Affordable, safe housing is a huge concern for all populations. Traditionally, neighborhoods have been segregated along socioeconomic lines. However, even in modern cities, policy attempts to integrate communities through equal access housing have failed. Housing lotteries, through neighborhood preference programs, are now being employed by cities across the country to keep families in their neighborhoods.

Unfortunately, those same lotteries are meeting a pushback from the Department of Housing and Urban Development (HUD), which has stated that neighborhood preference and housing lotteries violate federal fair housing laws. In an interesting turn of events, the populations that fair housing laws are designed to protect are now being utilized to keep them out of their home neighborhoods. This comes as a surprise to many supporters of these anti-displacement programs, as the legislation was created to assist victims of segregation, not perpetuate it.

Federal Fair Housing Laws

In 1968, shortly after the assassination of Dr. Martin Luther King, Jr., Congress passed the Fair Housing Act (FHA) in response to concerns about racial segregation. The statute sought to address the issues created by residential segregation, while moving cities and towns away from unequal housing and economic conditions. It was initially enacted under Title VIII of the Civil Rights Act of 1968 and then ultimately codified under 42 U.S.C. §3601-3619. A 1968 Supreme Court ruling, Jones v. Alfred H. Mayer Co., held that the Civil Rights Act of 1968 prohibits racial discrimination by private and governmental housing providers. These policies established a framework for eradicating segregated housing.

Under the FHA it is unlawful to “refuse to sell or rent […] or otherwise make unavailable or deny, a dwelling to a person because of race, color, religion, sex, familial status, or national origin” or “to discriminate against any person in” making certain real-estate transactions “because of race, color, religion, sex, handicap, familial status, or national origin.”  Since the passage of the FHA in 1968, many cities have become more diverse. The FHA plays an integral part in avoiding the Kerner Commission’s grim prophecy that the “nation is moving toward two societies, one black, one white–separate and unequal.” The Act was later amended in 1988 to create certain exemptions from liability and expanded protected characteristics, including discrimination on the basis of disability or families with children.

“Fair housing protest, 1964” Courtesy of [Seattle Municipal Archives via Flickr]

Equal Housing and Discrimination

Problems regarding fair housing and discrimination are pervasive in communities across the country. HUD estimates that there are roughly two million cases of housing discrimination annually, but the actual number may be much larger. Many cases of housing discrimination are not reported. Moreover, studies conducted by HUD show that many residents are unaware of what activities are illegal under the FHA.

Despite all of the efforts to diminish segregation and discrimination in housing access, very little progress has occurred nationally. While the country has become more diverse than ever, residential housing patterns remain stagnant. Even with the passage of the FHA and the expansion of state laws protecting residents from housing discrimination, improvements in socioeconomic and racial seclusion have made few advances.

What is Gentrification?

No matter where one travels, there are segregated neighborhoods all over the U.S., particularly in metropolitan areas. Gentrification, or the arrival of  wealthier people in an existing urban district, has become common practice. This causes a litany of problems for the current residents of that community, including increased rents and property values, in addition to drastic changes to the community’s culture.

Researchers have been quick to note that the practice of gentrification is not inherently bad. Seeing a neighborhood with decreased crime, new investments, and increased economic activity are desirable, positive traits for any community. Conflicts occur because usually wealthier, white populations are given significant credit for “improving” neighborhoods, while simultaneously displacing poor, minority residents.

Gentrification has some common characteristics, though there is no technical definition for it. First, there is a change in demographics, leading to an increase in median income, decrease in household size, and a decline in racial minorities. Second, the real estate markets transform, increasing property values and the number of evictions. Third, there is a shift in land use, usually a decrease in industrial uses and an increase in offices, high-end retail, and restaurants. Lastly, a variety of character and cultural attributes change, such as landscaping, public behavior, noise, and nuisance.

Neighborhood and Community Preference

Many cities are facing serious roadblocks for making affordable housing available to low-income and middle-class residents. As property and rent increases, the ability of certain families to stay in a particular neighborhood decreases. Thousands of minority populations are being displaced by gentrification across the country. To combat this growing problem, some cities, like San Francisco, have tried to utilize neighborhood preference and housing lotteries.

Essentially, the program allows current residents to participate in a lottery for affordable housing units partially financed by the federal government. This gives those who currently live in a neighborhood a preference, a right of first refusal. Rights of first refusal are contractual rights that give a particular person or business entity the opportunity to enter into a transaction before a third party. Participants must still compete against other residents, but they have a better chance of remaining in their home neighborhood. In San Francisco, this meant setting aside 40 percent of units in subsidized developments for residents already living in the district or a half mile away. This would allows residents first dibs at living in the brand-new, partially federally-financed building.

Why Does Neighborhood Preference Violate Fair Housing Laws?

While neighborhood preference can be viewed as a noble program, it technically violates HUD’s fair housing laws. The fact that laws designed to assist minority populations are now being used to not keep them in their home neighborhoods creates an extreme incongruity. By employing neighborhood preference, HUD states that it actually maintains segregation rather than eradicating it and limits equal access to housing.

The main issue with these programs is that they give a priority to those already living in a particular district. In these specific areas, residents tend to be low-income minorities. Allowing those residents a preference continues to segregate neighborhoods. It also allows race to be an integral factor in the process, as the effect of allowing current residents to have a preference means that black tenants are more likely to receive the new units.

HUD noted via a spokesperson that the agency takes great care when reviewing programs that have noble intentions but end up with negative consequences. However, it was also noted that there was no record of HUD ever approving a neighborhood preference program.

San Francisco is not the only city experiencing these roadblocks in assisting low-income residents. In New York, a fair housing group has filed suit alleging that the city’s policy of using community preferences for affordable housing units perpetuates segregation. The pattern is national, with urban neighborhoods becoming increasingly whiter and more affluent.

Conclusion

While there are many positive aspects to transforming a neighborhood, the social, economic, and physical impacts of some changes may have negative consequences for current residents. Federal fair housing laws exist to eliminate segregated neighborhoods, but often come at a cost to current residents. The laws designed specifically to protect certain classes of citizens are now being utilized to push those same people out of their homes.

On September 22, 2016, HUD came back with a different answer after placing the San Francisco program under review. In a letter to the mayor, HUD decided that while the city cannot give priority to neighborhood residents for spaces in affordable housing projects, it will allow 40 percent of the units to be prioritized for residents who are at a high risk of displacement. Race will not be a factor for consideration in the selection process. This announcement immediately affects the Willie B. Kennedy senior apartment complex, which has roughly 98 units and more than 6,000 applicants. The lottery for this particular property had been delayed pending HUD’s decision.

This change demonstrates HUD’s willingness to acknowledge the serious consequences of displacement. It may not be the most ideal way to combat issues of equal access, but it certainly shows a sensitivity to keeping citizens in their neighborhoods. While neighborhood preference programs are out, it seems that “anti-displacement” preference programs are in.

Resources

Primary

U.S. Department of Housing and Urban Development: Fair Housing and Equal Opportunity

The Kerner Commission: Report of the National Advisory Commission on Civil Disorders

Legal Information Institute: Fair Housing Act

Additional

NPR: How ‘Equal Access’ Is Helping Drive Black Renters Out Of Their Neighborhood

PBS: What is Gentrification?

CivilRights.Org: Fair Housing Laws

SF Gate: Federal Agency OKs Preferences at New SF senior Housing Complex

Investopedia: Right of First Refusal

Nicole Zub

Nicole is a third-year law student at the University of Kentucky College of Law. She graduated in 2011 from Northeastern University with Bachelor’s in Environmental Science. When she isn’t imbibing copious amounts of caffeine, you can find her with her nose in a book or experimenting in the kitchen. Contact Nicole at Staff@LawStreetMedia.com.

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Julian Castro has long been promoted as one of the rising celebrities of the Democratic party. Formerly the Mayor of San Antonio, now the Secretary of the Department of Housing and Urban Development, his name has definitely been floated by those who are familiar with the who’s who of the Democratic party, but hasn’t quite hit the national stage yet. It leads to a lot of questions: who is Julian Castro? How did he end up leading the Department of Housing and Urban Development? And what is that department doing under his leadership?

How did Castro become HUD secretary?

On Friday May 23, 2014, President Obama nominated Mayor of San Antonio Julián Castro to replace Shaun Donovan as secretary of the Department of Housing and Urban Development (HUD). Donovan, who had held the post since January 2009, became Secretary of the Office of Management and Budget, as Sylvia Matthew Burnwell moved on to head the Department of Health and Human Services, a position from which Secretary Kathleen Sebelius had recently resigned following the botched roll-out of HealthCare.gov. Julián Castro, 39, who had served three terms as Mayor of San Antonio,  faced the daunting Senate confirmation process and passed. Castro is the second former Mayor of San Antonio to direct HUD, after Henry Cisneros who was appointed by Bill Clinton in 1993.

Catro’s Qualifications

Since declining President Obama’s offer to lead the Department of Transportation in 2012, the top HUD job became a prime opportunity for Castro to gain national-policy experience. And as a Latino on the national stage, Castro could potentially appeal to a growing Hispanic voting base, shoring up the Latino vote for Democrats in future elections. “Having his understanding of the needs of the Hispanic community—having a cultural affinity about that—will lend quite a bit of depth to his policy and understanding of the role,” said Javier Palomarez, CEO of the U.S. Hispanic Chamber of Commerce.

Indeed HUD plays an increasingly vital role for underrepresented populations, as Latinos and the black community continue to bear the brunt of inequitable urban ‘revitalization’ across America. “We are in a century of cities,” Mayor Castro explained on Friday May 23, following the announcement of his nomination. “America’s cities are growing again and housing is at the top of the agenda.” He vowed to “do housing right,” implying a change from previous HUD policies, which primarily entailed large grants to cities spawning private investment and exorbitant costs of living without protections for the poor.

Castro’s track record is good, but not without blemishes. One instance of ‘revitalization’ in San Antonio under the Castro administration took place in the city’s historically impoverished Eastside neighborhood, once the heart of the city’s black community. In 2012 Castro successfully wrangled a $30 million HUD grant with which he demolished the Wheatly Courts Public Housing Project, and redeveloped the area for moderate-income families and market-rate households. With renovation costs exceeding $1 million, the program didn’t adhere to the affordability requirements. In January 2014, President Obama subsequently selected San Antonio’s Eastside as one of his first five anti-poverty “Promise Zones.”

Similarly, through city fee wavers and tax abatements, Castro revitalized San Antonio’s downtown district, drawing 11.5 million visitors and generating $3.1 billion annually. Since 2010, developers have completed or are building 2,700 housing units within five square miles in the downtown area, though few low-income families could afford such prime real estate and have been subsequently pushed to periphery of the city center. Indeed, San Antonio ranks forty-second in City Lab’s report of the most gentrified cities in America, and seven percent of San Antonio’s low-price tracts have been gentrified over the last year.

What were the concerns over Castro’s nomination?

Aside from Castro’s history of questionable urban policy, he lacked actual executive leadership experience. Unlike the strong-mayor governments of Chicago or New York, San Antonio’s is a council-manager system: a council is elected to serve as legislative branch and it appoints a manager to serve as the executive who has the authority to execute laws and the administration of the city government. The Mayoralty is merely a ceremonial post, a figurehead, and has no real power over the council. Castro was elected to city council in 2001 at the age of 26–the youngest in history–serving two consecutive terms. During his tenure on the city council, he successfully curbed urban sprawl by defeating plans for a PGA-approved golf coarse and suburban development outside the city in 2005; he has no executive experience in the city government, though, which could be problematic.

Castro did a “fantastic job” revitalizing San Antonio by “planning thousands of housing units downtown, attracting hundreds of millions of dollars of investment,” President Obama reasoned during his announcement of Castro’s appointment. In reality, though, Castro’s mayoral tenure was less than laudable, specifically pertaining to the urban minorities whom he supposedly seeks to help. In 2008, congress approved an $8.6 million HUD grant to San Antonio as part of the National Neighborhood Stabilization Program (NSP) as a means to ameliorate the escalating rate of foreclosures at the height of the 2008 financial crisis. With the grant, the program stipulated, cities must buy, refurbish, and resell homes left vacant after eviction; a 2012 HUD Inspector General report concluded, however, that between 2009 and 2011, $1.1 million was allocated to houses that were then sold at market-rate and not reserved for low-income families as the HUD program demanded. It is fair to say that the HUD grant package was awarded before Castro came to office, but the infections to the program nonetheless took place under his leadership.

So, how has the HUD fared under Castro?

So far, so good, but given that Castro has only been in the job a few months, there’s still a lot that needs to happen before anything resembling a final judgment can be made. However, Castro and his administration have absolutely had notable success–for example, the Federal Housing Administration (FHA) is no longer in debt after the severe problems it experienced during the 2008 financial crisis. Although that won’t automatically lower loans for people seeking them from the FHA, it’s certainly a step in the right direction. Overhauling struggling institutions like Freddie Mac and Fannie Mae have also taken top priority for Castro. Overall, it seems like he’s finding his place at HUD.

Conclusion

Calling Castro a rising Democratic star probably isn’t too far from the truth, but it’s still tough to predict who will fight their way onto the political landscape in years to come. After all, President Obama’s rise was almost meteoric–most people did not know who he was just a few years before he accepted the nomination for President from the Democratic Party. Whether or not Castro will end up living up to his potential can only be told by time.

Resources

Primary 

Federal Reserve Bank of Cleveland: Gentrification and Financial Health Report 2013

U.S. Department of Housing and Urban Development: Office of Inspector General, Memorandum NO: 2012-FW1804

White House: President Obama Nominates Julián Castro as Next HUD Secretary, and Shaun Donovan as OMB Director

Additional

Latin Post: Julián Castro HUD Secretary Nomination Endorsed by National Association of Hispanic Real Estate Professionals

Inman: National Association of Hispanic Real Estate Professionals backs Julián Castro to lead HUD

Bloomberg: Castro Move to HUD Sets Up Possible VP Selection in 2016

Politico: For Julián Castro, Plenty of Challenges at HUD

Texas Monthly: Alamo Heights

Politico: Julián Castro’s San Antonio Misused HUD money

Washington Post: Julián Castro Nominated as HUD secretary

Monitor: Commentary: Should Julián Castro Go to DC to Head HUD?

New Republic: Why Would Obama Put a Rising Democratic Star Into a Cabinet Backwater?

CityLab: Why Julián Castro’s Record as a Mayor of San Antonio Doesn’t Necessarily Tell Us Much About Hist Future at HUD 

NPR: Obama Taps San Antonio Mayor Julián Castro For HUD Secretary

LA Times: Obama Picks San Antonio Mayor Julian Castro to be Housing Secretary

Washington Examiner: Barack Obama Names Julián Castro for HUD, Shaun Donovan for OMB

Washington Examiner: If Chosen For HUD, Julian Castro’s Work, Big Payday Could Face Scrutiny

Ryan Purcell

Ryan D. Purcell holds an MA in American History from Rutgers University where he explored the intersection between hip hop graffiti writers and art collectives on the Lower East Side. His research is based on experience working with the Newark Public Arts Project and from tagging independently throughout New Jersey and New York. Contact Ryan at staff@LawStreetMedia.com.

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