in the united states district court dallas division … · 2016-09-23 · michael gerber, * civil...

IN THE UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

The Inclusive Communities Project, Inc., *Plaintiff, *

v. **

The Texas Department of *Housing and Community Affairs, and *Michael Gerber, * Civil Action No. 3:08-CV-00546-DLeslie Bingham-Escareño, *Tomas Cardenas, *C. Kent Conine, *Dionicio Vidal (Sonny) Flores, *Juan Sanchez Muñoz, and *Gloria L. Ray in their official capacities, *

Defendants. **

THE INCLUSIVE COMMUNITIES PROJECT, INC.’S BRIEF IN SUPPORT OFMOTION FOR A NEW TRIAL AND ADDITIONAL RELIEF

Table of contents

Table of authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

I. The increase in the racial segregation of Defendants’ LIHTCunits was proven. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. The three discretionary allocation policies were consistently present in the QAPs . . . . . . . . . 3

A. Identification of the discretionary 9% forward commitment policy . . . . . . . . . . . . . . . . . . . . . 3

B. The QAPs since 1991 specifically authorized TDHCA’s discretion in the decision whether to allocate tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

C. The 4% approval policy is expressly discretionary and includes the discretion to make awards despite concentrations of affordable units and unacceptable sites. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

III. The three identified discretionary policies were a proximate cause of perpetuation of racial segregation .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Case 3:08-cv-00546-D Document 274 Filed 09/23/16 of 30 PageID 9885

A. ICP identified the specific number of approved forward commitments that caused a statistical disparity in the distribution of LIHTC units. .. . . . . . . . . . . . . . . . . . . . . . 8

B. Had the discretion to select applications without regard to points been eliminated, the perpetuation of segregation would have decreased. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

C. The elimination of the 4% discretionary approval policy would have significantly decreased the perpetuation of racial segregation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

D. Elimination of the units attributable to the three challenged policies shows a substantial reduction in the perpetuation of racial segregation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

IV. The disparate impact standard of liability applies to claims that specific discretionary policies violate the FHA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

V. ICP’s burden was to prove that the discretionary policies were a cause of perpetuating racialsegregation rather than to prove the policies were the sole cause .. . . . . . . . . . . . . . . . . . . . . . . . 19

VI. The 44 percent of 9% units awarded allocations without regard to points is evidence ofcausation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

VII. Even if the elements of the TDHCA decision process were incapable of separation, ICP proved that the decision making process as a whole was a cause of the perpetuation of segregation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Certificate of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Table of authorities

Cases

Artisan/Am. Corp. v. City of Alvin, Tex., 588 F.3d 291 (5th Cir. 2009) . . . . . . . . . . . . . . . . . . . . . 3

Ave. 6E Investments, LLC v. City of Yuma, Ariz., 818 F.3d 493 (9th Cir. 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . 18

-ii-


City of Miami v. Bank of Am. Corp., 800 F.3d 1262 (11th Cir. 2015),cert. granted sub nom. Bank of Am. Corp. v. City of Miami, Fla., 136 S. Ct. 2544 (2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 22

Crow v. Brown, 457 F.2d 788 (5th Cir. 1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 15, 20

Dekalb Cty. v. HSBC N. Am. Holdings, Inc., 2013 WL 7874104 (N.D. Ga. 2013) .. . . . . . . . . . 17

Huntington Branch, N.A.A.C.P. v. Town of Huntington, 844 F.2d 926 (2d Cir.), aff'd in part sub nom. Town of Huntington, N.Y. v. Huntington Branch, N.A.A.C.P., 488 U.S. 15 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 16, 20

ICP v. TDHCA, 2012 WL 3201401 (N.D. Tex. (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

McClain v. Lufkin Industries, Inc., 519 F.3d 264 (5th Cir. 2008) . . . . . . . . . . . . . . . . . . . . . . 23, 24

Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 558 F.2d 1283 (7th Cir. 1977) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Nat’l Cable & Telecommunications Ass’n v. Brand X Internet Servs., 545 U.S. 967 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Ramirez v. GreenPoint Mortgage Funding, Inc., 633 F. Supp. 2d 922 (N.D. Cal. 2008) . . . . . . 17

Staub v. Proctor Hosp., 562 U.S. 411 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Taylor v. Accredited Home Lenders, Inc., 580 F. Supp. 2d 1062 (S.D. Cal. 2008) . . . . . . . . . . . 17

Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., ___ U.S. ___, 135 S.Ct. 2507 (2015) . . . . . . . . . . . 2, 19

U.S. v. City of Black Jack, 508 F.2d 1179 (8th Cir. 1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

United States v. Jamestown Center–in–the–Grove Apartments, 557 F.2d 1079 (5th Cir. 1977) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Walmart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Watson v. Fort Worth Bank & Trust, 487 U.S. 977 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Statutes

26 U.S.C. § 42(i)(3)(B)(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

-iii-


26 U.S.C. § 42(m)(1)(B)(ii)(III) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

42 U.S.C. § 3613(c)(1) .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Tex. Gov’t Code § 2306.111(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Tex. Gov’t Code § 2306.6714 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Tex. Gov’t Code § 2306.6725(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Regulations

10 Tex. Admin. Code § 10.206 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

24 C.F.R. § 100.70(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

24 C.F.R. § 100.500(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,18

24 C.F.R. § 100.500(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Other

19 Tex. Reg. 10062, December 20, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

20 Tex. Reg. 1645, March 7, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

HUD, Final Rule, 78 Fed. Reg. 11460 February 15, 2013 .. . . . . . . . . . . . . . . . . . . . . 2, 17, 18, 24

Seicshnaydre, Disparate Impact and the Limits of Local Discretion After Inclusive Communities, Tulane University School of Law Public Law and Legal Theory Working Paper Series Working Paper No. 16-10 August 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

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The perpetuation of racial segregation in the year to year distribution of Defendants’

LIHTC units in the City of Dallas and in the Dallas metro area cannot be disputed. The record

proves that three specific discretionary policies in TDHCA’s allocation process were proximate

causes of the perpetuation of segregation. The record also proves the interrelated elements of the

discretionary allocation process were a proximate cause perpetuating racial segregation. ICP

satisfied its burden of proof to show a prima facie case under the disparate impact standard.

I. The increase in the racial segregation of Defendants’ LIHTC units was proven.

The discriminatory effect, perpetuation of segregation in the distribution of the units for

which TDHCA made allocations, is established by undisputed and uncontradicted facts. The

racial segregation existed when TDHCA assumed control of the LIHTC programs in 1991. ICP

416. The racial segregation continued to increase as the number of LIHTC units in predominantly

minority areas increased. ICP 2016 ex. 63 - 66 App 745 - 751. The degree of racial segregation in

LIHTC units is not contested or disputed by TDHCA.1

ICP’s prima facie case is based on the effect of TDHCA’s discretionary allocation

policies perpetuating racial segregation. The perpetuation of racial segregation injures the entire

community and not just some racial groups.

“if it perpetuates segregation and thereby prevents interracial association it will beconsidered invidious under the Fair Housing Act independently of the extent towhich it produces a disparate effect on different racial groups.” Metro. Hous. Dev.Corp. v. Vill. of Arlington Heights, 558 F.2d 1283, 1290 (7th Cir. 1977).

The perpetuation of segregation effect must be evaluated independently of the extent to

which a race neutral policy produces a disparate effect on different racial groups. Id.

1 94% of the LIHTC family units in the City of Dallas are in minority areas and74% of the LIHTC family units in the Dallas metro area are in minority areas.

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Recognizing the perpetuation of racial segregation advances the principal purpose of Title VIII to

promote, “open, integrated residential housing patterns.” Huntington Branch, N.A.A.C.P. v. Town

of Huntington, 844 F.2d 926, 937 (2d Cir.), aff'd in part sub nom. Town of Huntington, N.Y. v.

Huntington Branch, N.A.A.C.P., 488 U.S. 15 (1988). Race neutral policies that confine

affordable housing to minority areas perpetuate racial segregation. Id.

The recent U.S. Supreme Court opinion in this case affirmed the application of the

discriminatory impact standard to disproportionate adverse impacts and to perpetuation of

segregation. The Court held that the FHA aims to ensure that governmental policies can be

achieved “without arbitrarily creating discriminatory effects or perpetuating segregation.” Texas

Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., __

U.S. __, 135 S.Ct. 2507, 2522 (2015); Ave. 6E Investments, LLC v. City of Yuma, Ariz., 818 F.3d

493, 503 (9th Cir. 2016).

HUD continues to enforce the FHA disparate impact liability against both disparate

adverse impacts and the perpetuation of racial segregation.

(a) Discriminatory effect. A practice has a discriminatory effect where it actuallyor predictably results in a disparate impact on a group of persons or creates,increases, reinforces, or perpetuates segregated housing patterns because of race,color, religion, sex, handicap, familial status, or national origin. 24 C.F.R. §100.500 (a); HUD, Final Rule, 78 Fed. Reg. 11460, 11469, February 15, 2013.

The effect of perpetuating racial segregation exists when affordable rental housing is

located almost exclusively in the areas with the heaviest concentration of African American or

Black residents. Crow v. Brown, 457 F.2d 788, 790 (5th Cir. 1972). The perpetuation of racial

segregation in the concentrated distribution of LIHTC units in minority areas is clear. Each unit

that is added to the concentration of units in minority areas perpetuates racial segregation.

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Artisan/Am. Corp. v. City of Alvin, Tex., 588 F.3d 291, 299 n. 20 (5th Cir. 2009). The proof of

the discriminatory effect perpetuating racial segregation is just the first step in the proof of a

prima facie case. ICP has shown the existence of the discriminatory effect.

II. The three discretionary allocation policies were consistently present in the QAPs.

The three specifically identified discretionary allocation policies raised in this motion

were consistently present in the QAPs from year to year. The changes to the wording, if any, did

not substantively change these three policies.

A. Identification of the discretionary 9% forward commitment policy.

The authority to make forward commitments was a discretionary policy in the QAPs

from the initial adoption of the policy in the 1995 QAP through 2008. ICP ex. 342 pp. 2 - 3, ICP

ex. 427 pp. 1-2.

The QAP forward commitment policy from 2004 through 2008 stated

The Board will utilize its discretion in determining the amount of credits to beallocated as forward commitments and the reasons for those commitmentsconsidering scores and discretionary factors. ICP exhibits 121, page 40; 122, page43; 123, page 45; 124, page 49; 125, page 61.

The 2003 QAP forward commitment was only slightly different.

The Board will utilize its discretion in determining the amount of credits to beallocated as forward commitments and the reasons for those commitments inmeeting compelling housing needs.” ICP ex. 120, page 31.

The QAP forward commitment policy from 1995 through 2002 stated:

the Department with approval of the Board may determine to issue commitmentsof tax credit authority with respect to Projects from the State Housing CreditCeiling for the calendar year following the year of issuance (each a "forwardcommitment").”2

2 ICP exhibits 344, page 45; 345, page 50; 346, page 44; 116, page 36; 117, page31; 118 page 32; 119 page 49; 19 Tex. Reg. 10062, December 20, 1994; 20 Tex. Reg. 1645,

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TDHCA utilized its forward commitment discretion to award any eligible 9% application

an allocation of tax credits from the next year’s allocation rather than from the current allocation.

ICP ex 167 pdf p 10; ICP 2016 ex 34, pdf p 4 - 5, App 362 - 374. The allocation is made without

regard to the selection point score. The application is not ranked, scored, or rated again in the

next year’s cycle but is given an automatic award. ICP ex 393, pdf pp. 76-77. TDHCA made

these forward commitments every year from 1995 on. ICP 2016 ex 62 App 726 - 745; ICP ex

334 pdf p 45; ICP exs 437, 430, 445, 451 pdf p 34.

The forward commitment policy was not applied to select the best or the highest scoring

application that did not receive an allocation based on points. Brooke Boston, a TDHCA staff

person, confirmed that the Board had absolute discretion to grant a forward commitment to any

eligible 9% application. ICP ex. 167, pdf 10. Ms. Boston’s affidavit does not mention any limits

on the forward commitment discretion to “uniquely deserving applications.” The affidavit does

confirm the TDHCA Board’s discretion in awarding tax credits and that forward commitments

are an exercise of that discretion. Only the TDHCA Board could make forward commitments.

Doc 102-12, p 1, ¶ 3.

B. The QAPs since 1991 specifically authorized TDHCA’s discretion in the decisionwhether to allocate tax credits without regard to points.

TDHCA’s evaluation of proposed projects has always been subject to the specific,

written, QAP policy authorizing the use of discretion in the decision whether or not to award an

allocation. From 1991 through 1994 the QAPs specifically set out that TDHCA’s evaluation of

the proposed projects under the threshold and selection criteria was to “be determined by the

Department in its sole discretion and will not be subject to challenge or contest by any

March 7, 1995.

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applicant.”3

From 1995 through 2008, the written discretion policies directed the TDHCA Board that

it may not rely solely on the number of points scored. The 1995 QAP adopted the statement for

the Board’s use of discretion in each determination to allocate tax credits. This provision

remained essentially the same with only minor modifications and additions through 2011.4

In making a determination to allocate tax credits, the Department and Board shallbe authorized not to rely solely on the number of points scored by an Applicant.They may, in addition, also take into account such factors as the concentration oflow income projects within specific markets or submarkets, geographic dispersionof the credits on a state-wide basis, site conditions, or the type of housing beingproposed. ICP ex. 343, p 16 [§50.4(h)].

Each annual QAP gave examples of “such factors” that the Board may take into account

in addition to or instead of points. The other factors were explicitly described as “ discretionary

factors”. The list of “such factors” includes a wide variety of subjects but has always included the

concentration of low income projects within specific areas and site conditions. From 2004

through 2008, the other factors included the general discretionary factors of “any matter

considered relevant” and “other good cause as determined by the Board”.5

C. The 4% approval policy is expressly discretionary and includes the discretion to

3 1991, ICP ex. 336, p. 12, 13 §49.6 (e); 1992, ICP ex. 338, p. 12, 13 §49.6 (d);1993 ICP ex. 59, p 27 § 49.6(d); 1994 ICP ex. 340, p 18 § 49.6(d).

4 2011 Qualified Allocation Plan, § 49.10(a)(2), Defendants’ exhibit 17, p 60.

5 1995B QAP - ICP ex. 343, p. 16 §50.4(h); 1996 QAP - ICP ex. 344, p.22§49.4(h); 1997 QAP - ICP ex. 345, p.25 §50.4(h); 1998 QAP - ICP ex. 346, p.17 §49.4(h); 1999QAP - ICP ex. 116, p. 12 §50.4(h); 2000 QAP - ICP ex. 117, p. 10 §49.4(h); 2001 QAP - ICPex. 118 p. 9 § 50.4(g), p.12 § 50.7(b); 2002 QAP - ICP ex. 119, p. 11 §49.4(h), p. 18 §49.7(c); 2003 QAP ICP ex. 120, p 30, § 49.9(g), §49.10(a) [dispersion a factor, not site conditions]; 2004QAP - ICP ex. 121, p. 39 §50.10(a)(2); 2005 QAP - ICP ex. 122, p.42 §49.10(a)(2); 2006 QAP -ICP ex. 123. P. 44-45 § 50.10(a)(2); 2007 QAP - ICP ex. 124, p. 48-49 § 49.10(a)(2); 2008QAP - ICP ex. 125, p. 60-61 § 50.10(a)(2).

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make awards despite concentrations of affordable units and unacceptable sites.

It is clear from the QAPs that the TDHCA policy for the consideration of the 4%/tax

exempt bond applications was discretionary, could take factors such as concentration,

unacceptable sites and locations into account, and was not a pro forma or automatic approval

policy. The following statement by a TDHCA board member denying a 4% allocation explains

the discretion.

So it's their job to have rules and to stay within their box and it's our job as aboard to exercise discretion and common sense when we think it's called for. . . .So the board, really our role here is to call them prudently as we see them, and I'mvery proud of this board's record in doing that on a case-by-case basis. ICP ex. 174pdf p 25.6

The QAP policy provisions also set out the discretion and the factors that can be taken

into account in the exercise of the discretion. In 1999, the general discretion to approve 4%/tax

exempt bond applications included the review of concentration of low income projects within

specific markets or submarkets, geographic dispersion of multifamily housing and site

conditions. § 50.6(h)(5), ICP ex. 116 page 14. In 2000, the general discretion to approve 4%/tax

exempt bond applications included the review of concentration of low income Projects within

specific markets or submarkets, geographic dispersion of multifamily housing and site

conditions. § 49.6(g)(5), ICP ex. 117 page 25. In 2001, the QAP specifically required the

evaluation of 4%/tax exempt bond applications on the basis of additional factors. § 50.7(b), ICP

ex. 118 page 12. The QAP required the 4%/tax exempt bond applications to be evaluated for

excessive concentration of affordable housing within a particular market area and whether the

location was an “Unacceptable” site. § 50.7(h), ICP ex 118, page 24.

6 Another 4% allocation request in Houston was denied because of unacceptablesite conditions in 2005. ICP ex. 165 July 14, 2005 transcript 85.

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In 2002, the QAP specifically required 4%/tax exempt bond applications to be evaluated

for both excessive concentration of affordable housing and whether the location was an

unacceptable site before approving the application. §49.7(i), (1), (2), ICP ex. 119 page, 33. In

2003, the Board’s 4% allocation decisions were required by the QAP to take various factors into

account including geographic dispersion and integration by income. § 49.10(a), (g); § 49.12(b),

ICP ex. 120 pp. 30, 32. The QAP specifically authorized the discretion of the Board to waive

violations of the Department’s concentration policy. § 49.13(a)(5), ICP ex 120 pp. 34.

In 2004 through 2008, the QAP policy stated that the 4%/tax exempt bond award

decisions were subject to the discretion of the TDHCA Board was the same from 2004 to 2008.7

Both 9% and 4% allocation decisions were to be made taking factors other than points into the

Board’s discretion. The 2004 QAP stated

50.10 (a) Board Decisions. . . (2) . . . The Board may also apply thesediscretionary factors to its consideration of Tax Exempt Bond Developments. . . .In making tax credit decisions (including those related to Tax Exempt BondDevelopments), the Board, in its discretion, may evaluate, consider and apply anyone or more of the following discretionary factors: [2306.111 (g)(3)] ICP ex. 121,page 39.

The discretionary factors listed included: (B) the proposed location of the Development,

including supporting broad geographic dispersion; (H) the Development's proximity to other rent

restricted developments, including avoiding over-concentration; use; housing; income; (I) the

availability of adequate public and private facilities and services; (Q) any matter considered by

the Board to be relevant to the approval decision and in furtherance of the Department's purposes

and the policies of Chapter 2306, Texas Government Code; or (R) other good cause as

7 The wording of the policies is basically the same from 2004 - 2008.see note 4above.

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determined by the Board. ICP ex. 121, page 39.

The QAP policy from 2004 to 2008 also provided for the use of these same discretionary

factors in the Board’s decision to authorize the issuance of the formal determination notice to the

owner. 50.12(e) Satisfaction of Requirements for Tax Exempt Bond Developments. TheBoard, however, may utilize the discretionary factors identified in §50.10(a) ofthis title in determining if they will authorize the Department to issue aDetermination Notice to the Development Owner. ICP ex. 121, page 39.8

III. The three identified discretionary policies were a proximate cause ofperpetuation of racial segregation.

One relevant statistic for the discriminatory effect perpetuating racial segregation from

the discretionary policies is whether there would have been a significant change in the

distribution of minority units approved had TDHCA not been permitted the use of these

discretionary policies. This statistic for each of the three discretionary policies satisfies robust

causality as shown by the record set out below.

A. ICP identified the specific number of approved forward commitments thatcaused a statistical disparity in the distribution of LIHTC units.

Taking all family and elderly units into consideration, had TDHCA not been permitted to

exercise the forward commitment discretion, segregation would have been decreased by 1,369

fewer units from the actual total of 4,719. This is a 29% decrease (1,369/4,719 = .29). From 1999

through 2008, TDHCA approved LIHTCs for a total of 4,719 LIHTC units in minority areas.

During this period, TDHCA exercised its discretion applying the forward commitment policy to

8 2005, ICP ex. 122, page 46; 2006, ICP ex. 123, page 49; 2007, ICP 124, page53; 2008, ICP ex. 125, pp. 65-66.

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approve a total of 1,369 LIHTC units in minority areas.9 TDHCA exercised its forward

commitment discretion to approve only 388 LIHTC units in Caucasian areas. ICP 2016 ex. 67

App 752. This discretionary policy caused a significant increase in the perpetuation of racial

segregation in the City of Dallas and the Dallas metro area.

There is additional evidence of causation from the forward commitment policy. TDHCA

approved forward commitments for 15% of the family units in applications for LIHTC units in

minority areas. TDHCA approved only 6% of the family units in applications for LIHTC units in

Caucasian areas. ICP 2016 Ex. 67 App. 752. TDHCA did not dispute or provide any evidence to

contradict the disparities shown in this exhibit. The names, units, points awarded in year

approved, and race of location for the forward commitments approved and awarded are set out in

ICP 2016 ex. 62, App. 726 - 745.

In addition, TDHCA approved Oakwood Place in 1998 for a forward commitment in

1999. The application was for 206 units in a minority area and an unacceptable site. ICP 451, pdf

p 3; ICP ex. 220; Currey Landfill, ICP exs 247, 249 - 251, ICP 2016 ex 47, App 667 - 668.

TDHCA approved two applications in 1995 for forward commitments in 1996. The Park

@ Cliff Creek had 280 units (81 points) in tract 109.02, 3% Caucasian.10 Enchanted Hills had

229 units (80 points) in tract 122.08, 6% Caucasian. ICP ex. 430 pdf p 2; ICP 2016 ex 60, App

719 - 724; ICP ex. 22, p.s 1, 2. Each of these minority area projects scored lower than the Garden

9 From 1999 through 2008, TDHCA approved LIHTCs for 2,693 family units inminority areas and for 2,026 elderly units in minority areas. This is a total of 4,719 LIHTC unitsin minority areas. During this period, TDHCA exercised its discretion applying the forwardcommitment policy to approve family 981 LIHTC units in minority areas and 388 elderly units inminority areas. ICP 2016 ex. 67 App 752.

10 Park @ Cliff Creek had a high crime rate. ICP ex. 220.

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Oaks Apartments in Addison (83 points). Enchanted Hills was tied with the North Creek

Apartments (80 points) in Plano. ICP ex. 426, pdf p 4, 6, 10. Had TDHCA not been permitted to

exercise the forward commitment discretion, the perpetuation of racial segregation would have

been lessened by these additional 715 units in minority areas. There were no units in Caucasian

areas selected for forward commitments from 1994 through 1998. ICP Reply Brief, pp. 12 -13.

B. Had the discretion to select applications without regard to points been eliminated,the perpetuation of segregation would have decreased.

If the 1999 - 2008 applications that received forward commitments and the other 1999 -

2008 applications are ranked solely by points awarded, the perpetuation of segregation is further

decreased. The elimination of the discretion not to use points as the basis for award allocations

reduces the number of units in minority areas by an additional 421 units and increases the

number of units in Caucasian areas by 593. See summary below. These results satisfy the robust

causality requirement.

In order to compare the applications awarded to those that would have been selected

relying solely on points, the evidence in ICP 2016 ex. 62 is summarized below. The first table for

each year sets out the applications that were awarded an allocation of 9% tax credits. The second

table sets out the applications that would have been awarded solely on the basis of points.11

Awards of allocations in 1999 Development name units in Min. units in Cauc. points Oakwood Place Apartments 206 FC from 1998Roseland Townhomes 192 90Eban Village Apartments 220 83

11 The applications for units scored and awarded under the statewide Rural SetAside and At Risk Set Aside are not used. The At Risk applications compete state wide. Tex.Gov’t Code § 2306.6714. The Rural Set Aside applications compete only against other Rural SetAside applications. Tex. Gov’t Code 2306.111(d).

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Treymore at LaPrada, The 196 83South Boulevard Retirement Center 30 _____ 79total as awarded 844 0

As if allocated by points only in 1999The Villas of Greenville 128 93Ironwood Ranch Townhomes 250 93Hampton Retirement Village 140 91Roseland Townhomes 192 90Villas of Hickory Estates 128 ____ 8812

total by point order 588 250______________________________________________________________________________Awards of allocations in 2000Development name units in Min. units in Cauc. points Rosemont at Arlington Park 100 92The Villas of Greenville 128 FC from 1999Villas of Hickory Estates 128 FC from 1999LBJ Garden Villas ___ 208 FC from 1999total as awarded 356 208

As if allocated by points only in 2000Columbia Valley Townhomes 160 95Clarkridge Plaza 250 94Courtyard at Pecan Downs 128 93Rosemont at Arlington Park 10013 ___ 92total by point order 510 128______________________________________________________________________________Awards of allocations in 2001Development name units in Min. units in Cauc. pointsRosemont at Timbercreek 100 83Ewing Villas 80 79Corinth Autumn Oaks 128 77Grand Texas Seniors Community, The 230 77Bachon Townhomes ____ 120 74total as awarded 410 248

12 Two applications were tied at 88 points. Both were in minority areas. Of thesetwo, the application that TDHCA chose for a forward commitment is included. ICP 2016 ex. 62App 726.

13 Three applications were tied at 92 points. All three were in minority areas. Ofthese three, the application that TDHCA chose for the award of an allocation is included. ICP2016 ex. 62 App 728.

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As if allocated by points only in 2001Roseland Estates 138 86Cedar Hill Gardens 132 85Rosemont at Timbercreek 100 83Ennis Senior Estates 248 82Ewing Villas 80 ____ 7914

total by point order 450 248______________________________________________________________________________Awards of allocations in 2002Development name units in Min. units in Cauc. pointsCedar Hill Gardens 132 85Prairie Commons 72 FC from 2001Roseland Estates 138 FC from 2001Madison Point Apartments 176 FC from 2001Villas of Lancaster 144 154Terrell Senior Terraces, Phase II 180 ____ 143total as awarded 842 0

As if allocated by points only in 2002Madison Point Apartments 176 157Villas of Lancaster 144 154Sphinx at Murdeaux 150 153Terrell Senior Terraces, Phase II 180 143The Village at Prairie Creek 196 141Mayfair Ridge apartments ____ 120 139total by point order 846 120______________________________________________________________________________Awards of allocations in 2003Development name units in Min. units in Cauc. pointsArbor Woods 151 FC from 2002The Pegasus 156 104Oak Timbers- Grand Prairie 80 102The Senior Apartments at Curtis Wright 154 102Reserve II at Las Brisas ____ 180 102total as awarded 541 180

As if allocated by points only in 2003The Pegasus 156 104Oak Timbers- Grand Prairie 80 102

14 Two applications were tied at 79 points. Both were in minority areas. Of thesetwo, the application that TDHCA chose for a forward commitment is included. ICP 2016 ex. 62App 730.

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The Senior Apartments at Curtis Wright 154 102Reserve II at Las Brisas 180 102Frazier Fellowship 76 ___ 10015

total by point order 466 180______________________________________________________________________________Awards of allocations in 2004

There was no difference in the unit total as awarded from the unit total as if by points

only in 2004.

Development name units in Min. units in Cauc. pointstotal as awarded and by point order 300 260______________________________________________________________________________Awards of allocations in 2005 units in Min. units in Cauc. pointsDevelopment nameSphinx at Luxar 100 186Sphinx At Reese Court 80 16816

Wahoo Frazier Townhomes 118 ___ 187total as awarded 298 0

As if allocated by points only in 200517

Sphinx at Luxar 100 186Rhias Oaks Apartments 208 176Wahoo Frazier Townhomes 118 ___ 187

15 Two applications were tied at 100 points. Both were in minority areas. Of thetwo, the application that was not subject to the developer cap was included. ICP ex. 492 pdf page22 (entry for Churchill at Pinnacle Park).

16 The Final Score in QAP points for Sphinx at Reese Court was 168.ICP ex 377,ICP ex 315, 3 of 15, May 18, 2005. After the final score was computed, the application wasawarded 12 non-QAP, bonus points to bring its score up to 180. Defendant ex 83 and ICP ex370, 2005 HTC Application Log, p. 122-123, dated Oct. 11, 2005; TDHCA Board Book, June27, 2005 Public Input form for Reese Court; ICP ex 380, p 2. This calculation is based on theFinal Score of 168 QAP points.

17 The TDHCA Board removed Fairway Crossing from the staff recommendedapplication list in 2005 which eliminated consideration of the application under the pointsawarded. ICP 167 page 11-12. The application was not eligible because of the pending criminalenforcement proceeding. ICP ex. 122 2005 QAP §49.5(a)(3)page 10; ICP 2016 ex. 29 pdf page 5.The City of Dallas withdrew its support and the application lost the points necessary for an awardbased on points. ICP 2016 ex. 30 App 242-243.

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total by point order 218 208_

______________________________________________________________________________Awards of allocations in 2006

There was no difference in the unit total as awarded from the unit total as if by points

only in 2006.

Development name units in Min. units in Cauc. pointstotal as awarded and by point order 0 243______________________________________________________________________________Awards of allocations in 2007Development name units in Min. units in Cauc. pointsFairway Crossing Apartments 310 FC from 2006Evergreen at Farmers Branch 90 200Peachtree Seniors 144 ___ 200total as awarded18 544 0

As if allocated by points only in 2007Evergreen at Farmers Branch 90 200Peachtree Seniors 144 200Villas on Raiford 180 190Country Lane Seniors- Greenville 102 ___ 190total by point order 336 180______________________________________________________________________________Awards of allocations in 2008Development name units in Min. units in Cauc. pointsVillas on Raiford 180 FC from 2007Evergreen at the Colony 145 203Carpenter's Point 150 203Sphinx at Fiji Senior 130 ___ 200total as awarded 280 325

As if allocated by points only in 2008Evergreen at Vista Ridge 95 204Evergreen at the Colony 145 203

18 The tables do not include the forward commitment or award to City Walk atAkard. This 209 unit project was neither family nor elderly housing. It was transitional housingfor which a special, one of a kind, eligibility exists. 26 U.S.C. § 42(i)(3)(B)(iii) Transitionalhousing for homeless. The application was ineligible for an award on points in 2006 because itdid not meet the financial viability requirement by $5.6 million. ICP 2016 ex. 38 pdf 36.

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Carpenter's Point 150 200Sphinx at Fiji Senior 130 ____ 200total by point order 280 240______________________________________________________________________________

Had points been the only criteria, there would have been 421 fewer units in minority

areas. Absent the discretion to not take points into account, there would have been an additional

593 units in Caucasian areas. The number exceeds the small number of units at stake in the

heartland perpetuation of segregation case. Town of Huntington, 844 F.2d at 930 (160 units);

U.S. v. City of Black Jack, 508 F.2d 1179, 1182 (8th Cir. 1974) (108 units).

C. The elimination of the 4% discretionary approval policy would have significantlydecreased the perpetuation of racial segregation.

Of the total 7,283 4% tax credits units in minority areas in the City of Dallas, 4,896 units

are in locations marked by conditions of over-concentration and unacceptable sites. ICP’s 2016

ex 62, App 726 - 745. By using its discretion to approve these 4% units in minority areas with

these conditions, the TDHCA Board clearly increased and perpetuated the racially segregated

neighborhoods that the Fair Housing Act was intended to remedy. Crow, 457 F.2d at 790.

The QAP provisions providing Defendants with the discretion to approve or deny 4%/ tax

exempt bond applications set up a different allocation system than the competitive, discretionary,

9% system. Under the 4% discretionary policy, each application is considered individually and

not in competition with any other application. Despite the lack of competition, the QAP did not

provide for automatic or pro forma or mechanical policy of approval of 4% applications. If there

had been a policy that provided for the automatic, pro forma, or mechanical approval of all 4%

applications submitted, that would have been the objective, race neutral policy that perpetuated

racial segregation. But that was not the policy contained in the QAPs for the 4% program.

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However, the QAP policy made each award discretionary, including the discretion to make an

award despite conditions that would justify denying an application. The 4% discretionary factors

set out in the QAP included avoiding concentrations of LIHTC units and locations with

undesirable conditions.

Each individual application of the 4% discretionary approval policy that caused the

approval of the 4% LIHTC units in minority areas marked by over-concentration or unacceptable

site conditions perpetuated racial segregation. This discriminatory effect occurred whether or not

TDHCA was engaged in disparate treatment. Town of Huntington, 844 F.2d at 937 - 938. The

allocations steered LIHTC units to minority concentrated areas. But for the application of the 4%

discretionary approval policy, there would have been only 12,636 LIHTC units in the City of

Dallas minority areas instead of 17,532. ICP 2016 ex. 65; ICP’s 2016 ex 62, App 726 - 745

(Total minus 4,896 of the 4% units in areas of over-concentration or unacceptable sites).

Defendants’ asserted interest in using the tax credits in areas of concentration and

unacceptable site conditions rather than not using the credits is not part of the prima facie case.

24 C.F.R. § 100.500(c).

D. Elimination of the units attributable to the three challenged policies shows asubstantial reduction in the perpetuation of racial segregation.

The record shows that elimination of the three challenged policies would have

substantially reduced the number of LIHTC units allocated for minority concentrated areas

during the 1999 through 2008 period. The elimination of the discretionary 9% forward

commitment policy would have reduced the perpetuation of segregation by 1,369 units in

minority areas. ICP 2016 ex. 67 App 752. The elimination of the discretionary 9% approval

policy to not take points into account would have reduced the perpetuation of segregation by

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reducing the number of units in minority areas by 421 and increasing the number of units in

Caucasian areas by 593 units. See page 16 above. The elimination of the 4% discretionary

approval policy would have reduced the units in over-concentrated areas and unacceptable sites

in minority areas by 4,896 units and increased the units in Caucasian areas by 440 units. ICP

2016 ex. 62 App 726 - 745. The total effect would have reduced the number of units in minority

areas by 6,686.

IV. The disparate impact standard of liability applies to claims that specificdiscretionary policies violate the FHA.

HUD interprets the FHA as applying the disparate impact standard of liability to

discretionary policies. In adopting this interpretation over an objection based on Walmart Stores,

Inc. v. Dukes, 131 S.Ct. 2541 (2011), HUD pointed out that the case specifically upheld the

application of disparate impact to discretionary policies under Title VII. HUD further pointed out

that the holding was directed at the issue of commonality in class actions seeking to challenge

discretionary policies. HUD, 78 Fed. Reg. at 11468. Federal courts have adopted the same

interpretation applying the disparate impact standard to specifically identified discretionary

practices.19 The U.S. Supreme Court directly held that specifically identified discretionary

policies are subject to the Title VII discretionary impact standard. Watson v. Fort Worth Bank &

Trust, 487 U.S. 977, 991 (1988).

A party is not required to choose between asserting a disparate impact claim and a

disparate treatment claim. “Liability can be established for the conduct illustrated in part 100

19 Dekalb Cty. v. HSBC N. Am. Holdings, Inc., 2013 WL 7874104, at *15 (N.D.Ga. 2013); Ramirez v. GreenPoint Mortgage Funding, Inc., 633 F. Supp. 2d 922, 927–28 (N.D.Cal. 2008); Taylor v. Accredited Home Lenders, Inc., 580 F. Supp. 2d 1062, 1068 (S.D. Cal.2008).

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through evidence of intentional discrimination, or based on discriminatory effects.” 78 Fed. Reg.

at 11464. The conduct illustrated in 24 C.F.R. § Part 100 includes the perpetuation of racial

segregation. 24 C.F.R. § 100.70(a), 100.500(a).

While an injunction against the use of a discretionary policy is authorized, affirmative

relief necessary to remedy the remaining effects of the policy is also appropriate. 42 U.S.C. §

3613(c)(1) (including . . . ordering such affirmative action as may be appropriate).

Appropriate relief for disparate impact violations of the [FHA] is to be determinedon a case-by-case basis with relief tailored in each instance to the needs of theparticular situation. . . . Relief should be aimed toward twin goals insuring that nofuture violations of the [FHA] occur and removing any lingering effects of pastdiscrimination United States v. Jamestown Center–in–the–Grove Apartments, 557F.2d 1079, 1080 (5th Cir.1977) (citations omitted).

Even if Defendants have quit using one of the three policies, that cessation does not

eliminate the Court’s power to remedy the remaining discriminatory effects of the practice. In

addition, the use of discretion is still in the regulation governing the decision to allocate tax

credits and in state law. 10 Tex. Admin. Code § 10.206; Tex. Gov't Code § 2306.6725(c)(1).

TDHCA still has the discretion to use forward commitments that it had from the time it first

adopted the discretionary policy in 1995. ICP ex 342, 2 - 3. The voluntary cessation of conduct

does not moot either the liability claim or the request for injunctive relief. City of Mesquite v.

Aladdin's Castle, Inc., 455 U.S. 283, 289, 289 n. 10 (1982).

The use of race as a consideration for the remedy of any disparate impact violation

involving discretion can be done within constitutional bounds. The usual remedy should be race

neutral. But the remedy for a disparate impact violation can be race conscious without violating

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the U.S. Constitution. Texas, 135 S.Ct. at 24214 - 2525.20 The record in this case is proof that a

non-race conscious remedy can be implemented for a violation caused by a discretionary

allocation process. ICP v. TDHCA, 2012 WL 3201401 (N.D. Tex. (2012).

V. ICP’s burden was to prove that the discretionary policies were a cause ofperpetuating racial segregation rather than to prove the policies were the sole cause.

ICP had the burden to prove that the three specifically identified discretionary policies

were a proximate cause of the perpetuation of racial segregation, not sole cause. City of Miami v.

Bank of Am. Corp., 800 F.3d 1262, 1282 (11th Cir. 2015), cert. granted sub nom. Bank of Am.

Corp. v. City of Miami, Fla., 136 S. Ct. 2544 (2016). It is common for injuries to have multiple

proximate causes. Staub v. Proctor Hosp., 562 U.S. 411, 419–20 (2011).

ICP proved causation with record evidence showing that the elimination of each element

of discretion would significantly lessen the number and percentage of LIHTC units located in

minority areas and perpetuating racial segregation. The elimination of the policy of discretion to

make forward commitments would have reduced the number of 9% units approved that would

perpetuate racial segregation by 1,369 units from 4,719 to 3,350 units during the period of 1999 -

2008. ICP 2016 ex. 67 App 752. The elimination of the policy of discretion to take factors other

than points into consideration in the selection process would have further reduced the number of

units perpetuating racial segregation during that period by increasing the units in Caucasian areas

by 593 units and decreasing the units in minority areas by 421 units. Calculations from ICP 2016

ex. 62 App 726 - 745 set out in brief. This impact takes into account whether the forward

commitment awarded units would have been within the point range for awards had points been

20 Citing Parents Involved in Community Schools v. Seattle School Dist. No. 1,551 U.S. 701, 789 (2007).

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the sole criteria for the awards. The elimination of the policy of discretion to award 4%

allocations to units in areas marked by adverse conditions such as over-concentration of LIHTC

units and unacceptable sites would have reduced the number of total LIHTC units in City of

Dallas minority areas by 4,896. ICP 2016 ex. 62 App 726 - 745.

The 4% approval policy was explicitly discretionary. The discretion included

consideration of factors that could cause the rejection of any 4% application and whether to deny

the application based on these factors. These factors included concentration and unacceptable

sites. See pp. 7 - 8 above. The record shows that many of the 4% units were approved despite the

existence of conditions that could have resulted in denial. The application of this policy was the

direct cause of the approval of 4,896 units in minority areas that, between 1999 and 2008, would

not have been approved absent the discretion to allow the concentration and unacceptable site

conditions.21 The consistent decisions that continue to disproportionately place affordable

housing in areas of minority concentration perpetuate racial segregation. Crow, 457 F.2d at 790.

There may be legitimate interests that justify this discriminatory effect, but that is not part of the

prima facie case.

The exercise of the discretion to deny 4% allocations for two Caucasian area applications

also perpetuated racial segregation. By excluding units from Caucasian areas, the TDHCA policy

perpetuated racial segregation in the same manner as zoning ordinances limiting affordable rental

housing to minority areas perpetuate segregation. Town of Huntington, 844 F.2d at 937 - 938.

ICP proved that the three specifically identified discretionary policies were a proximate

21 ICP’s Prima Facie Case Brief collected this evidence at pp. 9 - 39. Document 259.

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cause of the perpetuation of racial segregation by hypothetically eliminating the effect of

discretion and comparing this to the actual awards. This proof is not contradicted by possible

existence of other, non-intervening, factors that may have affected developers’ decisions whether

to file an application. These remote factors, even if existent, did not control TDHCA’s decisions

whether to award allocations to the applications that were filed.

The uncontradicted evidence showed that the potential effects of possible other factors

such as whether zoning prevented a developer from filing an application were not a displacing

cause that outweighed the proximate cause of the discretionary policies. ICP’s proof takes the

actual pool of applications as the basis for its analysis. TDHCA is the only agency that can make

the decisions to award or not award allocations from the actual pool of applications. Defendants’

Answer to Complaint paragraph 10. For example, only TDHCA made the decision to disregard

the points for the Ironwood and East Meadow applications for units in Caucasian areas and deny

the applications. ICP 2016 ex 62, App 726. These applications were eligible and thus met the

requirements for zoning and financial viability including land costs.22 Since the locations were

not in QCTs, these developers did not need or want the QCT basis boost. The only entity or

factor responsible for the denial of a tax credit allocation to these units was the TDHCA Board

and it’s exercise of discretion. Only TDHCA could make the forward commitment decisions

choosing from all eligible applications. Doc 102-12, p 1, ¶ 3. The perpetuation of racial

segregation from TDHCA’s specifically identified discriminatory allocation policies was clearly

foreseeable. TDHCA consistently stated its concern for the over-concentration of LIHTC units in

22 Defendants stated that all applications submitted would support the award of taxcredits as a material fact upon which they relied to establish their defenses. ICP ex. 52, pdf 13,response to interrogatory 19.

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the QAPs. See pp. 6 - 8 above. The policies met the standard for proximate cause of the

perpetuation of segregation. City of Miami., 800 F.3d at 1282

Judge Jones’s special concurring opinion observed that if federal law substantially limited

TDHCA’s discretion, there would not be a causal connection. The preference cited is for

applications that contribute to a concerted community revitalization plan in a QCT. 26 U.S.C. §

42(m)(1)(B)(ii)(III). The undisputed and uncontradicted facts show that TDHCA did not limit its

discretion under any of the three identified allocation policies in order to comply with that

preference under either the 4% or 9% program. See QAP provisions collected at note 4 and pp. 6

- 7 above. TDHCA has never asserted that the preference applied to the 4% program. Tex. Gov’t

Code § 2306.359. The 9% program awarded, at most, a small number of below the line selection

criteria points for community revitalization in QCTs. ICP ex. 64, Summary of points available

for Qualified Census Tract location as contained in QAPs from 1999 to 2010. The exercise of

discretion was done in disregard of all the points scored including those for community

revitalization.

By focusing the causation analysis on the three specifically identified discretionary

policies, ICP met the robust causality requirement of Texas v. ICP. Seicshnaydre, Disparate

Impact and the Limits of Local Discretion After Inclusive Communities, pp. 14, 15, 17, 21,

41,Tulane University School of Law Public Law and Legal Theory Working Paper Series

Working Paper No. 16-10 August 2016.23

VI. The 44 percent of 9% units awarded allocations without regard to points isevidence of causation.

23 Available at Social Science Research Network electronic library at:http://ssrn.com/abstract=2823813.

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One method to determine the causal effect of the 9% program discretionary forward

commitment policy and the 9% program policy to disregard point totals calculates the percentage

of units awarded allocations without regard to points. This follows the reasoning by the Fifth

Circuit Court of Appeals in determining the role of discretion compared to the objective policy to

use seniority in promotions. The Court found the selection process was discretionary because

approximately half of the individual promotions were made without regard to seniority. McClain

v. Lufkin Industries, Inc., 519 F.3d 264, 276 (5th Cir. 2008).

The analysis adds the number of units in applications awarded forward commitment

allocations and the number of units in applications awarded allocations without regard to points.

The result is additional evidence showing proximate cause from these two policies. From 1999

through 2008, TDHCA approved 9% applications for 6,291 units. The approved units included

1,757 units, 28%, that were approved by forward commitments. This is 28% of all approved

units. ICP 2016 exhibit 67 App 752 (total of “family” and “elderly”).

In addition to the forward commitments, another 984 total units were awarded allocations

without regard to points. These are the units in applications that were not forward commitments,

were awarded allocations, but did not score enough points to have been awarded an allocation

based on points.24 These 984 units are 16% of the total 6,291 units awarded allocations from

1999 through 2008 and includes units in minority and Caucasian areas.

The two challenged policies account for 44% of the units receiving awards from 1999

24 Eban Village Apartments (220 units), Treymore at LaPrada (196 units), SouthBoulevard Retirement Center (30 units), ICP 2016 ex. 62 App 726; Grand Texas SeniorsCommunity (230 units) ICP 2016 ex. 62 App 726; Corinth Autumn Oaks (128 units) BachonTownhomes (120 units) ICP 2016 ex. 62 App 730; Sphinx At Reese Court (80 units), ICP 2016ex. 62 App 738.

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through 2008. This percentage is comparable to the approximately 50% measure showing

causation in McClain. Id.

VII. Even if the elements of the TDHCA decision process were incapable ofseparation, ICP proved that the decision making process as a whole was a cause of theperpetuation of segregation.

ICP's proof of causation by the three specifically identified discretionary policies met the

robust causation standard by focusing on those policies as a cause of the perpetuation of

segregation. In addition, ICP's evidence presented in its prima facie case briefs proved that the

interrelated elements of the TDHCA allocation process were a cause of the perpetuation of

segregation even if those elements could not be separated for analysis. This meets the standard

adopted by HUD for the analysis of discretionary policies under the disparate impact analysis

burden of proof. HUD, 78 Fed. Reg. at 11469.25 The specific contributions of the decision

making process year by year to the perpetuation of segregation were set out in ICP 2016 ex. 62 -

67 App 726 - 752; ICP Prima Facie Case Brief, pp. 9 - 39. This proof that the discretionary

decision making process perpetuated racial segregation also followed the “incapable of

separation” analysis of discretion used in Title VII. McClain, 519 F.3d at 278 - 279.

The evidence presented that the discretionary decision process was a cause perpetuating

racial segregation included the disparate approval rates for all applications and for the forward

commitments. Between 1999 and 2008, TDHCA’s minority area forward commitment approval

rate for family units is 2.5 times the rate of TDHCA’s forward commitment approval rate for

Caucasian area units. ICP 2016 ex 67, App 752. Between 1999 and 2008, TDHCA’s minority

25 This interpretation is entitled to deference under Nat’l Cable &Telecommunications Ass’n v. Brand X Internet Servs., 545 U.S. 967, 982 (2005).

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area 41% approval rate for family units is almost double, 1.95 times, the Caucasian area

approval rate for family units, 21%. ICP 2016 ex 67, App 752.

The Defendants argued against some of the data but did not present facts to substantially

lower the number of units perpetuating racial segregation caused by TDHCA’s 9% and 4%

discretionary allocation process. ICP proved that from 1991 through 2008 there were at least

3,713 family units that the TDHCA Board’s discretionary decisions excluded from Caucasian

suburbs. See record cites for this sum at ICP Reply Brief, page 17 - 18. Had just these units been

approved, the number of total family units in Caucasian areas would have been 12,035 instead of

the existing 8,322 in those areas. ICP 2016 ex 66, App 750 (3,713 + 8,322 = 12,035). The

percent of total family units that were in Caucasian areas at the end of 2008 would have

increased from 26% of the total to 38%. The corresponding decrease in the percent of total

family units that were in minority areas would have been from 74% to 62%.26

Conclusion

The LIHTC units are racially segregated. The record proves that three specific

discretionary policies in TDHCA’s allocation process were proximate causes of the perpetuation

of segregation. The record also proves the interrelated elements of the discretionary allocation

process were a proximate cause perpetuating racial segregation. TDHCA did not limit its

discretion for the federal preference. ICP proved its prima facie case.

26 The Caucasian area calculation based on ICP 2016 ex 66 App 750 is 8,322+3,713 = 12,035. 12,035/ 31,414 = 38%. The minority area calculation is 23,092 - 3,713 = 19,379.19,379/31,414 = 62%.

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Respectfully Submitted,

/s/ Michael M. DanielMichael M. DanielState Bar No. 05360500DANIEL & BESHARA, P.C.3301 Elm Street Dallas, Texas 75226-1637214-939-9230Fax 214-741-3596E-mail: [email protected] Attorney for Plaintiff

Laura B. BesharaState Bar No. 02261750DANIEL & BESHARA, P.C.3301 Elm Street Dallas, Texas 75226-1637214-939-9230Fax 214-741-3596E-mail: [email protected] Attorney for Plaintiff

Certificate of Service

I hereby certify that on September 23, 2016 I electronically submitted the foregoingdocument with the clerk of the court for the U.S. District Court, Northern District of Texas, usingthe electronic case files system of the court. The electronic case files system will send a “Noticeof Electronic Filing” to the individuals who have consented in writing to accept this Notice asservice of this document by electronic means.

s/ Michael M. Daniel

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mailto:[email protected]

mailto:[email protected]

in the united states district court dallas division … · 2016-09-23 · michael gerber, * civil...

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