Disparate Impact

So I’ve gotten some pushback on the last post in the comments. One of the main objections is that “bigot” is an inflammatory and unhelpful word. That’s probably true, and had I been at that meeting, I would not have used it. But I suppose my position is that the balance of offense here still lies with the people asking the city the disallow new rental buildings, and given how rarely – almost never – those sort of people get called out by anyone, let alone the elected official who has been asked to enact their segregatory policies, I just can’t feel that that’s the real injustice here.

But there’s also some feeling that I was not correct to perceive a racial issue, especially given that the new apartments – other than the 10% subsidized under the Affordable Requirements Ordinance – would almost certainly cater to relatively upper-income, disproportionately white people. Which is true! And yet the underlying dynamic here is that people want to control the “quality” of their neighbors, which will almost inevitably have racial implications. That’s true both because 1) people perceive blacks in particular as reducing the value of a neighborhood independent of their income, and 2) even a purely class-based bias will created disproportionately white neighborhoods, given the distribution of income.*

Now, you may say that in this case, somehow, we have found an exceptional group of American people without racial prejudice, even subconscious. Fine. But 2) is enough all on its own. The Supreme Court just ruled last month that the Fair Housing Act of 1968 prohibits racial segregation by “disparate impact” – meaning exactly the kind of policy at issue here, which is on its surface race-blind but which will inevitably have a racist outcome if implemented. If Anthony Kennedy thinks there’s race involved, then I think there’s probably race involved.

I also want to highlight this, from a follow-up DNAinfo story:

But opposition to two projects doesn’t mean West Loop residents are opposed to all rental developments, Tenenbaum said.

“What we do favor is supporting the families that make the West Loop a desirable area,” he said. “What’s wrong with families and what’s wrong with homes? Who serves on the parks councils? The PTAs? The local school boards, CAPS committees? On community boards? For the most part, its people who put down roots.”

What’s wrong with families? Well, for one thing, family status is actually a protected class, too. What Tenenbaum is straightforwardly asking for is straightforwardly illegal under the Fair Housing Act. Which is just to say that this situation is wrong from all sorts of angles, I suppose.


 

* I’m reminded of an affordable housing fight in the North Shore suburbs a few years ago. The housing at issue would have been targeted to people at something like 120% of Area Median Income – that is, people who were actually richer than the average metropolitan Chicagoan. In practice, they were actually probably nurses and teachers. They were probably going to be almost all white. And yet the campaign against the project – which was ultimately successful in blocking it – repeatedly referenced Cabrini-Green, with obviously racial implications. Which isn’t to say that the West Loopers are quite as noxious as that, it’s just to point out that there don’t actually have to be any black people involved for anti-black racism to play a major role in decision-making.

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8 thoughts on “Disparate Impact

  1. Daniel,

    Thanks for the attention. This is a well crafted response and generally speaking I concede your clarified points. Thanks again for all your hard work on the blog.

    1. On Tenenbaum: I don’t know that what he’s saying is “straightforwardly illegal”… it seems he (and many residents) would prefer more units for sale vs rent, because he feels owners are more “engaged”. Whether or not that’s illegal would depend on the court’s interpretation of “disparate-impact” (see below). He’s not advocating an explicit ban on childless and/or single renter/owners.

    Also you can say let the free market decide what to build, but the critical issue in finding the highest development value of that land is FINANCING the project (getting a loan from a bank to build it). Pre-recession this was skewed significantly toward condos. Post-recession it continues to overwhelmingly favor rentals, from DNA:

    “West Loop developers seeking to build apartment buildings have previously said that it difficult to finance a large condo building project.”

    There’s been a LOT of talk about “you can always turn rentals into condos later”, but so far that has not significantly materialized. I think it would be could to see aldermen/residents asking more questions about building to suit BOTH options in the same building. Rentals do tend to be more highly skewed toward 1 and 2 bedroom units (which are less “family-friendly”) and that’s not easy to change. Also (and I don’t want to stereotype too much here, but) interior finishes are more frequently “builder grade” for high-wear & tear (as opposed to a broad spectrum of middle & high end options in condos, at least downtown).

    2. On the supreme court ruling: have you seen much written about what we can expect will change in practice? Might be a good subject for a future post. Perhaps interview a friendly Chicago lawyer or two? Scotusblog is a good reference (albeit fairly laywer-ly technical):

    http://www.scotusblog.com/2015/06/paul-hancock-fha/

    “Although recognizing disparate impact under the FHA, the Court focused much of its analysis on the “important and appropriate means of ensuring that disparate-impact liability is properly limited.” While the fuller implications of the Court’s decision will take time to develop through application in the lower courts, aspects of the potential impact of the ruling are discussed below.”

    “Overbroad application of disparate impact may give rise to serious constitutional questions
    Courts must apply safeguards at the pleadings stage to protect defendants”

    “In describing the requisite pleadings-stage safeguards, the Court relied upon Wards Cove v. Atonio, in which it held that to sustain a disparate-impact case, a plaintiff must identify a specific policy of the defendant and adequately plead that such policy is the cause of the disparity. To distinguish meritless from meritorious claims, the Court directed lower courts to “avoid interpreting disparate-impact liability to be so expansive as to inject racial considerations” into every FHA decision. Thus, the Court held that a “racial imbalance does not, without more, establish a prima facie case of disparate impact,” and that a plaintiff can no longer maintain a disparate-impact claim by pleading a mere “statistical disparity.” Disallowing claims where a plaintiff cannot establish a “robust” causal link to a defendant’s actual policies serves to eliminate suits seeking to hold a defendant liable for alleged racial disparities it “did not create.” The Court held that “[i]t 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.”

    1. Yeah, I’m actually very, very skeptical that the SCOTUS ruling will be used to dramatically change zoning decisions. Historically, local governments are given amazing latitude with respect to land use law, and Kennedy’s opinion gives single-family-home-sized loopholes for cities to argue that their zoning is supporting some legitimate purpose that trumps racial disparate impact.

      As for Tenenbaum, though, his comment doesn’t fall under those protections, because one of his “legitimate purposes” is to discriminate by familial status, which is explicitly one of the protected classes of the Fair Housing Act. That’s what I think is straightforwardly illegal.

      1. I mean, it’s a very interesting question. If the courts did decide to move in that direction, though, it would open a slippery slope. All zoning artificially affects the price of land which in turn affects the price of housing and ultimately the racial makeup of a given municipality.

        In some cases, it’s pretty clear-cut – as in low-income areas that ban multi-family housing in an attempt to enforce segregation. But in a wealthy area with high land values, zoning deregulation won’t lead to racial integration in any kind of reasonable timeframe.

  2. Ex. – Hypothetically speaking, West Loop neighbors associations put forward a “long term development plan” that provides for new density and targets a mix of rentals & condos (say 50/50 or even 75/25 rentals) over a 10-15 year horizon. If the alderman were on board (which he’s clearly not), and shot down a project because new neighborhood development over the period was 80, 90,100% rentals, how likely is a court to find that turning down the project had a “disparate impact” on any protected class’ ability to live in the West Loop and was therefore, illegal?

  3. One more: Not dismissing your points above about the problems with owners vs renters. But one more example to show that it is a significantly complex issue and not a simple rich/poor, white/black issue. For a the decade leading into 2008 (and the greater part of the last 50 years since the development of the 30 year mortgage, which has its American roots in the GI bill with mortgage insurance as “‘deferred compensation”: link: http://www.randomhistory.com/1-50/037mortgage.html), public perception in the US was brow-beaten with the “positive impacts of homeownership”, both financial and “social”. While prices took the shine off the financial side, I don’t think public opinion or “common knowledge” has fully swung back to the middle on “social” benefits yet.

    That said, here is a good paper trying to update some of the research and pokes some holes in the old data (basically saying that after controlling for other variables like income, home ownership doesn’t provide any particular benefit).

    http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/hbtl-04.pdf

    That said there are real, tangible, proven financial and social benefits to existing homeowners for using existing available means (like zoning) to restrict development in their neighborhoods for exclusively higher income households (see link above). Perhaps you think it’s unethical, perhaps you think that low income households should have more legal protections to establish further income integration in neighborhoods, but part of the reason the issue is complex is that it mixes and muddles together rational, self-interested behavior with what is (at times) legitimately bigoted discrimination. And further, even when no ill-intentioned parties exist, the broader social question is when and to what degree do we overrule those individual wishes for the “greater good” of a more integrated society?

    1. Thanks for all of this very thoughtful pushback! This is one of the reasons I enjoy doing the blog so much.

      I completely agree that it’s a complex issue, and that one of the things that makes it complex is that there’s a straightforward (and powerful) financial interest for homeowners to do whatever will raise their own property values. That’s the crux of William Fischel’s take on zoning, which I mostly think is right. And there’s nothing evil about wanting your largest asset to appreciate: for many middle-class or working-class people, that’s their retirement fund, or their kid’s college fund.

      But it puts them in the position of wanting things that are clearly discriminatory – and, yes, racist. To paraphrase a quote I never get tired of paraphrasing, in a country where home prices are heavily influenced by neighborhood racial composition, no height limit or minimum lot area will prevent home prices from falling unless it also helps to keep out unwanted minorities. Ditto for the low-income. That the system doesn’t require any actual bigotry on the part of the homeowners to have these discriminatory outcomes just makes it all the more sinister.

      For me, the philosophical question isn’t really whether we overrule individual wishes for a “greater good” – though even that framing misses the individual wishes of the people who would like to live in an exclusionary neighborhood but can’t because of said exclusionary policies – but what is a legitimate use of state power and what isn’t. From my perspective, any use of state power that makes mobility (and I have in mind physical mobility, but this actually applies to social and economic mobility as well for obvious reasons) more difficult, or impossible, ought to be subject to extreme skepticism, especially when it disproportionately impacts historically disadvantaged groups.

  4. Am I alone in perceiving this as a anti-gentrification position, rather than one of social discrimination?

    Many of the comments from West Loop owners usually start with “I have lived here for fifteen years”, which they follow up with remarks about keeping the character of the neighborhood, or making it an area for families. It is the same thing we are currently hearing out of Humboldt Park. Instead of families as a general term, it is ‘long term residents’, and ‘culture’. Both fear the inevitable change coming to their respective neighborhoods.

    For the West Loop, new apartment buildings, regardless their size, indicate a dramatic economic and social shift for the neighborhood. Long term owners see waves of $2,000-5,000/month apartments as a threat. No longer will they be surrounded by people like themselves, but they will be surrounded by people who are more successful, and more mobile, than themselves. Restaurants and shops they cannot afford will proliferate, new buildings, both rental and to own will be of higher quality than their own, and prices for common services/goods will likely increase. Change scares people, whether they are living below the poverty line in Humboldt Park, or consider themselves upper middle class in the West Loop.

    1. When the opposition is about gentrification, you almost never hear the renter-owner distinction, which I think is really purely about discrimination, whether or not you think that discrimination is justified.

      That said, it’s definitely true that people oppose new construction in general for anti-gentrification reasons. I’ve written about that a fair amount, so I won’t recapitulate all of it, but I will say that I think it’s not always irrational (new construction will generally bring about a change in character), even if, in the long run, it’s almost always counterproductive to the cause of affordable housing.

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