (adopting three-year limitation period because, inter alia, it “should . . . be enough time to monitor the defendants’ rental practices to ensure that they are not discriminatory, while limiting the burden imposed upon the court as well as the defendants by the imposition of injunctive relief”); Rogers v. 66-36 Yellowstone Blvd. Coop. Owners, Inc., 599 F. Supp. 79, 85-86 (E.D.N.Y. 1984) (recognizing that two years was best suited for advancement towards these two goals); Williamsburg Fair Hous. Comm. v. N.Y. City Hous. Auth., 493 F. Supp. 1225, 1251 (S.D.N.Y. 1980) (holding that court had “duty to render a decree which will so far as possible eliminate the discriminatory effects of the past as well as bar like discrimination in the future”) (quoting Louisiana v. United States, 380 U.S. 145, 154 (1965)).
The court finds that a five-year period is necessary because progress toward ensuring - 34 -

that no future violations of the FHA occur and of removing any lingering effects of past discrimination will be measured according to reports of LIHTC awards that (as to 9% tax credits) are made on an annual cycle. And because various factors can influence where applicants choose to develop projects in a particular annual cycle, the court must have a sufficiently broad empirical basis to enable it to assess whether the FHA violation in this case has in fact been remedied. By retaining jurisdiction for five years, the court will be able to evaluate the impact of several QAPs on the allocation of LIHTC. Cf. Rogers, 599 F. Supp. at 85-86 (recognizing that one-year duration for injunctive order would not be sufficient to permit a “newly implanted open housing program to take root”). During this period, the parties will have opportunities to request modifications to the remedial plan. This will enable the court to reduce TDHCA’s remedial obligations in fewer than five years if they are no longer warranted, or to increase the remedial requirements in the plan now adopted that do have the intended effect of ensuring that no future violations of the FHA occur and removing any lingering effects of past discrimination.
* * * For the reasons explained, the court adopts in part TDHCA’s Plan, and it enters judgment today in accordance with its memorandum opinions and orders in this case and the
- 35 -

remedial plan adopted today. SO ORDERED. August 7, 2012.

_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE

- 36 -

 
 Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 1 of 29 PageID 7521

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

JUDGMENT

I

In a memorandum opinion and order filed September 28, 2010, the court granted plaintiff

The Inclusive Communities Project, Inc.’s (“ICP’s”) motion for partial summary judgment and

denied defendants’ motions for judgment on the pleadings and for summary judgment. The parties

thereafter tried the balance of the case in a bench trial. In a memorandum opinion and order filed

March 20, 2012, the court found in favor of ICP on its disparate impact claim under §§ 3604(a) and

3605(a) of the Fair Housing Act (“FHA”), and in favor of defendants on all other claims. In a

memorandum opinion and order filed today, the court adopts a remedial plan for addressing the FHA

violation.

For the reasons set out in the memorandum opinions and orders filed September 28, 2010,

March 20, 2012, and today, it is ordered and adjudged as follows:

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 2 of 29 PageID 7522
II As used in this judgment, the terms “TDHCA” and “defendants” mean, collectively, defendants Texas Department of Housing and Community Affairs and its Executive Director and board members in their official capacities. The term “Plan” means TDHCA’s proposed remedial plan, attached to this judgment as Exhibit A. The term “QAP” means the Qualified Allocation Plan adopted by TDHCA under I.R.C. § 42(m)(1)(B), and Tex. Gov’t Code Ann. § 2306.6702(a)(10) (West 2011). The term “LIHTC” means Low Income Housing Tax Credits awarded under a QAP.
III TDHCA, its officers, agents, servants, employees, and attorneys, and all those in active concert or participation with it who receive actual notice of this judgment by personal service or otherwise, are enjoined from administering the LIHTC program in the Dallas metropolitan area in a manner inconsistent with the FHA.
IV TDHCA shall, within a reasonable time after the entry of this judgment, implement the following affirmative actions concerning the awarding of 4% and 9% LIHTC in the Dallas metropolitan area: A. include in the QAP as an additional below-the-line criteria the “Opportunity Index,” as set forth in the Plan at 6-7; B. include in the QAP the additional below-the-line criteria regarding the quality of public education and anti-concentration, and remove all other “Development Location” criteria, as set forth in the Plan at 7-8; C. continue to include in the QAP a 130% basis boost for proposed developments in
- 2-

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 3 of 29 PageID 7523
high opportunity areas (“HOAs”); D. continue to include in the QAP criteria for disqualifying proposed development sites that have undesirable features, as set forth in the Plan at 11-13, and incorporate the more robust process of identifying and addressing other potentially undesirable site features, as set forth in the Plan at 13-14; E. promulgate by rule a fair housing choice disclosure that must be given to prospective tenants and maintain a website providing information as to tax-credit assisted properties, as set forth in the Plan at 18; F. conduct an annual disparate impact analysis, as set forth in the Plan at 18-19; G. provide a mechanism to challenge public comments that cause proposed developments to receive negative points, as set forth in the Plan at 19, and include in the QAP the additional two-point below-the-line criterion regarding support or neutrality from a neighborhood organization that previously opposed a development and an associated debarment rule, as set forth in the Plan at 19-20; H. adopt a tie breaker, in the event of a tie in scoring a 9% application, that favors an application proposing development in an HOA; and I. each calendar year, no later than 120 days after the TDHCA Board of Directors issues final commitments for allocations of LIHTC, file the annual report with the clerk of court, in accordance with the memorandum opinion and order filed today.
- 3-

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 4 of 29 PageID 7524
V The remedial plan adopted by this judgment shall be effective for a period of five years after the first annual report is filed. During this period, the court shall retain jurisdiction. At such earlier time, if any, that TDHCA or another party can demonstrate that, as to the Dallas metropolitan area, the remedial plan adopted by this judgment has ensured that no future violations of the FHA will occur and has removed any lingering effects of past discrimination, it may move the court to terminate all or specific provisions of this judgment and/or the remedial plan.
VI The objections and supplement to objections of intervenor Frazier Revitalization Inc. to the Plan, as adopted by this judgment as components of the remedial plan, are denied.
VII Except for ICP’s disparate impact claim under the FHA, ICP’s claims against defendants are dismissed with prejudice. Except for the remedial relief included in this judgment, ICP’s requests for remedial relief are denied. ICP may apply for an award of attorney’s fees and non-taxable costs under Fed. R. Civ. P. 54(d).
- 4-

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 5 of 29 PageID 7525 VIII
Defendants shall bear their own taxable costs of court. ICP shall recover 50% of its taxable costs of court, as calculated by the clerk of court, from defendants. Defendants shall bear the remaining 50% of ICP’s taxable costs of court, as calculated by the clerk of court.
Done at Dallas, Texas August 7, 2012. _________________________________ SIDNEY A. FITZWATER CHIEF JUDGE
- 5-

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 6 of 29 PageID 7526 JUDGMENT EXHIBIT A

IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC., *

*

PLAINTIFF,

*

*

V.

*

*

THE TEXAS DEPARTMENT OF

*

HOUSING AND COMMUNITY AFFAIRS, AND

*

MICHAEL GERBER,

*

LESLIE BINGHAM-ESCARENO,

*

TOMAS CARDENAS,

*

C. KENT CONINE,

*

DIONICIO VIDAL (SONNY) FLORES,

*

JUAN SANCHEZ MUNOZ, AND

*

GLORIA L. RAY,

*

IN THEIR OFFICIAL CAPACITIES,

*

*

DEFENDANTS.

*

CIVIL ACTION NO. 3:08-CV-0546-D

DEFENDANTS’ PROPOSED REMEDIAL PLAN This proposed Remedial Plan (“Plan”) is submitted to the Court in accordance with the Memorandum Opinion and Order dated March 20, 2012. Certain clarifying remarks are provided to explain to the Court and to the Plaintiff why certain propounded ways to provide remedial measures are not being offered in this Plan. To the extent that some of these clarifying remarks relate to matters of public record which occurred after the closing of the record in these proceedings, Defendant Texas Department of Housing and Community Affairs (the “Department”) is prepared to offer such support by way of affidavits of fact or sworn testimony as the Court may deem necessary.

DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 1 of 24 1070764.1

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 7 of 29 PageID 7527
Introduction and Background When the Qualified Allocation Plan (QAP) for 2012 (the “2012 QAP”) was submitted to Governor Perry to approve, reject, or modify and approve in accordance with Tex. Gov’t. Code, §2306.6724(b), Governor Perry approved the 2012 QAP with modifications. Those modifications clearly limited the use of discretion by the Department’s Governing Board by curtailing the ability of the Department to make awards of forward commitments of low income housing tax credits (LIHTCs) and by narrowing the conditions under which that Governing Board could approve waivers under the 2012 QAP. That signal was consistent with the limited discretion provided by statute, as confirmed by opinions issued by the Office of the Attorney General. Thus, with regard to the proposal of this Plan, Department staff has endeavored to structure a proposal that strives to create a legally-supportable framework in which future QAPs can achieve the objectives of race neutral dispersion of LIHTC assisted developments within the remedial plan area by fashioning clear requirements, which are reasonably calculated to yield the intended result. Because this is a process with numerous variables, not least of which is the complex decision-making process that developers undergo in selecting their proposed sites, this Plan will require annual analysis and, as needed, recalibration. In addition to the limitations on discretion in the 2012 QAP, that rule took a new and significant policy direction towards the development and intended successful implementation of measures to generate a greater level of tax credit-assisted development activity in high opportunity areas. The results to date of these strong actions, actions already taken that set the stage for significant high opportunity activity in the area covered by these proceedings, are publicly available. On the Department’s website the current status report of the 2012 competitive 9% tax credit round shows that a significant number of competitive applications in
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 2 of 24 1070764.1

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 8 of 29 PageID 7528
high opportunity areas have been submitted in Urban Region 3 with 16 of the applications located in such areas, many of which indicate they are top scoring applications.
The graphic below shows compellingly that actions already taken by the Department have materially changed the overall character of the competitive LIHTC round in 2012, promoting overwhelming interest in high opportunity areas.
In applicant-initiated appeals and requests for waivers the Board has taken seriously the limitations placed on its discretion and deliberated extensively in publicly conducted, transcribed meetings, leading to results that have closely followed the 2012 QAP. The Board has considered waivers only in truly exceptional and compelling circumstances where failure to grant the waiver would result in a clear failure to make the opportunity to compete available throughout the state.
It is the Department’s belief that this proposed Remedial Plan offers meaningful improvements on the path already forged in the 2012 QAP and creates concepts which, if successful, can nurture and reinforce future QAPs. The Plan embraces the notion of providing maximum permissible incentives for areas that truly reflect the greatest opportunity, namely those areas with the highest income, lowest poverty, and best public education opportunities.
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 3 of 24 1070764.1

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 9 of 29 PageID 7529
As set forth more fully in §12, captioned “Plan subject to statutory constraints,” the Department operates under several layers of complex legal requirements, including the congressional statement in Internal Revenue Code §42(m) that the Department must give preference to “projects which are located in qualified census tracts (as defined in subsection (d)(5)(C)) and the development of which contributes to a concerted community revitalization plan…”. Furthermore, the statutory schema for scoring of LIHTC competitive applications under QAPs is driven largely by TEX. GOV’T. CODE, §2306.6710, which has not been questioned in these proceedings and, presumably, must be adhered to in developing and administering future QAPs. Two of the key remedial tools proffered by the Plaintiff are the use of discretion, as discussed above, and the creation of set-asides. With respect to set-asides, it is open to question whether there is statutory authority for the Department to create set-asides in addition to those set forth in TEX. GOV’T. CODE, Chapter 2306. Even if, arguendo, creating set-asides were authorized, the suggestion to create a set-aside in the remedial area is problematic because that area is but a portion of a larger region pursuant to statute and to which the Department must regionally allocate LIHTCs.
As a result of these limitations and premises, the Department is proposing a Plan which focuses on: (1) according proposed developments located in defined high opportunity areas the greatest incentives allowed by state law; and, (2) according developments in Qualified Census Tracts (QCTs) that are part of true concerted revitalization plans co-equal incentives in order to provide the preference created by Internal Revenue Code §42(m). It is envisioned that the revitalization incentive will set a very high threshold, making it unlikely to yield a number of successful applicants in QCTs such that would perpetuate any discriminatory patterns found to have occurred unintentionally.
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 4 of 24 1070764.1

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 10 of 29 PageID 7530
Plaintiff has requested that 4% non-competitive LIHTCs be addressed in this plan. Because of restrictions of federal law, states do not have the ability to designate the 130% basis boost for 4% LIHTC’s, and therefore the only 4% LIHTC’s eligible for the 130% basis boost are developments in federally designated QCTs and difficult to develop areas (DDAs).
The development and implementation of this Plan and the development of future QAPs in accordance with this Plan will be a matter to which the Department, in collaboration with Plaintiff, the Department’s oversight bodies, and the public, will continue to work to develop more nuanced and effective ideas to achieve an optimal dispersion of LIHTC developments. In developing this remedial plan for the subject Dallas metro area, the Department intends to apply some of these concepts, or similar concepts to the remainder of the state; however, certain other regions will need specifically tailored plans due to differing demographics and other factors.
1. Use of discretion - waivers. In approving the 2012 QAP, Governor Perry determined that the continuation of the ability to make awards of forward commitments was not desirable and that in exercising its discretion to waive any aspect of the QAP the Board should only grant waivers when doing so was necessary to further a purpose or policy enunciated in Tex. Gov’t. Code, Chapter 2306.
2. Strengthened definition of a High Opportunity Area (HOA). In the development of its 2012 QAP, the Department adopted a strengthened definition of a high opportunity area; and, under the scoring criterion of development location, provided 4 competitive points for a development proposing a location in a HOA. In order to qualify as being in an HOA, a development must be in a census tract that has BOTH a low incidence of poverty AND an above median income as well as being located in an area served by either recognized elementary schools or having a significant and accessible element of public
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 5 of 24 1070764.1

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 11 of 29 PageID 7531

transportation. The Department currently anticipates that the highest four scoring 2012 applications in Urban Region 3 are located within the 5 county remedial area, are located in HOAs, and are within the attendance zones of recognized or exemplary rated elementary schools. The Department further anticipates awards in Urban Region 3 will be limited to no more than 6 applications due to the amount of 9% credits available for allocation.

In future QAPs, the Department is committed to continuing to strengthen the criteria for locating developments within HOAs. The Department will create a new “Opportunity Index” in order to incentivize applications to locate developments in the highest income and lowest poverty areas of the remedial area. At the same time, applicants that propose projects in areas of high opportunity that do not meet the most stringent criteria will still be incentivized, albeit to a lesser degree. The proposed Opportunity Index is reflected in the following chart. The highest “below the line” (scoring items ranking lower than statutorily required scoring items) point value will be assigned to the highest category within the Opportunity Index (actual point values may change commensurate with changes in the above the line statutory scoring criteria).

Points 7 Points
5 Points 5 Points

Population Served
General use
General use
Any

Poverty Factor <15% rate for all individuals
<15% rate for all individuals
<15% rate for all individuals

Income Factor
Tract in top quartile of median household income for county or, for site in an Metropolitan Statistical Area (MSA), top quartile for MSA Tract in top 2 quartiles of median household income for county or, for site in an MSA, top 2 quartiles for MSA Tract in top quartile of median household income for county or, for site in an MSA, top quartile for

School Quality Factor
“Exemplary” or “Recognized” elementary school
“Exemplary” or “Recognized” elementary school
“Exemplary” or “Recognized” elementary school

DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 6 of 24 1070764.1

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3 Points

Any

1 Point

Any

<15% rate for all individuals
<15% rate for all individuals

MSA

Tract in top quartile of

N/A

median household income

for county or, for site in an

MSA, top quartile for

MSA

Tract in top 2 quartiles of N/A

median household income

for county or, for site in an

MSA, top 2 quartiles for

MSA

Up to 7 Points Any

The proposed development site is located in a QCT for which there is in effect a concerted revitalization plan (consistent with the elements described in §5. See Revitalization Index, §4, below.

The Department will utilize data from the 5-year American Community Survey to

determine a development site’s qualification under the poverty and income criteria. For

categories requiring an “Exemplary” or “Recognized” elementary school, the development site

must be located within the school attendance zone that has the applicable academic rating, as of

the beginning of the Application Acceptance Period, or comparable rating if the rating system

changes by the same date as determined by the Texas Education Agency. An elementary

attendance zone does not include elementary schools with district-wide possibility of enrollment

or no defined attendance zones, sometimes known as magnet schools. However, districts with

district-wide enrollment and only one elementary school are acceptable.

The following additional factors, indicative of educational quality and opportunity or lack of affordable housing, will be incorporated as new below-the-line criteria:

a. Location within the attendance zone of a public school with an academic rating of “Recognized” or “Exemplary” (or comparable rating) by the Texas Education Agency (up to 3 points):

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A. 1 points if it is both an elementary school, and either a middle school or high school; or
B. 3 points if it is an elementary school, a middle school, and a high school. b. A municipality or, if outside of the boundaries of any municipality, a county that has never received a competitive tax credit allocation. The application must also comply with all other anti-concentration provisions (2 points for general use/family or supportive housing; 1 point for elderly). All other Development Location incentive criteria in the current QAP, such as incentives for developments in central business districts, will be removed in future QAPs, unless required by statute, in order to maintain high incentives to target HOAs. 3. 130% basis boost for transactions in HOAs. Under the authority granted by the Housing and Economic Recovery Act of 2008, P. L. 110-289, the 2012 QAP offers a 130% basis boost for transactions assisted by 9% LIHTCs that are located in HOAs as defined in paragraph 2, above. The Department will continue to include in its QAPs a 130% basis boost for applications that are intended to be located in HOAs. This requirement will not preclude or limit the Department’s ability to offer a lawful basis boost in other appropriate instances. The authority for states to define criteria for a 130% boost for non-competitive 4% housing tax credit or taxexempt bond developments is not available under §42 of the Internal Revenue Code. 4. The remedial balance and the Revitalization Index. The Opportunity Index clearly provides the greatest point incentives for HOA transactions that serve the general public, including families, that are also in areas of
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 14 of 29 PageID 7534
significantly greater income, the top quartile. While a proposed transaction in a second quartile tract, a proposed transaction in the top quartile serving a targeted, albeit legally targeted, population rather than the general population, or even a proposed transaction in a second quartile tract serving an elderly population would be characterized as HOA, it is clear that in order to achieve the spirit and intent of the Plan, it is only that top quartile/general population plan should receive that greatest level of recognition for competitive enhancement. This Plan does propose a mechanism allowing for a similar prioritization for a proposed transaction in a qualified census tract (QCT) that is the subject of a concerted plan of community revitalization, as federally mandated by Internal Revenue Code (IRC) §42(m). The Department contends that failure to grant same preference for such transactions could be seen as inconsistent with federal law. However, the Department is well aware of the fact that a significant level of continuing activity in development in QCTs would be inconsistent with the remedial objectives of this Plan. Therefore, it is critical to note that in developing this language, Department strongly believes that the high thresholds established for revitalization plans will demand significant investments of time, analysis, and local commitments of funding for non-housing activity from an applicant. Accordingly, these points are unlikely to achieve in the natal cycle after approval of a Remedial Plan, a significant number of applications that can demonstrably earn the maximum points for being in a QCT AND having in place a revitalization plan meeting the substantive criteria proposed.
As the graphic below conveys, changes implemented in the 2012 QAP have clearly resulted in a virtual curtailment of QCT activity. While such a curtailment might be viewed as accelerating a catch-up to restore a more balanced distribution of assisted developments in areas
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 15 of 29 PageID 7535
of all income levels, it would not be consistent with a prospective race neutral distribution or the congressionally expressed preferences set forth in the IRC.

Therefore, the Department believes that it is appropriate for an application in the area of greatest opportunity to be given coequal incentives with an application achieving the greatest revitalization purpose. Without this balance the Plan would in effect be forsaking that sector of the community in greatest need of this federal assistance. However, it is a generally acknowledged contention that tax credit developers have been able to marshal community support to validate the conclusions that they were meeting the objectives of IRC §42(m) possibly where meaningful non-housing revitalization activity was not occurring. In order to assure that such efforts involve meaningful substance and do not create an unregulated opportunity to characterize an effort as revitalization that may not be meaningful and substantive, the Department has developed a concept similar to the Opportunity Index to address revitalization.

Revitalization index:

Points 7 points

Population served
Any

Criteria
The proposed development site is located in a QCT in which there is in effect a concerted revitalization plan (consistent with the elements described in §5 and the

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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 16 of 29 PageID 7536

3 points Any 2 points Any

non-housing costs, as reflected in the local government certified plan budget, exceed $25,000 per unit in the proposed development. The proposed development site is located in a QCT in which there is in effect a concerted revitalization plan (consistent with the elements described in §5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $10,000 per unit but are less than $25,000 per unit. The proposed development site is not located in a QCT but there is in effect a concerted revitalization plan (consistent with the elements described in §5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $10,000 per unit.

An application seeking to receive points under the Revitalization Plan must provide the

plan and plan budget for review at pre-application and provide substantiation of the budget

through submittal of a local government certified copy of the plan and budget supporting the

claimed points at full application.

5. Strengthened criteria for disqualifying proposed sites that have undesirable features.

In the 2012 QAP, the Department included criteria for disqualifying proposed sites that have undesirable features, as follows:

(13) Development Sites with negative characteristics in subparagraphs (A) - (G) of this paragraph will be considered ineligible. If Staff identifies what it believes would constitute an unacceptable negative site feature not covered by the those identified in subparagraphs (A) (G) of this paragraph Staff may seek Board clarification and, after holding a hearing before the Board, the Board may make a final determination as to whether that feature is unacceptable. Rehabilitation (excluding Reconstruction) Developments with ongoing and existing federal assistance from HUD or TRDO-USDA are exempt. For purposes of this exhibit, the term 'adjacent' is interpreted as sharing a
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 17 of 29 PageID 7537
boundary with the Development Site. The distances are to be measured from the nearest boundary of the Development Site to the boundary of the negative characteristic. If none of these negative characteristics exist, the Applicant must sign a certification to that effect. The negative characteristics include: (A) developments located adjacent to or within 300 feet of junkyards; (B) developments located adjacent to or within 300 feet of active railroad tracks, unless the Applicant provides evidence that the city/community has adopted a Railroad Quiet Zone or the railroad in question is commuter or light rail (Developments located in a Central Business District are exempt); (C) developments located adjacent to or within 300 feet of heavy industrial uses such as manufacturing plants, refinery blast zones, etc.; (D) developments located adjacent to or within 300 feet of a solid waste or sanitary landfills; (E) developments where the buildings are located within the easement of any overhead high voltage transmission line or inside the engineered fall distance of any support structure for high voltage transmission lines, radio antennae, satellite towers, etc. This does not apply to local service electric lines and poles; (F) developments where the buildings are located within the accident zones or clear zones for commercial or military airports; or
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 18 of 29 PageID 7538
(G) development is located adjacent to or within 300 feet of a sexuallyoriented business. For purposes of this paragraph, a sexually-oriented business shall be defined as stated in §243.002 of the Texas Government Code. As a part of the Plan, the Department will continue to include the same or similar criteria in its QAPs for disqualifying proposed sites that have undesirable features. Additionally, the Department will incorporate a more robust process to identify and address other potentially undesirable site features in future QAPs. Under this criterion, an applicant proposing development of multifamily housing with tax credits must disclose to the Department and may obtain the Department’s written notification of pre-clearance if the site involves any negative site features at the proposed site or within 1000 feet of the proposed site such as the following: a. A history of significant or recurring flooding; b. A hazardous waste site or a source of localized hazardous emissions, whether remediated or not; c. Heavy industrial use; d. Active railways (other than commuter trains); e. Landing strips or heliports; f. Significant presence of blighted structures; g. Fire hazards which will increase the fire insurance premiums for the proposed site;
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 19 of 29 PageID 7539
h. Locally known presence of gang activity, prostitution, drug trafficking, or other significant criminal activity that rises to the level of frequent police reports.
The Department will develop a process for the efficient, timely resolution of the preclearance process. The Department may require that disclosure occur on an expedited basis, including but not limited to during the pre-application process. The Department will review these matters as disclosed to them and will either issue or withhold a pre-clearance. The standard to be employed will be that the pre-clearance will be withheld if one or more of the factors enumerated above are present at or within 1000 feet of the proposed site and are of a nature that would not be typical in a neighborhood that would qualify for HOA points under the Opportunity Index. An applicant providing disclosure will be encouraged to provide any plans for mitigation of the present undesirable feature(s), which may include a concerted community revitalization plan as described in §5.
In assessing disclosures the Department staff may, at its discretion, conduct a site inspection. Non-disclosure of any of the enumerated conditions if known or in the exercise of reasonable diligence could have been ascertained is a basis for withholding pre-clearance. Withholding or denial of pre-clearance may be appealed pursuant to the appeals process set forth in the applicable QAP.
With respect to the presence or absence of hazardous waste sites or emissions, an applicant may rely on the required Phase I Environmental Site Assessment.
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 20 of 29 PageID 7540
6. Strengthening of incentives for applications in qualified census tracts where the housing is part of a concerted community revitalization plan.
Consistent with §42(m) of the Internal Revenue Code, the 2012 QAP offers incentives for applications in qualified census tracts and for applications in areas where the housing is a necessary component of a community revitalization plan. In future QAPs, the Department will strengthen the correlation between revitalization and development located in qualified census tracts and the requirements for establishing that true community revitalization is occurring and that affordable housing is a necessary part of the revitalization and will continue to provide appropriate incentives for affordable rental housing developments meeting such strengthened criteria.
Beginning with its 2013 QAP, the Department will establish a scoring criteria in which any application for low income housing tax credits located in a qualified census tract, as defined in §42(d)(5)(C) of the Internal Revenue Code, will be eligible for enhanced points, based on its location, if there is, as described below, a concerted revitalization plan that is in effect and to which the development will contribute.
A concerted community revitalization plan adopted by a municipality or county will be deemed to exist based on the following:
a. A community revitalization plan must have been adopted by the municipality or county in which the proposed development is intended to be located.
b. The adopting municipality or county must have performed, in a process providing for public input, an assessment of the factors in need of being addressed as a part of such community revitalization plan. Factors to be considered include the following:
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 21 of 29 PageID 7541
A. adverse environmental conditions, natural or manmade, that are material in nature and are inconsistent with the general quality of life in typical average income neighborhoods. By way of example, such conditions might include significant and recurring flooding, presence of hazardous waste sites or ongoing localized emissions not under appropriate remediation, nearby heavy industrial, uses or uses presenting significant safety or noise concerns such as major thoroughfares, nearby active railways (other than commuter trains), or landing strips; significant and widespread (i.e., not localized to a small number of businesses or other buildings) rodent or vermin infestation acknowledged to present health risks requiring a concerted effort; or fire hazards;
B. presence of blighted structures; C. presence of inadequate transportation; D. lack of accessibility to and/or presence of inadequate health care facilities, law enforcement and fire fighting facilities, social and recreational facilities, and other public facilities comparable to those typically found in neighborhoods containing comparable but unassisted housing; E. the presence of significant crime. F. the presence, condition, and performance of public education; or G. the presence of local business providing employment opportunities. H. A municipality is not required to identify and address all such factors, but it must set forth in its plan those factors that it has identified and determined it will address. c. The adopting municipality or county must have based its plan on the findings of the foregoing assessment and must have afforded the public opportunity to provide input and
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 22 of 29 PageID 7542

comment on the proposed plan and the factors that it would address. To the extent that issues identified require coordination with other authorities, jurisdictions, or the like, such as school boards or hospitals, the adopting municipality should include coordination with such bodies in its plan and, to the extent feasible, secure their cooperation.

d. The adopted plan, taken as a whole, must be a plan that can reasonably be expected to revitalize the community and address in a substantive and meaningful way the material factors identified. The adopted plan must specifically address how the providing of affordable rental housing fits into the overall plan and is a necessary component thereof.

e. The adopted plan must describe the planned sources and uses of funds to accomplish its purposes.

f. For any application located in a qualified census tract at the time of application to be eligible for enhanced points for this item based on its location, the revitalization plan must already be in place as evidenced by as certification that:

followed;

A. the plan was duly adopted with the required public comment processes

B. that funding and activity under the plan have already commenced; and

C. the adopting municipality or county has no reason to believe that the overall funding for the full and timely implementation of the plan will be unavailable.

At the time of any award of Low Income Housing Tax Credits the site and neighborhood of any unit covered by the award and must conform to the Department’s rules regarding unacceptable sites.

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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 23 of 29 PageID 7543
It is recognized that municipalities and counties will need to devote time and effort to adopt a concerted revitalization plan that complies with the requirements of this remedial plan. Therefore, for purposes of the first cycle of Low Income Housing Tax Credit awards following the issuance of an Order adopting a remedial plan, the The Board of the Department may, in a public meeting, determine that a revitalization plan substantively and meaningfully satisfies a revitalization effort, notwithstanding one or more of the above factors not having been satisfied.
7. Promulgation of fair housing choice disclosure. The Department will promulgate by rule a fair housing choice disclosure in a form substantially equivalent to that set out in Attachment A, advising prospective tenants in writing of a website or other method of contact where they can obtain information about alternative housing and their rights under fair housing laws. The Department will maintain a website providing relevant information and identifying tax credit assisted properties searchable by ZIP code, city, and/or county. The Department will require that no initial lease be entered into for a unit assisted with low income housing tax credits unless that disclosure has first been provided to the prospective tenant. 8. Annual analysis of effectiveness of plan and continued development and enhancement of a policy of avoidance of over-concentration of low income housing units. The Department will annually conduct an analysis of the effects of its prior QAP to determine if that QAP was contributing to disparate impact; and will take appropriate and lawfully permitted measures to amend the next and subsequent QAPs (beginning with its 2013 QAP), to avoid present or potentially developing disparate impact in the allocation of low income housing tax credits.
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 24 of 29 PageID 7544
As each QAP is developed, the Department will analyze the distribution achieved under the previous QAP. It will take that analysis into account and use it to develop (within the measures available to the Department under applicable law) changes in the incentives, threshold requirements, and other factors to address any potential disparate impact and to achieve, prospectively, a broad and race neutral dispersion of low income housing tax credit assisted properties.
The QAP disparate impact analysis the Department performs will be made public. The public will be given opportunity to comment on the analysis, and the development of QAPs will also be carried out in a public meeting or hearing with opportunity for review and comment by the public, including the Plaintiff. In order to achieve consistency on a statewide basis, the Department will endeavor to apply the principles and objectives in this Plan on a statewide basis.
9. Review of challenged public input. Any public comment that will be considered for negative scoring of applications, or as opposition to 4% non-competitive allocations, may be challenged if it is contrary to findings or determinations, including zoning determinations, of a municipality, county, school district, or other local governmental entity. If any such comment is challenged, the party that made the challenge will have to declare the basis for the challenge. The party that made the comment will be given seven (7) days to provide any support for the accuracy of its assertions. All such materials and the analysis of the Department’s staff will be provided to a fact finder for a review and determination. The Department’s determination will be final.
Additionally, applications in HOAs that receive statements of neutrality or support from a Neighborhood Organization that had provided a statement of opposition against a tax credit development in the last three years and for which the prior application was assigned the point
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 25 of 29 PageID 7545
value associated with opposition, will receive an additional two (2) points. The Department will amend its debarment rules to provide that if an applicant is found to have worked to create opposition to their own or another’s application in any application round, they shall be subject to debarment. An applicant against whom debarment proceedings have been initiated in good faith by the Department shall not be eligible for these points.
10. Tie breakers. In the event of a tie in scoring, the tie breaker will be a preference for the developments that are located the greatest distance from the nearest development that is assisted by either 4% or 9% credits.
11. Transparency and openness of process. The Department will continue to make available on its website proposed and final QAPs with comments and responses, applications, underwriting reports, application and award logs, scoring logs by subject, inventories, and appeal materials. Additionally, the Department will beginning with the 2013 competitive tax credit cycle, post market studies, Phase I Environmental Site Assessments and property condition assessments on its website. Nothing will require the disclosure of any item which has been found to be confidential as a matter of law.
12. Plan subject to statutory constraints. This Plan acknowledges that as the Department considers and takes actions within its lawful powers, the implementation of such matters is an inherently deliberate and public process that takes time. Factors which must be addressed include adherence to the Texas Administrative Procedures Act; the Texas General Appropriations Act; Chapter 2306 of the Texas Government Code; and adherence to various federal requirements regarding the administration of other sources of funding impacting the Department’s ability to address such matters. Subject to
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 26 of 29 PageID 7546
adherence to all such requirements, as they may apply, the Department shall take appropriate actions within its power and control as provided for herein.
Nothing in this Plan shall in any way limit or affect the right of the State of Texas to enact laws; or obligate the Department to take any action not allowed by law; or require the Department to become obligated for funds that have not been appropriated to it for the purposes intended.
Respectfully submitted, By: /s/ G. Tomas Rhodus
G. Tomas Rhodus Texas State Bar No. 16824500 William B. Chaney Texas State Bar No. 04108500 LOOPER REED & McGRAW, P.C. 1601 Elm Street, Suite 4600 Dallas, Texas 75201 214.954.4135 (Phone) 214.953.1331 (Fax) Timothy E. Bray Texas State Bar No. 24061240 Shelley N. Dahlberg Assistant Attorneys General General Litigation Division P.O. Box 12548, Capitol Station Austin, Texas 78711 512.463.2120 (Phone) 512.320.0667 (Fax) ATTORNEYS FOR DEFENDANTS
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 27 of 29 PageID 7547 CERTIFICATE OF FILING AND SERVICE
I certify that on May 18, 2012, I electronically submitted the foregoing document with the clerk of the court for the United States District Court for the Northern District of Texas using the electronic case file system of the court, such that all counsel of record will be provided a “Notice of Electronic filing”, and access to this document.
/s/ G. Tomas Rhodus G. Tomas Rhodus
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Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 28 of 29 PageID 7548
Attachment A to
Remedial Plan
FAIR HOUSING CHOICE DISCLOSURE You are about to enter into a lease agreement, which is a binding contract. Before you enter into your lease you should know that under fair housing laws you have certain basic rights, including the right to make certain choices as to where you will live. There are programs administered by a number of state and local institutions to provide assistance with respect to housing, including, but not limited to, affordable rental housing supported by low income housing tax credits, housing assisted with loans or grants from HUD programs and USDA programs, different types of vouchers, and public housing. The requirements under the programs may be different and not all types of housing options may be available where you would like to live. Where you live has the potential to impact you and others in your household. For example, where you live may provide greater access to some (but not necessarily all) of the things listed below: • Better schools • Less crime • Better public transportation • Better access to health care • Better access to grocery stores offering more healthy food choices • Better proximity to family, friends, and organizations to which you might belong
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 23 of 24 1070764.1

Case 3:08-cv-00546-D Document 194 Filed 08/07/12 Page 29 of 29 PageID 7549 There are other things that may be important to you. If you want to explore other housing
options you can identify other affordable rental properties in your community at: [hyperlink]
This link will also summarize your rights under fair housing laws and direct you to fair housing resources.
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 24 of 24 1070764.1

 
 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

MEMORANDUM OPINION AND ORDER

Defendants’ September 4, 2012 motion to alter or amend judgment or, alternatively,

for new trial is granted in part and denied in part.

I

In the court’s August 7, 2012 memorandum opinion and order, Inclusive Communities

Project, Inc. v. Texas Department of Housing and Community Affairs, 2012 WL 3201401

(N.D. Tex. Aug. 7, 2012) (Fitzwater, C.J.) (“Remedy Opinion”), it noted that its decision to

decline to include the “Revitalization Index” in the remedy “does not preclude TDHCA from

following its usual processes to include the ‘Revitalization Index’ in the QAP.” Id. at *10

n.16. Defendants maintain that, despite this notation, the judgment “order[s] Defendants to

eliminate any other development location criteria.” Ds. Mot. Alter or Amend Judg. 8. They

state that, “[a]s a result, Defendants are unsure whether they are permitted to use the

Revitalization Index, a development location criteri[on], in the Dallas metropolitan area if

it was enacted as part of the QAP.” Id. Because, as noted in the Remedy Opinion, the court did not intend to “preclude
TDHCA from following its usual processes to include the ‘Revitalization Index’ in the QAP,” the court amends the judgment to add the following provision at the end of § IV: “Nothing in this judgment precludes TDHCA from following its usual processes to include the Revitalization Index, as set forth in the Plan at 10-11, in the QAP.”
II Defendants maintain that the court should amend the judgment to make clear the portions that apply to 4% LIHTCs. See Ds. Mot. Alter or Amend Judg. 9. In the Remedy Opinion, the court noted “that the Plan [did] not address 4% LIHTC specifically,” but it concluded that “ICP’s objection [did] not identify a specific deficiency in the remedial plan that result[ed] from this omission.” Inclusive Cmtys., 2012 WL 3201401, at *14. The court also pointed out that “[t]here are distinctions between 4% and 9% LIHTC in that 4% LIHTC are available to all who qualify. Additionally, parts of the remedial plan would have the effect of promoting 4% LIHTC in predominantly Caucasian areas (e.g., criteria for disqualifying proposed sites with undesirable features).” Id. The court concluded that it would “consider the adequacy of the remedial plan in relation to 4% LIHTC as part of its annual review process.” Id. To clarify that some components of the remedial plan may not apply to 4% LIHTC, the court amends § IV of the judgment so that the part that reads “TDHCA shall, within a reasonable time after the entry of this judgment, implement the following affirmative actions
- 2 -

concerning the awarding of 4% and 9% LIHTC in the Dallas metropolitan area” is amended to read “TDHCA shall, within a reasonable time after the entry of this judgment, implement the following affirmative actions concerning the awarding of 9% LIHTC (and, to the extent applicable, 4% LIHTC) in the Dallas metropolitan area.” As indicated in the Remedy Opinion, the court “will consider the adequacy of the remedial plan in relation to 4% LIHTC as part of its annual review process.” Id. If, for example, the revised language in § IV of the amended judgment has the effect of permitting TDHCA to administer LIHTC in the Dallas metropolitan area in a manner inconsistent with the FHA—which is expressly prohibited under § III of the amended judgment—the court can revisit this provision and other issues pertaining to 4% LIHTC as part the annual review process.
III Defendants maintain that the court should not have taxed costs as it did. The court concludes that § VIII of the judgment is incorrectly worded and should be revised in the amended judgment. The court intended that defendants bear their own taxable costs of court and 50% of ICP’s taxable costs of court, and that ICP bear the remaining 50% of its own taxable costs of court. Accordingly, the judgment is amended so that § VIII provides: “Defendants shall bear their own taxable costs of court. ICP shall recover 50% of its taxable costs of court, as calculated by the clerk of court, from defendants and shall bear the remaining 50% of its own taxable costs of court, as calculated by the clerk of court.”
- 3 -

IV Except as granted in this memorandum opinion and order, defendants’ motion to alter or amend judgment or, alternatively, for new trial is denied.
* * * Defendants’ September 4, 2012 motion to alter or amend judgment or, alternatively, for new trial is granted in part and denied in part. SO ORDERED. November 8, 2012.
_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE
- 4 -

 
 Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 1 of 28 PageID 7845

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

AMENDED JUDGMENT

I

In a memorandum opinion and order filed September 28, 2010, the court granted plaintiff

The Inclusive Communities Project, Inc.’s (“ICP’s”) motion for partial summary judgment and

denied defendants’ motions for judgment on the pleadings and for summary judgment. The parties

thereafter tried the balance of the case in a bench trial. In a memorandum opinion and order filed

March 20, 2012, the court found in favor of ICP on its disparate impact claim under §§ 3604(a) and

3605(a) of the Fair Housing Act (“FHA”), and in favor of defendants on all other claims. In a

memorandum opinion and order filed August 7, 2012, the court adopted a remedial plan for

addressing the FHA violation. The court also filed a judgment on August 7, 2012. In a

memorandum opinion and order filed today, the court grants in part and denies in part defendants’

motion to alter or amend judgment or, alternatively, for new trial.

For the reasons set out in the memorandum opinions and orders filed September 28, 2010,

March 20, 2012, August 7, 2012, and today, it is ordered and adjudged as follows:

Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 2 of 28 PageID 7846
II As used in this amended judgment (hereafter “judgment”), the terms “TDHCA” and “defendants” mean, collectively, defendants Texas Department of Housing and Community Affairs and its Executive Director and board members in their official capacities. The term “Plan” means TDHCA’s proposed remedial plan, attached to this judgment as Exhibit A. The term “QAP” means the Qualified Allocation Plan adopted by TDHCA under I.R.C. § 42(m)(1)(B), and Tex. Gov’t Code Ann. § 2306.6702(a)(10) (West 2011). The term “LIHTC” means Low Income Housing Tax Credits awarded under a QAP.
III TDHCA, its officers, agents, servants, employees, and attorneys, and all those in active concert or participation with it who receive actual notice of this judgment by personal service or otherwise, are enjoined from administering the LIHTC program in the Dallas metropolitan area in a manner inconsistent with the FHA.
IV TDHCA shall, within a reasonable time after the entry of this judgment, implement the following affirmative actions concerning the awarding of 9% LIHTC (and, to the extent applicable, 4% LIHTC) in the Dallas metropolitan area: A. include in the QAP as an additional below-the-line criteria the “Opportunity Index,” as set forth in the Plan at 6-7; B. include in the QAP the additional below-the-line criteria regarding the quality of public education and anti-concentration, and remove all other “Development Location” criteria, as set forth in the Plan at 7-8;
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C. continue to include in the QAP a 130% basis boost for proposed developments in high opportunity areas (“HOAs”); D. continue to include in the QAP criteria for disqualifying proposed development sites that have undesirable features, as set forth in the Plan at 11-13, and incorporate the more robust process of identifying and addressing other potentially undesirable site features, as set forth in the Plan at 13-14; E. promulgate by rule a fair housing choice disclosure that must be given to prospective tenants and maintain a website providing information as to tax-credit assisted properties, as set forth in the Plan at 18; F. conduct an annual disparate impact analysis, as set forth in the Plan at 18-19; G. provide a mechanism to challenge public comments that cause proposed developments to receive negative points, as set forth in the Plan at 19, and include in the QAP the additional two-point below-the-line criterion regarding support or neutrality from a neighborhood organization that previously opposed a development and an associated debarment rule, as set forth in the Plan at 19-20; H. adopt a tie breaker, in the event of a tie in scoring a 9% application, that favors an application proposing development in an HOA; and I. each calendar year, no later than 120 days after the TDHCA Board of Directors issues final commitments for allocations of LIHTC, file the annual report with the clerk of court, in accordance with the memorandum opinion and order filed today. Nothing in this judgment precludes TDHCA from following its usual processes to include the Revitalization Index, as set forth in the Plan at 10-11, in the QAP.
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V The remedial plan adopted by this judgment shall be effective for a period of five years after the first annual report is filed. During this period, the court shall retain jurisdiction. At such earlier time, if any, that TDHCA or another party can demonstrate that, as to the Dallas metropolitan area, the remedial plan adopted by this judgment has ensured that no future violations of the FHA will occur and has removed any lingering effects of past discrimination, it may move the court to terminate all or specific provisions of this judgment and/or the remedial plan.
VI The objections of intervenor Frazier Revitalization Inc. to the Plan, as adopted by this judgment as components of the remedial plan, are denied.
VII Except for ICP’s disparate impact claim under the FHA, ICP’s claims against defendants are dismissed with prejudice. Except for the remedial relief included in this judgment, ICP’s requests for remedial relief are denied. ICP may apply for an award of attorney’s fees and non-taxable costs under Fed. R. Civ. P. 54(d).
VIII Defendants shall bear their own taxable costs of court. ICP shall recover 50% of its taxable costs of court, as calculated by the clerk of court, from defendants and shall bear the remaining 50% of its own taxable costs of court, as calculated by the clerk of court. Done at Dallas, Texas November 8, 2012.
_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE
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Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 5 of 28 PageID 7849 JUDGMENT EXHIBIT A

IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC., *

*

PLAINTIFF,

*

*

V.

*

*

THE TEXAS DEPARTMENT OF

*

HOUSING AND COMMUNITY AFFAIRS, AND

*

MICHAEL GERBER,

*

LESLIE BINGHAM-ESCARENO,

*

TOMAS CARDENAS,

*

C. KENT CONINE,

*

DIONICIO VIDAL (SONNY) FLORES,

*

JUAN SANCHEZ MUNOZ, AND

*

GLORIA L. RAY,

*

IN THEIR OFFICIAL CAPACITIES,

*

*

DEFENDANTS.

*

CIVIL ACTION NO. 3:08-CV-0546-D

DEFENDANTS’ PROPOSED REMEDIAL PLAN This proposed Remedial Plan (“Plan”) is submitted to the Court in accordance with the Memorandum Opinion and Order dated March 20, 2012. Certain clarifying remarks are provided to explain to the Court and to the Plaintiff why certain propounded ways to provide remedial measures are not being offered in this Plan. To the extent that some of these clarifying remarks relate to matters of public record which occurred after the closing of the record in these proceedings, Defendant Texas Department of Housing and Community Affairs (the “Department”) is prepared to offer such support by way of affidavits of fact or sworn testimony as the Court may deem necessary.

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Introduction and Background When the Qualified Allocation Plan (QAP) for 2012 (the “2012 QAP”) was submitted to Governor Perry to approve, reject, or modify and approve in accordance with Tex. Gov’t. Code, §2306.6724(b), Governor Perry approved the 2012 QAP with modifications. Those modifications clearly limited the use of discretion by the Department’s Governing Board by curtailing the ability of the Department to make awards of forward commitments of low income housing tax credits (LIHTCs) and by narrowing the conditions under which that Governing Board could approve waivers under the 2012 QAP. That signal was consistent with the limited discretion provided by statute, as confirmed by opinions issued by the Office of the Attorney General. Thus, with regard to the proposal of this Plan, Department staff has endeavored to structure a proposal that strives to create a legally-supportable framework in which future QAPs can achieve the objectives of race neutral dispersion of LIHTC assisted developments within the remedial plan area by fashioning clear requirements, which are reasonably calculated to yield the intended result. Because this is a process with numerous variables, not least of which is the complex decision-making process that developers undergo in selecting their proposed sites, this Plan will require annual analysis and, as needed, recalibration. In addition to the limitations on discretion in the 2012 QAP, that rule took a new and significant policy direction towards the development and intended successful implementation of measures to generate a greater level of tax credit-assisted development activity in high opportunity areas. The results to date of these strong actions, actions already taken that set the stage for significant high opportunity activity in the area covered by these proceedings, are publicly available. On the Department’s website the current status report of the 2012 competitive 9% tax credit round shows that a significant number of competitive applications in
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high opportunity areas have been submitted in Urban Region 3 with 16 of the applications located in such areas, many of which indicate they are top scoring applications.
The graphic below shows compellingly that actions already taken by the Department have materially changed the overall character of the competitive LIHTC round in 2012, promoting overwhelming interest in high opportunity areas.
In applicant-initiated appeals and requests for waivers the Board has taken seriously the limitations placed on its discretion and deliberated extensively in publicly conducted, transcribed meetings, leading to results that have closely followed the 2012 QAP. The Board has considered waivers only in truly exceptional and compelling circumstances where failure to grant the waiver would result in a clear failure to make the opportunity to compete available throughout the state.
It is the Department’s belief that this proposed Remedial Plan offers meaningful improvements on the path already forged in the 2012 QAP and creates concepts which, if successful, can nurture and reinforce future QAPs. The Plan embraces the notion of providing maximum permissible incentives for areas that truly reflect the greatest opportunity, namely those areas with the highest income, lowest poverty, and best public education opportunities.
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As set forth more fully in §12, captioned “Plan subject to statutory constraints,” the Department operates under several layers of complex legal requirements, including the congressional statement in Internal Revenue Code §42(m) that the Department must give preference to “projects which are located in qualified census tracts (as defined in subsection (d)(5)(C)) and the development of which contributes to a concerted community revitalization plan…”. Furthermore, the statutory schema for scoring of LIHTC competitive applications under QAPs is driven largely by TEX. GOV’T. CODE, §2306.6710, which has not been questioned in these proceedings and, presumably, must be adhered to in developing and administering future QAPs. Two of the key remedial tools proffered by the Plaintiff are the use of discretion, as discussed above, and the creation of set-asides. With respect to set-asides, it is open to question whether there is statutory authority for the Department to create set-asides in addition to those set forth in TEX. GOV’T. CODE, Chapter 2306. Even if, arguendo, creating set-asides were authorized, the suggestion to create a set-aside in the remedial area is problematic because that area is but a portion of a larger region pursuant to statute and to which the Department must regionally allocate LIHTCs.
As a result of these limitations and premises, the Department is proposing a Plan which focuses on: (1) according proposed developments located in defined high opportunity areas the greatest incentives allowed by state law; and, (2) according developments in Qualified Census Tracts (QCTs) that are part of true concerted revitalization plans co-equal incentives in order to provide the preference created by Internal Revenue Code §42(m). It is envisioned that the revitalization incentive will set a very high threshold, making it unlikely to yield a number of successful applicants in QCTs such that would perpetuate any discriminatory patterns found to have occurred unintentionally.
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Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 9 of 28 PageID 7853
Plaintiff has requested that 4% non-competitive LIHTCs be addressed in this plan. Because of restrictions of federal law, states do not have the ability to designate the 130% basis boost for 4% LIHTC’s, and therefore the only 4% LIHTC’s eligible for the 130% basis boost are developments in federally designated QCTs and difficult to develop areas (DDAs).
The development and implementation of this Plan and the development of future QAPs in accordance with this Plan will be a matter to which the Department, in collaboration with Plaintiff, the Department’s oversight bodies, and the public, will continue to work to develop more nuanced and effective ideas to achieve an optimal dispersion of LIHTC developments. In developing this remedial plan for the subject Dallas metro area, the Department intends to apply some of these concepts, or similar concepts to the remainder of the state; however, certain other regions will need specifically tailored plans due to differing demographics and other factors.
1. Use of discretion - waivers. In approving the 2012 QAP, Governor Perry determined that the continuation of the ability to make awards of forward commitments was not desirable and that in exercising its discretion to waive any aspect of the QAP the Board should only grant waivers when doing so was necessary to further a purpose or policy enunciated in Tex. Gov’t. Code, Chapter 2306.
2. Strengthened definition of a High Opportunity Area (HOA). In the development of its 2012 QAP, the Department adopted a strengthened definition of a high opportunity area; and, under the scoring criterion of development location, provided 4 competitive points for a development proposing a location in a HOA. In order to qualify as being in an HOA, a development must be in a census tract that has BOTH a low incidence of poverty AND an above median income as well as being located in an area served by either recognized elementary schools or having a significant and accessible element of public
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transportation. The Department currently anticipates that the highest four scoring 2012 applications in Urban Region 3 are located within the 5 county remedial area, are located in HOAs, and are within the attendance zones of recognized or exemplary rated elementary schools. The Department further anticipates awards in Urban Region 3 will be limited to no more than 6 applications due to the amount of 9% credits available for allocation.

In future QAPs, the Department is committed to continuing to strengthen the criteria for locating developments within HOAs. The Department will create a new “Opportunity Index” in order to incentivize applications to locate developments in the highest income and lowest poverty areas of the remedial area. At the same time, applicants that propose projects in areas of high opportunity that do not meet the most stringent criteria will still be incentivized, albeit to a lesser degree. The proposed Opportunity Index is reflected in the following chart. The highest “below the line” (scoring items ranking lower than statutorily required scoring items) point value will be assigned to the highest category within the Opportunity Index (actual point values may change commensurate with changes in the above the line statutory scoring criteria).

Points 7 Points
5 Points 5 Points

Population Served
General use
General use
Any

Poverty Factor <15% rate for all individuals
<15% rate for all individuals
<15% rate for all individuals

Income Factor
Tract in top quartile of median household income for county or, for site in an Metropolitan Statistical Area (MSA), top quartile for MSA Tract in top 2 quartiles of median household income for county or, for site in an MSA, top 2 quartiles for MSA Tract in top quartile of median household income for county or, for site in an MSA, top quartile for

School Quality Factor
“Exemplary” or “Recognized” elementary school
“Exemplary” or “Recognized” elementary school
“Exemplary” or “Recognized” elementary school

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3 Points

Any

1 Point

Any

<15% rate for all individuals
<15% rate for all individuals

MSA

Tract in top quartile of

N/A

median household income

for county or, for site in an

MSA, top quartile for

MSA

Tract in top 2 quartiles of N/A

median household income

for county or, for site in an

MSA, top 2 quartiles for

MSA

Up to 7 Points Any

The proposed development site is located in a QCT for which there is in effect a concerted revitalization plan (consistent with the elements described in §5. See Revitalization Index, §4, below.

The Department will utilize data from the 5-year American Community Survey to

determine a development site’s qualification under the poverty and income criteria. For

categories requiring an “Exemplary” or “Recognized” elementary school, the development site

must be located within the school attendance zone that has the applicable academic rating, as of

the beginning of the Application Acceptance Period, or comparable rating if the rating system

changes by the same date as determined by the Texas Education Agency. An elementary

attendance zone does not include elementary schools with district-wide possibility of enrollment

or no defined attendance zones, sometimes known as magnet schools. However, districts with

district-wide enrollment and only one elementary school are acceptable.

The following additional factors, indicative of educational quality and opportunity or lack of affordable housing, will be incorporated as new below-the-line criteria:

a. Location within the attendance zone of a public school with an academic rating of “Recognized” or “Exemplary” (or comparable rating) by the Texas Education Agency (up to 3 points):

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A. 1 points if it is both an elementary school, and either a middle school or high school; or
B. 3 points if it is an elementary school, a middle school, and a high school. b. A municipality or, if outside of the boundaries of any municipality, a county that has never received a competitive tax credit allocation. The application must also comply with all other anti-concentration provisions (2 points for general use/family or supportive housing; 1 point for elderly). All other Development Location incentive criteria in the current QAP, such as incentives for developments in central business districts, will be removed in future QAPs, unless required by statute, in order to maintain high incentives to target HOAs. 3. 130% basis boost for transactions in HOAs. Under the authority granted by the Housing and Economic Recovery Act of 2008, P. L. 110-289, the 2012 QAP offers a 130% basis boost for transactions assisted by 9% LIHTCs that are located in HOAs as defined in paragraph 2, above. The Department will continue to include in its QAPs a 130% basis boost for applications that are intended to be located in HOAs. This requirement will not preclude or limit the Department’s ability to offer a lawful basis boost in other appropriate instances. The authority for states to define criteria for a 130% boost for non-competitive 4% housing tax credit or taxexempt bond developments is not available under §42 of the Internal Revenue Code. 4. The remedial balance and the Revitalization Index. The Opportunity Index clearly provides the greatest point incentives for HOA transactions that serve the general public, including families, that are also in areas of
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significantly greater income, the top quartile. While a proposed transaction in a second quartile tract, a proposed transaction in the top quartile serving a targeted, albeit legally targeted, population rather than the general population, or even a proposed transaction in a second quartile tract serving an elderly population would be characterized as HOA, it is clear that in order to achieve the spirit and intent of the Plan, it is only that top quartile/general population plan should receive that greatest level of recognition for competitive enhancement. This Plan does propose a mechanism allowing for a similar prioritization for a proposed transaction in a qualified census tract (QCT) that is the subject of a concerted plan of community revitalization, as federally mandated by Internal Revenue Code (IRC) §42(m). The Department contends that failure to grant same preference for such transactions could be seen as inconsistent with federal law. However, the Department is well aware of the fact that a significant level of continuing activity in development in QCTs would be inconsistent with the remedial objectives of this Plan. Therefore, it is critical to note that in developing this language, Department strongly believes that the high thresholds established for revitalization plans will demand significant investments of time, analysis, and local commitments of funding for non-housing activity from an applicant. Accordingly, these points are unlikely to achieve in the natal cycle after approval of a Remedial Plan, a significant number of applications that can demonstrably earn the maximum points for being in a QCT AND having in place a revitalization plan meeting the substantive criteria proposed.
As the graphic below conveys, changes implemented in the 2012 QAP have clearly resulted in a virtual curtailment of QCT activity. While such a curtailment might be viewed as accelerating a catch-up to restore a more balanced distribution of assisted developments in areas
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of all income levels, it would not be consistent with a prospective race neutral distribution or the congressionally expressed preferences set forth in the IRC.

Therefore, the Department believes that it is appropriate for an application in the area of greatest opportunity to be given coequal incentives with an application achieving the greatest revitalization purpose. Without this balance the Plan would in effect be forsaking that sector of the community in greatest need of this federal assistance. However, it is a generally acknowledged contention that tax credit developers have been able to marshal community support to validate the conclusions that they were meeting the objectives of IRC §42(m) possibly where meaningful non-housing revitalization activity was not occurring. In order to assure that such efforts involve meaningful substance and do not create an unregulated opportunity to characterize an effort as revitalization that may not be meaningful and substantive, the Department has developed a concept similar to the Opportunity Index to address revitalization.

Revitalization index:

Points 7 points

Population served
Any

Criteria
The proposed development site is located in a QCT in which there is in effect a concerted revitalization plan (consistent with the elements described in §5 and the

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3 points Any 2 points Any

non-housing costs, as reflected in the local government certified plan budget, exceed $25,000 per unit in the proposed development. The proposed development site is located in a QCT in which there is in effect a concerted revitalization plan (consistent with the elements described in §5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $10,000 per unit but are less than $25,000 per unit. The proposed development site is not located in a QCT but there is in effect a concerted revitalization plan (consistent with the elements described in §5 and the non-housing costs, as reflected in the local government certified plan budget, exceed $10,000 per unit.

An application seeking to receive points under the Revitalization Plan must provide the

plan and plan budget for review at pre-application and provide substantiation of the budget

through submittal of a local government certified copy of the plan and budget supporting the

claimed points at full application.

5. Strengthened criteria for disqualifying proposed sites that have undesirable features.

In the 2012 QAP, the Department included criteria for disqualifying proposed sites that have undesirable features, as follows:

(13) Development Sites with negative characteristics in subparagraphs (A) - (G) of this paragraph will be considered ineligible. If Staff identifies what it believes would constitute an unacceptable negative site feature not covered by the those identified in subparagraphs (A) (G) of this paragraph Staff may seek Board clarification and, after holding a hearing before the Board, the Board may make a final determination as to whether that feature is unacceptable. Rehabilitation (excluding Reconstruction) Developments with ongoing and existing federal assistance from HUD or TRDO-USDA are exempt. For purposes of this exhibit, the term 'adjacent' is interpreted as sharing a
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boundary with the Development Site. The distances are to be measured from the nearest boundary of the Development Site to the boundary of the negative characteristic. If none of these negative characteristics exist, the Applicant must sign a certification to that effect. The negative characteristics include: (A) developments located adjacent to or within 300 feet of junkyards; (B) developments located adjacent to or within 300 feet of active railroad tracks, unless the Applicant provides evidence that the city/community has adopted a Railroad Quiet Zone or the railroad in question is commuter or light rail (Developments located in a Central Business District are exempt); (C) developments located adjacent to or within 300 feet of heavy industrial uses such as manufacturing plants, refinery blast zones, etc.; (D) developments located adjacent to or within 300 feet of a solid waste or sanitary landfills; (E) developments where the buildings are located within the easement of any overhead high voltage transmission line or inside the engineered fall distance of any support structure for high voltage transmission lines, radio antennae, satellite towers, etc. This does not apply to local service electric lines and poles; (F) developments where the buildings are located within the accident zones or clear zones for commercial or military airports; or
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(G) development is located adjacent to or within 300 feet of a sexuallyoriented business. For purposes of this paragraph, a sexually-oriented business shall be defined as stated in §243.002 of the Texas Government Code. As a part of the Plan, the Department will continue to include the same or similar criteria in its QAPs for disqualifying proposed sites that have undesirable features. Additionally, the Department will incorporate a more robust process to identify and address other potentially undesirable site features in future QAPs. Under this criterion, an applicant proposing development of multifamily housing with tax credits must disclose to the Department and may obtain the Department’s written notification of pre-clearance if the site involves any negative site features at the proposed site or within 1000 feet of the proposed site such as the following: a. A history of significant or recurring flooding; b. A hazardous waste site or a source of localized hazardous emissions, whether remediated or not; c. Heavy industrial use; d. Active railways (other than commuter trains); e. Landing strips or heliports; f. Significant presence of blighted structures; g. Fire hazards which will increase the fire insurance premiums for the proposed site;
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h. Locally known presence of gang activity, prostitution, drug trafficking, or other significant criminal activity that rises to the level of frequent police reports.
The Department will develop a process for the efficient, timely resolution of the preclearance process. The Department may require that disclosure occur on an expedited basis, including but not limited to during the pre-application process. The Department will review these matters as disclosed to them and will either issue or withhold a pre-clearance. The standard to be employed will be that the pre-clearance will be withheld if one or more of the factors enumerated above are present at or within 1000 feet of the proposed site and are of a nature that would not be typical in a neighborhood that would qualify for HOA points under the Opportunity Index. An applicant providing disclosure will be encouraged to provide any plans for mitigation of the present undesirable feature(s), which may include a concerted community revitalization plan as described in §5.
In assessing disclosures the Department staff may, at its discretion, conduct a site inspection. Non-disclosure of any of the enumerated conditions if known or in the exercise of reasonable diligence could have been ascertained is a basis for withholding pre-clearance. Withholding or denial of pre-clearance may be appealed pursuant to the appeals process set forth in the applicable QAP.
With respect to the presence or absence of hazardous waste sites or emissions, an applicant may rely on the required Phase I Environmental Site Assessment.
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6. Strengthening of incentives for applications in qualified census tracts where the housing is part of a concerted community revitalization plan.
Consistent with §42(m) of the Internal Revenue Code, the 2012 QAP offers incentives for applications in qualified census tracts and for applications in areas where the housing is a necessary component of a community revitalization plan. In future QAPs, the Department will strengthen the correlation between revitalization and development located in qualified census tracts and the requirements for establishing that true community revitalization is occurring and that affordable housing is a necessary part of the revitalization and will continue to provide appropriate incentives for affordable rental housing developments meeting such strengthened criteria.
Beginning with its 2013 QAP, the Department will establish a scoring criteria in which any application for low income housing tax credits located in a qualified census tract, as defined in §42(d)(5)(C) of the Internal Revenue Code, will be eligible for enhanced points, based on its location, if there is, as described below, a concerted revitalization plan that is in effect and to which the development will contribute.
A concerted community revitalization plan adopted by a municipality or county will be deemed to exist based on the following:
a. A community revitalization plan must have been adopted by the municipality or county in which the proposed development is intended to be located.
b. The adopting municipality or county must have performed, in a process providing for public input, an assessment of the factors in need of being addressed as a part of such community revitalization plan. Factors to be considered include the following:
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A. adverse environmental conditions, natural or manmade, that are material in nature and are inconsistent with the general quality of life in typical average income neighborhoods. By way of example, such conditions might include significant and recurring flooding, presence of hazardous waste sites or ongoing localized emissions not under appropriate remediation, nearby heavy industrial, uses or uses presenting significant safety or noise concerns such as major thoroughfares, nearby active railways (other than commuter trains), or landing strips; significant and widespread (i.e., not localized to a small number of businesses or other buildings) rodent or vermin infestation acknowledged to present health risks requiring a concerted effort; or fire hazards;
B. presence of blighted structures; C. presence of inadequate transportation; D. lack of accessibility to and/or presence of inadequate health care facilities, law enforcement and fire fighting facilities, social and recreational facilities, and other public facilities comparable to those typically found in neighborhoods containing comparable but unassisted housing; E. the presence of significant crime. F. the presence, condition, and performance of public education; or G. the presence of local business providing employment opportunities. H. A municipality is not required to identify and address all such factors, but it must set forth in its plan those factors that it has identified and determined it will address. c. The adopting municipality or county must have based its plan on the findings of the foregoing assessment and must have afforded the public opportunity to provide input and
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comment on the proposed plan and the factors that it would address. To the extent that issues identified require coordination with other authorities, jurisdictions, or the like, such as school boards or hospitals, the adopting municipality should include coordination with such bodies in its plan and, to the extent feasible, secure their cooperation.

d. The adopted plan, taken as a whole, must be a plan that can reasonably be expected to revitalize the community and address in a substantive and meaningful way the material factors identified. The adopted plan must specifically address how the providing of affordable rental housing fits into the overall plan and is a necessary component thereof.

e. The adopted plan must describe the planned sources and uses of funds to accomplish its purposes.

f. For any application located in a qualified census tract at the time of application to be eligible for enhanced points for this item based on its location, the revitalization plan must already be in place as evidenced by as certification that:

followed;

A. the plan was duly adopted with the required public comment processes

B. that funding and activity under the plan have already commenced; and

C. the adopting municipality or county has no reason to believe that the overall funding for the full and timely implementation of the plan will be unavailable.

At the time of any award of Low Income Housing Tax Credits the site and neighborhood of any unit covered by the award and must conform to the Department’s rules regarding unacceptable sites.

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Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 22 of 28 PageID 7866
It is recognized that municipalities and counties will need to devote time and effort to adopt a concerted revitalization plan that complies with the requirements of this remedial plan. Therefore, for purposes of the first cycle of Low Income Housing Tax Credit awards following the issuance of an Order adopting a remedial plan, the The Board of the Department may, in a public meeting, determine that a revitalization plan substantively and meaningfully satisfies a revitalization effort, notwithstanding one or more of the above factors not having been satisfied.
7. Promulgation of fair housing choice disclosure. The Department will promulgate by rule a fair housing choice disclosure in a form substantially equivalent to that set out in Attachment A, advising prospective tenants in writing of a website or other method of contact where they can obtain information about alternative housing and their rights under fair housing laws. The Department will maintain a website providing relevant information and identifying tax credit assisted properties searchable by ZIP code, city, and/or county. The Department will require that no initial lease be entered into for a unit assisted with low income housing tax credits unless that disclosure has first been provided to the prospective tenant. 8. Annual analysis of effectiveness of plan and continued development and enhancement of a policy of avoidance of over-concentration of low income housing units. The Department will annually conduct an analysis of the effects of its prior QAP to determine if that QAP was contributing to disparate impact; and will take appropriate and lawfully permitted measures to amend the next and subsequent QAPs (beginning with its 2013 QAP), to avoid present or potentially developing disparate impact in the allocation of low income housing tax credits.
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 18 of 24 1070764.1

Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 23 of 28 PageID 7867
As each QAP is developed, the Department will analyze the distribution achieved under the previous QAP. It will take that analysis into account and use it to develop (within the measures available to the Department under applicable law) changes in the incentives, threshold requirements, and other factors to address any potential disparate impact and to achieve, prospectively, a broad and race neutral dispersion of low income housing tax credit assisted properties.
The QAP disparate impact analysis the Department performs will be made public. The public will be given opportunity to comment on the analysis, and the development of QAPs will also be carried out in a public meeting or hearing with opportunity for review and comment by the public, including the Plaintiff. In order to achieve consistency on a statewide basis, the Department will endeavor to apply the principles and objectives in this Plan on a statewide basis.
9. Review of challenged public input. Any public comment that will be considered for negative scoring of applications, or as opposition to 4% non-competitive allocations, may be challenged if it is contrary to findings or determinations, including zoning determinations, of a municipality, county, school district, or other local governmental entity. If any such comment is challenged, the party that made the challenge will have to declare the basis for the challenge. The party that made the comment will be given seven (7) days to provide any support for the accuracy of its assertions. All such materials and the analysis of the Department’s staff will be provided to a fact finder for a review and determination. The Department’s determination will be final.
Additionally, applications in HOAs that receive statements of neutrality or support from a Neighborhood Organization that had provided a statement of opposition against a tax credit development in the last three years and for which the prior application was assigned the point
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 19 of 24 1070764.1

Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 24 of 28 PageID 7868
value associated with opposition, will receive an additional two (2) points. The Department will amend its debarment rules to provide that if an applicant is found to have worked to create opposition to their own or another’s application in any application round, they shall be subject to debarment. An applicant against whom debarment proceedings have been initiated in good faith by the Department shall not be eligible for these points.
10. Tie breakers. In the event of a tie in scoring, the tie breaker will be a preference for the developments that are located the greatest distance from the nearest development that is assisted by either 4% or 9% credits.
11. Transparency and openness of process. The Department will continue to make available on its website proposed and final QAPs with comments and responses, applications, underwriting reports, application and award logs, scoring logs by subject, inventories, and appeal materials. Additionally, the Department will beginning with the 2013 competitive tax credit cycle, post market studies, Phase I Environmental Site Assessments and property condition assessments on its website. Nothing will require the disclosure of any item which has been found to be confidential as a matter of law.
12. Plan subject to statutory constraints. This Plan acknowledges that as the Department considers and takes actions within its lawful powers, the implementation of such matters is an inherently deliberate and public process that takes time. Factors which must be addressed include adherence to the Texas Administrative Procedures Act; the Texas General Appropriations Act; Chapter 2306 of the Texas Government Code; and adherence to various federal requirements regarding the administration of other sources of funding impacting the Department’s ability to address such matters. Subject to
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 20 of 24 1070764.1

Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 25 of 28 PageID 7869
adherence to all such requirements, as they may apply, the Department shall take appropriate actions within its power and control as provided for herein.
Nothing in this Plan shall in any way limit or affect the right of the State of Texas to enact laws; or obligate the Department to take any action not allowed by law; or require the Department to become obligated for funds that have not been appropriated to it for the purposes intended.
Respectfully submitted, By: /s/ G. Tomas Rhodus
G. Tomas Rhodus Texas State Bar No. 16824500 William B. Chaney Texas State Bar No. 04108500 LOOPER REED & McGRAW, P.C. 1601 Elm Street, Suite 4600 Dallas, Texas 75201 214.954.4135 (Phone) 214.953.1331 (Fax) Timothy E. Bray Texas State Bar No. 24061240 Shelley N. Dahlberg Assistant Attorneys General General Litigation Division P.O. Box 12548, Capitol Station Austin, Texas 78711 512.463.2120 (Phone) 512.320.0667 (Fax) ATTORNEYS FOR DEFENDANTS
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 21 of 24 1070764.1

Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 26 of 28 PageID 7870 CERTIFICATE OF FILING AND SERVICE
I certify that on May 18, 2012, I electronically submitted the foregoing document with the clerk of the court for the United States District Court for the Northern District of Texas using the electronic case file system of the court, such that all counsel of record will be provided a “Notice of Electronic filing”, and access to this document.
/s/ G. Tomas Rhodus G. Tomas Rhodus
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 22 of 24 1070764.1

Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 27 of 28 PageID 7871
Attachment A to
Remedial Plan
FAIR HOUSING CHOICE DISCLOSURE You are about to enter into a lease agreement, which is a binding contract. Before you enter into your lease you should know that under fair housing laws you have certain basic rights, including the right to make certain choices as to where you will live. There are programs administered by a number of state and local institutions to provide assistance with respect to housing, including, but not limited to, affordable rental housing supported by low income housing tax credits, housing assisted with loans or grants from HUD programs and USDA programs, different types of vouchers, and public housing. The requirements under the programs may be different and not all types of housing options may be available where you would like to live. Where you live has the potential to impact you and others in your household. For example, where you live may provide greater access to some (but not necessarily all) of the things listed below: • Better schools • Less crime • Better public transportation • Better access to health care • Better access to grocery stores offering more healthy food choices • Better proximity to family, friends, and organizations to which you might belong
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 23 of 24 1070764.1

Case 3:08-cv-00546-D Document 208 Filed 11/08/12 Page 28 of 28 PageID 7872 There are other things that may be important to you. If you want to explore other housing
options you can identify other affordable rental properties in your community at: [hyperlink]
This link will also summarize your rights under fair housing laws and direct you to fair housing resources.
DEFENDANTS’ PROPOSED REMEDIAL PLAN – PAGE 24 of 24 1070764.1

 
 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

MEMORANDUM OPINION AND ORDER

Plaintiff The Inclusive Communities Project, Inc. (“ICP”) moves for an award of

$1,870,067.00 in attorney’s fees and $24,392.00 in nontaxable costs. Defendants Texas

Department of Housing and Community Affairs and its Executive Director and board

members in their official capacities (collectively, “TDHCA”) oppose the motion. For the

reasons that follow, the court awards ICP attorney’s fees in the sum of $1,869,577.00 and

nontaxable costs in the sum of $24,392.00.

I

ICP’s fee motion follows a bench trial in which ICP pursued claims that, in allocating

Low Income Housing Tax Credits (“LIHTC”) in the Dallas metropolitan area, TDHCA

intentionally discriminated based on race, in violation of the Equal Protection Clause of the

Fourteenth Amendment (actionable under 42 U.S.C. § 1983) and 42 U.S.C. § 1982, and that

TDHCA’s allocation decisions had a disparate racial impact, in violation of §§ 3604(a) and

3605(a) of the Fair Housing Act (“FHA”).1 The court ruled in favor of ICP on its disparate impact claim under §§ 3604(a) and 3605(a) of the FHA, and against ICP on its intentional discrimination claims under the Equal Protection Clause and § 1982. See Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 860 F.Supp.2d 312, 313-14, 321 (N.D. Tex. 2012).
ICP moves under Fed. R. Civ. P. 54(d)(2)(C) and 42 U.S.C. § 3613(c)(2) for an award of attorney’s fees and nontaxable costs. It has reduced its fee requests by 664 hours (a 12% reduction from the lodestar), which it maintains are related to the unsuccessful discriminatory purpose claim. ICP has also reduced the hours claimed based on eliminating time spent on intervenor Frazier Revitalization Inc.’s amicus brief and motion to intervene, possible duplication of effort, and other billing judgment reductions. TDHCA argues that the requested fees should be reduced for three reasons: first, ICP had limited success in the lawsuit; second, certain billing entries are vague; and third, the hourly rates claimed by ICP’s attorneys are unreasonable.
II When a plaintiff prevails on a claim under §§ 3604(a) and 3605(a) of the FHA, “the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney’s fee and costs.” 42 U.S.C. § 3613(c)(2).
The determination of a fees award is a two-step process.
1The court assumes the parties’ familiarity with its prior opinions in this case, and thus only sets out the facts necessary to understand this memorandum opinion and order.
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Rutherford v. Harris Cnty., 197 F.3d 173, 192 (5th Cir. 1999). First the court calculates the “lodestar” which is equal to the number of hours reasonably expended multiplied by the prevailing hourly rate in the community for similar work. Id. The court should exclude all time that is excessive, duplicative, or inadequately documented. Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993). Once the lodestar amount is calculated, the court can adjust it based on the twelve factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 71719 (5th Cir. 1974).2
Jimenez v. Wood Cnty., Tex., 621 F.3d 372, 379-80 (5th Cir. 2010). The lodestar, however,
is presumptively reasonable and adequate to induce attorneys to undertake representation in
meritorious civil rights cases. See Perdue v. Kenny A., ___ U.S. ___, 130 S. Ct. 1662, 1672-
73 (2010). The applicant bears the burden of substantiating both the requested hours and the
hourly rates. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).
III
TDHCA’s principal ground for opposing ICP’s fee application is that ICP achieved
limited success in this lawsuit by failing to prove intentional discrimination. TDHCA
maintains that, as with the court’s decision to award ICP 50% of its taxable costs, the court
2The factors are: (1) the time and labor required for the litigation; (2) the novelty and difficulty of the questions presented; (3) the skill required to perform the legal services properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the result obtained; (9) the experience, reputation and ability of the attorneys; (10) the “undesirability” of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. Johnson, 488 F.2d at 717-19. The Supreme Court has “barred any use” of the sixth factor. Merrick v. Scott, 2011 WL 1938188, at *1 n.3 (N.D. Tex. May 20, 2011) (Fitzwater, C.J.) (quoting Rutherford, 197 F.3d at 193).
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should award 50% of the fees reasonably incurred, and it contends that ICP’s 12% voluntary reduction is inadequate.
A A plaintiff’s degree of success is the most critical Johnson factor for determining reasonableness of the fee award. See, e.g., Barrow v. Greenville Indep. Sch. Dist., 2005 WL 6789456, at *18 (N.D. Tex. Dec. 20, 2005) (Fitzwater, C.J.) (citing Farrar v. Hobby, 506 U.S. 103, 114 (1992)), aff’d, 2007 WL 3085028 (5th Cir. Oct. 23, 2007). Determining fee reasonableness based on the degree of success depends initially on whether the plaintiff’s claims for relief were related. See Hensley, 461 U.S. at 434-45. The court holds that ICP’s claims of intentional discrimination and disparate impact involved a “common core of facts” and were based on “related legal theories.”3 The court therefore focuses next on “the significance of the overall relief obtained by [ICP] in relation to the hours reasonably expended on the litigation.” Id. at 435. When a plaintiff obtains “excellent results, [its] attorney[s] should recover a fully compensatory fee. Normally this will encompass all hours reasonably expended on the litigation[.]” Id. But where a plaintiff “achieve[s] only partial or limited success,” granting full compensation may be excessive, and the court may reduce the attorney’s fees award to account for the limited success. Id. at 436.
3TDHCA does not contend that ICP’s claims for relief were unrelated. - 4 -

B As a threshold matter, the court rejects the premise that its decision to award ICP 50% of its taxable costs affects the attorney’s fees determination. This is because different standards apply. For attorney’s fees, decisions like Hensley prescribe how the court, in its discretion, is to determine reasonableness. See Hensley, 461 U.S. at 435-36. A different standard regulates the court’s discretion in awarding taxable costs. Cf. Copper Liquor, Inc. v. Adolph Coors Co., 684 F.2d 1087, 1101 (5th Cir. 1982) (“[W]e know of no authority for a percentage reduction of either costs, properly defined, or expenses, recoverable as ‘cost of suit,’ based on the factors used by the district court to reduce attorneys’ fees.”), overruled on other grounds by Int’l Woodworkers of Am. v. Champion Int’l Corp., 790 F.2d 1174 (5th Cir 1986) (en banc); see Taniguchi v. Kan Pac. Saipan, Ltd., 132 S. Ct. 1997, 2006 (2012) (holding that court’s discretion under Rule 54(d) “is solely a power to decline to tax, as costs, the items enumerated in [28 U.S.C.] § 1920.” (quoting Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 442 (1987))). The court therefore declines to apply correspondingly its decision on taxable costs to its award of attorney’s fees.
C TDHCA maintains that ICP had only limited success because its intentional discrimination claim was unsuccessful. But when a plaintiff obtains “excellent results” compared to the relief sought, “the fee award should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit.” Hensley, 461 U.S. at 435. In cases seeking injunctive relief, courts consider the results “excellent” where the
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plaintiff obtains “the bulk of the relief [it] sought.” Smith v. Tarrant Cnty. Coll. Dist., 2010 WL 4063226, at *6 (N.D. Tex. Oct. 13, 2010) (Means, J.) (holding that plaintiff obtained “excellent results” in action against college’s restrictions on political activity, where “Plaintiffs obtained the bulk of the relief they sought, including a court order enjoining TCC from prohibiting Plaintiffs’ protests on campus. While the Court did not accept each and every contention raised by Plaintiffs, the Court granted favorable relief to Plaintiffs based on the claims in support of which these contentions were raised.”); see also Barrow, 2005 WL 6789456, at *18 (holding that “[f]rom a non-monetary standpoint, [plaintiff] clearly obtained excellent results” by establishing “that her constitutional right had been violated, that she had sustained actual damages as a result, and that [defendant] should be punished for his conduct through an award of punitive damages”). Cf. Wesley v. Yellow Transp., Inc., 2010 WL 4629972, at *5-6 (N.D. Tex. Nov. 8, 2010) (Fitzwater, C.J.) (reducing attorney’s fees request by 50% where requested amount exceeded six times plaintiffs’ recovery, plaintiffs only prevailed on three (or fewer) of original twenty-four claims, and several plaintiffs represented by same attorneys were entirely unsuccessful).
Although ICP failed to prove intentional discrimination, and the court did not adopt all of ICP’s objections to TDHCA’s proposed remedial plan, the ultimate results of ICP’s lawsuit were “excellent.” ICP secured a remedy that addressed virtually every request in its complaint.4 The following examples are illustrative. ICP sought injunctive relief requiring
4Not only did ICP secure a remedy that addressed virtually every request in its complaint, TDHCA has not suggested that ICP could have obtained any additional relief if
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TDHCA to allocate LIHTC so that more such developments are located in non-minority
census tracts. See Compl. 16. The remedial plan adopts an “Opportunity Index” to provide
more incentives for LIHTC applicants to target “high opportunity areas” (“HOAs”). See
Inclusive Cmtys. Project v. Tex. Dep’t of Housing & Cmty. Affairs, 2012 WL 3201401, at *4
(N.D. Tex. Aug. 7, 2012) (“ICP IV”). The plan institutes a tie-breaker that favors
developments in HOAs. See id. ICP’s complaint sought to enjoin TDHCA from approving
LIHTC for areas with environmental concerns or high crime rates. See Compl. 16-17. The
remedial plan “strengthen[s] the criteria for disqualifying proposed development sites that
have undesirable features” and requires that applicants obtain preclearance from TDHCA if
a proposed site “involves any negative site features . . . [at] or within 1000 feet of the
proposed site.”5 ICP IV, 2012 WL 3201401, at *11. The complaint also requested
monitoring requirements, which the remedial plan includes. See Compl. 17; ICP IV, 2012
WL 3201401, at *12. Because ICP obtained an excellent degree of success, the court
it had successfully proved intentional discrimination. Instead, TDHCA simply relies on its mistaken interpretation of Hensley, contending that ICP achieved limited success because some of its claims failed. Contra Hensley, 461 U.S. at 435 (holding that when plaintiff obtains excellent results in lawsuit with related claims, “the court’s rejection of or failure to reach certain grounds is not a sufficient reason for reducing a fee. The result is what matters.”).
5Although the court in adopting the remedial plan did not accept all of ICP’s objections, including its objection that the preclearance requirement’s bright-line distance rule is an inadequate measure of risk, the court need not have awarded ICP everything it requested to consider the results obtained “excellent.” See, e.g., Smith, 2010 WL 4063226, at *1, 6 (concluding that some of plaintiffs’ challenges to college’s rules were nonjusticiable, but finding results “excellent” because plaintiffs “obtained the bulk of the relief they sought”).
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declines to reduce the amount based on the eighth Johnson factor beyond the 12% reduction that ICP already voluntarily incorporated into its requested amount of attorney’s fees.6
D TDHCA objects that ICP is attempting to recover fees for a disparate impact claim that it did not plead, and that this warrants a reduction in the fee award. First, TDHCA does not maintain that ICP’s supposed failure to plead disparate impact is an independent ground for reducing the fee award. It instead relies on this argument as evidence that ICP’s attorneys spent much of their time on the unsuccessful intentional discrimination claim. See, e.g., Ds. Br. 6 (“Given that Plaintiff expressly pled this case only as a discriminatory ‘purpose’ suit, certainly most of the time spent in discovery related to the purposeful discrimination claim.” (citation omitted)). But as the court has already explained, because ICP obtained excellent results, the court declines to further reduce the fee to account for hours expended on the unsuccessful claims. Second, the court rejects the premise that ICP is attempting to recover fees on an unpleaded claim. The court recognized in an opinion filed almost one year before trial that ICP had brought a discriminatory impact claim under the FHA. See Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 749 F.Supp.2d 486, 498 n.10 (N.D. Tex. 2010) (Fitzwater, C.J.) (“ICP II”) (“The court addresses only ICP’s discriminatory impact claim under the FHA.”). And regardless whether ICP had adequately alleged this claim in its
6The court has considered the remaining Johnson factors and concludes that no further adjustment to the lodestar is warranted.
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complaint, “[t]he joint pretrial order supersedes all pleadings and governs the issues and evidence to be presented at trial.” E.E.O.C. v. Serv. Temps, Inc., 2010 WL 5108733, at *3 (N.D. Tex. Dec. 9, 2010) (Fitzwater, C.J.) (citing Quick Techs., Inc. v. Sage Grp., PLC, 313 F.3d 338, 345-46 n.5 (5th Cir. 2002)), aff’d, 679 F.3d 323 (5th Cir. 2012). “‘Once the [pretrial] order is entered, it controls the scope and course of the trial.’” Schadler v. Anthem Life Ins. Co., 147 F.3d 388, 392-93 n.4 (5th Cir. 1998) (quoting Rule 16). It is apparent from the pretrial order that a disparate impact claim was at issue. Not only are the terms “disparate impact” and “discriminatory impact” used in the pretrial order, see PTO at 5, but the term “compelling governmental interest” is used as well, id. at 7-9. And as is clear from the court’s ruling in ICP II, the burden of proving that TDHCA’s actions were in furtherance of a compelling government interest relates directly to a disparate impact claim. See ICP II, 749 F.Supp.2d at 498 (“If ICP can establish a prima facie case in support of its FHA claim, the burden shifts to defendants to prove that TDHCA’s actions furthered a compelling government interest.”).
IV TDHCA maintains that ICP’s attorneys’ billing records contain hundreds of hours of vague entries that should not be compensated or, alternatively, should result in a 10% reduction in the fees requested.
A The party seeking reimbursement of attorney’s fees meets its burden of establishing the number of hours expended by “presenting evidence that is adequate for the court to
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determine what hours should be included in the reimbursement.” Bramlett v. Med. Protective Co. of Fort Wayne, Ind., 2010 WL 3294248, at *2 (N.D. Tex. Aug. 20, 2010) (Fitzwater, C.J.) (quoting Bode v. United States, 919 F.2d 1044, 1047 (5th Cir. 1990)). “Exceptionally terse descriptions of activities do not constitute sufficient documentation.” Id. (citing League of United Latin Am. Citizens No. 4552 (LULAC) v. Roscoe Indep. Sch. Dist., 119 F.3d 1228, 1233 (5th Cir. 1997)) (disallowing fees for “research and review of cases” because entry was impermissibly vague); see also Cookston v. Freeman, Inc., 1999 WL 714760, at *2 (N.D. Tex. Sept. 14, 1999) (Fitzwater, J.) (collecting cases). “Litigants take their chances when submitting such fee applications, as they provide little information from which to determine the ‘reasonableness’ of the hours expended on tasks vaguely referred to as ‘pleadings,’ ‘documents,’ or ‘correspondence’ without stating what was done with greater precision.” La. Power & Light Co. v. Kellstrom, 50 F.3d 319, 327 (5th Cir. 1995). Billing entries must explain the subject matter of the task enough to allow the court to determine whether the time was reasonably expended. See Fralick v. Plumbers & Pipefitters Nat’l Pension Fund, 2011 WL 487754, at *7 (N.D. Tex. Feb. 11, 2011) (Fitzwater, C.J.).
B TDHCA identifies the time entries it challenges in only one sentence in its brief: “Here, Plaintiff’s counsel’s billing records include hundreds of hours of vague entries, such as ‘preparation for trial,’ Doc. 203 at 108, ‘exhibit preparation,’ Doc. 203 at 97, and block billing of ‘analysis, research, drafting’ for various pleadings, Doc. 203 at 94-95.” Ds. Br. 9.
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1 The time entries for “analysis, research, drafting,” in the context of this case, are neither impermissible block billing nor fatally vague. The term “block billing” refers to the disfavored “time-keeping method by which each lawyer and legal assistant enters the total daily time spent working on a case, rather than itemizing the time expended on specific tasks.” Fralick, 2011 WL 487754, at *4 (citation omitted). For example, a person engaging in block billing would record the total amount of time spent on a case that day, and then group several tasks under that single entry, leaving the court unable to determine how much time was devoted to a given task. See id. at *5. ICP’s billing entries for “analysis, research, drafting” are not block billing because these tasks are sufficiently intertwined to be treated as one task. See P. App. 94; see also Fralick, 2011 WL 487754, at *5 (holding that entries are not block-billed where “the task [has] a one-to-one correspondence with the number of hours reported for that day,” such as “[attorney] expended 2.5 hours on 1/28/09 preparing exhibits to complaint and did nothing else on this case”). Neither are the entries “analysis, research, drafting” vague. Each entry of “analysis, research, drafting” describes the subject matter of the task, such as “analysis, research, drafting response to [TDHCA] brief” or “analysis, research and drafting reply brief.” P. App. 94. Including the subject matter of the task provides an explanation so that the court can determine whether the time was reasonably expended. See Fralick, 2011 WL 487754, at *7 (comparing insufficient entry “Tel. confs. with DJones” with sufficient entry “Tel. conf. with
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RHopp re joint status report”). The court declines to reduce any of the fees for billing entries designated as “analysis, research, drafting.”
2 The billing entries for “exhibit preparation” are not vague because they offer some description of the subject matter and thus enable the court to determine whether the time was reasonably expended. The entries for “exhibit preparation” include a basic description of the exhibits, such as “exhibit preparation of new exhibits including exhibits to support remedy requested,” “exhibit preparation of new exhibits,” and “exhibit preparation and drafting exhibit list with complete names.” P. App. 97. These entries are sufficient for the court to determine whether the time expended was reasonable.
3 The billing entries for “preparation for trial,” however, are vague. Although these entries only appear on the days of trial, the court cannot determine what tasks ICP maintains were entailed in “preparation for trial,” or whether the time expended was reasonable. See P. App. 108. Therefore, a reduction in the hours is warranted. When the court determines that billing entries are vague, it can reduce the allowed time for the entries. See Fralick, 2011 WL 487754, at *7 (applying 10% reduction to vague entries). ICP’s attorneys’ records describe 14 hours expended by Laura B. Beshara, Esquire (“Beshara”) as having been expended in “preparation for trial.” Applying a 10% reduction and multiplying the reduced time by the hourly rate of $350 (which the court finds below is
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reasonable), the court subtracts $490 from the fee award (1.4 hours x $350 = $490).7
V
The court next considers whether the requested hourly rates for ICP’s attorneys are
reasonable.
A
“The hourly rates to be used in the lodestar calculation are determined by ‘the
prevailing market rates in the relevant community.’” Barrow, 2005 WL 6789456, at *15
(quoting Blum v. Stenson, 465 U.S. 886, 895 (1984)). As the fee applicant, ICP “bears the
burden of demonstrating ‘that the requested rates are in line with those prevailing in the
community for similar services by lawyers of reasonably comparable skill, experience, and
reputation.’” Id. (quoting Blum, 465 U.S. at 895 n.11).
7Although there are similar examples to “preparation for trial” that can be found in the attorneys’ time records, see, e.g., P. App. 90 (“prepare for pretrial conference”), TDHCA does not challenge them in its one-sentence assertion. See Ds. Br. 9. If a party does not object to particular billing entries as inadequately documented, the court is not obliged sua sponte to sift through fee records searching for vague entries or block-billing. See generally Kellstrom, 50 F.3d at 325 (holding that district court erred in failing to conduct full analysis of billing records “[a]s to the specific items of which [opposing party] complains”). It is a common practice for courts to address only those potentially inadequate entries brought to the court’s attention. See, e.g., Barrow, 2005 WL 6789456, at *12 (“examining the individual entries to which [the opposing party] objects”); Great Am. Ins. Co. v. AFS/IBEX Fin. Servs., Inc., 2009 WL 361956, at *4 (N.D. Tex. Feb. 13, 2009) (O’Connor, J.) (analyzing “specific entries identified by [opposing party]”), vacated on other grounds, 612 F.3d 800 (5th Cir. 2010); Rabo Agrifinance, Inc. v. Veigel Farm Partners, 2008 WL 3992060, at *4 (N.D. Tex. Aug. 20, 2008) (Robinson, J.) (“Defendants refer to only 7 billing entries that they contend are ‘vague.’ Of those entries referenced by the Defendants, the Court finds that the following billing entries are too vague[.]”).
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B ICP requests $400 per hour for Michael M. Daniel, Esquire (“Daniel”) and $350 per hour for Beshara. As support for these rates, ICP relies on Daniel’s declaration detailing his and Beshara’s qualifications and experience. Both have been civil rights attorneys since they graduated law school: Daniel in 1974 and Beshara in 1991. Daniel’s declaration lists numerous civil rights cases that they have litigated, including many concerning housing issues. Based on these qualifications and experience, Daniel avers that the requested rates are reasonable. And to show that the requested rates are within the appropriate range, ICP relies on cases from judges of this court addressing the reasonable rates paid to attorneys with similar qualifications and experience. See, e.g., Black v. SettlePou, P.C., 2012 WL 3638681, at *4 (N.D. Tex. Aug. 24, 2012) (Kinkeade, J.) (finding reasonable, in employment case, rates of $450 per hour for 10-year attorney and $375 per hour for 7-year attorney); Nassar v. Univ. of Tex. Sw. Med. Ctr., 2010 WL 3000877, at *5 (N.D. Tex. July 27, 2010) (Boyle, J.) (accepting as reasonable, in employment case, rates of $400 per hour for 12-year attorney, $500 per hour for 11-year attorney, and $750 per hour for 27-year attorney), aff’d in part, rev’d in part, 674 F.3d 448 (5th Cir. 2012), cert. granted, 2013 WL 203552 (U.S. Jan. 18, 2013) (No. 12-484); see also P. App. 122-30 (listing attorneys’ years of practice). TDHCA requests that the court decrease the requested rates by $50 each. It objects that ICP has failed to submit affidavits from other attorneys practicing in the community, and that the examples of attorney’s fees on which ICP relies are from unrelated cases. The court concludes that ICP has satisfied its burden “to produce satisfactory evidence, in addition to
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[its] attorney’s affidavit, that the requested rates are in line with those prevailing in the relevant community for similar services by lawyers of reasonably comparable skill, experience and reputation.” Wheeler v. Mental Health & Mental Retardation Auth. of Harris Cnty., Tex., 752 F.2d 1063, 1073 (5th Cir. 1985) (citing Blum, 465 U.S. at 895 n.11). Similar to the plaintiff in Wheeler, ICP submitted its attorney’s declaration and directed the court’s attention to fee awards in the relevant district court. Compare id. (“Wheeler submitted the affidavit of her attorney . . . . Wheeler further directed the court’s attention to fee awards in the Southern District of Texas based upon hourly rates in line with those requested by her attorney.”) with Estrada v. City of El Paso, Tex., 500 F.Supp.2d 677, 679 (W.D. Tex. 2006) (adopting rate proposed by defendant because plaintiff “ha[d] not submitted any evidence other than her own counsel’s declaration”).
TDHCA also objects that the requested rates exceed the average and median rates for attorneys with similar years of experience in the Dallas area, according to the 2009 survey compiled by the State Bar of Texas. See Ds. Br. Exh. 1 at 11 (listing median rate as $286 per hour for Dallas attorney with over 25 years experience, and $287 per hour for one with 21 to 25 years experience). Although ICP’s requested rates exceed the median for attorneys in the Dallas area, “[h]ere, rather than dealing with the ‘median,’ we have two attorneys with significant experience and ability.” Williams v. City of Balch Springs, Tex., 1999 WL 1146802, at *4 (N.D. Tex. Nov. 17, 1999) (Solis, J.). Both Daniel and Beshara have extensive experience in civil rights litigation, including many cases concerning housing discrimination. Moreover, “trial courts are considered experts as to the reasonableness of
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attorney’s fees[.]” Primrose Operating Co. v. Nat’l Am. Ins. Co., 382 F.3d 546, 562 (5th Cir. 2004); Wachovia Bank, Nat’l Ass’n v. Schlegel, 2010 WL 4275277, at *2 n.4 (N.D. Tex. Oct. 29, 2010) (Fitzwater, C.J.) (same). The court finds, based on its expertise in determining reasonable attorney’s fees, that the hourly rates claimed for Daniel and Beshara are well within what is reasonable for attorneys of their experience and expertise.
TDHCA’s arguments and evidence are insufficient to undermine the reasonableness of the requested rates for Daniel and Beshara.
VI ICP moves for an award of $24,392.00 in nontaxable costs, which TDHCA does not contest. These costs consist of $14,442.00 in fees and expenses that ICP paid to its expert witnesses whom TDHCA deposed, and $9,950 representing 50% of the fees and expenses incurred in obtaining the experts’ initial opinions. TDHCA does not challenge either of these requests, and the court grants ICP’s motion in this respect.
* * * Accordingly, the court grants plaintiff’s motion for attorney’s fees and nontaxable costs in the amount of $1,869,577.00 in attorney’s fees and $24,392.00 in nontaxable costs. SO ORDERED. February 15, 2013.
_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE - 16 -

 
 Case: 12-11211 Document: 00512570522 Page: 1 Date Filed: 03/24/2014 Case 3:08-cv-00546-D Document 227 Filed 04/22/14 Page 1 of 16 PageID 8641

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-11211 cons. w/13-10306

United States Court of Appeals Fifth Circuit
FILED
March 24, 2014
Lyle W. Cayce Clerk

THE INCLUSIVE COMMUNITIES PROJECT, INCORPORATED,

Plaintiff - Appellee v.

TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS; MICHAEL GERBER; LESLIE BINGHAM-ESCARENO; TOMAS CARDENAS; C KENT CONINE; DIONICIO VIDAL FLORES, Sonny; JUAN SANCHEZ MUNOZ; GLORIA L. RAY, In Their Official Capacities,

Defendants - Appellants

FRAZIER REVITALIZATION, INCORPORATED

Intervenor-Appellant

Cons. w/13-10306
THE INCLUSIVE COMMUNITIES PROJECT, INCORPORATED,
Plaintiff - Appellee
v.
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS; MICHAEL GERBER; LESLIE BINGHAM-ESCARENO; TOMAS CARDENAS; C KENT CONINE; DIONICIO VIDAL FLORES, Sonny; JUAN SANCHEZ MUNOZ; GLORIA L. RAY, In Their Official Capacities,
Defendants - Appellants

Case: 12-11211 Document: 00512570522 Page: 2 Date Filed: 03/24/2014 Case 3:08-cv-00546-D Document 227 Filed 04/22/14 Page 2 of 16 PageID 8642
No. 12-11211 cons. w/13-10306Appeals from the United States District Court for the Northern District of Texas
Appeals from the United States District Court for the Northern District of Texas
Before JONES, WIENER, and GRAVES, Circuit Judges. JAMES E. GRAVES, JR., Circuit Judge:
In this housing discrimination case, the district court held that plaintiff The Inclusive Communities Project (“ICP”) had proven that Defendants’ allocation of Low Income Housing Tax Credits (“LIHTC”) in Dallas resulted in a disparate impact on African-American residents under the Fair Housing Act (“FHA”). The primary issue on appeal is the correct legal standard to be applied in disparate impact claims under the FHA. We adopt the standard announced in recently enacted Department of Housing and Urban Development (“HUD”) regulations regarding the burdens of proof in disparate impact housing discrimination cases, see 24 C.F.R. § 100.500, and remand to the district court for application of this standard in the first instance.
I. Factual and Procedural Background ICP filed this action against Defendants the Texas Department of Housing and Community Affairs (“TDHCA”) and its Executive Director and board members in their official capacities under the FHA, the Fourteenth Amendment, and 42 U.S.C. §§ 1982 and 1983. “ICP is a non-profit organization that seeks racial and socioeconomic integration in the Dallas metropolitan area. In particular, ICP assists low-income, predominately African-American families who are eligible for the Dallas Housing Authority’s Section 8 Housing Choice Voucher program (‘Section 8’) in finding affordable housing in predominately Caucasian, suburban neighborhoods.” Inclusive Communities Project, Inc. v. Texas Dep’t of Hous. & Cmty. Affairs (ICP II), 860 F. Supp. 2d 312, 314 (N.D. Tex. 2012) (order after bench trial) (footnote omitted). A
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No. 12-11211 cons. w/13-10306
development that receives tax credits under the LIHTC program cannot refuse
tenants because of their use of Section 8 vouchers; thus “it is important to ICP
where the developments are located in the Dallas metropolitan area.” Id.
Under § 42 of the Internal Revenue Code, the federal government
provides LIHTC that are distributed to developers of low-income housing
through a designated state agency. See generally 26 U.S.C. § 42. TDHCA
administers the federal LIHTC program in Texas. See Tex. Gov’t Code
§ 2306.6701 et seq. Developers apply to TDHCA for tax credits for particular
housing projects. Such credits may be sold to finance construction of the
project. ICP II, 860 F. Supp. 2d at 314. The number of credits TDHCA may
award for a low-income housing project is determined by calculating the
project’s “qualified basis,” which is a fraction representing the percentage of
the project occupied by low-income residents multiplied by eligible costs. See
26 U.S.C. § 42(c).
There are two types of credits: 9% credits and 4% credits. The 9% credits
are distributed on an annual cycle and are oversubscribed, and developers
must compete with each other to earn the available credits. As the district
court explained:
Certain federal and state laws dictate, at least in part, the manner in which TDHCA can select the applications that will receive 9% tax credits. First, I.R.C. § 42 requires that the designated state agency adopt a “Qualified Allocation Plan” (“QAP”) that prescribes the “selection criteria.” See id. at § 42(m)(1)(A)-(B). The QAP must include, inter alia, certain selection criteria, see id. at § 42(m)(1)(C), and preferences, see id. at § 42(m)(1)(B); otherwise, “zero” housing credit dollars will be provided, see id. at § 42(m)(1)(A). Second, the Texas Government Code regulates how TDHCA administers the LIHTC program. The Code requires TDHCA to adopt annually a QAP and corresponding manual. Id. at § 2306.67022. It also sets out how TDHCA is to evaluate applications. TDHCA must first “determine whether the application satisfies the threshold criteria” in the QAP. Id. at §
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2306.6710(a). Applications that meet the threshold criteria are then “score[d] and rank[ed]” by “a point system” that “prioritizes in descending order” ten listed statutory criteria (also called “above-the-line criteria”), which directly affects TDHCA’s discretion in creating the “selection criteria” in each QAP. Id. at § 2306.6710(b). The Texas Attorney General has interpreted this provision to obligate TDHCA to “use a point system that prioritizes the [statutory] criteria in that specific order.” Tex. Att’y Gen. Op. No. GA-0208, 2004 WL 1434796, at *4 (2004). Although the Texas Government Code does not mandate the points to be accorded each statutory criterion, “the statute must be construed to require [TDHCA] to assign more points to the first criterion than to the second, and so on, in order to effectuate the mandate that the scoring system ‘prioritiz[e the criteria] in descending order.’” Id. (quoting Tex. Gov’t Code Ann. § 2306.6710(b)(1) (West 2004)). And while TDHCA can consider other criteria and preferences (also called “below-the-line” criteria), it “lacks discretionary authority to intersperse other factors into the ranking system that will have greater points than” the statutory criteria. Id. at *6 (citation and internal quotation omitted). Once TDHCA adopts a QAP, it submits the plan to the Governor, who can “approve, reject, or modify and approve” it. Tex. Gov’t Code Ann. § 2306.6724(b)-(c) (West 2001). Once approved, TDHCA staff review the applications in accordance with the QAP, underwrite applications in order “to determine the financial feasibility of the development and an appropriate level of housing tax credits,” id. at § 2306.6710(b)(1)(A) & (d), and submit their recommendations to TDHCA. See id. at § 2306.6724(e). TDHCA then reviews the staff recommendations and issues final commitments in accordance with the QAP. See id. at § 2306.6724(e)-(f).
ICP II, 860 F. Supp. 2d at 314-16 (footnotes omitted). The parties heavily
dispute the amount of discretion TDHCA has to award 9% credits to projects
other than those receiving the highest scores. By contrast, all agree that the
4% credits are allocated on a non-competitive basis year-round to
developments that use private activity bonds as a component of their project
financing, some of which are issued by TDHCA. Applicants need to meet only
certain threshold eligibility and underwriting requirements in order to receive
4

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No. 12-11211 cons. w/13-10306 4% tax credits. Applications for the 4% tax credits are not subject to scoring under the QAP selection criteria. See id. at 316.
In March 2008, ICP filed suit against Defendants, claiming that the distribution of LIHTC in Dallas violated 42 U.S.C. §§ 1982 and 1983, the Fourteenth Amendment, and the FHA, 42 U.S.C. §§ 3604 and 3605. The FHA makes it unlawful, inter alia, to “make unavailable or deny, a dwelling to any person because of race. . . .” 42 U.S.C. § 3604(a). Section 3605(a) provides that it is unlawful, inter alia, “for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race. . . .” Id. § 3605(a). A “residential real estate-related transaction” includes providing financial assistance for the construction of a dwelling. Id. § 3605(b). ICP alleged that Defendants were disproportionately approving tax credit units in minorityconcentrated neighborhoods and disproportionately disapproving tax credit units in predominantly Caucasian neighborhoods, thereby creating a concentration of the units in minority areas, a lack of units in other areas, and maintaining and perpetuating segregated housing patterns.
ICP filed a motion for partial summary judgment to establish standing and a prima facie case of discrimination. Defendants filed motions for judgment on the pleadings and summary judgment. Defendants argued that, assuming that ICP had established a prima facie case, Defendants won as a matter of law, under both disparate treatment and disparate impact theories of discrimination.1 The district court denied Defendants’ motions and granted
1 On appeal, Defendants now attempt to raise multiple challenges to the prima facie case of disparate impact, including various challenges to ICP’s statistics and an argument that ICP failed to isolate a specific policy or practice that caused the disparate impact. Our own review of the record does not clearly resolve which of these challenges to the prima facie case of disparate impact were waived in the district court. Because we reverse and remand
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No. 12-11211 cons. w/13-10306 ICP partial summary judgment, concluding that ICP had made a prima facie showing of both intentional discrimination and disparate impact. Inclusive Communities Project, Inc. v. Texas Dep’t of Hous. & Cmty. Affairs (ICP I), 749 F. Supp. 2d 486, 499-500, 501-02 (N.D. Tex. 2010) (order granting partial summary judgment). With regard to the disparate impact case, the court concluded that “ICP has established that its clients are African-Americans, members of a protected class, who rely on government assistance with housing, and that TDHCA has disproportionately approved tax credits for non-elderly developments in minority neighborhoods and, conversely, has disproportionately denied tax credits for non-elderly housing in predominately Caucasian neighborhoods.” Id. at 499. In particular, the court relied on evidence that, “from 1999-2008, TDHCA approved tax credits for 49.7% of proposed non-elderly units in 0% to 9.9% Caucasian areas, but only approved 37.4% of proposed nonelderly units in 90% to 100% Caucasian areas.” Id. The court also pointed to data showing “92.29% of LIHTC units in the city of Dallas were located in census tracts with less than 50% Caucasian residents.” Id. The court found that the statistical evidence was supported by other evidence, including the “Talton Report,” a report of the House Committee on Urban Affairs and prepared for the Texas House of Representatives, which concluded that TDHCA disproportionately allocates LIHTC funds to developments located in areas with above-average minority concentrations. Id. at 500. The court also relied on a HUD study reaching “a similar conclusion.” Id. The district court held that “[t]his evidence establishes that TDHCA disproportionately approves applications for non-elderly LIHTC units in minority neighborhoods, leading to a concentration of such units in these areas.
for other reasons, we do not address the issue of whether the district court erred by holding that ICP had established a prima facie case.
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No. 12-11211 cons. w/13-10306 This concentration increases the burden on ICP as it seeks to place AfricanAmerican Section 8 clients in LIHTC housing in predominately Caucasian neighborhoods.” Id.
The case then proceeded to trial on the remaining elements of ICP’s intentional discrimination and disparate impact claims. After a bench trial on the merits, the district court found that ICP did not meet its burden of establishing intentional discrimination and therefore found for the Defendants on ICP’s § 1982, § 1983, and Fourteenth Amendment claims. ICP II, 860 F. Supp. 2d at 318-21. On the disparate impact claim under the FHA, 42 U.S.C. §§ 3604(a) and 3605(a), the district court applied the burdens of proof found in the Second Circuit’s decision in Huntington Branch, which required Defendants to (1) justify their actions with a compelling governmental interest and (2) prove that there were no less discriminatory alternatives. See id. at 322-23 (citing Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926, 939 (2d Cir. 1988), aff’d, 488 U.S. 15 (1988) (per curiam)).2 The district court assumed that Defendants’ interests were legitimate and bona fide, but concluded that Defendants had not produced any evidence supporting their contention that there were no less discriminatory alternatives to the challenged allocations. Id. at 326. The court concluded that Defendants had not shown “that TDHCA cannot allocate LIHTC in a manner that is objective, predictable, and transparent, follows federal and state law, and furthers the public interest, without disproportionately approving LIHTC in predominantly minority neighborhoods and disproportionately denying LIHTC in predominantly Caucasian neighborhoods.” Id. For example, the court noted that Defendants did not prove that “TDHCA cannot add other below-the-line
2 The Supreme Court affirmed the Second Circuit in Huntington Branch, but expressly did not rule on the proper test for disparate impact housing discrimination claims in its opinion. Town of Huntington, N.Y. v. Huntington Branch, N.A.A.C.P., 488 U.S. 15, 18 (1988).
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No. 12-11211 cons. w/13-10306 criteria [to the QAP] that will effectively reduce the discriminatory impact while still furthering its interests.” Id. at 327. “Moreover,” the court found, “although defendants maintain that TDHCA’s discretion in creating the selection criteria is limited to adopting below-the-line criteria, it appears that this discretion is actually broader. It appears to extend to the authority to choose the number of points to be accorded each above- and below-the-line criterion, so long as the priority of statutory above-the-line criteria is maintained and the Governor approves.” Id. at 328. Because it held that Defendants had not met their burden of proof, the district court found in favor of ICP on its discriminatory impact claim under the FHA. Id. at 331.
After trial, while the district court was considering the injunctive remedy that should be implemented, Frazier Revitalization, Inc. (“FRI”) was granted permission to intervene to represent the interests of developers or organizations who seek to revitalize low-income neighborhoods. After considering submissions from the parties, the district court adopted a remedial plan including alterations to the QAP, stated that it would review the plan annually for at least five years, and entered judgment. See Inclusive Communities Project, Inc. v. Texas Dep’t of Hous. & Cmty. Affairs, No 3:08-CV0546-D, 2012 WL 3201401 (N.D. Tex. Aug. 7, 2012), amended in part, 2012 WL 5458208 (N.D. Tex. Nov. 8, 2012). The court also ordered Defendants to pay attorneys’ fees to ICP. 3
II. Discussion Defendants, along with Intervenor FRI, appeal various issues. However, we find it necessary to reach only one issue: whether the district court correctly
3 The consolidated appeal, No. 13-10306, challenges the attorneys’ fees the district court awarded to ICP. In light of our remand, we likewise vacate and remand the award of attorneys’ fees in that appeal.
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No. 12-11211 cons. w/13-10306
found that ICP proved a claim of violation of the Fair Housing Act based on
disparate impact.
As the district court correctly noted, violation of the FHA can be shown
either by proof of intentional discrimination or by proof of disparate impact.
See Artisan/Am. Corp. v. City of Alvin, Tex., 588 F.3d 291, 295 (5th Cir. 2009)
(“We have recognized that a claim brought under the Act ‘may be established
not only by proof of discriminatory intent, but also by proof of a significant
discriminatory effect.’”); Simms v. First Gibraltar Bank, 83 F.3d 1546, 1555
(5th Cir. 1996) (“We agree that a violation of the FHA may be established not
only by proof of discriminatory intent, but also by a showing of significant
discriminatory effect.”).4 However, we have not previously determined the
legal standards that should be applied in disparate impact housing
discrimination cases.
4 Defendants and FRI point to two recent cases in which the Supreme Court granted certiorari to determine whether disparate impacts claims are cognizable under the FHA. See Twp. of Mount Holly, N.J. v. Mt. Holly Gardens Citizens in Action, Inc., 133 S. Ct. 2824 (2013); Magner v. Gallagher, 132 S. Ct. 548 (2011). Both cases were dismissed before the Court heard any argument. Twp. of Mount Holly, N.J. v. Mt. Holly Gardens Citizens in Action, Inc., 134 S. Ct. 636 (2013); Magner v. Gallagher, 132 S. Ct. 1306 (2012). “Absent an intervening Supreme Court case overruling prior precedent, we remain bound to follow our precedent even when the Supreme Court grants certiorari on an issue.” United States v. LopezVelasquez, 526 F.3d 804, 808 n.1 (5th Cir. 2008). Our circuit precedent provides that disparate impact claims are cognizable under the FHA. See Artisan/Am. Corp., 588 F.3d at 295; Simms, 83 F.3d at 1555. All other circuits that have considered the issue have agreed. See Mt. Holly Gardens Citizens in Action, Inc v. Twp. of Mount Holly, 658 F.3d 375, 381 (3d Cir. 2011); Gallagher v. Magner, 619 F.3d 823, 833-34 (8th Cir. 2010); Graoch Assocs. #33, L.P. v. Louisville/Jefferson Cnty. Metro Human Relations Comm’n, 508 F.3d 366, 371 (6th Cir. 2007); Langlois v. Abington Hous. Auth., 207 F.3d 43, 49 & n.3 (1st Cir. 2000); Mountain Side Mobile Estates P’ship v. HUD, 56 F.3d 1243, 1250 (10th Cir. 1995); Huntington Branch, 844 F.2d at 934; Smith v. Town of Clarkton, 682 F.2d 1055, 1065 (4th Cir. 1982); Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 558 F.2d 1283, 1290 (7th Cir. 1977); see also Implementation of the Fair Housing Act’s Discriminatory Effects Standard, 78 Fed. Reg. 11,460 (February 15, 2013) (codified at 24 C.F.R. § 100.500) (“HUD and every federal appellate court to have ruled on the issue have determined that liability under the Act may be established through proof of discriminatory effects”).
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No. 12-11211 cons. w/13-10306 As we stated above, on the disparate impact claim under the FHA, 42 U.S.C. §§ 3604(a) and 3605(a), the district court applied the burdens of proof found in Huntington Branch. ICP II, 860 F. Supp. 2d at 322 (citing Huntington Branch, 844 F.2d at 939). The district court noted the absence of controlling law, as this court has not previously addressed the question of what legal standards apply to a disparate impact housing discrimination claim. Our sister circuits have applied multiple different legal standards to similar claims under the FHA. See Robert G. Schwemm, Housing Discrimination Law and Litigation § 10:6 (2013) (discussing the various standards applied across the circuits). Most circuits agree that once a plaintiff establishes a prima facie case, the burden shifts to the defendants to show that the challenged practice serves a legitimate interest. See Mt. Holly Gardens, 658 F.3d at 382; Gallagher, 619 F.3d at 833-34; Graoch Assocs., 508 F.3d at 374; Mountain Side Mobile Estates, 56 F.3d at 1254; Huntington Branch, 844 F.2d at 936. At that point, the circuits diverge in some respects. The Second and Third Circuits require a defendant to bear the burden of proving that there are no less discriminatory alternatives to a practice that results in a disparate impact. See Huntington Branch, 844 F.2d at 936; Mt. Holly Gardens, 658 F.3d at 382 (requiring defendant to prove there is no less discriminatory alternative and plaintiff to prove there is a less discriminatory alternative). The Eighth and Tenth Circuits place the burden on the plaintiff to prove that there are less discriminatory alternatives. See Gallagher, 619 F.3d at 834; Mountain Side Mobile Estates, 56 F.3d at 1254. The Seventh Circuit has applied a four-factor balancing test rather than burden-shifting. See Metro. Hous. Dev. Corp., 558 F.2d at 1290. The Fourth and Sixth Circuits have applied a four-factor balancing test to public defendants and a burden-shifting approach to private defendants. See Betsey v. Turtle Creek Assocs., 736 F.2d 983, 988 n.5 (4th Cir. 1984); Graoch Assocs., 508 F.3d at 371, 372-74.
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No. 12-11211 cons. w/13-10306 However, after the district court’s decision in this case, HUD issued regulations regarding disparate impact claims under the FHA. See 24 C.F.R. § 100.500; Implementation of the Fair Housing Act’s Discriminatory Effects Standard, 78 Fed. Reg. 11,460 (Feb. 15, 2013). Congress has given HUD authority to administer the FHA, including authority to issue regulations interpreting the Act. 42 U.S.C. §§ 3608(a), 3614a. Specifically, 42 U.S.C. § 3608(a) gives the Secretary of HUD the “authority and responsibility for administering this Act,” and § 3614a provides expressly that “The Secretary may make rules. . . to carry out this subchapter.” The new regulations issued by HUD took effect in March 2013. 24 C.F.R. § 100.500. The regulations recognize, as we have, that “Liability may be established under the Fair Housing Act based on a practice’s discriminatory effect, as defined in paragraph (a) of this section, even if the practice was not motivated by a discriminatory intent.” 24 C.F.R. § 100.500. The regulations further provide that “A practice has a discriminatory effect where it actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin.” Id. § 100.500(a). Finally, with regard to the burdens of proof in disparate impact housing discrimination cases, the regulations provide: (1) The charging party . . . has the burden of proving that a
challenged practice caused or predictably will cause a discriminatory effect. (2) Once the charging party or plaintiff satisfies the burden of proof set forth in paragraph (c)(1) of this section, the respondent or defendant has the burden of proving that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the respondent or defendant.
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Case: 12-11211 Document: 00512570522 Page: 12 Date Filed: 03/24/2014 Case 3:08-cv-00546-D Document 227 Filed 04/22/14 Page 12 of 16 PageID 8652
No. 12-11211 cons. w/13-10306 (3) If the respondent or defendant satisfies the burden of proof
set forth in paragraph (c)(2) of this section, the charging party or plaintiff may still prevail upon proving that the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect. 24 C.F.R. § 100.500(c). We now adopt the burden-shifting approach found in 24 C.F.R. § 100.500 for claims of disparate impact under the FHA. See 24 C.F.R. § 100.500. First, a plaintiff must prove a prima facie case of discrimination by showing that a challenged practice causes a discriminatory effect, as defined by 24 C.F.R. § 100.500(a). 24 C.F.R. § 100.500(c)(1). If the plaintiff makes a prima facie case, the defendant must then prove “that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests . . . .” Id. § 100.500(c)(2). If the defendant meets its burden, the plaintiff must then show that the defendant’s interests “could be served by another practice that has a less discriminatory effect.” Id. § 100.500(c)(3). These standards are in accordance with disparate impact principles and precedent. While the approaches of our sister circuits have varied, the most recent decisions have applied a similar three-step burden-shifting approach. Mt. Holly Gardens, 658 F.3d at 382; Gallagher, 619 F.3d at 834; Graoch Assocs., 508 F.3d at 374. Further, the three-step burden-shifting test contained in the HUD regulations is similar to settled precedent concerning Title VII disparate impact claims in employment discrimination cases. See 42 U.S.C. § 2000e-2(k); Ricci v. DeStefano, 557 U.S. 557, 624 (2009) (describing the disparate impact burdens of proof in Title VII employment discrimination cases). Many courts interpreting the FHA recognize the similar purpose and language of the statutes and borrow from Title VII precedent to interpret the FHA. See, e.g., Graoch Assocs., 508 F.3d at 371-73; Kyles v. J.K. Guardian Sec.
12

Case: 12-11211 Document: 00512570522 Page: 13 Date Filed: 03/24/2014 Case 3:08-cv-00546-D Document 227 Filed 04/22/14 Page 13 of 16 PageID 8653
No. 12-11211 cons. w/13-10306 Servs., Inc., 222 F.3d 289, 295 (7th Cir. 2000) (“Courts have recognized that Title VIII is the functional equivalent of Title VII and so the provisions of these two statutes are given like construction and application.”) (internal citations omitted)); Huntington Branch, 844 F.2d at 934-35.
Given the complex record and fact-intensive nature of this case, and the district court’s demonstrated expertise with those facts, we remand for the district court to apply this legal standard to the facts in the first instance. To be clear, we do not hold that the district court must retry the case; we leave it to the sound discretion of that court to decide whether any additional proceedings are necessary or appropriate. Finally, given our decision to remand, we do not find it necessary to reach the additional arguments raised by Defendants in support of reversal.
III. Conclusion For the reasons we have stated, we REVERSE and REMAND for further proceedings consistent with this opinion.
13

Case: 12-11211 Document: 00512570522 Page: 14 Date Filed: 03/24/2014 Case 3:08-cv-00546-D Document 227 Filed 04/22/14 Page 14 of 16 PageID 8654
No. 12-11211 cons. w/13-10306 JONES, Circuit Judge, specially concurring.
As a second-best result, I concur in the court’s judgment to reverse and remand this case for reconsideration under the recently promulgated HUD guidelines. This is second-best, however, because on remand, the district court should reconsider the State’s forceful argument that the appellees did not prove a facially neutral practice that caused the observed disparity in TDHCA’s allocation of LIHTC units to predominately “non-Caucasian” areas. Perhaps the standard for proving a prima facie case of disparate impact in the fair housing context was uncertain before the HUD guidelines resolved circuit splits. In any event, because FHA cases will now be modeled closely upon the Title VII formula, it is clear that the appellees could not rely on statistical evidence of disparity alone for their prima facie case. See Smith v. City of Jackson, 544 U.S. 228, 241, 125 S. Ct. 1536, 1545 (2005) (“[I]t is not enough to simply allege that there is a disparate impact on workers.”); Pacheco v. Mineta, 448 F.3d 783, 787 n.5 (5th Cir. 2003) (finding “Pacheco’s disparate impact allegations . . . wholly conclusional” because “[t]here is no suggestion of in what manner the process operated so as to disadvantage Hispanics”); Simms v. First Gibraltar Bank, 83 F.3d 1546, 1555 (5th Cir. 1996) (Fair Housing Act issue is “whether a policy, procedure, or practice specifically identified by the plaintiff has a significantly greater discriminatory impact on members of a protected class.”) A plaintiff must specifically identify the facially neutral policy that caused the disparity.
The appellees’ entire argument for disparate impact here assumed the conclusion: there is a statistical “imbalance” in the location of LIHTC units approved by TDHCA, therefore there must be a disparate approval “practice” that causes the statistical imbalance. The district court accepted this oversimplified formulation. But under disparate impact law, the State’s burden is NOT to justify the statistics, but only the facially neutral policy or
14

Case: 12-11211 Document: 00512570522 Page: 15 Date Filed: 03/24/2014 Case 3:08-cv-00546-D Document 227 Filed 04/22/14 Page 15 of 16 PageID 8655
No. 12-11211 cons. w/13-10306 policies that caused the statistics. The State’s burden ensues only when a plaintiff isolates the policy that caused the disparity. Without proof of an offending policy, alleged racial imbalance in and of itself is both the cause and effect of a violation. This has not been the law for many years. The Supreme Court held in Wards Cove that:
“[e]ven if on remand respondents can show that nonwhites are underrepresented . . . in a [statistically correct] manner . . ., this alone will not suffice to make out a prima facie case of disparate impact. Respondents will also have to demonstrate that the disparity they complain of is the result of one or more of the employment practices that they are attacking here, specifically showing that each challenged practice has a significantly disparate impact on employment opportunities for whites and nonwhites. To hold otherwise would result in employers being potentially liable for ‘the myriad of innocent causes that may lead to statistical imbalances in the composition their work forces.’ ”
Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 657, 109 S. Ct. 2115, 2125 (1989) (quoting Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 992, 108 S. Ct. 2777, 2787 (1988)). Put more bluntly, if the appellees’ framing of disparate impact analysis is correct, then the NBA is prima facie liable for disparate impact in the hiring of basketball players.
As the district court’s opinions demonstrate, TDHCA's policies and practices for awarding LIHTC grants are anything but simple. They are governed by federal and state statutes, which require satisfaction of numerous criteria to ensure the integrity, financial viability, and effectiveness of the projects. One specific object of the federal tax credit provision is to advantage projects located in low income census tracts or subject to a community revitalization plan. 26 U.S.C. § 42(m)(1)(B). In essence, the appellees are seeking a larger share of a fixed pool of tax credits at the expense of other lowincome people who might prefer community revitalization. To balance these
15

Case: 12-11211 Document: 00512570522 Page: 16 Date Filed: 03/24/2014 Case 3:08-cv-00546-D Document 227 Filed 04/22/14 Page 16 of 16 PageID 8656
No. 12-11211 cons. w/13-10306 conflicting goals while meeting the program’s other specifications, a complex point system has been used and annually updated. On remand, the district court must “require, as part of [appellees’] prima facie case, a demonstration that specific elements of the [State’s award practices] have a significantly disparate impact on nonwhites.” Wards Cove, 490 U.S. at 658, 109 S. Ct. at 2125.
I concur in the judgment.
16

 
 Case: 12-11211 Document: 00512596065 Page: 1 Date Filed: 04/15/2014 Case 3:08-cv-00546-D Document 228 Filed 04/22/14 Page 1 of 2 PageID 8657

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT
No. 12-11211 D.C. Docket No. 3:08-CV-546

United States Court of Appeals Fifth Circuit
FILED
March 24, 2014
Lyle W. Cayce Clerk

THE INCLUSIVE COMMUNITIES PROJECT, INCORPORATED,
Plaintiff - Appellee
v.
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS; MICHAEL GERBER; LESLIE BINGHAM-ESCARENO; TOMAS CARDENAS; C KENT CONINE; DIONICIO VIDAL FLORES, Sonny; JUAN SANCHEZ MUNOZ; GLORIA L. RAY, In Their Official Capacities,
Defendants - Appellants
FRAZIER REVITALIZATION, INCORPORATED
Intervenor-Appellant
Appeals from the United States District Court for the Northern District of Texas, Dallas
Before JONES, WIENER, and GRAVES, Circuit Judges.
JUDGMENT
This cause was considered on the record on appeal and was argued by counsel.
It is ordered and adjudged that the judgment of the District Court is reversed, and the cause is remanded to the District Court for further proceedings in accordance with the opinion of this Court.

- - - - -- ---- -----

~---

Case: 12-11211 Document: 00512596065 Page: 2 Date Filed: 04/15/2014 Case 3:08-cv-00546-D Document 228 Filed 04/22/14 Page 2 of 2 PageID 8658
IT IS FURTHER ORDERED that appellee pay to appellants the costs on appeal to be taxed by the Clerk of this Court. JONES, Circuit Judges, specially concurring.
ISSUED AS MANDATE: ~R 1 5 1014
Clerk, New Orleans, Louisiana

 
 Case: 12-11211 Document: 00512596066 Page: 1 Date Filed: 04/15/2014 Case 3:08-cv-00546-D Document 229 Filed 04/22/14 Page 1 of 2 PageID 8659

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT
No. 13-10306

United States Court of Appeals Fifth Circuit
FILED
March 24, 2014
Lyle W. Cayce Clerk

D.C. Docket No. 3:08-CV-546

THE INCLUSIVE COMMUNITIES PROJECT, INCORPORATED,

Plaintiff - Appellee

v.

TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS; MICHAEL GERBER; LESLIE BINGHAM-ESCARENO; TOMAS CARDENAS; C. KENT CONINE; DIONICIO VIDAL FLORES, Sonny; JUAN SANCHEZ MUNOZ; GLORIA L. RAY, In Their Official Capacities,

Defendants - Appellants

Appeal from the United States District Court for the Northern District of Texas, Dallas

Before JONES, WIENER, and GRAVES, Circuit Judges.

JUDGMENT

This cause was considered on the record on appeal and was argued by counsel.

It is ordered and adjudged that the judgment of the District Court is reversed, and the cause is remanded to the District Court for further proceedings in accordance with the opinion of this Court.

Case: 12-11211 Document: 00512596066 Page: 2 Date Filed: 04/15/2014 Case 3:08-cv-00546-D Document 229 Filed 04/22/14 Page 2 of 2 PageID 8660
IT IS FURTHER ORDERED that plaintiff-appellee pay to defendantsappellants the costs on appeal to be taxed by the Clerk of this Court. JONES, Circuit Judge, specially concurring.
t.D\\ 1 {, t\\\4
ISSUED AS MANDATE: ,.
New Orleans, Louisiana

 
 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

MEMORANDUM OPINION AND ORDER

Following the Fifth Circuit’s remand in this case, defendants Texas Department of

Housing and Community Affairs and others (collectively, “TDHCA”) move to stay the

proceedings pending the Supreme Court’s disposition of their petition for a writ of certiorari.

Plaintiff The Inclusive Communities Project, Inc. (“ICP”) opposes the motion. For the

reasons that follow, the court grants the motion.

I

In its merits decision in this case, the court held that ICP had failed to prove its

intentional discrimination claims, but that it had proved that TDHCA’s allocation decisions

had a disparate racial impact, in violation of §§ 3604(a) and 3605(a) of the Fair Housing Act

(“FHA”). See Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 860

F.Supp.2d 312, 321, 331 (N.D. Tex. 2012) (Fitzwater, C.J.) (“ICP III”), rev’d, 747 F.3d 275

(5th Cir. 2014), petition for cert. filed, 82 U.S.L.W. 3686 (U.S. May 13, 2014) (No.

13-1371). In ruling in ICP’s favor on its disparate impact claim, the court noted that the Fifth
Circuit had not yet adopted a standard and proof regime for FHA-based disparate impact
claims, that the circuits that had done so had adopted at least three different standards and
proof regimes, and that this court’s prior summary judgment decision—Inclusive
Communities Project, Inc. v. Texas Department of Housing and Community Affairs, 749
F.Supp.2d 486 (N.D. Tex. 2010) (Fitzwater, C.J.)—had essentially followed the approach
of the Second Circuit in Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926,
939 (2d Cir.), aff’d in part, 488 U.S. 15 (1988), but without engaging in a process of
balancing the factors identified in Metropolitan Housing Development Corp. v. Village of
Arlington Heights, 558 F.2d 1283 (7th Cir. 1977). ICP III, 860 F.Supp.2d at 322 n.17. The
court also noted that it appeared at one point “that the Supreme Court might clarify this
unsettled area of the law,” id., and that this court had deferred its decision in this case based
on a case pending before the Supreme Court.
After this case was tried, and while the parties were making post-trial submissions, the Court granted certiorari in Gallagher v. Magner to decide two questions: “Are disparate impact claims cognizable under the Fair Housing Act?” and “If such claims are cognizable, should they be analyzed under the burden shifting approach used by three circuits, under the balancing test used by four circuits, under a hybrid approach used by two circuits, or by some other test?” On February 14, 2012 this court entered an order deferring its decision in this case until Magner was decided. But the Supreme Court dismissed the petition the same day this court entered its order.
Id. (citations omitted). After the Supreme Court dismissed the petition, this court issued its
ruling in favor of ICP on its disparate impact claim.
- 2 -

On appeal, the Fifth Circuit reversed and remanded. It held that this court had “correctly noted [that a] violation of the FHA can be shown either by proof of intentional discrimination or by proof of disparate impact.” Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 747 F.3d 275, 280 (5th Cir. 2014) (citing cases). But the panel also noted that the Fifth Circuit had “not previously determined the legal standards that should be applied in disparate impact housing discrimination cases,” id. at 280-81; that other circuits “have applied multiple different legal standards to similar claims under the FHA,” id. at 281; and that “after [this] court’s decision in this case, [the U.S Department of Housing and Urban Development (“HUD”)] issued regulations regarding disparate impact claims under the FHA,” id. at 282. The panel then adopted the burden-shifting approach found in the new HUD regulations for claims of disparate impact under the FHA, id. at 282, and it remanded the case to this court “to apply this legal standard to the facts in the first instance,” id. at 283. In a footnote, the panel acknowledged, but rejected, TDHCA’s and intervenor’s reliance on the two recent cases in which the Supreme Court had granted writs of certiorari to determine whether disparate impacts claims are cognizable under the FHA—Township of Mount Holly, N.J. v. Mt. Holly Gardens Citizens in Action, Inc., ___ U.S. ___, 133 S.Ct. 2824 (2013) (granting petition for writ of certiorari), and Magner v. Gallagher, ___ U.S. ___, 132 S.Ct. 548 (2011) (same)—but had dismissed the writs before hearing argument, Township of Mount Holly, N.J. v. Mt. Holly Gardens Citizens in Action, Inc., ___ U.S. ___, 134 S.Ct. 636 (2013) (dismissing writ), and Magner v. Gallagher, ___ U.S. ___, 132 S.Ct. 1306 (2012) (same). Inclusive Cmtys. Project, 747 F.3d at 280-81 n.4.
- 3 -

TDHCA has filed a petition for a writ of certiorari that presents two questions: “1. Are disparate-impact claims cognizable under the Fair Housing Act? [and] 2. If disparate-impact claims are cognizable under the Fair Housing Act, what are the standards and burdens of proof that should apply?” TDHCA Mot. Stay App. 2 (petition for a writ of certiorari).
II “The district court has a general discretionary power to stay proceedings before it in the control of its docket and in the interests of justice.” McKnight v. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982). “[A] stay must be ‘so framed in its inception that its force will be spent within reasonable limits, so far at least as they are susceptible of prevision and description.’” Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 545 (5th Cir. 1983) (quoting Landis v. N. Am. Co., 299 U.S. 248, 257 (1936)) (addressing stay entered in one case pending resolution of another case). The court holds in its discretion that the proceedings on remand should be stayed pending resolution of the Supreme Court’s decision on TDHCA’s petition for a writ of certiorari. First, the Supreme Court has twice, and relatively recently, granted petitions that presented the question whether disparate impact claims are cognizable under the FHA. If the Court grants TDHCA’s petition and decides that such claims cannot be brought under the FHA, this court and the parties should not expend the resources necessary to litigate a claim that is not legally viable. Second, this court noted in its decision on the merits that “[t]he Fifth Circuit ha[d] not yet adopted a standard and proof regime for FHA-based disparate impact claims,” and that
- 4 -

“[t]he circuits that ha[d] done so ha[d] adopted at least three different standards and proof regimes.” ICP III, 860 F.Supp.2d at 322 n.17. Although the Fifth Circuit has now adopted the HUD regulations for FHA disparate impact claims, TDHCA’s petition for a writ of certiorari asks the Supreme Court to decide what standards and burdens of proof should apply if such a claim is available under the FHA.
The idea that this case should be stayed while awaiting guidance from the Supreme Court did not first arise when TDHCA filed the instant motion. As noted, this court ordered that its merits ruling be deferred while awaiting the Supreme Court’s decision in Magner v. Gallagher, which was then scheduled for oral argument. In a February 14, 2012 order the court wrote: “The court has concluded that it should defer its decision in this case until Magner is decided. After the Supreme Court’s opinion is filed, this court will decide whether to establish a supplemental schedule for briefing in the present case.” Feb. 14, 2012 Order at 1-2. Although this court now has the benefit of an unequivocal, binding decision of the Fifth Circuit confirming that a disparate impact claim is available under the FHA and adopting a specific proof regimen and standard, given the Supreme Court’s recent inclination to decide whether an FHA disparate impact claim is even available, and the possibility that it will decide in this case what are the standards and burdens of proof that apply—decisions that will materially affect the proceedings in this case on remand—the court concludes in its discretion that this case should be stayed pending the outcome of TDHCA’s petition.
- 5 -

III Accordingly, TDHCA’s May 16, 2014 motion to stay proceedings pending disposition of petition for certiorari is granted, and this case is stayed pending the Supreme Court’s decision on TDHCA’s petition for a writ of certiorari. If the petition is granted as to at least one question presented, the stay will remain in place, and the court will direct that the case be administratively closed for statistical purposes pending further order. If the petition is denied, the stay will be lifted automatically, and the court will proceed to adjudicate the case in accordance with the mandate and opinion of the United States Court of Appeals for the Fifth Circuit in Inclusive Communities, 747 F.3d 275, after considering the parties’ views on such matters as the procedures and schedule that should be followed. SO ORDERED. June 23, 2014.
_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE
- 6 -

 
 Case 3:08-cv-00546-D Document 241 Filed 10/02/14 Page 1 of 1 PageID 8741

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

ORDER

The Supreme Court of the United States has today granted a petition for a writ of certiorari

in this case. Accordingly, the stay that this court granted in its June 23, 2014 memorandum opinion

and order will remain in place, and the court directs that this case be administratively closed for

statistical purposes pending further order.

SO ORDERED.

October 2, 2014.

_________________________________ SIDNEY A. FITZWATER CHIEF JUDGE

 
 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE INCLUSIVE COMMUNITIES PROJECT, INC.,
Plaintiff,
VS.
THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, et al.,
Defendants.

§ § § § § Civil Action No. 3:08-CV-0546-D § § § § § § §

MEMORANDUM OPINION

On remand from the Supreme Court and the Fifth Circuit, and applying a materially

different (and more onerous) prima facie case burden of proof than the one applied originally,

the court must decide as trier of fact whether plaintiff The Inclusive Communities Project,

Inc. (“ICP”) has proved a prima facie case and may therefore proceed to the next sequential

step of its disparate impact claim under the Fair Housing Act, 42 U.S.C. § 3601, et seq.

(“FHA”). For the reasons that follow,1 the court finds that ICP has not proved a prima facie

1Pursuant to Fed. R. Civ. P. 52(a)(1), the court sets out its findings of fact and conclusions of law in this memorandum opinion. Although the court has carefully considered the record, this memorandum opinion has been written to comply with the level of detail required in this circuit for findings of fact and conclusions of law. See, e.g., Century Marine Inc. v. United States, 153 F.3d 225, 231 (5th Cir. 1998) (discussing standards). The court has not set out its findings and conclusions in punctilious detail, slavishly traced the claims issue by issue and witness by witness, or indulged in exegetics, parsing or declaiming every fact and each nuance and hypothesis. It has instead written a memorandum opinion that contains findings and conclusions that provide a clear understanding of the basis for the court’s decision. See id.

case, and it dismisses ICP’s disparate impact claim. I
This is an action by ICP against defendants Texas Department of Housing and Community Affairs and its Executive Director and board members in their official capacities (collectively, “TDHCA”) challenging TDHCA’s allocation of Low Income Housing Tax Credits (“LIHTC”) in the Dallas metropolitan area.2 ICP sought relief for intentional discrimination based on race, in violation of the Equal Protection Clause of Fourteenth Amendment (actionable under 42 U.S.C. § 1983) and 42 U.S.C. § 1982. Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 860 F.Supp.2d 312, 313 (N.D. Tex. 2012) (Fitzwater, C.J.) (“ICP III”), rev’d, 747 F.3d 275 (5th Cir. 2014), aff’d and remanded, ___ U.S. ___, 135 S.Ct. 2507 (2015). ICP also alleged that TDHCA was liable under §§ 3604(a) and 3605(a) of the FHA on a disparate impact theory. Id. Following the entry of partial summary judgment in ICP’s favor, and a bench trial, the court found in favor of ICP on its FHA-based disparate impact claim and against ICP on all other claims. Id. at 314.
At the time the court first decided this case on the merits, the Fifth Circuit had not “determined the legal standards that should be applied in disparate impact housing discrimination cases.” Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 747 F.3d 275, 280-81 (5th Cir. 2014) (“ICP V”), aff’d and remanded, ___ U.S. ___, 135 S.Ct. 2507 (2015). Absent controlling precedent from the Supreme Court or the Fifth
2Intervenor Frazier Revitalization Inc.—who is aligned with TDHCA—has obtained leave to intervene.
- 2 -

Circuit, this court essentially followed the approach of the Second Circuit in Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926, 939 (2d Cir.), aff’d in part, 488 U.S. 15 (1988), but without engaging in a process of balancing the factors identified in Metropolitan Housing Development Corp. v. Village of Arlington Heights, 558 F.2d 1283 (7th Cir. 1977). ICP III, 860 F.Supp.2d at 322 n.17. Before trial, the court granted partial summary judgment holding that ICP had made a prima facie showing that TDHCA had violated the FHA based on ICP’s disparate impact theory. Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 749 F.Supp.2d 486, 499-500 (N.D. Tex. 2010) (Fitzwater, C.J.) (“ICP II”). At trial, the court decided ICP’s disparate impact claim on the merits using as a starting point its summary judgment ruling that ICP had established a prima facie case.
In ICP II the court held that ICP was entitled to summary judgment establishing that it had made a prima facie showing of disparate impact. . . . Because ICP has made this showing, the burden has shifted to defendants to prove by a preponderance of the evidence that their actions were in furtherance of a legitimate governmental interest. ICP III, 860 F.Supp.2d at 322. But as the court explains below, the court’s conclusion that ICP had established a prima facie case beyond peradventure was reached without the benefit of the Supreme Court’s decision in this case, and rested on understandings such as that TDHCA “essentially [did] not contest ICP’s prima facie cases,” ICP II, 749 F.Supp.2d at 498, that “ICP’s prima facie burden [was] not a heavy one,” id. at 499, and that “ICP ha[d] adduced evidence that [was] uncontested,” id. at 500.
- 3 -

On appeal, the Fifth Circuit reversed and remanded. ICP V, 747 F.3d 275. It held that this court had “correctly noted [that a] violation of the FHA can be shown either by proof of intentional discrimination or by proof of disparate impact.” Id. at 280. But the Fifth Circuit also noted that it had “not previously determined the legal standards that should be applied in disparate impact housing discrimination cases,” id. at 280-81; that other circuits “have applied multiple different legal standards to similar claims under the FHA,” id. at 281; and that “after [this] court’s decision in this case, [the U.S. Department of Housing and Urban Development (“HUD”)] issued regulations regarding disparate impact claims under the FHA,” id. at 282. The panel adopted the burden-shifting approach of the new HUD regulations for disparate impact claims brought under the FHA, id. at 282, and it remanded the case for this court “to apply this legal standard to the facts in the first instance,” id. at 283.3
The Supreme Court then granted certiorari to decide whether disparate impact claims are cognizable under the FHA. Affirming the judgment of the Fifth Circuit, the Supreme Court held that disparate impact claims are cognizable. Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., ___ U.S. ___, 135 S.Ct. 2507 (2015) (“ICP VI”). Following the Supreme Court’s remand to the Fifth Circuit, the panel then “remand[ed] this case . . . for further proceeding consistent with [its] opinion and the opinion of the Supreme Court.”
3The Fifth Circuit made clear that it was not requiring that this court “must retry the case,” and that it was leaving “it to the sound discretion of [this] court to decide whether any additional proceedings are necessary or appropriate.” ICP V, 747 F.3d at 283.
- 4 -

Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 795 F.3d 509 (5th Cir. 2015) (per curiam).
This court, in turn, requested that the parties propose how the case should proceed on remand. Inclusive Cmtys. Project, Inc. v. Tex. Dep’t of Hous. & Cmty. Affairs, 2015 WL 5916220, at *1 (N.D. Tex. Oct. 8, 2015) (Fitzwater, J.). ICP maintained that the briefing should commence at step two of the three-part burden-shifting approach—that TDHCA4 should be required to address the justification element, followed by ICP’s addressing the less discriminatory alternative element. Id. at *3. ICP “posit[ed] that the court should adhere to its summary judgment decision that ICP ha[d] established the first element (prima facie case).” Id. TDHCA and intervenor Frazier Revitalization Inc. contended that “the court should reconsider whether ICP ha[d] pleaded and proved a prima facie case,” and that “TDHCA should not be required to address the justification prong unless ICP meets its obligation to plead and prove a prima facie case.” Id.
The court concluded “that the interests of justice and fundamental fairness require[d] that [the court] first consider on the current (or a supplemented) trial record whether ICP ha[d] established a prima facie case.” Id. This was so because, although the court had granted partial summary judgment in ICP II holding that ICP had established a prima facie case on its disparate impact claim, it had done so without the benefit of the Supreme Court’s opinion; it had not given the prima facie requirement the same emphasis that the Supreme
4The court uses TDHCA to refer to defendants collectively. ICP actually referred to defendants.
- 5 -

Court had given it—for example, the court had stated that ICP’s prima facie burden was not a heavy one, and it had concluded that ICP need only provide evidence that raised an inference of discrimination; and the court arguably had “not analyze[d] ICP’s evidence through the prism of the ‘robust causality requirement’ envisioned by the Supreme Court.” Id.
The court also reasoned that TDHCA had not had the benefit of the Supreme Court’s decision, and, therefore, “a pellucid sense of its importance in the equation of proving FHA disparate impact liability.” Id. at *4. In ICP II the court pointed out that, in opposing ICP’s summary judgment motion, defendants essentially had not contested ICP’s prima facie cases, and ICP had established a prima facie case based on evidence that was “uncontested.” Id. (quoting ICP II, 749 F.Supp.2d at 500). The court reasoned that TDHCA should therefore be permitted to challenge ICP’s prima facie showing “based on a clearer understanding of the requirements and consequences of ICP’s establishing a prima facie case.” Id.
Finally, the court concluded: given the significant developments in this case on appeal, . . . the interests of justice and fundamental fairness require not only that ICP’s disparate impact claim be decided anew under the burden-shifting regimen adopted by HUD and the Fifth Circuit, but that the court start with whether ICP has established a prima facie case.
Id. The parties have submitted their prima facie case briefing and have supplemented the
record, and the court has heard oral argument.
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II ICP is a non-profit organization that seeks racial and socioeconomic integration in the Dallas metropolitan area. To that end, ICP assists low-income, predominantly AfricanAmerican families who are eligible for the Dallas Housing Authority’s Section 8 Housing Choice Voucher program (“Section 8”) in finding affordable housing in predominately Caucasian, suburban neighborhoods. Because under the LIHTC program a development that receives tax credits cannot refuse housing solely because a person is using a Section 8 voucher, it is important to ICP where the developments are located in the Dallas metropolitan area. Under § 42 of the Internal Revenue Code (“I.R.C.”), the government provides tax credits (here, LIHTC) that a state (here, Texas) distributes to developers through a designated state agency (here, TDHCA). See Tex. Gov’t Code Ann. § 2306.053(b)(10) (West 2008). Developers apply to TDHCA for tax credits, which can be sold to finance construction of a housing project. ICP alleges that TDHCA’s allocation of LIHTC in the Dallas metropolitan area has a disparate impact on the location of low-income housing in the area. ICP complains of TDHCA’s allocation of two different types of tax credits: the 4% credit, and the 9% credit. Nine percent tax credits are distributed on an annual cycle and are generally oversubscribed. Certain federal and state laws dictate, at least in part, how TDHCA selects applications for 9% tax credits. First, I.R.C. § 42 requires that the designated state agency adopt a “Qualified Allocation Plan” (“QAP”) that prescribes the “selection criteria” for 9%
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tax credits. Id. at § 42(m)(1)(A)-(B). The QAP must include, inter alia, certain criteria and preferences; otherwise, zero housing credit dollars will be provided. § 42(m)(1)(A)-(C). Second, the Texas Government Code regulates how TDHCA administers the LIHTC program: it requires that TDHCA adopt annually a QAP and corresponding manual, id. at § 2306.67022, and sets out how TDHCA should evaluate applications, id. at § 2306.6710(a). First, TDHCA must “determine whether the application satisfies the threshold criteria” in the QAP. Id. at § 2306.6710(a). Applications satisfying the “threshold criteria” are then “score[d] and rank[ed]” by a point system that “prioritizes in descending order” ten listed statutory criteria (also called “above-the-line criteria”), which directly affects TDHCA’s discretion in creating “selection criteria” in each QAP. Id. at § 2306.6710(b). TDHCA is also permitted to consider other criteria and preferences (also called “below-the-line” criteria), but it “lacks discretionary authority to intersperse other factors into the ranking system that will have greater points than” the statutory criteria. Tex. Att’y Gen. Op. No. GA0208, 2004 WL 1434796, at *6 (2004).
Once the TDHCA adopts a QAP, it submits it to the Governor, who can “approve, reject, or modify and approve” it. Tex. Gov’t Code Ann. § 2306.6724(b)-(c) (West 2001). The TDHCA staff then review applications, underwrite applications to determine their financial feasibility and appropriate level of tax credits, and submit recommendations to the TDHCA. § 2306.6710(b)(1)(A) & (d), § 2306.6724(e). The TDHCA reviews the staff recommendations and issues final commitments in accordance with the QAP. Id. at § 2306.6724(e)-(f).
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Unlike 9% tax credits, 4% tax credits are awarded according to non-competitive criteria, available to applicants on a year-round basis, and generally are not oversubscribed. In awarding a 4% tax credit, the TDHCA “reviews the application for threshold, eligibility and then the development is underwritten.” P. Ex. 1 at 20; see also Tex. Gov’t Code Ann. § 2306.67021 (West 2001). Applications for the 4% tax credit are not subject to scoring under the selection criteria and are not decided under a competitive scoring model.
III The Supreme Court held in ICP VI that disparate impact claims are cognizable under the FHA. ICP VI, 135 S. Ct. at 2514-15. The Court did not disturb the Fifth Circuit’s adoption of the HUD burden-shifting regimen, but it prescribed several limitations on disparate impact liability, and it questioned whether ICP can prove liability in this case. The Court cautioned that disparate impact liability should not be established “based solely on a showing of statistical disparity,” id. at 2522; and that it properly results in the removal of “artificial, arbitrary, and unnecessary barriers,” but does not eschew “valid governmental policies,” id. As a result of the Fifth Circuit’s decision adopting the HUD regulations, and the Supreme Court’s affirmance (without altering the burden-shifting approach), the following proof regimen now applies to ICP’s disparate impact claim under the FHA:
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We now adopt the burden-shifting approach found in 24 C.F.R. § 100.500 for claims of disparate impact under the FHA. See 24 C.F.R. § 100.500. First, a plaintiff must prove a prima facie case of discrimination by showing that a challenged practice causes a discriminatory effect, as defined by 24 C.F.R. § 100.500(a). 24 C.F.R. § 100.500(c)(1). If the plaintiff makes a prima facie case, the defendant must then prove “that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests . . . .” Id. § 100.500(c)(2). If the defendant meets its burden, the plaintiff must then show that the defendant’s interests “could be served by another practice that has a less discriminatory effect.” Id. § 100.500(c)(3).
ICP V, 747 F.3d at 282.
In the first step of proving its prima facie case, ICP must “point to [TDHCA’s] policy
or policies causing that [statistical] disparity.” ICP VI, 135 S.Ct. at 2523. “[A] one-time
[housing] decision may not be a policy at all.” Id. at 2523. Importantly, “‘racial imbalance
. . . does not, without more, establish a prima facie case of disparate impact.’” Id. (quoting
Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 653 (1989)). This “robust causality
requirement . . . protects defendants from being held liable for racial disparities they did not
create.” Id. The Court noted that, in cases such as this one, “it may also be difficult to
establish causation because of the multiple factors that go into investment decisions about
where to construct or renovate housing units.” Id. at 2523-24. Accordingly, this court must
“examine with care whether a plaintiff has made out a prima facie case of disparate impact,
and prompt resolution of these cases is important.” Id. at 2523.
“A plaintiff who fails to allege facts at the pleading stage or produce statistical
evidence demonstrating a causal connection cannot make out a prima facie case of disparate
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impact.” Id. The Court specifically noted Judge Jones’s specially concurring opinion in ICP V, in which she observed that “if the ICP cannot show a causal connection between the Department’s policy and a disparate impact—for instance, because federal law substantially limits the Department’s discretion—that should result in dismissal of this case.” Id. at 2524 (citing ICP V, 747 F.3d at 283-84). The Court cautioned that, “[u]nlike the heartland of disparate-impact suits targeting artificial barriers to housing, the underlying dispute in this case involves a novel theory of liability,” id. at 2522, and that “[t]his case, on remand, may be seen simply as an attempt to second-guess which of two reasonable approaches a housing authority should follow in the sound exercise of its discretion in allocating tax credits for low-income housing.” Id. at 2523.
IV The heart of ICP’s complaint is the allocation of 9% tax credits for low-income housing developments.5 ICP alleges that the policy or practice of permitting the TDHCA to use its discretion in allocating 9% tax credits perpetuates racial segregation, in violation of the FHA. ICP complains of the TDHCA’s exercise of discretion on the whole and in specific ways. Because ICP must identify a specific policy or practice that causes a statistically significant disparity in the location of low-income housing, see ICP VI, 135 S. Ct. 2507, the court will separately address ICP’s challenges to TDHCA’s discretion on the whole and in
5The court addresses ICP’s challenges to the 4% program and the 9% program separately because the allocation of each type of credits is done separately and the programs are administered in different ways.
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specific contexts. A
The court first decides whether TDHCA’s exercise of discretion in deciding how to allocate 9% tax credits is a specific, facially neutral policy sufficient to establish a prima facie case of disparate impact liability.
1 ICP alleges that the exercise of TDHCA’s discretion in the 9% tax credit program has caused the exclusion of all but 6% of the LIHTC units from Caucasian areas in the City of Dallas and all but 26% of the LIHTC units from Caucasian areas in the Dallas metropolitan area. Between 1999 and 2008, applications for 9% tax credits for units located in minority tracts had a 41% approval rate, while applications for units located in Caucasian tracts had a 21% approval rate. As evidence of disparate impact, ICP points to TDHCA’s decisions to deny or approve applications for specific applications for 9% tax credits between 1999 and 2008. ICP alleges that the use of TDHCA discretion in the aggregate resulted in an approval rate for units located in Caucasian areas of nearly half the approval rate for units located in minority areas. TDHCA responds that ICP has not identified a specific, facially-neutral policy that caused a racially disparate impact sufficient to establish a prima facie case under the FHA. It argues that discretion itself is not a policy; ICP has not accounted for the actions, policies, or preferences of third parties—such as Congress, the Texas Legislature, developers, and local communities—that impact the location of LIHTC units; ICP relies on several specific
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exercises of discretion—such as the use of set-asides for elderly units—but does not allege any facts demonstrating a statistical disparity caused by that use of discretion; and ICP challenges statewide policies but claims only localized statistical disparity. TDHCA also maintains that ICP is not actually challenging TDHCA’s use of discretion; rather, ICP is seeking to require TDHCA to use its discretion in a specific way, that is, to provide desegregated housing opportunities for ICP’s clients and to remedy historical housing segregation.
ICP replies that discretion can be a policy sufficient to state a disparate impact claim, and that federal laws establishing a preference for providing low-income housing in minority areas did not cause the statistical disparity in low-income housing.
2 To prove a disparate impact claim, the plaintiff must first identify a facially-neutral policy that has resulted in the disparate impact. See ICP VI, 135 S.Ct. at 2522-24; see also City of Miami v. Bank of Am. Corp., 2016 WL 1072488, at *4-5 (S.D. Fla. Mar. 17, 2016) (applying ICP VI).6 As the Supreme Court explained, disparate impact claims seek to remove impermissible barriers; therefore, ICP must identify a specific policy that has created barriers to fair housing. See City of Los Angeles v. Wells Fargo & Co., 2015 WL 4398858, at *8 (C.D. Cal. July 17, 2015) (applying ICP VI). ICP must affirmatively identify a specific
6As the Supreme Court explained, disparate impact cases “interpreting Title VII and the ADEA provide essential background and instruction” in this case. ICP VI, 135 S.Ct. at 2518.
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policy that produced a disparate impact, rather than point to a lack of policy that caused it. See id. Nor is it sufficient for ICP to point to a generalized policy that leads to a disparate impact. Meacham v. Knolls Atomic Power Lab., 554 U.S. 84, 100 (2008) (quoting Smith v. City of Jackson, 544 U.S. 228, 241 (2005)). This is not a “trivial burden.” Id.
The offending policy or practice must be specifically identified for at least two reasons. First, the court cannot evaluate whether the offending policy caused a statistically significant disparity without knowing the offending policy with precision. Meacham, 554 U.S. at 100 (explaining that plaintiff must specifically identify the offending policy so that the court can ensure that employers are not liable for “the myriad of innocent causes that may lead to statistical imbalances.”); Hanrahan v. Blank Rome LLP, 142 F.Supp.3d 349, 354 (E.D. Pa. 2015) (dismissing disparate impact claim where plaintiff failed to identify and isolate a specific employment policy). Especially where the defendant has combined discretionary or subjective decision-making with objective criteria, “the plaintiff is in our view responsible for isolating and identifying the specific . . . practices that are allegedly responsible for any observed statistical disparities.” Wards Cove, 490 U.S. at 656; see also Anderson v. Douglas & Lomason Co., 26 F.3d 1277, 1283-85 (5th Cir. 1994). If the plaintiff does not identify a specific policy or practice, the court cannot determine whether that policy or practice has created a barrier to fair housing or has resulted in a statistical disparity. See Wells Fargo, 2015 WL 4398858, at *8 (citing ICP VI, 135 S.Ct. at 2523). In Anderson, an employment discrimination case, the plaintiff asserted that the cumulative effects of the defendant’s employment practices caused a racial disparity in promotions. Anderson, 26
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F.3d at 1284. The Fifth Circuit affirmed the dismissal of the plaintiff’s disparate treatment impact claim and noted that the plaintiff had failed to identify a specific policy that caused the racial disparity. Id.
Likewise, ICP has failed to point to a specific, facially neutral policy that purportedly caused a racially disparate impact. By relying simply on TDHCA’s exercise of discretion in awarding tax credits, ICP has not isolated and identified the specific practice that caused the disparity in the location of low-income housing. Like the plaintiff in Anderson, ICP has pointed to the “cumulative effects” of TDHCA’s decision-making process over a multi-year period. ICP cannot rely on this generalized policy of discretion to prove disparate impact.
Identification of a specific policy or practice is also essential for determining how to remedy the disparate impact. Although the court need not now decide what remedy, if any, is required in this case, consideration of the potential remedies for disparate impact claims demonstrates what kinds of policies are offending. The Supreme Court requires that “[r]emedial orders in disparate-impact cases . . . concentrate on the elimination of the offending practice, and courts should strive to design race-neutral remedies.” ICP VI, 135 S.Ct. at 2512. The Court cautioned that lower courts should be careful not to “impose racial targets or quotas,” because doing so “might raise difficult constitutional questions.” Id. In sum, any remedy must focus on removing the offending practices and must be race-neutral.
ICP has not identified any offending policy for which there exists a constitutionallysound remedy. To remedy disparate impact, the court must craft a race-neutral remedy that removes the offending practice. For example, if ICP complained that TDHCA’s use of bonus
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points for certain types of housing developments had a disparate impact, the court could order a remedy that adjusted how the TDHCA awarded such bonus points. Here, ICP has not identified any barriers to housing that the court can remove. Although ICP complains of TDHCA’s exercise of discretion in housing decisions, it does not ask the court to prohibit TDHCA from using its discretion; rather, it asks the court to require that TDHCA exercise its discretion in a specific way: to desegregate housing. For example, ICP implies that TDHCA should be required to award bonus points for developments that provide opportunities for desegregation and to subtract points for developments in areas of slum and blight.7 Because ICP has not sufficiently identified a specific, facially-neutral policy that has caused a statistical disparity, the court cannot fashion a remedy that removes that policy.
B ICP’s disparate impact claim must be dismissed for an additional reason: regardless of the label ICP places on its claim, it is actually complaining about disparate treatment, not disparate impact.8 The purpose of disparate impact liability is to root out a facially neutral policy that has an unintended discriminatory result. Phillips v. Cohen, 400 F.3d 388, 398 (6th Cir. 2005) (citing Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 986 (1988)). But
7Additionally, in response to TDHCA’s proposed remedial plan, ICP argued that TDHCA “can and should use its discretion to remedy the violation” to “accomplish the remedial purpose of the plan.” ICP 6/18/12 Resp. to Ds. Proposed Remedial Plan at 10.
8ICP originally asserted claims for disparate treatment and disparate impact, both rooted in the TDHCA’s allocation of tax credits for low-income housing. The court ruled against ICP on its disparate treatment claim. ICP III, 860 F.Supp.2d at 314.
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a claim for intentional discrimination is evaluated under the disparate treatment framework, which requires a showing of targeted discrimination. Wards Cove, 490 U.S. at 666. Where the plaintiff establishes that a subjective policy, such as the use of discretion, has been used to achieve a racial disparity, the plaintiff has shown disparate treatment. See, e.g., Johnson v. Metro. Gov’t of Nashville & Davidson Cnty., 2008 WL 3163531, at *4-6 (M.D. Tenn. Aug. 4, 2008) (citing Phillips and Wards Cove). On the other hand, where the plaintiff establishes that the existence of the policy itself, rather than how the policy is applied, resulted in a racial disparity, the plaintiff has shown disparate impact. Id.
These examples are illustrative. In Johnson the plaintiffs alleged that the defendantemployer applied a promotion method that had an adverse effect on white male employees. Id. Rather than challenge the method itself, plaintiffs challenged the results of the employer’s application of the method to them, and argued that the method was used to avoid promoting white male employees. Id. The court held that plaintiffs’ claim was one for disparate treatment because they argued that the method was used to intentionally discriminate against them, even if they did not label their claim as such.
Similarly, in Reminder v. Roadway Express, Inc., 215 Fed. Appx. 481 (6th Cir. 2007) (per curiam), the plaintiff asserted a disparate impact claim, arguing that his employer’s method of downsizing resulted in a disproportionate termination of employees over age 40. Id. at 485. The Sixth Circuit held that the plaintiff “clearly” asserted a disparate treatment—not disparate impact—claim despite its label because the plaintiff did not identify a specific neutral policy but rather the impact of the downsizing methods that targeted
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persons over age 40. Id. ICP likewise complains of disparate treatment. Although ICP labels its claim as one
for disparate impact, a fair reading of ICP’s arguments reveals that it is complaining about the results of TDHCA’s discretion, not the existence of the discretion. See, e.g., ICP 2/25/16 Prima Facie Reply Br. at 10 (“This longstanding result [of TDHCA’s decisions] is consistent with the use of a race based cap on the percentage of LIHTC family units to be allowed in Caucasian areas.”); at 15-16 (arguing that TDHCA’s stated reasons for its decisions are pretextual). If ICP were challenging the existence of TDHCA’s discretion rather than how the discretion is used, ICP would seek to enjoin that discretion and to mandate a points-only system or another wholly objective method of awarding tax credits. Instead, ICP maintains that TDHCA’s exercise of discretion should be the means to achieve a specific end: to provide increased opportunities for desegregated low-income housing. Because ICP is actually complaining of the results of TDHCA’s exercise of discretion rather than of the existence of that discretion, ICP has not established a claim for disparate impact.
C Even assuming arguendo that TDHCA’s use of discretion is a specific, facially neutral policy, ICP has not established that the exercise of that discretion caused the disparity in the location of low-income housing.
1 “A disparate-impact claim relying on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity.” ICP VI, 135 S.Ct. at
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2523. This causality requirement is “robust” to ensure that “defendants do not resort to the use of racial quotas” to avoid liability for statistical disparities. Id. The plaintiff must demonstrate that the statistical disparity is caused by the defendant’s policy or policies, rather than by other factors. Id. (citing CFR § 100.500(c)(1) (2014)). Accordingly, to establish a prima facie case of disparate impact, ICP must prove facts that plausibly demonstrate a causal link between the challenged policy or practice and a statistical disparity. Id.; see also Ellis v. City of Minneapolis, 2015 WL 5009341, at *10 (D. Minn. Aug. 24, 2015) (applying ICP VI ). The use of discretion “should itself raise no inference of discriminatory conduct.” Johnson v. Uncle Ben’s, Inc., 965 F.2d 1363, 1369 (5th Cir. 1992) (citing Watson, 487 U.S. 989).
2 ICP has not proved that TDHCA’s policy of allowing discretion in allocating 9 % tax credits caused a statistically-significant disparity. ICP has established that (1) TDHCA has discretion in how it allocates 9% tax credits and (2) as of 2008, 26% of LIHTC units in the Dallas metropolitan area are located in Caucasian areas and 74% are located in minority areas. ICP has not proved that it was TDHCA’s exercise of discretion—and not something else—that caused the difference in the number of LIHTC units in each area. Put differently, ICP has not demonstrated that, had TDHCA not been permitted to exercise any discretion when allocating 9% tax credits, and had those decisions been made strictly by the points system, there would be no, or significantly less, disparity in the location of LIHTC units. Nor has ICP proved what the distribution of LIHTC units or the percentages of
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approved 9% applications would have been had TDHCA awarded credits based strictly on points—had it exercised no discretion. It is therefore possible that, based strictly on points, the statistical disparity would be the same, lesser, or even greater. For example, ICP adduced evidence that, in 1999, TDHCA awarded credits to the Rosemont at Arlington Park development, a family development with 100 units in a predominately minority area of Dallas, with 92 points. ICP 1/7/16 Prima Facie Br. App. at 728. The highest scoring application in 1999, with 95 points, was the Columbia Valley Townhomes, a family development with 160 units in a predominately minority area of Dallas. Id. Accordingly, had the TDHCA awarded credits based strictly on points, it would have created a greater disparity in the number of LIHTC units in minority areas and in Caucasian areas: it would have awarded credits to 160 units in a minority area instead of 100 units. In 2005, the TDHCA’s awards would have been the same had it awarded credits based solely on points. Id. at 738. And as TDHCA explained at oral argument, from 2004 to 2008, TDHCA approved 12 applications for tax credits for low-income housing in minority areas and 12 applications for tax credits for low-income housing in Caucasian areas.
Nor has ICP accounted for other potential causes of the statistical disparity. TDHCA argues that “ICP does not account for the actions, policies, or preferences of third parties like Congress, the Texas Legislature, developers, and local communities that impact the location of LIHTC units.” Ds. 2/4/16 Prima Facie Resp. Br. at 19. It points to other potential causes of the statistical disparity: the preference under federal law for placement of LIHTC properties in low-income communities and the corresponding “basis boost” received by
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applications for tax credits for developments in low-income communities; the preference under state law for financial feasibility and community participation; developers’ decisions regarding the locations of housing projects; and the decisions and preferences of local governments regarding zoning and approval of specific projects.
ICP replies that the existing statistical disparity cannot be caused by the federal preference for placement of LIHTC properties in low-income communities because the statistical disparity predated the federal preference. And according to ICP, “[t]he uncontested facts rule out the possibility that either third parties or other factors are causing the perpetuation of segregation.” ICP 2/25/16 Prima Facie Reply Br. at 18. ICP offers the example of two applications for 9% tax credits for housing projects in Caucasian tracts that were eligible for credits but denied. ICP reasons that, because these two projects were not eligible for the federal “basis boost,” TDHCA’s exercise of discretion was the only cause for the denial of the applications.
ICP has not proved that TDHCA’s exercise of discretion—and not other factors—caused the statistical disparity. The Supreme Court recognized in ICP VI “[i]t may be difficult [for ICP] to establish causation because of the multiple factors that go into investment decisions about where to construct or renovate housing units.” ICP VI, 135 S.Ct. at 2524. Therefore, “if the ICP cannot show a causal connection between [TDHCA’s] policy and a disparate impact—for instance, because federal law substantially limits [TDHCA’s] discretion—that should result in dismissal of this case.” Id. (citing Jones, J., specially concurring in ICP V, 747 F.3d at 283-84). ICP has failed to demonstrate that local zoning
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rules, community preferences, or developers’ choices did not contribute to the statistical disparity. For example, TDHCA asserted at oral argument, and ICP does not refute, that no developers have applied for credits for developments in predominately Caucasian areas in the City of Dallas since 1995. Accordingly, TDHCA has neither granted nor denied any such application, and it is not TDHCA’s discretion that has caused the lower number of LIHTC units in the City of Dallas.
ICP also attempts to causally link to a cumulative statistical disparity TDHCA’s exercise of discretion in a case-by-case review during an annual-cycle over a multi-year period. The facts belie ICP’s position. Each year, TDHCA decides whether to approve or deny applications for 9% tax credits submitted that year. Because there is a fixed number of credits that TDHCA can award, it must compare the applications during each annual cycle and decide which ones to award. TDHCA does not, however, compare applications submitted in one year to applications submitted in a different year. In other words, TDHCA’s approval of an application in 2000 should have no effect on its denial of an application in 2003, and vice versa. Accordingly, ICP’s reliance on a statistical disparity that has accumulated over a multi-year period is misplaced; the disparity cannot be causally linked to the exercise of discretion in a single year.
Finally, ICP acknowledges that the discretion exercised by TDHCA has changed from year to year. In other words, the policy to which ICP attributes a cumulative disparity has in fact changed during that time period. For example, from 1995 to 2011, the QAP permitted TDHCA to award forward commitments. But TDHCA has not been authorized to award
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forward commitments since 2011. The point system set forth in the QAP has also changed from year to year. Because the challenged policy has changed from year to year in each QAP, ICP cannot point to a specific policy that caused an aggregate statistical disparity over a multi-year period. See, e.g., City of Miami, 2016 WL 1072488, at *5 & n.3 (holding that plaintiff failed to demonstrate disparate impact where it “lump[ed] together eight years of data” over which time period defendant’s policies had changed).
D In addition to challenging TDHCA’s general policy of exercising discretion in awarding tax credits, ICP also challenges several specific ways in which TDHCA exercises its discretion. For the reasons explained supra at § IV(A)(2), the court holds that TDHCA’s use of discretion is not a specific, facially neutral policy that can support a claim for disparate impact. But assuming arguendo that ICP can prove a disparate impact claim based on a specific exercise of discretion, the court must still decide whether ICP has proved that the exercise of discretion has caused a statistically significant disparity in the approval of 9% tax credits. ICP relies on the following specific exercises of discretion: (1) “discretionary forward commitments in the 9% program”; (2) “other exercises of discretion in taking factors other than point totals into account in the 9% program”; (3) “discretion in the scoring of 9% selection criteria”; (4) “the discretionary decision to eliminate taking into account in individual allocation decisions whether the project would provide desegregated housing opportunities in connection with court ordered desegregation remedies”; (5) “using discretion to allocate 9% tax credits for units restricted to elderly only residents”; (6) “discretion in
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selecting groups of applications for guaranteed allocations through set asides”; and (7) “the exercise of discretion to approve rather than disapprove projects that would be located in areas marked by conditions of slum and blight, high crime rates, noxious industrial uses, adverse environmental conditions, and concentrations of LIHTC units.” ICP 1/7/16 Prima Facie Br. at 2.
1 ICP complains of TDHCA’s discretion to award forward commitments to applications seeking 9% tax credits. According to ICP, each QAP from 1995 to 2011 permitted TDHCA to award any eligible 9% tax credit application an allocation of credits from the following year’s allocation rather than from the current year’s allocation. For example, TDHCA could deny an application for tax credits in 1999 but commit to award the applicant tax credits in 2000. ICP alleges that, although no QAP from 2012 to the present expressly gives TDHCA discretion to award forward commitments, pertinent regulations governing the award of tax credits permit TDHCA to exercise such discretion today. TDHCA responds that it used its discretion to award forward commitments on a caseby-case basis to award credits for projects that were “uniquely deserving” but that did not have enough points to be awarded credits in the application year; the current QAP does not allow for forward commitments, and ICP’s complaint is moot; ICP has not identified a policy of awarding forward commitments sufficient to state a prima facie case; and ICP has not alleged facts demonstrating a statistical imbalance caused by the approval or denial of forward commitments.
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ICP has not satisfied the robust causality requirement. Although ICP has proved that TDHCA gave forward commitments to several applications for 9% tax credits, ICP has not proved a statistical disparity caused by the forward commitments. For example, ICP has not proved how many applications were awarded forward commitments that would not otherwise have been awarded tax credits in their application years or in the following year, or what applications would have been awarded had the applications been denied instead of forwarded. ICP has not proved how the statistical disparity would have lessened if TDHCA had no discretion to award forward commitments.9
2 ICP also complains of TDHCA’s discretion to take into account factors other than point totals, and its discretion in scoring applications for tax credits. TDHCA responds that ICP has not isolated and identified a specific policy causing a disparity, as required by the Supreme Court, and that this court therefore cannot craft a remedial order eliminating the offending policy. TDHCA also argues that what ICP is actually seeking is for the court to engineer a QAP so as to remedy racial imbalance in housing and to achieve ICP’s ideal distribution of LIHTC units, and that the Supreme Court has cautioned that such remedies raise serious constitutional concerns. ICP has not proved that TDHCA’s exercise of discretion in scoring or in taking other factors into account has caused a statistically-significant disparity. As discussed supra at §
9TDHCA also argues that, because the QAP no longer grants TDHCA discretion to award forward commitments, there is nothing for the court to remedy. The court agrees.
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IV(A)(2), ICP has not demonstrated a specific policy that the court could remedy, or that TDHCA’s discretion to consider factors other than points has caused a statisticallysignificant disparity.
3 ICP complains of TDHCA’s decision not to consider whether a proposed development would provide desegregated housing opportunities. According to ICP, until 1994, TDHCA awarded additional points for developments located in Caucasian areas. After 1994, TDHCA could in its discretion award additional points for desegregated developments, but chose not to do so. TDHCA responds that ICP has failed to allege any facts demonstrating that, had TDHCA awarded additional points to applications for developments in Caucasian areas, those applications would have been approved, or that approval of such applications would have lessened the statistical disparity. ICP has failed to prove that TDHCA’s decision not to award additional points for projects that provide desegregated housing caused any statistical disparity. In addition, ICP does not seek any constitutionally-sound remedy—i.e., the “elimination of the offending practice.” ICP VI, 135 S.Ct. at 2524. ICP does not seek to remove a specific barrier to fair housing, but to impose on TDHCA the requirement that it award additional points for housing that furthers desegregation. The Supreme Court has made clear that such remedies are constitutionally suspect, and the court declines to impose such remedy. See id.; see also Wells Fargo, 2015 WL 4398858, at *8 (holding that absence of policy cannot form basis for
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disparate impact claim because there is nothing to remedy). 4
ICP challenges TDHCA’s discretion to allocate tax credits to units for elderly-only residents and the use of set-asides for elderly-only units. TDHCA has the discretion to “set aside” certain types of applications and to score these applications in their subset, rather than against the general application pool. From 2001 to 2003, TDHCA set aside a certain number of 9% tax credits for units for elderly residents. ICP complains that TDHCA did not establish a set-aside for applications for units located in Caucasian areas, and it challenges TDHCA’s use of elderly-only set-asides.
TDHCA responds that ICP does not explain how TDHCA’s decision to set aside a certain number of tax credits for elderly-only developments caused the placement of more LIHTC units in minority areas than in Caucasian areas, and that ICP has not proved that, had TDHCA not set aside any tax credits for elderly-only developments, the racial disparity would have been lessened.
ICP has not proved that TDHCA’s use of set-asides or other allocation of LIHTC for elderly-only units has caused a statistically-significant disparity, and it has not proved how tax credits for elderly-only units in Caucasian areas contributes to racial disparity in housing. To the extent ICP asks the court to require that TDHCA implement a new set-aside for applications for family units in Caucasian areas, such a remedy is not constitutionally sound, does not eliminate an offending practice, and may result in the use of racial quotas. See ICP VI, 135 S.Ct. at 2524.
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5 Finally, ICP maintains that TDHCA has used its discretion to approve projects located in areas of slum and blight, with high crime rates, adverse environmental conditions, and where there is a high concentration of LIHTC units. TDHCA responds that ICP’s concerns are exaggerated, and that ICP has not demonstrated that the decision to approve projects in certain areas causes a statistically-significant disparity. ICP has not established that TDHCA’s approval of projects in areas of slum and blight caused a racially disparate impact, and ICP does not seek a constitutionally-permissible remedy. ICP does not seek to restrict TDHCA’s discretion or to remove a challenged policy; instead, ICP asks the court to preclude the TDHCA from granting tax credits for developments in areas with certain conditions. For the reasons explained supra at § IV(A)(2), the court declines to grant such remedy.
V The court turns next to the question whether ICP has proved a prima facie case of disparate impact with respect to the allocation of 4% tax credits.
A ICP contends that TDHCA exercised its discretion to implement specific discretionary policies, practices, and decisions affecting the allocation of 4% tax credits, and that the exercise of discretion caused the perpetuation of racial segregation. According to ICP, TDHCA consistently used its discretion to approve applications for 4% tax credits for units in minority areas that maintained racial disparity across the Dallas metropolitan area, already
- 28 -

had a high concentration of LIHTC units, and were plagued by slum and blight. ICP complains that, once in 1999 and once in 2003, the TDHCA exercised its discretion and denied applications for 4% tax credits for projects located in Caucasian tracts in the Dallas metropolitan area for reasons that were not applied to applications for 4% tax credits for similar projects located in minority areas. ICP maintains that TDHCA’s exercise of discretion resulted in the approval of 4% tax credits for 4,896 of the 7,283 units in minority areas in the City of Dallas.
TDHCA responds that discretion in and of itself is not a specific policy sufficient to prove disparate impact based on a violation of the FHA; each decision to approve or deny a tax credit is the result of numerous individual policy decisions, many of which are outside TDHCA’s control; the 4% tax credit program is not oversubscribed, and ICP has not alleged that TDHCA approved a 4% tax credit for a project in a minority area that required it to deny a 4% tax credit for a project in a Caucasian area; ICP only identifies two projects for which TDHCA denied applications for 4% tax credits over a span of 17 years; and ICP has not acknowledged that, unless developers seek 4% tax credits for projects in Caucasian areas, TDHCA cannot allocate such credits.
ICP replies that TDHCA perpetuated racial segregation by using its discretion to approve applications for 4% tax credits in minority areas with undesirable site conditions, and by denying two applications for 4% tax credits for projects in Caucasian areas.
- 29 -

B Even assuming arguendo that ICP has proved that TDHCA had a facially neutral policy or practice in allocating 4% tax credits—the use of discretion in the allocation of 4% tax credits—ICP has not proved that TDHCA’s exercise of discretion caused a statisticallysignificant disparity in the location of low-income housing. ICP maintains that TDHCA in its discretion denied the applications of two projects for 4% credits, even though the projects met the stated criteria for approval. In 1999, TDHCA rejected an application for 4% credits for the Treymore at Duck Creek, a project in a Caucasian tract in Garland, Texas. TDHCA’s stated reasons for the denial were the “desires of the elected officials of the City of Garland,” i.e., that Garland had sufficient lowincome housing and did not need additional units. ICP casts doubt on the TDHCA’s stated reason and alleges that the following year, TDHCA approved an application for 4% tax credits for a low-income housing development in a minority tract in Garland. In 2003, TDHCA exercised its discretion to deny an application for 4% tax credits for the Primrose at Stonebrook, a housing development in Frisco, Texas. The Stonebrook was a proposed development of three-bedroom units located in a Caucasian area in Frisco, and TDHCA denied the project because it lacked diversity in the type of units. ICP argues that TDHCA’s proffered reason is pretextual because TDHCA waived unit-mix requirements for other applications and approved other developments containing only three- or four-bedroom units. ICP has not satisfied the robust causality requirement of ICP VI. See ICP VI, 135
- 30 -

S.Ct. at 2523. ICP states, without explanation or supporting evidence, that TDHCA’s discretion in awarding 4% credits has resulted in the approval of 4,896 of the 7,283 units for 4% tax credits located in minority areas in the Dallas metropolitan area. Although ICP states that “TDHCA did consistently use its discretion to approve 4% application[s] for units in minority areas that maintained the racial segregation,” ICP 1/7/16 Prima Facie Br. at 42, ICP does not explain how TDHCA’s exercise of discretion in denying two applications over a 17year period has maintained racial segregation.
ICP has not established that TDHCA’s denial of two applications over a 17-year period is a “policy” that can cause a disparate impact. See, e.g., ICP VI, 135 S.Ct. at 2523 (noting that a “one-time decision may not be a policy at all”). Nor has ICP proved that TDHCA’s denial of two applications for 4% tax credits over that time period has caused any statistically-significant disparity in the location of low-income housing.
ICP has also failed to prove that factors other than TDHCA’s discretion—such as developers’ preferences for building projects in certain areas, local and state laws, and the expressed needs of communities and local officials—have not caused or contributed to any disparity in the location of housing developments receiving 4% tax credits. Because TDHCA has approved the vast majority of applications for 4% tax credits since 1999, any disparity is likely caused by factors other than TDHCA’s exercise of discretion.
- 31 -

* * * For the reasons explained, the court finds and concludes that ICP has failed to prove a prima facie case of discrimination by showing that a challenged practice caused a discriminatory effect, as defined by 24 C.F.R. § 100.500(a). Accordingly, the court dismisses ICP’s disparate impact claim and enters judgment today in favor of defendants. August 26, 2016.
_________________________________ SIDNEY A. FITZWATER UNITED STATES DISTRICT JUDGE
- 32 -

 
 U.S. District Court Northern District of Texas (Dallas) CIVIL DOCKET FOR CASE #: 3:08-cv-00546-D

The Inclusive Communities Project Inc v. Texas Department of Housing and Community Affairs et al Assigned to: Chief Judge Sidney A Fitzwater Case in other court: 12-11211
12-11211 13-10306 Cause: 42:1981 Housing Discrimination

Date Filed: 03/28/2008 Date Terminated: 08/26/2016 Jury Demand: None Nature of Suit: 443 Civil Rights: Housing/Accommodations Jurisdiction: Federal Question

Plaintiff
The Inclusive Communities Project Inc

represented by Michael M Daniel Daniel & Beshara PC 3301 Elm Street Dallas, TX 75226-1637 214-939-9230 Fax: 214-939-9229 Email: daniel.michael@att.net LEAD ATTORNEY ATTORNEY TO BE NOTICED

Laura Beth Beshara Daniel & Beshara PC 3301 Elm Street Dallas, TX 75226-1637 214-939-9230 Fax: 214-939-9229 Email: laurabeshara@swbell.net ATTORNEY TO BE NOTICED

V.

Defendant

Texas Department of Housing represented by G Tomas Rhodus

and Community Affairs

Gray Reed & McGraw, P.C.

1601 Elm St

Suite 4600

Dallas, TX 75201

214-954-4135

Fax: 214-953-1332

Email: trhodus@grayreed.com

LEAD ATTORNEY

ATTORNEY TO BE NOTICED
Beth Klusmann Office of the Texas Attorney General PO Box 12548 Austin, TX 78711 512/936-1914 Fax: 512/474-2697 Email: beth.klusmann@texasattorneygeneral.gov ATTORNEY TO BE NOTICED
David Cameron Gair Gray Reed & McGraw PC 1601 Elm St Suite 4600 Dallas, TX 75201 214-954-4135 Fax: 214-953-1331 Email: dgair@grayreed.com ATTORNEY TO BE NOTICED
James D MacIntyre Looper Reed & McGraw 1601 Elm St Suite 4600 Dallas, TX 75201 214/237-6348 Fax: 214/953-1332 Email: jmacintyre@lrmlaw.com ATTORNEY TO BE NOTICED
James Beau Eccles Attorney General of Texas General Litigation Div -019 PO Box 12548 Capitol Station Austin, TX 78711-2548 512/463-2100 Fax: 512/320-0667 FAX Email: beau.eccles@texasattorneygeneral.gov ATTORNEY TO BE NOTICED
Jonathan F Mitchell 106 East Sixth Street

Suite 900 Austin, TX 78701 512-686-3940 Fax: 512-686-3941 Email: jonathan@mitchell.law TERMINATED: 01/20/2015
Maria Amelia Calaf Office of the Attorney General of Texas PO Box 12548 Austin, TX 78711-2548 512/475-4058 Fax: 512/320-0667 Email: maria.calaf@texasattorneygeneral.gov ATTORNEY TO BE NOTICED
Michael C Kelsheimer Gray Reed & McGraw PC 1601 Elm Street, Suite 4600 Dallas, TX 75201 214-954-4135 Fax: 214-953-1332 Email: mkelsheimer@grayreed.com
Nancy K Juren Attorney General of Texas General Litigation Div -019 PO Box 12548 Capitol Station Austin, TX 78711-2548 512/463-2100 Fax: 512/320-0667 FAX Email: nancy.juren@texasattorneygeneral.gov TERMINATED: 10/15/2015
Shelley Dahlberg Office of the Texas Attorney General PO Box 12548 Capitol Station Austin, TX 78711-2548 512/463-2120 Email: shelley.dahlberg@TexasAttorneyGeneral.gov ATTORNEY TO BE NOTICED

Defendant Michael Gerber

Timothy Earl Bray Office of the Texas Attorney General PO Box 12548 Capitol Station Austin, TX 78711-2548 512/463-2120 Fax: 512/320-0667 Email: tim.bray@texasattorneygeneral.gov ATTORNEY TO BE NOTICED
William B Chaney Gray Reed & McGraw LLP 1601 Elm St Suite 4600 Dallas, TX 75201 214-954-4135 Fax: 214-953-1332 Email: wchaney@grayreed.com ATTORNEY TO BE NOTICED
Scott A Keller Office of the Attorney General 209 West 14th St. 7th Floor (MC 059) Austin, TX 78701 512-936-1700 Fax: 512-474-2697 Email: scott.keller@texasattorneygeneral.gov ATTORNEY TO BE NOTICED
represented by G Tomas Rhodus (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Beth Klusmann (See above for address) ATTORNEY TO BE NOTICED
David Cameron Gair (See above for address) ATTORNEY TO BE NOTICED
James D MacIntyre (See above for address)

Defendant Leslie Bingham-Escareno

ATTORNEY TO BE NOTICED
James Beau Eccles (See above for address) ATTORNEY TO BE NOTICED
Jonathan F Mitchell (See above for address) TERMINATED: 01/20/2015
Maria Amelia Calaf (See above for address) ATTORNEY TO BE NOTICED
Nancy K Juren (See above for address) TERMINATED: 10/15/2015
Shelley Dahlberg (See above for address) ATTORNEY TO BE NOTICED
Timothy Earl Bray (See above for address) ATTORNEY TO BE NOTICED
William B Chaney (See above for address) ATTORNEY TO BE NOTICED
Scott A Keller (See above for address) ATTORNEY TO BE NOTICED
represented by G Tomas Rhodus (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
James Beau Eccles (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Beth Klusmann

Defendant Tomas Cardenas

(See above for address) ATTORNEY TO BE NOTICED
David Cameron Gair (See above for address) ATTORNEY TO BE NOTICED
James D MacIntyre (See above for address) ATTORNEY TO BE NOTICED
Jonathan F Mitchell (See above for address) TERMINATED: 01/20/2015
Maria Amelia Calaf (See above for address) ATTORNEY TO BE NOTICED
Nancy K Juren (See above for address) TERMINATED: 10/15/2015
Shelley Dahlberg (See above for address) ATTORNEY TO BE NOTICED
Timothy Earl Bray (See above for address) ATTORNEY TO BE NOTICED
William B Chaney (See above for address) ATTORNEY TO BE NOTICED
Scott A Keller (See above for address) ATTORNEY TO BE NOTICED
represented by G Tomas Rhodus (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Beth Klusmann

Defendant C Kent Conine

(See above for address) ATTORNEY TO BE NOTICED
David Cameron Gair (See above for address) ATTORNEY TO BE NOTICED
James D MacIntyre (See above for address) ATTORNEY TO BE NOTICED
James Beau Eccles (See above for address) ATTORNEY TO BE NOTICED
Jonathan F Mitchell (See above for address) TERMINATED: 01/20/2015
Maria Amelia Calaf (See above for address) ATTORNEY TO BE NOTICED
Nancy K Juren (See above for address) TERMINATED: 10/15/2015
Shelley Dahlberg (See above for address) ATTORNEY TO BE NOTICED
Timothy Earl Bray (See above for address) ATTORNEY TO BE NOTICED
William B Chaney (See above for address) ATTORNEY TO BE NOTICED
Scott A Keller (See above for address) ATTORNEY TO BE NOTICED
represented by G Tomas Rhodus (See above for address)

LEAD ATTORNEY ATTORNEY TO BE NOTICED
Beth Klusmann (See above for address) ATTORNEY TO BE NOTICED
David Cameron Gair (See above for address) ATTORNEY TO BE NOTICED
James D MacIntyre (See above for address) ATTORNEY TO BE NOTICED
James Beau Eccles (See above for address) ATTORNEY TO BE NOTICED
Jonathan F Mitchell (See above for address) TERMINATED: 01/20/2015
Maria Amelia Calaf (See above for address) ATTORNEY TO BE NOTICED
Nancy K Juren (See above for address) TERMINATED: 10/15/2015
Shelley Dahlberg (See above for address) ATTORNEY TO BE NOTICED
Timothy Earl Bray (See above for address) ATTORNEY TO BE NOTICED
William B Chaney (See above for address) ATTORNEY TO BE NOTICED
Scott A Keller (See above for address) ATTORNEY TO BE NOTICED

Defendant
Dionicio Vidal Flores Sonny

represented by G Tomas Rhodus (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Beth Klusmann (See above for address) ATTORNEY TO BE NOTICED
David Cameron Gair (See above for address) ATTORNEY TO BE NOTICED
James D MacIntyre (See above for address) ATTORNEY TO BE NOTICED
James Beau Eccles (See above for address) ATTORNEY TO BE NOTICED
Jonathan F Mitchell (See above for address) TERMINATED: 01/20/2015
Maria Amelia Calaf (See above for address) ATTORNEY TO BE NOTICED
Nancy K Juren (See above for address) TERMINATED: 10/15/2015
Shelley Dahlberg (See above for address) ATTORNEY TO BE NOTICED
Timothy Earl Bray (See above for address) ATTORNEY TO BE NOTICED
William B Chaney (See above for address) ATTORNEY TO BE NOTICED

Defendant Juan Sanchez Munoz

Scott A Keller (See above for address) ATTORNEY TO BE NOTICED
represented by G Tomas Rhodus (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Beth Klusmann (See above for address) ATTORNEY TO BE NOTICED
David Cameron Gair (See above for address) ATTORNEY TO BE NOTICED
James D MacIntyre (See above for address) ATTORNEY TO BE NOTICED
James Beau Eccles (See above for address) ATTORNEY TO BE NOTICED
Jonathan F Mitchell (See above for address) TERMINATED: 01/20/2015
Maria Amelia Calaf (See above for address) ATTORNEY TO BE NOTICED
Nancy K Juren (See above for address) TERMINATED: 10/15/2015
Shelley Dahlberg (See above for address) ATTORNEY TO BE NOTICED
Timothy Earl Bray (See above for address) ATTORNEY TO BE NOTICED

Defendant
Gloria L Ray in their official capcities

William B Chaney (See above for address) ATTORNEY TO BE NOTICED
Scott A Keller (See above for address) ATTORNEY TO BE NOTICED
represented by G Tomas Rhodus (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Beth Klusmann (See above for address) ATTORNEY TO BE NOTICED
David Cameron Gair (See above for address) ATTORNEY TO BE NOTICED
James D MacIntyre (See above for address) ATTORNEY TO BE NOTICED
James Beau Eccles (See above for address) ATTORNEY TO BE NOTICED
Jonathan F Mitchell (See above for address) TERMINATED: 01/20/2015
Maria Amelia Calaf (See above for address) ATTORNEY TO BE NOTICED
Nancy K Juren (See above for address) TERMINATED: 10/15/2015
Shelley Dahlberg (See above for address) ATTORNEY TO BE NOTICED

Intervenor Frazier Revitalization Inc.

Timothy Earl Bray (See above for address) ATTORNEY TO BE NOTICED
William B Chaney (See above for address) ATTORNEY TO BE NOTICED
Scott A Keller (See above for address) ATTORNEY TO BE NOTICED
represented by Brent M Rosenthal Rosenthal Weiner LLP 12221 Merit Dr. Suite 1640 Dallas, TX 75251 214-871-6602 Fax: 214-871-6640 Email: brent@rosenthalweiner.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Janice Pennington Rosenthal Pennington LLP 6116 N Central Expy Suite 301 Dallas, TX 75206-5153 214/453-2500 Fax: 214/453-2510

Date Filed 03/28/20 08
03/28/20 08 03/28/20 08

# Docket Text
1 COMPLAINT against Texas Department of Housing and Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray filed by The Inclusive Communities Project Inc. (Filing fee $350; Receipt number 20522) (npk) (Entered: 03/31/2008)
2 CERTIFICATE OF INTERESTED PERSONS/DISCLOSURE STATEMENT by The Inclusive Communities Project Inc. (npk) (Entered: 03/31/2008)
3 Summons Issued as to Texas Department of Housing and Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine,

Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray. (npk) (Entered: 03/31/2008)

03/31/20 4 Order Designating Case for ECF - see order for specifics. (Signed by Judge

08

Sidney A Fitzwater on 3/31/08) (npk) (Entered: 03/31/2008)

05/22/20 08

5 Unopposed Motion for Extension of Time to File Answer to Plaintiff's Original Complaint filed by Texas Department of Housing and Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray (Attachments: # 1 Text of Proposed Order) (Bray, Timothy) (Entered: 05/22/2008)

05/22/20 08

6 ORDER granting 5 Motion for Extension of Time to File Answer. Texas Department of Housing and Community Affairs answer due 6/30/2008; Michael Gerber answer due 6/30/2008; Leslie Bingham-Escareno answer due 6/30/2008; Tomas Cardenas answer due 6/30/2008; C Kent Conine answer due 6/30/2008; Dionicio Vidal Flores answer due 6/30/2008; Juan Sanchez Munoz answer due 6/30/2008; Gloria L Ray answer due 6/30/2008. (Signed by Judge Sidney A Fitzwater on 5/22/08) (tln) (Entered: 05/22/2008)

06/24/20 7 WAIVER OF SERVICE Returned Executed as to Michael Gerber. Waiver

08

sent on 3/31/2008. (Daniel, Michael) (Entered: 06/24/2008)

06/24/20 8 WAIVER OF SERVICE Returned Executed as to Tomas Cardenas. Waiver

08

sent on 3/31/2008. (Daniel, Michael) (Entered: 06/24/2008)

06/24/20 9 WAIVER OF SERVICE Returned Executed as to Leslie Bingham-Escareno.

08

Waiver sent on 3/31/2008. (Daniel, Michael) (Entered: 06/24/2008)

06/24/20 10 WAIVER OF SERVICE Returned Executed as to Juan Sanchez Munoz.

08

Waiver sent on 3/31/2008. (Daniel, Michael) (Entered: 06/24/2008)

06/24/20 11 WAIVER OF SERVICE Returned Executed as to Gloria L Ray. Waiver sent

08

on 3/31/2008. (Daniel, Michael) (Entered: 06/24/2008)

06/24/20 12 WAIVER OF SERVICE Returned Executed as to Dionicio Vidal Flores.

08

Waiver sent on 3/31/2008. (Daniel, Michael) (Entered: 06/24/2008)

06/24/20 13 WAIVER OF SERVICE Returned Executed as to C Kent Conine. Waiver sent

08

on 3/31/2008. (Daniel, Michael) (Entered: 06/24/2008)

06/27/20 14 MOTION to Dismiss filed by Texas Department of Housing and Community

08

Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent

Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray with

Brief/Memorandum in Support. (Attachments: # 1 Text of Proposed Order)

(Bray, Timothy) (Entered: 06/27/2008)

07/01/20 15 ORDER: On June 27, 2008 defendants filed an initial responsive pleading in

08

this case but did not provide the clerk with a certificate of interested persons.

Accordingly, no later than 20 days after this order is filed, defendants must comply with Rules 7.4 and 3.1(f) so that the court can ensure that recusal is not required in this case. (Signed by Judge Sidney A Fitzwater on 7/1/208) (axm) (Entered: 07/02/2008)

07/01/20 16 Order for Scheduling Order Proposal: Proposed Scheduling Order due by

08

7/31/2008. (Signed by Judge Sidney A Fitzwater on 7/1/2008) (axm) (Entered:

07/02/2008)

07/02/20 17 CERTIFICATE OF INTERESTED PERSONS/DISCLOSURE STATEMENT

08

by Texas Department of Housing and Community Affairs, Michael Gerber,

Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal

Flores, Juan Sanchez Munoz, Gloria L Ray. (Bray, Timothy) (Entered:

07/02/2008)

07/17/20 18 RESPONSE in Opposition filed by The Inclusive Communities Project Inc

08

re 14 MOTION to Dismiss (Daniel, Michael) (Entered: 07/17/2008)

07/17/20 19 Appendix in Support filed by The Inclusive Communities Project Inc

08

re 18 Response in Opposition to Motion to Dismiss. (Daniel, Michael)

Modified on 7/18/2008 (jyg). (Entered: 07/17/2008)

07/31/20 20 Joint Proposal for contents of scheduling and discovery order by The Inclusive

08

Communities Project Inc, Texas Department of Housing and Community

Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent

Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray. (Daniel,

Michael) Modified on 7/31/2008 (lmp). (Entered: 07/31/2008)

08/05/20 21 SCHEDULING ORDER: Joinder of Parties due by 12/1/2008. Amended

08

Pleadings due by 6/1/2009. Discovery due by 7/1/2009. Status Report due by

7/1/2009. Motions due by 8/1/2009. The court will set the case for trial by

separate order. (Signed by Judge Sidney A Fitzwater on 8/5/2008) (axm)

(Entered: 08/05/2008)

08/27/20 22 MOTION for Leave to File Supplemental Brief In Opposition To Motion To

08

Dismiss filed by The Inclusive Communities Project Inc (Daniel, Michael)

(Entered: 08/27/2008)

08/27/20 23 RESPONSE in Opposition filed by The Inclusive Communities Project Inc

08

re 14 MOTION to Dismiss. (Daniel, Michael) Modified on 8/29/2008 (tln).

(Entered: 08/27/2008)

08/28/20 24 ORDER granting 22 Unopposed Motion for Leave to File Supplemental Brief

08

and plaintiff's brief, filed prematurely on 8/27/2008 without leave of court, is

deemed properly filed. (Signed by Judge Sidney A Fitzwater on 8/28/08) (jyg)

(Entered: 08/28/2008)

12/11/20 25 Memorandum Opinion and Order denying 14 Defendants' Motion to Dismiss.

08

(see order) (Ordered by Chief Judge Sidney A Fitzwater on 12/11/2008) (axm)

(Entered: 12/11/2008)

03/11/20 26 ANSWER to 1 Complaint, filed by Texas Department of Housing and

09

Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas

Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria

L Ray (Bray, Timothy) (Entered: 03/11/2009)

04/07/20 27 TRIAL SETTING ORDER: Docket Call set on the court's two week docket

09

beginning 2/1/2010 before Chief Judge Sidney A Fitzwater. (see order)

(Ordered by Chief Judge Sidney A Fitzwater on 04/07/09) (lmp) (Entered:

04/08/2009)

06/12/20 28 First MOTION to Amend/Correct Scheduling Order filed by Texas

09

Department of Housing and Community Affairs, Michael Gerber, Leslie

Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores,

Juan Sanchez Munoz, Gloria L Ray (Attachments: # 1 Text of Proposed

Order) (Bray, Timothy) (Entered: 06/12/2009)

06/17/20 29 RESPONSE in Opposition filed by The Inclusive Communities Project Inc

09

re 28 First MOTION to Amend/Correct Scheduling Order (Daniel, Michael)

(Entered: 06/17/2009)

06/17/20 30 Appendix in Support filed by The Inclusive Communities Project Inc

09

re 29 Response in Opposition to Defendants' First Motion to Amend

Scheduling Order (Daniel, Michael) (Entered: 06/17/2009)

06/25/20 31 MOTION to Determine Sufficiency of Answers to Plaintiff's Requests for

09

Admissions filed by The Inclusive Communities Project Inc with

Brief/Memorandum in Support. (Daniel, Michael) (Entered: 06/25/2009)

06/25/20 32 Appendix in Support filed by The Inclusive Communities Project Inc

09

re 31 MOTION to Determine Sufficiency of Answers to Plaintiff's Requests

for Admissions (Daniel, Michael) (Entered: 06/25/2009)

06/25/20 33 MOTION to Compel Defendants' Answers to Plaintiff's Interrogatories filed

09

by The Inclusive Communities Project Inc with Brief/Memorandum in

Support. (Daniel, Michael) (Entered: 06/25/2009)

06/25/20 34 Appendix in Support filed by The Inclusive Communities Project Inc

09

re 33 MOTION to Compel Defendants' Answers to Plaintiff's

Interrogatories (Daniel, Michael) (Entered: 06/25/2009)

06/26/20 35 MOTION to Compel Production of Documents filed by The Inclusive

09

Communities Project Inc with Brief/Memorandum in Support. (Daniel,

Michael) (Entered: 06/26/2009)

06/26/20 36 Appendix in Support filed by The Inclusive Communities Project Inc

09

re 35 MOTION to Compel Production of Documents (Daniel, Michael)

(Entered: 06/26/2009)

06/29/20 37 ORDER REFERRING 31 Motion to Determine Sufficiency of Answers to

09

Plaintiff's Requests for Admissions filed by The Inclusive Communities

Project Inc, 33 Motion to Compel filed by The Inclusive Communities Project

Inc. Motion(s) referred to Magistrate Judge Irma C Ramirez. (see order)

(Ordered by Chief Judge Sidney A Fitzwater on 06/29/09) (lmp) (Entered:

06/29/2009)

06/29/20 38 MOTION for Protective Order filed by Texas Department of Housing and

09

Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas

Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria

L Ray (Attachments: # 1 Exhibit 1, # 2 Text of Proposed Order) (Bray,

Timothy) Modified on 7/13/2009 (svc). (Entered: 06/29/2009)

06/29/20 39 ORDER OF REFERENCE REFERRING 35 Motion to Compel Production of

09

Documents filed by The Inclusive Communities Project Inc. Motion(s)

referred to Magistrate Judge Irma C Ramirez. (See Order) (Ordered by Chief

Judge Sidney A Fitzwater on 6/29/09) (skt) (Entered: 06/30/2009)

06/30/20 40 ORDER: The parties to the instant dispute are ordered to meet face-to-face.

09

(see order) (Ordered by Magistrate Judge Irma C Ramirez on 6/30/2009)

(axm) (Entered: 06/30/2009)

07/01/20 41 Joint Estimate of Trial Length and Report on Settlement Status filed by The

09

Inclusive Communities Project Inc, Texas Department of Housing and

Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas

Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria

L Ray. (Daniel, Michael) (Entered: 07/01/2009)

07/07/20 42 ***VACATED per 7/10/09 ORDER*** ORDER granting 38 Motion for

09

Protective Order. (see order for specifics) (Ordered by Chief Judge Sidney A

Fitzwater on 7/7/09) (tln) Modified on 7/13/2009 (svc). (Entered: 07/08/2009)

07/08/20 43 MOTION to Set Aside 42 Order on Motion for Protective Order filed by The

09

Inclusive Communities Project Inc with Brief/Memorandum in Support.

(Daniel, Michael) (Entered: 07/08/2009)

07/08/20 44 Appendix in Support filed by The Inclusive Communities Project Inc

09

re 43 MOTION to Set Aside 42 Order on Motion for Protective Order (Daniel,

Michael) (Entered: 07/08/2009)

07/09/20 45 RESPONSE filed by Texas Department of Housing and Community Affairs,

09

Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine,

Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray re 43 MOTION to

Set Aside 42 Order on Motion for Protective Order (Bray, Timothy) (Entered:

07/09/2009)

07/13/20 46 ORDER AND ORDER OF REFERENCE granting 42 Motion to Set Aside on

09

Defendants' Motion for Protective Order. The Court refers 38 Motion for

Protective Order to United States Magistrate Judge Irma Carrillo Ramirez for

determination. (See Order for specifics) (Ordered by Chief Judge Sidney A

Fitzwater on 7/13/09) (skt) (Entered: 07/13/2009)

07/14/20 47 ORDER: Defendant's Motion for Protective Order, filed June 29, 2009 (doc.

09

38), has been referred to this Court for hearing, if necessary, and for

determination. The parties to the instant dispute are hereby ORDERED to

meet face-to-face to fully confer on each of the items in dispute. (see order)

(Ordered by Magistrate Judge Irma C Ramirez on 07/14/09) (lmp) (Entered:

07/15/2009)

07/15/20 48 Joint Submission on Plaintiff's MOTION to Compel Defendants' Answers to

09

Plaintiff's Interrogatories re 40 Order filed by The Inclusive Communities

Project Inc, Texas Department of Housing and Community Affairs, Michael

Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio

Vidal Flores, Juan Sanchez Munoz, Gloria L Ray (Daniel, Michael) Modified

on 7/16/2009 (axm). (Entered: 07/15/2009)

07/15/20 49 Joint Submission Concerning Plaintiff's MOTION to Compel Production of

09

Documents re 40 Order filed by The Inclusive Communities Project Inc, Texas

Department of Housing and Community Affairs, Michael Gerber, Leslie

Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores,

Juan Sanchez Munoz, Gloria L Ray (Daniel, Michael) (Entered: 07/15/2009)

07/15/20 50 Joint Submission on Plaintiff's Motion to Deem Requests for Admissions

09

Admitted re 40 Order filed by The Inclusive Communities Project Inc, Texas

Department of Housing and Community Affairs, Michael Gerber, Leslie

Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores,

Juan Sanchez Munoz, Gloria L Ray (Daniel, Michael) Modified on 7/16/2009

(axm). (Entered: 07/15/2009)

07/15/20 51 AGREED ORDER CONCERNING PLAINTIFF'S 33 Motion to Compel

09

Defendants' Answers to Plaintiff's Interrogatories. (see order) (Ordered by

Magistrate Judge Irma C Ramirez on 07/15/09) (lmp) Modified on 7/22/2009

(lmp). (Entered: 07/16/2009)

07/15/20 52 AGREED ORDER re 35 Motion to to Compel Production of Documents. (see

09

order) (Ordered by Magistrate Judge Irma C Ramirez on 07/15/09) (lmp)

Modified on 7/22/2009 (lmp). (Entered: 07/16/2009)

07/15/20 53 AGREED ORDER on Plaintiffs Motion to Deem Requests for Admissions

09

Admitted re 31 MOTION to Determine Sufficiency of Answers to Plaintiff's

Requests for Admissions. (see order) (Ordered by Magistrate Judge Irma C

Ramirez on 07/15/09) (lmp) Modified on 7/22/2009 (lmp). (Entered:

07/16/2009)

07/15/20 54 ORDER: Set Deadlines as to 31 Motion to Determine Sufficiency of Answers

09

to Plaintiff's Requests for Admissions, 33 Motion to Compel, 35 Motion to

Compel. Motion Hearing set for 7/22/2009 09:00 AM before Magistrate Judge

Irma C Ramirez. (see order) (Ordered by Magistrate Judge Irma C Ramirez on

07/15/09) (lmp) Modified on 7/22/2009 (lmp). (Entered: 07/16/2009)

07/22/20 09

Minute Entry for proceedings held before Magistrate Judge Irma C Ramirez: Motion Hearing held on 7/22/09 re 31Motion for Miscellaneous Relief filed by The Inclusive Communities Project Inc, 35 Motion to Compel filed by The Inclusive Communities Project Inc, 33 Motion to Compel filed by The Inclusive Communities Project Inc. Attorney Appearances: Plaintiff - Michael Daniel, Kevin Hamby; Laura Beshara; Defense - Timothy Bray.(Digital File) Time in Court: 50 minutes. NO PDF ATTACHED - THIS IS A VIRTUAL MINUTE ENTRY. (lmm) (Entered: 07/22/2009)

07/22/20 55 ORDER granting in part 31 Motion to Determine Sufficiency of Answers to

09

Plaintiff's Requests for Admissions; Granting in part 33 MOTION to Compel

Defendants' Answers to Plaintiff's Interrogatories; granting 35 MOTION to

Compel Production of Documents. All relief not expressly awarded herein is

hereby denied. See Order (Ordered by Magistrate Judge Irma C Ramirez on

7/22/09) (svc) (Entered: 07/22/2009)

07/23/20 56 AGREED ORDER CONCERNING DEFENDANTS' MOTION FOR

09

PROTECTIVE ORDER. (see order for specifics) (Ordered by Magistrate

Judge Irma C Ramirez on 7/23/09) (tln) (Entered: 07/23/2009)

07/27/20 57 ORDER denying 28 First Motion to Amend Scheduling Order without

09

prejudice. (See Order for specifics) (Ordered by Chief Judge Sidney A

Fitzwater on 7/27/2009) (skt) (Entered: 07/27/2009)

08/03/20 58 MOTION to Extend Time Scheduling Order filed by The Inclusive

09

Communities Project Inc with Brief/Memorandum in Support. (Daniel,

Michael) (Entered: 08/03/2009)

08/04/20 59 Defendants' Statement of No Opposition to Plaintiff's 58 Motion for

09

Amendment of Scheduling Order by Defendants Texas Department of

Housing and Community Affairs, Michael Gerber, Leslie Bingham-Escareno,

Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez

Munoz, Gloria L Ray. (Bray, Timothy) Modified on 8/5/2009 (skt). (Entered:

08/04/2009)

08/13/20 60 ORDER granting 58 Plaintiff's Motion for Amendment of Scheduling Order.

09

(see order) (Ordered by Chief Judge Sidney A Fitzwater on 8/13/2009) (klm)

(Entered: 08/13/2009)

08/14/20 61 NOTICE of Appearance and Designation of Lead Counsel filed by Texas

09

Department of Housing and Community Affairs, Michael Gerber, Leslie

Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray (Bray, Timothy) (Entered: 08/14/2009)

08/14/20 62 NOTICE of Attorney Appearance by Michael C Kelsheimer for William B.

09

Chaney, G. Tomas Rhodus on behalf of Texas Department of Housing and

Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas

Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria

L Ray. (Kelsheimer, Michael) Modified on 8/17/2009 (tln). (Entered:

08/14/2009)

08/14/20 63 Supplemental MOTION to Amend/Correct Scheduling Order filed by Texas

09

Department of Housing and Community Affairs, Gloria L Ray, Juan Sanchez

Munoz, Michael Gerber, Dionicio Vidal Flores, C Kent Conine, Tomas

Cardenas, Leslie Bingham-Escareno with Brief/Memorandum in Support.

(Kelsheimer, Michael) Modified on 8/17/2009 (tln). (Entered: 08/14/2009)

08/24/20 64 RESPONSE filed by The Inclusive Communities Project Inc

09

re 63 Supplemental MOTION to Amend/Correct Scheduling Order (Daniel,

Michael) (Entered: 08/24/2009)

10/02/20 65 MOTION for Summary Judgment filed by The Inclusive Communities Project

09

Inc (Daniel, Michael) (Entered: 10/02/2009)

10/02/20 66 Brief/Memorandum in Support filed by The Inclusive Communities Project

09

Inc re 65 MOTION for Summary Judgment (Daniel, Michael) (Entered:

10/02/2009)

10/02/20 67 Appendix in Support filed by The Inclusive Communities Project Inc

09

re 66 Brief/Memorandum in Support of Motion (Attachments: # 1 Appendix

Pages 61 - 80, # 2 Appendix Pages 81 - 105, # 3 Appendix Pages 106 - 250,

# 4 Appendix Pages 251 - 782, # 5 Appendix Pages 783 - 1475, # 6 Appendix

Pages 1476 - 1821) (Daniel, Michael) (Entered: 10/02/2009)

10/02/20 68 MOTION for Judgment on the pleadings filed by Texas Department of

09

Housing and Community Affairs, Michael Gerber, Leslie Bingham-Escareno,

Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez

Munoz, Gloria L Ray (MacIntyre, James) (Entered: 10/02/2009)

10/02/20 69 Brief/Memorandum in Support filed by Texas Department of Housing and

09

Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas

Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria

L Ray re 68MOTION for Judgment on the pleadings (MacIntyre, James)

(Entered: 10/02/2009)

10/02/20 70 MOTION for Summary Judgment filed by Texas Department of Housing and

09

Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas

Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria

L Ray with Brief/Memorandum in Support. (MacIntyre, James) (Entered:

10/02/2009)

10/02/20 71 Appendix in Support filed by Texas Department of Housing and Community

09

Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent

Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray

re 68 MOTION for Judgment on the pleadings, 70 MOTION for Summary

Judgment (Attachments: # 1 Appendix Part 2, # 2 Appendix Part 3,

# 3 Appendix Part 4) (MacIntyre, James) (Entered: 10/02/2009)

10/20/20 72 ORDER granting 63 supplemental motion to amend scheduling order. Within

09

30 days of the date this memorandum opinion and order is filed, defendants

may take the Fed. R. Civ. P. 30(b)(6) deposition of plaintiff Inclusive

Communities Project, Inc. and designate expert witnesses and otherwise

comply with Rule 26(a)(2) (Ordered by Chief Judge Sidney A Fitzwater on

10/20/09) (Chief Judge Sidney A Fitzwater) (Entered: 10/20/2009)

10/22/20 73 RESPONSE in Opposition filed by The Inclusive Communities Project Inc

09

re 70 MOTION for Summary Judgment (Daniel, Michael) (Entered:

10/22/2009)

10/22/20 74 RESPONSE in Opposition filed by The Inclusive Communities Project Inc

09

re 73 Response in Opposition Brief in Opposition to the Defendants' Motion

for Summary Judgment (Daniel, Michael) (Entered: 10/22/2009)

10/22/20 75 Appendix in Support filed by The Inclusive Communities Project Inc

09

re 74 Response in Opposition ICP's Appendix in Opposition to Defendants'

Motion for Summary Judgment (Attachments: # 1 Appendix 128-185,

# 2 Appendix Pages 186-200, # 3 Appendix Pages 201-213, # 4 Appendix

Pages 214-225, # 5 Appendix Pages 226-317, # 6 Appendix Pages 318-407)

(Daniel, Michael) (Entered: 10/22/2009)

10/22/20 76 RESPONSE in Opposition filed by The Inclusive Communities Project Inc

09

re 68 MOTION for Judgment on the pleadings ICP's Brief in Opposition to

the Defendants' Motion for Judgment on the Pleadings (Daniel, Michael)

(Entered: 10/22/2009)

10/22/20 77 RESPONSE to 65 Motion for Partial Summary Judgment filed by Texas

09

Department of Housing and Community Affairs, Michael Gerber, Leslie

Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores,

Juan Sanchez Munoz, Gloria L Ray (Attachments: # 1 Appendix Appendix to

Defendants' Opposition to Plaintiffs' Motion for Partial Summary Judgment,

# 2 Appendix appendix part 1, # 3 Appendix appendix part 2, # 4 Appendix

appendix part 3, # 5 Appendix appendix part 4, # 6 Appendix appendix part 5,

# 7 Appendix appendix part 6, # 8 Appendix appendix part 7) (Rhodus, G)

(Entered: 10/22/2009)

11/06/20 78 ICP'S REPLY BRIEF IN SUPPORT OF 65 MOTION for Summary Judgment

09

filed by The Inclusive Communities Project Inc. (Daniel, Michael) Modified

on 11/9/2009 (mfw). (Entered: 11/06/2009)

11/06/20 79 Defendants' REPLY to Plaintiff's Brief in Response to re: 68 MOTION for

09

Judgment on the pleadings, 70 MOTION for Summary Judgment filed by

Texas Department of Housing and Community Affairs (Attachments:

# 1 Appendix Appendix to Defendants' Reply) (Rhodus, G) (Entered:

11/06/2009)

11/09/20 80 MOTION for Leave to File Supplemental Appendix on Issue of TDHCA

09

Immunity filed by The Inclusive Communities Project Inc with

Brief/Memorandum in Support. (Attachments: # 1 Appendix Plaintiff's

Supplemental Appendix on Issue of TDHCA Immunity) (Daniel, Michael)

(Entered: 11/09/2009)

11/12/20 81 Unopposed MOTION Modify Deadlines Set in October 20, 2009

09

Memorandum Opinion and Order filed by Texas Department of Housing and

Community Affairs, Leslie Bingham-Escareno, Tomas Cardenas, C Kent

Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria

Ray. (Rhodus, G) (Entered: 11/12/2009)

11/13/20 82 ORDER granting 81 Unopposed MOTION Modify Deadlines Set in October

09

20, 2009 Memorandum Opinion and Order (see order for specifics). (Ordered

by Chief Judge Sidney A Fitzwater on 11/13/09) (Chief Judge Sidney A

Fitzwater) (Entered: 11/13/2009)

11/20/20 83 NOTICE of Withdrawal off 11th Amendment Claim filed by Texas Department

09

of Housing and Community Affairs (Rhodus, G) (Entered: 11/20/2009)

12/01/20 84 ***WITHDRAWN PER ORDER OF 12/22/09*** MOTION for Protective

09

Order filed by The Inclusive Communities Project Inc with

Brief/Memorandum in Support. (Daniel, Michael) Modified on 12/23/2009

(jrb). (Entered: 12/01/2009)

12/01/20 85 Appendix in Support filed by The Inclusive Communities Project Inc

09

re 84 MOTION for Protective Order (Daniel, Michael) (Entered: 12/01/2009)

12/02/20 86 ORDER REFERRING 84 Motion for Protective Order filed by The Inclusive

09

Communities Project Inc. Motion(s) referred to Magistrate Judge Irma C

Ramirez. (Ordered by Chief Judge Sidney A Fitzwater on 12/2/2009) (mfw)

(Entered: 12/02/2009)

12/07/20 87 ORDER setting deadlines as to 84 Motion for Protective Order. Responses due

09

by 12/18/2009. Motion Hearing set for 12/22/2009 10:00 AM before

Magistrate Judge Irma C Ramirez. (see order) (Ordered by Magistrate Judge

Irma C Ramirez on 12/7/2009) (tln) (Entered: 12/07/2009)

12/07/20 88 OBJECTION filed by Texas Department of Housing and Community Affairs

09

re: 84 MOTION for Protective Order (Rhodus, G) (Entered: 12/07/2009)

12/18/20 89 NOTICE of Attorney Appearance by G Tomas Rhodus for David C. Gair on

09

behalf of Texas Department of Housing and Community Affairs. (Rhodus, G)

(Entered: 12/18/2009)

12/22/20 09

Minute Entry for proceedings held before Magistrate Judge Irma C Ramirez: Motion Hearing held on 12/22/09 re 84Motion for Protective Order filed by The Inclusive Communities Project Inc. Attorney Appearances: Plaintiff Michael Daniel, Laura Beshara; Defense - Tom Rhodus, David Gair.(Digital File) Time in Court: 1 hour 3 minutes. NO PDF ATTACHED - THIS IS A VIRTUAL MINUTE ENTRY. (lmm) (Entered: 12/22/2009)

12/22/20 90 ORDER withdrawing 84 MOTION for Protective Order filed by The Inclusive

09

Communities Project. See Order (Ordered by Magistrate Judge Irma C

Ramirez on 12/22/2009) (svc) (Entered: 12/23/2009)

12/23/20 91 MOTION to Continue filed by The Inclusive Communities Project Inc with

09

Brief/Memorandum in Support. (Daniel, Michael) (Entered: 12/23/2009)

12/24/20 92 RESPONSE filed by Texas Department of Housing and Community Affairs,

09

Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine,

Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray re: 91MOTION to

Continue (Rhodus, G) (Entered: 12/24/2009)

12/30/20 93 ORDER granting 91 Motion to Continue. Plaintiff's December 23, 2009

09

motion for a continuance, which defendants do not oppose, is granted, and this

case is reset to the court's two-week civil docket of Monday, June 21, 2010.

(Ordered by Chief Judge Sidney A Fitzwater on 12/30/2009) (Chief Judge

Sidney A Fitzwater) (Entered: 12/30/2009)

12/30/20 09

Set/Reset Hearings: Case is reset to the court's two-week civil docket of Monday, June 21, 2010 before Chief Judge Sidney A Fitzwater. (see order/doc. 93 for specifics) (tln) (Entered: 12/30/2009)

01/14/20 94 Unopposed MOTION For Additional Briefing and Deposition Dates filed by

10

The Inclusive Communities Project Inc (Daniel, Michael) (Entered:

01/14/2010)

01/14/20 95 ORDER granting 94 Inclusive Communities' Unopposed MotionFor

10

Additional Briefing and Deposition Dates. (See order for specifics.) (Ordered

by Chief Judge Sidney A Fitzwater on 1/14/2010) (Chief Judge Sidney A

Fitzwater) (Entered: 01/14/2010)

01/19/20 96 NOTICE OF FILING OF OFFICIAL TRANSCRIPT of Motion for Protective

10

Order Proceedings held on Dec. 22, 2009 before Judge Irma Ramirez. Court

Reporter/Transcriber Betty Tate, Telephone number 972-596-9442. Parties are

notified of their duty to review the transcript. A copy may be purchased from

the court reporter or viewed at the clerk's office public terminal. If redaction is

necessary, a Redaction Request - Transcript must be filed within 21 days. If no

such Request is filed, the transcript will be made available via PACER without

redaction after 90 calendar days. If redaction request filed, this transcript will not be accessible via PACER; see redacted transcript. The clerk will mail a copy of this notice to parties not electronically noticed.. Redaction Request due 2/12/2010. Redacted Transcript Deadline set for 2/22/2010. Release of Transcript Restriction set for 4/22/2010. (Tate, Betty) (Entered: 01/19/2010)

02/10/20 97 Unopposed MOTION to Extend Time of Deadline for Deposition of Dr. Allan

10

Parnell filed by Texas Department of Housing and Community Affairs,

Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine,

Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray. (Attachments:

# 1 Exhibit Proposed Order) (Gair, David) Modified on 2/11/2010 (klm).

(Entered: 02/10/2010)

02/10/20 98 ELECTRONIC ORDER granting 97 Motion to Extend Time. Dr. Parnell's

10

deposition may be taken no later than February 19, 2010. (Ordered by Chief

Judge Sidney A Fitzwater on 2/10/2010) (Chief Judge Sidney A Fitzwater)

(Entered: 02/10/2010)

03/15/20 99 ELECTRONIC ORDER: The court approves the parties' agreement that

10

defendants' brief submitted with their supplemental opposition is limited to 15

countable pages (i.e., pages exclusive of cover pages, tables of content, tables

of authority, and appendixes). (Ordered by Chief Judge Sidney A Fitzwater on

3/15/2010) (Chief Judge Sidney A Fitzwater) (Entered: 03/15/2010)

03/15/20 10

10 RESPONSE filed by Texas Department of Housing and Community Affairs, 0 Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine,
Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray re: 65MOTION for Summary Judgment (Gair, David) (Entered: 03/15/2010)

03/15/20 10

10 Brief/Memorandum in Support filed by Texas Department of Housing and 1 Community Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas
Cardenas, C Kent Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray re 100Response/Objection, 65 MOTION for Summary Judgment (Gair, David) (Entered: 03/15/2010)

03/15/20 10

10 Appendix in Support filed by Texas Department of Housing and Community 2 Affairs, Michael Gerber, Leslie Bingham-Escareno, Tomas Cardenas, C Kent
Conine, Dionicio Vidal Flores, Juan Sanchez Munoz, Gloria L Ray re 100Response/Objection, 101 Brief/Memorandum in Support of Motion, 65 MOTION for Summary Judgment (Attachments: # 1 Appendix, # 2 Appendix, # 3 Appendix, # 4 Appendix, # 5 Appendix, # 6 Appendix, # 7 Appendix, # 8 Appendix, # 9 Appendix, # 10 Appendix, # 11 Appendix, # 12 Appendix, # 13 Appendix, # 14 Appendix, # 15Appendix) (Gair, David) (Entered: 03/15/2010)

04/05/20 10 REPLY filed by The Inclusive Communities Project Inc re: 65 MOTION for

10

3 Summary Judgment (Daniel, Michael) (Entered: 04/05/2010)

04/05/20 10 MOTION To File Supplemental Appendix on TDHCA'S Daubert Motion To

10

4 Strike Expert Reports filed by The Inclusive Communities Project Inc with

Brief/Memorandum in Support. (Daniel, Michael) (Entered: 04/05/2010)

04/05/20 10 Appendix in Support filed by The Inclusive Communities Project Inc

10

5 re 104 MOTION To File Supplemental Appendix on TDHCA'S Daubert

Motion To Strike Expert Reports (Daniel, Michael) (Entered: 04/05/2010)

04/16/20 10

10 NOTICE Defendant's Notice of Non-Opposition to Plaintiff's Motion to File 6 Supplemental Appendix on TDHCA's Daubert Motion to Strike Expert Reports
and Memorandum in Support of Motion re: 104 MOTION To File Supplemental Appendix on TDHCA'S Daubert Motion To Strike Expert Reports, 105 Appendix in Support filed by Texas Department of Housing and Community Affairs (Rhodus, G) (Entered: 04/16/2010)

04/16/20 10

RESPONSE filed by Texas Department of Housing and Community Affairs re: 104 MOTION To File Supplemental Appendix on TDHCA'S Daubert Motion To Strike Expert Reports. (see doc. 106) for image) (tln) (Entered: 04/19/2010)

04/27/20 10 ELECTRONIC ORDER granting 104 MOTION To File Supplemental

10

7 Appendix (Ordered by Chief Judge Sidney A Fitzwater on 4/27/2010) (Chief

Judge Sidney A Fitzwater) (Entered: 04/27/2010)

04/27/20 10 Appendix in Support filed by The Inclusive Communities Project Inc

10

8 re 104 MOTION To File Supplemental Appendix on TDHCA'S Daubert

Motion To Strike Expert Reports (Daniel, Michael) (Entered: 04/27/2010)

05/18/20 10

10 ORDER: There are pending motions in this case that the court has determined 9 should be decided before the parties, attorneys, and witnesses are required to
incur the financial and other costs and burdens of preparing for trial and making pretrial filings. Accordingly, the court resets the case for trial for the two-week docket of Monday, August 23, 2010. (Ordered by Chief Judge Sidney A Fitzwater on 5/18/2010) (Chief Judge Sidney A Fitzwater) (Entered: 05/18/2010)

05/18/20 10

Set/Reset Scheduling Order Deadlines: The court resets the case for trial for the two-week docket of Monday, 8/23/2010 before Chief Judge Sidney A Fitzwater. (Per 109 Order.) (twd) (Entered: 05/18/2010)

07/22/20 10

11 Unopposed MOTION to Continue Trial Date or Pretrial Deadlines filed by 0 Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal
Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs (Attachments: # 1 Proposed Order Proposed Order) (Gair, David) (Entered: 07/22/2010)

07/23/20 11 ELECTRONIC ORDER granting 110 Unopposed MOTION to Continue Trial

10

1 Date or Pretrial Deadlines. The trial setting is VACATED. The court will set a

new trial date after deciding the pending motions. (Ordered by Chief Judge

Sidney A Fitzwater on 7/23/2010) (Chief Judge Sidney A Fitzwater) (Entered: 07/23/2010)

09/28/20 10

11 Memorandum Opinion and Order granting plaintiff's 65 October 2, 2009 2 motion for partial summary judgment; denying 68 defendants' October 2, 2009
motion for judgment on the pleadings and 70 October 2, 2009 motion for summary judgment; and denying plaintiff's 80 November 9, 2009 motion for leave to file supplemental appendix as moot. (Ordered by Chief Judge Sidney A Fitzwater on 9/28/2010) (Chief Judge Sidney A Fitzwater) (Entered: 09/28/2010)

11/04/20 10

11 TRIAL SETTING ORDER: The court sets this case for trial for the two-week 3 docket of Monday, March 7, 2011. (Ordered by Chief Judge Sidney A
Fitzwater on 11/4/2010) (Chief Judge Sidney A Fitzwater) (Entered: 11/04/2010)

01/21/20 11 Unopposed MOTION to Continue filed by The Inclusive Communities Project

11

4 Inc (Daniel, Michael) (Entered: 01/21/2011)

01/25/20 11

11 ORDER granting 114 Unopposed MOTION to Continue filed by The 5 Inclusive Communities Project Inc. (Ordered by Chief Judge Sidney A
Fitzwater on 1/25/2011) (Chief Judge Sidney A Fitzwater) (Entered: 01/25/2011)

01/25/20 11

Reset Scheduling Order Deadline per Order (doc 115): Trial reset for 6/20/2011 before Chief Judge Sidney A Fitzwater. (axm) (Entered: 01/26/2011)

04/28/20 11 Plaintiff ICP's Notice filed by The Inclusive Communities Project Inc (Daniel,

11

6 Michael) Modified on 4/29/2011 (jrb). (Entered: 04/28/2011)

05/23/20 11 Inclusive Communities Project, INC. Pretrial Disclosures filed by The

11

7 Inclusive Communities Project Inc. (Attachments: # 1 Additional Page(s) May

23 disclosure exhibit list) (Daniel, Michael) (Entered: 05/23/2011)

05/23/20 11

11 Designation of Deposition by Leslie Bingham-Escareno, Tomas Cardenas, C 8 Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz,
Gloria L Ray, Texas Department of Housing and Community Affairs. (Rhodus, G) (Entered: 05/23/2011)

05/23/20 11

11 Witness List by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, 9 Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray,
Texas Department of Housing and Community Affairs. (Rhodus, G) (Entered: 05/23/2011)

05/23/20 12 Defendants' Rule 26(a)(3)(A)(iii)Pretrial Disclosures - Exhibit List filed by

11

0 Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal

Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas

Department of Housing and Community Affairs. (Rhodus, G) (Entered: 05/23/2011)

05/27/20 11

12 Supplemental Pretrial Disclosures Exhibit List filed by Leslie Bingham1 Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael
Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. (Rhodus, G) (Entered: 05/27/2011)

06/01/20 12 Inclusive Communities Project, Inc. June 1, 2011 Modified Pretrial

11

2 Disclosures filed by The Inclusive Communities Project Inc. (Daniel, Michael)

(Entered: 06/01/2011)

06/02/20 11

12 Exhibit List SECOND SUPPLEMENTAL RULE 26(a)(3)(A)(iii) PRETRIAL 3 DISCLOSURES by Leslie Bingham-Escareno, Tomas Cardenas, C Kent
Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. (Gair, David) (Entered: 06/02/2011)

06/06/20 12 OBJECTION filed by The Inclusive Communities Project Inc re: 121 Pretrial

11

4 Disclosures, 120 Pretrial Disclosures, 123 Exhibit List. (Daniel, Michael)

Modified on 6/7/2011 (mfw). (Entered: 06/06/2011)

06/06/20 12 OBJECTION filed by The Inclusive Communities Project Inc re: 119 Witness

11

5 List (Daniel, Michael) (Entered: 06/06/2011)

06/06/20 12 Witness List by The Inclusive Communities Project Inc. (Daniel, Michael)

11

6 (Entered: 06/06/2011)

06/06/20 12 Exhibit List by The Inclusive Communities Project Inc. (Daniel, Michael)

11

7 (Entered: 06/06/2011)

06/06/20 12 Proposed Findings of Fact by The Inclusive Communities Project Inc. (Daniel,

11

8 Michael) (Entered: 06/06/2011)

06/06/20 12 Designation of Deposition by The Inclusive Communities Project Inc. (Daniel,

11

9 Michael) (Entered: 06/06/2011)

06/06/20 11

13 MOTION Challenges and Objections to Plaintiff's Expert Reports filed by 0 Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal
Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs with Brief/Memorandum in Support. (Gair, David) (Entered: 06/06/2011)

06/06/20 11

13 Proposed Findings of Fact by Leslie Bingham-Escareno, Tomas Cardenas, C 1 Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz,
Gloria L Ray, Texas Department of Housing and Community Affairs. (Rhodus, G) (Entered: 06/06/2011)

06/06/20 13 Exhibit List by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine,

11

2 Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray,

Texas Department of Housing and Community Affairs. (Rhodus, G) (Entered: 06/06/2011)

06/06/20 11

13 Witness List by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, 3 Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray,
Texas Department of Housing and Community Affairs. (Rhodus, G) (Entered: 06/06/2011)

06/06/20 11

13 Designation of Deposition by Leslie Bingham-Escareno, Tomas Cardenas, C 4 Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz,
Gloria L Ray, Texas Department of Housing and Community Affairs. (Rhodus, G) (Entered: 06/06/2011)

06/06/20 11

13 OBJECTION filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent 5 Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria
L Ray, Texas Department of Housing and Community Affairs re: 129 Designation of Deposition (Rhodus, G) (Entered: 06/06/2011)

06/06/20 11

13 OBJECTION filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent 6 Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria
L Ray, Texas Department of Housing and Community Affairs re: 127 Exhibit List (Rhodus, G) (Entered: 06/06/2011)

06/15/20 11

13 ELECTRONIC ORDER: Having considered the parties' positions concerning 7 scheduling difficulties presented by the proposed trial dates of July 11-14,
2011, the court has decided that it should consider other possible trial dates. The parties are directed to confer and advise the court whether they can be available on any of the following dates: August 8-11 (pretrial conference would be conducted telephonically on July 27 or 28, provided counsel are available); August 15-18; and August 29-September 1. By joint letter or by simultaneous letters to the court, they may advise the court of their availability or of specific issues with any of these particular trial dates. (Ordered by Chief Judge Sidney A Fitzwater on 6/15/2011) (Chief Judge Sidney A Fitzwater) (Entered: 06/15/2011)

06/20/20 13 RESPONSE filed by The Inclusive Communities Project Inc re: 130 MOTION

11

8 Challenges and Objections to Plaintiff's Expert Reports (Daniel, Michael)

(Entered: 06/20/2011)

06/20/20 13 Appendix in Support filed by The Inclusive Communities Project Inc

11

9 re 138 Response/Objection (Attachments: # 1Additional Page(s) 54-105,

# 2 Additional Page(s) 106-135) (Daniel, Michael) (Entered: 06/20/2011)

06/20/20 11

14 ADDITIONAL ATTACHMENTS to 139 Appendix in Support by Plaintiff 0 The Inclusive Communities Project Inc. (Attachments: # 1 Additional Page(s)
136-201, # 2 Additional Page(s) 202-215, # 3 Additional Page(s) 216-265, # 4Additional Page(s) 266-315) (Daniel, Michael) (Entered: 06/20/2011)

06/21/20 11

14 ORDER: This case is set for a nonjury trial on Monday, August 29, 2011 at 1 9:00 a.m. The case will be tried under time limits so that the trial is completed
by Thursday, September 1, 2011. The court will later set a telephonic pretrial conference. (Ordered by Chief Judge Sidney A Fitzwater on 6/21/2011) (Chief Judge Sidney A Fitzwater) (Entered: 06/21/2011)

06/21/20 11

Set/Reset Hearings: Non-jury trial set for 8/29/2011 09:00 AM before Chief Judge Sidney A Fitzwater. (see doc. 141 for image) (tln) (Entered: 06/22/2011)

07/05/20 11

14 NOTICE of Defendants' Confirmation of Informal Leave of Court Pursuant to 2 Local Rule 7.3 re: 140 Additional Attachments to Main
Document, 130 MOTION Challenges and Objections to Plaintiff's Expert Reports, 139 Appendix in Support, 138 Response/Objection filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs (Gair, David) (Entered: 07/05/2011)

07/06/20 11

14 REPLY filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, 3 Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray,
Texas Department of Housing and Community Affairs re: 130 MOTION Challenges and Objections to Plaintiff's Expert Reports (Gair, David) (Entered: 07/06/2011)

07/11/20 11

14 ORDER denying 130 MOTION Challenges and Objections to Plaintiff's 4 Expert Reports filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent
Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. Defendants' June 6, 2011 motion to renew challenges and objections to plaintiff's expert reports is denied. In denying the motion, the court does not foreclose defendants from making objections at trial or moving for relief that is not foreclosed by the law of the case. (Ordered by Chief Judge Sidney A Fitzwater on 7/11/2011) (Chief Judge Sidney A Fitzwater) (Entered: 07/11/2011)

08/25/20 11

14 ELECTRONIC Minute Entry for proceedings held before Chief Judge Sidney 5 A. Fitzwater: Pretrial Conference held on 8/25/2011. Attorney Appearances:
Plaintiff - Michael M. Daniel and Laura Beth Beshara; Defense - G. Tomas Rhodus, William B. Chaney, David C. Gair, and Russell E. Jumper. (Court Reporter: Not Recorded) (No exhibits) Time in Court - 0:43. The court conducted the pretrial conference with counsel. There was no objection to entering the Pretrial Order. The parties will make brief opening statements and will present closing arguments in post-trial written submissions. The case will be tried under time limits, with 11 hours allocated to each side. The parties will attempt to narrow their objections to the exhibits so that exhibits to which there are no objections can be admitted at the beginning of the trial. To promote the efficiency of presenting the evidence, objections, including Daubert-type objections, can be made on the record during trial and addressed

in the post-trial written submissions. The court covered other housekeeping matters with counsel. The trial will begin on Monday, August 29, 2011 at 9:00 a.m. (Chief Judge Sidney A. Fitzwater) (Entered: 08/25/2011)

08/25/20 14 PRETRIAL ORDER. (Ordered by Chief Judge Sidney A Fitzwater on

11

6 8/25/2011) (Chief Judge Sidney A Fitzwater) (Entered: 08/25/2011)

08/28/20 14 NOTICE Plaintiff ICP's Notice of Exhibits Offered filed by The Inclusive

11

7 Communities Project Inc (Daniel, Michael) (Entered: 08/28/2011)

08/28/20 14 NOTICE Plaintiff ICP's Notice of Agreement on Exhibits filed by The

11

8 Inclusive Communities Project Inc (Daniel, Michael) (Entered: 08/28/2011)

08/29/20 11

ELECTRONIC Minute Entry for proceedings held before Chief Judge Sidney A Fitzwater: 1st Day of Bench Trial begun on 8/29/2011. Opening statements. Testimony begins. Adjourned until Tuesday, August 30, 2011 at 9:00am. Attorney Appearances: Plaintiff - Michael M. Daniel with Laura Beth Beshara; Defense - William B. Chaney with G. Thomas Rhodus. (Court Reporter: Pamela Wilson) (Exhibits admitted) Time in Court - 5:32. (chmb) Modified on 8/29/2011 (chmb). (Entered: 08/29/2011)

08/30/20 11

ELECTRONIC Minute Entry for proceedings held before Chief Judge Sidney A Fitzwater: 2nd day of Bench Trial held on 8/30/2011. Testimony continued. Adjourned until Wednesday, August 31, 2011 at 9:00am. Attorney Appearances: Plaintiff - Michael M. Daniel with Laura Beth Beshara; Defense - William B. Chaney with G. Thomas Rhodus. (Court Reporter: Pamela Wilson) (Exhibits admitted) Time in Court - 4:55. (chmb) (Entered: 08/31/2011)

08/31/20 11

ELECTRONIC Minute Entry for proceedings held before Chief Judge Sidney A Fitzwater: 3rd Day of Bench Trial held on 8/31/2011. Testimony continued. Adjourned until Thursday, Sept 1, 2011 at 9:00am. Attorney Appearances: Plaintiff - Michael M. Daniel with Laura Beth Beshara; Defense - William B. Chaney with G. Thomas Rhodus. (Court Reporter: Pamela Wilson) (Exhibits admitted) Time in Court - 4:59. (chmb) (Entered: 09/01/2011)

09/01/20 11

ELECTRONIC Minute Entry for proceedings held before Chief Judge Sidney A Fitzwater: 4th and Final day of Bench Trial completed on 9/1/2011. Deft's rest. Plaintiff's close case. Taken under advisement. Written order to follow. Attorney Appearances: Plaintiff - Michael M. Daniel with Laura Beth Beshara; Defense - William B. Chaney with G. Thomas Rhodus. (Court Reporter: Pamela Wilson) (Exhibits admitted) Time in Court - 1:31. (chmb) (Entered: 09/01/2011)

09/01/20 11

14 NOTICE of Exhibits Offered re: 132 Exhibit List filed by Leslie Bingham9 Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael
Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs (Gair, David) (Entered: 09/01/2011)

09/06/20 15 Plaintiff's NOTICE of Its Offer of Some of Defendants' Exhibits filed by The

11

0 Inclusive Communities Project Inc (Daniel, Michael) Modified on 9/7/2011

(skt). (Entered: 09/06/2011)

09/14/20 15 NOTICE Plaintiff ICP'S Notice that Transcript has been Provided filed by

11

1 The Inclusive Communities Project Inc (Daniel, Michael) (Entered:

09/14/2011)

09/19/20 11

15 NOTICE OF FILING OF OFFICIAL ELECTRONIC TRANSCRIPT of 2 Volume 1 Trial Proceedings held on 8/29/2011 before Judge Sidney A.
Fitzwater. Court Reporter/Transcriber Pamela Wilson, Telephone number 214.662.1557. Parties are notified of their duty to review the transcript. A copy may be purchased from the court reporter or viewed at the clerk's office public terminal. If redaction is necessary, a Redaction Request Transcript must be filed within 21 days. If no such Request is filed, the transcript will be made available via PACER without redaction after 90 calendar days. If redaction request filed, this transcript will not be accessible via PACER; see redacted transcript. The clerk will mail a copy of this notice to parties not electronically noticed. (280 pages) Redaction Request due 10/11/2011. Redacted Transcript Deadline set for 10/20/2011. Release of Transcript Restriction set for 12/19/2011. (pjw) (Entered: 09/19/2011)

09/19/20 11

15 NOTICE OF FILING OF OFFICIAL ELECTRONIC TRANSCRIPT of Trial 3 Proceedings held on 8/30/2011 before Judge Sidney Fitzwater. Court
Reporter/Transcriber Pamela Wilson, Telephone number 214.662.1557. Parties are notified of their duty to review the transcript. A copy may be purchased from the court reporter or viewed at the clerk's office public terminal. If redaction is necessary, a Redaction Request - Transcript must be filed within 21 days. If no such Request is filed, the transcript will be made available via PACER without redaction after 90 calendar days. If redaction request filed, this transcript will not be accessible via PACER; see redacted transcript. The clerk will mail a copy of this notice to parties not electronically noticed. (219 pages) Redaction Request due 10/11/2011. Redacted Transcript Deadline set for 10/20/2011. Release of Transcript Restriction set for 12/19/2011. (pjw) (Entered: 09/19/2011)

09/19/20 11

15 NOTICE OF FILING OF OFFICIAL ELECTRONIC TRANSCRIPT of 4 Volume 3 Trial Proceedings held on 8/31/2011 before Judge Sidney Fitzwater.
Court Reporter/Transcriber Pamela Wilson, Telephone number 214.662.1557. Parties are notified of their duty to review the transcript. A copy may be purchased from the court reporter or viewed at the clerk's office public terminal. If redaction is necessary, a Redaction Request - Transcript must be filed within 21 days. If no such Request is filed, the transcript will be made available via PACER without redaction after 90 calendar days. If redaction request filed, this transcript will not be accessible via PACER; see redacted transcript. The clerk will mail a copy of this notice to parties not electronically noticed. (211 pages) Redaction Request due 10/11/2011. Redacted Transcript

Deadline set for 10/20/2011. Release of Transcript Restriction set for 12/19/2011. (pjw) (Entered: 09/19/2011)

09/19/20 11

15 NOTICE OF FILING OF OFFICIAL ELECTRONIC TRANSCRIPT of 5 Volume 4 Trial Proceedings held on 9/1/2011 before Judge Sidney Fitzwater.
Court Reporter/Transcriber Pamela Wilson, Telephone number 214.662.1557. Parties are notified of their duty to review the transcript. A copy may be purchased from the court reporter or viewed at the clerk's office public terminal. If redaction is necessary, a Redaction Request - Transcript must be filed within 21 days. If no such Request is filed, the transcript will be made available via PACER without redaction after 90 calendar days. If redaction request filed, this transcript will not be accessible via PACER; see redacted transcript. The clerk will mail a copy of this notice to parties not electronically noticed. (82 pages) Redaction Request due 10/11/2011. Redacted Transcript Deadline set for 10/20/2011. Release of Transcript Restriction set for 12/19/2011. (pjw) (Entered: 09/19/2011)

10/03/20 11

15 ORDER REGARDING SCHEDULING OF POST-TRIAL SUBMISSIONS. 6 The court directs the parties to advise the court by letter, which may be
submitted electronically by one attorney on behalf of all counsel, of the threestage schedule to which they have agreed. Although the court has no objection to the schedule proposed in the September 14, 2011 letter, it is seeking to ensure that both sides have been fully heard regarding the timing of submissions, considering this change from a two- to a three-stage process. The court will approve a scheduling order once it has been advised of the parties' positions. (See order for specifics.) (Ordered by Chief Judge Sidney A Fitzwater on 10/3/2011) (Chief Judge Sidney A Fitzwater) (Entered: 10/03/2011)

10/05/20 11

15 ORDER APPROVING POST-TRIAL BRIEFING SCHEDULE AND 7 RELATED MATTERS. (See order for specifics.) (Ordered by Chief Judge
Sidney A Fitzwater on 10/5/2011) (Chief Judge Sidney A Fitzwater) (Entered: 10/05/2011)

11/09/20 15 TRIAL BRIEF ICP's Initial Post Trial Brief by The Inclusive Communities

11

8 Project Inc. (Daniel, Michael) (Entered: 11/09/2011)

11/09/20 15 Proposed Findings of Fact by The Inclusive Communities Project Inc. (Daniel,

11

9 Michael) (Entered: 11/09/2011)

11/09/20 11

16 Defendants' Post Trial Brief filed by Leslie Bingham-Escareno, Tomas 0 Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan
Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs re 157 Order (Rhodus, G) Modified Text on 11/10/2011 (egb). (Entered: 11/09/2011)

11/09/20 16 Appendix in Support filed by Leslie Bingham-Escareno, Tomas Cardenas, C

11

1 Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz,

Gloria L Ray, Texas Department of Housing and Community Affairs re 160 to Defendants' Post Trial Brief (Rhodus, G) Modified Text on 11/10/2011 (egb). (Entered: 11/09/2011)

11/09/20 11

16 Proposed Findings of Fact by Leslie Bingham-Escareno, Tomas Cardenas, C 2 Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz,
Gloria L Ray, Texas Department of Housing and Community Affairs. (Rhodus, G) (Entered: 11/09/2011)

12/07/20 16 RESPONSE filed by The Inclusive Communities Project Inc

11

3 re: 160 Brief/Memorandum in Support of Motion, (Daniel, Michael) (Entered:

12/07/2011)

12/07/20 16 RESPONSE filed by The Inclusive Communities Project Inc re: 162 Proposed

11

4 Findings of Fact (Daniel, Michael) (Entered: 12/07/2011)

12/07/20 11

16 RESPONSE filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent 5 Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria
L Ray, Texas Department of Housing and Community Affairs re: 158 Trial Brief (Gair, David) (Entered: 12/07/2011)

12/07/20 11

16 RESPONSE filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent 6 Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria
L Ray, Texas Department of Housing and Community Affairs re: 159 Proposed Findings of Fact (Gair, David) (Entered: 12/07/2011)

12/21/20 16 REPLY filed by The Inclusive Communities Project Inc

11

7 re: 165 Response/Objection (Daniel, Michael) (Entered: 12/21/2011)

12/21/20 16 REPLY filed by The Inclusive Communities Project Inc

11

8 re: 166 Response/Objection (Daniel, Michael) (Entered: 12/21/2011)

12/21/20 11

16 REPLY filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, 9 Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray,
Texas Department of Housing and Community Affairs re: 163 Response/Objection (Rhodus, G) (Entered: 12/21/2011)

12/21/20 11

17 REPLY filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, 0 Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray,
Texas Department of Housing and Community Affairs re: 162 Proposed Findings of Fact (Rhodus, G) (Entered: 12/21/2011)

02/14/20 12

17 ORDER: On November 7, 2011, after the trial was completed, the Supreme 1 Court granted certiorari in Gallagher v. Magner. The court has concluded that
it should defer its decision in this case until Magner is decided. After the Supreme Court's opinion is filed, this court will decide whether to establish a supplemental schedule for briefing in the present case. (Ordered by Chief Judge Sidney A Fitzwater on 2/14/2012) (Chief Judge Sidney A Fitzwater) (Entered: 02/14/2012)

02/15/20 17 NOTICE Plaintiff ICP's Notice that Petition for Certiorari in Magner v.

12

2 Gallagher is Dismissed re: 171 Order, filed by The Inclusive Communities

Project Inc (Daniel, Michael) (Entered: 02/15/2012)

02/17/20 12

17 Unopposed MOTION for Leave to File Amicus Curiae Brief filed by Frazier 3 Revitalization Inc. with Brief/Memorandum in Support. (Attachments:
# 1 Exhibit(s) proposed amicus brief, # 2 Proposed Order). Party Frazier Revitalization Inc. added. (Rosenthal, Brent) (Entered: 02/17/2012)

02/21/20 12

17 ORDER granting 173 Unopposed MOTION for Leave to File Amicus Curiae 4 Brief filed by Frazier Revitalization Inc. (Ordered by Chief Judge Sidney A
Fitzwater on 2/21/2012) (Chief Judge Sidney A Fitzwater) (Entered: 02/21/2012)

03/13/20 17 MOTION for Leave to File Brief in Response to FRI Amicus Brief filed by

12

5 The Inclusive Communities Project Inc with Brief/Memorandum in Support.

(Daniel, Michael) (Entered: 03/13/2012)

03/13/20 12

17 Appendix in Support filed by The Inclusive Communities Project Inc 6 re 175 MOTION for Leave to File Brief in Response to FRI Amicus Brief
(Attachments: # 1 Additional Page(s) Pages 32 - 55, # 2 Additional Page(s) Pages 56 - 90, # 3 Additional Page(s) Pages 91 - 132) (Daniel, Michael) (Entered: 03/13/2012)

03/20/20 12

17 ORDER denying 175 MOTION for Leave to File Brief in Response to FRI 7 Amicus Brief filed by The Inclusive Communities Project Inc. (Ordered by
Chief Judge Sidney A Fitzwater on 3/20/2012) (Chief Judge Sidney A Fitzwater) (Entered: 03/20/2012)

03/20/20 12

17 MEMORANDUM OPINION AND ORDER. Following a summary judgment 8 decision and a bench trial, the court finds that plaintiff has proved its disparate
impact claim under the Fair Housing Act, but it otherwise finds in favor of defendants. Within 60 days of the date this memorandum opinion and order is filed, defendants must file their remedial plan. Plaintiff may submit objections within 30 days after the remedial plan is filed. If objections are filed, the court will establish any necessary additional procedures by separate order. (Ordered by Chief Judge Sidney A Fitzwater on 3/20/2012) (Chief Judge Sidney A Fitzwater) (Entered: 03/20/2012)

04/30/20 17 MOTION to Intervene filed by Frazier Revitalization Inc. (Attachments:

12

9 # 1 Proposed Order) (Rosenthal, Brent) (Entered: 04/30/2012)

04/30/20 18 Brief/Memorandum in Support filed by Frazier Revitalization Inc.

12

0 re 179 MOTION to Intervene (Rosenthal, Brent) (Entered: 04/30/2012)

05/18/20 12

18 NOTICE of Defendants' Proposed Remedial Plan filed by Leslie Bingham1 Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael
Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs (Chaney, William) (Entered: 05/18/2012)

05/21/20 18 RESPONSE AND OBJECTION filed by The Inclusive Communities Project

12

2 Inc re: 179 MOTION to Intervene (Daniel, Michael) (Entered: 05/21/2012)

05/21/20 12

18 Appendix in Support filed by The Inclusive Communities Project Inc 3 re 182 Response/Objection to FRI Motion to Intervene (Attachments:
# 1 Additional Page(s) Pages 50 - 115, # 2 Additional Page(s) Pages 116 170) (Daniel, Michael) (Entered: 05/21/2012)

06/04/20 18 REPLY filed by Frazier Revitalization Inc. re: 179 MOTION to Intervene

12

4 (Rosenthal, Brent) (Entered: 06/04/2012)

06/12/20 18 Memorandum Opinion and Order granting 179 Motion to Intervene filed by

12

5 Frazier Revitalization Inc. (Ordered by Chief Judge Sidney A Fitzwater on

6/12/2012) (skt) (Entered: 06/13/2012)

06/18/20 18 RESPONSE filed by The Inclusive Communities Project Inc re: 181 Notice

12

6 (Other), Notice (Other) (Daniel, Michael) (Entered: 06/18/2012)

06/18/20 18 Appendix in Support filed by The Inclusive Communities Project Inc

12

7 re 186 Response/Objection Of ICP's Response to Defendants' Proposed

Remedial Plan (Daniel, Michael) (Entered: 06/18/2012)

06/18/20 18 OBJECTION filed by Frazier Revitalization Inc. re: 181 Notice (Other),

12

8 Notice (Other) (Rosenthal, Brent) (Entered: 06/18/2012)

07/12/20 18 Letter to Texas Department of Housing and Community Affairs from

12

9 Representative Eric Johnson. (twd) (Entered: 07/12/2012)

07/24/20 19 Letter to Texas Department of Housing and Community Affairs from

12

0 Representative Rafael Anchia. (cea) (Entered: 07/24/2012)

08/03/20 12

19 MOTION for Leave to File Supplement to Objections filed by Frazier 1 Revitalization Inc. with Brief/Memorandum in Support. (Attachments:
# 1 Declaration(s), # 2 Proposed Order) (Rosenthal, Brent) (Entered: 08/03/2012)

08/07/20 12

19 ORDER granting 191 MOTION for Leave to File Supplement to Objections 2 filed by Frazier Revitalization Inc. (Ordered by Chief Judge Sidney A
Fitzwater on 8/7/2012) (Chief Judge Sidney A Fitzwater) (Entered: 08/07/2012)

08/07/20 12

19 MEMORANDUM OPINION AND ORDER. The court adopts a remedial plan 3 and it enters judgment today in accordance with its memorandum opinions and
orders in this case and the remedial plan adopted today. (Ordered by Chief Judge Sidney A Fitzwater on 8/7/2012) (Chief Judge Sidney A Fitzwater) (Entered: 08/07/2012)

08/07/20 19 JUDGMENT partially in favor of The Inclusive Communities Project Inc

12

4 against, Texas Department of Housing and Community Affairs, C Kent

Conine, Dionicio Vidal Flores, Gloria L Ray, Juan Sanchez Munoz, Leslie

Bingham-Escareno, Michael Gerber, Tomas Cardenas. Objections and supplement to objections of intervenor Frazier Revitalization Inc. denied to the extent remedial plan adopted. Pursuant to LR 79.2 and LCrR 55.2, exhibits may be claimed during the 60-day period following final disposition (to do so, follow the procedures found at www.txnd.uscourts.gov/Court Records). The clerk will discard exhibits that remain unclaimed after the 60-day period without additional notice. (Clerk to notice any party not electronically noticed.) (Ordered by Chief Judge Sidney A Fitzwater on 8/7/2012) (Chief Judge Sidney A Fitzwater) (Entered: 08/07/2012)

08/21/20 19 MOTION for Attorney Fees and Nontaxable Costs from TDHCA filed by The

12

5 Inclusive Communities Project Inc with Brief/Memorandum in Support.

(Attachments: # 1 Proposed Order) (Daniel, Michael) (Entered: 08/21/2012)

08/21/20 19 BILL OF COSTS by The Inclusive Communities Project Inc. (Daniel,

12

6 Michael) (Entered: 08/21/2012)

08/31/20 19 NOTICE of Attorney Appearance by Beth Klusmann for James "Beau" Eccles

12

7 on behalf of All Defendants. (Klusmann, Beth) (Entered: 08/31/2012)

09/04/20 19 Costs Taxed in amount of $ 8657.06 against The Texas Department of

12

8 Housing and Community Affairs. (ndt) (Entered: 09/04/2012)

09/04/20 12

19 MOTION to Alter or Amend Judgment or Alternatively, for New Trial filed 9 by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio
Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs with Brief/Memorandum in Support. (Attachments: # 1 Brief in Support) (Klusmann, Beth) Modified on 9/5/2012 (skt). (Entered: 09/04/2012)

09/06/20 12

20 ORDER: Unless the court requests a response to 199 defendants' September 4, 0 2012 motion to alter or amend judgment or, alternatively, for new trial, no
response is permitted or required. (Ordered by Chief Judge Sidney A Fitzwater on 9/6/2012) (Chief Judge Sidney A Fitzwater) (Entered: 09/06/2012)

09/10/20 12

20 SCHEDULING ORDER for making submissions concerning 195 08/21/2012 1 MOTION for Attorney Fees and Nontaxable Costs from TDHCA filed by The
Inclusive Communities Project Inc. (Ordered by Chief Judge Sidney A Fitzwater on 9/10/2012) (Chief Judge Sidney A Fitzwater) (Entered: 09/10/2012)

09/24/20 12

20 Brief/Memorandum in Support filed by The Inclusive Communities Project 2 Inc re 201 Order, Inclusive Communities Project, Inc.'s Brief in Support of
Motion for Attorney Fees and Nontaxable Costs from TDHCA (Daniel, Michael) (Entered: 09/24/2012)

09/24/20 20 Appendix in Support filed by The Inclusive Communities Project Inc

12

3 re 202 Brief/Memorandum in Support of Motion(Daniel, Michael) (Entered:

09/24/2012)

10/15/20 12

20 RESPONSE filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent 4 Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria
L Ray, Texas Department of Housing and Community Affairs re: 195 MOTION for Attorney Fees and Nontaxable Costs from TDHCA (Attachments: # 1 Exhibit(s) 1) (Eccles, James Beau) (Entered: 10/15/2012)

10/29/20 20 REPLY filed by The Inclusive Communities Project Inc re: 195 MOTION for

12

5 Attorney Fees and Nontaxable Costs from TDHCA (Daniel, Michael)

(Entered: 10/29/2012)

11/01/20 20 NOTICE of Change of Address for Attorney Brent M Rosenthal on behalf of

12

6 Frazier Revitalization Inc.. (Filer confirms contact info in ECF is current.)

(Rosenthal, Brent) (Entered: 11/01/2012)

11/08/20 12

20 Memorandum Opinion and Order granting in part and denying in 7 part 199 Motion to Alter or Amend Judgment or, Alternatively for New Trial.
(Ordered by Chief Judge Sidney A Fitzwater on 11/8/2012) (axm) (Entered: 11/08/2012)

11/08/20 12

20 AMENDED JUDGMENT: The remedial plan adopted by this judgment shall 8 be effective for a period of five years after the first annual report is filed.
During this period, the court shall retain jurisdiction. Defendants shall bear their own taxable costs of court. ICP shall recover 50% of its taxable costs of court, as calculated by the clerk of court, from defendants and shall bear the remaining 50% of its own taxable costs of court, as calculated by the clerk of court. (Ordered by Chief Judge Sidney A Fitzwater on 11/8/2012) (axm) (Entered: 11/08/2012)

12/04/20 12

20 NOTICE OF APPEAL to the Fifth Circuit as to 208 Judgment, 194 Amended 9 Judgment by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine,
Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. Filing fee $455, receipt number 0539-4983715. T.O. form to appellant electronically at Transcript Order Form or US Mail as appropriate. Copy of NOA to be sent US Mail to parties not electronically noticed. Copy of NOA to be sent US Mail to parties not electronically noticed. (Klusmann, Beth) Modified text and linkage on 12/5/2012 (axm). (Entered: 12/04/2012)

12/05/20 12

21 NOTICE OF APPEAL to the Fifth Circuit as to 208 Judgment by Frazier 0 Revitalization Inc. Filing fee $455, receipt number 0539-4986859. T.O. form
to appellant electronically at Transcript Order Form or US Mail as appropriate. Copy of NOA to be sent US Mail to parties not electronically noticed. Copy of NOA to be sent US Mail to parties not electronically noticed. (Rosenthal, Brent) (Entered: 12/05/2012)

12/05/20 21 NOTICE of Joint Submission on Proposed Contents of TDHCA Annual

12

1 Report re: 193 Memorandum Opinion and Order filed by The Inclusive

Communities Project Inc, Frazier Revitalization Inc, Texas Department of Housing and Community Affairs, Leslie Bingham-Escareno, Thomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray. (Daniel, Michael) Modified filers on 12/6/2012 (axm). (Entered: 12/05/2012)

12/07/20 12

21 Transcript Order Form: re 210 Notice of Appeal, transcript not requested by C 2 Kent Conine, Michael Gerber, Dionicio Vidal Flores, Gloria L Ray, Texas
Department of Housing and Community Affairs, Juan Sanchez Munoz, Leslie Bingham-Escareno, Tomas Cardenas for Bench Trial held on 8/29/2011 to 9/1/2011 before Judge Fitzwater. Transcript is already on file in Clerk's office. (cea) Modified on 12/10/2012 (svc). (Entered: 12/07/2012)

12/10/20 12

USCA Case Number 12-11212 for 210 Notice of Appeal, filed by Frazier Revitalization Inc., and 12-11211 for 209Notice of Appeal,, filed by Juan Sanchez Munoz, Michael Gerber, C Kent Conine, Leslie Bingham-Escareno, Gloria L Ray, Dionicio Vidal Flores, Texas Department of Housing and Community Affairs, Tomas Cardenas. (svc) (Entered: 12/10/2012)

02/06/20 21 ORDER re: Contents of TDHCA Annual Reports. (Ordered by Chief Judge

13

3 Sidney A Fitzwater on 2/6/2013) (Chief Judge Sidney A Fitzwater) (Entered:

02/06/2013)

02/07/20 13

USCA Case Number 12-11211 for 209 Notice of Appeal,, filed by Juan Sanchez Munoz, Michael Gerber, C Kent Conine, Leslie Bingham-Escareno, Gloria L Ray, Dionicio Vidal Flores, Texas Department of Housing and Community Affairs, Tomas Cardenas. (svc) (Entered: 02/07/2013)

02/07/20 13

Record on Appeal for USCA5 12-11211 (related to 210 , 209 appeal): Record consisting of: 28 ECF electronic record, 4 Volume(s) electronic transcript, original exhibits, certified to USCA. To request a copy of the record (on disk or on paper), contact the appeals deputy in advance to arrange delivery. (svc) (Entered: 02/07/2013)

02/11/20 13

Record on Appeal for USCA5 12-11211 (related to 210 , 209 appeal): transmitted to Office of the Texas Attorney General on disk only by Federal Express 794723490046 (svc) (Entered: 02/11/2013)

02/11/20 13

Record on Appeal for USCA5 12-11211 (related to 210 , 209 appeal): transmitted to DANIEL & BESHARA, P.C. on disk only by hand delivery. (svc) (Entered: 02/11/2013)

02/11/20 13

Record on Appeal for USCA5 12-11211 (related to 210 , 209 appeal): transmitted to Law Office of Brent M. Rosenthal, PC on disk only by mail. (svc) (Entered: 02/11/2013)

02/15/20 21 MEMORANDUM OPINION AND ORDER granting 195 MOTION for

13

4 Attorney Fees and Nontaxable Costs from TDHCA filed by The Inclusive

Communities Project Inc. The court grants plaintiff's motion for attorney's fees

and nontaxable costs in the amount of $1,869,577.00 in attorney's fees and $24,392.00 in nontaxable costs. (Ordered by Chief Judge Sidney A Fitzwater on 2/15/2013) (Chief Judge Sidney A Fitzwater) (Entered: 02/15/2013)

02/20/20 13

Supplemental Record on Appeal for USCA5 12-11211 (related to 210 , 209 appeal): Record consisting of: 1 ECF electronic record, certified to USCA. To request a copy of the record (on disk or on paper), contact the appeals deputyin advance to arrange delivery. (svc) (Entered: 02/20/2013)

02/20/20 13

Supplemental Record on Appeal for USCA5 12-11211 (related to 210 , 209 appeal): transmitted to DANIEL & BESHARA, P.C (svc) (Entered: 02/20/2013)

02/20/20 13

Supplemental Record on Appeal for USCA5 12-11211 (related to 210 , 209 appeal): transmitted to Office of the Texas Attorney General (svc) (Entered: 02/20/2013)

03/04/20 13

Record on Appeal for USCA5 12-11211 (related to 210 , 209 appeal): Record consisting of: 13 Container(s) of original exhibits (6 boxes of Defendants' Exhibits, 7 boxes of Plaintiff's Exhibits) transmitted to Beth Klusmann by mail. Shipped: Fed Ex 7948 8631 9280, 7948 8631 8916, 7948 8631 9224, 7948 8631 9121, 7948 8631 8949, 7948 8631 9670, 7948 8631 9886, 7948 8631 9588, 7948 8631 9603, 7948 8631 9794, 7948 8631 9555, 7948 8631 9809, 7948 8631 9901. (axm) (Entered: 03/04/2013)

03/15/20 13

21 NOTICE OF APPEAL to the Fifth Circuit as to 214 Memorandum Opinion 5 and Order, by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine,
Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. Filing fee $455, receipt number 0539-5182112. T.O. form to appellant electronically at Transcript Order Form or US Mail as appropriate. Copy of NOA to be sent US Mail to parties not electronically noticed. (Klusmann, Beth) (Entered: 03/15/2013)

03/22/20 13

21 Transcript Order Form: re 215 Notice of Appeal, transcript is already on file in 6 Clerk's office by C Kent Conine, Michael Gerber, Dionicio Vidal Flores,
Gloria L Ray, Texas Department of Housing and Community Affairs, Juan Sanchez Munoz, Leslie Bingham-Escareno, Tomas Cardenas for Bench Trial held on 8/29/2011 to 9/1/2011 before Judge Fitzwater. (jrr) (Entered: 03/22/2013)

03/25/20 13

USCA Case Number 13-10306 for 215 Notice of Appeal,, filed by Juan Sanchez Munoz, Michael Gerber, C Kent Conine, Leslie Bingham-Escareno, Gloria L Ray, Dionicio Vidal Flores, Texas Department of Housing and Community Affairs, Tomas Cardenas. (svc) (Entered: 03/25/2013)

03/25/20 13

2nd Supplemental Record on Appeal for USCA5 12-11211/13-10306 (related to 215 appeal): Record consisting of: 1 ECF electronic record, certified to

USCA. To request a copy of the record (on disk or on paper), contact the appeals deputy in advance to arrange delivery. (svc) (Entered: 03/25/2013)

03/29/20 13

2nd Supplemental Record on Appeal for USCA5 12-11211/13-10306 (related to 215 , 210 , 209 appeal): transmitted to Law Office of Michael M Daniel on disk only by mail. (svc) (Entered: 03/29/2013)

04/02/20 13

2nd Supplemental Record on Appeal for USCA5 12-11211/13-10306 (related to 215 , 210 , 209 appeal): transmitted to Attorney General of Texas (svc) (Entered: 04/02/2013)

06/24/20 13

21 Record on Appeal for USCA5 12-11211 (related to 215 , 210 , 209 appeal): 7 Record consisting of: 30 Volume(s) ECF electronic record, 5 Volume(s)
electronic transcript, transmitted to USCA5. Shipped: Federal Express 296232215011907, 296232215011914, 296232215011921 (svc) (Entered: 06/24/2013)

11/22/20 13

21 STATUS REPORT filed by Leslie Bingham-Escareno, Tomas Cardenas, C 8 Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz,
Gloria L Ray, Texas Department of Housing and Community Affairs. (Attachments: # 1 Pages 1-163, # 2 Pages164-187, # 3 Pages 188-423, # 4 Pages 424-484, # 5 Pages 485-570, # 6Pages 571-644) (Klusmann, Beth) (Entered: 11/22/2013)

12/16/20 13

21 MOTION to Amend/Correct the Remedial Plan filed by Leslie Bingham9 Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael
Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs with Brief/Memorandum in Support. (Attachments: # 1 Proposed Order) (Klusmann, Beth) (Entered: 12/16/2013)

12/17/20 13

22 Brief/Memorandum in Support filed by The Inclusive Communities Project 0 Inc re 219 MOTION to Amend/Correct the Remedial Plan Inclusive
Communities Project, Inc.'s Brief in Support of Defendants' Motion to Amend the Remedial Plan (Daniel, Michael) (Entered: 12/17/2013)

12/19/20 13

22 ORDER: Defendants' 219 December 16, 2013 motion to amend the remedial 1 plan is before the court for consideration. Plaintiff has filed a brief in support
of the motion. Unless, no later than December 30, 2013 at noon, intervenors make a written filing that demonstrates good cause not to amend the remedial plan as requested, the court will enter no later than December 31, 2013 the proposed order submitted by defendants. (Ordered by Chief Judge Sidney A Fitzwater on 12/19/2013) (Chief Judge Sidney A Fitzwater) (Entered: 12/19/2013)

12/20/20 22 RESPONSE filed by The Inclusive Communities Project Inc re: 218 Status

13

2 Report, (Daniel, Michael) (Entered: 12/20/2013)

12/27/20 22 RESPONSE filed by Frazier Revitalization Inc. re: 219 MOTION to

13

3 Amend/Correct the Remedial Plan (Rosenthal, Brent) (Entered: 12/27/2013)

12/27/20 22 NOTICE of Change of Address for Attorney Brent M Rosenthal on behalf of

13

4 Frazier Revitalization Inc.. (Filer confirms contact info in ECF is current.)

(Rosenthal, Brent) (Entered: 12/27/2013)

12/27/20 13

22 ORDER granting 219 MOTION to Amend the Remedial Plan filed by Leslie 5 Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores,
Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. (Ordered by Chief Judge Sidney A Fitzwater on 12/27/2013) (Chief Judge Sidney A Fitzwater) (Entered: 12/27/2013)

01/17/20 14

22 REPLY filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, 6 Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray,
Texas Department of Housing and Community Affairs re: 218 Status Report, (Klusmann, Beth) (Entered: 01/17/2014)

04/22/20 14

22 Opinion of USCA in accordance with USCA judgment re 215 Notice of 7 Appeal,, filed by Juan Sanchez Munoz, Michael Gerber, C Kent Conine,
Leslie Bingham-Escareno, Gloria L Ray, Dionicio Vidal Flores, Texas Department of Housing and Community Affairs, Tomas Cardenas, 210 Notice of Appeal, filed by Frazier Revitalization Inc., 209Notice of Appeal,, filed by Juan Sanchez Munoz, Michael Gerber, C Kent Conine, Leslie BinghamEscareno, Gloria L Ray, Dionicio Vidal Flores, Tomas Cardenas, Texas Department of Housing and Community Affairs. (svc) (Entered: 04/22/2014)

04/22/20 14

22 JUDGMENT/MANDATE of USCA as to 210 Notice of Appeal, filed by 8 Frazier Revitalization Inc., 209 Notice of Appeal,, filed by Juan Sanchez
Munoz, Michael Gerber, C Kent Conine, Leslie Bingham-Escareno, Gloria L Ray, Dionicio Vidal Flores, Texas Department of Housing and Community Affairs, Tomas Cardenas. Case remanded to the district court for further proceedings. Issued as Mandate: 4/15/14. (svc) (Entered: 04/22/2014)

04/22/20 14

22 JUDGMENT/MANDATE of USCA as to 215 Notice of Appeal,, filed by Juan 9 Sanchez Munoz, Michael Gerber, C Kent Conine, Leslie Bingham-Escareno,
Gloria L Ray, Dionicio Vidal Flores, Texas Department of Housing and Community Affairs, Tomas Cardenas. Case remanded to the district court for further proceedings. Issued as Mandate: 4/15/2014. (svc) (Entered: 04/22/2014)

04/22/20 23 USCA5 Bill of Costs. (Attachments: # 1 letter) (svc) (Entered: 04/22/2014)

14

0

04/22/20 14

23 STATUS REPORT ORDER: Status Report due by 5/27/2014. Accordingly, 1 no later than May 27, 2014, the parties must file a joint status report in which
they propose a procedure and schedule for how this case should be litigated on remand. If they differ in their proposed procedures or schedules, they must set forth the reasons for their differences. The joint status report may contain any other proposals, suggestions, or information that a party believes will assist the

court and the parties in litigating the case on remand. (Ordered by Chief Judge Sidney A Fitzwater on 4/22/2014) (Chief Judge Sidney A Fitzwater) (Entered: 04/22/2014)

05/16/20 14

23 NOTICE of Attorney Appearance by Jonathan F. Mitchell on behalf of Leslie 2 Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores,
Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. (Filer confirms contact info in ECF is current.) (Mitchell, Jonathan) (Entered: 05/16/2014)

05/16/20 14

23 MOTION to Stay Proceedings Pending Disposition of Petition for 3 Certiorari filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent
Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs (Attachments: # 1 Proposed Order) (Eccles, James Beau) (Entered: 05/16/2014)

05/16/20 14

23 Brief/Memorandum in Support filed by Leslie Bingham-Escareno, Tomas 4 Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan
Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs re 233 MOTION to Stay Proceedings Pending Disposition of Petition for Certiorari (Eccles, James Beau) (Entered: 05/16/2014)

05/16/20 14

23 Appendix in Support filed by Leslie Bingham-Escareno, Tomas Cardenas, C 5 Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz,
Gloria L Ray, Texas Department of Housing and Community Affairs re 234Brief/Memorandum in Support of Motion, (Eccles, James Beau) (Entered: 05/16/2014)

05/20/20 23 RESPONSE AND OBJECTION filed by The Inclusive Communities Project

14

6 Inc re: 233 MOTION to Stay Proceedings Pending Disposition of Petition for

Certiorari (Daniel, Michael) (Entered: 05/20/2014)

05/21/20 23 Appeal Record Returned consisting of 12 boxes of exhibits and have been

14

7 returned to chambers. (svc) (Entered: 05/22/2014)

05/27/20 14

23 Joint STATUS REPORT On Proposed Procedure and Schedule on 8 Remand filed by C Kent Conine, Dionicio Vidal Flores, Frazier Revitalization
Inc., Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs, The Inclusive Communities Project Inc. (Daniel, Michael) (Entered: 05/27/2014)

06/23/20 14

23 MEMORANDUM OPINION AND ORDER granting 233 MOTION to Stay 9 Proceedings Pending Disposition of Petition for Certiorari filed by Juan
Sanchez Munoz, Michael Gerber, C Kent Conine, Leslie Bingham-Escareno, Gloria L Ray, Dionicio Vidal Flores, Texas Department of Housing and Community Affairs, Tomas Cardenas. (Ordered by Chief Judge Sidney A Fitzwater on 6/23/2014) (Chief Judge Sidney A Fitzwater) (Entered: 06/23/2014)

09/29/20 24 NOTICE of Change of Address for Attorney Brent M Rosenthal on behalf of

14

0 Frazier Revitalization Inc.. (Filer confirms contact info in ECF is current.)

(Rosenthal, Brent) (Entered: 09/29/2014)

10/02/20 24 Order Continuing Stay and Administratively Closing Case for Statistical

14

1 Purposes. (Ordered by Chief Judge Sidney A Fitzwater on 10/2/2014) (Chief

Judge Sidney A Fitzwater) (Entered: 10/02/2014)

10/15/20 24 Received letter from USCA5 that Supreme Court Granted Certiorari (svc)

14

2 (Entered: 10/15/2014)

12/05/20 14

24 Record on Appeal for USCA5 13-10306 (related to 215 appeal): Record 3 consisting of: 12 Boxes of original exhibits, transmitted to United States
Supreme Court. Shipped: Federal Express 772109362428,2564,3148,3413,2884,3090,2921,3310,3126,2612,3137,3847 (svc) (Entered: 12/05/2014)

01/15/20 15

24 MOTION to Substitute Attorney. Jonathan F. Mitchell Added attorney Scott 4 A Keller,Scott A Keller for C Kent Conine,Scott A Keller for Michael
Gerber,Scott A Keller for Dionicio Vidal Flores,Scott A Keller for Gloria L Ray,Scott A Keller for Texas Department of Housing and Community Affairs,Scott A Keller for Juan Sanchez Munoz,Scott A Keller for Leslie Bingham-Escareno,Scott A Keller for Tomas Cardenas. Motion filed by C Kent Conine, Michael Gerber, Dionicio Vidal Flores, Gloria L Ray, Texas Department of Housing and Community Affairs, Juan Sanchez Munoz, Leslie Bingham-Escareno, Tomas Cardenas (Keller, Scott) (Entered: 01/15/2015)

01/20/20 15

24 ORDER granting 244 MOTION to Substitute Attorney. Jonathan F. Mitchell 5 terminated. Added attorney Scott A Keller for C Kent Conine,Scott A Keller
for Michael Gerber,Scott A Keller for Dionicio Vidal Flores,Scott A Keller for Gloria L Ray,Scott A Keller for Texas Department of Housing and Community Affairs,Scott A Keller for Juan Sanchez Munoz,Scott A Keller for Leslie Bingham-Escareno,Scott A Keller for Tomas Cardenas. Motion filed by C Kent Conine, Michael Gerber, Dionicio Vidal Flores, Gloria L Ray, Texas Department of Housing and Community Affairs, Juan Sanchez Munoz, Leslie Bingham-Escareno, Tomas Cardenas. (Ordered by Judge Sidney A Fitzwater on 1/20/2015) (Judge Sidney A Fitzwater) (Entered: 01/20/2015)

08/06/20 15

24 Opinion of USCA in accordance with USCA judgment re 210 Notice of 6 Appeal, filed by Frazier Revitalization Inc., 209 Notice of Appeal. The
Supreme Court affirmed our judgment and remanded this case to us for further proceedings consistent with its opinion. Accordingly, we now remand this case to the United States District Court for the Northern District of Texas for further proceedings consistent with our opinion and the opinion of the Supreme Court. (svc) (Entered: 08/07/2015)

08/07/20 15

Appeal Record Returned consisting of 12 boxes of exhibits. (svc) (Entered: 08/07/2015)

08/10/20 15

12 boxes of exhibits returned to Chambers. (svc) (Entered: 08/10/2015)

08/11/20 15

24 ORDER: No later than 9/11/2015, the parties must file a joint status report in 7 which they propose a procedure and schedule for how this case should be
litigated on remand. Case reopened per chambers. (Ordered by Judge Sidney A Fitzwater on 8/11/2015) (jrr) (Entered: 08/11/2015)

08/27/20 15

24 NOTICE of Attorney Appearance by Nancy K Juren on behalf of Leslie 8 Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores,
Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. (Filer confirms contact info in ECF is current.) (Juren, Nancy) (Entered: 08/27/2015)

09/10/20 15

24 Joint STATUS REPORT filed by Leslie Bingham-Escareno, Tomas Cardenas, 9 C Kent Conine, Dionicio Vidal Flores, Frazier Revitalization Inc., Michael
Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs, The Inclusive Communities Project Inc. (Daniel, Michael) (Entered: 09/10/2015)

10/08/20 25 MEMORANDUM OPINION AND ORDER establishing procedure on

15

0 remand. (Ordered by Judge Sidney A Fitzwater on 10/8/2015) (Judge Sidney

A Fitzwater) (Entered: 10/08/2015)

10/15/20 15

25 NOTICE of Attorney Appearance by Maria Amelia Calaf on behalf of Leslie 1 Bingham-Escareno, Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores,
Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. (Filer confirms contact info in ECF is current.) (Calaf, Maria) (Entered: 10/15/2015)

10/22/20 15

25 MOTION to Amend/Correct 250 Memorandum Opinion and Order The 2 Inclusive Communities Project, Inc's Motion to Supplement the Trial
Record filed by The Inclusive Communities Project Inc (Attachments: # 1 Proposed Order) (Daniel, Michael) (Entered: 10/22/2015)

10/22/20 15

25 Brief/Memorandum in Support filed by The Inclusive Communities Project 3 Inc re 252 MOTION to Amend/Correct 250 Memorandum Opinion and
Order The Inclusive Communities Project, Inc's Motion to Supplement the Trial Record(Daniel, Michael) (Entered: 10/22/2015)

10/22/20 15

25 MOTION to Supplement the Record filed by Leslie Bingham-Escareno, 4 Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan
Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs (Attachments: # 1 Proposed Order) (Klusmann, Beth) (Entered: 10/22/2015)

10/22/20 25 Brief/Memorandum in Support filed by Leslie Bingham-Escareno, Tomas

15

5 Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan

Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community

Affairs re 254 MOTION to Supplement the Record (Klusmann, Beth) (Entered: 10/22/2015)

11/09/20 15

25 REPLY filed by The Inclusive Communities Project Inc re: 252 MOTION to 6 Amend/Correct 250 Memorandum Opinion and Order The Inclusive
Communities Project, Inc's Motion to Supplement the Trial Record (Daniel, Michael) (Entered: 11/09/2015)

11/23/20 15

25 REPLY filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent Conine, 7 Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray,
Texas Department of Housing and Community Affairs re: 254 MOTION to Supplement the Record (Klusmann, Beth) (Entered: 11/23/2015)

12/10/20 15

25 MEMORANDUM OPINION AND ORDER granting in part 252 Motion to 8 Supplement the Trial Record, filed by The Inclusive Communities Project Inc,
and 254 Cross-Motion to Supplement the Record, filed by Juan Sanchez Munoz, Michael Gerber, C Kent Conine, Leslie Bingham-Escareno, Gloria L Ray, Dionicio Vidal Flores, Texas Department of Housing and Community Affairs, Tomas Cardenas, and adopting procedure for first round of merits briefing (plaintiff's prima facie case). (Ordered by Judge Sidney A Fitzwater on 12/10/2015) (Judge Sidney A Fitzwater) (Entered: 12/10/2015)

01/07/20 16

25 Brief/Memorandum in Support filed by The Inclusive Communities Project 9 Inc re 258 Memorandum Opinion and Order,, The Inclusive Communities
Project, Inc.'s Prima Facie Case Brief (Daniel, Michael) (Entered: 01/07/2016)

01/07/20 16

26 Appendix in Support filed by The Inclusive Communities Project Inc 0 re 259 Brief/Memorandum in Support of Motion Appendix in Support of The
Inclusive Communities Project, Inc.'s Prima Facie Case Brief (Attachments: # 1 Additional Page(s) Pages 58-84, # 2 Additional Page(s) Pages 85-374, # 3 Additional Page(s) Pages 375-679, # 4 Additional Page(s) Pages 680-814) (Daniel, Michael) (Entered: 01/07/2016)

01/21/20 16

26 MOTION DEFENDANTS UNOPPOSED MOTION TO SUPPLEMENT 1 THE TRIAL RECORD filed by Leslie Bingham-Escareno, Tomas Cardenas,
C Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs (Attachments: # 1 Proposed Order) (Calaf, Maria) (Entered: 01/21/2016)

01/22/20 16

26 ORDER granting 261 DEFENDANTS' UNOPPOSED MOTION TO 2 SUPPLEMENT THE TRIAL RECORD filed by Leslie Bingham-Escareno,
Tomas Cardenas, C Kent Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs. (Ordered by Judge Sidney A Fitzwater on 1/22/2016) (Judge Sidney A Fitzwater) (Entered: 01/22/2016)

02/04/20 16

26 RESPONSE filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent 3 Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria
L Ray, Texas Department of Housing and Community Affairs re: 259Brief/Memorandum in Support of Motion (Klusmann, Beth) (Entered: 02/04/2016)

02/25/20 26 REPLY filed by The Inclusive Communities Project Inc re: 258 Memorandum

16

4 Opinion and Order,, (Daniel, Michael) (Entered: 02/25/2016)

03/16/20 16

26 ADVISORY TO COUNSEL. Counsel are requested to confer and advise the 5 court by letter or email of their availability for oral argument on the question
whether plaintiff has established a prima facie case. The court is available at 2:00 p.m. on any of the following Fridays: June 17, June 24, July 1, or July 8, 2016. A letter can be sent to Fitzwater_Orders@txnd.uscourts.gov, and email information can be submitted via a Chambers "Help Desk" Submission Form at http://cf.txnd.uscourts.gov/www2/forms/saf_email.cfm. After a date is selected, the court will issue an order setting the hearing and addressing the argument procedure. (Judge Sidney A. Fitzwater) (Entered: 03/16/2016)

03/22/20 16

26 ORDER: Hearing set for 6/17/2016 02:00 PM in US Courthouse, Courtroom 6 1525, 1100 Commerce St., Dallas, TX 75242-1310 before Judge Sidney A
Fitzwater. (Ordered by Judge Sidney A Fitzwater on 3/22/2016) (Judge Sidney A Fitzwater) (Entered: 03/22/2016)

04/07/20 16

26 NOTICE of Intervenor Argument Request re: 266 Order Setting 7 Deadline/Hearing filed by Leslie Bingham-Escareno, Tomas Cardenas, C Kent
Conine, Dionicio Vidal Flores, Michael Gerber, Juan Sanchez Munoz, Gloria L Ray, Texas Department of Housing and Community Affairs (Klusmann, Beth) (Entered: 04/07/2016)

05/13/20 26 ORDER re Oral Argument Procedure. (Ordered by Judge Sidney A Fitzwater

16

8 on 5/13/2016) (Judge Sidney A Fitzwater) (Entered: 05/13/2016)

06/17/20 16

26 ELECTRONIC Minute Entry for proceedings held before Judge Sidney A 9 Fitzwater: Oral argument held on 6/17/2016. Taken under advisement. Written
order to follow. Attorney Appearances: Plaintiff - Michael M. Daniel with Laura B Beshara; Defense - Beth Klusmann with Maria Calaf and Brent Rosenthal. (Court Reporter: Pamela Wilson) (No exhibits) Time in Court :57. (chmb) (Entered: 06/17/2016)

07/01/20 16

27 Notice of Filing of Official Electronic Transcript of Oral Argument 0 Proceedings held on 6/17/2016 before Judge Sidney Fitzwater. Court
Reporter/Transcriber Pamela Wilson, Telephone number 214.662.1557. Parties are notified of their duty to review the transcript. A copy may be purchased from the court reporter or viewed at the clerk's office. If redaction is necessary, a Redaction Request - Transcript must be filed within 21 days. If no such Request is filed, the transcript will be made available via PACER without redaction after 90 calendar days. If redaction request filed, this transcript will

not be accessible via PACER; see redacted transcript. The clerk will mail a copy of this notice to parties not electronically noticed. (59 pages) Redaction Request due 7/22/2016. Redacted Transcript Deadline set for 8/1/2016. Release of Transcript Restriction set for 9/29/2016. (pjw) (Entered: 07/01/2016)

08/26/20 27 MEMORANDUM OPINION finding that plaintiff has not proved a prima

16

1 facie case on its disparate impact claim. (Ordered by Judge Sidney A

Fitzwater on 8/26/2016) (Judge Sidney A Fitzwater) (Entered: 08/26/2016)

08/26/20 16

27 JUDGMENT in favor of Texas Department of Housing and Community 2 Affairs, C Kent Conine, Dionicio Vidal Flores, Gloria L Ray, Juan Sanchez
Munoz, Leslie Bingham-Escareno, Michael Gerber, and Tomas Cardenas against The Inclusive Communities Project Inc. Pursuant to LR 79.2 and LCrR 55.2, exhibits may be claimed during the 60-day period following final disposition (to do so, follow the procedures found at Exhibit Guide). The clerk will discard exhibits that remain unclaimed after the 60-day period without additional notice. (Clerk to notice any party not electronically noticed.) (Ordered by Judge Sidney A Fitzwater on 8/26/2016) (Judge Sidney A Fitzwater) (Entered: 08/26/2016)

09/23/20 16

27 MOTION for New Trial , MOTION to 3 Amend/Correct 272 Judgment,, 271 Memorandum Opinion and Order (),
MOTION to Alter Judgment filed by The Inclusive Communities Project Inc (Daniel, Michael) (Entered: 09/23/2016)

09/23/20 16

27 Brief/Memorandum in Support filed by The Inclusive Communities Project 4 Inc re 273 MOTION for New TrialMOTION to
Amend/Correct 272 Judgment,, 271 Memorandum Opinion and Order MOTION to Alter Judgment(Daniel, Michael) (Entered: 09/23/2016)

10/04/20 16

27 ORDER denying 273 Motion for New Trial; denying 273 Motion to 5 Amend/Correct; denying 273 Motion to Alter Judgment filed by The Inclusive
Communities Project Inc. (Ordered by Judge Sidney A Fitzwater on 10/4/2016) (Judge Sidney A Fitzwater) (Entered: 10/04/2016)

02/07/20 18

Notice Regarding Disposition of Trial/Hearing Exhibits Pursuant to Local Court Rule CV 79.2(b). Exhibits scheduled for destruction 14 days from the date of this notice unless claimed. --Signed by Deputy Clerk S VanCamp. (svc) (Entered: 02/07/2018)

05/21/20 18

Return of Exhibits to Texas Department of Housing and Community Affairs via Federal Express: 772273721176,772273721901,772273721820,772273721810,772273721740, 772273721669,772273721544, 772273721522,772273721474 (svc) (Entered: 05/21/2018)

05/21/20 18

Destruction of Exhibits offered by The Inclusive Communities Project Inc (EXH-ADM flag removed) (svc) (Entered: 05/21/2018)

 
 (Slip Opinion)

OCTOBER TERM, 2014

1

Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES

Syllabus
TEXAS DEPARTMENT OF HOUSING AND 
 COMMUNITY AFFAIRS ET AL. v. INCLUSIVE 

COMMUNITIES PROJECT, INC., ET AL. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 13–1371. Argued January 21, 2015—Decided June 25, 2015
The Federal Government provides low-income housing tax credits that are distributed to developers by designated state agencies. In Texas, the Department of Housing and Community Affairs (Department) distributes the credits. The Inclusive Communities Project, Inc. (ICP), a Texas-based nonprofit corporation that assists low-income families in obtaining affordable housing, brought a disparate-impact claim under §§804(a) and 805(a) of the Fair Housing Act (FHA), alleging that the Department and its officers had caused continued segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods. Relying on statistical evidence, the District Court concluded that the ICP had established a prima facie showing of disparate impact. After assuming the Department’s proffered non-discriminatory interests were valid, it found that the Department failed to meet its burden to show that there were no less discriminatory alternatives for allocating the tax credits. While the Department’s appeal was pending, the Secretary of Housing and Urban Development issued a regulation interpreting the FHA to encompass disparate-impact liability and establishing a burden-shifting framework for adjudicating such claims. The Fifth Circuit held that disparate-impact claims are cognizable under the FHA, but reversed and remanded on the merits, concluding that, in light of the new regulation, the District Court had improperly required the Department to prove less discriminatory alternatives. The FHA was adopted shortly after the assassination of Dr. Martin Luther King, Jr. Recognizing that persistent racial segregation had

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left predominantly black inner cities surrounded by mostly white suburbs, the Act addresses the denial of housing opportunities on the basis of “race, color, religion, or national origin.” In 1988, Congress amended the FHA, and, as relevant here, created certain exemptions from liability.
Held: Disparate-impact claims are cognizable under the Fair Housing Act. Pp. 7–24. (a) Two antidiscrimination statutes that preceded the FHA are relevant to its interpretation. Both §703(a)(2) of Title VII of the Civil Rights Act of 1964 and §4(a)(2) of the Age Discrimination in Employment Act of 1967 (ADEA) authorize disparate-impact claims. Under Griggs v. Duke Power Co., 401 U. S. 424, and Smith v. City of Jackson, 544 U. S. 228, the cases announcing the rule for Title VII and for the ADEA, respectively, antidiscrimination laws should be construed to encompass disparate-impact claims when their text refers to the consequences of actions and not just to the mindset of actors, and where that interpretation is consistent with statutory purpose. Disparate-impact liability must be limited so employers and other regulated entities are able to make the practical business choices and profit-related decisions that sustain the free-enterprise system. Before rejecting a business justification—or a governmental entity’s analogous public interest—a court must determine that a plaintiff has shown that there is “an available alternative . . . practice that has less disparate impact and serves the [entity’s] legitimate needs.” Ricci v. DeStefano, 557 U. S. 557, 578. These cases provide essential background and instruction in the case at issue. Pp. 7–10. (b) Under the FHA it is unlawful to “refuse to sell or rent . . . or otherwise make unavailable or deny, a dwelling to a person because of race” or other protected characteristic, §804(a), or “to discriminate against any person in” making certain real-estate transactions “because of race” or other protected characteristic, §805(a). The logic of Griggs and Smith provides strong support for the conclusion that the FHA encompasses disparate-impact claims. The results-oriented phrase “otherwise make unavailable” refers to the consequences of an action rather than the actor’s intent. See United States v. Giles, 300 U. S. 41, 48. And this phrase is equivalent in function and purpose to Title VII’s and the ADEA’s “otherwise adversely affect” language. In all three statutes the operative text looks to results and plays an identical role: as a catchall phrase, located at the end of a lengthy sentence that begins with prohibitions on disparate treatment. The introductory word “otherwise” also signals a shift in emphasis from an actor’s intent to the consequences of his actions. This similarity in text and structure is even more compelling because Congress passed the FHA only four years after Title VII and four months after the

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ADEA. Although the FHA does not reiterate Title VII’s exact language, Congress chose words that serve the same purpose and bear the same basic meaning but are consistent with the FHA’s structure and objectives. The FHA contains the phrase “because of race,” but Title VII and the ADEA also contain that wording and this Court nonetheless held that those statutes impose disparate-impact liability.
The 1988 amendments signal that Congress ratified such liability. Congress knew that all nine Courts of Appeals to have addressed the question had concluded the FHA encompassed disparate-impact claims, and three exemptions from liability in the 1988 amendments would have been superfluous had Congress assumed that disparateimpact liability did not exist under the FHA.
Recognition of disparate-impact claims is also consistent with the central purpose of the FHA, which, like Title VII and the ADEA, was enacted to eradicate discriminatory practices within a sector of the Nation’s economy. Suits targeting unlawful zoning laws and other housing restrictions that unfairly exclude minorities from certain neighborhoods without sufficient justification are at the heartland of disparate-impact liability. See, e.g., Huntington v. Huntington Branch, NAACP, 488 U. S. 15, 16–18. Recognition of disparateimpact liability under the FHA plays an important role in uncovering discriminatory intent: it permits plaintiffs to counteract unconscious prejudices and disguised animus that escape easy classification as disparate treatment.
But disparate-impact liability has always been properly limited in key respects to avoid serious constitutional questions that might arise under the FHA, e.g., if such liability were imposed based solely on a showing of a statistical disparity. Here, the underlying dispute involves a novel theory of liability that may, on remand, be seen simply as an attempt to second-guess which of two reasonable approaches a housing authority should follow in allocating tax credits for low-income housing. An important and appropriate means of ensuring that disparate-impact liability is properly limited is to give housing authorities and private developers leeway to state and explain the valid interest their policies serve, an analysis that is analogous to Title VII’s business necessity standard. It would be paradoxical to construe the FHA to impose onerous costs on actors who encourage revitalizing dilapidated housing in the Nation’s cities merely because some other priority might seem preferable. A disparate-impact claim relying on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity. A robust causality requirement is important in ensuring that defendants do not resort to the use of racial quotas. Courts must

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therefore examine with care whether a plaintiff has made out a prima facie showing of disparate impact, and prompt resolution of these cases is important. Policies, whether governmental or private, are not contrary to the disparate-impact requirement unless they are “artificial, arbitrary, and unnecessary barriers.” Griggs, 401 U. S., at 431. Courts should avoid interpreting disparate-impact liability to be so expansive as to inject racial considerations into every housing decision. These limitations are also necessary to protect defendants against abusive disparate-impact claims.
And when courts do find liability under a disparate-impact theory, their remedial orders must be consistent with the Constitution. Remedial orders in disparate-impact cases should concentrate on the elimination of the offending practice, and courts should strive to design race-neutral remedies. Remedial orders that impose racial targets or quotas might raise difficult constitutional questions.
While the automatic or pervasive injection of race into public and private transactions covered by the FHA has special dangers, race may be considered in certain circumstances and in a proper fashion. This Court does not impugn local housing authorities’ race-neutral efforts to encourage revitalization of communities that have long suffered the harsh consequences of segregated housing patterns. These authorities may choose to foster diversity and combat racial isolation with race-neutral tools, and mere awareness of race in attempting to solve the problems facing inner cities does not doom that endeavor at the outset. Pp. 10–23. 747 F. 3d 275, affirmed and remanded.
KENNEDY, J., delivered the opinion of the Court, in which GINSBURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined. THOMAS, J., filed a dissenting opinion. ALITO, J., filed a dissenting opinion, in which ROBERTS, C. J., and SCALIA and THOMAS, JJ., joined.

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NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 13–1371
_________________
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, ET AL., PETITIONERS v. THE INCLUSIVE COMMUNITIES PROJECT, INC., ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 
 APPEALS FOR THE FIFTH CIRCUIT

[June 25, 2015] 

JUSTICE KENNEDY delivered the opinion of the Court.
The underlying dispute in this case concerns where housing for low-income persons should be constructed in Dallas, Texas—that is, whether the housing should be built in the inner city or in the suburbs. This dispute comes to the Court on a disparate-impact theory of liability. In contrast to a disparate-treatment case, where a “plaintiff must establish that the defendant had a discriminatory intent or motive,” a plaintiff bringing a disparateimpact claim challenges practices that have a “disproportionately adverse effect on minorities” and are otherwise unjustified by a legitimate rationale. Ricci v. DeStefano, 557 U. S. 557, 577 (2009) (internal quotation marks omitted). The question presented for the Court’s determination is whether disparate-impact claims are cognizable under the Fair Housing Act (or FHA), 82 Stat. 81, as amended, 42 U. S. C. §3601 et seq.
I A
Before turning to the question presented, it is necessary

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to discuss a different federal statute that gives rise to this dispute. The Federal Government provides low-income housing tax credits that are distributed to developers through designated state agencies. 26 U. S. C. §42. Congress has directed States to develop plans identifying selection criteria for distributing the credits. §42(m)(1). Those plans must include certain criteria, such as public housing waiting lists, §42(m)(1)(C), as well as certain preferences, including that low-income housing units “contribut[e] to a concerted community revitalization plan” and be built in census tracts populated predominantly by low-income residents. §§42(m)(1)(B)(ii)(III), 42(d)(5)(ii)(I). Federal law thus favors the distribution of these tax credits for the development of housing units in low-income areas.
In the State of Texas these federal credits are distributed by the Texas Department of Housing and Community Affairs (Department). Under Texas law, a developer’s application for the tax credits is scored under a point system that gives priority to statutory criteria, such as the financial feasibility of the development project and the income level of tenants. Tex. Govt. Code Ann. §§2306.6710(a)–(b) (West 2008). The Texas Attorney General has interpreted state law to permit the consideration of additional criteria, such as whether the housing units will be built in a neighborhood with good schools. Those criteria cannot be awarded more points than statutorily mandated criteria. Tex. Op. Atty. Gen. No. GA– 0208, pp. 2–6 (2004), 2004 WL 1434796, *4–*6.
The Inclusive Communities Project, Inc. (ICP), is a Texas-based nonprofit corporation that assists low-income families in obtaining affordable housing. In 2008, the ICP brought this suit against the Department and its officers in the United States District Court for the Northern District of Texas. As relevant here, it brought a disparateimpact claim under §§804(a) and 805(a) of the FHA. The

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ICP alleged the Department has caused continued segregated housing patterns by its disproportionate allocation of the tax credits, granting too many credits for housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods. The ICP contended that the Department must modify its selection criteria in order to encourage the construction of lowincome housing in suburban communities.
The District Court concluded that the ICP had established a prima facie case of disparate impact. It relied on two pieces of statistical evidence. First, it found “from 1999–2008, [the Department] approved tax credits for 49.7% of proposed non-elderly units in 0% to 9.9% Caucasian areas, but only approved 37.4% of proposed nonelderly units in 90% to 100% Caucasian areas.” 749 F. Supp. 2d 486, 499 (ND Tex. 2010) (footnote omitted). Second, it found “92.29% of [low-income housing tax credit] units in the city of Dallas were located in census tracts with less than 50% Caucasian residents.” Ibid.
The District Court then placed the burden on the Department to rebut the ICP’s prima facie showing of disparate impact. 860 F. Supp. 2d 312, 322–323 (2012). After assuming the Department’s proffered interests were legitimate, id., at 326, the District Court held that a defendant—here the Department—must prove “that there are no other less discriminatory alternatives to advancing their proffered interests,” ibid. Because, in its view, the Department “failed to meet [its] burden of proving that there are no less discriminatory alternatives,” the District Court ruled for the ICP. Id., at 331.
The District Court’s remedial order required the addition of new selection criteria for the tax credits. For instance, it awarded points for units built in neighborhoods with good schools and disqualified sites that are located adjacent to or near hazardous conditions, such as high crime areas or landfills. See 2012 WL 3201401 (Aug. 7,

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2012). The remedial order contained no explicit racial targets or quotas.
While the Department’s appeal was pending, the Secretary of Housing and Urban Development (HUD) issued a regulation interpreting the FHA to encompass disparateimpact liability. See Implementation of the Fair Housing Act’s Discriminatory Effects Standard, 78 Fed. Reg. 11460 (2013). The regulation also established a burden-shifting framework for adjudicating disparate-impact claims. Under the regulation, a plaintiff first must make a prima facie showing of disparate impact. That is, the plaintiff “has the burden of proving that a challenged practice caused or predictably will cause a discriminatory effect.” 24 CFR §100.500(c)(1) (2014). If a statistical discrepancy is caused by factors other than the defendant’s policy, a plaintiff cannot establish a prima facie case, and there is no liability. After a plaintiff does establish a prima facie showing of disparate impact, the burden shifts to the defendant to “prov[e] that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests.” §100.500(c)(2). HUD has clarified that this step of the analysis “is analogous to the Title VII requirement that an employer’s interest in an employment practice with a disparate impact be job related.” 78 Fed. Reg. 11470. Once a defendant has satisfied its burden at step two, a plaintiff may “prevail upon proving that the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect.” §100.500(c)(3).
The Court of Appeals for the Fifth Circuit held, consistent with its precedent, that disparate-impact claims are cognizable under the FHA. 747 F. 3d 275, 280 (2014). On the merits, however, the Court of Appeals reversed and remanded. Relying on HUD’s regulation, the Court of Appeals held that it was improper for the District Court to

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have placed the burden on the Department to prove there were no less discriminatory alternatives for allocating lowincome housing tax credits. Id., at 282–283. In a concurring opinion, Judge Jones stated that on remand the District Court should reexamine whether the ICP had made out a prima facie case of disparate impact. She suggested the District Court incorrectly relied on bare statistical evidence without engaging in any analysis about causation. She further observed that, if the federal law providing for the distribution of low-income housing tax credits ties the Department’s hands to such an extent that it lacks a meaningful choice, then there is no disparate-impact liability. See id., at 283–284 (specially concurring opinion).
The Department filed a petition for a writ of certiorari on the question whether disparate-impact claims are cognizable under the FHA. The question was one of first impression, see Huntington v. Huntington Branch, NAACP, 488 U. S. 15 (1988) (per curiam), and certiorari followed, 573 U. S. ___ (2014). It is now appropriate to provide a brief history of the FHA’s enactment and its later amendment.
B
De jure residential segregation by race was declared unconstitutional almost a century ago, Buchanan v. Warley, 245 U. S. 60 (1917), but its vestiges remain today, intertwined with the country’s economic and social life. Some segregated housing patterns can be traced to conditions that arose in the mid-20th century. Rapid urbanization, concomitant with the rise of suburban developments accessible by car, led many white families to leave the inner cities. This often left minority families concentrated in the center of the Nation’s cities. During this time, various practices were followed, sometimes with governmental support, to encourage and maintain the separation

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of the races: Racially restrictive covenants prevented the conveyance of property to minorities, see Shelley v. Kraemer, 334 U. S. 1 (1948); steering by real-estate agents led potential buyers to consider homes in racially homogenous areas; and discriminatory lending practices, often referred to as redlining, precluded minority families from purchasing homes in affluent areas. See, e.g., M. Klarman, Unfinished Business: Racial Equality in American History 140– 141 (2007); Brief for Housing Scholars as Amici Curiae 22–23. By the 1960’s, these policies, practices, and prejudices had created many predominantly black inner cities surrounded by mostly white suburbs. See K. Clark, Dark Ghetto: Dilemmas of Social Power 11, 21–26 (1965).
The mid-1960’s was a period of considerable social unrest; and, in response, President Lyndon Johnson established the National Advisory Commission on Civil Disorders, commonly known as the Kerner Commission. Exec. Order No. 11365, 3 CFR 674 (1966–1970 Comp.). After extensive factfinding the Commission identified residential segregation and unequal housing and economic conditions in the inner cities as significant, underlying causes of the social unrest. See Report of the National Advisory Commission on Civil Disorders 91 (1968) (Kerner Commission Report). The Commission found that “[n]early two-thirds of all nonwhite families living in the central cities today live in neighborhoods marked by substandard housing and general urban blight.” Id., at 13. The Commission further found that both open and covert racial discrimination prevented black families from obtaining better housing and moving to integrated communities. Ibid. The Commission concluded that “[o]ur Nation is moving toward two societies, one black, one white— separate and unequal.” Id., at 1. To reverse “[t]his deepening racial division,” ibid., it recommended enactment of “a comprehensive and enforceable open-occupancy law making it an offense to discriminate in the sale or rental of

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any housing . . . on the basis of race, creed, color, or national origin.” Id., at 263.
In April 1968, Dr. Martin Luther King, Jr., was assassinated in Memphis, Tennessee, and the Nation faced a new urgency to resolve the social unrest in the inner cities. Congress responded by adopting the Kerner Commission’s recommendation and passing the Fair Housing Act. The statute addressed the denial of housing opportunities on the basis of “race, color, religion, or national origin.” Civil Rights Act of 1968, §804, 82 Stat. 83. Then, in 1988, Congress amended the FHA. Among other provisions, it created certain exemptions from liability and added “familial status” as a protected characteristic. See Fair Housing Amendments Act of 1988, 102 Stat. 1619.
II
The issue here is whether, under a proper interpretation of the FHA, housing decisions with a disparate impact are prohibited. Before turning to the FHA, however, it is necessary to consider two other antidiscrimination statutes that preceded it.
The first relevant statute is §703(a) of Title VII of the Civil Rights Act of 1964, 78 Stat. 255. The Court addressed the concept of disparate impact under this statute in Griggs v. Duke Power Co., 401 U. S. 424 (1971). There, the employer had a policy requiring its manual laborers to possess a high school diploma and to obtain satisfactory scores on two intelligence tests. The Court of Appeals held the employer had not adopted these job requirements for a racially discriminatory purpose, and the plaintiffs did not challenge that holding in this Court. Instead, the plaintiffs argued §703(a)(2) covers the discriminatory effect of a practice as well as the motivation behind the practice. Section 703(a), as amended, provides as follows:
“It shall be an unlawful employer practice for an employer—

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“(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or
“(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.” 42 U. S. C. §2000e–2(a).
The Court did not quote or cite the full statute, but rather relied solely on §703(a)(2). Griggs, 401 U. S., at 426, n. 1.
In interpreting §703(a)(2), the Court reasoned that disparate-impact liability furthered the purpose and design of the statute. The Court explained that, in §703(a)(2), Congress “proscribe[d] not only overt discrimination but also practices that are fair in form, but discriminatory in operation.” Id., at 431. For that reason, as the Court noted, “Congress directed the thrust of [§703(a)(2)] to the consequences of employment practices, not simply the motivation.” Id., at 432. In light of the statute’s goal of achieving “equality of employment opportunities and remov[ing] barriers that have operated in the past” to favor some races over others, the Court held §703(a)(2) of Title VII must be interpreted to allow disparate-impact claims. Id., at 429–430.
The Court put important limits on its holding: namely, not all employment practices causing a disparate impact impose liability under §703(a)(2). In this respect, the Court held that “business necessity” constitutes a defense to disparate-impact claims. Id., at 431. This rule provides, for example, that in a disparate-impact case,

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§703(a)(2) does not prohibit hiring criteria with a “manifest relationship” to job performance. Id., at 432; see also Ricci, 557 U. S., at 587–589 (emphasizing the importance of the business necessity defense to disparate-impact liability). On the facts before it, the Court in Griggs found a violation of Title VII because the employer could not establish that high school diplomas and general intelligence tests were related to the job performance of its manual laborers. See 401 U. S., at 431–432.
The second relevant statute that bears on the proper interpretation of the FHA is the Age Discrimination in Employment Act of 1967 (ADEA), 81 Stat. 602 et seq., as amended. Section 4(a) of the ADEA provides:
“It shall be unlawful for an employer— “(1) to fail or refuse to hire or to discharge any indi-
vidual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age;
“(2) to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age; or
“(3) to reduce the wage rate of any employee in order to comply with this chapter.” 29 U. S. C. §623(a).
The Court first addressed whether this provision allows disparate-impact claims in Smith v. City of Jackson, 544 U. S. 228 (2005). There, a group of older employees challenged their employer’s decision to give proportionately greater raises to employees with less than five years of experience.
Explaining that Griggs “represented the better reading of [Title VII’s] statutory text,” 544 U. S., at 235, a plurality of the Court concluded that the same reasoning pertained

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to §4(a)(2) of the ADEA. The Smith plurality emphasized that both §703(a)(2) of Title VII and §4(a)(2) of the ADEA contain language “prohibit[ing] such actions that ‘deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s’ race or age.” 544 U. S., at 235. As the plurality observed, the text of these provisions “focuses on the effects of the action on the employee rather than the motivation for the action of the employer” and therefore compels recognition of disparate-impact liability. Id., at 236. In a separate opinion, JUSTICE SCALIA found the ADEA’s text ambiguous and thus deferred under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), to an Equal Employment Opportunity Commission regulation interpreting the ADEA to impose disparate-impact liability, see 544 U. S., at 243–247 (opinion concurring in part and concurring in judgment).
Together, Griggs holds and the plurality in Smith instructs that antidiscrimination laws must be construed to encompass disparate-impact claims when their text refers to the consequences of actions and not just to the mindset of actors, and where that interpretation is consistent with statutory purpose. These cases also teach that disparateimpact liability must be limited so employers and other regulated entities are able to make the practical business choices and profit-related decisions that sustain a vibrant and dynamic free-enterprise system. And before rejecting a business justification—or, in the case of a governmental entity, an analogous public interest—a court must determine that a plaintiff has shown that there is “an available alternative . . . practice that has less disparate impact and serves the [entity’s] legitimate needs.” Ricci, supra, at 578. The cases interpreting Title VII and the ADEA provide essential background and instruction in the case now before the Court.
Turning to the FHA, the ICP relies on two provisions.

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Section 804(a) provides that it shall be unlawful:
“To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” 42 U. S. C. §3604(a).
Here, the phrase “otherwise make unavailable” is of central importance to the analysis that follows.
Section 805(a), in turn, provides:
“It shall be unlawful for any person or other entity whose business includes engaging in real estaterelated transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.” §3605(a).
Applied here, the logic of Griggs and Smith provides strong support for the conclusion that the FHA encompasses disparate-impact claims. Congress’ use of the phrase “otherwise make unavailable” refers to the consequences of an action rather than the actor’s intent. See United States v. Giles, 300 U. S. 41, 48 (1937) (explaining that the “word ‘make’ has many meanings, among them ‘[t]o cause to exist, appear or occur’ ” (quoting Webster’s New International Dictionary 1485 (2d ed. 1934))). This results-oriented language counsels in favor of recognizing disparate-impact liability. See Smith, supra, at 236. The Court has construed statutory language similar to §805(a) to include disparate-impact liability. See, e.g., Board of Ed. of City School Dist. of New York v. Harris, 444 U. S. 130, 140–141 (1979) (holding the term “discriminat[e]” encompassed disparate-impact liability in the context of a statute’s text, history, purpose, and structure).

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A comparison to the antidiscrimination statutes examined in Griggs and Smith is useful. Title VII’s and the ADEA’s “otherwise adversely affect” language is equivalent in function and purpose to the FHA’s “otherwise make unavailable” language. In these three statutes the operative text looks to results. The relevant statutory phrases, moreover, play an identical role in the structure common to all three statutes: Located at the end of lengthy sentences that begin with prohibitions on disparate treatment, they serve as catchall phrases looking to consequences, not intent. And all three statutes use the word “otherwise” to introduce the results-oriented phrase. “Otherwise” means “in a different way or manner,” thus signaling a shift in emphasis from an actor’s intent to the consequences of his actions. Webster’s Third New International Dictionary 1598 (1971). This similarity in text and structure is all the more compelling given that Congress passed the FHA in 1968—only four years after passing Title VII and only four months after enacting the ADEA.
It is true that Congress did not reiterate Title VII’s exact language in the FHA, but that is because to do so would have made the relevant sentence awkward and unclear. A provision making it unlawful to “refuse to sell[,] . . . or otherwise [adversely affect], a dwelling to any person” because of a protected trait would be grammatically obtuse, difficult to interpret, and far more expansive in scope than Congress likely intended. Congress thus chose words that serve the same purpose and bear the same basic meaning but are consistent with the structure and objectives of the FHA.
Emphasizing that the FHA uses the phrase “because of race,” the Department argues this language forecloses disparate-impact liability since “[a]n action is not taken ‘because of race’ unless race is a reason for the action.” Brief for Petitioners 26. Griggs and Smith, however,

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dispose of this argument. Both Title VII and the ADEA contain identical “because of ” language, see 42 U. S. C. §2000e–2(a)(2); 29 U. S. C. §623(a)(2), and the Court nonetheless held those statutes impose disparate-impact liability.
In addition, it is of crucial importance that the existence of disparate-impact liability is supported by amendments to the FHA that Congress enacted in 1988. By that time, all nine Courts of Appeals to have addressed the question had concluded the Fair Housing Act encompassed disparateimpact claims. See Huntington Branch, NAACP v. Huntington, 844 F. 2d 926, 935–936 (CA2 1988); Resident Advisory Bd. v. Rizzo, 564 F. 2d 126, 146 (CA3 1977); Smith v. Clarkton, 682 F. 2d 1055, 1065 (CA4 1982); Hanson v. Veterans Administration, 800 F. 2d 1381, 1386 (CA5 1986); Arthur v. Toledo, 782 F. 2d 565, 574–575 (CA6 1986); Metropolitan Housing Development Corp. v. Arlington Heights, 558 F. 2d 1283, 1290 (CA7 1977); United States v. Black Jack, 508 F. 2d 1179, 1184–1185 (CA8 1974); Halet v. Wend Investment Co., 672 F. 2d 1305, 1311 (CA9 1982); United States v. Marengo Cty. Comm’n, 731 F. 2d 1546, 1559, n. 20 (CA11 1984).
When it amended the FHA, Congress was aware of this unanimous precedent. And with that understanding, it made a considered judgment to retain the relevant statutory text. See H. R. Rep. No. 100–711, p. 21, n. 52 (1988) (H. R. Rep.) (discussing suits premised on disparateimpact claims and related judicial precedent); 134 Cong. Rec. 23711 (1988) (statement of Sen. Kennedy) (noting unanimity of Federal Courts of Appeals concerning disparate impact); Fair Housing Amendments Act of 1987: Hearings on S. 558 before the Subcommittee on the Constitution of the Senate Committee on the Judiciary, 100th Cong., 1st Sess., 529 (1987) (testimony of Professor Robert Schwemm) (describing consensus judicial view that the FHA imposed disparate-impact liability). Indeed, Con-

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gress rejected a proposed amendment that would have eliminated disparate-impact liability for certain zoning decisions. See H. R. Rep., at 89–93.
Against this background understanding in the legal and regulatory system, Congress’ decision in 1988 to amend the FHA while still adhering to the operative language in §§804(a) and 805(a) is convincing support for the conclusion that Congress accepted and ratified the unanimous holdings of the Courts of Appeals finding disparate-impact liability. “If a word or phrase has been . . . given a uniform interpretation by inferior courts . . . , a later version of that act perpetuating the wording is presumed to carry forward that interpretation.” A. Scalia & B. Garner, Reading Law: The Interpretation of Legal Texts 322 (2012); see also Forest Grove School Dist. v. T. A., 557 U. S. 230, 244, n. 11 (2009) (“When Congress amended [the Act] without altering the text of [the relevant provision], it implicitly adopted [this Court’s] construction of the statute”); Manhattan Properties, Inc. v. Irving Trust Co., 291 U. S. 320, 336 (1934) (explaining, where the Courts of Appeals had reached a consensus interpretation of the Bankruptcy Act and Congress had amended the Act without changing the relevant provision, “[t]his is persuasive that the construction adopted by the [lower federal] courts has been acceptable to the legislative arm of the government”).
Further and convincing confirmation of Congress’ understanding that disparate-impact liability exists under the FHA is revealed by the substance of the 1988 amendments. The amendments included three exemptions from liability that assume the existence of disparate-impact claims. The most logical conclusion is that the three amendments were deemed necessary because Congress presupposed disparate impact under the FHA as it had been enacted in 1968.
The relevant 1988 amendments were as follows. First,

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Congress added a clarifying provision: “Nothing in [the FHA] prohibits a person engaged in the business of furnishing appraisals of real property to take into consideration factors other than race, color, religion, national origin, sex, handicap, or familial status.” 42 U. S. C. §3605(c). Second, Congress provided: “Nothing in [the FHA] prohibits conduct against a person because such person has been convicted by any court of competent jurisdiction of the illegal manufacture or distribution of a controlled substance.” §3607(b)(4). And finally, Congress specified: “Nothing in [the FHA] limits the applicability of any reasonable . . . restrictions regarding the maximum number of occupants permitted to occupy a dwelling.” §3607(b)(1).
The exemptions embodied in these amendments would be superfluous if Congress had assumed that disparateimpact liability did not exist under the FHA. See Gustafson v. Alloyd Co., 513 U. S. 561, 574 (1995) (“[T]he Court will avoid a reading which renders some words altogether redundant”). Indeed, none of these amendments would make sense if the FHA encompassed only disparate-treatment claims. If that were the sole ground for liability, the amendments merely restate black-letter law. If an actor makes a decision based on reasons other than a protected category, there is no disparate-treatment liability. See, e.g., Texas Dept. of Community Affairs v. Burdine, 450 U. S. 248, 254 (1981). But the amendments do constrain disparate-impact liability. For instance, certain criminal convictions are correlated with sex and race. See, e.g., Kimbrough v. United States, 552 U. S. 85, 98 (2007) (discussing the racial disparity in convictions for crack cocaine offenses). By adding an exemption from liability for exclusionary practices aimed at individuals with drug convictions, Congress ensured disparate-impact liability would not lie if a landlord excluded tenants with such convictions. The same is true of the provision allowing for reasonable restrictions on occupancy. And the

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exemption from liability for real-estate appraisers is in the same section as §805(a)’s prohibition of discriminatory practices in real-estate transactions, thus indicating Congress’ recognition that disparate-impact liability arose under §805(a). In short, the 1988 amendments signal that Congress ratified disparate-impact liability.
A comparison to Smith’s discussion of the ADEA further demonstrates why the Department’s interpretation would render the 1988 amendments superfluous. Under the ADEA’s reasonable-factor-other-than-age (RFOA) provision, an employer is permitted to take an otherwise prohibited action where “the differentiation is based on reasonable factors other than age.” 29 U. S. C. §623(f )(1). In other words, if an employer makes a decision based on a reasonable factor other than age, it cannot be said to have made a decision on the basis of an employee’s age. According to the Smith plurality, the RFOA provision “plays its principal role” “in cases involving disparate-impact claims” “by precluding liability if the adverse impact was attributable to a nonage factor that was ‘reasonable.’ ” 544 U. S., at 239. The plurality thus reasoned that the RFOA provision would be “simply unnecessary to avoid liability under the ADEA” if liability were limited to disparate-treatment claims. Id., at 238.
A similar logic applies here. If a real-estate appraiser took into account a neighborhood’s schools, one could not say the appraiser acted because of race. And by embedding 42 U. S. C. §3605(c)’s exemption in the statutory text, Congress ensured that disparate-impact liability would not be allowed either. Indeed, the inference of disparateimpact liability is even stronger here than it was in Smith. As originally enacted, the ADEA included the RFOA provision, see §4(f)(1), 81 Stat. 603, whereas here Congress added the relevant exemptions in the 1988 amendments against the backdrop of the uniform view of the Courts of Appeals that the FHA imposed disparate-impact liability.

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Recognition of disparate-impact claims is consistent with the FHA’s central purpose. See Smith, supra, at 235 (plurality opinion); Griggs, 401 U. S., at 432. The FHA, like Title VII and the ADEA, was enacted to eradicate discriminatory practices within a sector of our Nation’s economy. See 42 U. S. C. §3601 (“It is the policy of the United States to provide, within constitutional limitations, for fair housing throughout the United States”); H. R. Rep., at 15 (explaining the FHA “provides a clear national policy against discrimination in housing”).
These unlawful practices include zoning laws and other housing restrictions that function unfairly to exclude minorities from certain neighborhoods without any sufficient justification. Suits targeting such practices reside at the heartland of disparate-impact liability. See, e.g., Huntington, 488 U. S., at 16–18 (invalidating zoning law preventing construction of multifamily rental units); Black Jack, 508 F. 2d, at 1182–1188 (invalidating ordinance prohibiting construction of new multifamily dwellings); Greater New Orleans Fair Housing Action Center v. St. Bernard Parish, 641 F. Supp. 2d 563, 569, 577–578 (ED La. 2009) (invalidating post-Hurricane Katrina ordinance restricting the rental of housing units to only “ ‘blood relative[s]’ ” in an area of the city that was 88.3% white and 7.6% black); see also Tr. of Oral Arg. 52–53 (discussing these cases). The availability of disparate-impact liability, furthermore, has allowed private developers to vindicate the FHA’s objectives and to protect their property rights by stopping municipalities from enforcing arbitrary and, in practice, discriminatory ordinances barring the construction of certain types of housing units. See, e.g., Huntington, supra, at 18. Recognition of disparateimpact liability under the FHA also plays a role in uncovering discriminatory intent: It permits plaintiffs to counteract unconscious prejudices and disguised animus that escape easy classification as disparate treatment. In this

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way disparate-impact liability may prevent segregated housing patterns that might otherwise result from covert and illicit stereotyping.
But disparate-impact liability has always been properly limited in key respects that avoid the serious constitutional questions that might arise under the FHA, for instance, if such liability were imposed based solely on a showing of a statistical disparity. Disparate-impact liability mandates the “removal of artificial, arbitrary, and unnecessary barriers,” not the displacement of valid governmental policies. Griggs, supra, at 431. The FHA is not an instrument to force housing authorities to reorder their priorities. Rather, the FHA aims to ensure that those priorities can be achieved without arbitrarily creating discriminatory effects or perpetuating segregation.
Unlike the heartland of disparate-impact suits targeting artificial barriers to housing, the underlying dispute in this case involves a novel theory of liability. See Seicshnaydre, Is Disparate Impact Having Any Impact? An Appellate Analysis of Forty Years of Disparate Impact Claims Under the Fair Housing Act, 63 Am. U. L. Rev. 357, 360–363 (2013) (noting the rarity of this type of claim). This case, on remand, may be seen simply as an attempt to second-guess which of two reasonable approaches a housing authority should follow in the sound exercise of its discretion in allocating tax credits for lowincome housing.
An important and appropriate means of ensuring that disparate-impact liability is properly limited is to give housing authorities and private developers leeway to state and explain the valid interest served by their policies. This step of the analysis is analogous to the business necessity standard under Title VII and provides a defense against disparate-impact liability. See 78 Fed. Reg. 11470 (explaining that HUD did not use the phrase “business necessity” because that “phrase may not be easily under-

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stood to cover the full scope of practices covered by the Fair Housing Act, which applies to individuals, businesses, nonprofit organizations, and public entities”). As the Court explained in Ricci, an entity “could be liable for disparate-impact discrimination only if the [challenged practices] were not job related and consistent with business necessity.” 557 U. S., at 587. Just as an employer may maintain a workplace requirement that causes a disparate impact if that requirement is a “reasonable measure[ment] of job performance,” Griggs, supra, at 436, so too must housing authorities and private developers be allowed to maintain a policy if they can prove it is necessary to achieve a valid interest. To be sure, the Title VII framework may not transfer exactly to the fair-housing context, but the comparison suffices for present purposes.
It would be paradoxical to construe the FHA to impose onerous costs on actors who encourage revitalizing dilapidated housing in our Nation’s cities merely because some other priority might seem preferable. Entrepreneurs must be given latitude to consider market factors. Zoning officials, moreover, must often make decisions based on a mix of factors, both objective (such as cost and traffic patterns) and, at least to some extent, subjective (such as preserving historic architecture). These factors contribute to a community’s quality of life and are legitimate concerns for housing authorities. The FHA does not decree a particular vision of urban development; and it does not put housing authorities and private developers in a double bind of liability, subject to suit whether they choose to rejuvenate a city core or to promote new low-income housing in suburban communities. As HUD itself recognized in its recent rulemaking, disparate-impact liability “does not mandate that affordable housing be located in neighborhoods with any particular characteristic.” 78 Fed. Reg. 11476.
In a similar vein, a disparate-impact claim that relies on

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a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity. A robust causality requirement ensures that “[r]acial imbalance . . . does not, without more, establish a prima facie case of disparate impact” and thus protects defendants from being held liable for racial disparities they did not create. Wards Cove Packing Co. v. Atonio, 490 U. S. 642, 653 (1989), superseded by statute on other grounds, 42 U. S. C. §2000e–2(k). Without adequate safeguards at the prima facie stage, disparate-impact liability might cause race to be used and considered in a pervasive way and “would almost inexorably lead” governmental or private entities to use “numerical quotas,” and serious constitutional questions then could arise. 490 U. S., at 653.
The litigation at issue here provides an example. From the standpoint of determining advantage or disadvantage to racial minorities, it seems difficult to say as a general matter that a decision to build low-income housing in a blighted inner-city neighborhood instead of a suburb is discriminatory, or vice versa. If those sorts of judgments are subject to challenge without adequate safeguards, then there is a danger that potential defendants may adopt racial quotas—a circumstance that itself raises serious constitutional concerns.
Courts must therefore examine with care whether a plaintiff has made out a prima facie case of disparate impact and prompt resolution of these cases is important. A plaintiff who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact. For instance, a plaintiff challenging the decision of a private developer to construct a new building in one location rather than another will not easily be able to show this is a policy causing a disparate impact because such a one-time decision may not be a policy at all. It may also be difficult to establish causation because of the mul-

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tiple factors that go into investment decisions about where to construct or renovate housing units. And as Judge Jones observed below, if the ICP cannot show a causal connection between the Department’s policy and a disparate impact—for instance, because federal law substantially limits the Department’s discretion—that should result in dismissal of this case. 747 F. 3d, at 283–284 (specially concurring opinion).
The FHA imposes a command with respect to disparateimpact liability. Here, that command goes to a state entity. In other cases, the command will go to a private person or entity. Governmental or private policies are not contrary to the disparate-impact requirement unless they are “artificial, arbitrary, and unnecessary barriers.” Griggs, 401 U. S., at 431. Difficult questions might arise if disparate-impact liability under the FHA caused race to be used and considered in a pervasive and explicit manner to justify governmental or private actions that, in fact, tend to perpetuate race-based considerations rather than move beyond them. Courts should avoid interpreting disparateimpact liability to be so expansive as to inject racial considerations into every housing decision.
The limitations on disparate-impact liability discussed here are also necessary to protect potential defendants against abusive disparate-impact claims. If the specter of disparate-impact litigation causes private developers to no longer construct or renovate housing units for low-income individuals, then the FHA would have undermined its own purpose as well as the free-market system. And as to governmental entities, they must not be prevented from achieving legitimate objectives, such as ensuring compliance with health and safety codes. The Department’s amici, in addition to the well-stated principal dissenting opinion in this case, see post, at 1–2, 29–30 (opinion of ALITO, J.), call attention to the decision by the Court of Appeals for the Eighth Circuit in Gallagher v. Magner,

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619 F. 3d 823 (2010). Although the Court is reluctant to approve or disapprove a case that is not pending, it should be noted that Magner was decided without the cautionary standards announced in this opinion and, in all events, the case was settled by the parties before an ultimate determination of disparate-impact liability.
Were standards for proceeding with disparate-impact suits not to incorporate at least the safeguards discussed here, then disparate-impact liability might displace valid governmental and private priorities, rather than solely “remov[ing] . . . artificial, arbitrary, and unnecessary barriers.” Griggs, 401 U. S., at 431. And that, in turn, would set our Nation back in its quest to reduce the salience of race in our social and economic system.
It must be noted further that, even when courts do find liability under a disparate-impact theory, their remedial orders must be consistent with the Constitution. Remedial orders in disparate-impact cases should concentrate on the elimination of the offending practice that “arbitrar[ily] . . . operate[s] invidiously to discriminate on the basis of rac[e].” Ibid. If additional measures are adopted, courts should strive to design them to eliminate racial disparities through race-neutral means. See Richmond v. J. A. Croson Co., 488 U. S. 469, 510 (1989) (plurality opinion) (“[T]he city has at its disposal a whole array of raceneutral devices to increase the accessibility of city contracting opportunities to small entrepreneurs of all races”). Remedial orders that impose racial targets or quotas might raise more difficult constitutional questions.
While the automatic or pervasive injection of race into public and private transactions covered by the FHA has special dangers, it is also true that race may be considered in certain circumstances and in a proper fashion. Cf. Parents Involved in Community Schools v. Seattle School Dist. No. 1, 551 U. S. 701, 789 (2007) (KENNEDY, J., concurring in part and concurring in judgment) (“School

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boards may pursue the goal of bringing together students of diverse backgrounds and races through other means, including strategic site selection of new schools; [and] drawing attendance zones with general recognition of the demographics of neighborhoods”). Just as this Court has not “question[ed] an employer’s affirmative efforts to ensure that all groups have a fair opportunity to apply for promotions and to participate in the [promotion] process,” Ricci, 557 U. S., at 585, it likewise does not impugn housing authorities’ race-neutral efforts to encourage revitalization of communities that have long suffered the harsh consequences of segregated housing patterns. When setting their larger goals, local housing authorities may choose to foster diversity and combat racial isolation with race-neutral tools, and mere awareness of race in attempting to solve the problems facing inner cities does not doom that endeavor at the outset.
The Court holds that disparate-impact claims are cognizable under the Fair Housing Act upon considering its results-oriented language, the Court’s interpretation of similar language in Title VII and the ADEA, Congress’ ratification of disparate-impact claims in 1988 against the backdrop of the unanimous view of nine Courts of Appeals, and the statutory purpose.
III
In light of the longstanding judicial interpretation of the FHA to encompass disparate-impact claims and congressional reaffirmation of that result, residents and policymakers have come to rely on the availability of disparateimpact claims. See Brief for Massachusetts et al. as Amici Curiae 2 (“Without disparate impact claims, States and others will be left with fewer crucial tools to combat the kinds of systemic discrimination that the FHA was intended to address”). Indeed, many of our Nation’s largest cities—entities that are potential defendants in disparate-

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impact suits—have submitted an amicus brief in this case supporting disparate-impact liability under the FHA. See Brief for City of San Francisco et al. as Amici Curiae 3–6. The existence of disparate-impact liability in the substantial majority of the Courts of Appeals for the last several decades “has not given rise to . . . dire consequences.” Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 565 U. S. ___, ___ (2012) (slip op., at 21).
Much progress remains to be made in our Nation’s continuing struggle against racial isolation. In striving to achieve our “historic commitment to creating an integrated society,” Parents Involved, supra, at 797 (KENNEDY, J., concurring in part and concurring in judgment), we must remain wary of policies that reduce homeowners to nothing more than their race. But since the passage of the Fair Housing Act in 1968 and against the backdrop of disparate-impact liability in nearly every jurisdiction, many cities have become more diverse. The FHA must play an important part in avoiding the Kerner Commission’s grim prophecy that “[o]ur Nation is moving toward two societies, one black, one white—separate and unequal.” Kerner Commission Report 1. The Court acknowledges the Fair Housing Act’s continuing role in moving the Nation toward a more integrated society.
The judgment of the Court of Appeals for the Fifth Circuit is affirmed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.

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1

THOMAS, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 13–1371
_________________
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, ET AL., PETITIONERS v. THE INCLUSIVE COMMUNITIES PROJECT, INC., ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 
 APPEALS FOR THE FIFTH CIRCUIT

[June 25, 2015] 

JUSTICE THOMAS, dissenting.
I join JUSTICE ALITO’s dissent in full. I write separately to point out that the foundation on which the Court builds its latest disparate-impact regime—Griggs v. Duke Power Co., 401 U. S. 424 (1971)—is made of sand. That decision, which concluded that Title VII of the Civil Rights Act of 1964 authorizes plaintiffs to bring disparate-impact claims, id., at 429–431, represents the triumph of an agency’s preferences over Congress’ enactment and of assumption over fact. Whatever respect Griggs merits as a matter of stare decisis, I would not amplify its error by importing its disparate-impact scheme into yet another statute.
I 
 A 

We should drop the pretense that Griggs’ interpretation of Title VII was legitimate. “The Civil Rights Act of 1964 did not include an express prohibition on policies or practices that produce a disparate impact.” Ricci v. DeStefano, 557 U. S. 557, 577 (2009). It did not include an implicit one either. Instead, Title VII’s operative provision, 42 U. S. C. §2000e–2(a) (1964 ed.), addressed only employer decisions motivated by a protected characteristic. That

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provision made it “an unlawful employment practice for an employer—
“(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or
“(2) to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.” §703, 78 Stat. 255 (emphasis added).1
Each paragraph in §2000e–2(a) is limited to actions taken “because of ” a protected trait, and “the ordinary meaning of ‘because of ’ is ‘by reason of ’ or ‘on account of,’ ” University of Tex. Southwestern Medical Center v. Nassar, 570 U. S. ___, ___ (2013) (slip op., at 9) (some internal quotation marks omitted). Section 2000e–2(a) thus applies only when a protected characteristic “was the ‘reason’ that the employer decided to act.” Id., at ___ (slip op., at 10) (some internal quotation marks omitted).2 In other words, “to
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1 The current version of §2000e–2(a) is almost identical, except that §2000e–2(a)(2) makes it unlawful for an employer “to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.” (Emphasis added.) This change, which does not impact my analysis, was made in 1972. 86 Stat. 109.
2 In 1991, Congress added §2000e–2(m) to Title VII, which permits a plaintiff to establish that an employer acted “because of” a protected characteristic by showing that the characteristic was “a motivating factor” in the employer’s decision. Civil Rights Act of 1991, §107(a), 105 Stat. 1075. That amended definition obviously does not legitimize disparate-impact liability, which is distinguished from disparate-

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take action against an individual because of ” a protected trait “plainly requires discriminatory intent.” See Smith v. City of Jackson, 544 U. S. 228, 249 (2005) (O’Connor, J., joined by KENNEDY and THOMAS, JJ., concurring in judgment) (internal quotation marks omitted); accord, e.g., Gross v. FBL Financial Services, Inc., 557 U. S. 167, 176 (2009).
No one disputes that understanding of §2000e–2(a)(1). We have repeatedly explained that a plaintiff bringing an action under this provision “must establish ‘that the defendant had a discriminatory intent or motive’ for taking a job-related action.” Ricci, supra, at 577 (quoting Watson v. Fort Worth Bank & Trust, 487 U. S. 977, 986 (1988)). The only dispute is whether the same language—“because of ”—means something different in §2000e–2(a)(2) than it does in §2000e–2(a)(1).
The answer to that question should be obvious. We ordinarily presume that “identical words used in different parts of the same act are intended to have the same meaning,” Desert Palace, Inc. v. Costa, 539 U. S. 90, 101 (2003) (internal quotation marks omitted), and §2000e–2(a)(2) contains nothing to warrant a departure from that presumption. That paragraph “uses the phrase ‘because of . . . [a protected characteristic]’ in precisely the same manner as does the preceding paragraph—to make plain that an employer is liable only if its adverse action against an individual is motivated by the individual’s [protected characteristic].” Smith, supra, at 249 (opinion of O’Connor, J.) (interpreting nearly identical provision of the Age Discrimination in Employment Act of 1967 (ADEA)).
The only difference between §2000e–2(a)(1) and §2000e– 2(a)(2) is the type of employment decisions they address.
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treatment liability precisely because the former does not require any 
 discriminatory motive. 


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See Smith, supra, at 249 (opinion of O’Connor, J.). Section 2000e–2(a)(1) addresses hiring, firing, and setting the terms of employment, whereas §2000e–2(a)(2) generally addresses limiting, segregating, or classifying employees. But no decision is an unlawful employment practice under these paragraphs unless it occurs “because of such individual’s race, color, religion, sex, or national origin.” §§2000e–2(a)(1), (2) (emphasis added).
Contrary to the majority’s assumption, see ante, at 10– 13, the fact that §2000e–2(a)(2) uses the phrase “otherwise adversely affect” in defining the employment decisions targeted by that paragraph does not eliminate its mandate that the prohibited decision be made “because of ” a protected characteristic. Section 2000e–2(a)(2) does not make unlawful all employment decisions that “limit, segregate, or classify . . . employees . . . in any way which would . . . otherwise adversely affect [an individual’s] status as an employee,” but those that “otherwise adversely affect [an individual’s] status as an employee, because of such individual’s race, color, religion, sex, or national origin.” (Emphasis added); accord, 78 Stat. 255. Reading §2000e– 2(a)(2) to sanction employers solely on the basis of the effects of their decisions would delete an entire clause of this provision, a result we generally try to avoid. Under any fair reading of the text, there can be no doubt that the Title VII enacted by Congress did not permit disparateimpact claims.3
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3 Even “[f ]ans . . . of Griggs [v. Duke Power Co., 401 U. S. 424 (1971),] tend to agree that the decision is difficult to square with the available indications of congressional intent.” Lemos, The Consequences of Congress’s Choice of Delegate: Judicial and Agency Interpretations of Title VII, 63 Vand. L. Rev. 363, 399, n. 155 (2010). In the words of one of the decision’s defenders, Griggs “was poorly reasoned and vulnerable to the charge that it represented a significant leap away from the expectations of the enacting Congress.” W. Eskridge, Dynamic Statutory Interpretation 78 (1994).

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B 

The author of disparate-impact liability under Title VII was not Congress, but the Equal Employment Opportunity Commission (EEOC). EEOC’s “own official history of these early years records with unusual candor the commission’s fundamental disagreement with its founding charter, especially Title VII’s literal requirement that the discrimination be intentional.” H. Graham, The Civil Rights Era: Origins and Development of National Policy 1960–1972, p. 248 (1990). The Commissioners and their legal staff thought that “discrimination” had become “less often an individual act of disparate treatment flowing from an evil state of mind” and “more institutionalized.” Jackson, EEOC vs. Discrimination, Inc., 75 The Crisis 16 (1968). They consequently decided they should target employment practices “which prove to have a demonstrable racial effect without a clear and convincing business motive.” Id., at 16–17 (emphasis deleted). EEOC’s “legal staff was aware from the beginning that a normal, traditional, and literal interpretation of Title VII could blunt their efforts” to penalize employers for practices that had a disparate impact, yet chose “to defy Title VII’s restrictions and attempt to build a body of case law that would justify [their] focus on effects and [their] disregard of intent.” Graham, supra, at 248, 250.
The lack of legal authority for their agenda apparently did not trouble them much. For example, Alfred Blumrosen, one of the principal creators of disparate-impact liability at EEOC, rejected what he described as a “defeatist view of Title VII” that saw the statute as a “compromise” with a limited scope. A. Blumrosen, Black Employment and the Law 57–58 (1971). Blumrosen “felt that most of the problems confronting the EEOC could be solved by creative interpretation of Title VII which would be upheld by the courts, partly out of deference to the administrators.” Id., at 59.

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EEOC’s guidelines from those years are a case study in Blumrosen’s “creative interpretation.” Although EEOC lacked substantive rulemaking authority, see Faragher v. Boca Raton, 524 U. S. 775, 811, n. 1 (1998) (THOMAS, J., dissenting), it repeatedly issued guidelines on the subject of disparate impact. In 1966, for example, EEOC issued guidelines suggesting that the use of employment tests in hiring decisions could violate Title VII based on disparate impact, notwithstanding the statute’s express statement that “it shall not be an unlawful employment practice . . . to give and to act upon the results of any professionally developed ability test provided that such test . . . is not designed, intended, or used to discriminate because of race, color, religion, sex, or national origin,” §2000e–2(h) (emphasis added). See EEOC, Guidelines on Employment Testing Procedures 2–4 (Aug. 24, 1966). EEOC followed this up with a 1970 guideline that was even more explicit, declaring that, unless certain criteria were met, “[t]he use of any test which adversely affects hiring, promotion, transfer or any other employment or membership opportunity of classes protected by title VII constitutes discrimination.” 35 Fed. Reg. 12334 (1970).
EEOC was initially hesitant to take its approach to this Court, but the Griggs plaintiffs forced its hand. After they lost on their disparate-impact argument in the Court of Appeals, EEOC’s deputy general counsel urged the plaintiffs not to seek review because he believed “ ‘that the record in the case present[ed] a most unappealing situation for finding tests unlawful,’ ” even though he found the lower court’s adherence to an intent requirement to be “ ‘tragic.’ ” Graham, supra, at 385. The plaintiffs ignored his advice. Perhaps realizing that a ruling on its disparateimpact theory was inevitable, EEOC filed an amicus brief in this Court seeking deference for its position.4
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4 Efforts by Executive Branch officials to influence this Court’s dis-

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EEOC’s strategy paid off. The Court embraced EEOC’s theory of disparate impact, concluding that the agency’s position was “entitled to great deference.” See Griggs, 401 U. S., at 433–434. With only a brief nod to the text of §2000e–2(a)(2) in a footnote, id., at 426, n. 1, the Court tied this novel theory of discrimination to “the statute’s perceived purpose” and EEOC’s view of the best way of effectuating it, Smith, 544 U. S., at 262 (opinion of O’Connor, J.); see id., at 235 (plurality opinion). But statutory provisions—not purposes—go through the process of bicameralism and presentment mandated by our Constitution. We should not replace the former with the latter, see Wyeth v. Levine, 555 U. S. 555, 586 (2009) (THOMAS, J., concurring in judgment), nor should we transfer our responsibility for interpreting those provisions to administrative agencies, let alone ones lacking substantive rulemaking authority, see Perez v. Mortgage Bankers Assn., 575 U. S. ___, ___–___ (2015) (THOMAS, J., concurring in judgment) (slip op., at 8–13).
——————
parate-impact jurisprudence may not be a thing of the past. According to a joint congressional staff report, after we granted a writ of certiorari in Magner v. Gallagher, 564 U. S. ___ (2011), to address whether the Fair Housing Act created disparate-impact liability, then-Assistant Attorney General Thomas E. Perez—now Secretary of Labor—entered into a secret deal with the petitioners in that case, various officials of St. Paul, Minnesota, to prevent this Court from answering the question. Perez allegedly promised the officials that the Department of Justice would not intervene in two qui tam complaints then pending against St. Paul in exchange for the city’s dismissal of the case. See House Committee on Oversight and Government Reform, Senate Committee on the Judiciary, and House Committee on the Judiciary, DOJ’s Quid Pro Quo With St. Paul: How Assistant Attorney General Thomas Perez Manipulated Justice and Ignored the Rule of Law, Joint Staff Report, 113th Cong., 1st Sess., pp. 1–2 (2013). Additionally, just nine days after we granted a writ of certiorari in Magner, and before its dismissal, the Department of Housing and Urban Development proposed the disparateimpact regulation at issue in this case. See 76 Fed. Reg. 70921 (2011).

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II
Griggs’ disparate-impact doctrine defies not only the statutory text, but reality itself. In their quest to eradicate what they view as institutionalized discrimination, disparate-impact proponents doggedly assume that a given racial disparity at an institution is a product of that institution rather than a reflection of disparities that exist outside of it. See T. Sowell, Intellectuals and Race 132 (2013) (Sowell). That might be true, or it might not. Standing alone, the fact that a practice has a disparate impact is not conclusive evidence, as the Griggs Court appeared to believe, that a practice is “discriminatory,” 401 U. S., at 431. “Although presently observed racial imbalance might result from past [discrimination], racial imbalance can also result from any number of innocent private decisions.” Parents Involved in Community Schools v. Seattle School Dist. No. 1, 551 U. S. 701, 750 (2007) (THOMAS, J., concurring) (emphasis added).5 We should not automatically presume that any institution with a neutral practice that happens to produce a racial disparity is guilty of discrimination until proved innocent.
As best I can tell, the reason for this wholesale inversion of our law’s usual approach is the unstated—and unsubstantiated—assumption that, in the absence of discrimination, an institution’s racial makeup would mirror that of society. But the absence of racial disparities in multi-
——————
5 It takes considerable audacity for today’s majority to describe the origins of racial imbalances in housing, ante, at 5–6, without acknowledging this Court’s role in the development of this phenomenon. In the past, we have admitted that the sweeping desegregation remedies of the federal courts contributed to “ ‘white flight’ ” from our Nation’s cities, see Missouri v. Jenkins, 515 U. S. 70, 95, n. 8 (1995); id., at 114 (THOMAS, J., concurring), in turn causing the racial imbalances that make it difficult to avoid disparate impact from housing development decisions. Today’s majority, however, apparently is as content to rewrite history as it is to rewrite statutes.

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ethnic societies has been the exception, not the rule. When it comes to “proportiona[l] represent[ation]” of ethnic groups, “few, if any, societies have ever approximated this description.” D. Horowitz, Ethnic Groups in Conflict 677 (1985). “All multi-ethnic societies exhibit a tendency for ethnic groups to engage in different occupations, have different levels (and, often, types) of education, receive different incomes, and occupy a different place in the social hierarchy.” Weiner, The Pursuit of Ethnic Equality Through Preferential Policies: A Comparative Public Policy Perspective, in From Independence to Statehood 64 (R. Goldmann & A. Wilson eds. 1984).
Racial imbalances do not always disfavor minorities. At various times in history, “racial or ethnic minorities . . . have owned or directed more than half of whole industries in particular nations.” Sowell 8. These minorities “have included the Chinese in Malaysia, the Lebanese in West Africa, Greeks in the Ottoman Empire, Britons in Argentina, Belgians in Russia, Jews in Poland, and Spaniards in Chile—among many others.” Ibid. (footnotes omitted). “In the seventeenth century Ottoman Empire,” this phenomenon was seen in the palace itself, where the “medical staff consisted of 41 Jews and 21 Muslims.” Ibid. And in our own country, for roughly a quarter-century now, over 70 percent of National Basketball Association players have been black. R. Lapchick, D. Donovan, E. Loomer, & L. Martinez, Institute for Diversity and Ethics in Sport, U. of Central Fla., The 2014 Racial and Gender Report Card: National Basketball Association 21 (June 24, 2014). To presume that these and all other measurable disparities are products of racial discrimination is to ignore the complexities of human existence.
Yet, if disparate-impact liability is not based on this assumption and is instead simply a way to correct for imbalances that do not result from any unlawful conduct, it is even less justifiable. This Court has repeatedly reaf-

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firmed that “ ‘racial balancing’ ” by state actors is “ ‘patently unconstitutional,’ ” even when it supposedly springs from good intentions. Fisher v. University of Tex. at Austin, 570 U. S. ___, ___ (2013) (slip op., at 9). And if that “racial balancing” is achieved through disparate-impact claims limited to only some groups—if, for instance, white basketball players cannot bring disparate-impact suits— then we as a Court have constructed a scheme that parcels out legal privileges to individuals on the basis of skin color. A problem with doing so should be obvious: “Government action that classifies individuals on the basis of race is inherently suspect.” Schuette v. BAMN, 572 U. S. ___, ___ (2014) (plurality opinion) (slip op., at 12); accord, id., at ___ (SCALIA, J., concurring in judgment) (slip op., at 9). That is no less true when judges are the ones doing the classifying. See id., at ___ (plurality opinion) (slip op., at 12); id., at ___ (SCALIA, J., concurring in judgment) (slip op., at 9). Disparate-impact liability is thus a rule without a reason, or at least without a legitimate one.
III
The decision in Griggs was bad enough, but this Court’s subsequent decisions have allowed it to move to other areas of the law. In Smith, for example, a plurality of this Court relied on Griggs to include disparate-impact liability in the ADEA. See 544 U. S., at 236. As both I and the author of today’s majority opinion recognized at the time, that decision was as incorrect as it was regrettable. See id., at 248–249 (O’Connor, J., joined by KENNEDY and THOMAS, JJ., concurring in judgment). Because we knew that Congress did not create disparate-impact liability under Title VII, we explained that “there [wa]s no reason to suppose that Congress in 1967”—four years before Griggs—“could have foreseen the interpretation of Title VII that was to come.” Smith, supra, at 260 (opinion of O’Connor, J.). It made little sense to repeat Griggs’ error

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in a new context. My position remains the same. Whatever deference is
due Griggs as a matter of stare decisis, we should at the very least confine it to Title VII. We should not incorporate it into statutes such as the Fair Housing Act and the ADEA, which were passed years before Congress had any reason to suppose that this Court would take the position it did in Griggs. See Smith, supra, at 260 (opinion of O’Connor, J.). And we should certainly not allow it to spread to statutes like the Fair Housing Act, whose operative text, unlike that of the ADEA’s, does not even mirror Title VII’s.
Today, however, the majority inexplicably declares that “the logic of Smith and Griggs” leads to the conclusion that “the FHA encompasses disparate-impact claims.” Ante, at 11. JUSTICE ALITO ably dismantles this argument. Post, at 21–28 (dissenting opinion). But, even if the majority were correct, I would not join it in following that “logic” here. “[E]rroneous precedents need not be extended to their logical end, even when dealing with related provisions that normally would be interpreted in lockstep. Otherwise, stare decisis, designed to be a principle of stability and repose, would become a vehicle of change . . . distorting the law.” CBOCS West, Inc. v. Humphries, 553 U. S. 442, 469–470 (2008) (THOMAS, J., dissenting) (footnote omitted). Making the same mistake in different areas of the law furthers neither certainty nor judicial economy. It furthers error.
That error will take its toll. The recent experience of the Houston Housing Authority (HHA) illustrates some of the many costs of disparate-impact liability. HHA, which provides affordable housing developments to low-income residents of Houston, has over 43,000 families on its waiting lists. The overwhelming majority of those families are black. Because Houston is a majority-minority city with minority concentrations in all but the more affluent areas,

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any HHA developments built outside of those areas will increase the concentration of racial minorities. Unsurprisingly, the threat of disparate-impact suits based on those concentrations has hindered HHA’s efforts to provide affordable housing. State and federal housing agencies have refused to approve all but two of HHA’s eight proposed development projects over the past two years out of fears of disparate-impact liability. Brief for Houston Housing Authority as Amicus Curiae 8–12. That the majority believes that these are not “ ‘dire consequences,’ ” see ante, at 24, is cold comfort for those who actually need a home.
* * *
I agree with the majority that Griggs “provide[s] essential background” in this case, ante, at 10: It shows that our disparate-impact jurisprudence was erroneous from its inception. Divorced from text and reality, driven by an agency with its own policy preferences, Griggs bears little relationship to the statutory interpretation we should expect from a court of law. Today, the majority repeats that error.
I respectfully dissent.

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SUPREME COURT OF THE UNITED STATES
_________________
No. 13–1371
_________________
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, ET AL., PETITIONERS v. THE INCLUSIVE COMMUNITIES PROJECT, INC., ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 
 APPEALS FOR THE FIFTH CIRCUIT

[June 25, 2015] 

JUSTICE ALITO, with whom THE CHIEF JUSTICE, JUSTICE SCALIA, and JUSTICE THOMAS join, dissenting.
No one wants to live in a rat’s nest. Yet in Gallagher v. Magner, 619 F. 3d 823 (2010), a case that we agreed to review several Terms ago, the Eighth Circuit held that the Fair Housing Act (or FHA), 42 U. S. C. §3601 et seq., could be used to attack St. Paul, Minnesota’s efforts to combat “rodent infestation” and other violations of the city’s housing code. 619 F. 3d, at 830. The court agreed that there was no basis to “infer discriminatory intent” on the part of St. Paul. Id., at 833. Even so, it concluded that the city’s “aggressive enforcement of the Housing Code” was actionable because making landlords respond to “rodent infestation, missing dead-bolt locks, inadequate sanitation facilities, inadequate heat, inoperable smoke detectors, broken or missing doors,” and the like increased the price of rent. Id., at 830, 835. Since minorities were statistically more likely to fall into “the bottom bracket for household adjusted median family income,” they were disproportionately affected by those rent increases, i.e., there was a “disparate impact.” Id., at 834. The upshot was that even St. Paul’s good-faith attempt to ensure minimally acceptable housing for its poorest residents could not ward off a disparate-impact lawsuit.

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Today, the Court embraces the same theory that drove the decision in Magner.1 This is a serious mistake. The Fair Housing Act does not create disparate-impact liability, nor do this Court’s precedents. And today’s decision will have unfortunate consequences for local government, private enterprise, and those living in poverty. Something has gone badly awry when a city can’t even make slumlords kill rats without fear of a lawsuit. Because Congress did not authorize any of this, I respectfully dissent.
I
Everyone agrees that the FHA punishes intentional discrimination. Treating someone “less favorably than others because of a protected trait” is “ ‘the most easily understood type of discrimination.’ ” Ricci v. DeStefano, 557 U. S. 557, 577 (2009) (quoting Teamsters v. United States, 431 U. S. 324, 335, n. 15 (1977); some internal quotation marks omitted). Indeed, this classic form of discrimination—called disparate treatment—is the only one prohibited by the Constitution itself. See, e.g., Arlington Heights v. Metropolitan Housing Development Corp., 429 U. S. 252, 264–265 (1977). It is obvious that Congress intended the FHA to cover disparate treatment.
The question presented here, however, is whether the FHA also punishes “practices that are not intended to discriminate but in fact have a disproportionately adverse effect on minorities.” Ricci, supra, at 577. The answer is equally clear. The FHA does not authorize disparateimpact claims. No such liability was created when the law was enacted in 1968. And nothing has happened since then to change the law’s meaning.
——————
1 We granted certiorari in Magner v. Gallagher, 565 U. S. ___ (2011). Before oral argument, however, the parties settled. 565 U. S. ___ (2012). The same thing happened again in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., 571 U. S. ___ (2013).

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A 

I begin with the text. Section 804(a) of the FHA makes it unlawful “[t]o refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” 42 U. S. C. §3604(a) (emphasis added). Similarly, §805(a) prohibits any party “whose business includes engaging in residential real estate-related transactions” from “discriminat[ing] against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.” §3605(a) (emphasis added).
In both sections, the key phrase is “because of.” These provisions list covered actions (“refus[ing] to sell or rent . . . a dwelling,” “refus[ing] to negotiate for the sale or rental of . . . a dwelling,” “discriminat[ing]” in a residential real estate transaction, etc.) and protected characteristics (“race,” “religion,” etc.). The link between the actions and the protected characteristics is “because of.”
What “because of ” means is no mystery. Two Terms ago, we held that “the ordinary meaning of ‘because of ’ is ‘by reason of ’ or ‘on account of.’ ” University of Tex. Southwestern Medical Center v. Nassar, 570 U. S. ___, ___ (2013) (slip op., at 9) (quoting Gross v. FBL Financial Services, Inc., 557 U. S. 167, 176 (2009); some internal quotation marks omitted). A person acts “because of ” something else, we explained, if that something else “ ‘was the “reason” that the [person] decided to act.’ ” 570 U. S., at ___ (slip op., at 10).
Indeed, just weeks ago, the Court made this same point in interpreting a provision of Title VII of the Civil Rights Act of 1964, 42 U. S. C. §2000e–2(m), that makes it unlawful for an employer to take a variety of adverse employment actions (such as failing or refusing to hire a job

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applicant or discharging an employee) “because of ” religion. See EEOC v. Abercrombie & Fitch Stores, Inc., 575 U. S. ___, ___ (2015) (slip op., at 4). The Court wrote: “ ‘Because of ’ in §2000e–2(a)(1) links the forbidden consideration to each of the verbs preceding it.” Ibid.
Nor is this understanding of “because of ” an arcane feature of legal usage. When English speakers say that someone did something “because of ” a factor, what they mean is that the factor was a reason for what was done. For example, on the day this case was argued, January 21, 2015, Westlaw and Lexis searches reveal that the phrase “because of ” appeared in 14 Washington Post print articles. In every single one, the phrase linked an action and a reason for the action.2
——————
2 See al-Mujahed & Naylor, Rebels Assault Key Sites in Yemen, pp. A1, A12 (“A government official . . . spoke on the condition of anonymity because of concern for his safety”); Berman, Jury Selection Starts in Colo. Shooting Trial, p. A2 (“Jury selection is expected to last four to five months because of a massive pool of potential jurors”); Davidson, Some VA Whistleblowers Get Relief From Retaliation, p. A18 (“In April, they moved to fire her because of an alleged ‘lack of collegiality’ ”); Hicks, Post Office Proposes Hikes in Postage Rates, p. A19 (“The Postal Service lost $5.5 billion in 2014, in large part because of continuing declines in first-class mail volume”); Editorial, Last Responders, p. A20 (“Metro’s initial emergency call mentioned only smoke but no stuck train [in part] . . . because of the firefighters’ uncertainty that power had been shut off to the third rail”); Letter to the Editor, Metro’s Safety Flaws, p. A20 (“[A] circuit breaker automatically opened because of electrical arcing”); Bernstein, He Formed Swingle Singers and Made Bach Swing, p. B6 (“The group retained freshness because of the ‘stunning musicianship of these singers’ ”); Schudel, TV Producer, Director Invented Instant Replay, p. B7 (“[The 1963 Army-Navy football game was] [d]elayed one week because of the assassination of President John F. Kennedy”); Contrera & Thompson, 50 Years On, Cheering a Civil Rights Matriarch, pp. C1, C5 (“[T]he first 1965 protest march from Selma to Montgomery . . . became known as ‘Bloody Sunday’ because of state troopers’ violent assault on the marchers”); Pressley, ‘Life Sucks’: Aaron Posner’s Latest Raging Riff on Chekhov, pp. C1, C9 (“ ‘The Seagull’ gave Posner ample license to experiment because of

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Without torturing the English language, the meaning of these provisions of the FHA cannot be denied. They make it unlawful to engage in any of the covered actions “because of ”—meaning “by reason of ” or “on account of,” Nassar, supra, at ___ (slip op., at 9)—race, religion, etc. Put another way, “the terms [after] the ‘because of ’ clauses in the FHA supply the prohibited motivations for the intentional acts . . . that the Act makes unlawful.” American Ins. Assn. v. Department of Housing and Urban Development, ___ F. Supp. 3d ___, ___, n. 20, 2014 WL 5802283, at *8, n. 20 (DC 2014). Congress accordingly outlawed the covered actions only when they are motivated by race or one of the other protected characteristics.
It follows that the FHA does not authorize disparateimpact suits. Under a statute like the FHA that prohibits actions taken “because of ” protected characteristics, intent makes all the difference. Disparate impact, however, does not turn on “ ‘subjective intent.’ ” Raytheon Co. v. Hernandez, 540 U. S. 44, 53 (2003). Instead, “ ‘treat[ing] [a] particular person less favorably than others because of ’ a protected trait” is “ ‘disparate treatment,’ ” not disparate impact. Ricci, 557 U. S., at 577 (emphasis added). See also, e.g., Personnel Administrator of Mass. v. Feeney, 442 U. S. 256, 279 (1979) (explaining the difference between “because of ” and “in spite of ”); Hernandez v. New York,
——————
its writer and actress characters and its pronouncements on art”); A Rumpus on ‘The Bachelor,’ p. C2 (“Anderson has stood out from the pack . . . mostly because of that post-production censoring of her nether regions” (ellipsis in original)); Steinberg, KD2DC, Keeping Hype Alive, pp. D1, D4 (explaining that a commenter “asked that his name not be used because of his real job”); Boren, Former FSU Boss Bowden Wants 12 Wins to Be Restored, p. D2 (“[T]he NCAA restored the 111 victories that were taken from the late Joe Paterno because of the Jerry Sandusky child sex-abuse scandal”); Oklahoma City Finally Moves Past .500 Mark, p. D4 (“Trail Blazers all-star LaMarcus Aldridge won’t play in Wednesday night’s game against the Phoenix Suns because of a left thumb injury”).

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500 U. S. 352, 359–360 (1991) (plurality opinion) (same); Alexander v. Sandoval, 532 U. S. 275, 278, 280 (2001) (holding that it is “beyond dispute” that banning discrimination “ ‘on the ground of race’ ” “prohibits only intentional discrimination”).
This is precisely how Congress used the phrase “because of ” elsewhere in the FHA. The FHA makes it a crime to willfully “interfere with . . . any person because of his race” (or other protected characteristic) who is engaging in a variety of real-estate-related activities, such as “selling, purchasing, [or] renting” a dwelling. 42 U. S. C. §3631(a). No one thinks a defendant could be convicted of this crime without proof that he acted “because of,” i.e., on account of or by reason of, one of the protected characteristics. But the critical language in this section—“because of ”—is identical to the critical language in the sections at issue in this case. “One ordinarily assumes” Congress means the same words in the same statute to mean the same thing. Utility Air Regulatory Group v. EPA, 573 U. S. ___, ___ (2014) (slip op., at 15). There is no reason to doubt that ordinary assumption here.
Like the FHA, many other federal statutes use the phrase “because of ” to signify what that phrase means in ordinary speech. For instance, the federal hate crime statute, 18 U. S. C. §249, authorizes enhanced sentences for defendants convicted of committing certain crimes “because of ” race, color, religion, or other listed characteristics. Hate crimes require bad intent—indeed, that is the whole point of these laws. See, e.g., Wisconsin v. Mitchell, 508 U. S. 476, 484–485 (1993) (“[T]he same criminal conduct may be more heavily punished if the victim is selected because of his race or other protected status”). All of this confirms that “because of ” in the FHA should be read to mean what it says.

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B 

In an effort to find at least a sliver of support for disparateimpact liability in the text of the FHA, the principal respondent, the Solicitor General, and the Court pounce on the phrase “make unavailable.” Under §804(a), it is unlawful “[t]o . . . make unavailable . . . a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” 42 U. S. C. §3604(a). See also §3605(a) (barring “discriminat[ion] against any person in making available such a [housing] transaction . . . because of race, color, religion, sex, handicap, familial status, or national origin”). The Solicitor General argues that “[t]he plain meaning of the phrase ‘make unavailable’ includes actions that have the result of making housing or transactions unavailable, regardless of whether the actions were intended to have that result.” Brief for United States as Amicus Curiae 18 (emphasis added). This argument is not consistent with ordinary English usage.
It is doubtful that the Solicitor General’s argument accurately captures the “plain meaning” of the phrase “make unavailable” even when that phrase is not linked to the phrase “because of.” “[M]ake unavailable” must be viewed together with the rest of the actions covered by §804(a), which applies when a party “refuse[s] to sell or rent” a dwelling, “refuse[s] to negotiate for the sale or rental” of a dwelling, “den[ies] a dwelling to any person,” “or otherwise make[s] unavailable” a dwelling. §3604(a) (emphasis added). When a statute contains a list like this, we “avoid ascribing to one word a meaning so broad that it is inconsistent with its accompanying words, thus giving ‘unintended breadth to the Acts of Congress.’ ” Gustafson v. Alloyd Co., 513 U. S. 561, 575 (1995) (quoting Jarecki v. G. D. Searle & Co., 367 U. S. 303, 307 (1961)). See also, e.g., Yates v. United States, 574 U. S. ___, ___ (2015) (plurality opinion) (slip op., at 14); id., at ___ (ALITO, J., concurring in judgment) (slip op., at 1). Here, the phrases

8 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 

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that precede “make unavailable” unmistakably describe intentional deprivations of equal treatment, not merely actions that happen to have a disparate effect. See American Ins. Assn., ___ F. Supp. 3d, at ___, 2014 WL 5802283, at *8 (citing Webster’s Third New International Dictionary 603, 848, 1363, 1910 (1966)). Section 804(a), moreover, prefaces “make unavailable” with “or otherwise,” thus creating a catchall. Catchalls must be read “restrictively” to be “like” the listed terms. Washington State Dept. of Social and Health Servs. v. Guardianship Estate of Keffeler, 537 U. S. 371, 384–385 (2003). The result of these ordinary rules of interpretation is that even without “because of,” the phrase “make unavailable” likely would require intentionality.
The FHA’s inclusion of “because of,” however, removes any doubt. Sections 804(a) and 805(a) apply only when a party makes a dwelling or transaction unavailable “because of ” race or another protected characteristic. In ordinary English usage, when a person makes something unavailable “because of ” some factor, that factor must be a reason for the act.
Here is an example. Suppose that Congress increases the minimum wage. Some economists believe that such legislation reduces the number of jobs available for “unskilled workers,” Fuller & Geide-Stevenson, Consensus Among Economists: Revisited, 34 J. Econ. Educ. 369, 378 (2003), and minorities tend to be disproportionately represented in this group, see, e.g., Dept. of Commerce, Bureau of Census, Detailed Years of School Completed by People 25 Years and Over by Sex, Age Groups, Race and Hispanic Origin: 2014, online at http://www.census.gov/hhes/ socdemo/education/data/cps/2014/tables.html (all Internet materials as visited June 23, 2015, and available in Clerk of Court’s case file). Assuming for the sake of argument that these economists are correct, would it be fair to say that Congress made jobs unavailable to African-

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Americans or Latinos “because of ” their race or ethnicity? A second example. Of the 32 college players selected by
National Football League (NFL) teams in the first round of the 2015 draft, it appears that the overwhelming majority were members of racial minorities. See Draft 2015, http://www.nfl.com/draft/2015. See also Miller, Powerful Sports Agents Representing Color, Los Angeles Sentinel, Feb. 6, 2014, p. B3 (noting “there are 96 players (76 of whom are African-American) chosen in the first rounds of the 2009, 2010, and 2011 NFL drafts”). Teams presumably chose the players they think are most likely to help them win games. Would anyone say the NFL teams made draft slots unavailable to white players “because of ” their race?
A third example. During the present Court Term, of the 21 attorneys from the Solicitor General’s Office who argued cases in this Court, it appears that all but 5 (76%) were under the age of 45. Would the Solicitor General say he made argument opportunities unavailable to older attorneys “because of ” their age?
The text of the FHA simply cannot be twisted to authorize disparate-impact claims. It is hard to imagine how Congress could have more clearly stated that the FHA prohibits only intentional discrimination than by forbidding acts done “because of race, color, religion, sex, familial status, or national origin.”
II
The circumstances in which the FHA was enacted only confirm what the text says. In 1968, “the predominant focus of antidiscrimination law was on intentional discrimination.” Smith v. City of Jackson, 544 U. S. 228, 258 (2005) (O’Connor, J., concurring in judgment). The very “concept of disparate impact liability, by contrast, was quite novel.” Ibid. (collecting citations). See also Tr. of Oral Arg. 15 (“JUSTICE GINSBURG: . . . If we’re going to

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be realistic about this, . . . in 1968, when the Fair Housing Act passed, nobody knew anything about disparate impact”). It is anachronistic to think that Congress authorized disparate-impact claims in 1968 but packaged that striking innovation so imperceptibly in the FHA’s text.
Eradicating intentional discrimination was and is the FHA’s strategy for providing fair housing opportunities for all. The Court recalls the country’s shameful history of segregation and de jure housing discrimination and then jumps to the conclusion that the FHA authorized disparateimpact claims as a method of combatting that evil. Ante, at 5–7. But the fact that the 1968 Congress sought to end housing discrimination says nothing about the means it devised to achieve that end. The FHA’s text plainly identifies the weapon Congress chose—outlawing disparate treatment “because of race” or another protected characteristic. 42 U. S. C. §§3604(a), 3605(a). Accordingly, in any FHA claim, “[p]roof of discriminatory motive is critical.” Teamsters, 431 U. S., at 335, n. 15.
III
Congress has done nothing since 1968 to change the meaning of the FHA prohibitions at issue in this case. In 1968, those prohibitions forbade certain housing practices if they were done “because of ” protected characteristics. Today, they still forbid certain housing practices if done “because of ” protected characteristics. The meaning of the unaltered language adopted in 1968 has not evolved.
Rather than confronting the plain text of §§804(a) and 805(a), the Solicitor General and the Court place heavy reliance on certain amendments enacted in 1988, but those amendments did not modify the meaning of the provisions now before us. In the Fair Housing Amendments Act of 1988, 102 Stat. 1619, Congress expanded the list of protected characteristics. See 42 U. S. C. §§3604(a), (f )(1). Congress also gave the Department of Housing and

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ALITO, J., dissenting
Urban Development (HUD) rulemaking authority and the power to adjudicate certain housing claims. See §§3612, 3614a. And, what is most relevant for present purposes, Congress added three safe-harbor provisions, specifying that “[n]othing in [the FHA]” prohibits (a) certain actions taken by real property appraisers, (b) certain occupancy requirements, and (c) the treatment of persons convicted of manufacturing or distributing illegal drugs.3
According to the Solicitor General and the Court, these amendments show that the FHA authorizes disparateimpact claims. Indeed, the Court says that they are “of crucial importance.” Ante, at 13. This “crucial” argument, however, cannot stand.
A
The Solicitor General and the Court contend that the 1988 Congress implicitly authorized disparate-impact liability by adopting the amendments just noted while leaving the operative provisions of the FHA untouched. Congress knew at that time, they maintain, that the Courts of Appeals had held that the FHA sanctions disparate-impact claims, but Congress failed to enact bills that would have rejected that theory of liability. Based on this, they submit that Congress silently ratified those
——————
3 These new provisions state: “Nothing in this subchapter prohibits a person engaged in the business of furnishing appraisals of real property to take into consideration factors other than race, color, religion, national origin, sex, handicap, or familial status.” §3605(c). “Nothing in this subchapter limits the applicability of any reasonable local, State, or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling. Nor does any provision in this subchapter regarding familial status apply with respect to housing for older persons.” §3607(b)(1). “Nothing in this subchapter prohibits conduct against a person because such person has been convicted by any court of competent jurisdiction of the illegal manufacture or distribution of a controlled substance as defined in section 802 of title 21.” §3607(b)(4).

12 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 

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decisions. See ante, at 13–14; Brief for United States as Amicus Curiae 23–24. This argument is deeply flawed.
Not the greatest of its defects is its assessment of what Congress must have known about the judiciary’s interpretation of the FHA. The Court writes that by 1988, “all nine Courts of Appeals to have addressed the question had concluded the Fair Housing Act encompassed disparateimpact claims.” Ante, at 13 (emphasis added). See also Brief for United States as Amicus Curiae 12. But this Court had not addressed that question. While we always give respectful consideration to interpretations of statutes that garner wide acceptance in other courts, this Court has “no warrant to ignore clear statutory language on the ground that other courts have done so,” even if they have “ ‘consistently’ ” done so for “ ‘30 years.’ ” Milner v. Department of Navy, 562 U. S. 562, 575–576 (2011). See also, e.g., CSX Transp., Inc. v. McBride, 564 U. S. ___, ___ (2011) (ROBERTS, C. J., dissenting) (slip op., at 11) (explaining that this Court does not interpret statutes by asking for “a show of hands” (citing Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, 532 U. S. 598 (2001); McNally v. United States, 483 U. S. 350 (1987))).
In any event, there is no need to ponder whether it would have been reasonable for the 1988 Congress, without considering the clear meaning of §§804(a) and 805(a), to assume that the decisions of the lower courts effectively settled the matter. While the Court highlights the decisions of the Courts of Appeals, it fails to mention something that is of at least equal importance: The official view of the United States in 1988.
Shortly before the 1988 amendments were adopted, the United States formally argued in this Court that the FHA prohibits only intentional discrimination. See Brief for United States as Amicus Curiae in Huntington v. Huntington Branch, NAACP, O. T. 1988, No. 87–1961, p. 15

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(“An action taken because of some factor other than race, i.e., financial means, even if it causes a discriminatory effect, is not an example of the intentional discrimination outlawed by the statute”); id., at 14 (“The words ‘because of ’ plainly connote a causal connection between the housingrelated action and the person’s race or color”).4 This was the same position that the United States had taken in lower courts for years. See, e.g., United States v. Birmingham, 538 F. Supp. 819, 827, n. 9 (ED Mich. 1982) (noting positional change), aff ’d, 727 F. 2d 560, 565–566 (CA6 1984) (adopting United States’ “concession” that there must be a “ ‘discriminatory motive’ ”). It is implausible that the 1988 Congress was aware of certain lower court decisions but oblivious to the United States’ considered and public view that those decisions were wrong.
This fact is fatal to any notion that Congress implicitly ratified disparate impact in 1988. The canon of interpretation on which the Court and the Solicitor General purport to rely—the so-called “prior-construction canon”— does not apply where lawyers cannot “justifiably regard the point as settled” or when “other sound rules of interpretation” are implicated. A. Scalia & B. Garner, Reading Law: The Interpretation of Legal Texts 324, 325 (2012). That was the case here. Especially after the United States began repudiating disparate impact, no one could have reasonably thought that the question was settled.
Nor can such a faulty argument be salvaged by pointing to Congress’ failure in 1988 to enact language that would have made it clear that the FHA does not authorize disparate-impact suits based on zoning decisions. See ante,

——————
4 In response to the United States’ argument, we reserved decision on the question. See Huntington v. Huntington Branch, NAACP, 488 U. S. 15, 18 (1988) (per curiam) (“Since appellants conceded the applicability of the disparate-impact test . . . we do not reach the question whether that test is the appropriate one”).

14 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 

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at 13–14.5 To change the meaning of language in an already enacted law, Congress must pass a new law amending that language. See, e.g., West Virginia Univ. Hospitals, Inc. v. Casey, 499 U. S. 83, 100, 101, and n. 7 (1991). Intent that finds no expression in a statute is irrelevant. See, e.g., New York Telephone Co. v. New York State Dept. of Labor, 440 U. S. 519, 544–545 (1979); Easterbrook, Statutes’ Domains, 50 U. Chi. L. Rev. 533, 538–540 (1983). Hence, “we walk on quicksand when we try to find in the absence of corrective legislation a controlling legal principle.” Helvering v. Hallock, 309 U. S. 106, 121 (1940).
Unsurprisingly, we have rejected identical arguments about implicit ratification in other cases. For example, in Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A., 511 U. S. 164 (1994), a party argued that §10(b) of the Securities Exchange Act of 1934 imposes liability on aiders and abettors because “Congress ha[d] amended the securities laws on various occasions since 1966, when courts first began to interpret §10(b) to cover aiding and abetting, but ha[d] done so without providing that aiding and abetting liability is not available under §10(b).” Id., at 186. “From that,” a party asked the Court
——————
5 In any event, the Court overstates the importance of that failed amendment. The amendment’s sponsor disavowed that it had anything to do with the broader question whether the FHA authorizes disparateimpact suits. Rather, it “left to caselaw and eventual Supreme Court resolution whether a discriminatory intent or discriminatory effects standard is appropriate . . . [in] all situations but zoning.” H. R. Rep. No. 100–711, p. 89 (1988). Some in Congress, moreover, supported the amendment and the House bill. Compare ibid. with 134 Cong. Rec. 16511 (1988). It is hard to believe they thought the bill—which was silent on disparate impact—nonetheless decided the broader question. It is for such reasons that failed amendments tell us “little” about what a statute means. Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A., 511 U. S. 164, 187 (1994). Footnotes in House Reports and law professor testimony tell us even less. Ante, at 13–14.

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to “infer that these Congresses, by silence, ha[d] acquiesced in the judicial interpretation of §10(b).” Ibid. The Court dismissed this argument in words that apply almost verbatim here:
“ ‘It does not follow that Congress’ failure to overturn a statutory precedent is reason for this Court to adhere to it. It is “impossible to assert with any degree of assurance that congressional failure to act represents” affirmative congressional approval of the courts’ statutory interpretation. Congress may legislate, moreover, only through the passage of a bill which is approved by both Houses and signed by the President. See U. S. Const., Art. I, §7, cl. 2. Congressional inaction cannot amend a duly enacted statute.’ Patterson v. McLean Credit Union, 491 U. S. 164, 175, n. 1 (1989) (quoting Johnson v. Transportation Agency, Santa Clara Cty., 480 U. S. 616, 672 (1987) (SCALIA, J., dissenting)).” Ibid. (alterations omitted).
We made the same point again in Sandoval, 532 U. S. 275. There it was argued that amendments to Title VI of the Civil Rights Act of 1964 implicitly ratified lower court decisions upholding a private right of action. We rejected that argument out of hand. See id., at 292–293.
Without explanation, the Court ignores these cases.
B
The Court contends that the 1988 amendments provide “convincing confirmation of Congress’ understanding that disparate-impact liability exists under the FHA” because the three safe-harbor provisions included in those amendments “would be superfluous if Congress had assumed that disparate-impact liability did not exist under the FHA.” Ante, at 14, 15. As just explained, however, what matters is what Congress did, not what it might have “assumed.” And although the Court characterizes

16 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 

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these provisions as “exemptions,” that characterization is inaccurate. They make no reference to §804(a) or §805(a) or any other provision of the FHA; nor do they state that they apply to conduct that would otherwise be prohibited. Instead, they simply make clear that certain conduct is not forbidden by the Act. E.g., 42 U. S. C. §3607(b)(4) (“Nothing in this subchapter prohibits . . .”). The Court should read these amendments to mean what they say.
In 1988, policymakers were not of one mind about disparate-impact housing suits. Some favored the theory and presumably would have been happy to have it enshrined in the FHA. See ante, at 13–14; 134 Cong. Rec. 23711 (1988) (statement of Sen. Kennedy). Others worried about disparate-impact liability and recognized that this Court had not decided whether disparate-impact claims were authorized under the 1968 Act. See H. R. Rep. No. 100–711, pp. 89–93 (1988). Still others disapproved of disparate-impact liability and believed that the 1968 Act did not authorize it. That was the view of President Reagan when he signed the amendments. See Remarks on Signing the Fair Housing Amendments Act of 1988, 24 Weekly Comp. of Pres. Doc. 1140, 1141 (1988) (explaining that the amendments did “not represent any congressional or executive branch endorsement of the notion, expressed in some judicial opinions, that [FHA] violations may be established by a showing of disparate impact” because the FHA “speaks only to intentional discrimination”).6
——————
6 At the same hearings to which the Court refers, ante, at 13, Senator Hatch stated that if the “intent test versus the effects test” were to “becom[e] an issue,” a “fair housing law” might not be enacted at all, and he noted that failed legislation in the past had gotten “bogged down” because of that “battle.” Fair Housing Amendments Act of 1987: Hearings on S. 558 before the Subcommittee on the Constitution of the Senate Committee on the Judiciary, 100th Cong., 1st Sess., 5 (1987). He also noted that the bill under consideration did “not really go one way or the other” on disparate impact since the sponsors were content to “rely” on the lower court opinions. Ibid. And he emphasized that

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The 1988 safe-harbor provisions have all the hallmarks of a compromise among these factions. These provisions neither authorize nor bar disparate-impact claims, but they do provide additional protection for persons and entities engaging in certain practices that Congress especially wished to shield. We “must respect and give effect to these sorts of compromises.” Ragsdale v. Wolverine World Wide, Inc., 535 U. S. 81, 93–94 (2002).
It is not hard to see why such a compromise was attractive. For Members of Congress who supported disparate impact, the safe harbors left the favorable lower court decisions in place. And for those who hoped that this Court would ultimately agree with the position being urged by the United States, those provisions were not surplusage. In the Circuits in which disparate-impact FHA liability had been accepted, the safe-harbor provisions furnished a measure of interim protection until the question was resolved by this Court. They also provided partial protection in the event that this Court ultimately rejected the United States’ argument. Neither the Court, the principal respondent, nor the Solicitor General has cited any case in which the canon against surplusage has been applied in circumstances like these.7

——————
“the issue of intent versus effect—I am afraid that is going to have to be decided by the Supreme Court.” Ibid. See also id., at 10 (“It is not always a violation to refuse to sell, but only to refuse to sell ‘because of ’ another’s race. This language made clear that the 90th Congress meant only to outlaw acts taken with the intent to discriminate . . . . To use any standard other than discriminatory intent . . . would jeopardize many kinds of beneficial zoning and local ordinances” (statement of Sen. Hatch)).
7 In any event, even in disparate-treatment suits, the safe harbors are not superfluous. For instance, they affect “the burden-shifting framework” in disparate-treatment cases. American Ins. Assn. v. Department of Housing and Urban Development, ___ Supp. 3d ___, 2014 WL 5802283, *10 (DC 2014). Under the second step of the burden-shifting scheme from McDonnell Douglas Corp. v. Green, 411 U. S. 792 (1973),

18 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 

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On the contrary, we have previously refused to interpret enactments like the 1988 safe-harbor provisions in such a way. Our decision in O’Gilvie v. United States, 519 U. S. 79 (1996)—also ignored by the Court today—is instructive. In that case, the question was whether a provision of the Internal Revenue Code excluding a recovery for personal injury from gross income applied to punitive damages. Well after the critical provision was enacted, Congress adopted an amendment providing that punitive damages for nonphysical injuries were not excluded. Pointing to this amendment, a taxpayer argued: “Why . . . would Congress have enacted this amendment removing punitive damages (in nonphysical injury cases) unless Congress believed that, in the amendment’s absence, punitive damages did fall within the provision’s coverage?” Id., at 89. This argument, of course, is precisely the same as the argument made in this case. To paraphrase O’Gilvie, the Court today asks: Why would Congress have enacted the 1988 amendments, providing safe harbors from three types of disparate-impact claims, unless Congress believed
——————
which some courts have applied in disparate-treatment housing cases, see, e.g., 2922 Sherman Avenue Tenants’ Assn. v. District of Columbia, 444 F. 3d 673, 682 (CADC 2006) (collecting cases), a defendant must proffer a legitimate reason for the challenged conduct, and the safeharbor provisions set out reasons that are necessarily legitimate. Moreover, while a factfinder in a disparate-treatment case can sometimes infer bad intent based on facially neutral conduct, these safe harbors protect against such inferences. Without more, conduct within a safe harbor is insufficient to support such an inference as a matter of law. And finally, even if there is additional evidence, these safe harbors make it harder to show pretext. See Fair Housing Advocates Assn., Inc. v. Richmond Heights, 209 F. 3d 626, 636–637, and n. 7 (CA6 2000).
Even if they were superfluous, moreover, our “preference for avoiding surplusage constructions is not absolute.” Lamie v. United States Trustee, 540 U. S. 526, 536 (2004). We “presume that a legislature says in a statute what it means,” notwithstanding “[r]edundanc[y].” Connecticut Nat. Bank v. Germain, 503 U. S. 249, 253–254 (1992).

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that, in the amendments’ absence, disparate-impact claims did fall within the FHA’s coverage?
The Court rejected the argument in O’Gilvie. “The short answer,” the Court wrote, is that Congress might have simply wanted to “clarify the matter in respect to nonphysical injuries” while otherwise “leav[ing] the law where it found it.” Ibid. Although other aspects of O’Gilvie triggered a dissent, see id., at 94–101 (opinion of SCALIA, J.), no one quarreled with this self-evident piece of the Court’s analysis. Nor was the O’Gilvie Court troubled that Congress’ amendment regarding nonphysical injuries turned out to have been unnecessary because punitive damages for any injuries were not excluded all along.
The Court saw the flaw in the argument in O’Gilvie, and the same argument is no better here. It is true that O’Gilvie involved a dry question of tax law while this case involves a controversial civil rights issue. But how we read statutes should not turn on such distinctions.
In sum, as the principal respondent’s attorney candidly admitted, the 1988 amendments did not create disparateimpact liability. See Tr. of Oral Arg. 36 (“[D]id the things that [Congress] actually did in 1988 expand the coverage of the Act? MR. DANIEL: No, Justice”).
C
The principal respondent and the Solicitor General—but not the Court—have one final argument regarding the text of the FHA. They maintain that even if the FHA does not unequivocally authorize disparate-impact suits, it is at least ambiguous enough to permit HUD to adopt that interpretation. Even if the FHA were ambiguous, however, we do not defer “when there is reason to suspect that the agency’s interpretation ‘does not reflect the agency’s fair and considered judgment on the matter in question.’ ” Christopher v. SmithKline Beecham Corp., 567 U. S. ___, ___ (2012) (slip op., at 10).

20 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 

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Here, 43 years after the FHA was enacted and nine days after the Court granted certiorari in Magner (the “rodent infestation” case), HUD proposed “to prohibit housing practices with a discriminatory effect, even where there has been no intent to discriminate.” Implementation of the Fair Housing Act’s Discriminatory Effects Standard, 76 Fed. Reg. 70921 (2011). After Magner settled, the Court called for the views of the Solicitor General in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., 568 U. S. ___ (2012), another case raising the same question. Before the Solicitor General filed his brief, however, HUD adopted disparate-impact regulations. See Implementation of the Fair Housing Act’s Discriminatory Effects Standard, 78 Fed. Reg. 11460 (2013). The Solicitor General then urged HUD’s rule as a reason to deny certiorari. We granted certiorari anyway, 570 U. S. ___ (2013), and shortly thereafter Mount Holly also unexpectedly settled. Given this unusual pattern, there is an argument that deference may be unwarranted. Cf. Young v. United Parcel Service, Inc., 575 U. S. ___, ___ (2015) (slip op., at 16–17) (refusing to defer where “[t]he EEOC promulgated its 2014 guidelines only recently, after this Court had granted certiorari” (discussing Skidmore v. Swift & Co., 323 U. S. 134, 140 (1944))).8
There is no need to dwell on these circumstances, however, because deference is inapt for a more familiar reason: The FHA is not ambiguous. The FHA prohibits only disparate treatment, not disparate impact. It is a bedrock rule that an agency can never “rewrite clear statutory terms to suit its own sense of how the statute should
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8 At argument, the Government assured the Court that HUD did not promulgate its proposed rule because of Magner. See Tr. of Oral Arg. 46 (“[I]t overestimates the efficiency of the government to think that you could get, you know, a supposed rule-making on an issue like this out within seven days”). The Government also argued that HUD had recognized disparate-impact liability in adjudications for years. Ibid.

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operate.” Utility Air Regulatory Group, 573 U. S., at ___ (slip op., at 23). This rule makes even more sense where the agency’s view would open up a deeply disruptive avenue of liability that Congress never contemplated.
IV
Not only does disparate-impact liability run headlong into the text of the FHA, it also is irreconcilable with our precedents. The Court’s decision today reads far too much into Griggs v. Duke Power Co., 401 U. S. 424 (1971), and far too little into Smith v. City of Jackson, 544 U. S. 228 (2005). In Smith, the Court explained that the statutory justification for the decision in Griggs depends on language that has no parallel in the FHA. And when the Smith Court addressed a provision that does have such a parallel in the FHA, the Court concluded—unanimously— that it does not authorize disparate-impact liability. The same result should apply here.
A
Rather than focusing on the text of the FHA, much of the Court’s reasoning today turns on Griggs. In Griggs, the Court held that black employees who sued their employer under §703(a)(2) of Title VII of the Civil Rights Act of 1964, 42 U. S. C. §2000e–2(a)(2), could recover without proving that the employer’s conduct—requiring a high school diploma or a qualifying grade on a standardized test as a condition for certain jobs—was motivated by a discriminatory intent. Instead, the Court held that, unless it was proved that the requirements were “job related,” the plaintiffs could recover by showing that the requirements “operated to render ineligible a markedly disproportionate number of Negroes.” 401 U. S., at 429.
Griggs was a case in which an intent to discriminate might well have been inferred. The company had “openly discriminated on the basis of race” prior to the date on

22 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 

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which the 1964 Civil Rights Act took effect. Id., at 427. Once that date arrived, the company imposed new educational requirements for those wishing to transfer into jobs that were then being performed by white workers who did not meet those requirements. Id., at 427–428. These new hurdles disproportionately burdened African-Americans, who had “long received inferior education in segregated schools.” Id., at 430. Despite all this, the lower courts found that the company lacked discriminatory intent. See id., at 428. By convention, we do not overturn a finding of fact accepted by two lower courts, see, e.g., Rogers v. Lodge, 458 U. S. 613, 623 (1982); Blau v. Lehman, 368 U. S. 403, 408–409 (1962); Graver Tank & Mfg. Co. v. Linde Air Products Co., 336 U. S. 271, 275 (1949), so the Court was confronted with the question whether Title VII always demands intentional discrimination.
Although Griggs involved a question of statutory interpretation, the body of the Court’s opinion—quite remarkably—does not even cite the provision of Title VII on which the plaintiffs’ claims were based. The only reference to §703(a)(2) of the 1964 Civil Rights Act appears in a single footnote that reproduces the statutory text but makes no effort to explain how it encompasses a disparate-impact claim. See 401 U. S., at 426, n. 1. Instead, the Court based its decision on the “objective” of Title VII, which the Court described as “achiev[ing] equality of employment opportunities and remov[ing] barriers that have operated in the past to favor an identifiable group of white employees over other employees.” Id., at 429–430.
That text-free reasoning caused confusion, see, e.g., Smith, supra, at 261–262 (O’Connor, J., concurring in judgment), and undoubtedly led to the pattern of Court of Appeals decisions in FHA cases upon which the majority now relies. Those lower courts, like the Griggs Court, often made little effort to ground their decisions in the statutory text. For example, in one of the earliest cases in

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this line, United States v. Black Jack, 508 F. 2d 1179 (CA8 1974), the heart of the court’s analysis was this: “Just as Congress requires ‘the removal of artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of racial or other impermissible classification,’ such barriers must also give way in the field of housing.” Id., at 1184 (quoting Griggs, supra, at 430–431; citation omitted).
Unlike these lower courts, however, this Court has never interpreted Griggs as imposing a rule that applies to all antidiscrimination statutes. See, e.g., Guardians Assn. v. Civil Serv. Comm’n of New York City, 463 U. S. 582, 607, n. 27 (1983) (holding that Title VI, 42 U. S. C. §2000d et seq., does “not allow compensatory relief in the absence of proof of discriminatory intent”); Sandoval, 532 U. S., at 280 (similar). Indeed, we have never held that Griggs even establishes a rule for all employment discrimination statutes. In Teamsters, the Court rejected “the Griggs rationale” in evaluating a company’s seniority rules. 431 U. S., at 349–350. And because Griggs was focused on a particular problem, the Court had held that its rule does not apply where, as here, the context is different. In Los Angeles Dept. of Water and Power v. Manhart, 435 U. S. 702 (1978), for instance, the Court refused to apply Griggs to pensions under the Equal Pay Act of 1963, 29 U. S. C. §206(d) or Title VII, even if a plan has a “disproportionately heavy impact on male employees.” 435 U. S. at 711, n. 20. We explained that “[e]ven a completely neutral practice will inevitably have some disproportionate impact on one group or another. Griggs does not imply, and this Court has never held, that discrimination must always be inferred from such consequences.” Ibid.
B
Although the opinion in Griggs did not grapple with the text of the provision at issue, the Court was finally re-

24 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 
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quired to face that task in Smith, 544 U. S. 228, which
addressed whether the Age Discrimination in Employment Act of 1967 (ADEA), 29 U. S. C. §621 et seq., authorizes
disparate-impact suits. The Court considered two provisions of the ADEA, §§4(a)(1) and 4(a)(2), 29 U. S. C. §§623(a)(1) and (a)(2).
The Court unanimously agreed that the first of these provisions, §4(a)(1), does not authorize disparate-impact claims. See 544 U. S., at 236, n. 6 (plurality opinion); id.,
at 243 (SCALIA, J., concurring in part and concurring in judgment) (agreeing with the plurality’s reasoning); id., at
249 (O’Connor, J., concurring in judgment) (reasoning that this provision “obvious[ly]” does not allow disparate-
impact claims). By contrast, a majority of the Justices found that the
terms of §4(a)(2) either clearly authorize disparate-impact
claims (the position of the plurality) or at least are ambiguous enough to provide a basis for deferring to such an
interpretation by the Equal Employment Opportunity Commission (the position of JUSTICE SCALIA). See 544 U. S., at 233–240 (plurality opinion); id., at 243–247 (opin-
ion of SCALIA, J.). In reaching this conclusion, these Justices reasoned that
§4(a)(2) of the ADEA was modeled on and is virtually identical to the provision in Griggs, 42 U. S. C. §2000e–
2(a)(2). Section 4(a)(2) provides as follows:

“It shall be unlawful for an employer—

.

.

.

.

.

“(2) to limit, segregate, or classify his employees in

any way which would deprive or tend to deprive any

individual of employment opportunities or otherwise

adversely affect his status as an employee, because of

such individual’s age.” 29 U. S. C. §623(a) (emphasis

added).

The provision of Title VII at issue in Griggs says this:

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“It shall be an unlawful employment practice for an

employer—

.

.

.

.

.

“(2) to limit, segregate, or classify his employees or

applicants for employment in any way which would

deprive or tend to deprive any individual of employ-

ment opportunities or otherwise adversely affect his

status as an employee, because of such individual’s

race, color, religion, sex, or national origin.” 42

U. S. C. §2000e–2(a)(2) (emphasis added).

For purposes here, the only relevant difference between these provisions is that the ADEA provision refers to “age” and the Title VII provision refers to “race, color, religion, or national origin.” Because identical language in two statutes having similar purposes should generally be presumed to have the same meaning, the plurality in Smith, echoed by JUSTICE SCALIA, saw Griggs as “compelling” support for the conclusion that §4(a)(2) of the ADEA authorizes disparate-impact claims. 544 U. S., at 233–234 (plurality opinion) (citing Northcross v. Board of Ed. of Memphis City Schools, 412 U. S. 427, 428 (1973) (per curiam)).
When it came to the other ADEA provision addressed in Smith, namely, §4(a)(1), the Court unanimously reached the opposite conclusion. Section 4(a)(1) states:
“It shall be unlawful for an employer— “(1) to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age.” 29 U. S. C. §623(a)(1) (emphasis added).

The plurality opinion’s reasoning, with which JUSTICE
SCALIA agreed, can be summarized as follows. Under §4(a)(1), the employer must act because of age, and thus

26 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 

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must have discriminatory intent. See 544 U. S., at 236, n. 6.9 Under §4(a)(2), on the other hand, it is enough if the employer’s actions “adversely affect” an individual “because of . . . age.” 29 U. S. C. §623(a).
This analysis of §§4(a)(1) and (a)(2) of the ADEA confirms that the FHA does not allow disparate-impact claims. Sections 804(a) and 805(a) of the FHA resemble §4(a)(1) of the ADEA, which the Smith Court unanimously agreed does not encompass disparate-impact liability. Under these provisions of the FHA, like §4(a)(1) of the ADEA, a defendant must act “because of ” race or one of the other prohibited grounds. That is, it is unlawful for a person or entity to “[t]o refuse to sell or rent,” “refuse to negotiate,” “otherwise make unavailable,” etc. for a forbidden reason. These provisions of the FHA, unlike the Title VII provision in Griggs or §4(a)(2) of the ADEA, do not make it unlawful to take an action that happens to adversely affect a person because of race, religion, etc.
The Smith plurality’s analysis, moreover, also depended on other language, unique to the ADEA, declaring that “it shall not be unlawful for an employer ‘to take any action otherwise prohibited . . . where the differentiation is based
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9 The plurality stated: “Paragraph (a)(1) makes it unlawful for an employer ‘to fail or refuse to hire . . . any individual . . . because of such individual’s age.’ (Emphasis added.) The focus of the paragraph is on the employer’s actions with respect to the targeted individual. Paragraph (a)(2), however, makes it unlawful for an employer ‘to limit . . . his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.’ (Emphasis added.) Unlike in paragraph (a)(1), there is thus an incongruity between the employer’s actions—which are focused on his employees generally—and the individual employee who adversely suffers because of those actions. Thus, an employer who classifies his employees without respect to age may still be liable under the terms of this paragraph if such classification adversely affects the employee because of that employee’s age—the very definition of disparate impact.” 544 U. S., at 236, n. 6.

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on reasonable factors other than age.’ ” 544 U. S., at 238 (quoting 81 Stat. 603; emphasis added). This “otherwise prohibited” language was key to the plurality opinion’s reading of the statute because it arguably suggested disparate-impact liability. See 544 U. S., at 238. This language, moreover, was essential to JUSTICE SCALIA’s controlling opinion. Without it, JUSTICE SCALIA would have agreed with Justices O’Connor, KENNEDY, and THOMAS that nothing in the ADEA authorizes disparate-impact suits. See id., at 245–246. In fact, even with this “otherwise prohibited” language, JUSTICE SCALIA merely concluded that §4(a)(2) was ambiguous—not that disparateimpacts suits are required. Id., at 243.
The FHA does not contain any phrase like “otherwise prohibited.” Such language certainly is nowhere to be found in §§804(a) and 805(a). And for all the reasons already explained, the 1988 amendments do not presuppose disparate-impact liability. To the contrary, legislative enactments declaring only that certain actions are not grounds for liability do not implicitly create a new theory of liability that all other facets of the statute foreclose.
C
This discussion of our cases refutes any notion that “[t]ogether, Griggs holds[10] and the plurality in Smith instructs that antidiscrimination laws must be construed to encompass disparate-impact claims when their text refers to the consequences of actions and not just to the mindset of actors, and where that interpretation is con-

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10 Griggs, of course, “holds” nothing of the sort. Indeed, even the plurality opinion in Smith (to say nothing of JUSTICE SCALIA’s controlling opinion or Justice O’Connor’s opinion concurring in the judgment) did not understand Griggs to create such a rule. See 544 U. S., at 240 (plurality opinion) (relying on multiple considerations). If Griggs already answered the question for all statutes (even those that do not use effects language), Smith is inexplicable.

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sistent with statutory purpose.” Ante, at 10. The Court stumbles in concluding that §804(a) of the FHA is more like §4(a)(2) of the ADEA than §4(a)(1). The operative language in §4(a)(1) of the ADEA—which, per Smith, does not authorize disparate-impact claims—is materially indistinguishable from the operative language in §804(a) of the FHA.
Even more baffling, neither alone nor in combination do Griggs and Smith support the Court’s conclusion that §805(a) of the FHA allows disparate-impact suits. The action forbidden by that provision is “discriminat[ion] . . . because of ” race, religion, etc. 42 U. S. C. §3605(a) (emphasis added). This is precisely the formulation used in §4(a)(1) of the ADEA, which prohibits “discriminat[ion] . . . because of such individual’s age,” 29 U. S. C. §623(a)(1) (emphasis added), and which Smith holds does not authorize disparate-impact claims.
In an effort to explain why §805(a)’s reference to “discrimination” allows disparate-impact suits, the Court argues that in Board of Ed. of City School Dist. of New York v. Harris, 444 U. S. 130 (1979), “statutory language similar to §805(a) [was construed] to include disparateimpact liability.” Ante, at 11. In fact, the statutory language in Harris was quite different. The law there was §706(d)(1)(B) of the 1972 Emergency School Aid Act, which barred assisting education agencies that “ ‘had in effect any practice, policy, or procedure which results in the disproportionate demotion or dismissal of instructional or other personnel from minority groups in conjunction with desegregation . . . or otherwise engaged in discrimination based upon race, color, or national origin in the hiring, promotion, or assignment of employees.’ ” 444 U. S., at 132–133, 142 (emphasis added).
After stating that the first clause in that unusual statute referred to a “disparate-impact test,” the Harris Court concluded that “a similar standard” should apply to the

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textually “closely connected” second clause. Id., at 143. This was so, the Court thought, even though the second clause, standing alone, may very well have required discriminatory “intent.” Id., at 139. The Court explained that the Act’s “less than careful draftsmanship” regarding the relationship between the clauses made the “wording of the statute . . . ambiguous” about teacher assignments, thus forcing the Court to “look closely at the structure and context of the statute and to review its legislative history.” Id., at 138–140. It was the combined force of all those markers that persuaded the Court that disparate impact applied to the second clause too.
Harris, in other words, has nothing to do with §805(a) of the FHA. The “wording” is different; the “structure” is different; the “context” is different; and the “legislative history” is different. Id., at 140. Rather than digging up a 36-year-old case that Justices of this Court have cited all of twice, and never once for the proposition offered today, the Court would do well to recall our many cases explaining what the phase “because of ” means.
V
Not only is the decision of the Court inconsistent with what the FHA says and our precedents, it will have unfortunate consequences. Disparate-impact liability has very different implications in housing and employment cases.
Disparate impact puts housing authorities in a very difficult position because programs that are designed and implemented to help the poor can provide the grounds for a disparate-impact claim. As Magner shows, when disparate impact is on the table, even a city’s good-faith attempt to remedy deplorable housing conditions can be branded “discriminatory.” 619 F. 3d, at 834. Disparateimpact claims thus threaten “a whole range of tax, welfare, public service, regulatory, and licensing statutes.” Washington v. Davis, 426 U. S. 229, 248 (1976).

30 TEXAS DEPT. OF HOUSING AND COMMUNITY AFFAIRS v. INCLUSIVE COMMUNITIES PROJECT, INC. 

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This case illustrates the point. The Texas Department of Housing and Community Affairs (the Department) has only so many tax credits to distribute. If it gives credits for housing in lower income areas, many families— including many minority families—will obtain better housing. That is a good thing. But if the Department gives credits for housing in higher income areas, some of those families will be able to afford to move into more desirable neighborhoods. That is also a good thing. Either path, however, might trigger a disparate-impact suit.11
This is not mere speculation. Here, one respondent has sued the Department for not allocating enough credits to higher income areas. See Brief for Respondent Inclusive Communities Project, Inc., 23. But another respondent argues that giving credits to wealthy neighborhoods violates “the moral imperative to improve the substandard and inadequate affordable housing in many of our inner cities.” Reply Brief for Respondent Frazier Revitalization Inc. 1. This latter argument has special force because a city can build more housing where property is least expensive, thus benefiting more people. In fact, federal law often favors projects that revitalize low-income communities. See ante, at 2.
No matter what the Department decides, one of these respondents will be able to bring a disparate-impact case. And if the Department opts to compromise by dividing the credits, both respondents might be able to sue. Congress surely did not mean to put local governments in such a position.
The Solicitor General’s answer to such problems is that HUD will come to the rescue. In particular, HUD regula-
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11 Tr. of Oral Arg. 44–45 (“Community A wants the development to be in the suburbs. And the next state, the community wants it to be in the poor neighborhood. Is it your position . . . that in either case, step one has been satisfied[?] GENERAL VERRILLI: That may be right”).

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tions provide a defense against disparate-impact liability if a defendant can show that its actions serve “substantial, legitimate, nondiscriminatory interests” that “necessar[ily]” cannot be met by “another practice that has a less discriminatory effect.” 24 CFR §100.500(b) (2014). (There is, of course, no hint of anything like this defense in the text of the FHA. But then, there is no hint of disparateimpact liability in the text of the FHA either.)
The effect of these regulations, not surprisingly, is to confer enormous discretion on HUD—without actually solving the problem. What is a “substantial” interest? Is there a difference between a “legitimate” interest and a “nondiscriminatory” interest? To what degree must an interest be met for a practice to be “necessary”? How are parties and courts to measure “discriminatory effect”?
These questions are not answered by the Court’s assurance that the FHA’s disparate-impact “analysis ‘is analogous to the Title VII requirement that an employer’s interest in an employment practice with a disparate impact be job related.’ ” Ante, at 4 (quoting 78 Fed. Reg. 11470). See also ante, at 18 (likening the defense to “the business necessity standard”). The business-necessity defense is complicated enough in employment cases; what it means when plopped into the housing context is anybody’s guess. What is the FHA analogue of “job related”? Is it “housing related”? But a vast array of municipal decisions affect property values and thus relate (at least indirectly) to housing. And what is the FHA analogue of “business necessity”? “Housing-policy necessity”? What does that mean?
Compounding the problem, the Court proclaims that “governmental entities . . . must not be prevented from achieving legitimate objectives, such as ensuring compliance with health and safety codes.” Ante, at 21. But what does the Court mean by a “legitimate” objective? And does the Court mean to say that there can be no disparate-

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impact lawsuit if the objective is “legitimate”? That is certainly not the view of the Government, which takes the position that a disparate-impact claim may be brought to challenge actions taken with such worthy objectives as improving housing in poor neighborhoods and making financially sound lending decisions. See Brief for United States as Amicus Curiae 30, n. 7.
Because HUD’s regulations and the Court’s pronouncements are so “hazy,” Central Bank, 511 U. S., at 188–189, courts—lacking expertise in the field of housing policy— may inadvertently harm the very people that the FHA is meant to help. Local governments make countless decisions that may have some disparate impact related to housing. See ante, at 19–20. Certainly Congress did not intend to “engage the federal courts in an endless exercise of second-guessing” local programs. Canton v. Harris, 489 U. S. 378, 392 (1989).
Even if a city or private entity named in a disparateimpact suit believes that it is likely to prevail if a disparateimpact suit is fully litigated, the costs of litigation, including the expense of discovery and experts, may “push cost-conscious defendants to settle even anemic cases.” Bell Atlantic Corp. v. Twombly, 550 U. S. 544, 559 (2007). Defendants may feel compelled to “abandon substantial defenses and . . . pay settlements in order to avoid the expense and risk of going to trial.” Central Bank, supra, at 189. And parties fearful of disparate-impact claims may let race drive their decisionmaking in hopes of avoiding litigation altogether. Cf. Ricci, 557 U. S., at 563. All the while, similar dynamics may drive litigation against private actors. Ante, at 19.
This is not the Fair Housing Act that Congress enacted.
VI
Against all of this, the Court offers several additional counterarguments. None is persuasive.

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A 

The Court is understandably worried about pretext. No one thinks that those who harm others because of protected characteristics should escape liability by conjuring up neutral excuses. Disparate-treatment liability, however, is attuned to this difficulty. Disparate impact can be evidence of disparate treatment. E.g., Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U. S. 520, 541–542 (1993) (opinion of KENNEDY, J.); Hunter v. Underwood, 471 U. S. 222, 233 (1985). As noted, the facially neutral requirements in Griggs created a strong inference of discriminatory intent. Nearly a half century later, federal judges have decades of experience sniffing out pretext.
B
The Court also stresses that “many of our Nation’s largest cities—entities that are potential defendants in disparate-impact suits—have submitted an amicus brief in this case supporting disparate-impact liability under the FHA.” Ante, at 23–24.
This nod to federalism is puzzling. Only a minority of the States and only a small fraction of the Nation’s municipalities have urged us to hold that the FHA allows disparate-impact suits. And even if a majority supported the Court’s position, that would not be a relevant consideration for a court. In any event, nothing prevents States and local government from enacting their own fair housing laws, including laws creating disparate-impact liability. See 42 U. S. C. §3615 (recognizing local authority).
The Court also claims that “[t]he existence of disparateimpact liability in the substantial majority of the Courts of Appeals for the last several decades” has not created “ ‘dire consequences.’ ” Ante, at 24. But the Court concedes that disparate impact can be dangerous. See ante, at 18–22. Compare Magner, 619 F. 3d, at 833–838 (holding that efforts to prevent violations of the housing code may vio-

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late the FHA), with 114 Cong. Rec. 2528 (1968) (remarks of Sen. Tydings) (urging enactment of the FHA to help combat violations of the housing code, including “rat problem[s]”). In the Court’s words, it is “paradoxical to construe the FHA to impose onerous costs on actors who encourage revitalizing dilapidated housing.” Ante, at 19. Our say-so, however, will not stop such costly cases from being filed—or from getting past a motion to dismiss (and so into settlement).
C
At last I come to the “purpose” driving the Court’s analysis: The desire to eliminate the “vestiges” of “residential segregation by race.” Ante, at 5, 23. We agree that all Americans should be able “to buy decent houses without discrimination . . . because of the color of their skin.” 114 Cong. Rec. 2533 (remarks of Sen. Tydings) (emphasis added). See 42 U. S. C. §§3604(a), 3605(a) (“because of race”). But this Court has no license to expand the scope of the FHA to beyond what Congress enacted.
When interpreting statutes, “ ‘[w]hat the legislative intention was, can be derived only from the words . . . used; and we cannot speculate beyond the reasonable import of these words.’ ” Nassar, 570 U. S., at ___ (slip op., at 13) (quoting Gardner v. Collins, 2 Pet. 58, 93 (1829)). “[I]t frustrates rather than effectuates legislative intent simplistically to assume that whatever furthers the statute’s primary objective must be the law.” Rodriguez v. United States, 480 U. S. 522, 526 (1987) (per curiam). See also, e.g., Board of Governors, FRS v. Dimension Financial Corp., 474 U. S. 361, 373–374 (1986) (explaining that “ ‘broad purposes’ ” arguments “ignor[e] the complexity of the problems Congress is called upon to address”).
Here, privileging purpose over text also creates constitutional uncertainty. The Court acknowledges the risk that disparate impact may be used to “perpetuate race-based

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considerations rather than move beyond them.” Ante, at 21. And it agrees that “racial quotas . . . rais[e] serious constitutional concerns.” Ante, at 20. Yet it still reads the FHA to authorize disparate-impact claims. We should avoid, rather than invite, such “difficult constitutional questions.” Ante, at 22. By any measure, the Court today makes a serious mistake.
* * *
I would interpret the Fair Housing Act as written and so would reverse the judgment of the Court of Appeals.