Simple Steps Can Keep Local Governments In Compliance With Fair Housing Act

The recent resolution of litigation in South Carolina demonstrates that local governments can run afoul of the federal Fair Housing Act even when government officials do not intend to discriminate. The effect of a local government action related to development can trigger serious fair housing concerns for racial or ethnic minorities.

Fortunately, local governments can take steps to make sure they are in compliance with the federal Fair Housing Act. The key is to be attentive to the needs of minorities and families within the community and to work closely with developers who seek to meet those needs by producing affordable housing.

The issue has gained national attention because of a settlement in a fair housing lawsuit brought by South Carolina developer Connelly Development LLC and the National Association of Home Builders (NAHB) against the City of West Columbia, SC. NAHB’s litigation team worked closely with Benjamin E. “Ned” Nicholson V and others at the McNair Law Firm in Columbia, S.C.

Connelly Development and NAHB filed litigation in federal court after the city took action to stop development of a multifamily rental project that would have served tenants earning at or below 60 percent of the area median income. With the case scheduled to go to court on Feb. 19, the City of West Columbia chose instead to settle the litigation.

The lesson for other local governments is that the city in this case could easily have avoided litigation and the costly settlement, which was more than half a million dollars.

“The City of West Columbia has a demonstrated need for housing for minority and low income families,” said Jerry Howard, NAHB’s executive vice president and chief executive officer. “The developer, Kevin Connelly, has a proven track record of building apartments that are affordable to low income residents. The city should have been doing everything in its power to support this project. Instead, it withheld a letter that he needed to make this project viable.”

Measures that local governments might take to stay on the right side of the Fair Housing Act include:
- Assess the housing needs of racial and ethnic minorities and families with children within the community;
- Adopt policies that encourage production, rehabilitation and maintenance of housing that is affordable to these and other protected classes;
- Collaborate with developers who are making a sincere effort to meet these housing needs;
- Seek alternatives to otherwise legitimate legislative and regulatory actions that place home prices beyond the reach of protected persons; and
- Assess decisions made during the development approval process to make sure that those decisions do not have a discriminatory effect on minorities or families.

“At a time when local governments conduct conferences and workshops to figure out ways to help make housing more affordable for low-income families, it just doesn’t makes sense for them to be stopping projects that seek that same goal,” Howard said. “Government leaders need to collaborate with developers who can produce affordable homes. They need to meet with those developers, listen to them, and find ways to help them produce quality workforce housing.”

Connelly Development LLC and NAHB filed the lawsuit in Feb. 15, 2005, against the City of West Columbia alleging that the city violated the Fair Housing Act of 1968 when it interfered with the developer’s efforts to provide much needed affordable housing that would have served the city’s African-American or black residents.

Connelly and his company, Connelly Development, LLC, have demonstrated a commitment to using tax credit programs to help meet the housing needs of low-income families. Connelly has significant experience in obtaining LIHTC allocations from the State Housing Finance and Development Authority (SHFDA) and in using those tax credits to develop affordable rental properties. Connelly has received tax credit awards to make possible 434 affordable housing units in nine projects throughout South Carolina. West Columbia made decisions that stopped Connelly in his effort to provide housing that would help meet the needs of the city’s low-income residents.

Connelly successfully navigated all of the land use, zoning, and financing challenges to develop a project know as “Tanners Crossing,” but the City of West Columbia withheld one last but vital approval: sewer service for the project. The sewer lines already existed, no costly extension of new lines was necessary, and there was more than sufficient capacity within the current infrastructure to accommodate Tanners Crossing. Yet the City would not approve a sewer hook-up for the project.

Lacking that final sewer approval, Connelly became ineligible for low-income housing tax credits (LIHTCs) from the SHFDA. Without the credits, Tanners Crossing became an economically infeasible venture for Connelly.

After all of that, the City of West Columbia annexed the Tanners Crossing site within its jurisdiction. Following that annexation, the City placed a restrictive zoning classification on the site to block Connelly, or anyone else, from building a multifamily project there.

“The ultimate outcome of the city’s actions was that the developer was unable to build apartments that would have been home to many minority citizens,” Howard said. “Even if denying the development was not aimed at anyone in particular, the effect was that West Columbia’s minority citizens were deprived of safe, decent, affordable housing.”

Congress created the Fair Housing Act in 1968 to ensure that certain classes of people most likely to experience discrimination – including racial minorities – would not be victims of discrimination in the sale or rental of housing. The Fair Housing Act also makes it unlawful to interfere with someone who seeks to aid or encourage racial minorities to enjoy their right to housing.

For more information, e-mail djaffe@nahb.com at NAHB, or call him at 800-368-5242 x8317.