All Not Golden in Southern California Says Justice Department Investigation

This week, the results of a two-year Justice Department investigation of alleged housing discrimination in Los Angeles County and cities of Lancaster and Palmdale, California were released. The investigation revealed that local housing officials and police harassed and intimidated minority residents who receive Section 8 vouchers and the DOJ has ordered these municipalities to pay $12.5 million in damages to these tenants, an order which the cities are refusing to follow. In a recent interview with NPR's Celeste Headlee, Richard Winton of the Los Angeles Times reported that residents had reported home visits by as many as eight housing officials at once and discrimination in housing availability in the area (known as Antelope Valley) based on race. In one particular egregious instance, a deputy posted a picture of a resident's car and garage on a derogatory Facebook page, which prompted racial epithets directed at that tenant as well as the destruction of property and abject racially-motivated humiliation.

Will the new DOJ findings encourage Lancaster and the
Antelope Valley to return to its progressive slogan?
Photo Credit: Arcadia Publishing 

The county and cities are refusing to pay the amount order by the Justice Department. If the municipalities and the federal government cannot reach a negotiated settlement or if the municipalities do not comply, Winton states that the result could be a court-enforced forced consent decree or appointment of a monitor to oversee local officials and the sheriff's department and issue outside audits. Antelope Valley has had a contentious recent history of housing discrimination and, though the information gleaned from the DOJ's investigation is distressing, perhaps a settlement in which local officials compensate victims of housing discrimination will spur meaningful change in the region's housing practices and approach to building one community in which Housing Choice status is no longer a troubling lever of discrimination.

Disparate Impact Theory Goes to Washington

Disparate impact theory, which looks to results of allegedly discriminatory practices as well as the parties' intent, has been upheld by a variety of federal appeals courts as a valid way to prove housing discrimination. See e.g., Huntington Branch, NAAC v. Town of Huntington, 844 F.2d 926 (2d Cir. 1988).  However, until now, the Supreme Court has been notably silent about disparate impact theory. Two years ago, the Court was poised to hear arguments that a St. Paul, Minn. policy regarding low-cost rentals disproportionately affected minority residents and violated the Fair Housing Act before the city withdrew its appeal and the issue of disparate impact was sidestepped. However, SCOTUS recently agreed to hear the case of a group of African American and Hispanic residents of a Mount Holly, N.J. neighborhood that is set to be bulldozed to make way for a redevelopment project. See Twp. of Mount Holly v. Mount Holly Gardens Citizens in Action, Sup. Ct. Docket No. 11-1507. The neighborhood's residents claim that the redevelopment plan is discriminatory because it targets a predominately minority area and disproportionately affects minorities. While the Third Circuit Court of Appeals held that the community group had presented a triable claim of disparate impact, the Supreme Court will decide whether plaintiffs must prove that they were the target of intentional housing discrimination to prevail in a federal lawsuit. See Mt. Holly Gardens Citizens in Action, Inc. v. Twp. of Mount Holly, 658 F.3d 375 (3d Cir. 2011). The case is set to be heard by the nation's highest court in the fall and, as that date approaches, all fair housing eyes turn toward the nine justices and their long-awaited consideration of disparate impact theory.

Bulldozer tearing up houses in Mount Holly Gardens.
Photo Credit: Kent Pipes (via Huffington Post) 

The SAVE Act: Making it a Little Easier to 'Be Green'?

Image Credit: Energy Star 

Despite the recent push for green construction and remodeling, residential energy efficiency remains expensive. The common practice of lenders to ignore the value of green homes when underwriting mortgages keeps eco-friendly living even further out of reach of most moderate-income homebuyers. However, as The New York Times's Lisa Prevost reports, the Senate's bipartisan SAVE Act could make energy-efficient home features more attainable to these moderate-income buyers by incorporating the "green factor" into lender underwriting policies. See S. 1006 (June 6, 2013). The bill, which was introduced last month by Sens. Michael Bennet (D- Colo.) and Johnny Isakson (R-Ga.), seeks to "improve the accuracy of mortgage underwriting used by federal mortgage agencies by including a home's expected energy cost savings when determining the value and affordability of energy efficient homes." Specifically, the bill would require the FHA and lenders under federal conservatorship-namely Fannie Mae and Freddie Mac- to consider energy efficiency and energy savings realized when underwriting loans to buyers who submit a HUD home-energy report. These loans that take into account energy savings would recognize the added value that energy efficient features bring to a property and could result in larger amounts of money available to middle class buyers (the bill's supporters say that the risk of larger borrowing amounts is offset by studies that show that homes meeting federal energy guidelines are 32 percent less likely to go into default than homes that do not meet these standards).

The bill, which has broad support from groups including the U.S. Chamber of Commerce, U.S. Green Building Council, and National Resources Defense Council, is noteworthy not only for its efforts to bring energy conservation into mainstream lending policies but also because it is an uncommon example of politicians reaching across the aisle to collaborate with members of the other party and divergent interest groups. As Senator Bennet stated in his press release regarding the legislation, "it is rare to see such diverse interests come together, and that is because this is a common-sense bill." While the bill seems to hit all the right notes of common sense- including job creation, public-private partnerships, and the expansion of green home affordability- forthcoming debate over the bill may tell us how far common sense can go on Capitol Hill.

Transit Oriented Development and Timely Payments

Image Credit: GTD Aquitaine 

Once again, Kaid Benfield has written a piece worthy of discussion and dissection. Recent research by the NRDC and the Center for Housing Technology has found that, when all other factors are controlled, residents of housing located near public transit and in walkable locations are substantially less likely to default on payments. The study is fascinating and can be accessed here with additional insight by Professor Benfield:

Homes Near Public Transit Are Less Likely to Go Into Default

Rolling the Dice on Foreclosure Mediation in Vegas

Image Credit: RRC Realty 

This blog has chronicled many of the legal efforts to hold lenders more accountable and enter into loan modifications and buyback programs with former mortgagors with an eye on accumulated procedural victories transforming into substantive change. This week, an NPR report on the state of the housing recovery in Las Vegas- the nation's former unofficial foreclosure capital- illustrates the potential for such substantive change. The story focused on the effect of Nevada's Assembly Bill 284 on reducing the number of homeowners in default on their mortgages amidst rebounding home values. The law, which forces banks to prove they have the legal right to foreclose on homes and requires bank workers to sign an affidavit that they have personal knowledge of a property’s document history, was partially responsible for the number of default notices issued in Nevada grinding to a near halt in the past eighteen months. In addition, the law also allowed many homeowners to remain in their homes and use the value of their home- increasing by the week in Vegas's newly hot market- to sell at price points where they can pay off their debts and avoid short sales and foreclosure. The report interviewed several such Nevadans who have avoided the auction block with the help of AB 284, including a woman who went from the brink of foreclosure to facing the rosy future of multiple offers for her Henderson home. While real estate, like Vegas itself, is never a sure bet, strong foreclosure prevention laws have helped level the playing field for mortgagors who were victims of the sandstorm of speculating that preceded the housing crisis. 

Monumental Month for Land Use at SCOTUS

While last week's Supreme Court decisions on affirmative action in higher education, the Voting Rights Act, and same-sex marriage garnered extensive media coverage, the Court's recently-concluded term also produced a historic (though less glamorous) ruling on property rights and land use in America. In Koontz v. St. Johns River Water Management District, the Court considered the question of what concessions a local government can elicit from a property owner who seeks to develop his or her land in a way that may cause wider environmental or public harm. See Sup. Ct. Docket No. 11-1447, 570 U.S. __ (2013). Though the Koontz case involved the respondent, a land-use agency, proposing that petitioner, a Florida landowner, develop only one acre of his nearly fifteen acre wetlands parcel and and (a) conserve the rest or (b) pay for contractors to make improvements to nearby government-owned wetlands in exchange for a special permit for construction on wetlands, the case focused on whether the department's conditions for permit approval violated the Takings Clause of the Fifth Amendment. The Court, in a majority opinion written by Justice Alito, appears to expand the definition of what constitutes a governmental taking of land beyond the physical takings of property that were addressed in the previous Nollan v. California Coastal Commission and Dolan v. City of Tigard decisions to include "extortionate demands that…[do not] take property but impermissibly burden the right not to have property taken without just compensation." See 483 U.S. 825 (1987); 512 U.S. 687 (1994).

Photo Credit: Andrew Weinstein 

The expansion of what amounts to a taking and therefore must be subject to constitutional scrutiny (the standard requires a nexus or relationship between the concession sought by the government and the harm to be avoided and proportionality between the concession and harm) represents a victory for landowners and developers. However, many conservation and smart growth advocates have expressed concern that the decision prevents local governments and planning agencies from, in the words of Justice Kagan's dissent, "impos[ing] ordinary financial obligations without triggering the protections of the Takings Clause." These advocates (as well as various legal scholars) worry that policies such as mitigation banks and requirements for developers to contribute to sewage systems would be placed in the same categories as takings and property easements demanded by local governments. As with many of the landmark cases decided by the Court this term, only time will reveal the ripple effects of the ruling. In the meantime, planners, land-use authorities, and developers will likely continue to debate where "financial obligations" that are the government's prerogative to impose end and takings requiring constitutional scrutiny begin.