Huston: Here Come the Property Police

December 1, 2015

by Tom Charles Huston

Land-use regulation is the means by which communities self-segregate by race and class. Through the use of zoning and subdivision control ordinances, regulators establish housing price points and those prices determine who can live in the community. The Obama administration has set out to upend this process by using “disparate impact” analysis to establish violations of federal fair-housing laws. Municipalities that admit that they discriminate against low-income housing on the grounds it doesn’t “pay for itself” are setting themselves up for a long and expensive round of litigation.

I have been in the residential land-development business for 40 years, and, if you really want to see the exclusionary impulse in action, all you have to do is attend a typical zoning-board hearing. Ten years ago, we had to provide tax-benefit analysis to the Carmel planners in order to get approval for townhouses in the Village of WestClay. The burden was on us as the developer to demonstrate that the taxes generated by the new homes would exceed the “estimated” costs of providing public services (fire, police and schools).

That wasn’t a problem for us because of our price point, but it demonstrates that there is nothing conceptually new in what the Indianapolis Business Journal reported recently. What is new is that Noblesville, Westfield and Fishers, which used to be happy to get new housing at any price point, have now joined Carmel in establishing price barriers to entry.

A community that seeks to have a broad and balanced range of housing available at all price points can do so. The concept, however, of testing individual projects for tax-generating potential without taking into account the potential offsets of other projects in the community with higher price points is conspicuously flawed and would hardly survive judicial scrutiny if challenged as a violation of fair-housing laws as construed and applied by the Obama administration.

The threat of the Obama administration challenging local housing policies armed with the blunt instrument of disparate impact is not the only challenge likely to arise to the overtly exclusionary housing policies of municipalities. It is a political fact that there are more voters who can’t afford a $250,000 new home than there are those who can. Ultimately these voters are going to insist through the political process that they not be systematically excluded from the new-home market by the overtly discriminatory practices of local governments acting under color of state law.

The response is likely to be imperfect and, if the Obama administration has its way, irrelevant.

Tom Charles Huston, A.B., J.D., is an adjunct scholar of the Indiana Policy Review who resides in Indianapolis.

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