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

The Texas Department of Housing and Community Affairs (Department) (defendant) was a state agency that distributed federal tax credits to developers to build low-income housing. The Department determined which developers would be distributed credits based on specific selection criteria that the Department had established. The Inclusive Communities Project, Inc. (ICP) (plaintiff) was a nonprofit corporation that aided low-income families in obtaining housing. ICP claimed that the Department’s selection criteria had resulted in a disproportionately high allocation of tax credits to predominantly black neighborhoods as compared to white neighborhoods. ICP argued that the Department’s conduct was unlawful in that it created a disparate impact on black neighborhoods. ICP sued the Department for violating provisions of the Fair Housing Act (Act), 42 U.S.C. § 3601 et seq. Specifically, ICP claimed that the Department had violated 42 U.S.C. § 3604(a), which prohibited an entity from otherwise making a dwelling unavailable to a person because of the person’s race, color, or national origin. ICP also alleged that the Department had violated 42 U.S.C. § 3605(a), which similarly prohibited an entity involved in real-estate transactions from discriminating against a person because of race, color, or national origin. The district court found in favor of ICP, and the Department appealed. The court of appeals held that disparate-impact claims are cognizable under the Act but reversed and remanded the case on the merits. The United States Supreme Court granted certiorari to consider the question of whether disparate-impact claims are cognizable under the Act.