Fall 2015 Issue of Horizons

REAL ESTATE

What is Disparate Impact? Disparate impact is a legal doctrine under the Fair Housing Act, which states that a policy may be considered discriminatory if it has a disproportionate adverse impact against any group based on race, national origin, religion, sex, familial status or disability when there is no legitimate, non- discriminatory business need for the policy.

How are Low-Income Housing Tax Credits Allocated? Low-income housing tax credits are provided by the Federal Government and are then allocated to developers by each state’s housing agency. The purpose of these federal tax credits is to help underprivileged residents improve their quality of life. Federal low-income housing tax credits are required, by Internal Revenue Code Section 42(m)(1)(C), to be allocated by state housing agencies based on the follow criteria:

1. Project location

2. Housing needs

3. Project characteristics

4. Sponsor characteristics

5. Tenant population and special housing needs

In a disparate impact case, a person can challenge practices that have a

6. Public housing waiting lists

disproportionately adverse effect on those protected by the Fair Housing Act and are otherwise unjustified by a legitimate rationale.

7. Tenant populations with children

8. Projects intended for eventual tenant ownership These criteria do not identify integration or racial composition of the properties or communities. If a disproportionate number of the lowest income tenants reside in minority neighborhoods and those neighborhoods have both the greatest housing needs and the largest population of families on public housing waiting lists, it is not surprising that a disproportionate share of affordable housing would be concentrated in these neighborhoods.

page 56 | horizons Fall 2015