Published on: December 1, 2019


Congressional Democrats and housing advocacy groups say a proposed revision in the Fair Housing Act’s “disparate impact” standard would undermine policies designed to combat housing discrimination. The change, proposed by the Department of Housing and Urban Development (HUD), targets a legal theory under which a practice may be deemed discriminatory if it has a discriminatory impact on a protected class, even if the discrimination is not intentional.

The revised standard would replace the current three-step standard for establishing disparate impact with a five-step evaluation that would shift the burden of proof from defendants, who now have to establish that the practice has a legitimate business purpose for which there is no reasonable alternative, to plaintiffs, who would have to establish that the practice has an “arbitrary, artificial and unnecessary” impact.

“This proposed rule is intended to increase legal clarity and promote the production and availability of housing in all areas while making sure every person is treated fairly under the law,” HUD Secretary Ben Carson said in a press release. The revised rule will also bring HUD’s policy into line with a 2015 Supreme Court ruling (Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc.) that upheld the disparate impact standard as a basis for bringing Fair Housing Act discrimination claims. While affirming the use of that legal theory, the ruling also held that plaintiffs who use statistical disparities to support their discrimination claims must show that the policies they are challenging created the disparities. (See this month’s Legal Brief.)

Critics contend that the policy change will make it more difficult for victims of housing discrimination to win relief. “Without the disparate impact standard, a plaintiff would essentially have to prove malicious intent as plain as a ‘No Blacks Allowed’ sign in order to get relief,” Rep. Maxine Waters (D-CA), chair of the House Financial Services Committee, wrote in a letter to HUD opposing the rule.

Housing advocates echoed those concerns. The bar for establishing disparate impact “was already set high,” the National Community Reinvestment Coalition said in a separate letter. The HUD proposal “would put it in the stratosphere.” If approved as written, the letter warns, the HUD policy “will severely weaken an important enforcement tool that is critical to combating modern forms of discrimination.”


Existing home sales posted their fourth consecutive year-over-year gain in October, rising 4.6 percent above the year-ago total. That’s the good news. The not-to-good news: The improvement occurred at the top of the price range, encompassing homes between $500,000 and $750,000. Sales of less expensive homes, affordable to low- and middle-income buyers, declined. First-time buyers purchased fewer than one-third of the homes sold in October, according to the National Association of Realtors (NAR). “Existing home owners are all selling to each other and leaving first-time buyers out in the cold,” Mark Fleming, chief economist for First American Financial Corp., told the Wall Street Journal.

Lack of inventory continues to be a big part of the problem, for which analysts cite two causes: Builders (until recently) have been targeting higher-priced homes; and existing home owners are remaining in place for longer than they have in the past. A recent study by Capital Economics found that there were only 550,000 vacant single-family homes for sale priced below $250,000 in the third quarter of this year ─ half the number available for sale seven years ago.

Although a strong economy will boost household formations, the report notes, the inventory shortage and rising prices will limit homeownership opportunities for these prospective buyers. “New households have to live somewhere, and, if they are not buying a home, they will rent one,” the report concludes. “That suggests rental vacancy rates will stay relatively low, preventing a sharp fall in rental growth as the economy slows.”


Congress will eventually restructure the federal flood insurance program, but apparently not any time soon. The short-term Continuing Resolution Congress approved recently to avoid another government shutdown includes a provision renewing the funding of the National Flood Insurance Program (NFIP). The renewal – the twelfth Congress has approved in the past two years — will keep that program operating through December 20th. Although the NFIP could continue processing claims if Congressional authorization for the program expires, it could not issue new policies, creating a roadblock for homebuyers seeking to purchase homes in designated flood zones, where flood insurance is a mortgage lending requirement.

Lawmakers have developed a variety of plans for restructuring the NFIP, but all have stumbled over the government funding and/or insurance premium costs required to keep the program solvent. “The program is several billion dollars in debt,” Jeremy Jenks, VP of sales for the Trembley Group, told DS News recently. “I think what’s happening,” he suggested, “is that Congress knows they need to do something about this, but they’re not sure what to do.”

In a related development, the Federal Emergency Management Agency (FEMA), which oversees the flood program, has delayed implementation of a new formula for pricing flood insurance premiums that would be based on what agency officials say is a more accurate measure of flood risks. The new rating plan, which had been scheduled to take effect in October of 2020, will now be implemented in October of 2021. The delay will provide additional time needed for “a comprehensive analysis of the proposed rating structure, in order to protect policy holders an minimize any unintentional negative effects of the transition,” FEMA said.

Insurance industry trade groups, which have supported the new rating plan, criticized the implementation delay, which industry executives termed “troubling, though not surprising.”

“Virtually every home in America faces some risk of flooding, and every homeowner should be able [to determine] how great their risk is,” Jimi Grande, senior vice president of government affairs for the National Association of Mutual Insurance Companies, told Insurance journal. Delaying conversion to a more accurate rating system, he said, “effectively encourages continued development in flood-prone areas, and worse, will leave homeowners across the country with fewer choices for flood insurance, [increasing] their vulnerability to flood risks [of which they are often unaware].”


Tourists viewing the gigantic dams controlling the nation’s waterways see engineering marvels. Safety experts see disasters in the making. The dams are more than 50 years old, on average, the Associated Press reports, and most have deficiencies of varying degrees of seriousness that require attention.

The AP report identified 1,688 dams in “high-hazard” areas in 44 states that are deemed to be in poor or unsatisfactory condition, with problems that include: leaks (“which may indicate a dam is failing internally”); unrepaired erosion; tree growth that can “destabilize” some dams; and spillways unable to handle the water flow created by a large flood. Climate change is compounding the risks.

“These are like ticking bombs just sitting there, waiting for the wrong conditions to occur to cause catastrophic failure,” a former FEMA official quoted in the article, warns.

The Association of State Dam Safety Officials estimates that it would cost more than $70 billion to repair and upgrade the nation’s 90,000 dams. Cost is just part of the problem, the AP report notes. The dams are privately owned, making the repairs a private rather than a governmental expense.

The Willett Pond Dam near Norwood is among the structures the article highlights. A recent inspection found that the spillway could handle only 13 percent of the overflow from a serious flood before the dam was breached, sending a torrent of water into the city. A local nonprofit has received a $215,000 grant to design spillway repairs, estimated to cost between $1 million and $5 million. There is no funding currently available to repair the structure, however, the AP report notes, “and no timeline to fix it.”


Wall Street analysts are beginning to include the effects of climate change in their assessments of corporate health and performance. Their calculations include both sides of the ledger ─ the perceived risks and the steps corporate executives are taking to mitigate them. Analysts are looking specifically at how the byproducts of climate change ─ such as heat waves, droughts, floods devastating storms and wild fires ─ will affect profitability. Reflecting this emphasis, more companies are beginning to discuss their responses to climate change in their quarterly calls with analysts. Reuters calculated that approximately 70 calls have included this topic since the beginning of the year ─ about double the number tallied in any of the past six years.

Portfolio fund managers have apparently gotten the message and are also including climate risks in their assessment of potential investments.

“Without expecting a company to significantly change its strategy, we are increasingly having conversations with management teams to ask them about their plans for climate resilience,” Arthur Hurley, senior portfolio manager for the Columbia Real Estate Fund, told Insurance Journal.


Security experts are warning real estate brokers that they are facing outsized risks from cybercrime. Agents that fail to take proactive measures to protect themselves “are running naked through the woods and are going to get pricked,” Robert Siciliano, CEO of Safr.Me cautioned at a recent conference.

The rapid increase in personal loans may indicate problems ahead for the nation’s economy.

A newly enacted California law will require community associations to have decks in their community inspected at least once every nine years to ensure that they are structurally sound and waterproof.

Jersey City residents voted overwhelmingly to restrict the short-term rental of residences in their community, despite the $4.2 million campaign Airbnb mounted to defeat the measure.

Boston rents, averaging $4.25 per square foot, are the third highest in the country, behind New York (second at $5.20) and San Francisco – first at $5.75.


Real estate industry executives were disappointed when the U.S. Supreme Court upheld “disparate impact” as a grounds for proving discrimination under the Fair Housing Act. But they were also hopeful that the 2015 decision (Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc.) would make it more difficult to apply that theory. A recent ruling by a Texas District Court, suggests that their optimism was justified. (The Inclusive Communities Project, Inc. v. Heartland Community Association, Inc.) See related item on HUD’s proposed rule change above.

The trigger in this dispute between a homeowner association (Heartland Community Association) and The Inclusive Communities Project (the same housing advocacy organization on the losing end of the 2015 Supreme Court decision) was a policy adopted by Heartland’s governing board prohibiting owners from renting their residences to tenants who were using federal programs, such as Section 8, to subsidize their rent.

ICP contended that the policy had a discriminatory impact, because all of the renters using Section 8 vouchers in the Heartland community were Black and none were non-Hispanic whites. ICP also contended that the policy had a discriminatory intent, because the HOA enacted it only after the number of Black renters in Heartland and the number of Blacks on the Section 8 waiting list in the Dallas metropolitan area had increased significantly between 2013 and 2017.

Heartland countered that the voucher policy was neutral because it affected all Section 8 renters – not just minorities. The HOA also said ICP had no proof of the discriminatory intent the group alleged, other than “unsupported assumptions” about Heartland’s motives. Most importantly, Heartland argued, ICP had failed to meet the “robust test” the Supreme Court established in its 2015 decision, requiring plaintiffs citing statistical disparities to support a disparate impact claim to demonstrate that the policy they are challenging created those disparities.

The District Court agreed that those deficiencies defeated ICP’s disparate impact claim. On the key point – the use of statistics as evidence of disparate impact ─ The Supreme Court ruled that a disparate impact claim “must fail if the plaintiff cannot point to a defendant’s policy or policies causing [the] disparity.” ICP failed to meet that base line test, the District Court said.

ICP claimed that Heartland’s policy had a discriminatory impact on both Heartland’s existing minority tenants and on future tenants currently on the Section 8 waiting list, because both groups consisted almost entirely of minorities. “But rather than sufficiently allege a causal link between the policy and the statistical disparities,” the District Court noted, “ICP repeatedly argues that the policy violates the disparate impact standard because the individuals affected by it are Black or African-American….These arguments do not address the key issue of whether there are factual allegations from which the court can reasonably infer that the policy is causing the statistical disparities.” Those disparities, the court said, “preexisted the enactment of the policy and therefore cannot be shown to have been caused by it.”

The court also found no support for ICP’s claim that Heartland’s policy had a discriminatory intent. ICP had asserted, among other points, that the board of directors adopted its no-voucher policy because it was aware that the voucher population in the Dallas area was primarily minority. “ICP essentially asks [the court] to automatically view a ‘no voucher tenants’ policy as synonymous with a ‘no black tenants’ policy without providing adequate support for that linkage….[Heartland’s] presumed awareness that the voucher population….is disproportionately black cannot alone be enough,” the court said.


“It’s early and plenty of data is still missing, but as of right now the fourth quarter is looking a little ugly.” ─ Wall Street Journal columnist Jeffrey Sparshott.

Marcus, Errico, Emmer & Brooks specializes in condo law, representing clients in Massachusetts, Rhode Island and New Hampshire.