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C^ /2:F IS/S 

A Sheltered Crisis: 

The State of Fair Housing 

in the Eighties 

Presentations at a consultation sponsored 

by the United States Commission on Civil Rights 

Washington, D.C. 

September 26-27, 1983 

A Sheltered Crisis: 

The State of Fair Housing 

in the Eighties 

Presentations at a consultation sponsored 

by the United States Commission on Civil Rights 

Washington, D.C. 

September 26-27, 1983 


CONTENTS . , \. 


Keynote Address 1 

Housing Discrimination: An Overview by Robert C. Weaver 1 

Demographic Changes for 1970-1980: Implications for Federal Fair Housing Policy . . 7 

Population Growth and Spatial Distribution by Joe Darden 7 

Suburban Racial Segregation and the Segregative Actions of Government: Two 

Aspects of Metropolitan Population Distribution by Yale Rabin 31 

The Effects of the Recession and Housing Supply on Fair Housing Goals, Public and 

Private 54 

The Effects of the Recession and Housing Supply on Fair Housing by Henry 

Schecter 54 

Housing Vouchers: Its Effects on the Supply and Distribution of Housing by 

JohnPalffy 64 

Effects of the Recession and Housing Supply on Fair Housing Goals by William 

North 70 

Effects of the Recession and Housing Supply on Fair Housing Goals by Gushing 

Dolbeare 75 

Creative Financing and Discrimination 83 

Discrimination in Home Mortgage Financing by Glenda Sloane 83 

Address by Thomas L. Clark 90 

Creative Forms of Finance Discrimination by Theresa Watson 94 

Hispanics and Fair Housing: The Neighborhood Development Issue by Jorge N. 

Hernandez 100 

Discrimination Against Women 104 

Discrimination Against Women in Housing Finance by Dorothy S. Ridings 104 

Women With Children in Today's Housing Market by Sue A. Marshall 1 10 

Discrimination Against Hispanic Women in Housing by Irene Packer 1 14 

Housing Discrimination Against Families With Children: A Growing Problem 

of Exclusionary Practices by Carol Golubock 128 

Overview of Federal Housing Policy: Past and Present 133 

Federal Housing Policy and Equal Opportunity by Martin E. Sloane 133 

Persistent Mechanisms of Racial and National Origin Discrimination 143 

A Sheltered Crisis: The State of Fair Housing Opportunity in the Eighties by 

Diana Pearce 143 

Housing Discrimination: A New Technology by William R. Tisdale 156 

America's Blind Spot: The Devestating Impact of Residential Segregation by 
Christine Klepper 162 

Presentation by W. Scott Davis 171 

Hispanic America: Limited Housing Options by Jose S. Garza 1 74 

Urban Revitalization or Gentrification and Dislocation 178 

The Extent, Causes, and Consequences of Urban Gentrification by Daphne 

Spain 178 

Urban Revitalization or Gentrification and Dislocation by George R. Genung ... 189 
Displacement and Dislocation of Low-Income Asians from Low-Cost Housing 

Units Due to Urban Redevelopment — San Francisco and Oakland Experience 

by Edwin M. Lee 200 

Fair Housing Advocacy in the Crucible of Urban Revitalization by John O. 

Calmore 204 

Zoning: Affirmatively to Include or Exclude 209 

Statement by Carl Bisgaier 209 

Report on the Question of Zoning by Richard F. Bellman 214 

Special District Zoning in New York City's Chinatown: A Design for 

Destruction by Margaret Fung 219 

Housing and Development Restrictions and Social Equity by H.M. Franklin 223 

Keynote Address 

Housing Discrimination: An Overview 

Robert C. Weaver* 

As in all aspects of American life, race discrimina- 
tion has been and remains widely prevalent in 
housing, where it is even more deeply entrenched 
and stubborn than elsewhere. As in education, 
segregation in housing breeds discrimination. The 
consequences are limited supply, fewer options, 
restricted mobility, and inferior services, facilities, 
and infrastructure. 

Paradoxical as it may seem today, the black ghetto 
is of comparatively recent origin, although some 
racial residential homogeneity has always existed in 
urban America. Slavery required blacks held in 
bondage to live close to their white owner or the 
latters' surrogates. Thus the older cities of the 
antebellum South, such as Charleston and New 
Orleans, had generally mixed racial residential pat- 
terns. Before Emancipation, free urban blacks in the 
South, aptly described as slaves without masters,' 
lived for the most part in poor neighborhoods and in 
unbelievably inadequate structures. Yet no unitary 
ghetto developed. Free blacks, the vast majority of 
whom were poor and more residentially segregated 
than slaves, resided in many low-income sections of 
most South cities. They lived close to whites of 
similar incomes. The occasionally affluent among 
them frequently owned homes in the finest residen- 
tial neighborhoods of many cities of the old South.' 

* First Secretary of Housing and Urban Development; Presi- 
dent, National Committee Against Discrimination in Housmg. 
' Ira Berlin, Slaves Wilhout Masters: The Free Negro m the 
Antebellum South (New York; Pantheon Books, 1974). 

In these cities, the traditional practice of black 
domestics living either in or in close proximity to 
their place of employment persisted after slavery. By 
the beginning of the 20th century, however, decline 
in the number of domestic servants, exclusion of 
blacks from newly developed residential areas in the 
cities, and growth of the black population facilitated 
a significant increase in residential segregation. The 
newer cities of the South, like Durham, Tulsa, and 
Miami, embraced patterns of racial separation in 
housing more easily and rapidly. 

With the exception of Philadelphia, the propor- 
tion of blacks in northern cities was quite small 
throughout the 19th century. Even New York and 
Chicago had few blacks; the 30,000 in New York at 
the turn of the century were less than 2 percent of 
the total. By 1910 the 90,000 in that city, in part a 
consequence of annexation of additional boroughs, 
placed a strain upon the supply of housing available 
to them. This, however, was highly atypical. As in 
the South, the low incidence of residential segrega- 
tion in the urban north was due partly to blacks' 
concentration in domestic service and residence in 
servants' quarters. Because of their small numbers, 
black residents did not arouse apprehension of 
minority inundation, and thus the presence of black 

^ Ibid., pp. 252, 254, 257. 

neighbors did not become a great threat to w hites in 
the area.' Available data indicate that, in the last 
decade of the century, blacks in New York and 
Boston were less spatially segregated than the new 
European immigrant groups.* 

In the decade 1900-1910, the number of blacks in 
many northern cities increased, but their proportion 
in the total population declined because of the large 
European immigration. Blacks were still less resi- 
dentially segregated than were a number of the new 
European groups. The rate of black migration 
increased during the next two decades, and their 
proportion in many northern cities" populations 
grew sharply as European immigration declined. 
Racial residential segregation increased too.= As in 
the South, decline in domestic service employment 
reduced racial dispersion, and exclusion of blacks 
from newly developed areas had a similar impact. 

The Taeubers summarized the situation in these 

Those cities in both North and South which already had 
sizeable Negro populations in 1910 generally gained 
additional Negroes between 1910 and 1930, and housed 
them in an increasingly segregated pattern.* 

The most prophetic development affecting the 
housing of blacks early in the 20th century was 
initiation of municipal residential segregation ordi- 
nances. In 1910 Baltimore passed such a law which 
in effect designated white and black residential 
blocks. Over a dozen cities, including Atlanta, 
Birmingham, Louisville, New Orleans, and Rich- 
mond, followed suit.' These ordinances varied in 
content, but all were designed to extend over 
coverage of discriminatory legislation to housing. 
By 1917 the Supreme Court invalidated the Louis- 
ville ordinance and subsequently struck down simi- 
lar laws in New Orleans and Richmond. 

With the first great migration of blacks from the 
South to northern cities during World War I, there 
was enormous pressure for shelter at their destina- 
tions. This generated intense competition for hous- 
ing and apprehension that blacks would take over 

" Stanley Lieberson, A Piece of the Pie: Blacks and While 
Immigranis Since 1980 (Berkeley, Cal.: University of California 
Press. 1980). p. 277. 

* Ibid., pp. 268-69. 
» Ibid. pp. 290-91. 

• Karl E, Taeuber and Alma F. Taeuber, Negroes in Cities: 
Residential Segregation and Neighborhood Change (New York: 
Anthenum. 1969). p. 55. 

' Charles S. Johnson. Negro Housing (Washington. D.C.; The 

neighborhoods. Lacking a traditional pattern of 
segregation laws, northern cities turned to private 
agreements or covenants to forestall black occupan- 
cy in areas delineated in the covenants. Property 
owners' associations and local real estate boards 
sponsored promotion of these exclusionary instru- 
ments. Both ordinances and convenants supplement- 
ed acts of violence, social pressure, paucity of 
mortgage finance for blacks, and differentiation of 
the housing supply by real estate agents. Each of 
these developments interacted; together they perpe- 
tuated and accelerated racial residential segregation. 
In retrospect, however, it appears that the initial 
resistance to black residents had been concentrated 
in specific neighborhoods. It found expression in 
housing segregation ordinances and particularly in 
racial covenants only after professional advocates of 
residential separation had spent much time and 
money to propogandize its necessity and desirabili- 

Even more crucial was the endorsement and de 
facto seal of approval of racial covenants during the 
1930s and 1940s from the principal Federal housing 
agency, the FHA. This not only made the highly 
discriminatory instrument respectable but also en- 
couraged the real estate, mortgage, and home 
building industries to champion unabashedly ghetto 
patterns of living, downgrade the credit standing of 
minority purchasers, and articulate the false concept 
that black occupancy per se depressed property 

Although race restrictive covenants broke down 
under sustained pressure of mounting nonwhite 
effective demand for housing, they extracted a 
considerable toll from blacks and other nonwhites. 
As I observed some 35 years ago: 

Covenants delay the movement [of an expanding popula- 
tion], make the final breakthrough a mass movement, and 
create vested interests of the part of present occupants to 
keep Negroes out. They can be and are used as instruments 
for manipulating the market so as to withhold a segment of 
the demand until vacancies increase and the new purchas- 
er-groups can be used to sustain prices which otherwise 

President's Conference on Home Building and Home Ownership, 

1932). pp. 35-37, 

' Robert C. Weaver, The Negro Ghetto (New York: Harcourt, 

Brace, and Co.. 1948). pp. 39-40. 

' For early challenges to this concept, see Weaver. The Negro 

Ghetto, ch. XV; Charles Abrams. Forbidden Neighbors (New 

York: Harper and Brothers. 1955). pp. 285-92; Luigi Laurenti. 

Property Values and Race: Studies in Seven Cities (Berkeley, Cal.: 

University of California Press. 1960). 

would fall. When a change in occupancy finally comes, 
the pent-up demand for housing among colored people 
sustains prices at least until the change has been com- 

Thus their impact in the central city was primarily 
a delay tactic, costly for blacks, occasioning over- 
crowding, high area densities, and artifically high 
prices. In new subdivisions and in other neighbor- 
hoods removed from the Black Belt, they were a 
more lasting impediment. This followed from the 
absence of strong built-up pressure for black pene- 
tration upon such locations. 

By the mid- 1930s the gatekeepers in housing — real 
estate dealers, mortgage bankers, and related finan- 
cial institutions, appraisers, and homebuilders — had 
become committed to the following principles: 

• There were three separate housing markets; 
those for whites, nonwhites, and mixed occupan- 

• Racial homogeneity was essential for stability 
and desirability of residential areas. 

• Inharmonious racial groups should be prohibit- 
ed from residential developments. 

• Change in social or racial occupancy generally 
contributed to instability and decline in property 

FHA had articulated those precepts in its early 
Underwriting Manuals. Both the Federal Govern- 
ment and the housing industry acted in accordance 
with them, and, as a result, blacks were almost 
completely excluded from new construction and 
largely denied access to existing structures in the 
suburbs. The white noose around the central city 
was firmly in place. 

Exclusion of blacks from suburbia inflicted a high 
level of discrimination upon them. This was espe- 
cially true after World War II when FHA mortgage 
insurance and VA loan guarantee programs, as well 
as massive Federal highway building and income tax 
policy, fueled the great white trek to suburbia." 
Between 1934 and 1960, FHA single-family mort- 

'" Weaver, The Negro Ghetto, p. 235. 

" Weaver, "The Suburbanization of America," School Desegre- 
gation — The Courts and Suburban Migration (Washington, D.C.: 
U.S., Commission on Civil Rights, 1977), pp. 29-33, 38-40. 
" U.S., Department of Housing and Urban Development, 1974 
Statistical Yearbook. 1976, p. 117. 

" U.S., Commission on Civil Rights, Twenty Years After Brown: 
Equal Opportunity in Housing, 1975, footnote 1, p. 41. 
" HUD table, "U.S. Housing Starts 1961-70, by Categories," 
Dec. 29, 1971. 

" Early in 1983 the Supreme Court of New Jersey unanimously 
upheld a trial court's decision that zoning which banned lower 

gages covered over 5 million housing starts, some 21 
percent of the total." Only 2 percent of the FHA- 
insured loans were made to blacks." The economic 
costs of such discrimination were multiple. Some of 
the greatest were denial of government-backed, low 
downpayment, long-term loans, slight participation 
in enforced or unconscious saving programs, inabili- 
ty to purchase property with great potential for 
appreciation and a hedge against inflation, and 
exclusion of the more affluent minorities from 
significant income tax benefits. 

Two major changes occurred between 1960 and 
1968. First a Federal fair housing policy emerged. It 
provided a commitment and some machinery for 
combatting discrimination in a wide segment of the 
housing market. The second was a significant expan- 
sion in the geographic coverage and volume of the 
subsidized housing program so that in 1970 subsi- 
dized starts constituted 29.3 percent of that year's 
total starts." The 1968 Housing and Urban Devel- 
opment Act not only authorized two new subsidized 
housing programs but also removed the requirement 
for local government approval except for compli- 
ance with building and zoning regulations. Despite 
the lingering impediment of exclusionary zoning," 
for the first time new housing for lower income 
families appeared in significant numbers in suburbs.'* 
The General Accounting Office characterized the 
1968 subsidized rental program as "the foremost 
example of Government assistance for privately 
developed rental housing," adding that it "was 
intended primarily to serve moderate income tenants 
and it does. . . ."" The impact of this program and 
the improved economic status of blacks contributed 
to the opening of the suburbs to them. The first 
increased the supply of standard housing at reason- 
able rentals (and sales prices), and the second 
augmented the housing purchasing power of blacks. 
Lacking was vigorous enforcement of the 1968 fair 
housing law. 

income housing was exclusionary and therefore unconstitutional. 
The State Supreme Court further ordered rezoning and additional 
affirmative action, including mmimum amounts of lower income 
housing in new developments, density incentives, and use of 
Federal subsidies. Fundamentals Fairness in Zoning: Mount Laurel 
Reaffirmed (Washington, D.C.: The Potomac Institute, Inc. 
1983), pp. 2-3. 

>« David Falk and Herbert M. Franklin, Equal Housing Opportu- 
nity: The Unfinished Federal Agenda (Washington, D.C.: The 
Potomac Institute, 1976), p. 1 1. 

" General Accounting Office, Section 236 — An Evaluation with 
Lessons for the Future, 1978, pp. 1,4. 

It is difficult to evaluate the impact of fair housing 
legislation upon racial residential patterns if, for no 
other reason, because in periods of blacks' increasing 
spatial mobility, such patterns are fluid. Also, as in 
many economic and social issues, there is a tempta- 
tion and tendency to confuse causation with correla- 
tion. At the same time, identification of increasing 
black suburbanization with residential integration is 
seductive, serving to assuage the consciences of 
those troubled by the stubborn tenacity of racial 
discrimination. This much, however, may be said 
with a degree of confidence: Fair housing legislation 
has contributed to the spatial mobility of blacks and 
the improved quality of their housing. It has not 
lived up to its promise for effectively attacking 
housing discrimination and accelerating integrated 
patterns of residence. During the 1960s small reduc- 
tions in racial residential segregation typified cities 
in all regions of the Nation. The progress made in 
this direction during the 1970s was disappointing. 
For 28 cities with more than 100,000 blacks, the 
index of racial segregation in housing for 1980 was 
81, down from 87 in 1970.'* Despite a decline of 10 
points in the index of racial residential segregation in 
8 of the cities during the decade, on the basis of the 
average decline of 6 points, at the end of 50 years the 
average city would still have an index of over 50.'^ 

Census data indicate that the black population of 
the suburbs rose from 2.5 million in 1960 to 3.6 
million in 1970 and nearly 6.2 million in 1980. As 
might have been expected, the racial residential 
patterns in suburbia varied from metropolitan area to 
metropolitan area. In some locations, where the 
black population was somewhat limited, more afflu- 
ent blacks tended to live in relatively racially 
integrated communities and neighborhoods around 
the suburban perimeters. Where there were large 
concentrations of blacks, the tendency was for 
substantial black middle-class neighborhoods to ap- 
pear in one or more corridors beyond the core areas, 
with some scattered areas of multiracial living 
elsewhere beyond the city's limits. 

'• Karl Taeuber, "Racial Residential Segregation 1980," Glenda 
G. Sloane, A Decent Home: A Report on the Continuing Failure of 
the Federal Government to Provide Equal Housing Opportunity 
(Washington, D.C.: Citizens' Commission on Civil Rights, 1983), 
app. pp. 3-4. 
■• Ibid, p. 4 

" Louis Harris and Associates, "A Study of Attitudes Toward 
Racial and Religious Minorities and Toward Women," report to 
the National Conference of Christians and Jews, November 1978, 
p. 5. 

Growth of suburbanization among minority mid- 
dle-class households has occasioned a false notion 
that housing discrimination is no longer prevalent 
among blacks and Hispanics with sufficient money 
to purchase or rent housing in the private market. As 
recently as late 1978, for example, a Harris survey 
reported that only 23 percent of whites believed that 
blacks were discriminated against in the housing 
market.^" Actually, however, with the passage of 
fair housing legislation, discriminatory practices 
have become more complex and subtle. Redlining is 
done behind closed doors and off the record. 
Steering is increasingly prevalent but usually effect- 
ed with a new finesse, and fewer overt acts of 
discrimination are committed. 

Accelerated suburbanization of blacks occurred at 
a time the suburbs closest to the cities experienced a 
shift from single-family to multifamily structures, 
increased population density, declined in socioeco- 
nomic status among residents, and growing conver- 
sion of land from residential to nonresidential use. It 
was this type of inner suburb that received the vast 
majority of black migrants rather than more remote 
ones with much better housing in more desirable 
neighborhoods and possessing characteristics associ- 
ated with the more traditional image of suburbs.^' 
"There are a few more blacks and a few more 
Hispanics in a number of formerly all-white suburbs, 
but the great majority of nonwhite middle-class 
families are still moving into segregated or rapidly 
changing neighborhoods. There are more black 
suburbanities primarily because, in a number of 
cities, ghettos have expanded beyond the city line 
and into the inner suburbs."" 

Noting the propensity of blacks to move to 
suburbs where other blacks already reside, a study of 
the Joint Center for Political Studies found scant 
evidence that black suburbanization is effectively 
integrating the suburbs. "Rather it is more likely that 
sections of these suburbs are being transformed into 
predominantly black communities."^' Since most 
measures of residential integration are oriented to a 

" William P. O'Hare, Jane-Yu Li, Roy Chatterjee, Margaret 

Shukur, Blacks on the Move: A Decade of Demographic Change 

(Washington, D.C.: Joint Center for Political Studies, 1982), p. 


^^ Gary Orfield, Toward a Strategy for Urban Integration: Lessons 

in School and Housing Policy from Twelve Cities (New York: The 

Ford Foundation, 1981), pp. 53-54. 

^^ O'Hare and Associates, Blacks on the Move, p. 65. 

particular time, they do not shed much Hght upon 
the stabiHty of multiracial neighborhoods.** 

There is evidence, however, that suburbanization 
usually upgrades the quality of shelter for the blacks 
involved. In this regard it duplicates many earlier 
racial neighborhood changes in the inner city. Also, 
while the proportion of blacks in the inner city 
declined slightly since 1970, blacks now comprise a 
much larger proportion of the total population of 
these cities. This is due to the fact that whites have 
continued to depart from cities at a decidedly more 
rapid rate than blacks. 

For some time there has been controversy over 
the reason for this phenomenon. Conventional wis- 
dom frequently ascribes it exclusively or almost 
exclusively to white flight from blacks. As early as 
the late 1950s," and in a paper prepared for this 
Commission in 1975," I challenged the validity of 
that assumption. A later study concluded that, while 
racial factors affected the choice of a suburban site 
by whites, deteriorating economic and social condi- 
tions were principal factors that precipitated the 
decision to move." A subsequent analysis agreed 
that the gap between the rates of white and black 
suburbanization was attributable in part to black 
reluctance because of actual or anticipated racial 
discrimination in the housing market.^* As recently 
as the spring of 1983, the authors of the above 
analysis concluded that the experience or the expec- 
tation of discrimination makes it harder for blacks to 
receive comparable housing and deters them from 
even looking in some places.*' 

Fair housing legislation has been a factor in 
accelerating the suburbanization of blacks and loo- 
sening the white noose around the central city. At 

" Ibid, p. 68. 

"^ Weaver, "Non-white Population Movements and Urban 
Ghettos," Phylon. vol. 20. (Third Quarter 1959), pp. 335^1. 
" Weaver, "The Suburbanization of America," pp. 40-43. 
" William H. Frey, "Central City White Right" Racial and 
Nonracial Causes, American Sociological Review, vol. 44 (1979), 
pp. 425-48, 

" John L. Goodman, Jr., and Mary Streitwieser, "Explaining 
Racial Differences in City-to-Suburb Residential Mobility," 
Working Paper 1384-09 (Washington, D.C.: Urban Institute, 
January 1982). 

" Goodman and Streitwieser, "Explaining Racial Differences: A 
Study of City-to-Suburb Residential Mobility," Urban Affairs 
Quarterly, vol. 18, no. 3 (March 1983), pp. 301-25. 
'° For example: U.S. Department of Housing and Urban 
Development, "Measuring Racial Discrimination in American 
Housing Markets," The Housing Market Practices Survey, 1979; 
Glenda A. Sloane, A Decent Home: Orfield, Toward a Strategy for 
Urban Intergration: Morton J. Schussheim, "Housing: An Over- 
view," Housing — A Reader, prepared by the Congressional 

the same time this suburbanization, while initially 
increasing interracial living patterns, may be creat- 
ing racially transitional neighborhoods. Multiracial 
suburbs today may no more signify stable multiracial 
neighborhoods than have or do multiracial cities. 

An impressive body of research indicates that 
racial discrimination in shelter remains widely prev- 
alent.^" This is due primarily to four circumstances, 
which also adversely affect women: 

• inadequacies in the enforcement machinery 
contained in Title VIII. 

• inefficacy of governmental enforcement of 
antidiscrimination housing laws, with slight im- 
provement in the late 1970s, and culminating in 
the wholesale retreat of the Reagan administration 
from vigorous civil rights enforcement, especially 
in housing and education.'' 

• the 1973 moratorium, cutbacks, and, during 
the Reagan administration, virtual abandonment 
of subsidized housing,'* and 

• recession for the Nation and depression for 

In 1972 Kain and Quigley delineated that segrega- 
tion in housing occasioned much more than econom- 
ic deprivation. 

Persistence, a thick skin, a willingness to spend enormous 
amounts of time house-hunting and minimum requirements 
for nonwhites who wish to move into white neighbor- 
hoods. These psychic and transition costs may be far more 
significant than out-of-the pocket costs to Negroes consid- 
ering a move out of the ghetto. Most blacks limit their 
search for housing to the ghetto; this limitation is more 
than geographic. There is less variety of housing services 
available inside the ghetto than outside; indeed, many 

Research Service, Library of Congress, for the Committee on 
Banking, Finance and Urban Affairs and the Subcommittee on 
Housing and Community Development, House of Representa- 
tives, 98th Cong., 1st sess., 1983, pp. 18-21; Congressional Record, 
May 5, 1983, pp. S.6152-6153. 

'■ Orfield, "Federal Agencies and Urban Segregation: Steps 
Toward Coordinated Action," Racial Segregation: Two Policy 
Views (New York: Ford Foundation, 1979); Orfield, "Toward a 
Strategy for Urban Integration," pp. 15-17, 22-27; Sloane, A 
Decent Home, pp. 72-78; Elliot M. Minceberg, "A Retreat on 
Rights," New York Times, Aug. 21, 1983, p. E17; Robert K. 
Gordon, "Civil Rights Wars: Reagan's 'Sensitivity' Campaign," 
New Republic, issue 3,580 (Aug. 29, 1983), pp. 7-9. 
" Weaver, "Housing Allowances," Land Economies, vol. LI, no. 
13 (August 1975), pp. 247-57; Robert Guenther, "Housing 
Vouchers Aren't Bane or Panacea, Tryouts Suggest," fVall Street 
Journal, June 16, 1982, p. 29; Chester H. Hartman, "The Evidence 
Against Housing Vouchers," New York Times, Mar. 8, 1982, p. 
A 14; Weaver, "Fair Housing Policies," Journal of Housing, 
March/April 1983, pp. 33-34. 

bundles of housing services are unavailable in the ghetto at 
any price." The situation so described 1 1 years ago still 
exists with only slight abatement. 

The history and process by which racial segrega- 
tion and discrimination in housing have developed 
and hardened are long and complex. By contrast, the 
effort to eradicate housing discrimination as an 
operating force in the housing industry and establish 
free choice in housing is of only recent vintage — 
barely 20 years. It would be unrealistic to expect 
radical changes in racial demographic patterns in so 
relatively short a time or a complete turnabout so 
soon in entrenched housing industry practices and 

But one could reasonably have anticipated much 
more rapid progress toward eradication of discrimi- 
nation and in achievement of open occupancy. An 
impressive lesson of the last 50 years is the impor- 
tance of the Federal Government in molding racial 
housing policy and patterns. Certain governmental 
changes, I am convinced, can establish equal hous- 

ing opportunity as a fact of American life, and can 
establish it within the foreseeable future. 

Let me state simply what is needed: 

First, firm enforcement of existing fair housing 

Second, amendments to the Fair Housing Act to 
strengthen enforcement, so that all relevant parties 
will know that violations will be dealt with swiftly, 
surely, and effectively, and so that minorities and 
others against whom housing discrimination is prac- 
ticed will gain confidence and assurance that their 
equal housing opportunity rights will be protected. 

Third, a restoration of subsidized housing pro- 
grams to provide the necessary bricks and mortar 
without which fair housing can only be a slogan 
devoid of much substance. 

There is no question that the Nation has the legal 
skills, administrative capacity, and economic wher- 
ewithal to accomplish these three objectives. The 
real problem is whether the Nation — and particular- 
ly the Federal Government — is prepared to under- 
take the commitment and effort to do so. 

" John F. Kain and John M. Quigley, "Housing Market 
Discrimination, Home Ownership, and Savings Behavior," Amer- 
ican Economic Review, vol. 62, no. 3 (June 1972), p. 264. 

Demographic Changes 1970-1980: 
Implications for Federal Fair Housing 

Population Growth and Spatial Distribution 

Joe T. Darden* 

According to the 1980 census, the resident popula- 
tion of the United States was 222.5 million in 1980. 
This represents an increase of 23 million people or 
11.4 percent during the 1970 to 1980 decade. The 
United States is becoming a more diverse society 
racially and ethnically. While the total population 
increased by 11.4 percent between 1970 and 1980, 
some racial and ethnic groups grew at a more 
dramatic rate. The black population grew by 17 
percent, from 22.6 million in 1970 to 26.5 million in 
1980 (U.S. Bureau of the Census, 1981a). Persons of 
Spanish origin or Hispanics increased by 61 percent, 
from 9.1 million in 1970 to 14.6 million in 1980. The 
American Indian, Eskimo, and Aleut population 
increased 71 percent, exceeding 1 million for the first 
time since the Census Bureau began recording data 
on these groups. In 1980 the number of Asian and 
Pacific Islanders was 3.5 million, representing a 
substantial increase over the 1970 figure of 1.5 

As a percentage of the total United States popula- 
tion, the white majority has been reduced. Census 
figures show that whites constitute 188.3 million or 
83.3 percent of the United States population; blacks, 

11.7 percent; American Indians, Eskimos, and Aleu- 
tian, 0.6 percent; Chinese, Filipinos, Japanese, Asian 
Indians, Koreans, Vietnamese, Hawaiians, Samoans, 
and Guamanians, 1.5 percent. Others accounted for 
3 percent of the population. 

The spatial distribution of the United States 
population continues to be uneven as above average 
growth continues in the South and West at the 
expense of the North. In the 1970s people moved in 
substantial numbers from the older urbanized re- 
gions of the Nation, the Northeast, and North 
Central States, to the South and West, giving the 
South and West population increases between 1970 
and 1980 of 20 and 24 percent, respectively, roughly 
twice the national average. The North Central 
States grew by only 4 percent and the Northeast by 
a mere 0.2 percent (Long and De Are, 1980). Every 
State in the West grew faster than the United States 
average, as did States in the South except Delaware 
and Maryland and the District of Columbia. 

• Professor, Geography and Urban Affairs, Michigan State 

The Spatial Distribution of Racial and 
Ethnic Groups 

Among the total population of the United States, 
the nonwhite and Spanish origin populations have 
remained highly concentrated. Blacks, for example, 
constitute more than one-fifth of the population in 
seven States — Mississippi, South Carolina, Louisi- 
ana, Georgia, Alabama, Maryland, and North Caro- 
lina. In the District of Columbia 70.3 percent of the 
population was black in 1980. About half (50.7 
percent) of the 1.4 million American Indians, Eski- 
mos, and Aleuts live in the West. Almost 60 percent 
of the 3.5 million Asian and Pacific Islanders are 
located in the Pacific division which includes Ha- 
waii, Alaska, California, Oregon, and Washington 
(Long and De Are, 1980). More than 60 percent of 
the 14.6 million Spanish origin population reside in 
three States: California, Texas, and New York. 
Almost 90 percent of Mexican Americans (Chica- 
nes) live in the five southwestern States of Texas, 
New Mexico, Arizona, California, and Colorado; 
about 70 percent of Puerto Ricans outside the island 
live in New York, New Jersey, and Pennsylvania; 
about 60 percent of the Cuban Americans live in 
Florida, and another 21 percent are in New York; 
about two-thirds of Central/South Americans live in 
California and New York (National Commission for 
Employment Policy, 1982, p. 3). 

Because most of the U.S. Spanish origin popula- 
tion (60 percent) is Mexican American, statistics on 
the Spanish origin population as a whole largely 
reflect the experiences of Mexican Americans and 
tend to obscure trends and problems of the other 
groups. In addition to their differences in spatial 
distribution, the several groups of Hispanics also 
differ in other important chracteristics (e.g., immi- 
grant status, age, education, and proficiency in 
English). (See National Commission for Employ- 
ment Policy, 1982, p. 9.) Due to their different 
characteristics, the Hispanic groups may have differ- 
ent experiences in the housing market. Furthermore, 
Hispanics as a whole also have a different set of 
experiences in the housing market than both blacks 
and whites. Such differences will be discussed later. 

Metropolitan and Nonmetropolitan Trends 

The period of rapid metropolitan growth is over. 
Metropolitan areas, particularly the largest metro- 
politan areas, grew more slowly in the 1970s than 
the Nation as a whole (U.S. Department of Housing 
and Urban Development, 1980, pp. 1-10). In fact, 

the lowest growth rates have occurred in the largest 
metropolitan areas. The New York metropolitan 
area, for example, the largest of all, experienced a 
loss of -5.7 percent between 1970 and 1980. In all, 9 
of the 32 largest metropolitan areas lost population 
between 1970 and 1980. 

This decline of metropolitan areas is clearly a 
reversal of previous trends. For many decades prior 
to 1970, the population of metropolitan areas, i.e., 
the larger central cities and their suburbs, typically 
grew more rapidly than that of their nonmetropoli- 
tan surroundings. Since 1970, in contrast, 1980 
census data show that the metropolitan areas have 
grown by only 9.5 percent, compared with a 15 
percent increase for nonmetropolitan areas (Long 
and De Are, 1980). Nonmetropolitan growth can be 
observed throughout the Nation. All regions regis- 
tered larger increases in population and net migra- 
tion in nonmetropolitan than metropolitan areas 
since 1970. Even in the South there has been a 
market increase in nonmetropolitan growth and a 
shift from heavy out-migration to net in-migration 
(U.S. Bureau of the Census, 1979). Who are these 
nonmetropolitan migrants? 

Patterns of Class and Race 

Recent migrants tended to be relatively educat- 
ed — one in four had attended college. Only 10 
percent of the households migrating to nonmetro- 
politan areas during the seventies had income below 
the poverty level while twice that many had income 
above the national median. Studies also indicate that 
most migrants to nonmetropolitan areas have stable 
or rising incomes. For example, only 26 percent of 
metropolitan to nonmetropolitan migrants in the 
Midwest during the mid-1970s reported declining 
incomes in the year after moving (Williams and 
Sofranko, 1979). By 1975 more than half of all 
nonmetropolitan workers were employed in service 
occupations. Recent migrants to nonmetropolitan 
areas are even more heavily concentrated in service 
occupations, especially professional services (U.S. 
Department of Housing and Urban Development, 
1980, pp. 1-22). Nearly one in four nonmetropoHtan 
workers is employed in manufacturing. Fewer than 
5 percent are employed in agriculture. Finally, 
migrants to nonmetropolitan areas were overwhelm- 
ingly white. Only 1 in 20 persons moving from a 
metropolitan to a nonmetropolitan area in the mid- 
1970s was black (U.S. Department of Housing and 
Urban Development, 1980, pp. 1-19). Thus, the 


relatively high rate of growth of nonmetropolitan 
areas in the 1970s was largely due to increases in the 
white population. More blacks and Hispanics moved 
from nonmetropolitan areas to metropolitan areas 
than went the other way (U.S. Department of 
Commerce, 1978). Thus, with respect to nonmetro- 
politan areas, blacks and Hispanics have been mov- 
ing in opposite directions than whites (Joint Center 
for Political Studies, 1982, p. 32). 

Differences in movement by class and race are 
also evident in the metropolitan area. Changes, 
however, did occur during the 1970s. The popula- 
tion of suburban areas has traditionally been over- 
whelmingly white and middle to upper income. At 
the time of the census in 1970, only 5 percent of the 
suburban population were black and only 8 percent 
were below the poverty level. By contrast, 22 
percent of central city residents were black and 15 
percent were below the poverty level (U.S. Depart- 
ment of Housing and Urban Development, 1980, pp. 
1-10). Almost 75 percent of suburban households 
were husband-wife families and fewer than 10 
percent were headed by a woman. More recent data 
indicates that more blacks and Hispanics, i.e., popu- 
lation groups that have been traditionally concen- 
trated in the central cities, began to move to the 
suburbs in greater numbers during the seventies. 

Black Suburbanization 

The black population residing in suburban areas 
increased by almost 2.5 million during the 1970s. 
This represented an increase of 70 percent in the 
black suburban population, compared to an increase 
of only 16.4 percent in the black central city 
population (Joint Center for Political Studies, 1982, 
p. 49; U.S. Bureau of the Census, 1981). The 
substantial growth in the black population of the 
suburbs in the 1970s was a distinct change from the 
1960s. Also, for the first time, there was a significant 
increase in the proportion of blacks in the total 
suburban population. The proportion rose from 4.8 
percent in 1970 to 6.1 percent in 1980, after remain- 
ing constant during the fifties and sixties (Joint 
Center for Political Studies, 1982, p. 49). One reason 
for the increase in the black suburban population 
was the increase in black migration from central 
cities to suburbs. During the 1970s, net black 
migration to the suburbs amounted to 937,000. 

There was a great deal of regional variation in 
black suburbanization. The South accounted for 
about 47 percent of all black suburban growth 

during the 1970s. The suburbs in the North Central 
region and the West each experienced about 20 
percent of the total growth in black suburban 
population, while the black suburban population of 
the Northeast grew by about 1 3 percent of the total 
(Joint Center for Political Studies, 1982, p. 53). 

In terms of rate of growth, however the regional 
results were much different. The West experienced 
an increase of 69 percent in black suburban popula- 
tion during the 1970s. The black suburban popula- 
tion of the North Central region grew by 58.3 
percent and that of the South by 37.8 percent, while 
the black suburban population of the Northeast grew 
by only 33.6 percent (Joint Center for Political 
Studies, 1982, p. 53). In other words, while the 
South experienced a larger volume of black subur- 
banization than any other region, the West had the 
greatest percentage increase. 

Black suburbanization also varied by the size of 
the Standard Metropolitan Statistical Area. Seventy- 
five percent of the growth in the black suburban 
population during the decade occurred in the 37 
SMSAs with a million or more people. In the North 
and West combined, 82 percent of the black subur- 
ban growth occurred in the largest SMSAs, while 
the corresponding figure for the South was only 67 
percent (Joint Center for Political Studies, 1982, p. 
58). There is also variation in black suburbanization 
between the largest SMSAs. For example, the rates 
of black movement to the suburbs were close to the 
rates for whites in Washington, Cleveland, St. Louis, 
Philadelphia, Newark, Los Angeles, and Miami, all 
of which experienced a large increase in black 
suburbanization. On the other hand, the rates of 
black suburbanization remained less than one-third 
of the rate for whites in Baltimore, Atlanta, New 
York, Boston, Chicago, Houston, Dallas, and New 
Orleans (Nelson, 1980). Despite the increasing rate 
of black suburbanization in the 1970s, the movement 
of the number of whites to the suburbs during the 
period was significantly greater. In fact, the number 
of whites moving to the suburbs during the period 
outnumbered blacks by more than five to one (U.S. 
Department of Housing and Urban Development, 
1980, pp. 1-13). 

Black Retention in Central Cities 

This differential movement of blacks and whites 
over several decades has resulted in the black 
population becoming a larger percentage of the 
central city population even though the total central 

city population itself has been declining. Blacks now 
comprise about 24 percent of the central city 
population up from 12 percent in 1950, but the 
portion of the national population that resides in 
central cities fell from 35.5 percent in 1950 to 30 
percent in 1980 (Joint Center for Political Studies, 
1982, p. 34). 

Although blacks comprise 24 percent of the 
population of all central cities, several central cities 
such as Washington, D.C., Atlanta, Detroit, Ne- 
wark, Gary, Birmingham, New Orleans, Baltimore, 
Richmond, and Wilmington, Delaware are already 
more than 50 percent black. These central cities are 
among the 553 total incorporated places in the 
United States with black majorities. These places 
were distributed over 24 States in 1980 (table 1 and 
figure 1). About two-thirds of the States and 90 
percent of the places were located in the South. 
Majority black places ranged in size from less than 
200 people to over 1 million and comprised less than 
1 percent of the black population in such States as 
Tennessee and Texas and more than 68 percent of 
the black population of Michigan. 

In sum, such differential movement of blacks and 
whites over central cities, suburbs, and nonmetro- 
politan areas has resulted in continued racial separa- 
tion over time. In 1950 the index of dissimilarity 
between blacks and whites over central cities, 
suburbs, and nonmetropolitan areas was only 13.1 
percent. By 1960 the index had increased to 21.4 
percent. In 1970 the index had increased to 30.3 
percent and in 1980 it stood at 32.8 percent (table 2). 
Such continued increase in the index which ranges 
from "0" (no dissimilarity) to 100 (complete dissimi- 
larity) lends support to the observation of more than 
a decade ago that "America is moving towards two 
societies — one black and one white separate and 
unequal" (National Advisory Commission on Civil 
Disorders, 1968). The continued separation on the 
basis of race has very important social and economic 
consequences, not only for blacks, but for Hispanics 
and other residents who are disproportionately 
concentrated in central cities. The 1980 census notes 
the continuing movement of jobs out of central cities 
and into the suburbs and nonmetropolitan areas. 
Central cities will continue to offer decreasing 
opportunities for social and economic mobility. 

The Changing Demographic 
Characteristics of Central Cities 

Compared to nonmetropolitan and suburban 
areas, central cities have become increasingly poor- 
er. Prior to 1960 most poor people lived in nonme- 
tropolitan areas, especially in small towns and rural 
areas. But by the mid-1970s, 60 percent lived in 
metropolitan areas and within metropolitan areas, 6 
of every 10 lived in the central city (U.S. Depart- 
ment of Housing and Urban Development, 1980, pp. 
1-13). The evidence indicates that low-income 
households have not suburbanized appreciably dur- 
ing the 1970s despite Federal dispersal policy. In 
1979 almost two-thirds of all the households that 
resided in SMSAs and earned less than $7,000 per 
year lived in central cities (U.S. Department of 
Commerce, 1981a). Further, 60 percent of all owner- 
occupied dwellings in SMSAs valued at less than 
$30,000 in 1979 were located in central cities, while 
73 percent of all renter-occupied units having gross 
rents under $125 per month were in central cities. 

Furthermore, the number of households headed 
by females — a group that includes the poorest 
American families — increased greatly during the 
1970s. Suburban areas shared in the increase but 
most families headed by women remain in the 
central cities. The lower incidence of female heads 
in suburban areas is due partly to differences in 
racial composition. Female-headed families tend to 
be disproportionately black and the number of such 
households in central cities increased from 945,000 
in 1970 to over 1 million in 1980. Nearly 50 percent 
of these households were living in poverty in 1980. 

Finally, the socioeconomic gap between central 
city and suburban residents is widening. This is best 
demonstrated by controlling for race. In 1979 
dollars, black median family income in the central 
cities declined by 13.9 percent from 1969 to 1979, 
while median family income for blacks in the 
suburbs increased by 9.1 percent. In 1979 the median 
income of central city blacks was only 76.8 percent 
of suburban black median income, whereas 10 years 
earlier it had been almost identical (Joint Center for 
Political Studies, 1982, p. 44). Evidence of a widen- 
ing socioeconomic gap is also revealed by examining 
changes in poverty. By 1980 a black family living in 
the central city was almost 33 percent more likely to 
be in poverty than a black family in the suburbs, 
whereas in 1970, such a family was only about 4 
percent more likely to be in poverty than a black 
family in the suburbs. The number of blacks in 



States With Majority Black Incorporated Places 

Number of 

Number of 

Number of Blacks 

Percent of Blacks 




in State 

in State 


































































New Jersey 





New York 





North Carolina 








1 ,076,734 












South Carolina 




















West Virginia 








Source: Computed by the author from data obtained from U.S. Department of Commerce, Bureau of the Census 1980 Census of 
Population and Housing. PHC80, Advance Reports. Washington: U.S. Government Printing Office, 1981. 








"^ CO 
LU >. 



^- o o 

• • 


Indexes of Dissimilarity Between Blacks and Whites Over Central Cities, 

Suburbs and Non-Metropolitan Areas, 1950-1980 

Dissimilarity Index 




Source- Computed by the author from data obtained from U.S. Bureau of the Census. Historical Stat^tics of the United States. 

central cities living below the poverty line increased 
significantly between 1970 and 1980. Obviously, 
there has been a movement of higher income blacks 
to the suburbs. 

Given such differential socioeconomic patterns of 
population distribution, there are those who are 
quick to state that the Fair Housing Act of 1968 has 
been successful in that blacks who can afford 
housing in racially integrated suburbs do indeed 
move there and those blacks who remain segregated 
in central cities are there because of poverty. 

Ability to Pay and Black Residential 
Segregation: The Evidence from Michigan 

The debate centered around poverty as an expla- 
nation for black residential segregation has a long 
history. At least since the 1950s the empirical 
evidence has been clear and consistent that poverty 
or inability of blacks to pay for housing is not the 
major reason for black residential segregation from 
whites (Wallace, 1953; Taeuber, 1965; Langendorf, 
1969; Darden, 1973; Farley, 1977; Massey, 1979). 
Most past studies have concluded that upper income 
blacks are no less segregated residentially from 
whites than lower income blacks and that poor 

whites seldom live in the same neighborhoods as 
poor blacks. Regardless of income, most whites live 
in predominantly white neighborhoods and most 
blacks live in predominantly black neighborhoods. 
Preliminary analyses of 1980 census data on 
central cities and suburbs of Michigan suggest the 
following. Since the passage of the Federal Fair 
Housing Act (1) black residential segregation in 
central cities of Michigan remains high, but the level 
of segregation declined between 1970 and 1980; (2) 
blacks who live in Michigan's suburbs are only 
slightly less segregated on the average than blacks 
who live in central cities; (3) unlike the pattern in 
Michigan's central cities, black segregation in sever- 
al suburbs has increased since 1970; (4) blacks in 
several of Michigan's suburbs are more segregated 
residentially than blacks in central cities; (5) the 
segregated distribution pattern of blacks in the 
central cities and the suburbs is not primarily a 
function of the inability of blacks to pay for housing 
in predominantly white neighborhoods. 

Data and Method 

Data for this analysis was obtained from the U.S. 
Bureau of the Census Tract Statistics for 1970 (U.S. 


452-986 0-84 

Bureau of the Census, 1972) and from the U.S. 
Bureau of the Census Population and Housing 
Summary Tape File 1-A (U.S. Bureau of the 
Census, 1982). The data consisted of (1) the number 
of blacks and whites by census tracts and (2) the 
median housing value and rent by census tracts for 
cities and suburbs of the 12 Standard Metropolitan 
Statistical Areas used in this study. 

An index of dissimilarity is used to measure the 
degree of segregation for each municipality. Resi- 
dential segregation is defined as the overall unev- 
enness in the spatial distribution of blacks and whites 
over census tracts within each municipality. The 
formula can be stated as follows: 

D = 100 (Vi L 
i = l 


where Xj = the percentage of the municipality's black 
population living in census tract i; 
yj = the percentage of the municipality's white 
population living in the same census tract i; 
D = the index of dissimilarity, or one-half the sum 
of the absolute differences (positive and 
negative) between the percentage spatial dis- 
tribution of blacks and whites in each munic- 
ipality (See Darden and Tabachneck, 1980, 
p. 228). 
The index may range from 0, indicating no segregation on 
the basis of race, to 100, indicating total segregation. 


As indicated in table 3, black residential segrega- 
tion declined from 1970 to 1980 in every Michigan 
central city except Ann Arbor resulting in a mean 
decrease in segregation of -12.7 percentage points. 
Ann Arbor, which had the lowest level of segrega- 
tion than any central city in 1970, experienced no 
change in segregation over the decade. But declines 
in several other central cities were substantial. Bay 
City, Lansing, and Muskegon experienced declines 
of more than 20 percentage points. Declines greater 
than 10 percentage points were experienced by 
Detroit, Grand Rapids, and Kalamazoo. As a result 
of such declines, the mean level of segregation stood 
at 56 percent in 1980, down from 69.3 percent in 
1970. Despite these changes, black residential segre- 
gation remained high, i.e., above 50 percent in 7 of 

the 12 central cities of Michigan in 1980. 

The data clearly show that black movement to the 
suburbs of Michigan was substantial between 1970 
and 1980. In several suburbs outside Detroit, for 
example, the rate of black suburbanization exceeded 
1,000 percent. Suburban municipalities with five or 
more census tracts and located within the Detroit 
Standard Metropolitan Statistical Area were chosen 
for an analysis of the residential segregation of 
blacks in the suburbs. Forty-seven municipalities met 
these criteria. The results revealed that blacks in the 
suburbs of Detroit were only slightly less segregated 
on the average than blacks in Michigan's 12 central 
cities, including Detroit. The mean level of segrega- 
tion for blacks in Detroit's suburbs was 53 percent 
which was only 3 percentage points less tl'an the 
mean level for blacks in Michigan's 12 central cities. 
Furthermore, unlike the downward trend in residen- 
tial segregation in the central cities, segregation 
actually increased since 1970 in several of Michi- 
gan's suburbs. As table 4 indicates, several of the 
suburbs had substantial increases. Black movement 
to the suburbs then, does not guarantee a reduction 
in residential segregation. Some blacks in the sub- 
urbs of Detroit in 1980 found themselves in suburbs 
that were more segregated than the city of Detroit 
and several Detroit suburbanites were living in areas 
more segregated than such central cities as Ann 
Arbor, Benton Harbor, Bay City, Muskegon, and 
Lansing (table 5 and table 3). 

The suburbs with such high levels of blacks 
residential segregation followed a pattern — all but 
one — Clinton Township is a declining suburb, i.e. 
declining in total population. Two — Lincoln Park 
and Dearborn — are located on Detroit's border or 
less than 1 mile away. They represent the typical 
pattern of blacks replacing whites in existing housing 
units. Few, if any, new housing units were being 
built in these suburbs. Should the present process 
continue, black ghettoization appears inevitable. The 
remaining eight suburbs represent the most common 
type of black suburbanization within metropolitan 
Detroit. Blacks were moving to declining suburbs 
more than 1 mile away from Detroit's border and 
replacing whites in existing units. Thus, physical 
expansion of the central city ghetto is not responsi- 
ble for the high level of black segregation in these 
suburbs. Instead, separate new evolving black subur- 
ban ghettos were occuring at a distance from the 
central city. 



Changes in Black Residential Segregation in Central Cities of Michigan, 1970-1980 


Percent of Total 

Index of Dissimilarity 


Central Cities 





Point Change 

Ann Arbor 





Battle Creel< 






Bay City 






Benton Harbor 

















- 0.5 

Grand Rapids 











- 5.7 
























- 0.8 





Source: Computed by the author from data obtained from U.S. Bureau of the Census. US. Census of Population and Housing: 
1970 Census Tracts Final Report PHC (17), Washington, D.C.; U.S. Government Printing Office, 1972; U.S. Bureau of the Census, 
Population and Housing Summary Tape File 1-A, 1982. 

The Relationship of Housing Cost to 
Black Residential Segregation in Central 
Cities and Suburbs 

Despite the fact that blacks in central cities and 
suburbs earn less income than whites, inability of 
blacks to pay for housing in predominantly white 
neighborhoods does not seem to be the primary 
factor related to the high level of black residential 
segregation. This conclusion was reached after 

preliminary statistical analyses were performed in 
which correlation coefficients were computed be- 
tween the percentage distribution of blacks and 
median housing value and rent for all census tracts 
examined. No significant relationship exists between 
the percentage distribution of blacks by census tracts 
and the spatial distribution of median housing value 
in 7 or 58 percent of the 12 central cities. The 
strongest relationship between median housing value 



Suburbs Within the Detroit Standard IVIetropolitan Statistical Area 
Where Black Segregation Increased, 1970-1980 



Index Change 

Number Blacks 





Percentage Point 




Oak Park 



+ 41.8 







+ 22.6 




Garden City 



+ 21.5 




Madison Heights 



+ 21.2 







+ 15.1 




Royal Oak 



+ 10.2 







+ 7.7 




Dearborn Heights 



+ 7.7 




Source: Computed by the author from data obtained from U.S. Bureau of the Census. U.S. Census of Population and Housing: 
7970 Census Tracts Final Report PHC, Washington, DC, and U.S. Bureau of the Census. Population and Housing Summary 
Tape File 1-A. 1982. 


Detroit Suburbs Where Blacks Are More Segregated Than Blacks in Detroit 

Suburban Municipality Level of Segregation 

Plymouth Township 90.6 

Roseville 89.7 

Allen Park 88.4 

Lincoln Park 82.3 

Madison Heights 79.0 

St. Clair Shores 78.7 

Clinton Township 77.5 

Westland 77.4 

Mount Clemens 75.5 

Dearborn 72.8 

Inkster 68.4 

Detroit 67.4 

Source: Computed by the author from data obtained from U.S. Bureau of the Census, Population and Housing Summary Tape 
File 1-A, 1982. 

and the percentage black population could be found 
in Muskegon (-.69) and Saginaw (-.74). 

In eight central cities, there were significant 
negative relationships between the percentage black 
population by census tracts and median rent. The 
relationships were weak, however, in all but two 
cities — Battle Creek (-.61) and Saginaw (-.77) (table 

No significant relationship exists between the 
percentage black population and the distribution of 
median housing value and rent in most of the 28 
Michigan suburbs examined. Significant negative 
relationships between the percentage black popula- 
tion and median housing value were found in only 
five or 17 percent of the suburbs. A strong negative 
relationship was found only in Bloomfield Township 
(-.74). On the other hand, the strongest correlation 
between percentage black and median housing value 
was a positive correlation of .93 for East Detroit 
(table 7). 

The pattern of rent and the percentage black 
population was also not strongly related. Strong 
significant negative relationships exist between me- 
dian rent and percentage black only in Clinton 
Township (-.63), St. Clair Shores (-.61), and East 
Lansing (-.61). The strongest relationship between 
percentage black and median rent was found in East 
Detroit, where the positive correlation was .88 
(table 7). 

In sum, the evidence suggests that in most central 
cities and suburbs of Michigan, there is no strong 
negative correlation between the spatial distribution 
of the black population and the spatial distribution of 
housing cost. Thus, inability of blacks to pay for 
housing in predominantly white sections of central 
cities and suburbs is not the primary reason blacks 
are highly segregated residentially from whites. 
Instead, past studies suggest that a more credible 
explanation for the high level of black residential 
segregation is racial discrimination in housing de- 
spite the Fair Housing Act of 1968. 

Racial Distribution as a Factor in Black 
Residential Segregation 

Historically blacks have been excluded from most 
white neighborhoods in central cities and suburbs in 
Michigan. Studies conducted since 1968 suggest that 
discriminatory tactics persist in the form of racial 
steering by white real estate brokers. In a study of 97 
randomly selected real estate agents in the Detroit 
Standard Metropolitan Statistical Area between 

1974 and 1975, it was found that blacks, more often 
than whites, were shown houses not located in the 
city where the sales agent's office was located; that 
is, they were steered out of town. Too, where and 
whether houses were shown to blacks depended 
upon the location of the sales office within the 
suburban municipality. The chances were signifi- 
cantly greater for whites to be shown houses in the 
same municipality as the real estate office's location 
(56 percent vs 33 percent, p <.05). Moreover, when 
whites were steered out, about four-fifths of the 
municipalities where they were shown houses were 
nearby white suburbs. In contrast, when blacks were 
steered out, two-thirds of the houses shown were in 
the predominantly black municipalities of Inkster 
and Detroit (Pearce, 1979, p. 335). Detroit alone 
accounted for almost a third of the homes shown to 
blacks, although only 13 percent of the real estate 
firms were located in Detroit. Not only did blacks 
see a disproportionate number of houses in Inkster 
and Detroit, but they were steered there dispropor- 
tionately by firms located in the western, southern, 
and eastern shore suburbs (Pearce, 1979, p. 335). 
Clearly then, the study revealed a consistent pattern 
of racially differentiated treatment of homeseekers. 
The data showed that these were not isolated 
instances of individual racism. Instead, there was a 
high level of consistency across the entire metropoli- 
tan area. There was a clear existence of practices 
that exclude three-fourths of black families from 
ever seeing homes and steers out many of the few 
that do see homes. 

The existence of racial steering and/or racial 
discriminatory treatment in providing housing infor- 
mation was also revealed by a national study 
conducted by the U.S. Department of Housing and 
Urban Development. Of the 40 Standard Metropoli- 
tan Statistical Areas studied, Detroit ranked first in 
discriminatory treatment of blacks in the rental 
housing market and third behind Cincinnati and 
Columbus, Ohio, in discrimination in housing sales. 
In the rental market in Detroit, whites were favored 
67 percent of the time and blacks only 10 percent — a 
statistically significant difference of 57 percentage 
points. In the housing sales market, whites were 
favored 64 percent of the time and blacks 22 
percent — a statistically significant difference of 42 
percentage points (tables 8 and 9). 

In Saginaw, the most segregated central city in 
Michigan, whites in the rental market were favored 
50 percent of the time and blacks only 23 percent — a 



Correlation Coefficients Between Percent Black and Median Housing Value and Rent- 
Central Cities 

Correlation Coefficients 
Michigan Central Cities Median Value N Median Rent 

Ann Arbor 

Battle Creek 

Bay City 

Benton Harbor 



Grand Rapids 






Median Value 


















































"Significant at the .01 level 
"Significant at the .05 level 



Correlation Coefficients Between Percent Blacl< and IVIedian l-lousing Value and Rent— 

Correlation Coefficients 

Michigan Suburbs 

Median Value 


Median Rent 


Ypsilianti City 





Ypsilianti Township 





Clinton Township 





East Detroit 










St. Clair Shores 





Shelby Township 





Sterling Heights 










Bloomfield Township 





Farmington Hills 










Royal Oak 















Waterford Township 





Port Huron 





Canton Township 










Dearborn Heights 










Lincoln Park 










Bedford Township 




















East Lansing 





"Significant at the .01 level 
'Significant at the .05 level 



Housing Rental Discrimination in Detroit, Saginaw and Other Selected SMSAs 












Detroit, Ml (30) 






Monroe, LA (29) 







Holyoke, MA-CT (29) 






Vallejo-Napa, CA (29) 






Indianapolis, IN (28) 






San Bernardino-Riverside- 

Ontario, CA (29) 






Los Angeles-Long Beach, CA (30) 






Dayton, OH (29) 






Tulsa, OK (30) 






Canton, OH (29) 






Nashville-Davidson, TN (29) 






Macon, GA (30) 






Fort Lauderdale-Hollywood, FL (28) 






Tampa-St. Petersburg, FL (30) 






York, PA (29) 






Peoria, IL (30) 






Fort Wayne, IN (30) 






Louisville, KY-IN (30) 






Columbus, OH (29) 






Cincinnati, OH-KY-IN (29) 






Akron, OH (26) 






Saginaw, Ml (30) 






Stockton, CA (28) 






Fort Worth, TX (28) 






Asheville, NC (29) 






Boston, MA (110) 






New York, NY (29) 






Oklahoma City, OK (30) 






Lexington, KY (30) 






Hartford, CT (30) 






Lawton, OK (30) 






Savannah, GA (15) 






Atlanta, GA(119) 






Dallas, TX (114) 






Sacramento, CA (118) 






Milwaukee, Wl (108) 






Greenville, SC (30) 






Harrisburg, PA (28) 






Patterson-Clifton-Passaic, NJ (29) 






Albany-Schenectady-Troy, NY (30) 





Note: Numbers in parentheses are the number of observations; tests of significance were performed on unweighted, unadjusted 

Source: U.S., Department of Housing and Urban Development, Office of Policy Development and Research, Measuring Racial 
Discrimination in American Housing Markets, The Housing Market Practices Survey, 1979. 



Housing Sales Discrimination in Detroit, Saginaw and Other Selected SMSAs 












Cincinnati, OH-KY-IN (48) 






Columbus, OH (40) 






Detroit, Ml (51) 






Lexington, KY (30) 






Fort Worth, TX (29) 






New York, NY (50) 






Asheville, NC (28) 






York, PA (29) 






Indianapolis, IN (50) 






Milwaukee, Wl (80) 






Akron, OH (40) 






Tulsa, OK (29) 






Savannah, GA (30) 






Canton, OH (30) 






Paterson-Clifton-Passaic, NJ (30) 






Fort Lauderdale-Hollywood, FL (45) 






Los Angeles-Long Beach, CA (50) 






Macon, GA (45) 






Vallejo-Napa, CA (29) 






Monroe, LA (29) 






Dayton, OH (43) 






Louisville, KY-IN (39) 






Nashville-Davidson, TN (39) 






Tampa-St. Petersburg, FL (44) 






Atlanta, GA (78) 






Boston, MA (73) 






Sacramento, CA (79) 






Albany-Schenectady-Troy, NY (30) 






Dallas,TX (80) 






Greenville, SC (30) 






Harrisburg, PA (30) 






Saginaw, Ml (30) 






Hartford, CT (30) 





Oklahoma City, OK (29) 





Peoria, IL (30) 





San Bernadino-Riverside- 

Ontario, CA (50) 






Stockton, CA (30) 






Lawton, OK (30) 






Fort Wayne, IN (25) 







Holyoke, MA-CT (30) 





Note; Numbers in parentheses are the number of observations; tests of significance were performed on unweighted, unadjusted 

Source: U.S., Department of Housing and Urban Development, Office of Policy Development and Research, Measuring Racial 
Discrimination in American Housing Marl<ets, The Housing Marl<et Practices Survey, 1979. 


statistically significant difference of 27 percentage 
points. In the housing sales market, there was less 
evidence of discrimination against blacks vis-a-vis 
u hites. Whites were favored 33 percent of the time 
and blacks were favored 30 percent of the time, a 
difference of only three percentage points. If there 
were no racial discrimination, one could expect no 
difference in the percentage of whites and of blacks 
favored by real estate brokers and hence, the 
discriminatory treatment index would be zero. The 
greater the difference in treatment on the basis of 
race, the greater the discriminatory treatment index 
(see U.S. Department of Housing and Urban Devel- 
opment, 1979. pp. 180-81). 

Black Residential Segregation and the 
Issue of Choice 

The third factor often advanced to explain black 
residential segregation is choice, or preference by 
blacks to remain segregated (Wolf, 1981, pp. 34-39). 
In other words, despite the evidence presented here, 
there are those who continue to argue that blacks do 
in fact have freedom of spatial mobility and that 
blacks who remain in black segregated areas are 
there by choice (Coleman, 1979, p. 11). It is 
conceivable that some blacks might desire to live 
only with other blacks even if they had total 
freedom to choose their living space. The explana- 
tion for their preferences, however, cannot be 
totally divorced from past and present forces of 
racism and discrimination (Darden, 1973, p. 64; 
Goodman and Streitwieser, 1982). Since blacks have 
never had the total freedom to live in any neighbor- 
hood within cities and suburbs, the influence of 
personal preference cannot be adequately measured. 
The case for personal preference as a factor in racial 
residential segregation remains hypothetical. Within 
this hypothetical context, the black self-segregation 
or black preference issue has been addressed with 
surveys of black attitudes toward racially integrated 
housing. Surveys of black preferences for integrated 
housing conducted in Detroit and other metropoli- 
tan areas have provided little support for the 
voluntary segregation hypothesis (see Brink and 
Harris, 1967, pp. 232-33; Campbell and Schuman, 
1968; Pettigrew, 1973; Farley et al., 1978). Most 
blacks surveyed in the study of Detroit by Farley et 
al. (1978) were willing to reside in racially mixed 
neighborhoods, whereas the whites were reluctant 
to remain in neighborhoods blacks were moving into 
and would not buy homes in already integrated 

areas. In a 1980 Detroit Free Press Survey 11 percent 
of the blacks in the survey preferred to live in a 
neighborhood that had both white and black families 
(McGehee and Watson, 1980, p. 37). 

In sum, the evidence supports the position that 
black residential segregation is best explained by 
exclusion and discrimination motivated by racial 
prejudice. Economic factors are of minor impor- 
tance, and since blacks are not an ethnic group in the 
way in which foreign born families once were, 
voluntary congregation is unlikely except as a 
response to intimidation. Thus, racial concentration 
is largely compelled (Wolf, 1981, p. 26). As a result, 
it remains severe, widespread, unresponsive to eco- 
nomic improvement and impervious to the assimila- 
tive processes that dispersed ethnic groups (Wolf, 
1981, p. 26). 

Why then, does the argument that "blacks prefer 
to live among their own kind" continue to be 
advanced? Two factors are probably responsible: (1) 
some groups have advanced such an argument as a 
rationale for maintaining the status quo and prevent- 
ing or delaying any efforts toward decreasing black 
residential segregation (Darden, 1973, p. 64). Such a 
rationale allows one to support a community's 
efforts to "maintain the ethnic purity of its neighbor- 
hood" without racist guilt (see Citizens Commission 
on Civil Rights, 1983, p. 49; New York Times, 1976); 
(2) other groups that advance such an argument do 
not understand the differences in the historical 
development of racial and ethnic groups in Ameri- 
can cities. They are unaware that unlike white 
ethnic, i.e., European immigrant groups, blacks 
clustered together not necessarily to enjoy a com- 
mon linguistic, cultural, and religious tradition, but 
because a systematic pattern of racial discrimination 
left them no alternative (Spear, 1967, p. 228). Blacks 
have been tied together less by a common cultural 
heritage than by a common set of grievances. Thus, 
the observed clustering of blacks can best be 
described as not primarily by choice, but as an 
involuntary adaptation to white discrimination 
(Spear, 1967, pp. 228-29). 

Hispanics and Racial Residential 

The Hispanic population represents the second 
largest minority group in the United States. It is also 
the fastest growing minority group. As indicated 
earlier in this paper Hispanics have different experi- 
ences in the housing market than either blacks or 



Hispanic Population and Segregation in Central Cities of Michigan, 1980 

Central Cities 

Ann Arbor 

Battle Creek 

Bay City 

Benton Harbor 



Grand Rapids 







Index of 


Percent of Total 




H vs. W 






































Source: Computed by the author from U.S. Bureau of the Census, Population and Housing Summary Tape File 1-A. 1982. 
H = Hispanic; W = White 

whites. Thus, it is expected that their pattern of 
residential distribution will be different. Like the 
black population, however, Hispanics represent a 
large, highly visible, urban minority with a history 
of discrimination and socioeconomic exploitation 
(Massey, 1979). On the other hand, the residential 
pattern of the Hispanic population may be influ- 
enced by both race and ethnicity. In fact, the data 
seem to suggest that in the housing market, the 
Hispanic population has had more of a socioeconom- 
ic barrier similar to the earlier European immigrants, 
and less of a color barrier than blacks (Massey, 
1981). As a result, Hispanic-white segregation ranges 
from moderate to high but rarely reaches the very 
high levels that characterize black-white segrega- 
tion. An analysis of Hispanic segregation in cities 
and suburbs in Michigan supports these statements. 

The Evidence from Michigan 

The data for this analysis were obtained from the 
U.S. Bureau of the Census' Population and Housing 
Summary Tape File 1-A. The data consisted of (1) 
the number of whites and persons of Spanish origin 
by census tracts, and (2) the median housing value 
and rent by census tracts for cities and suburbs of the 

12 Standard Metropolitan Statistical Areas used in 
this study. Hispanics consist of persons of Spanish 
origin or descent who classified themselves in one of 
the specific Spanish origin categories listed in the 
1980 census questionnaire, such as Mexican, Puerto 
Rican, Cuban or other Spanish origin. Persons of 
Spanish origin may be of any race (U.S. Department 
of Commerce, 1981b, p. 3). Thus, the whites of 
Spanish origin and blacks of Spanish origin were 
identified and subtracted from the corresponding 
total white and black population in each census 

In 1980, 162,000 Hispanics were living in Michi- 
gan. Thirty-eight percent or 62,187 Hispanics re- 
sided in Michigan's 12 central cities. Among all the 
census tracts examined, the mean level of segrega- 
tion between Hispanics and whites was 35.4 percent. 
Note that the mean level for blacks and whites was 
56 percent. The level of segregation ranged from a 
low of 23.2 percent in Muskegon to a high of 60.0 
percent in Saginaw (table 10; also see table 3). 

Clusters of Hispanics are also found in some 
neighboring suburbs of the central cities. An impor- 
tant question is whether Hispanics in the suburbs are 
less segregated residentially than Hispanics in the 


central cities. Most suburban Hispanics in Michigan 
reside outside Detroit, but still live within the six- 
county Detroit Standard Metropolitan Statistical 
Area. Seventeen percent (27,682) of Michigan's 
Hispanic population are found here. Those suburban 
municipalities with at least five census tracts were 
chosen for analysis. Twenty-eight suburban munici- 
palities met this criterion, almost all of them within 
the Detroit SMSA. 

In general, Hispanics in the suburbs were less 
segregated from whites than Hispanics in the central 
cities. The mean suburban index of dissimilarity was 
20.4 percent compared to 35.4 percent in the cities, a 
difference of 15 percentage points. Segregation 
between Hispanics and whites ranged from a low of 
9.0 percent in Canton Township, a suburb of 
Detroit, to a high of 24.8 percent in East Lansing, a 
suburb of Lansing (table 11). 

It is clear that the level of Hispanic segregation 
tends to vary among central cities and suburbs, 
indicating that within some municipalities Hispanics 
are more evenly distributed between census tracts. 
In other municipalities, Hispanics are more concen- 
trated. An important factor which influences the 
spatial distribution of a population in a truly open 
market economy is the cost of housing. The cost of 
housing also varies by census tracts. 

The Relationship of Housing Cost to 
Hispanic Residential Segregation in Cities 
and Suburbs 

If Hispanics locate disproportionately in census 
tracts where the value and rent are low, it would be 
reasonable to conclude that the segregation of 
Hispanics may be related to the cost of housing. If, 
on the other hand, little or no relationship exists, it 
would Se reasonable to conclude that housing cost is 
probably not an important variable in explaining 
Hispanic segregation. 

Correlation coefficients were computed between 
the percentage distribution of Hispanics and median 
housing value and rent for all census tracts exam- 
ined. In every central city except Ann Arbor there is 
a negative relationship between the distribution of 
Hispanics and the value of owner-occupied housing. 
The relationships are strong in Bay City, Lansing, 
Jackson, Kalamazoo, and very strong in Saginaw 
and Muskegon (table 12). The relationship is signifi- 
cant in all but two cities. 

The correlation coefficients between the distribu- 
tion of Hispanics and median housing rent indicated 

weaker negative relationships generally than those 
for actual housing value. Battle Creek and Benton 
Harbor showed weak positive relationships. The 
relationships were significant in 7 of the 12 central 

The coefficients between percentage Hispanics 
and housing value and rent were generally weaker 
for the suburbs. Weak negative relationships were 
revealed for 10, or 35 percent, of the 28 suburbs 
when percentage of Hispanics was correlated with 
the median value of owner-occupied housing. Six of 
the suburban areas showed moderate negative rela- 
tionships. Only two showed strong relationships and 
two revealed relationships that were very strong. In 
eight of the suburban municipalities, the relationship 
was positive. The relationship was significant in only 
seven suburbs — namely Clinton Township (-.55), St. 
Clair Shores (-.77), Warren (-.58), Port Huron (- 
.65), Dearborn (-.85), Dearborn Heights (.61), and 
Livonia (-.41). 

Correlation coefficients between percentage His- 
panic and median rent revealed weak negative 
relationships in 13, or 46 percent of the suburban 
areas. Significant negative relationships were found 
in only 3 of the 28 suburbs; these areas were Port 
Huron (-.58), Dearborn Heights (-.66), and East 
Lansing (-.53) (table 13). 

In sum, the pattern of Hispanic residential segre- 
gation from whites in cities and suburbs is generally 
lower than the pattern of black segregation from 
whites. Segregation between Hispanics and whites in 
the cities is greater than segregation between His- 
panics and whites in the suburbs. This pattern is 
consistent with assimilation theory and implies that 
Hispanics in the suburbs who generally have a 
higher socioeconomic status are more able to find 
housing on a nonsegregated basis. 

The cost of housing is more important in explain- 
ing the segregated distribution pattern of the Hispan- 
ic population and of lesser importance in explaining 
the segregated distribution pattern of the black 
population. The segregated distribution pattern of 
Hispanics in owner-occupied housing is influenced 
more by the cost of housing than is the segregated 
distribution pattern of Hispanics in renter-occupied 
housing. The segregated distribution pattern of 
Hispanics in central cities has a strong relationship to 
the cost of housing, whereas the segregated distribu- 
tion pattern of Hispanics in the suburbs is not 
strongly related to the cost of housing. Thus, other 
factors must also be examined if the segregated 



Hispanic Population and Segregation in Selected Suburbs of Michigan, 1980 


Ypsilanti City 

Ypsilanti Township 

Clinton Township 

East Detroit 


St. Clair Shores 

Shelby Township 

Sterling Heights 


Bloomfield Township 

Farmington Hills 


Royal Oak 



Waterford Township 

Port Huron 

Canton Township 


Dearborn Heights 


Lincoln Park 


Radford Township 




East Lansing 


Index of 


Percent of Total 




H vs. W 






















































































Source: Computed by the author from U.S. Bureau of the Census, Population and Housing Summary Tape File 1-A. 
H = Hispanic; W = White 



Correlation Coefficients Between Percent Hispanic and Median Housing Value and 
Rent -Central Cities 

_ Correlation Coefficients 

Michigan Central Cities 

Ann Arbor 

Battle Creek 

Bay City 

Benton Harbor 



Grand Rapids 






Median Value 


Median Rent 


















































"Significant at the .01 level 
"Significant at the .05 level 



Correlation Coefficients Between Percent Hispanic and Median Housing Value and 

Rent— Suburbs 



Michigan Suburbs 

Median Value 


Median Rent 


Ypsilanti City 





Ypsilanti Township 





Clinton Township 





East Detroit 










St. Clair Shores 





Shelby Township 





Sterling Heights 










Bloomfield Township 





Farmington Hills 










Royal Oak 















Waterford Township 





Port Huron 





Canton Township 










Dearborn Heights 










Lincoln Park 










Redford Township 




















East Lansing 





'Significant at the .01 level 
* 'Significant at tfie .05 level 


distribution pattern of Hispanics is to be totally 
understood. One such factor that may prevent 
further reductions in Hispanic residential segrega- 
tion is discrimination in housing. 

Implications for Federal Housing Policy 

It has been 15 years since the Federal Fair 
Housing Act was passed. The act was supposed to 
eliminate housing discrimination in both the public 
and private housing markets. However, it is clear 
from the demographic data that blacks, whites, and 
Hispanics have different patterns of population 
distribution which have resulted from different 
patterns of buying and renting homes. Since these 
differences cannot be totally explained by differ- 
ences in buying power, the patterns suggest that 
discrimination against blacks and Hispanics con- 
tinues to be a problem in need of a solution. 

Clearly, the role played by the Federal Govern- 
ment has not been effective in counteracting racial 
residential segregation, presently so deeply in- 
grained in American residential structures that the 
mere elimination of existing discriminatory practices 
may not be sufficient to eradicate it. Just as "affirma- 

tive" segregationist policies and practices created 
racial residential segregation, so it will take "affirma- 
tive" integrationist policies and practices to end it. 
Thus, if all racial discrimination in housing ceased 
today, America's residential areas would remain 
largely segregated in the absence of any affirmative 
policies or plans to integrate them. Therefore, the 
challenge before the U.S. Commission on Civil 
Rights, the Congress, and the Courts is to pressure 
the executive branch of government to carry out its 
constitutional responsibilities of providing equal 
housing opportunities for all American citizens. Sure 
enough the challenge has become more difficult as 
the present administration has (1) curtailed subsi- 
dized housing, (2) eliminated protections for the 
poor and minorities under the Housing and Commu- 
nity Development Act, (3) adopted a policy of 
voluntary compliance, (4) reduced data collection 
on the race and sex of beneficiaries, and (5) retreated 
on enforcement of the Fair Housing Law (Citizens 
Commission on Civil Rights, 1983). Despite the 
prevailing obstacles, the integration challenge must 
be met. 



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and Schuster, 1967. 

2. Campbell, Angus and Howard Schuman. Racial Attitudes in Fifteen Cities. 
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Continuing Failure of the Federal Government to Provide Equal Housing 
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5. Darden, J.T. Afro-American in Pittsburgh: The Residential Segregation of a 
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Mathematical Descriptions of Inequality, Dissimilarity, Segregation, or 
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8. Farley, Reynolds. "Residential Segregation in Urbanized Areas of the 
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18. Nelson, Kathryn P. "Recent Suburbanization of Blacks." Journal of the 
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Economic Characteristics of the Metropolitan and Non-Metropolitan Population: 
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National Urban Policy Report, 1980. 

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Suburban Racial Segregation and the Segregative Actions 
of Government: Two Aspects of Metropolitan Population 

Yale Rabin* 


This discussion deals with two aspects of black 
population movement in metropolitan areas, spatial 
distribution and the segregative effects of govern- 
ment actions on spatial distribution. The first looks 
at the distribution of blacks in the outer rings of 
metropolitan areas in general and focuses on the 
patterns of black concentration evident in the rings 
of seven SMSAs. 

The second aspect is examined through examples 
of a variety of government actions which have had 
segregative racial effects in the past and which, 
because of the persistence of their effects, appear to 
exert important continuing influences on the loca- 
tions of predominantly black residential areas and on 
the directions in which they expand. 

The Pattern of Black Suburbanization 

A widespread expectation during the sixties, 
whose fulfillment was sought by many and obstruct- 
ed by others, was that to the extent that blacks could 
find housing in the burgeoning suburbs of our 
metropolitan areas their segregation would be re- 
duced and their quality of life improved. In relative 
terms, substantial numbers of black households did 
find housing in the suburban rings of metropolitan 
areas during the decade between 1960 and 1970. 
Black population outside the central cities of metro- 
politan areas increased during that period by 758,000 
to 3,433,000, an increase of 28.3 percent. Although 
the absolute numbers were small and the distribution 
among SMSAs was uneven — nearly one-sixth of the 
increase was in the suburbs of Washington, D.C, 
alone — the increase was significantly greater than in 
earlier decades. 

However, a number of observers soon pointed out 
that in many metropolitan areas the spatial distribu- 
tion of blacks in the suburbs bore little resemblance 
to those earlier expectations. Emerging patterns of 
segregation were noted and described by Reynolds 
Farley, Harold Rose, Eunice and George Grier, 
Phoebe Cottingham, and Thomas Clark, to name but 

a few. Several segregated patterns of settlement 
were identified which accounted for substantial 
proportions of the black movement to the suburban 
rings of metropolitan areas. 

In many cases central city black neighborhoods 
had simply expanded to reach and cross over city 
boundaries, thus extending into contiguous areas of 
the suburbs. In other cases large numbers of the new 
black suburbanites were crowded into the deterio- 
rated housing of declining older industrial cities in 
the suburban rings. Many others had settled around 
the nucleus of presuburban black rural enclaves or 
had moved to older all-black municipalities within 
the suburban ring. 

During the decade of the seventies the number of 
blacks who found housing in the suburban rings was 
nearly four times as great as during the sixties (see 
table 1), and a disproportionately large share of this 
movement was to the largest SMSAs. The 33 
SMSAs, which in 1970 each had populations of 1 
million or more (see table 2), included in 1980 about 
half the total population of all metropolitan areas 
and 81 percent of the black population of all 
metropolitan areas. 

Among these 33, 7 SMSAs each had black 
populations in their outer rings in 1980 of 200,000 or 
more (see table 3). These seven: Washington, Los 
Angeles-Long Beach, Philadelphia, Chicago, Ne- 
wark, Atlanta, and St. Louis accounted for about 17 
percent of all metropolitan population in 1980 but 
contained 55 percent of all blacks in the suburban 
rings of all metropolitan areas. 

A cursory examination, at a relatively coarse level 
of detail, of the spatial distribution of blacks in the 
rings of these seven SMSAs which focused on large 
concentrations of majority black census tracts (see 
explanatory note, table 3) reveals a persistent contin- 
uation of the pattern of suburban segregation which 
were described earlier. Chicago has the largest 
number of separate suburban centers of black con- 
centration, nine in all, including the virtually all- 
black city of Robbins, Illinois. Philadelphia is also 

Associate Dean, School of Architecture, University of Virgin- 



Population Change by Race in Metropolitan Areas*, 1960-1980 

Inside Central 
Population (Millions) Total Cities 


1960 12.3 9.6 

1970 16.3 12.9 

1980 21.5 15.3 


Percent Change 








Outside Central 





'Metropolitan areas In 1960 and 1970 are as defined in 1970^ Metropolitan areas in 1980 are as defined in 1980. No adjustment is 
made for changes in SMSA boundaries between 1970 and 1980 or for additional SMSA's designated in 1980. Overall, tfie effect 
of botfi of these changes on the number of blacl^s in metropolitan areas in minimal. Data is from the U.S. Census of Population 
for 1970 and 1980. 

characterized by noncontiguous centers of suburban 
black concentration in Camden, Chester, and Norris- 
town, and also has a small, but growing, spillover of 
the West Philadelphia black community into adja- 
cent Delaware County. In the remaining five of the 
seven the dominant pattern of segregation is charac- 
terized by spillover from the principal black majori- 
ty area in the central city. 

The largest spillover concentrations are in the 
Washington, Atlanta, and Los Angeles-Long Beach 
SMSAs. These three also experienced the greatest 
growth in the number of blacks in the outer ring 
during the seventies. Over 239,000 blacks were 
added to the Washington suburbs, over 40 percent of 
them to contiguous spillover areas in adjacent 
Prince Georges County, Maryland. The most dra- 
matic increase occurred in the Atlanta SMSA where 
the number of blacks in the outer ring grew by 
161,000, an increase of nearly 300 percent. These are 
concentrated mainly in contiguous areas southeast of 
the city in Dekalb County and in smaller contiguous 
areas southwest in Fulton County. 

Approximately 157,000 blacks moved to the Los 
Angeles-Long Beach suburbs extending the earlier 
spillover pattern of concentration into Carson, West 

Athens, East Compton, West Compton (all these 
except Carson are now majority black) and other 
adjacent municipalities. However, Pomona, north- 
east of the central cities and noncontiguous, also 
experienced a large black population increase. These 
three SMSAs alone accounted for more than two 
out of every five blacks added to the suburbs of the 
33 large SMSAs. 

In the St. Louis area just over a quarter of the 
suburban ring black population is across the Missis- 
sippi River in East St. Louis, Illinois, which experi- 
enced only a very small increase in black population. 
The bulk of the new concentrated area was formed 
by the extension of the earlier majority black area in 
University City northward into Wellston along the 
western edge of the city. 

In the Newark SMSA there were substantial black 
population increases in East Orange, which was 
majority black in 1970 and 83 percent black in 1980, 
and in Plainfield and Orange which have become 
majority black since 1970. Significant increases in 
black population also occurred in Montclair, Irving- 
ton, and Hillside. 

In summary, it is clear that the volume of 
movement by blacks to the outer rings of metropoli- 



Changes in the Number of Blacks Living Outside the Central Cities of the 33 SMSA's 
Which Had Populations of Over 1 ,000,000 in 1970 (Figures in 1 ,000 rounded to nearest 

Total SMSA 
1970 1980 Change % Change Pop 

* New York 






Los Angeles-Long Beach 


















* Detroit 






San Francisco-Oakland 






* Washington 


















* St. Louis 


















* Houston 












* Minneapolis-St. Paul 






* Dallas 












Annaheim-Santa Anna- 

Garden Grove 












* Atlanta 












-1- Patterson-Clifton-Pasaic 






San Diego 


















* Kansas City 






* Denver 






San Bernadino-Riverside- 












San Jose 






New Orleans 






Tampa-St. Petersburg 






Portland, OR 












* SMSA's to which cities and/or counties were added after 1970. 

+ Bergen County transferred to N.Y. SMSA in 1973. 

Source: Bureau of the Census, Standard Metropolitan Statistical Areas and Standard Consolidated Statistical Areas: 1980. 



Distribution of Black Population Outside the Central Cities of 7 SMSAs, 1970 & 1980 

Los Angeles- 
Washington Long Beach Philadelphia Chicago Newark Atlanta St. Louis 
Black population outside 

central city 






128,299 140,884 55,581 124,625 
230,826 226,042 215,915 201,470 

Percent of SMSA black 
pop. outside central city 









Black pop. outside central 
city but in concentrated 




86,257 87,958 9,607 69,873 
128,882 158,587 99,838 100,642 

Black pop. in concentrated 
areas as a percent of 
black pop. outside 
central city 













Percent change in total 
SMSA population 1970-80 








•SMSAs to which counties were added between 1970 and 1980. No adjustment is made; impact is negligible. 

"Concentrated areas include: majority black tracts contiguous to central city majority black tracts plus edge tracts with higher 
percent black than the percent black in the municipality; in municipalities with minority black and total black population of 5,000 
or more all majority black tracts plus edge tracts with higher percent black than the percent black in the municipality; and all 
blacks in municipalities which are majority black. 

Source: Bureau of the Census, Census of Population by Tracts for each of the above SMSAs 1970 and 1980. 


tan areas has substantially increased; that these new 
black suburban residents continue to be dispropor- 
tionately concentrated outside the central cities of a 
small number of large SMSAs; and that their spatial 
distribution there is dominated by strong patterns of 
racial segregation. It is also noted that, with the 
exception of the Atlanta SMSA to which 10 counties 
were added between 1970 and 1980, the 7 metropoli- 
tan areas with the largest volumes of black suburban 
growth during the decade of the seventies all 
experienced low or declining overall rates of growth 
during the same period (see table 3). In sharp 
contrast with the expectations of the sixties, the 
evidence strongly suggests that the prospects for the 
eighties are for the continuing racial and economic 
polarization of metropolitan population. 

The Segregative Effects of Government 

The picture of black suburbanization presented 
above was readily drawn from census data, system- 
atically gathered at regular intervals, standardized in 
format, and conveniently available, enabling direct 
comparisons to be made from time to time and from 
place to place. In sharp contrast the anecdotal nature 
of the following discussion of the segregative effects 
of government actions is an inevitable outcome of 
the multiplicity of data sources involved and the 
variety of data gathering methods employed. 

The descriptions of government actions are de- 
rived from the findings of ad hoc case studies 
conducted by this writer over a period of 17 years in 
about 30 cities. Each of these studies was initiated in 
response to allegations that a government or agency 
of government was guilty of racial discrimination, 
usually against blacks but often against Hispanics 
and sometimes against native Americans, in some 
land-use related activity such as the provision of 
municipal facilities, the location of public housing, 
the administration of public education, the construc- 
tion of highways, urban renewal, the relocation of 
displacees, and the exercise of development controls. 

The studies were often, but not always, carried 
out in support of litigation and were commissioned 
by a number of sponsors, including the NAACP 
Legal Defense Fund, the National Committee 
Against Discrimination in Housing, the Mexican- 
American Legal Defense Fund, the U.S. Commis- 
sion on Civil Rights, the U.S. Department of 
Housing and Urban Development, the New Jersey 
Department of the Public Advocate, and community 

legal services agencies in several cities. These studies 
usually involved the comparison of demographic 
change over time at fine scale levels of detail with 
the findings of historical research in agency docu- 
ments, public records, and newspaper and library 
archives. In addition, numerous interviews were 
conducted, sometimes informally, but often in the 
form of legal depositions. The studies varied in 
depth and duration depending on the complexity of 
the issues and the availability of resources. 

Important relationships between government ac- 
tion and racial segregation were identified, relation- 
ships which fall entirely outside the conventional 
data on income and housing from which inferential 
conclusions are customarily drawn to explain shift- 
ing patterns of residence by race. It was found that 
government actions, sometimes local but often in 
combination with programs of State or Federal 
government, had significant segregative effects on 
the location of predominantly minority residential 
areas and on the directions in which they expand. 
The persistence of the changes brought about 
strongly suggests that the inertia of these actions 
continued to influence racial distribution. 

These actions, singly or in combination, fall into 
three general categories, although overlapping ef- 
fects place some actions in more than one category. 

1. Those which eliminate entire enclaves of 
minority housing. 

2. Those which create barriers to the direction in 
which or extent to which a minority area may 

3. Those which foster the movement of minori- 
ties into minority areas or promote the transition 
of majority areas to minority areas. 

Each case cited is typical rather than unique, and 
is presented to illustrate widespread practices. Ex- 
amples cited are limited to those which have 
segregated effects. Government actions which have 
had other seriously adverse impacts such as the 
disruption of minority social institutions or the 
elimination of minority businesses are not included. 

Elimination of Minority Enclaves 

The term minority enclave is used to describe 
relatively small concentrations of minority housing 
spatially separated from the principal minority hous- 
ing area. Several such enclaves were to be common- 
ly found in the central cities of many metropolitan 
areas as recently as the early sixties and many still 
exist in the outer rings. The elimination of minority 


enclaves has been brought about by several common 
types of government activity ranging from clearance 
and displacement to the bringing to bear of pressures 
resulting in more gradual elimination. One of the 
most important consequences of enclave elimination 
has been the segregative reinforcement of single 
areas of minority concentration. 

While the intention to produce this effect has 
rarely been made a matter of public record, there 
have been exceptions. One notable one was con- 
tained in the Workable Program recertification 
application to HUD by the city of Selma, Alabama, 
in 1968. An element of the application entitled 
"Housing Conditions and Neighborhood Analysis" 
included the following frank disclosure: 

Area No. 1 is a small Negro Area completely surrounded 
by good standard white houses. The area is definitely 
substandard and is exerting a blighting effect on the good 
nearby houses. It is proposed to redevelop the area into 
lots of zoning district R-1 which will largely insure white 
residential reuse. 

In Easton, Pennsylvania, during the mid-sixties 
there were three predominantly black enclaves 
north of the Lehigh River and a somewhat larger 
black community south of the Lehigh River. 
Through the combination of a series of urban 
renewal projects which cleared the three northern 
enclaves and the timely construction of subsidized 
housing in the majority black area south of the river 
(a category 3 action) a more rigid pattern of 
segregation was created. 

Sometimes the principal minority area to which 
displacees are forced to move is in another munici- 
pality. In Hamtramck, Michigan, during the late 
sixties the city carried out several urban renewal 
projects in black enclaves in order to provide land 
for the expansion of adjacent automobile plants. 
Nearly a third of the city's black population was 
displaced and because no relocation housing was 
provided most moved to Detroit. In the northwest- 
ern corner of Hamtramck the route of a highway 
was diverted to isolate a black enclave between the 
highway and an automobile plant rendering the area 
suitable only for the expansion of the automobile 
plant. This is also an example of the barrier effect. 
These activities are illustrated on the maps which 

A common influence on the disappearance of 
minority enclaves has been the closing of the 
minority schools which served them. In Austin, 

Texas, the school board closed black schools in five 
black enclaves in north and west Austin leaving 
black parents with the burden of transporting their 
children to black schools in the principal black area 
in southeast Austin. Within 10 years four of the 
enclaves had disappeared. 

In Mt. Laurel, New Jersey, the homesites in an 
existing black community have been zoned as 
nonconforming, providing the local government 
with a rationale for the refusal of permits for the 
replacement or renovation of the housing. A system- 
atic process of inspections, condemnations, and 
demolitions is slowly but steadily eliminating the 
minority community there. Since no relocation 
housing is available in Mt. Laurel within the means 
of the displacees, they are forced to move to another 
jurisdiction. In Baltimore County, Maryland, some 
black enclaves are zoned for nonresidential uses, 
thus promoting their redevelopment and elimination. 

The Creation of Racial Barriers 

Among public actions whose effect it is to create 
racial barriers, exclusionary zoning has been recog- 
nized for a long time. This practice, which prevents 
the construction of low-cost housing by regulatory 
provisions which establish large lot single-family 
zones, or restrict multifamily housing, or impose 
other cost-inflating requirements on development, 
has frequently been challenged in the courts, and 
was struck down recently in a sweeping decision by 
the New Jersey Supreme Court in what has come to 
be known as the Mt. Laurel II decision. In theory at 
least, the segregative effects of regulatory barriers 
such as exclusionary zoning, unlike those of physical 
barriers, do not persist in their influence after the 
barriers have been removed. To date their removal 
in some places has had little meaningful effect on 
access by low-income minority groups to those 
places because market-based economic barriers still 

Among physical barriers, the limited access high- 
way is by far the dominant form. These roads are 
most often built at grade or on embankments, and 
are provided with only widely spaced opportunities 
to cross from one side to the other. Superimposing 
highway maps on racial distribution can provide 
clear evidence of this barrier effect in many metro- 
politan areas. In El Paso Interstate 10, which runs 
through the city from southeast to northwest, was 
aligned precisely between the Hispanic barrio to the 
south and the Anglo area to the north, restricting the 



Principal Areas From Which Blacl< Households Have Been or Are Being Displaced 

19551 I ^956 


II n H 11 ii-Ji- iMi II II n 1^ 

II lit 957- 


Wayne County, Michigan 

Dorothy-Oliver Area 

A Smith-Clay Urban Renewal Area 

B Chrysler Expressway Right-of-Way 

C Denton-Miller Area 

D Grand Haven-Dyar-Dequindre Area 

^— Census Tract Boundary 

955 Census Tract Number 



Demolished Residential Structures 


These data were compiled from a comparison of aerial photograpfis taken on May 30, 1961 and April 
26, 1970. Each line on the map represents one residential structure which was demolished during this 
time period. Total 560. 


expansion of the Hispanic community and substan- 
tially increasing the cost of implementing a school 
desegregation plan. 

In Nashville, Tennessee, urban renewal land was 
provided to create an extension of the Music City 
area which would serve as both a buffer and a 
barrier between the Vanderbilt University campus 
area to the west and the all-black Edgehill neighbor- 
hood to the east. Another form of physical barrier 
results from the existence in many black residential 
enclaves, particularly in the south, of street systems 
which are discontinuous with streets in adjacent 
white areas. Access to such black enclaves is usually 
via a single street connecting to a major artery or 
nonresidential street. The Catonsville area of Balti- 
more County provided a striking example of this 
condition. There one could look from the black 
neighborhood across a 50 foot wide stretch of trees 
and underbrush to the continuation of the same 
streets in the white neighborhood. 

In suburban areas where there are numerous old 
black enclaves which frequently predate post World 
War II suburbanization, barriers are more often 
regulatory than physical. The most common regula- 
tory barriers around these enclaves are created by 
zoning the surrounding area for nonresidential uses 
or for large lot, low density residential. Several such 
zoning bound communities were found in Baltimore 
County. The existence of these conditions can be 
readily disclosed by the appropriate combination of 
zoning and demographic information. 

Increased Racial Concentration and Racial 

Perhaps the most potent and persistent segrega- 
tive action by government has been the concentra- 
tion of public and other assisted housing in the 
principal minority areas. Relocation assistance to 
displacees from public programs has also been an 
important factor in both the reinforcement of exist- 
ing minority concentrations, and in promoting the 
transition of some neighborhoods from majority to 
minority. The increased ease with which zoning 
changes from low to high density may be obtained 
has been noted as a tacit acknowledgment by local 
government that racial transition is acceptable. 

In Kansas City over 1,400 black households 
displaced by right-of-way acquisition for a contested 
freeway have been relocated into a single highway 
department designated zone along the path of the 
freeway, a process which greatly accelerated the 

transition of that zone from white to black. In 
Nashville the concentration of 3 public housing 
projects and 1 rent subsidy project, totalling nearly 
900 units, in a single urban renewal area greatly 
intensified the levels of both racial and economic 
segregation there. 

Philadelphia and the Whitman Project 

A somewhat more coherent picture of the inter- 
acting effects of segregative government actions is 
provided by reference to the findings from a 
Philadelphia case study conducted in 1975. At issue 
was the withdrawal by the Philadelphia Housing 
Authority of a commitment to build a public housing 
project in the all-white Whitman Park neighborhood 
in southeast Philadelphia on a site it had already 
acquired and cleared. An organization of public 
housing tenants filed suit in Federal court to seek the 
construction of the project claiming the failure to 
build it was racially discriminatory and was part of a 
pattern and practice of racial discrimination by the 
city, its housing authority, and other agencies of 

The study focused mainly on the relationship 
between racial distribution of population and the 
federally sanctioned site selection practices of the 
Philadelphia Housing Authority. A review of agen- 
cy records revealed that for a period of over 25 
years the housing authority had concentrated the 
construction of public housing in majority-black 
areas and had on numerous occasions withdrawn 
proposals to build projects in white areas when 
those proposals aroused neighborhood opposition. 
The locations of public housing projects in relation 
to black housing concentrations are shown at 10- 
year intervals on the accompanying series of maps. 
In addition, the city council had restricted the area 
within which the housing authority could acquire 
over 6,600 single-family units under the Used House 
Program to existing black-majority areas. The effect 
of these practices was to reinforce segregation by 
limiting all low-income blacks in need of and eligible 
for public housing to opportunities within the ghetto 
area only. 

Opposition to the construction of the housing 
project was led by a vociferous white neighborhood 
organization which loudly, and sometimes violently, 
asserted its right to defend and preserve the "charac- 
ter of the neighborhood." The housing site had been 
cleared 15 years earlier in 1959 and 1960. Early 
construction of the project had been delayed, not by 


Whitman Park Urban Renewal Area 1950 

Housing site boundary 
Renewal area boundary 
• One black occ. d.u. 


Whitman Park Urban Renewal Area 1960 

Housing site boundary 
Renewal area boundary 
One black occ. d.u. 


Whitman Park Urban Renewal Area 1970 

Housing site boundary 
■ Renewal area boundary 
• One black occ. d.u. 


opposition to public housing per se, but by disagree- 
ment over the number of units to be built and the 
housing authority's proposal to build a tower build- 
ing in the predominantly row-house neighborhood. 
This controversy had taken nearly 10 years to 
resolve and had resulted in an agreement to build 
townhouses. Contracts had been let and construc- 
tion had just begun when the racial opposition issue 
emerged fueled by the campaign rhetoric of mayoral 
condidate, Frank Rizzo. So violent were the protests 
that the contracts were cancelled, the contractor 
was compensated, and the proposal was withdrawn. 

An examination of census data and agency records 
revealed that 60 black families had lived in the six- 
block area which formed the housing site, and they 
comprised 42 percent of the families who were 
displaced by its acquisition and clearance. In addi- 
tion, the census block statistics showed that prior to 
clearance of the site there were 15 black-occupied 
housing units in the blocks adjacent to the site, and 
that after clearance this number increased to 30. 
These changes are shown on the maps which follow. 

An examination of Redevelopment Authority 
records disclosed that the larger area enclosed by 
the heavy line on the accompanying maps was 
designated in 1962 as the Whitman Park Urban 
Renewal Area, a "Spot Clearance and Rehabilitation 
Project." In the years between 1962 and 1970 just 
over 100 of the several thousand houses in the 
Whitman Urban Renewal Area were demolished 
including, coincidentally, every black-occupied 
house east of 4th Street. 

These facts, among many others, were presented 
at the trial held in late 1975 which resulted in an 
order that the contested housing be built. The city 
appealed, and in 1977 the Third Circuit Court of 
Appeals affirmed the district court order to build 
and the U.S. Supreme Court declined to review. 

After several more years of delay the project was at 
last built and was finally occupied in 1983. While 
compelling the construction of this housing is a 
significant legal and symbolic achievement, its im- 
pact in reversing the effects of years of cumulative 
segregative actions by government agencies in Phil- 
adelphia is negligible. 

The examples of segregative actions cited above, 
while illustrative only, have their counterparts in 
every metropolitan area. Except for Philadelphia, no 
specific relationship can, or should, be inferred 
between these examples and the seven SMSAs 
described earlier. Nevertheless, familiarity with 
most of these SMSAs suggests several possible 
relationships which at least warrant further investi- 
gation. These include: 

1. Displacement and relocation from urban re- 
newal in southwest Washington and the continu- 
ing expansion of black population to the northeast. 

2. Location of public housing by the Chicago 
Housing Authority and the location of black 
concentration in Chicago. 

3. Responses by St. Louis County to requests for 
apartment zoning and the spillover of black areas 
across the western and northern city limits. 

4. Displacement and relocation from the Centu- 
ry Freeway and the spread of black concentrated 
areas into Compton and beyond. 

No court is likely to order relief from the 
widespread cumulative effects of segregative actions 
by agencies of government, but an understanding 
and recognition by those who make policy of the 
role played by government in creating this segregat- 
ed society must provide an improved basis for the 
formulation of rational and equitable responses 
which promote integregation as affirmatively as past 
practices have promoted segregation. 


Map 1 

Percentage of Dwelling Units Used for Colored Housing 

.01% - 2.50% 

2.51% - 5.00% 

5.01%- 10.00% 

10.01%- 30.00% 

5WZa 30.01% - 50.00% 

50.01% - 75.00% 

75.01% - 100.00% 

City of Philadelphia Census-Tracts 
Philadelphia Surveys 1934 


MAP 2 

Percentage of Units with Race Other Than White 

City of Philadelphia Census-Tracts 
Real Property Survey 1939 

1 1 







- 4% 


5% - 



10% - 



30% - 



50% - 



452-986 0-84-4 

MAP 4 

Negro Population 1940 

• Public Housing Projects 

Each Dot Represents 100 Persons 

Philadelphia Census Tracts 
Philadelphia City Planning Commission 


MAP 5 

Nonwhite Population 1950 


/ 7^. 

/. .' 7^. 

/ >^>C\< '^-^• M- T>. A --^z ./"'\./^ 

/>^^<^7^^mx\-^' /> 

a:^ p 

,i...|ls -^ 1 ..... X\ // 


_ V— 1 

• Public Housing Projects 

Each Dot Represents 
Approximately 100 Persons 

Philadelphia Census Tracts 
Philadelphia City Planning Commission 


MAP 6 

Distribution of Non-White Population 1960 

• Public Housing Projects 

Each Dot Represents 
Approximately 100 Persons 


Philadelphia Census Tracts 

Philadelphia City Planning Commission 


MAP 7 

Distribution of Non-White Population 1970 

• Public Housing Projects 
Each Dot represents 
Approximately 100 Persons 


Philadelphia Census Tracts 

Philadelphia City Planning Commission 


MAP 8 

Housing Units In Philadelphia Housing Authority Scattered-Site and Leasing 


As of December 31, 1969 

o Scattered-Site Public 
Housing Units Completed 

D Leased Public Housing Units 

Symbol = 10 Units 


Planning Analysis Sections 

Philadelphia City Planning Commission 


Percent Black, 1980 

Less Than 5.0 

5.0 - 24.9 
25.0 - 49.9 
50.0 - 74.9 
75.0 or More 


An examination of Redevelopment Authority 
records disclosed that the larger area enclosed by 
the heavy line on the accompanying maps was 
designated in 1962 as the Whitman Park Urban 
Renewal Area, a "Spot Clearance and Rehabilitation 
Project." In the years between 1962 and 1970 just 
over 100 of the several thousand houses in the 
Whitman Urban Renewal Area were demolished 
including, coincidentally, every black-occupied 
house east of 4th Street. 

These facts, among many others, were presented 
at the trial held in late 1975 which resulted in an 
order that the contested housing be built. The city 
appealed, and in 1977 the Third Circuit Court of 
Appeals affirmed the district court order to build 
and the U.S. Supreme Court declined to review. 
After several more years of delay the project was at 
last built and was finally occupied in 1983. While 
compelling the construction of this housing is a 
significant legal and symbolic achievement, its im- 
pact in reversing the effects of years of cumulative 
segregative actions by government agencies in Phil- 
adelphia is negligible. 

The examples of segregative actions cited above, 
while illustrative only, have their counterparts in 
every metropolitan area. Except for Philadelphia, no 
specific relationship can, or should, be inferred 

between these examples and the seven SMSAs 
described earlier. Nevertheless, familiarity with 
most of these SMSAs suggests several possible 
relationships which at least warrant further investi- 
gation. These include: 

1. Displacement and relocation from urban re- 
newal in southwest Washington and the continu- 
ing expansion of black population to the northeast. 

2. Location of public housing by the Chicago 
Housing Authority and the location of black 
concentration in Chicago. 

3. Responses by St. Louis County to requests for 
apartment zoning and the spillover of black areas 
across the western and northern city limits. 

4. Displacement and relocation from the Centu- 
ry Freeway and the spread of black concentrated 
areas into Compton and beyond. 

No court is likely to order relief from the 
widespread cumulative effects of segregative actions 
by agencies of government, but an understanding 
and recognition by those who make policy of the 
role played by government in creating this segregat- 
ed society must provide an improved basis for the 
formulation of rational and equitable responses 
which promote integregation as affirmatively as past 
practices have promoted segregation. 



Thomas Clark, Blacks in Suburbs, New Brunswick, New Jersey, Rutgers 

University Center for Urban Policy Research, 1979. 
Phoebe H. Cottingham, "Black Income and Metropolitan Residential 

Dispersion," Urban Affairs Quarterly, March 1975. 
Reynolds Farley, "The Changing Distribution of Negroes With Metropolitan 

Areas: The Emergence of Black Suburbs," American Journal of Sociology, 

January 1970. 
Eunice and George Grier, Black Suburbanization at the Mid-1970s, 

Washington, D.C., The Washington Center for Metropolitan Studies, 1978. 
Robert W. Lake, The New Suburbanites, Race and Housing in the Suburbs, 

New Brunswick, New Jersey, Rutgers Center for Urban Policy Research, 

Yale Rabin, "Riverside Drive Urban Renewal Project, Easton, Pennsylvania," 

Preliminary Evaluation of Proposals, Report to the NAACP Legal Defense 

Fund, October 1967. 
Yale Rabin, "The Effects of Development Control on Housing Opportunities 

for Black Households in Baltimore County, Maryland": Report to the U.S. 

Commission on Civil Rights, August 1970. 
Yale Rabin, "A Plan to Increase the Supply of Housing Available to 

Displaced Low and Moderate Income Black Households in Hamtramck, 

Michigan," Report to the U.S. District Court for the Eastern District of 

Michigan, October 1972. 
Yale Rabin, "Highways as a Barrier to Equal Access," The Annals of the 

American Academy of PoHtical and Social Science, vol. 407, May 1973. 
Yale Rabin, "Housing Segregation in Philadelphia and the Whitman Park 

Public Housing Project: The Role of City and Federal Actions and 

Policies," Report to Community Legal Services of Philadelphia, December 

Yale Rabin, "Discrimination in the Public Use, Control, and Development of 

Land in Selma, Alabama": Report to the NAACP Legal Defense Fund, 

March 1970. 
Harold M. Rose, Black Suburbanization, Access to Improved Quality of Life or 

Maintenance of the Status Quo?, Cambridge, Mass., Ballinger Co., 1976. 


The Effects of the Recession and Housing 
Supply on Fair Housing Goals, Public and 

The Effects of the Recession and Housing Supply on 
Fair Housing 

Henry Schechter* 


It is a pleasure to participate in the Commission on 
Civil Rights Housing Consultation to discuss the 
views of the AFL-CIO on trends in housing and the 
economy as they relate to fair housing. 

While the focus of the discussion is on fair 
housing, that subject cannot be divorced from the 
adequacy of the housing supply. Limited available 
evidence suggests that tight housing market supply 
conditions also encourage an increased frequency of 
racial discrimination. Also, importantly, if decent 
housing is not vacant and available in local markets 
at prices and rents that families of limited income 
can afford, then, for them, the right to buy or rent 
without discrimination becomes a cruel hoax. Fair 
housing cannot be achieved in a practical sense until 
such time as decent housing for all at affordable 
rents and prices is available. In that light, the 
financial and economic aspects of housing, as well as 
the amplitude and condition of the housing stock 
will be examined. 

The physical condition of housing and its afforda- 
bility for low-income and minority households will 

be discussed in terms of changes over the decade of 
the 1970s. The present and projected effects of the 
economic recessionary conditions since the begin- 
ning of the Reagan administration are examined, and 
the proposal for housing vouchers as an alternative 
to assisted housing production programs will be 
evaluated. Finally, recommendations will be made 
for improving both the availability and the accessi- 
bility of housing for lower income, minority, and 
other special groups. 

Housing in the 1970s 

The physical condition of housing improved in 
the period of the 1970s for all households — both 
minority and nonminority. The President's Housing 
Commission report in 1982 pointed to the long-term 
improvement in housing, citing a trend back to the 
end of World War II. Overcrowding, the incidence 
of inadequate plumbing, and dilapidation have, in 
general, declined, according to the Commission 
report, (Advance Edition, pp. 7-9.) and as docu- 
mented in published surveys of the Bureau of the 

* Prepared with the collaboration of Frank Parente, Housing 
Specialist, Department of Economic Research, AFL-CIO. 


Census and the Department of Housing and Urban 

The number of physically inadequate and over- 
crowded housing units declined in the period from 
1970 to 1980, both for minorities and for nonminori- 
ties. At the same time, in 1980, as was true in 1970, 
minorities have worse and more crowded housing 
than Americans as a whole. 

Between 1970 and 1980, according to the HUD 
and Census Annual Housing Survey, the proportion 
of owner-occupied units lacking some or all plumb- 
ing declined from 4.2 percent to 1.5 percent for the 
entire population. For renter-occupied units, there 
was a drop from 7.8 to 3.6 percent. 

For minorities, there has been a drop also, but to 
ratios that were still far more unsatisfactory than for 
the overall population. For example, black renter- 
occupied units lacking plumbing declined from 17.6 
percent in 1970 to 7.1 percent in 1980, a level that is 
still double the rate for all renters. 

While the presence of full plumbing facilities is a 
necessity in any house, it can no longer be consid- 
ered as the criterion of housing adequacy in the 
1980s. For one thing, even if the plumbing facilities 
are there, do they work? And a similar question 
might be raised about kitchen facilities and heating 
and electrical systems. Also, is the roof leakproof; 
are there holes in walls, etc.? Based on a reasonable 
consideration of 15 housing condition items, the 
President's Housing Commission classified the con- 
dition of housing occupied by different population 
groups and published the results in its report in 1982. 
The incidence of inadequate housing for certain 
groupings were as follows: 

Owners 4.2 percent 

Renters 13.3 percent 

Very low income renters 18.8 percent 

Black households 19. 1 percent 

Hispanic households 12.3 percent 

Female-headed households 10. 1 percent 

Of course, there is great overlap among some of 
these groups. The very low-income renters category 
no doubt includes many of the black and Hispanic 
households. And both of the latter groups as well as 
the very low-income renters grouping includes 
many female-headed households. 

Another criterion of housing adequacy — from an 
occupancy viewpoint — is the degree of overcrowd- 
ing. A unit is generally considered overcrowded if it 
has more than one person per room. The overall rate 
of crowding declined from 6.4 to 3.1 percent for 

owners and from 10.2 to 6.2 percent for renters. 
Between 1970 and 1980 Spanish origin renters 
reduced their incidence of crowding from 28 per- 
cent in 1970 to 22 percent in 1980. Black renters 
progressed from 22 percent in crowded units in 1970 
to 10 percent in 1980 — still well above the national 

An overriding influence affecting the adequacy of 
the housing supply as the 1970s progressed was the 
huge population wave known as the post- World 
War II baby boom. It was during the seventies that 
this huge cohort of young people began to establish 
their own households, either as single persons who 
had left their parents' house, or as young married — 
or unmarried — couples. 

Despite some high housing production years, 
including a few record years of subsidized housing 
production — under the 10- year housing goal pro- 
gram enacted toward the end of the Johnson 
administration, housing prices and rents kept moving 
up. This was due in part to the domestic population 
pressures, as well as to the impact of the multiple oil 
price increases, worldwide food shortages, and 
rising prices, which created general inflationary 

As result, more of available income was being 
paid for housing in 1980 than in 1970. The median 
gross rent for the overall populace, for example, rose 
from 20 percent of income to 27 percent in 1980. 
Half of all renters paid more than a quarter of 
income in 1980, compared with 36 percent of the 
renters in 1970. This trend, of course, held for 
minorities who have consistently had a greater 
incidence of higher rent-to-income ratios. More than 
53 percent of blacks and Spanish origin households 
in 1980 paid more than one-fourth of income for 
rent, up from 43 percent for blacks and 40 percent 
for Spanish origin renters in 1970. 

The seeming paradox of improved housing condi- 
tions and rising rent-to-income ratios probably is 
explained, in part, by the 1970s activity of the 
Federal Government in expanding the low-income 
housing supply by new construction under assisted 
housing programs as well as by substantial subsi- 
dized middle-income residential financing in the 

While the physical quality of housing improved 
for minorities during the previous decade, in the 
eighties, the ability to pay for adequate housing has 
eroded. The incidence of poverty has increased, and 
families' income in constant dollars has declined 



Median Family Income 

All families 
Black families 
Spanish origin 
Female householders 
65 years and older 

1982 Income 

1 1 ,484 

1982 Income 

as percent of 




since 1980 under the economic conditions of the 
Reagan administration. 

The number of Americans below the poverty line 
increased from 25 million in 1970 to 29 million in 
1980, and to 34 million in 1982. The proportion 
living in poverty rose from 13 percent to 15 percent 
of the population in the 1980-1982 period. 

The national median family income in constant 
dollars rose from $24,500 in 1970 to a high of about 
$26,000 in 1978 and 1979. In 1980 it declined to 
$24,600, and between 1980 and 1982 it decHned by 
over $1,000 to $23,433, due to the recession and 
record levels of joblessness. 

The incomes of minority families were below the 
overall level of $24,300. Median constant dollar 
black family income of $13,398 in 1982, for example, 
represents only 57.2 percent of the median of all 
families. See table 1 for incomes of other groups. 

The Role of Assisted Housing 

During the 1970s, government assistance pro- 
grams made a big contribution to improving the 
housing situation of lower income people and 
minorities. This can be seen in the assisted housing 
production figures for the 1970s. 

In the decade of the 1970s, the number of 
occupied housing units increased by about 16.6 
million units to over 80 million units in 1980. Most of 
the net additions were made through the private 
housing production system. In addition, in the 10- 
year period 1970 to 1979, the Federal Government 
provided aid for 2.8 million new and rehabilitated 
units for lower income families by way of major 
government programs. These units, which averaged 
280,000 yearly and accounted for about 1 in 6 of the 
net increase in occupied housing units over the 
decade, largely would not have been built otherwise 
because the private housing market does not provide 
adequate production for lower income people. Espe- 
cially important to the lower income housing pro- 
duction were new and rehabilitated units provided 
by the low-rent public housing program (375,000 
units), section 8 rental assistance (445,000 units), 
section 236 rental (450,000 units). Agriculture De- 
partment Farmers Home Administration assisted 
single-family homes (733,000 units), and HUD sec- 
tion 235 single-family program (413,000 units). 
These programs accounted for the majority of the 
overall assisted production which helped improve 
the quality of housing for lower income and minori- 


ty families in the 1970s. The minority tenure in 
subsidized housing shows that such housing has been 
of crucial importance to these groups. 

Nationally, in 1977, almost half the tenancy in 
low-rent public housing was made up of blacks, 
according to records of the Department of Housing 
and Urban Development. In 19 States, however, 
blacks accounted for over half the tenants in public 
housing. Although American Indians occupy only 
1.5 percent of all public housing in the Nation, 
public housing is more important in a number of 
States, such as Arizona, Montana, New Mexico, and 
South Dakota, where Indians constitute from one- 
third to one-half the public housing tenancy. Simi- 
larly, in Arizona, California, Colorado, New Mexi- 
co, Puerto Rico, and Texas, "Spanish American" 
residents occupy at least one-fourth of low-rent 
public housing, although nationally this minority 
group accounted for only 12 percent of all public 
housing tenants. Oriental and other minorities occu- 
py over 90 percent of public housing in Hawaii and 
Guam, although less than 1 percent nationally. 

Female-headed households, who represent almost 
one-half of all persons in poverty, are heavily 
dependent on subsidized housing. In 1979 female- 
headed families accounted for 70 percent of all 
families reexamined for continuing public housing 
eligibility and 66 percent of all families reexamined 
for continuing public housing eligibility and 66 
percent of families moving into public housing. In 
1978 almost half of all public housing units were 
occupied by the elderly. Obviously, curtailments of 
activity under programs in which minorities partici- 
pate in large numbers can particularly hurt these 

The Present Situation in the Economy 
and Housing 

The economic recessionary period beginning In 
1980 has made conditions worse. Recent data also 
suggest that the economic recovery is losing steam. 
In July manufacturers' durable goods orders, hous- 
ing sales, and new unit starts all declined. In August 
the (civilian) unemployment rate remained at 9.5 
percent. Measured from July 1981, the official 
beginning of the last recession, to August 1983, the 
effects of the economic decline on the entire popula- 
tion and on minorities can be seen in official 
unemployment figures published by the Labor De- 

The August 1983 national unemployment rate of 
9.5 percent represents 10.7 million unemployed 
persons. This was 2.8 million or 2.3 percentage 
points more than in July 1981. The black unemploy- 
ment rate, for example, rose from 14.9 percent to 
20.0 percent over the 2-year period, with 2.3 million 
blacks unemployed. The table also shows that in 
August 1983 there were about 800,000 jobless 
Hispanics and over 650,000 jobless women who 
maintain families. In both August 1983 and July 1981 
the unemployment rates for minorities were worse 
than for the overall populace. (See table 2.) 

Poverty has increased due to the recession, partic- 
ularly for minorities who were worse off to begin 
with — and are still in a recession despite some 
economic improvement — including blacks, Spanish 
origin people, female-headed households. Median 
income as a percent of all family median income is 
still less for minorities than for the overall popula- 
tion. It should be no surprise that the recession has 
brought about record home mortgage default and 
foreclosure rates and has resulted in numerous 
evictions from owner-occupied and rental units in 
areas worst hit by the recession and in cities across 
the country. 

Housing production, which helped minorities to 
share in the overall level of improvement in housing 
quality in the 1970s, has lagged in large part due to 
high interest rate policies of the government, an anti- 
inflationary tool which repeatedly adds to higher 
long-run costs rates and brings about prolonged high 

Overall housing production, measured by housing 
starts, sank to just over 1 million units per year in 
both 1981 and 1982, down from the level of 2 million 
starts in 1978. Housing starts, although improved in 
1983, will amount to only about 1.6 million units for 
the year. Subsidized housing, which has been partic- 
ularly important for minorities because of their 
lower income, has been cut by the Reagan adminis- 
tration budgets. 

For example, since fiscal year 1980, the annual 
number of new and substantially rehabilitated units 
for which funds were reserved under the section 8 
rental and low-rent public housing programs has 
declined as follows: FY 1980 (actual)— 129,490; FY 
1981 (actual)— 110,500; FY 1982 (actual)— 39,100; 



Number of Unemployed Persons and Unemployment Rates, Seasonally Adjusted, 
1881-1983, in thousands 










Hispanic origin 



Women who maintain families 



uly 1981 

August 1983 



















1 1 .2% 

1 1 .6% 

Source: U.S., Department of Labor. 

FT 1983 (estimated)— 16,600; and FY 1984 (estimat- 
ed)— 21,500.' 

About 330,000 new and rehabilitated standard units 
will be lost to the lower income housing supply for 
the 4 years 1981-1984 under these programs because 
of the Reagan administration budget cuts. Instead, 
there is proposed an increased reliance on existing 
housing and conversions of existing subsidized units 
to other programs, reflecting the budget priorities of 
the administration. 

Another way of looking at the reduction in 
assisted housing effort is to note the number of net 
additional units per year under the same programs — 
regardless of whether the units are new, rehabilitat- 
ed, existing, or converted. By this measure, the 
number of added units is as follows: 1980 (actual) — 
105,892; 1981 (actual)— 189,159; 1982 (actual)— 
69,326; 1983 (estimated)— 98,146; 1984 (estimated)— 

Thus, about 267,000 fewer additional units over the 
years 1981-1984 will be made available for lower 
income households under these programs than 

■ Low Income Housing Information Service, from HUD Budget 

would have been added if the 1980 level had 

The faltering rate of production of nonsubsidized 
and subsidized housing in the early 1980s will make 
conditions worse for minorities as time goes on. As 
housing production falls, further improvements in 
the quality of the housing stock through infusions of 
new construction fail to materialize. The average 
age of housing increases, and the existing stock must 
accommodate a burgeoning populace. Despite the 
hope that over time there could be an increased 
reliance on the existing housing stock as a source of 
additional units by way of conversions or through 
other means, without new construction, the housing 
stock deteriorates. 

According to the 1980 Census Components of 
Inventory Change study, (HC 80-51-2, June 1983) 
despite net additions from conversions (e.g., 2 out of 
1) in excess of mergers (e.g., 1 out of 2), over the 
period 1973-1980, there was a new loss of about 
150,000 units each year from the housing supply, 
apart from the production of newly constructed 

' Low Income Housing Information Service, from HUD Budget 


homes and apartments. Thus, the first 150,000 units 
of new housing production each year goes to make 
up for units lost from the supply over the year in 
order to keep the overall number of housing units 
the same as before. 

The effect of reduced housing production during 
the first 3 years of the eighties will be a slowdown in 
the housing quality improvements which have been 
experienced in the past, unless steps are taken to 
compensate for lost production. In addition, other 
effects will include tighter market conditions, de- 
creased vacancies, and higher housing prices and 

Housing vacancy rates in the first quarter of 1983 
at 5.7 percent for rentals and 1.4 percent for 
homeownership units are on the low side in histori- 
cal perspective. Price rises due to recent underpro- 
duction may already be visible in recent median new 
home price rises from $70,900 in July of 1982 to 
$75,000 a year later. Likewise, over the year ending 
in July 1983 the Consumer Price Index for residen- 
tial rents rose at more than twice the rate of the 
overall price index. 

Racial discrimination and condominium conver- 
sions will serve to exacerbate the problems faced by 
minorities, in many cases confining them to the 
dwindling available housing stock in segregated 

Existing Housing and Housing Vouchers 

Housing vouchers have been put forward as an 
alternative to the production oriented assisted hous- 
ing programs which have operated in the past. 
Housing vouchers are an unsatisfactory approach, 
however, because vacancies are low in many places 
and vouchers creating additional demand will result 
in inflation in rents. Also, vouchers will not neces- 
sarily augment the supply of quality housing 
through fix-ups as has been claimed. Finally minori- 
ties would not necessarily have more choice in 
housing with vouchers, as has been argued by 

Lower income families — both minority and non- 
minority — would not necessarily find places to live 
via vouchers in areas with low vacancies. The result 
would be an increased demand for housing without a 
commensurate increase in supply, thus causing infla- 
tionary runups in rents. 

Vancancies vary from place to place. They may 
not exist in sufficient volume to permit housing 
choice to be exercised outside of segregated specific 
market or submarket areas, or for special types of 
shelter such as apartments for large families, or for 
specially adapted housing for the handicapped or the 
frail elderly. Vacant units may not be physically 
adequate. They may be available but rundown. 

To illustrate, in the first quarter of 1983 the 
national rental vacancy rate was 5.7 percent. Select- 
ed other rental vacancy rates suggest that a lower 
income family armed with a housing voucher would 
have no trouble finding shelter if seeking a rundown 
apartment, one with high rent, or a unit 40 to 50 
years old. However, there would be less in the way 
of choice if the family sought an adequate apartment 
in a central city, lived in the Northeast, or needed a 
large apartment. The vacancy rates were as follows: 
units lacking plumbing — 12.5 percent; in central city 
with all plumbing — 5.2 percent; $400 or more 
monthly rent — 6.9 percent; 6 or more rooms — 3.6 
percent; structure built 1939 or earlier — 6.0 percent; 
and in the Northeast — 4.2 percent.^ 

The 1980 census showed a national rental vacancy 
rate of 7.1 percent. The rate prevailing in many 
States and counties, however, was lower. For 
example, according to the census, the statewide 
rental vacancy rate in California was only 5.1 
percent. However, in 6 of the 10 largest California 
counties, those with more than 250,000 housing 
units, the rental vacancy rate was even below the 
statewide rate. In populous Los Angeles County, 
where almost one-third of the housing units in the 
State are located, the rental vacancy rate was only 
3.9 percent (1980 Census of Housing. Supplementary 
Report. HC 80-51-1). 

At the same time, there is a crushing need for 
additional low-income rental housing. This was 
documented in a survey of waiting lists of 25 local 
housing authorities around the country made by the 
Council of Large Public Housing Authorities in 
1982. It was found that the 25 housing authorities 
which, in total, had 359,075 housing units, had 
waiting lists which totalled 221,837. This total 
would have been larger if some of the authorities 
had not closed their lists to additional family 
applicants because they considered it the perpetra- 
tion of a hoax to accept an application from families 
who would not be able to obtain a unit for years. 

' U.S., Department of Commerce, Housing Vacancies, First 
Quarter, 1983, H. 111-83-01. 



Distribution of Enrolled HUD Experimental Housing Allowance Program Participants 

Percent of Enrollees 
Dwelling Status Brown County St. Joseph County 

Pre-enrollment dwelling certified: 

without repair 

after repair 
Moved before certification 
No dwelling ever certified: 

enrollment terminated 

still enrolled 








Source: Fourth Annual Report of the Housing Assistance Supply Experiment sponsored by the U.S., Department of Housing and 
Urban Development, Office of Policy Development and Research, October 1976-September 1977 (R-2302-HUD, May 1978), The 
Rand Corporation, table 4.7, p. 65. 

While many authorities reported that elderly house- 
holds might obtain a unit in from 1 to 6 or 12 
months, for nonelderly families the outlook general- 
ly was for a wait of at least 1 year, more often 3 
years, and sometimes as long as 10 years. 

In view of these conditions, it is not surprising that 
36 percent of New York City families given section 
8 certificates — a form of vouchers — were unable to 
use them because they could not find decent units in 
existing private structures, according to a 1982 study 
by the Pratt Institute's Center for Community and 
Environmental Development.* Minorities and fami- 
lies with children were least able to use their 

Perhaps the most significant aspect of the HUD 
Experimental Housing Allowance Program (EHAP) 
Supply Experiments of the 1970s, which are cited as 
the experimental justification for a housing voucher 
program, was that the great majority of the housing 
allowance recipients never moved. The fourth annu- 
al report on the two supply experiments showed the 
percentage distribution of enrolled program partici- 

* Results of study conducted by Frank De Giovanni and Mary 
Brooks (Impact of a Housing Voucher Program on New York 
City's Population), cited by Chester Hartman, "Housing Allow- 

pants after the second year of program participation 
at each experimental program site with respect to 
pre-enrollment occupancy or nonoccupancy of a 
dwelling that had been certified as meeting stan- 
dards (see table 3). The sites were Brown County, 
Wisconsin City, with Green Bay as a central city, 
and St. Joseph County, Indiana, with South Bend as 
a central city. The data also show the percentage 
that moved in order to qualify for a housing 

Thus 76 percent of enrollees in Brown County and 
70 percent in St. Joseph County had remained in 
their pre-enrollment dwelling. In fact, excluding 
those who had terminated their enrollment before 
obtaining a certified dwelling and those that were 
not yet in a certified dwelling, about 90 percent of 
the program participants receiving an allowance 
remained in the dwelling they had been living in 
before they received a housing allowance. Thus, it 
would be wrong to conclude from these experiments 
that a housing voucher program would lead to a 
great deal of mobility among lower income program 

ances, A Bad Idea Whose Time Has Come." Working Papers, 
November-December 1982, p. 57. 



Percentage Distribution of Items Repaired 

Item Repaired Owners 

Handrail or steps 24% 
Window, door, or partition 24% 
Paint 21% 
Plumbing 12% 
All other 19% 

Brown County 



Percent of All Repairs 

St. Joseph County 
Owners Renters 



Source: Experimental Housing Allowance Program: Conclusions; the 1980 Report, U.S., Department of Housing and Urban 
Development, Office of Policy Development and Research, Division of Housing Assistance Research, February 1980 (HUD- 
PDR-640), table V-4, p. 52. 

participations and that this would lead to increased 
housing choice for minorities. 

There is a claim that despite the lack of moves by 
experimental housing allowance recipients, housing 
was upgraded by repairs that were made to recipi- 
ents' dwellings. The nature of these repairs can best 
be evaluated from the percentage distributions of 
repairs by type of repair and by costs. The percent- 
age distributions for items repaired are in table 4. 

Thus at both sites the three most frequent types of 
repairs were generally of a routine, minor nature. 
This also is borne out by the distribution of dwell- 
ings evaluated by cash expenses for initial repairs 
(see table 5). 

Thus, about 65 to 70 percent of all the dwelling units 
occupied by allowance recipients either required no 
expense for repairs or repairs cost $20 or less. Less 
than 10 percent required repairs of over $100. 

What Should Be Done 

There is considerable evidence that racial discrim- 
ination exists and is a deterrent to minorities securing 
adequate housing. A HUD study, summarized in 
The President's National Urban Policy Report for 
1980, measured the degree to which blacks and 

whites seeking to rent or to buy homes encounter 
discriminatory barriers. The study, which monitored 
the experience of paired black and white prospective 
renters and buyers in 40 metropolitan areas, found 
that 27 percent of rental agents and 15 percent of 
sales agents engaged in some form of discriminatory 
practice. Since many people looking for housing 
visit more than one sales or rental agent, the level of 
discrimination experienced by households is even 
higher. For example, 72 percent of black households 
visiting four rental agents could expect to encounter 
discrimination, while 48 percent of black households 
visiting four sales agents could expect some type of 
discrimination. A similar HUD study reported that 
Mexican American households also experience dis- 
crimination when they look for housing: light- 
skinned Mexican Americans in Dallas met discrimi- 
nation about as frequently as blacks, and dark- 
skinned Mexican Americans encountered discrimi- 
nation even more frequently. 

The number of fair housing complaints to HUD 
and to other fair housing agencies for recent years is 
as follows: FY 1979—2,800; FY 1980—3,100; FY 


452-986 0-84 


Distribution of Dwellings by Cash Expenses for Repairs 

Percentage Distribution 

of Dwellings Evaluated 

Cash Expenses Brown County St. Joseph County 

$ per Dwelling Unit Owners Renters Owners Renters 

No repairs reported 3.3% 3.8% 4.8% 6.5% 

Repairs at no expense 17.3% 22.7% 22.8% 24.3% 
Repaired by expense annount 

$ 1-20 52.7% 48.2% 41.9% 40.1% 

$21-40 9.0% 10.4% 12.4% 12.7% 

$41-70 6.6% 5.4% 6.8% 7.9% 

$71-100 3.0% 2.8% 3.2% 3.5% 

over $100 8.1% 6.7% 8.1% 5.0% 

Source: Experimental Housing Allowance Program; Conclusions; the 1980 Report, U.S., Department of Housing and Urban 
Development, Office of Policy Development and Research, Division of Housing Assistance Research, February 1980 (HUD- 
PDR-640), table V-5, p. 53. 

1981—4,200; FY 1982—5,100; and FY 1983 (6 
months)— 2,100.^ 

In view of the persistence of discrimination and 
the lack of equal access to housing, strong measures 
should be taken to make the promise of equality in 
past legislation a reality. 

Under the current fair housing law, HUD has a 
procedure that enables a victim of housing discrimi- 
nation to report a violation. But the Department can 
do little to stop that violation. No official has 
authority to issue "cease and desist" orders to those 
found guilty of discriminating. HUD can only 
investigate and try to bring the two parties together 
to conciliate their differences. But without any 
power to back up its conciliation efforts, HUD has 
been unable to get landlords and sellers of housing to 
take the process seriously. 

The proposed Fair Housing Amendments Act of 
1983, S. 1220 and H.R. 3482 would amend the 1968 
law to put teeth into the enforcement process. A key 
change provides for hearings of individual housing 
discrimination complaints by administrative law 

judges who would make findings of fact and issue 
final orders. 

Either party could appeal the proposed final order 
of an administrative law judge to a three-member 
Fair Housing Review Commission and/or to the 
Federal court of appeals. A full court review of the 
case, to determine if there is sufficient evidence in 
the record to justify the decision, would be avail- 

Civil penalties up to $10,000 could be imposed by 
the administrative law judge. The judge could issue 
a cease and desist order, violations of which are 
punishable by fines of up to $1,000 per day. 

Beyond this, a number of actions are needed to 
assure the availability of reasonably priced and 
physically adequate shelter, including the mainte- 
nance of a growing economy with full employment 
and monetary policies which keep interest rates at 
affordable levels. More specifically, unless sufficient 
housing is produced to increase the stock to meet all 
needs within a reasonable time period, fair housing 
remains an ideal rather than a reality for many who 
are the intended beneficiaries. 

The President's National Urban Policy Report, 1980, p. 10. 


It can be estimated that there is an annual need for 
roughly 2 million new housing units to be construct- 
ed in the remaining years of the 1980s in order to 
keep housing conditions nationally from worsening. 
This estimate of need is based on a conservative 
estimate of the annual number of new households for 
the 1980s based on census projections of 1.6 million, 
an estimate for units lost to demolitions and disasters 
of 260,000 units, an allowance of 140,000 units for 
required added vacancies. To this must be added 
some portion, perhaps one-sixth or 300,000, of the 
roughly 1.5 million housing production shortfall 
attributable to recessionary conditions in the period 
1980-1984. And from the 2.3 million total an 
estimated 300,000 mobile home units to be produced 
annually is deducted. 

Included in the housing production total cited 
above, there should be a number of government 
assisted housing units each year, equal to at least 10 
percent of the total, or 200,000. 

The Federal Government, both traditionally and 
at the present time, has an important role in helping 
to supply lower income people with adequate 
housing. This includes lower income people with 
special housing needs such as the elderly, handi- 
capped, large families, and families headed by 
women. It also includes taking steps to produce 
shelter for those lower income citizens, including 
minorities, who will not have access to housing 
because of discrimination or because the regular 
housing market fails to produce adequate new 
housing for low-income occupants. We need the 
housing production programs slated for extinction 
by the Reagan administration. Reliance on the 
private market alone or depending on a housing 
voucher-type of housing assistance is not sufficient 
and will result in the housing situation of minorities 
and lower income people becoming worse instead of 


Housing Vouchers: Its Effects on the Supply and 
Distribution of Housing 

John Palffy* 


Federal housing assistance grew out of the coinci- 
dent severe shortages of housing and employment in 
the Great Depression. In accordance with the 
political and economic disposition of the age the 
Federal Government undertook construction of new 
housing projects in order to stimulate economic 
recovery, increase directly the supply of housing, 
and provide the poor with adequate housing. 

The notion that successful housing programs must 
impact the supply of new housing, however, ignores 
the documented successes of existing housing experi- 
ments and programs phased in during the last decade 
and a boom in the supply of adequate private 
housing that makes new public construction unnec- 
essary. It also underpins the current prejudice 
against section 8 existing housing and the proposed 
housing certificates or voucher program. 

Against the traditional benchmark, the results of 
all Federal housing programs are disappointing. 
Recent evidence demonstrates that such programs 
have an insignificant effect on the supply of new 
housing. However, the programs do positively effect 
the supply, quality, and distribution of the housing 
stock by stimulating the rehabilitation and mainte- 
nance of existing housing. In an era when the 
afTordability, not the availability of adequate hous- 
ing, is the primary concern of low-income renters, 
the section 8 existing and voucher programs offer 
the best opportunities to mitigate the inefficiencies 
and inequities prevalent in preceding programs. 

Description of the Voucher Program 

The proposed housing certificates or voucher 
program would replace the current section 8 existing 
housing program. The technical modifications are 
slight, but the resultant savings and behavioural 
changes would be considerable. The guidelines of 
and hopes for the program are based on nearly 10 
years of experience with section 8 existing housing 

* Policy Analyst, Heritage Foundation, Washington, DC. 
' Stephen K. Mayo, Shirley Mansfield, David Warner, and 
Richard Zwetchkenbaum, Housing Allowances and Other Rental 
Housing Assistance Programs — A Comparison Based on the Housing 
Allowance Demand Experiment, Abt Associates, Inc., June 1980. 

and the findings of the Experimental Housing 
Allowance Program of 1970. 

Briefly, the current section 8 existing program 
operates in the following manner: 

Low-income households meeting Federal eligibili- 
ty guidelines may apply for program assistance 
applicable only to a unit found to meet Federal 
health and safety guidelines at or less than a HUD 
determined "fair market rent" for that area. An 
eligible low-income household occupying the unit 
pays the landlord 30 percent of his income as "tenant 
contribution" towards rent. The difference between 
the "tenant contribution" and the fair market rent of 
the unit is then paid to the landlord by the housing 
authority. Importantly, low-income households are 
very restricted in their rental choices. They are 
limited to renting from participating landlords and 
cannot live in units exceeding the area fair market 
rent — even if they are willing to pay more for 

There are several significant advantages to such 
an existing housing or "demand oriented" program 
vis-a-vis new housing or "supply oriented" pro- 
grams. Most notably existing housing programs are 
considerably less expensive than housing projects or 
subsidized new construction programs. Many stud- 
ies, such as Mayo's,' report that Federal red tape, 
delays, regulations, such as Davis-Bacon, and cost- 
plus pricing can make public construction as much 
as twice as expensive as similar privately construct- 
ed housing. Consequently, section 8 new housing 
subsidies cost over $6,000 per year, compared with 
$2,300 for section 8 existing. In addition, existing 
housing allows for short-term flexible commitments, 
greater freedom for the low-income renter, and 
often a more favorable socioeconomic neighborhood 
in which to raise a family. The General Accounting 
Office and the Congressional Budget Office have 
cited other inequities and inefficiencies in the pre- 
vailing programs in their reports." 

' Federal Housing Assistance: Alternative Approaches. Congressio- 
nal Budget Office, May 1982 and Rental Housing: A National 
Problem That Needs Immediate Attention. Report to the Congress 
by the Comptroller General, General Accounting Office, Nov. 8, 


The proposed certificate plan improves upon 
section 8 existing housing by providing low-income 
households directly the difference between the 
payment standard and tenant contribution. This 
allows the household to choose any unit anywhere 
and at any price, and without the necessary compli- 
ance of the landlord, as long as it meets government 
safety standards. This program affords the same 
advantages as the current section 8 program, but in 
addition could cost 10 percent less and allow tenants 
complete freedom in choosing the rental unit and 
neighborhood of their choice. 

Criticisms of the Voucher Program 

As with any new program that promises simple 
free market solutions to complex problems, the 
voucher program has sprout considerable critics, 
despite the success of its prototypes. As a result 
vouchers were not included in the House version of 
the FY 1984 HUD authorization bill and the Senate 
version, which includes voucher legislation, has not 

For one, the sad fact is that, given Congress' 
liberal interpretation of program eligibility and 
generous benefits, it is impossible to provide housing 
benefits to all who may need them or are eligible. 
Fortunately the flexibility and reduced cost of the 
voucher program can reduce significantly the gross 
inequities rabid in our current housing programs and 
allow for several times more participating units. 
Several modifications of the payment standard, 
tenant contribution, and eligibility standards that 
could make the program even more equitable were 
proposed in "Revitalizing Low Income Housing."^ 

Second, conservative Senator William Armstrong 
(R-Co.) stalled Senate action because he fears that 
liberal spending inertia could eventually form 
vouchers into a $20 billion plus entitlement program. 
Though eligibility and benefits were liberalized in 
the short distance between the White House and 
Capitol Hill one would hope that Congress would 
not expand vouchers to that degree. These concerns 
could be mitigated by implementing vouchers as a 
State block grant as advocated also in "Revitalizing 
Low Income Housing." 

The third criticism, which the bulk of this essay 
addresses, contends that a successful housing pro- 

' John Palffy, Revitalizing Low-Income Housing, Heritage Foun- 
dation Backgrounder, no. 269, May 26, 1983. 
* Craig Swan, "Housing Subsidies and Housing Markets," 
Housing in the Seventies Working Papers 2, HUD, 1976. 

gram must increase the supply of new housing 
directly. It rests on the assumption that the demand 
for rental housing is greater than the existing supply. 
Consequently, a housing allowance program which 
increases the already excess demand for rental 
housing will only result in rent increases and 
landlord windfalls. 

Housing Programs Do Not Increase the 
Supply of New Housing 

The assumptions and conclusions of what has been 
called the "supply-side" school (with all due apolo- 
gies to Professor Laffer) must be debunked. Even if 
there were a general market shortage of housing 
rental units it is clear that no housing program, past, 
current, or proposed, can significantly increase the 
supply of new housing. 

A hypothesis persists that a "supply" strategy, 
based on new construction, yields greater increases 
in housing supply than a "demand" strategy, based 
on maintaining existing housing induces. This ig- 
nores the indirect effects of each strategy, however. 
On the surface the traditional supply strategy ap- 
pears to add a housing unit per participant. The 
demand strategy, only upgrades substandard hous- 
ing units when participants join the program. Clear- 
ly, adding an entire housing unit per participant 
increases housing supply more than merely repairing 
some housing units. However, consideration of 
overwhelming indirect effects demonstrates that 
new housing programs result in only marginal 
increases in housing supply as expensive public units 
"crowd-out" existing private units in the market- 

A study by Craig Swan indicates that for every 
100 units added by the supply strategy housing starts 
in the market decrease by 86 units because private 
dwellings vacated by program participants become 
excess supply, thus decreasing the demand for 
private new construction." A HUD analysis, which 
also accounts for the increased removal of private 
units from the market as they are abandoned, as well 
as decreased new construction, finds that the private 
market offsets 89 percent of government supplied 

' Peter C. Rydell and John E. Mulford, Consumption Increases 
Caused By Housing Assistance Programs; Housing Assistance Supply 
Experiment, Rand Corporation study sponsored by OPR-HUD, 
April 1982. 


There is No General Market Shortage of 
Rental Housing 

Despite the evidence that housing programs can- 
not increase significantly the stock of new housing, 
and the economic conclusions about supply and 
demand that follow from that evidence, critics 
maintain the fact that there is excess demand for 
rental housing. According to such critics a rising 
rent/renter's income ratio and lower vacancy rates 
indicate an existing shortage of rental units. They 
also cite rising operating expenses, the aging rental 
stock, abandoned unprofitable properties, and con- 
dominium conversions as reasons for a growing 
shortage of rental units. 

A Rand Corporation report by Ira Lowry, how- 
ever, demonstrates there is no such shortage of 
rental housing, in fact, and that the past two decades 
have seen steady improvement in the housing cir- 
cumstances of renters, especially those with low 
incomes. Rents in constant dollars have dropped, 
indicating excess supply; per capita housing con- 
sumption by renters has increased; and the incidence 
of both overcrowding and major housing defects has 
diminished sharply.* 

Although the median income of all renters fell in 
the 1970s, when measured in constant dollars, there 
was a radical change between 1970-78 in the 
composition of renter households, the effect of 
which was to divide income among more house- 
holds but not among more persons. Thus, with less 
people in the household it is not surprising or 
distressing that the median income per rental unit 
declined. Likewise since many middle-income rent- 
ers abandoned the rental market to purchase homes 
it is not surprising that the average rent/income 
ratio increased over the period. 

In short, while average renter income and occu- 
pants per unit are falling, real rents were not rising. 
By one index the price of rental services rose 103 
percent in the 1970s, but the consumer price index 
rose by 113 percent. Thus the real price of rental 
housing certainly did not increase and may have 
fallen slightly. In fact, Lowry contends that there 
was an 8 percent increase in real consumption per 
renter household during the years 1970-78. 

As HUD Secretary Samuel R. Pierce notes, a 
rental crisis exists only at the lowest income levels; 

• Ira S. Lowry, "Rental Housing in the 1970's: Searching for the 
Crisis," unpublished draft prepared for the Office of Policy 
Development and Research, HUD, April 1982. 

"our research has confirmed that in most localities 
the supply of housing is sufficient to meet the 
demands of low-income families. The major problem 
is the inability to afford rents. The housing certifi- 
cate program is ideally suited to solve that problem 
at a minimum cost to the Treasury."' 

The crisis is one of affordability, and thus one of 
selective economic demand. It is not one of avail- 
ability, or general supply of dwelling units. There is 
not a shortage of units, in other words, but rather a 
lack of sufficiently maintained units at low rents. To 
an unmeasurable degree this situation is brought 
about as public housing crowds out private land- 
lords and rent control depresses rental income, thus 
discouraging maintenance and new construction and 
encouraging abandonment. One estimate by the 
Annual Housing Survey claims that over 2.8 million 
units were removed between 1970 and 1977 in this 

This analysis suggests that if the goal of contem- 
porary housing assistance is to provide low-income 
households with safe and adequate housing two 
objectives must be fulfilled. Landlords must have 
the profit incentive to provide such units and tenants 
must have the monetary means to afford those units. 
The voucher program addresses these objectives. 

Impact of Housing Allowances on Supply 

Though no government housing program, includ- 
ing the proposed voucher program, results in any 
significant amount of new housing, vouchers do have 
significant effects on the supply of adequate housing. 
Much of today's deteriorating housing could be 
profitably repaired or maintained if landlords had an 
economic incentive to do so. Because they require 
that recipients live in standard housing, vouchers 
provide tenants with the cash required to stimulate 
landlords to bring their units up to standard and 
keep them there. 

It is not surprising that housing allowance pro- 
grams do not result in measurable program induced 
rental increases. Recipient rental demand accounts 
for less than 8 percent of aggregate rental demand in 
any given market and most of the increase in 
housing demand resulting from the allowance pro- 
gram is met by an increase in the supply of adequate 

' Letter to the Editor, New York Times. Mar. 23, 1983. 
' Lowry, "Rental Housing in the I970's." 


There are many housing units that need and will 
undertake the amount of repairs that are induced by 
the assistance payments in order to bring them up to 
standard. In the section 8 existing housing program, 
between a quarter and a half of the units selected by 
certified households failed the initial inspection by 
the public housing agency. In both EHAP and 
section 8, over 75 percent fixed their units rather 
than move. That astonishingly high repair rate is 
made possible by the low average cost of the 
necessary repairs; only about $100 per housing unit 

Further, on an annual basis, the stock is main- 
tained as a result of annual inspection of the units. In 
the Experimental Housing Allowance Program fully 
90 percent of those units which failed the annual 
inspection were repaired and remained in the pro- 
gram. Thus the housing assistance program can be 
expected to prevent the loss of units from the stock 
of standard housing by keeping these units from 
deteriorating through undermaintenance. 

According to an analysis of the HASH experience 
by Peter Rydell of the Rand Corporation, regardless 
of rental conditions, housing markets do respond to 
demand subsidies. In the two contradistinct housing 
markets employed in HASE,'" supply responses to 
the allowance program's demand shifts reduced the 
potential price increases for standard housing to less 
than 1 percent. There was a 23 to 27 percent 
decrease in demand for substandard housing and a 9 
to 15 percent increase in the demand for standard 
housing in the two trial counties. He notes that if 
there were no compensating adjustments in the 
supply of housing services, the price of standard 
housing would rise 17 percent to 29 percent. In both 
locations the repair of substandard housing to 
standard condition reduced the potential price in- 
crease for standard housing by two-thirds. Repair 
and supply adjustment" together reduce the poten- 
tial price increase by four-fifths. Repair, supply 
adjustments, and occupancy rate adjustment'^ to- 
gether reduce the potential price increase by 97 

' J.L. McDowell, Housing Allowances and Housing Improvements: 

Early Findings. Rand Corporation, September 1979. 

'» Peter C. Rydell, Supply Response to the Housing Allowance 

Program. Rand Corporation, October 1980. The two counties 

studied are Brown County, Wisconsin, with a growing, nonsegre- 

gated population and a tight housing market (4 percent rental 

vacancy rate) and St. Joseph County with a shrinking, segregated 

population and a loose housing market (10 percent rental vacancy 


" Rydell describes supply adjustment as the change in the supply 

percent. Other studies" indicate that EHAP actual- 
ly increased the number of adequate units in the 
HASE markets from 4 to 1 1 percent. 

A Rand Corporation analysis of EHP notes that, 
dollar for dollar, existing housing programs bring 
about larger increases in housing consumption than 
public housing programs. In other words, each 
dollar spent on existing housing programs increases 
the supply of adequate housing more than a dollar 
spent on public housing. 

Some program participants improve existing units 
to meet minimum standards while other participants 
who already live in standard housing move to better 
housing due to increased income generated by the 
demand subsidies. The statistics indicate the flow of 
government dollars for these programs; public hous- 
ing projects, a voucher program requiring tenants to 
live in adequate housing, and an unrestrained cash 
transfer. As expected, the nonsubsidy cost of the 
PHA is greatest as program dollars are siphoned off 
by unions and contractors. The cash transfer is the 
least wasteful program, but results in half the 
increase in housing consumption as the voucher 
program (see table 1). 

Note that many of the benefits of any housing 
program are funneled into nonhousing consumption. 
Typically only 25 percent of a housing subsidy 
(allowance or new unit) is actually spent on in- 
creased housing. Because tenant income is fungible, 
nearly three-quarters of the subsidy is used to reduce 
the rent burden and thus is funnelled into the 
purchase of other consumer goods. Thus one may 
conclude the operative nature of a housing allow- 
ance program is the requirement that it be applied to 
an adequate rental unit. The payment provides the 
means and the incentive for the poor household to 
meet this end. 

Integration Aspects of Existing Housing 

Potentially, housing allowance programs are an 
important avenue of escape from public housing 

of standard rental housing services arising from four ways. One, 

new construction exceeds demolition. Two, upgrading via repairs 

and capital additions exceeds deterioration. Three, tenure changes 

from owner-occupied to renter-occupied dwellings exceeds the 

converse. Four, conversions of substandard units to standard units 

exceeds the converse. 

'^ Rydell measures occupancy rate by 1 .0 less the fraction of rent 

lost because of vacancies. 

" Experimental Housing Allowance Program. Conclusions. The 

1980 Report. HUD, February 1980. 



Housing Allowances Compared with Public Housing 


(percentage of subsidy to each factor) 

PHA Housing Allowance 

Housing consumption increase 
Nonhousing consumption increase 
Nonsubsidy cost 














Source: Peter C. Rydell and John E. Mulford, Consumption Increases Caused by Housing Assistance Programs: Housing 
Assistance Supply Experiment, Rand Corporation study sponsored by OPR-HUD, April 1982. 

projects for poor and minority households. Freedom 
of mobility is important to anyone, but especially to 
poor families with youths. All too often poor 
children in housing projects are subject to excessive 
crime and other forms of behavior that lead to 
abbreviated educations, poor job prospects, teenage 
pregnancies, and broken families, traits that foster 
dependence on welfare. Yet, welfare families that 
move into a working class neighborhood often 
increase the economic and social prospects and their 
children break out of the "poverty cycle." By 
empowering participants to choose housing any- 
where and at any price the voucher program the freedom and mobility of the poor. 

Obviously public low-income housing concen- 
trates poor families in exclusively disadvantaged 
environments. Also, housing provided by construc- 
tion programs sometimes forces households into 
poorer or more heavily minority areas than they 
would normally occupy. However, the early results 
from EHAP did not offer much hope that house- 
holds fully utilized the significant opportunity of the 
voucher program. Detailed analysis by Reilly Atkin- 

son and Dowell Myers'* suggests that the allowance 
offers had little impact on the neighborhoods chosen 
by allowance households in terms of low-income 

Housing allowance programs do tend to lead to 
increased racial integration. While the existing hous- 
ing program has had little impact on overall integra- 
tion within cities, it has had an impact on the 
location of the participating families. Overall, partic- 
ipating households achieved a mean decrease in the 
percentage of minorities in their destination census 
tracts — the areas in which they received the subsidy. 
For movers this was about a 7 percentage point 
decrease on average. Of the minority households 
participating, 61 percent moved in order to partici- 
pate. Of these, 35 percent moved to areas with a 
lower minority concentration than their original 
neighborhood while 25 percent moved to areas with 
higher minority concentration. 

There remains, of course, the fear that minorities 
face discrimination in the open housing market, and 
hence that public housing projects are necessary to 
assure fair and adequate housing. The subsidies 

" Reilly Atkinson, William Hamilton, and Dowell Myers, 
Economic and Racial/Elhnic Concentration in the Housing Allow- 
ance Demand Experiment, Abt Associates Inc., January 1979. 


provided by the section 8 existing housing program 
and the housing payments certificate program, allow 
low-income families to obtain adequate rental units 
at a reasonable price. Should they encounter dis- 
crimination in their search for housing, the public 
housing agency is required to provide assistance in 
accordance with the fair housing act. 

There is insufficient evidence, however, to deter- 
mine whether or not minorities are discriminated 
against in existing housing programs. In EHAP, 
minorities applied at higher rates, but their participa- 
tion rates were about the same, because participation 
was most closely linked to two factors: the quality of 
the dwelling unit at enrollment and prior mobility. 
Poor or large families, and minority households — all 
of whom are less likely than other households to 
meet the housing standards in their original units — 
are less likely to participate in a voucher program if 
housing standards grow more stringent because they 
would have to move or make repairs. This would be 
costly and not necessarily desirable from their point 
of view. 

To the extent that minority families tend to be 
larger and poorer, it is these conditions, not race, 
which are more likely to affect their ability to find 
an adequate unit. For instance, there is a marketwide 
shortage of rental units for large families, making it 
more difficult for such families of any income to find 
satisfactory rentals. In order to meet higher partici- 
pation goals, therefore, it might be appropriate to 
liberalize housing adequacy requirements, thus mak- 
ing it less necessary to move or easier to find a 
suitable unit. As the above analysis suggests, such a 
strategy would reduce projected increases in hous- 
ing consumption as more of the voucher would be 
transferred to nonhousing expenditures. 

Other appropriate action may be to fund public 
support groups for disadvantaged persons. These 
support agencies may act as a clearinghouse between 

landlords and prospective tenants or assist tenants in 
finding suitable places, but would obviously negate 
some of the administrative cost advantage of vouch- 

The most favorable alternative, however, is to 
encourage private organizations to form such self- 
help housing support groups. These groups could 
not only act as clearinghouses and assist in locating 
units but could also offer labor assistance to families 
who wish to bring their units up to adequacy 
standards much in the spirit of homesteading. 


The voucher program should be encouraged as 
the most efficient and equitable means of providing 
rental assistance to most low-income households. 
"Demand-oriented" housing programs have one 
primary objective; to assist low-income families in 
acquiring and paying for adequate rental housing. 
Unlike supply-oriented construction programs, they 
are not designed to be an economic stimulus or 
affect directly the stock of housing. Past construc- 
tion programs have been costly failures in their quest 
to meet these latter two objectives. Federally con- 
structed housing is also wasteful — it "crowds out" 
90 percent of the housing it seeks to create and tends 
to lock tenants into poor neighborhoods. Both 
EHAP and the section 8 existing housing program 
have demonstrated their superiority in achieving the 
primary objective. 

Housing allowance programs, on the other hand, 
significantly affect the stock of adequate housing and 
reduce the rent burden on recipients. The voucher 
program would, in all probability, accomplish the 
same purposes as its predecessor, the section 8 
existing housing program, but it has two significant 
advantages. It would cost the American taxpayer up 
to 10 percent less, and it would offer poor families 
real freedom of choice, the opportunity of truly 
equal housing, and a better future for their children. 


Effects of the Recession and Housing Supply on Fair 
Housing Goals 

William North* 

The starting point in any discussion of the effects 
of the recession and housing supply on fair housing 
goals is necessarily the identification of the goals of 
fair housing. While such goals can be, and certainly 
have been, variously defined and in recent years 
have increasingly been the subject of disagreement 
and dispute, the private real estate community has 
historically understood the goals of fair housing to 
be essentially two: first, to assure that every person, 
regardless of race, creed, color, sex or national 
origin has an equal opportunity to purchase or rent 
the housing he or she desires and can afford; and 
second, to maximize the capacity of every person to 
afford the quantity and quality of housing required 
to satisfy his or her housing needs. 

With respect to the first goal, freedom of housing 
choice, the effects of recession and housing supply 
appear to be indirect, to the extent they impact 
attainment of the goal at all. Achievement of this 
goal appears to depend not on the vagaries and 
variations of the business cycle, but rather on the 
political, social, cultural, and other noneconomic 
barriers to housing access. Bias and prejudice limit- 
ing housing choice are prompted by a variety of 
popular perceptions and stereotypes concerning the 
effect of the presence of minorities on the quality of 
education, the crime rate, the tax base, property 
maintenance, and other conditions and amenities 
which, in the aggregate, influence property value, 
personal security, and community desirability. Such 
bias and prejudice can also be exacerbated by 
majority fears of shifts in political control, in 
business favor, and cultural dominance. 

While such perceptions and stereotypes of the 
effect of minority presence rarely refiect the reality 
of any particular time or place, they do generate 
fears which economic prosperity seems unable to 
correct or diminish. Likewise, at most, the effect of 
recession on housing bias and prejudice is reflected, 
if at all, as a by-product of resentment generated in 
the intensified job competition which recession 

• General Counsel, National Association of Realtors. 
' U.S., Department of Commerce, America's Black Population: 
1970 to 1982. A Statistical View (Spec. Pub. PIO/PoP-83-l) at 20 
(hereafter cited as America's Black Population). 

usually produces between members of minority and 
majority groups at the lower end of the skill 

With respect to the second goal, maximization of 
housing quantity and quality, the impact of reces- 
sion, and the business cycle more generally, has a 
significant impact on its attainment. This is because 
maximization of housing quality and quantity is 
essentially a function of housing affordability and 
housing affordability is vitally affected by the state 
of the economy. 

Fundamentally, housing affordability is deter- 
mined by two factors; first, the amount and quality 
of housing which is needed and, second, the money 
available to pay for the housing needed. While every 
person is limited by considerations of affordability in 
seeking housing, the affordability limitations applica- 
ble to minority homeseekers are generally exacer- 
bated by the fact that minorities tend to need more 
and larger housing units than do nonminorities, yet 
the money they have available to satisfy those needs 
is significantly less. 

Minority housing needs reflect, among other 
things, the higher birthrate experienced by minori- 
ties and the resultant larger family size. For example 
the fertility level of black women relative to white 
women is approximately 60 percent greater, while 
the fertility rate of black women 18 and 19 years old 
is double that of white women of the same age.* 

On the other hand, the income available to 
minority persons on the average is significantly 
below that of nonminorities. In part this reflects the 
fact that minorities are predominantly employed in 
lower paid, unskilled or semiskilled occupations; in 
part it reflects the fact that 41 percent of all black 
families are maintained by a woman with no husband 
present;^ in part by the fact that 49 percent of black 
children live in one-parent homes;^ in part by the 
fact that the income of a single woman is well below 
that of a single man and significantly below that of a 
minority married couple;* and in part by the fact 

» Id. at 4. 

' U.S., Department of Commerce, News, Aug. 22, 1983. 


that minority unemployment rates, at least since 
1970, have consistently been at least double nonmi- 
nority unemployment rates, whether in boom, bust, 
or in-between.^ 

While recession will usually have little impact on 
the need for housing which is decisively determined 
by cultural, religious, and social values relating to 
family formation and fertility, recession will, of 
course, have a significant impact on the capacity to 
pay for housing and on the availability and price of 

During the period 1979 through 1981, 9 million 
blacks representing 34 percent of that minority had 
incomes below the poverty level.* During that same 
period black unemployment rose from 11.3 percent 
to 14.2 percent as compared with a rise in white 
unemployment from 5.8 percent to 7.6 percent.' In 
the same period, the median income of white 
households rose from $17,259 to $20,153, while the 
median income of black and Hispanic households 
increased from $10,133 to $11,309 and $13,042 to 
$15,300, respectively.' 

The large percentage of minority families at the 
poverty level, the higher unemployment rate, the 
relatively low median income and its relatively 
slower growth all represent in absolute and relative 
terms a decline in housing purchasing power during 
the recession. This decline is confirmed, first, by a 
decline in home ownership rates and, second, by a 
decline in mobility. 

During the years 1979 through 1981 there were 
declines in home ownership for essentially every 
income status and for minority and majority groups 
alike. However, for the highest income group 
(incomes over 125 percent of median income) the 
decline was a modest 2.7, 3.5, and 3.2 percent for 
whites, blacks, and Hispanics, respectively.' On the 
other hand, for the group having incomes between 
75 and 125 percent of the median, the rate of decline 
was 8, 12, and 13 percent.'" While in the lowest 
income group, the rate of black and Hispanic decline 

* U.S., Bureau of Census, Current Population Reports, series P- 

60, no. 137 (hereafter cited as Current Population Reports): series 

P-23, no. 100, Statistical Portrait of Women in the United States; 

and America's Black Population at 4. 

^ U.S., Bureau of Labor Statistics, Employment and Earnings. 

Unemployment Rates by Various Categories of Workers, 1970 and 

1974-June 1982 (hereafter cited as Employment and Earnings). 

' America's Black Population at 4. 

' Employment and Earnings. 

" Current Population Reports, series P-60, no. 137. 

' National Association of Realtors(R), calculated from data 

reported in the 1973 to 1981 Annual Housing Survey, Financial 

Characteristics of the Housing Inventory, tables Al, A4, and A7. 

was 4.6 and 11.6 percent, respectively, with the rate 
of white home ownership increasing by 1.3 per- 

The impact of the 1979 to 1981 recession on 
minority household mobility is reflected in the fact 
that prior to that period blacks moved from the 
central city of an SMSA to the rest of the SMSA at a 
rate of 2.6 percent while Hispanics moved at a rate 
of 4.2 percent.'^ With the onset of the recession, the 
rate of exodus from the central city decreased by 
over 50 percent for both groups." 

These declines in home ownership and mobility, 
of course, suggest that the recession has retarded the 
process of integration, independent of any bias or 
prejudice, by reducing the number of minorities, or 
at least racial and ethnic minorities, able to purchase 
or rent in the relatively higher price housing market 
outside the center city. These distinctions in hom- 
eownership also reflect the inherently greater eco- 
nomic vulnerability of minorities to recession. Loss 
of income through unemployment is less likely to be 
cushioned by accumulated savings. Thus, home- 
owners with incomes under $17,500 (an income level 
nearly 44 percent more than the black median 
income) had total savings of approximately $7,400 
for whites, $4,400 for blacks, and $2,000 for Hispan- 
ics.'* Among renters, average savings in the same 
income group were $3,300 for whites, $300 for 
blacks, and $900 for Hispanics." These limited 
levels of savings make minority homeowners sub- 
stantially more exposed to mortgage default and 

Although the recent recession has brought the 
affordability problems of minorities into sharper 
focus, these problems, in no small measure, have 
their origin in the rampant inflationary period which 
preceded it. Thus, in the period 1976 through 1981, 
the median sales price of existing single-family 
homes increased from $38,100 to $66,4(X) and the 
average price of such homes from $42,200 to 
$78,300.'* At the same time, during the same period 

"> Id. 

•' Id 

'^ Current Population Reports, series P-20, no. 368. 

" Id 

" National Association of Realtors(g), calculated from survey 

data from the University of Michigan, Survey Research Center, 

Study of Consumer Credit, 1977. 

"■ Id 

" National Association of Realtors®, Existing Home Sales, July 

1983, at 9 (hereafter cited as Existing Home Sales). 


the median income of black households rose from 
$8,000 to a little over $1 1,000." Moreover, adjusted 
for inflation, the median income of black households 
actually declined by 10 percent.'* 

The growing affordability crisis is further reflect- 
ed by a comparison of the overall "affordability 
index" for all potential homebuyers over the period 
1977 through 1982 and with minority homebuyers. 
The "affordability index" is a means of measuring 
potential capacity for homeownership. It equates 
median family income with the qualifying income 
required by the Federal National Mortgage Associa- 
tion to purchase a home with a 20 percent downpay- 

Using this index, with 100 on the scale occurring 
when qualifying income equals median income, the 
capacity of all potential homebuyers to afford to buy 
has declined from 120.6 in 1977 to 70.6 in 1982." 
This means that a median income household has 
only 70 percent of the income necessary to quahfy to 
purchase a median price home. 

As serious as this deficiency is as regards potential 
homebuyers generally, the median income of black 
potential homebuyers in 1982 represented only 33 
percent of the income necessary to qualify to 
purchase a median price home. Of course this 
explains why such a disparity exists between the 
median value of minority-owned houses and that of 
nonminority-owned houses. For example, in 1980 
the median value of a single-family house owned and 
occupied by a black was $27,000 as compared with a 
median value of $48,000 for such a house owned and 
occupied by a white. ^" This value differential is 
indicative of the continuing quality deficiency in 
minority housing which found, in 1980, nearly one- 
half million black-occupied housing units still lack- 
ing complete plumbing facilities, a number five times 
greater than white-occupied units.*' 

In terms of affordability, minority housing access 
problems have been stubbornly unresponsive to the 
changes in the business cycle of the last decade. The 
income gains of the seventies were eroded by 
inflation which saw housing as a percentage of 
family income rise from 20 to over 35 percent. The 
rapid escalation of interest rates from 9 percent in 
1977 to a peak of 15.5 percent in 1982 particularly 
disadvantaged minorities who are especially credit 

Current Population Reports, series P-60, no. 137. 


Existing Home Sales at 1 2. 

America's Black Population at 23. 

cost sensitive. Beyond this, however, the effective 
withdrawal of traditional lenders, such as savings 
and loan companies, from long-term lending activi- 
ties and the consequent shift of real estate financing 
to forms of owner financing and adjustable rate 
mortgages impacted uniquely on minority housing 
costs and access. 

The greater reliance on owner-financing, of 
course, denied minorities those hard-won safeguards 
against "redlining" and against the "stereotyping" of 
minorities as poor credit risks applicable to institu- 
tional lenders. At the same time, the variable rate 
mortgages, while offering a lesser interest rate than 
the traditional fixed-rate contract, have further 
enhanced the financing uncertainties and complexi- 
ties experienced by minorities and increased the 
potential impact of changes in the job market, 
interest rates, and other economic developments 
beyond their control on their capacity to protect 
their home investment. 

While the recession has reduced inflation, interest 
rates, and housing cost escalation and has broadened 
access to institutional financing, these affordability 
gains have been offset in large measure, if not 
entirely, by income loss through unemployment. 

The decline in homeownership by lower income 
households which has occurred through the stagfla- 
tion and recession of the past decade, has inevitably 
increased the demand for low-cost rental housing. 
This increased demand, moreover, has developed at 
a time when the housing market, until very recently, 
has experienced a high level of condominium con- 
version activity which has intensified competition 
for rental units. One recent study estimated that at 
least 61,220 minority households have been dis- 
placed by condominium conversion." Such conver- 
sions and the trend in many major cities for higher 
income nonminority groups to return and upgrade 
inner-city neighborhoods are estimated to cause the 
involuntary displacement of from 600,000 to 850,000 
minority households annually." This competition 
has been further intensified by the increasing longev- 
ity of the elderly and their increasing proportion of 
lower income persons. The consequence of this is 
that, according to the 1980 Annual Housing Survey, 
there were 13 million very low income renters of 

»> Id. 

"' Congressional Research Service, Economic Prospects for Blacks 

in the I980's. Rpt. no. 81-267E, Dec. 18, 1981 at 44. 

" Id. 


whom 7.5 million paid more than 35 percent of their 
income in rent." This compares with the situation 
reported just 3 years earlier in the 1977 Annual 
Housing Survey which showed only 10.5 million 
very low income renters of whom only 6.5 million 
paid more than 30 percent of their income in rent.^^ 

There can be no question that housing affordabili- 
ty is the paramount barrier to the attainment of fair 
housing goals. Compared to the barrier to housing 
opportunity and mobility represented by housing 
unaffordability, the barrier represented by bias and 
prejudice, however immoral, illegal, and pernicious, 
is barely significant and could become irrelevant if 
the affordability problem could be solved. 

Federal housing subsidy programs currently assist 
approximately 3.2 million households, predominant- 
ly minorities.** Moreover, between 250,000 and 
400,000 families are being added to these programs 
each year." By any measure the denial of fair 
housing resulting from housing bias and prejudice, 
albeit unconscionable, illegal, and inexcusable, is 
nothing compared to the denial of fair housing 
resulting from affordability limitations. 

Of course, identification of housing affordability 
as the primary barrier to fair housing is not a new 
discovery. Since the first national housing program 
for low-income people was enacted in 1937, innu- 
merable governmental programs have been under- 
taken to make housing more affordable. At various 
times, the focus of these programs has been to 
increase the supply of low-income housing through 
programs to subsidize new construction or to rehabi- 
litate and renovate existing low-income housing. At 
other times, the focus of these problems has been to 
increase the capacity of households to afford hous- 
ing through low-income loans and rent subsidies in a 
variety of forms. In recent decades, through such 
initiatives as the Experimental Housing Allowance 
Program (EHAP), mandated by the 1970 Housing 
and Community Development Act, the housing 
affordability problem has been addressed concur- 
rently from both the "supply" and the "demand" 
side.*' Likewise the problem has been addressed 

" U.S., Department of Commerce, Bureau of Census, and U.S., 
Department of Housing and Urban Development, Office of 
Policy Development and Research, Annual Housing Survey: 1980, 

" U.S., Department of Commerce, Bureau of Census, and U.S., 
Department of Housing and Urban Development, Office of 
Policy Development and Research, Annual Housing Survey: 1977, 

" Congressional Research Service, Housing Vouchers: An Alter- 
native to Current Housing Programs?. Jan. 14, 1983. 

from both the supply and demand side by the 
Federal Government not only directly through 
federally administered programs but also through 
community-administered programs. 

Throughout the 1970s, as the problem of housing 
affordability stubbornly persisted and resisted ameli- 
oration, more and more money was committed to its 
solution until at the end of 1980 obligated budget 
authority stood at $110.2 billion for section 8 alone, 
and the obligations for all directly assisted housing 
reached $220.5 billion.*® This obligation is in 
addition to the indirect government assistance pro- 
vided housing through tax expenditures incurred by 
GNMA financing assistance, tax-exempt bonds is- 
sued by State finance and public housing agencies, 
and other tax provisions encouraging construction 
or rehabilitation of low-income housing. 

The Housing Payment Certificate Program which 
the administration proposes to substitute for the 
section 8 new construction program represents an 
effort to bring under control the future commitment 
of national and governmental resources to the 
solution of current housing affordability problems. 
In its focus on the effective demand for low-income 
housing, the voucher program does not address the 
present and potential shortages in the low-income 
rental housing supply. On the other hand, the low- 
income housing construction and rehabilitation pro- 
visions enacted in 1981 in the Economic Recovery 
Tax Act as well as the existing multifamily mortgage 
revenue bond program represent significant poten- 
tial incentives to rental housing construction and, if 
allowed time, may prove a more efficient and cost 
effective alternative to section 8. 

We would certainly not suggest that the Housing 
Payment Certificate Program or the economic Re- 
covery Tax Act is a solution to the affordability 
barrier to fair housing. But they do represent 
alternative initiatives to the programs of the past 
decade which have failed to fulfill their promise. 

And perhaps if there is any benefit to be realized 
from the trauma and travail of recession, that benefit 
is the fact that we are compelled to reexamine the 

=' Id. 

^' At least 18 Federal programs in support of low- and moderate- 
income households and low- and moderate-income housing are 
administered by HUD. U.S., Department of Housing and Urban 
Development, Programs of HUD. 

^° Congressional Research Service, Housing the Urban Poor: 
Urban Housing Assistance Programs by Grace Milgram, at 132. 


extent to which the source of our problems is lack of 
resources or is lack of organization, commitment, 
and responsibility. Certainly, as long as the money 
resources which are available are substantially un- 
limited, there is little or no incentive to examine 
anything other than the ways in which the resources 
can be expended. 

Recession, by limiting access to money resources, 
tests the reality of need in the crucible of individual 
involvement and choice. It is in this context that the 
effects of housing supply on fair housing goals will 
be determined. And there is no question as to the 
difficulty and controversiality of the involvement 
and choices required. 

The issues to be addressed and the choices to be 
made include: 

a. What is to be done about the rapidly deteriorat- 
ing family structure of low-income households. 

b. What is to be done about the legal and practical 
incapacity to manage low-income housing units so as 
to assure their maintenance and security and that of 
the neighborhoods in which they exist. 

c. What is to be done about the influx of illegal 
aliens and their impact on the supply of available 
low-income housing and on employment opportuni- 
ties for minorities and low-income groups. 

d. What is to be done about the displacement of 
low-income families prompted by "gentrification" of 
the central city, condominiumization, and the shift 
of job opportunities outside of the city core. 

e. What is to be done about equipping minorities 
and other low-income groups to accommodate the 
shift from an industrial to an information/service 
economy and to mitigate the impact on earning 
potential of the obsolescence of job skills. 

While the responses to these issues will require 
significant money resources, the more important 
requirement will be the acceptance of individual 
responsibility and the refusal to make or excuse 
illegal or irresponsible conduct. 

The fact that we understand the burdens which 
child support obligations impose on low-income 
males cannot be permitted to excuse such obligations 
when housing affordability is at risk. The fact that 
we understand the problems of disciplining children 
without parental supervision or support cannot be 
permitted to excuse or justify the damage they do to 
their housing and neighborhood. 

And most particularly, the fact that we appreciate 
the desire of illegal aliens to enjoy the opportunities 
of America cannot be permitted to obscure the 
reality that their presence is a violation of the law 
and effectively displaces upwards of 4 million 
Americans in the housing market and between 1.3 
and 2.6 million Americans, primarily minority and 
lower income people, in the job market. 

Just as the elimination of bias and prejudice as a 
barrier to fair housing requires us to change the 
social and cultural attitudes and institutions of the 
dominant majority, so the elimination of the afforda- 
bility barrier to fair housing will require us to 
change the social and cultural attitudes and institu- 
tions of the disadvantaged minorities. This is a 
process of change which cannot be dictated by the 
business cycle or be permitted to be influenced by it 
because it represents the only means of accommo- 
dating over time the demand for housing with the 
supply. It is a process which this recession may 
initiate but it is one which must be sustained through 
the recovery to come. 


Effects of Recession and Housing Supply on Fair 
Housing Goals 

Gushing N. Dolbeare* 

This paper will focus primarily on the housing 
problems of low-income people, particularly minori- 
ties, resulting from the lack of decent, affordable, 
available housing. While the problems are intensified 
by the recession, they are underlying and would 
need to be addressed by Federal action even in times 
of "full employment." 

Our major housing problems are caused by either 
low income, which makes decent housing unafforda- 
ble, or discrimination, which makes it unavailable, or 
both. In turn, the primary cause of low income is 
past or present unemployment, underemployment, 
or inadequately paid employment. Conversely, an 
adequate level of housing production and rehabilita- 
tion can have a major impact on providing employ- 
ment opportunities. Housing deserves to be consid- 
ered, along with other approaches, as a major 
component in a long-term economic policy to create 
and sustain full employment. 

Both because lower income households are pre- 
dominantly renters and because Federal low-income 
housing assistance programs are almost exclusively 
rental programs, this analysis is addressed primarily 
to renter households and the cost and supply of 
rental housing. 

This Nation has much to be proud of when we 
consider our housing accomplishments. Homeown- 
ership has become regarded as the norm, and the 
vast majority of nonminority households with a 
steadily employed member have, in fact, become 
homeowners. According to the latest available 
figures, in 1981, 65 percent of all households were 
owners, but 88 percent of all households consisting 
of married couples with no nonrelatives were 
owners. The proportions for minorities were, how- 
ever, much lower. Only 43 percent of all black 
households, and 62 percent of married couples with 
no nonrelatives were owners. And only 42 percent 
of all Hispanic households, and 54 percent of 
married couples were owners. 

Housing quality has also improved dramatically. 
The first census of housing was taken in 1940 and 
found 45 percent of all occupied dwelling units were 

either dilapidated or lacked basic plumbing facilities. 
While truly comparable data for 1980 are not 
available, the figure is almost certainly below 5 

We also have much to be ashamed of There are 
still several million households living in housing 
without basic plumbing or so seriously substandard 
that they are dangerous to health or safety. A 
disproportionate number are minority and rural 
households. Even more millions of households are 
unable to obtain shelter without spending more than 
half their incomes for it— and these are our lowest 
income households, who then cannot afford the 
other necessities of life. 

Almost half a century of providing assisted hous- 
ing for low-income people has produced fewer than 
4 million occupied, subsidized housing units — about 
3 years production of unsubsidized housing units. 
Through a historical accident, the Federal Govern- 
ment provides billions of dollars annually in home- 
owner subsidies through the tax system, which cost 
many times as much as direct housing subsidies, for 
middle and upper income people. These subsidies 
are believed by many to be sacrosanct. But, while 
we have entitlements to housing assistance for 
middle and upper income homeowners, we have 
refused to provide comparable assistance for low- 
income households. Not only is there no entitlement 
to assistance, but we do not even have subsidized 
homeownership programs for low-income people. 

The disparity between housing assistance provid- 
ed for low-income people and subsidies for higher 
income groups is dramatic and growing. The cost to 
the Treasury of homeowner mortgage interest and 
property tax deductions alone has risen by 63 
percent since 1980: from $23 billion in 1980 to an 
estimated $37.5 billion in 1984 (see table 1). 

Discrimination and discriminatory practices have 
been built into the operation of private housing 
markets. The Federal fair housing law does not even 
contain meaningful enforcement provisions and the 
proportion of State and local governments which 

President, National Low Income Housing Coalition. 



Housing Tax Subsidies, New Budget Authority and Housing Payments, 1980-84 

Tax subsidies 
Budget authority 
Housing payments 

Tax subsidies 
Budget authority 
Housing payments 

Tax subsidies 
Budget authority 
Housing payments 

Tax subsidies 
Budget authority 
Housing payments 

(Billions of dollars) 


$ 4.5 


$ 5.7 

$ 6.9 

$ 8.7 
$ 7.8 

are recognized as having "substantially equivalent" 
protections is minuscule. 

Indeed, housing policies and housing patterns are 
largely responsible for the divisions in our society 
between rich and poor, minority and majority, urban 
and suburban. By excluding minority and low-in- 
come people from new housing and new neighbor- 
hoods for most of the last 40 years, we have 
excluded them from decent schools, from communi- 
ty facilities, and from job opportunities. These are 
matters which need to be addressed by Federal 
housing policies and programs and cannot be as- 
sumed to take care of themselves with adequate 
economic recovery or growth. 

The strong preference for homeownership in our 
society is only partly a function of the substantial 
Federal subsidies which are provided for home- 
owners. It also reflects some deeper values. One 
indication of the kinds of housing choices people 
would make if income were not a factor is provided 
by the behavior of people who can afford to choose. 
Over 90 percent of all households with incomes 
above $50,000 are homeowners. The only household 
types where this ratio is less than 90 percent are units 
with nonrelatives and male householders with no 

spouse present — and the numbers in these categories 
are hardly significant. Thus, true freedom of choice 
would provide people at all income levels with the 
opportunity of owning or renting. 

Affordability is the major housing problem facing 
most low-income renter households. Since 1974 
Federal housing legislation has set the threshold for 
housing assistance at 80 percent of median income 
and has defined households with incomes below 50 
percent of median as "very low income." An 
estimated 61 percent of all renter households had 
incomes below 80 percent of median in 1980, and 40 
percent had incomes below 50 percent of median. 
The proportions were significantly higher for larger 
households and for minority households. Whereas 
55 percent of all black renter households and 48 
percent of all Hispanic renters had incomes below 50 
percent of median, only 36 percent of white renter 
households fell in this very low-income category. 

There are, quite simply, a lot more poor renter 
households than there are low-rent units in the 
housing inventory. As of 1980, there were 4 million 
more renter households with incomes below $7,000 
than there were units renting for $146 per month or 
less, including utilities, which is what a household 


with a $7,000 income can afford. There were almost 
twice as many households with incomes below 
$3,000 as there were units renting for less than $63. 

This being the case, it is small wonder that the 
vast majority of very low-income renters pay more 
than half their incomes for shelter. The contrast with 
higher income households is striking. Almost 80 
percent of all renters with incomes below $3,000 
paid more than half their incomes for shelter and 
close to 90 percent paid more than 35 percent. But 
less than 4 percent of renters with incomes above 
$10,000 pay half their incomes for rent and only 4 
percent of renters with incomes above $15,000 pay 
as much as 35 percent. (In addition to the almost 6 
million renter households paying over half their 
incomes for shelter, there are another 2.5 million 
owners who do so. As with renters, their incomes 
are predominantly below $10,000.) 

Because minority households have generally low- 
er incomes, as table 2 shows, they are more seriously 
affected by the inadequacy of the supply of decent, 
low-cost housing. Roughly one-quarter of the 28.8 
million renter households in 1981 were minority: 5.1 
million blacks and 2.55 million Hispanics. 

It is easy to forget that the decade of the 1970s 
saw, with the completion of almost 1 million units 
authorized by the Housing Act of 1968 and an 
additional 1.2 million units under the section 8 
program, a substantial increase in the subsidized 
housing inventory. Even so, only a small proportion 
of poor households now live in subsidized housing. 
(See table 4.) 

Moreover, low-income people have been falling 
further and further behind as housing costs have 
risen far more rapidly than incomes. In 1970 median 
renter income was $6,300 and median rent was $108. 
By 1980 median renter income had risen to $10,500, 
a 67 percent increase, but median rent was $241 per 
month, a 123 percent increase. Converted to con- 
stant dollars, we estimate the 1970-80 change in 
income and rents or housing costs as in table 3. 
Moreover, the greatest problems were at the bottom 
of the income scale. It is almost impossible to 
convey the intensity and magnitude of the housing 
prolems of our very lowest income renters. 

The increase in the affordability problem for very 
low income people was dramatic. In 1970 there were 
5.7 million households with incomes under $3,000 
and another 2.7 million households with incomes 
between $3,000 and $5,000. At the same time, there 
were 8.2 million units renting for less than $75 per 

month (30 percent of $3,000) and another 6.7 million 
units at rents between $75 and $125 per month. In 
other words, there were 5.6 million more units 
renting for less than $125 per month than there were 
renter households with incomes below $5,000. Even 
so, the situation was far from satisfactory: many of 
the units in this low-rent range were seriously 
substandard; or they were the wrong size; or they 
were in the wrong locations; or the owners discrimi- 
nated against would-be tenants; or, finally, they 
were occupied at bargain rents by higher income 

By 1980 the situation was infinitely worse. More- 
over, although hard data is not yet available, we 
have every reason to believe that the past 2 years 
have been even grimmer. In 1980 there were still 2.7 
million renter households with incomes below 
$3,000, but the number of units renting for less than 
$75 had dropped to 2.4 million. (There were also 0.6 
million more renter households with incomes be- 
tween $3,000 and $5,000 than units at rents between 
$75-$125.) The impact on very low-income house- 
holds is clearly unbearable and is a major reason for 
rent delinquencies, abandonment, doubling up, and 

In 1970 a family with an income of $3,000 (the top 
of the range) at the median rent of $85 paid by the 
5.8 million renter households with incomes below 
$3,000 would spend 34 percent of its income for 
shelter, leaving $165 for all other needs. 

In 1980 the family with an income of $3,000 at the 
median rent of $179 paid by the 2.7 million 
households with incomes below $3,000 would 
spend 72 percent of its income for shelter and 
have only $71 for all other needs. 
Twenty-nine percent of renter households with 
incomes below $3,000 were black; 8 percent were of 
Hispanic origin. All had incomes below 75 percent 
of the poverty level. Only 19 percent of the renter 
households in this lowest income bracket lived in 
subsidized housing in 1980. More than half, 51 
percent, were households of two or more people; 5 
percent were households of five or more; 49 percent 
were single-person households. More than one 
quarter, 27 percent, were female-headed households; 
13 percent were married couples with no other 
nonrelatives in the household; 6 percent were male- 
headed households. There were children under 18 in 
27 percent of the households, with 6 percent having 
three or more children. Only 4 percent paid less than 




Income of Renter Households, By Race, 1981 


Below $3000 







$25,000 or more 

Number Percent 


























































Income and Housing Costs, 1970 and 1980, in 1972 Constant Dollars 

1970 1980 Change 

Median renter income 





Median rent 





Median owner income 





Median value 





Median monthly cost 











25 percent of income for rent; 59 percent paid 60 
percent or more. Ten percent lived in units lacking 
some or all plumbing facilities; 4 percent were 
overcrowded. Forty-six percent lived in central 
cities; 3 1 percent lived outside of metropolitan areas. 

These households are the poorest of the poor, but 
in 1980 they were less than one-third of all house- 
holds with incomes below the poverty level. There 
were also another 3.3 million renter households with 
incomes above $3,000, but below the poverty level, 
and another 4.9 million owner-occupants below the 
poverty level. In other words, when we speak of 
low-income housing needs, we are, by the most 
conservative estimates, talking about millions of 
people: 29 million in all, including more than 1 1 
million children (4 million of them under six) and 4 
million elderly people. 

President Reagan's Commission on Housing, in its 
report last year, used a less conservative estimate of 
housing need: households with incomes below 50 
percent of median. There are 20 million such 
households, half of them renters. Only one-quarter 
of these renter households are now in subsidized 
housing. In other words, for each family now in 
low-income housing — after close to half a century of 

providing housing assistance — there are three others 
who need it, who probably want it, and who can't 
get it. 

Subsidized Housing Programs Have 
Helped, But Far More Is Needed 

The achievements of our housing assistance ef- 
forts over the last half century sharply contrast with 
this picture of housing need. At the end of fiscal 
1984, if all goes as planned, HUD will be providing 
housing assistance to not quite 4 million households 
and the Farmers Home Administration will be 
assisting another million. 

A rough picture of the characteristics of house- 
holds living in much assisted housing is provided by 
a recent Census Bureau report on characteristics of 
households receiving noncash benefits. The report 
covers only rental housing, omitting the owner- 
occupied units assisted under HUD's section 235 and 
FmHA's 502 programs. Thus, the total picked up by 
this survey is well below the actual number of units 
susidized. It includes occupied units assisted through 
public housing, section 8, and other rental subsidy 
programs. About 1 1 percent of all renter households 
received Federal housing assistance in 1981. But, 


significantly, almost one-third of all female-headed 
households with incomes below the poverty level 
lived in assisted housing, as did almost 37 percent of 
elderly households. Some 43 percent of assisted 
housing tenants also received food stamps, and four- 
fifths of these households were below the poverty 
level. (See table 4.) 

Three-fifths of all low-income housing residents 
were white. Three-fifths were family households, 
but more than half of these were headed by women 
with no husband present. There were children in just 
under half of all households. Half of all assisted 
housing was in central cities; another quarter was 
outside metropolitan areas. 

Where Next: Current Trends in Assisted 

By some measures — budget authority for incre- 
mental housing assistance, for example — low-income 
housing programs have been cut more savagely than 
any other programs. Last year, Senator Jake Gam, 
chair of the Senate Banking Committee and the 
HUD Appropriations Subcommittee, stated on the 
floor of the Senate that low-income housing pro- 
grams had absorbed over half of all the cuts made in 
domestic programs since the Reagan administration 
took office. Yet, it is worth noting that Congress has 
given the administration only about half the housing 
cuts it has requested. 

The increase in homelessness and other dramatic 
indicators of the low-income housing crisis is not, so 
far, because of cuts in housing programs. Rather it is 
the impact of the recession and cutbacks in other 
programs. We are still to reap the consequences of 
the housing cuts. 

Broadly stated (and grossly oversimplified), not 
only has the last decade seen the largest increment in 
assisted housing since the Federal Government 
began providing it in the 1930s, but, because of the 
time it takes between congressional action to pro- 
vide housing and getting it built and occupied, the 
largest number of program reservations (the first 
step in the process) came during the Ford adminis- 
tration; the largest number of construction starts 
during the Carter administration; the largest number 
of additional subsidized units actually occupied will 
apparently come under the Reagan administration; 
and we will only begin to see the effects of the 
devastating cuts of the past 3 years during the next 

The drop in the incremental number of assisted 
housing units has been accompanied by an even 
more serious loss: capacity. Even HUD, dedicated 
as it is to trying to provide housing assistance within 
the confines of the existing housing stock, has been 
forced to recognize that there are gaps and short- 
ages. For example, there are 2.4 million large renter 
households (5 persons or more) and only 1.0 million 
large rental units (4 or more bedrooms). Nor are 
landlords in the private sector willing to rent decent 
housing to low-income, single-parent households. 
Indeed, families with children at any income level 
face difficulties in renting housing. 

Fundamental Elements of an Adequate 
Low-Income Housing Program 

Vigorous efforts to end discriminatory practices 
are only one component of an adequate housing 
program for low-income people: one that makes 
access to decent, affordable housing a reality. The 
National Low Income Housing Coalition is now 
embarked on a process of developing specific pro- 
posals for a housing program that will, in fact, 
provided decent, affordable housing for all. An 
adequate low-income housing program would, we 
believe, incorporate the following elements: 

• An adequately funded entitlement, income- 
based housing assistance program to enable low- 
income people to obtain decent housing at costs 
they can afford. 

• Production and preservation programs to meet 
those low-income housing needs which cannot be 
met by income-support programs alone. 

• Strengthened fair housing laws and enforce- 
ment and a strong reaffirmation of the Federal 
Government's role in guaranteeing fair access to 

• A strong role for community-based, nonprofit 
organizations in the implementation of housing 
programs, along with the availability of Federal 
assistance to meet the broad range of housing 
needs at the neighborhood and community level. 

• Retention of the current stock of federally 
assisted and insured housing now occupied by low 
and moderate income people for their use and 
provision of the necessary funds to maintain it in 
viable condition. (This includes all present public 
housing, HUD-assisted, HUD-insured, and HUD- 
held units, as well as units assisted by the Farmers 
Home Administration.) 



Total Households, Poor Households, and Poor Households 
in Subsidized Housing, 1981 

(Households in thousands) 




Poor Households 

Number in 



Percent in 



All households 


1 1 ,676 



Metro, central city 
Metro, other 







Black households 





Married couple families 
Female householder 




21 .7% 

With children under 18 
With children under 6 
No children under 18 





Elderly householders 





Single-person households 





Note: Poor households are those with incomes below 100 percent of poverty level. Subsidized housing is rental housing only. 


• No displacement of low-income people from 
their neighborhoods by either public or private 

• Tax reform to curb massive housing subsidies 
through the tax system to middle and upper 
income people, particularly as long as budget 
constraints inhibit adequate housing aid to low- 
income people. The cost of housing-related tax 
subsidies has risen from $26 billion in 1980 to an 
estimated $43 billion in 1984. At the same time, 
new budget authority for low-income housing is 
set, under the administration's proposals, to drop 
from $26 billion in 1980 to $0.5 billion in 1984. 

• Monetary and credit policies to provide rea- 
sonable financing costs for housing and limit 

credit-related sharp fluctuations in building which 
increase the costs, prices, and rents of all housing. 
We believe that these elements provide the frame- 
work for a viable approach to meeting this Nation's 
housing needs. Clearly, this framework needs to be 
elaborated, tested against the views and experience 
of people attempting to meet the housing needs of 
our low-income and minority families and neighbor- 
hoods, and cast into specific legislative proposals. 
This is no small task. But it is one that is urgently 
needed. Without it, our housing efforts are doomed 
to inadequacy at best and countless millions of 
people will be deprived of the decent housing which 
should be their right. 


Creative Financing and Discrimination 

Discrimination in Home Mortgage Financing 

Glenda G. Sloane* 

Homeownership is the American dream. 
Throughout our history the Federal Government 
has intervened in times of crisis to protect home- 
owners and homesteaders threatened with the loss of 
their property. Although Federal action has been 
sporadic, and there has been no express national 
policy in support of homeownership, over the years 
the Federal Government has facilitated homeowner- 
ship as an intrinsic good and as a means to achieve 
other goals. For example, the offer of free land to 
settlers proved an effective impetus to expanding 
our frontiers. For most Americans, mortgage credit 
was and is the indispensible source of funds for the 
purchase of single homes and for the development of 
multifamily rental, cooperative, and condominium 
projects. In fact, the Federal Government's first 
significant entry into housing was in the mortgage 
credit area. 

Today the terms and conditions for securing 
mortgage credit that have evolved since the 1930s 
are undergoing radical change — change that may 
adversely affect minorities and women and consti- 
tute a setback in the protections secured over the last 
two decades. There are even indications that we 
may be in the process of reviving the mortgage 
credit systems antedating the reforms of the thirties. 

Before the Great Depression, the terms and 
conditions for securing a loan were so onerous that 
only a small segment of the population could qualify. 
In 1920 less than 40 percent of the nonfarm dwell- 
ings were owned by the families who occupied 
them. While some families could purchase homes 
outright, most needed some form of financing- 
financing that typically was available on the most 
prohibitive terms: 50 percent down and an unamor- 

* Director, Housing and Community Development, Center for 

National Policy Review, Catholic University Law School. 

' The Federal Housing Administration was established under the 

National Housing Act, Pub. L. No. 73-479, 48 Stat. 1246 (1934) 

(codified as amended in scattered sections of 12 U.S.C.). 

' The Federal Home Loan Bank Board was created under the 

Federal Home Loan Bank Act of July 22, 1932, ch. 422, 47 Stat. 

725 (codified as amended at 12 U.S.C. §1421 [1976]). 

tized loan at a high rate of interest payable in full at 
the end of 5 years. 

The economic crisis of the thirties and the 
undermining of financial institutions drastically 
changed the home financing system. In 1934 the 
Federal Government intervened to assist many 
families threatened by foreclosure and the loss of 
their homes. The establishment of the Federal 
Housing Administration (FHA)' revolutionized the 
mortgage industry. Low downpayments and a fully 
amortized 30-year loan at low interest rates replaced 
the restrictive terms and conditions of the market 
place. Even before FHA was established, Congress 
took steps that involved the Federal Government in 
home financing. In 1932 Congress created the 
Federal Home Loan Bank Board (FHLBB)= and 
soon after chartered savings and loan associations^ 
and provided insurance of accounts." While these 
actions were primarily directed to alleviate the 
economic crises, they operated to shore up housing 
credit and facilitate homeownership. 

Broadening the base for homeownership was 
accomplished in accordance with the established 
practices and policies of a dual market — one for 
blacks and one for whites. Women, of course, were 
rarely, if ever, considered as qualified borrowers. 
Loans were made to blacks only if they could meet 
more stringent credit requirements and more oner- 
ous terms than were whites. Both blacks and whites 
were ineligible to purchase homes in neighborhoods 
and locations because the racial composition was 
incompatible with accepted social and economic 

It was not until after World War II that the 
ramifications of these policies and the role of the 
Federal Government became significant. The impact 

' The chartering of savings and loan institutions was set out in 

the Home Owner's Loan Act of June 13, 1933, ch. 64, 48 Stat. 128 

(codified as amended at 12 U.S.C. §1461 [1976]). 

* The Federal Savings and Loan Insurance Corporation was 

created under the National Housing Act of June 27, 1934, ch. 847, 

48 Stat. 1246 (codified as amended at 12 U.S.C. §§1701, 1725 



of the introduction of Federal mortgage insurance 
into the market reached its peak after World War II. 
The huge demand for housing was predictable. One, 
the Nation's resources had been directed to the war 
effort and, consequently, little housing was pro- 
duced. Two, new families, particularly veterans' 
families and those who had doubled up for lack of 
available housing, were in the market to purchase 
homes. FHA primed the pump. But for whom? The 
promise of homeownership was not universal. Cre- 
ditworthiness and the home and property as ade- 
quate security for the loan were based on terms and 
conditions that varied according to the race and sex 
of the borrower and the location of the property. 
From its inception, FHA adopted and adhered to 
the "social" guidelines followed in the private 

When racial minorities and women applied for 
mortgage loans they were either rejected outright 
because of their race or sex or were subjected to 
more stringent terms and conditions, overly restric- 
tive payment-to-income ratios, and policies that had 
an adverse impact, such as refusal to count stable 
income from overtime or part-time work, or that 
required the applicant to have previously owned a 
home. (This is not an exhaustive list.) 

Loans were also denied by private mortgage 
lenders to all persons regardless of race because of 
the location of the property. These underwriting 
standards, incorporated into the FHA manuals of 
1935 immediately following its establishment in 
1934, were based on the premise that the "infiltration 
of inharmonious racial or nationality groups" into a 
neighborhood endangered property values.' To 
protect against such incursions, FHA advised that 
deed restrictions were the most effective insurance 
against such infiltration. The manual recommended 
that the restriction should apply for at least 20 years 
and should include "appropriate provisions for 
enforcement."" Thus the restrictive covenant be- 
came a standard provision in deeds on property that 
carried Federal mortgage insurance. In addition to 
inharmonious racial and national groups, the manual 
cautioned on loans made in neighborhoods where 
the schools served children who represented "a far 

' The 1935 FHA Manual as cited in The Richmond School 
Decision: Complete Text of Bradley v. School Board of Richmond at 
172 (Chicago: Integrated Education Associates, 1972). 
• Id at 173. 

' U.S., Federal Housing Administration, Underwriting Manual: 
Underwriting and Valuation Procedure under Title II of the 
National Housing Act. para. 266 (April 1936 rev'd cd., November 

lower level of society" albeit the neighborhood itself 
was "favorable."' 

In 1944 Congress enacted the G.I. Bill of Rights,' 
later amended to include a mortgage guarantee 
program to enable veterans to purchase homes with 
no downpayments and low interest rates.* The 
Veterans Administration (VA) endorsed the prem- 
ises and covenants consistent with FHA practices. 
Thus, the housing boom following World War II 
was shaped by, and subject to, discriminatory 
private and Federal and State governmental dictates 
on who is creditworthy and which property and 
neighborhood is adequate collateral. 

The essential role of the mortgage lender cannot 
be overstated. Were a real estate broker or individu- 
al home seller to negotiate a sale to an "inharmo- 
nious racial or nationality" family, it was likely that 
the purchaser could not secure a loan, or if a lender 
agreed, it was likely that FHA or VA would refuse 
to place insurance or guarantee commitments on the 
property, thereby obstructing a valid transaction 
between a willing seller and buyer. Discrimination 
based on race has implications not only for prospec- 
tive owners, but for renters as well. Mortgage 
financing for developers of multifamily rental hous- 
ing has been subject to the same proscriptions as 
sales housing. Neighborhood location and racial 
occupancy of tenants were determinative factors. 

The consequences of decades of the implementa- 
tion of these discriminatory housing practices and 
policies are evident: predominantly white suburbs 
with occasional minority pockets and concentrated 
and segregated minority populations in central cities. 

The eradication of formal published restrictions 
has been slow to develop. The very nature of the 
transactions involved in securing credit has made 
the task difficult, more difficult than in eliminating 
discrimination in other aspects of housing accessibili- 
ty. Throughout the decades of effort to prohibit 
housing discrimination, the elimination of discrimi- 
natory practices in mortgage lending has been and 
continues to be a complex and long-term effort. 
Securing protection against discrimination in mort- 
gage lending has been complicated by the difficulty 
in documenting the case. Establishing creditworth- 

» The Serviceman's Readjustment Act of 1944 (38 U.S.C. §1801 
et seq., June 22, 1944). 

' Mortgages for veterans were guaranteed by the Serviceman's 
Readjustment Act (G.I. Bill), (Pub. L. No. 78-346, 58 Stat. 284 
[ 1 944] as amended.) 


iness, and the value of the particular piece of 
property and the terms and conditions of the loan 
have been the province of the lender who was under 
no obligation to explain the bases for his decisions. 
An applicant who was rejected on grounds that 
he/she did not meet the institution's credit stan- 
dards, or that the appraised value of the house was 
well below the agreed price had no information with 
which to assess whether the lender's standards were 
applied to all applicants without regard to race or 
neighborhood. Further, there was no way, at least 
readily available, to determine if others in similar 
situations had received the same or different treat- 
ment. In addition, other policies that did not express- 
ly exclude persons by reason of race or sex had a 
discriminatory effect. For example, refusing to make 
home loans on houses 30 or 40 years old resulted in 
redlining older neighborhoods in central cities 
where minorities lived. 

The first major inroad was made by the Supreme 
Court when it refused in 1948 to enforce a racially 
restrictive covenant.'" Although the Court did not 
declare the covenant invalid, it concluded that 
enforcement by the Court constituted State action in 
violation of the equal protection clause of the 14th 
amendment of the Constitution. VA and FHA, 
however, did not forbear from insuring mortgages 
on properties with restrictive covenants until 1950, 
and then applied it to covenants filed after 1950 
only. The fact that these covenants could no longer 
be enforced did not impair their usefulness for, as 
"gentleman's agreements," they continued as insur- 
ance against the "risk" as perceived by mortgage 

The Supreme Court decision had no effect on the 
operation of other Federal agencies with functions 
relating to home finance. The FHLBB, Office of the 
Comptroller of the Currency (OCC)," the Federal 
Deposit Insurance Corporation (FDIC)," and the 
Federal Reserve Board (FRB)'' supervised savings 
and loan associations and banks throughout the 

■" Shelley v. Kraemer, 334 U.S. 1 (1948). 

" The Office of the Comptroller of the Currency was established 

to supervise the national banks under the National Banking Act of 

June 3, 1864, ch. 106 §1, 12 Stat. 99. 

'^ The Federal Deposit Insurance Corporation was created 

during the famous "one hundred days" of the New Deal under 

the Federal Reserve Act of June 16, 1933, ch. 89, §8, 48 Stat. 168 

which added section 12B to the Federal Reserve Act of 1931 

(codified as amended at 12 U.S.C. §1811 [1976]). 

" The Board of Governors of the Federal Reserve System was 

created under the Federal Reserve Act of 1913, 38 Stat. 251 

(codified as amended at 12 U.S.C. §221 [1976]). 

country through their various functions, such as 
chartering of institutions, insuring deposits, and 
advancing funds. They continued to ignore any 
responsibility although there was a growing aware- 
ness that minorities, otherwise qualified to borrow, 
were arbitrarily denied mortgage loans because of 
their race or national origin. One example of Federal 
concern that qualified minorities and others were 
able to secure mortgage loans is the Voluntary 
Home Mortgage Credit Program (YHMCP)'" that 
was established in 1954 to provide assistance to 
minorities and other applicants who had been 
rejected by two institutions. No obligation was 
placed on private institutions to participate and the 
program had limited impact. It was significant 
because it acknowledged the problem. 

In 1961 the Commission on Civil Rights issued a 
comprehensive report on discrimination in mortgage 
lending and recommended that the President issue 
an executive order directing the Federal agencies 
that supervise institutions that make mortgage loans 
"to conduct such business on a nondiscriminatory 
basis." In 1961 the FHLBB did adopt a resolution 
against discriminatory mortgage lending by their 
member institutions. 

In November 1962 Executive Order 11063 on 
Equal Opportunity in Housing was issued. It did not 
include coverage as recommended by the Commis- 
sion. Title VI of the Civil Rights Act of 1964 
continued the exclusion of the financial regulatory 
agencies from any obligation to develop and imple- 
ment Federal standards and rules prohibiting dis- 
crimination by their member institutions.'^ 

Other than the 1961 FHLBB resolution, no 
attention was paid by the financial regulatory agen- 
cies to the problem of mortgage lending discrimina- 
tion. The resistance by these agencies and lenders 
persisted up to and after the enactment of title VIII, 
the National Fair Housing Law in 1968.'* 

Title VIII specifically prohibits "discrimination in 
the financing of housing."" The act also directs that 

'* The Voluntary Home Mortgage Credit Program (VHMCP) 

was established under the National Housing Act of 1954, 68 Stat. 

637 (1954), 12 U.S.C. §1750cc [1958]). 

"■ See Laufman v. Oakley, 408 F. Supp. 489 (S.D. Ohio 1976) for 

holding that Title VI applies. 

" Title VIII of the Civil Rights Act of 1968, Pub. L. No. 90-284, 

82 Stat. 81 (codified as amended at 42 U.S.C. §§3601-3619 [1976 

and Supp. V 1981]). 

" Title VIII, §805 (42 U.S.C. §3605). See above, note 15 and 

accompanying text in this section. 


"all executive departments and agencies shall admin- 
ister their programs and activities relating to housing 
and urban development in a manner affirmatively to 
further the purposes of this title."'* None of the 
financial regulatory agencies acted to implement 
these provisions. 

In 1971, 10 public interest organizations filed 
rulemaking petitions with the 4 regulatory agencies 
calling for regulatory action to prohibit discrimina- 
tory practices by their member institutions consis- 
tent with the provisions of title VIII. No action or 
response was forthcoming." 

In 1974 the FHLBB issued regulations on nondis- 
crimination including prohibitions against redlining 
and other policies that have a discriminatory ef- 
fect.^" Other than receiving complaints, no enforce- 
ment mechanism or civil rights office was created to 
oversee adherence to the regulations. Lacking im- 
plementation provisions, these regulations amounted 
to little more than policy statements — albeit impor- 
tant policy statements. There was silence from the 
board's sister agencies. 

The years following the enactment of title VIII 
did not show a diminution of lending discrimination. 
Few cases were brought pursuant to title VIII 
demonstrating the difficulties in documenting and 
proving discrimination in a court of law or before a 
Federal agency. Although a Federal district court" 
in 1976 ruled that redlining was a violation of titles 
VI and VIII and the 1866 law, redlining and other 
discrimnatory lending practices and policies contin- 
ued. Nonetheless, the agencies only acted if a 
complaint was filed against a member institution. No 
steps were taken to ascertain whether their mem- 
ber's policies or practices were discriminatory or 
were efforts made to assure compliance with the 
law. Systematic examination of lenders, collection of 
race and sex data on accepted and rejected applica- 
tions, and the development of a civil rights presence 
and expertise were not undertaken. One justification 
for inaction was that there was insufficient informa- 

■• Title VIII, §808 (42 U.S.C. §3608). 

" Organizations that filed the 1971 rulemaking petition were: 
National Urban League, National Committee Against Discrimina- 
tion in Housing, National Association for the Advancement of 
Colored People, American Friends Service Committee, League 
of Women Voters, National Neighbors, Housing Association of 
Delaware Valley, Leadership Council for Metropolitan Open 
Communities. Metropolitan Washington Planning and Housing 
Association, Rural Housing Alliance, and the National Associa- 
tion of Real Estate Brokers. 

" Federal Home Loan Bank Board Regulations Against Dis- 
crimination, 12 C.F.R. §528 (as established on Dec. 17, 1974). 

tion to support the need for monitoring and enforce- 
ment measures. 

In 1976 the same 10 public interest organizations 
plus 1 that filed the rulemaking petition in 1971 filed 
a lawsuit against the same 4 agencies. ''^ The 
complaint cited the agencies for failing to fulfill their 
obligations under the various civil rights laws and 
asked the court for appropriate relief In 1977, after a 
few extensions of time, the agencies filed an answer 
that mainly relied on a "lack of knowledge or 
information sufficient to form a belief as to the truth 
of the allegation." Before trial was set, first the 
FHLBB, followed by the FDIC and the OCC, 
entered into settlement agreements with plaintiffs." 
The FRB did not settle, and the case was not 

The major provisions of the settlement agree- 
ments recognized the affirmative duty of the agen- 
cies to use their regulatory authority to identify 
discriminatory practices of their member institu- 
tions, and to develop and take corrective action 
where necessary. The agencies acknowledged the 
need for civil rights specialists and a training 
program for bank examiners that would incorporate 
into their regular bank examinations investigations 
for civil rights compliance. 

After a year, each of the three agencies had 
developed computerized individual data collection 
systems. All required the recording of race, sex, 
national origin, and marital status on applications. 

In July of 1982 a report on these systems was 
submitted to the Federal Financial Institutions Ex- 
amination Council (FFIEC) pursuant to a congres- 
sional directive." Overall, and given the short term 
that the systems have been in use and the low level 
of lending activity during this period, the contractor 
concluded that the automated analyses, as one of 
many tools serving examiners, "improve the examin- 
er's ability to detect possibly discriminatory policies 

" See Laufman v. Oakley, 408 F. Supp. 489 (S.D. Ohio 1976). 

" National Urban League v. Comptroller of the Currency, Civil 

Action No. 76-718 (United States District Court for the District 

of Columbia) (1976). 

" Settlement Agreement with the Federal Home Loan Bank 

Board, Mar. 22, 1977; Settlement Agreement with the Federal 

Deposit Insurance Corporation, May 13, 1977; Settlement with 

the Office of the Comptroller of the Currency, Nov. 30, 1977. 

" The Housing and Community Development Act of 1980, 



and practices in the most efficient and effective way 
possible. "^^ 

In its comments on the three agencies' civil rights 
enforcement programs, the contractor notes the role 
of the examiners. Regardless of what the automated 
systems pump out indicating potential areas of 
mortgage credit discrimination, it is the task of the 
examiner, whether in routine examinations or in 
investigation of specific allegations or evidence of 
discrimination, to make complex determinations on 
the institution's compliance with the law. The 
examiner has multiple compliance standards: 

1) Is an instutition serving the credit needs of the 

2) Is it extending credit without regard to the 
applicant's race, sex, marital status, and ages or 
the age and location of the property? 

3) In following up on apparent discriminatory 
rejections of applicants, is the explanation valid? 
These tasks require expertise and time as well as 

having to compete with the traditional duties for the 
examiner's attention. The training of examiners and 
the availability of support and assistance from civil 
rights specialists in the central and regional offices 
require a substantial commitment from the agencies. 
That commitment is a signal as well to the examiners 
and the institutions they examine that the agencies 
intend to enforce the law. 

The pressures on agencies to cut costs and 
paperwork threaten the continuation of the data 
collection system. Civil rights enforcement is depen- 
dent on information on the participation of minori- 
ties and women in the mortgage credit market and 
the geographic locations of properties that secure 
the mortgage loans. Constraints on data collection 
and analysis would be a serious setback at this time. 
First, the systems are essential to the examination 
process and with experience will become more 
useful and effective. Second, the condition of the 
housing market during these years of inflation has 
given rise to a number of new mortgage instru- 
ments — a development that creates a need for an 
expansion of the collection of data. There is no doubt 
that these new forms of mortgage credit have 
adverse implications for minorities, women, and 
inner-city and integrated neighborhoods. 

*' Section 340(e) Fair Housing Lending Study, Federal Financial 
Institutions Examination Council, July 30, 1982 (McLean, Va.: 
JRB Associates) pp. 7-11. 
" House Committee on Banking, Finance and Urban Affairs, 

While the conventional, fixed-term mortgage con- 
tinues to be the prevailing method for financing the 
purchase of a home and multifamily rental projects, 
an array of alternatives have come into use. For the 
borrowers, the reduction in risk to the lenders 
creates degrees of uncertainty on their ability to 
secure a loan initially and in having the continuing 
capacity to meet potential escalating payments. 

Mortgages that carry changing interest rates 
indexed to some given interest rates beyond the 
control of the borrower or lender introduce new 
factors in determining an applicant's creditworth- 
iness. It is no longer sufficient to evaluate present 
income alone. If the mortgage payments may in- 
crease in the future, the lender will examine the 
borrower's ability to meet this potential additional 
burden in the future, i.e., is the applicant upwardly 
mobile? What assurances are there that his/her 
income will increase in step with the interest 
increases as dictated by the index selected by the 

Variable rate mortgages (VRMs) are not uniform. 
(VRM is the general term used to cover arrange- 
ments where interest rates may change.) Particularly 
those that have no cap on the number or amounts of 
interest rate changes that may be applied over the 
life of the mortgage will require higher limits on 
present and future income of the borrower than 
under a conventional fixed-rate mortgage. Even 
where there is a cap, the lender will seek future 
assurance of increased earnings. 

The FHLBB has approved adjustable mortgage 
loans (AML initially called VRM) with no caps, 
requiring only that the index used is identifiable by 
the borrower and beyond the control of the lender.** 

Other loans based on increasing income are 
structured to assist borrowers who cannot carry 
payments in the early years but have the potential 
for assuming high payments in later years. Called 
graduated payment mortgages (GPM), the borrow- 
er's monthly payments rise over a period of 10 years 
or less. The FHLBB applies no limits on the amount 
or frequency of increases under the GPMs.*' 

Yet another "creative" instrument based on in- 
creased monthly payments is the growing equity 
mortgage (GEM). In contrast to the AMLs the 

98th Cong., 1st sess., Housing— A Reader, 66 (Comm. Print 98-5: 
July 1983). 
" Id. at 68. 


increased payments are not allotted to interest, but 
to the principal. It is possible for the borrower to 
then repay the loan in 12 to 15 years. FHA and the 
FHLBB have approved the use of these instruments. 
The former permits annual increases by 2.5, 5, or 7.5 
percent over a 5-year period or 2 or 3 percent in 10 
years. The FHLBB sets no limits.^* 

A distinctively different loan arrangement also 
available entails a balloon payment at the end of a 
short term. Called a rollover mortgage or a renegoti- 
able rate mortgage (RRM), at the end of a 3- or 5- 
year term, the loan may be renegotiated at new 
interest rates or rolled over. There is usually no 
obligation on the lender to renegotiate or rollover, 
and, in that event, the full payment is due. 

Clearly, all these new instruments have implica- 
tions for members of minority groups and women 
whose creditworthiness has been subject to the most 
stringent and biased scrutiny. The potential for 
increasing one's income is necessarily speculative 
and will hinge on subjective or even "intuitive" 
judgments of lenders. Their perception of the likeli- 
hood of minority persons and women being pro- 
moted to positions of responsibility and accom- 
pained by an increase in income will undoubtedly be 
affected by personal and stereotypical attitudes. 
(Because these groups are recent entrants to the 
housing market — due to a large extent to past 
discrimination — they will have difficulty qualifying 
under any circumstances, e.g., they have never 
owned a home before.) 

Even assuming discriminatory intent is not pre- 
sent, the belief that these classes of applicants pose 
greater risks will have the same effect as rejections 
based on intentional discrimination. 

Presently, none of the agencies or other entity is 
collecting information on the experience of minori- 
ties and women in securing mortgage loans as 
described above. If, in fact, they are being denied 
mortgage credit arbitrarily, new standards and 
judgments must be formulated to correct this inequi- 
ty. The first step is to determine what is happening 
in this new world of home finance. Certainly, the 
need for this information exists for purposes beyond 
that of civil rights concerns in the interest of 
understanding the impact on all consumers and 

The new instruments have potential adverse ef- 
fects for neighborhoods as well. Analagous to 

conditioning a loan on future earning power, the 
graduated payment adjustable mortgage loan 
(GPAML), the shared appreciation (SAM) or 
shared equtiy mortgage, and the price level adjusted 
mortgage (FLAM) assume the property secured by 
the loan will appreciate.^® In one situation, the 
monthly payments are insufficient to cover the 
interest due and the interest owed is that added to 
the outstanding loan balance. Larger downpayments 
or higher interest rates are usually applied to 
instruments providing negative amortization. Should 
the borrower sell or the lender foreclose to recap- 
ture the increase in the loan amount, the property 
would have to have increased in value. 

In the shared equity mortgage, a borrower, in 
return for a benefit, agrees to share with the lender 
the future appreciation in the value of the property. 
The lender may offer some break in the downpay- 
ment or interest rate in exchange for this prospective 

In yet another version, the FLAM, the interest 
rate does not change but the loan balance is 
recalculated each year in accordance with inflation 

What effect do these devices have on lenders' 
decisions to make loans in certain neighborhoods? 
Because the terms are based on assumptions that the 
property values will increase, conclusions will be 
drawn about the future of the area. While the old 
saws about property values declining in integrated 
and older neighborhoods have been discredited, 
they die hard. Whereas the conventional mortgage 
was based on values remaining stable and keyed to 
demonstrable evidence of that fact, the new mort- 
gages call for predictions as to future value and it is 
likely, if not probable, that the risk will occasion the 
most conservative assessment, including the old 
myths that guided lenders in the past. 

The availability of mortgage credit without dis- 
crimination is not and should not be dependent on 
economic conditions. Regardless of the mechanisms 
devised to facilitate homeownership or the provision 
of multifamily rental units, protection against exclu- 
sion because of race or sex from these benefits must 
be included. No action has been taken to date to 
monitor experience with these new mortgages. 
Where subjective considerations are introduced into 
the decision process, opportunities for discrimina- 
tion, intentional or not, result. 

Another current situation presents potential hard- 
ship for minority and female mortgagors. Lenders 
are coping with defaulting borrowers who are 
unemployed and unable to meet their mortgage 
obligations. The banking agencies are encouraging 
forebearance on foreclosure by these lenders but no 
guidance has been given to assure that factors of 
race or sex are not considered in determining 
whether or not to forebear in a particular case. 
Because these decisions are left to the discretion of 
the lender such guidelines are necessary. 

A final aspect of the mortgage credit process that 
impinges on access to credit for minorities and 
women and availability of credit for homes in 
integrated and older neighborhoods is the secondary 
mortgage market. A major player is the quasi-public 
Federal National Mortgage Association (FNMA).'" 
Its scope of activity is important in that it buys 
mortgages from mortgage bankers who are not 
under the supervision of any of the Federal financial 
regulatory agencies and therefore not subject to the 
rules and monitoring procedures as are most savings 
and loans and banks. FNMA is also authorized to 
purchase the new forms of mortgage loans. In 1978 
HUD proposed regulations that would obligate 
FNMA to purchase loans made to families of low 
and moderate incomes and in central cities and to 
apply underwriting guidelines that would prohibit 
FNMA from refusing to purchase loans because of 
the race, color, sex, etc., of the borrower or the 
racial composition of the neighborhood.^' FNMA 
resisted these efforts on grounds that the Secretary 
was exceeding her authority. (A weaker version of 
these regulations was adopted on August 15, 1978.) 
Regardless of the genesis of these rules or guidelines, 
they are consistent with Federal law and policy. 
FNMA itself points out its pivotal role in encour- 
gaging the availability of mortgage credit, improv- 
ing the geographical distribution of mortgage funds, 
and generating as much as two-thirds of its funds 
from nontraditional mortgage investors. Every actor 
in the process of facilitating homeownership must be 
subject to the same proscriptions against discrimina- 
tion. The operation of the secondary market is not 
neutral and it should be examined and monitored to 

" The Federal National Mortgage Association (FNMA) was 
created under the National Housing Act of June 27, 1934, ch. 847, 
Title III §307., 48 Stat. 1254 (codified as amended at 12 U.S.C. 
§1717 [1976]). 
" Regulations Implementing the Authority of the Secretary of 

assure it is not an obstruction to freedom of housing 


Mortgage financing institutions and mortgage 
instruments are in flux. As new structures and 
mechanisms evolve it is essential that the civil rights 
of minorities and women and the right of all persons 
to live in neighborhoods of their choice are protect- 
ed at the outset. In the past, these rights were either 
ignored or rejected, and the task of undoing the 
consequences has been overwhelming. 

Today, the Federal financial regulatory agencies 
are obligated to monitor the providers of credit 
under their supervision, to correct violations, and to 
act affirmatively to promote choice. None of these 
functions can be carried out unless there is sufficient 
information about the applicants for credit and the 
locations in which lenders are making mortgage 
loans. The information that is collected must be 
analyzed to determine whether an institution's poli- 
cies and practices are nondiscriminatory. The bank 
examiner is dependent on this data whether the 
examination is part of the regular examination or 
conducted in response to a specific complaint. The 
examiners must be educated about discriminatory 
patterns and policies and allowed the time necessary 
to perform his/her duties. Where violations are 
found, corrective action must be timely and appro- 
priate. Further, this entire process must be adapted 
to include the new mortgage instruments used by the 
lending institutions. Monitoring and enforcement of 
the civil rights laws is best overseen by specialists 
who apply their civil rights expertise to the specific 
activity of the agency. In the last year, the gains 
made as a result of the settlement agreements have 
been ending. The forms used for the collection of 
race, sex, etc., and location information are expiring. 
The terms of the settlement agreements have ended. 
There should be no question as to the need to 
continue and improve on the present systems and to 
maintain an office of civil rights. 

Owning a home must no longer be a dream 
deferred for those who, because of their race, 
national origin, or sex are denied mortgage credit — 
the key to homeownership. 

the Department of Housing and Urban Development Over the 
Conduct of the Secondary Market Operations of the Federal 
National Mortgage Association (FNMA), 24 C.F.R. §8 1.1 8(b) 



Thomas L. Clark. Jr.* 

Good Morning: 

It's a pleasure to have been invited to speak about 
some of the problems minorities and women have 
experienced in attempting to obtain mortgage fi- 
nancing. I also plan to speak about some of the 
things the consumer services division of the New 
York State Banking Department is doing to deal 
with the problem. 

As you are aware, changes in our economy, high 
interest rates, and deteriorating profit and loss 
statements have made long-term, fixed-rate financ- 
ing almost extinct and lenders have devised more 
sophisticated forms of financing to protect them- 
selves from low-yielding mortgage portfolios. Un- 
fortunately, some of their creative forms of financing 
have effectively eliminated vast segments of our 
population from the housing market. 

Either credit criteria place the loan beyond the 
prospective borrower's economic capabilities, or the 
type of credit offered does not fit within the confines 
of the geographical location of the property. I shall 
focus on some of the kinds of financing that I believe 
state the case. 

First, The Graduated Payment Mortgage, also 
referred to as "GMP," is designed for buyers whose 
present income is not sufficient to meet current 
mortgage rates, but who expect their income to 
increase significantly in the years ahead. The bor- 
rower's monthly payments are initially insufficient 
to repay the monthly principal and interest costs 
scheduled for the loan, resulting in negative amorti- 
zation. In other words, the principal balance of the 
loan is actually increased in the initial years of 
repayment and payments ultimately rise to a level 
higher then on comparable fixed-payment mort- 

Second, The "Growing Equity Mortgage," or 
GEM, is currently being offered to buyers that are 
looking for mortgages of $150,000 or more. Under 
this plan, the mortgagor agrees to increase the 
monthly payment by a certain percentage each year 
and the extra payment is used to reduce the principal 
balance. This enables the borrower to pay off the 
loan in 12-15 years instead of 30 years. A $150,000 

mortgage at 14 percent would cost the borrower 
about $18-$20,000 per year. No comment required. 

Third, the Pledged Account Mortgage (PAM) is a 
special type of GPM. On most GPM plans, the low 
initial payments are insufficient to pay all the interest 
owed. On a PAM, that portion of the interest due 
that is not covered by the monthly payment is 
deducted from a savings account pledged by the 
borrower from monies which otherwise would have 
been applied to a downpayment and to provide for a 
smaller loan amount. Some, but not all, graduated 
payment mortgages have the pledge account feature. 
Since such a loan provides for a larger loan amount 
in order to initially allow the scheduled monthly 
payment, the loan results in larger overall interest to 
the borrower. 

Fourth, with "Share Appreciation Mortgage," or 
SAM, the borrower offers to share a portion of the 
increased value of his home with the lender after a 
specified number of years, or sooner if the property 
is sold before maturity of the loan. 

Fifth, A "Negative Amortization Mortgage," or 
NAM, is a variable-rate mortgage in which the 
monthly payment remains constant even though the 
interest rate might change. Thus a borrower might 
end up owing more on a house after a period of time 
than the amount originally borrowed. 

Sixth, "Zero-Rate Mortgages," or ZRMS, are 
usually made by real estate developers to attract 
buyers who cannot qualify for conventional loans. 
The purchaser pays only the principal and no 
interest. As compensation for the interest, the 
developer raises the price of the house. A $50,000 
house might sell for $90,000. 

Most of the aforementioned mortgages are offered 
to purchases of property in the more economically 
advantaged areas and are not readily accessible to 
families of modest incomes. 

By way of illustration, mortgage amortization 
(principal plus interest) on a $60,000 fixed-rate 
mortgage loan payable over a 30-year period would 
require the monthly payment as indicated in table I. 

I might add that the monthly payment does not 
include real estate taxes, homeowner's insurance and 

New York State Deputy Superintendent of Banks. 



Monthly Payments for $60,000 Fixed-Rate Mortgage Loan Payable Over 30 Years 

At- 8% - $440.26 

9% - 


10% - 


11% - 

571 .40 

12% - 


13% - 


14% - 


15% - 


16% - 


17% - 


$ 5,283.12 

other "add-ons" which, by contract, are usually 
required additions to the mortgage payment. If we 
were lo include those costs plus the expense of 
heating, lighting, and insuring a home in the north- 
east region, we could easily add an average of $352 
per month to the figures in table 1 to defray those 
costs. Using a ratio of one week's salary to cover the 
combined described costs, a family would need a 
minimum household income of $55,000 per annum to 
support the basic fixed household expenditures on a 
home with a mortgage loan at 14 percent. 

My calculations were developed as in table 2. 

High interest rates themselves have the effect of 
eliminating minorities and women from the housing 
market. I fully recognize that there are countless 
other Americans of all ethnic groups faced with the 
same problem but somehow, through mortgage 
"buy-downs" and other forms of innovative financ- 
ing, banks and real estate developers are able to find 
ways of selling homes to nonminority purchasers in 
ways that are not equally available, in certain areas, 
to minority groups and women. 

During the past few minutes, I have talked about 
the various lending vehicles and the effect high 
interest rates have on the potential borrowers. The 

picture I have painted is gloomy, since the days of 
the 6, 7, or 8 percent mortgages are gone forever. 

Another area of grave concern is the effect that a 
branch closing has on the community. At a recent 
New York State Assembly hearing, Vincent Tese, 
the superintendent of the New York State Banking 
Department, testified on the impact and conse- 
quences branch closings can have on low- and 
moderate-income communities. 

As excerpted from his testimony, "Branch clos- 
ings obviously do not help a neighborhood and can 
in fact have a negative impact on the community. 
While we fully recognize that profitability and the 
marketplace are fundamental to successfully provid- 
ing banking services to communities, we also realize 
that successfully revitalizing main commercial ave- 
nues requires the availability of essential banking 
services." Superintendent Tese makes a valid point 
and I would like to expand upon it as follows: 

To the legitimate real estate developer, a branch 
closing contributes to the belief that the community 
is not salvageable; to other types of lenders such as 
insurance companies, private mortgage bankers, and 
investors, properties are no longer marketable; and 
to "fastbuck speculators," a boarded-up building is 




Oil or gas heating -$1,500.00 or $125.00 per mo. 
Lighting - 840.00 or 70.00 per mo. 

Real estate taxes - 1,500.00 or 125.00 per mo. 
Homeowner's insur. — 384.00 or 32.00 per mo. 

$4,224.00 $352.00 per mo. 

an ideal location for a sleazy operation that would 
pay "big bucks" for a more dignified location. This 
scenario has been repeated in inner cities and towns 
throughout the Nation. The end result has been 
catastrophic as once vibrant commercial areas have 
been destroyed and surrounding housing stock has 
been abandoned, turned over to families receiving 
public assistance, or set afire by arsonists, hired in 
some cases by unscrupulous owners. While there are 
many factors contributing to this situation, lenders 
and government, working together, must accept 
their responsibility to aid in the revitalization of 
these areas. 

David Rockefeller, in an address before the 
Harlem Chamber of Commerce, stressed the impor- 
tance of the public-private partnerships. In his 
opinion, "The private sector throughout the 'City' 
has a major stake and a major role to play. It is also 
clear, however, that the private sector cannot solve 
all of the problems by itself Extensive public 
involvement and resources are needed as well. If we 
don't move swiftly from the vague to the concrete in 
this area, the future will be increasingly cloudy for 
our city and our society as a whole." Mr. Rockefel- 
ler's observations extend far beyond the city of New 

York. Mortgage financing should be available on an 
equal basis, and new vehicles are needed to fill the 
gaps in mortgage lending that continue to exist. 

As a member of the banking department and head 
of the consumer services division, I have a personal 
commitment to "seek out" and expose unjust lending 
practices wherever they exist and along those lines, 
our division has established the following action 

(1) The director of our community reinvestment 
monitoring unit (CRMU) has intensified our moni- 
toring activities by establishing community profiles 
in areas serviced by our member banks; 

(2) Urban analysts have been hired to conduct 
field surveys with community organizations, mer- 
chants, and local residents to ascertain whether the 
local banking institutions are meeting the financial 
needs of its service community; 

(3) The information gathered will be supplied to 
our CRMU examiners and will be used during their 
examination of a bank's CRA practices and if these 
practices are found not in compliance, corrective 
modifications will have to be made in order to obtain 
our approval of future expansion plans; 


(4) Our CRM unit will closely monitor each 
bank's minority and women-owned business lending 
programs and encourage those without a program to 
implement an acceptable plan within a given time 

frame. , . . ^ 

(5) CRMU will also conduct seminars designed to 
assist minority enterprises with the structuring of 
loan proposals that will aid them in obtaining credit 
from the conventional lending sources. 

(6) Our consumer services division will continue 
to hold community outreach seminars throughout 
the State of New York to acquaint the public with 

the functions of the banking department and try to 
help them resolve legitimate banking problems they 
may have incurred with their local institution; 

(7) A quarterly "Newsletter" outlining the activi- 
ties of our division and informative articles concern- 
ing banking, legislation, and issues of public concern 
will be ready for distribution by the end of October. 

We have a number of plans on the drawing board 
and we believe we're on the "right-track" toward 
the accomplishment of our stated goals. 

I appreciate the opportunity to be part of this 
panel discussion and thank you for your attention. 


452-986 0-84 

Creative Forms of Finance Discrimination 

Theresa L. Watson* 

I appreciate the opportunity, on behalf of the 
American Savings and Loan League, to address the 
very important question whether minority groups 
and women have equal access to the mortgage 
market, looking at the impact of interest rates and 
government-supported secondary market mecha- 
nisms on the creation of affordable homeownership 
opportunities for them. 

The American Savings and Loan League is a 
nonprofit membership organization composed of 
savings and loan associations in the United States 
which are owned and/or operated by blacks, His- 
panics, Asian Americans, members of other ethnic 
minority groups, and women. Formed 35 years ago, 
the current membership includes 70 savings and loan 
associations operating in 24 States and the District of 
Columbia. More than half of the members are 
federally chartered associations. The average size of 
the members of the American League is only $25 
million in assets which is considerably smaller than 
the average asset size of all of the nonminority 
savings and loan associations. The smallest associa- 
tion has $3 million in assets; the largest somewhere 
near $300 million. Only one-half of our membership 
have been in existence for more than 10 years. The 
oldest association, however, was started in 1888 in 
Philadelphia, Pennsylvania. 

Despite their small size, these financial institutions 
have become an integral part of the minority 
neighborhoods throughout the country and general- 
ly were organized to fill an unmet need for credit in 
minority communities. Frequently they were the 
only financial institution in their community. Today, 
the total assets of the 75 minority S&Ls are ap- 
proaching $3 billion, with over 80 percent of the 
assets that amount in residential single-family mort- 

Savings and loan associations, as private busi- 
nesses, on their own initiative may attempt to 
provide low-cost mortgage money to low- and 
moderate-income persons, a significant number of 
whom are ethnic minorities and women. They are 
constrained, however, as for-profit private entities, 
to do business in a profitable manner. This means 

that they cannot pay 10 percent for deposits that are 
then loaned to a low-income person at a 9 percent 
mortgage rate. The 1 percent difference amounts to 
a subsidy from a company that has no governmental 
means of funding, but which must dig into its own 
pocket to pay. An S&L engaged in such socially- 
related practices would soon find itself bankrupt. 
The rules of the game, in large measure, have been 
established by the secondary market purchasers of 
the mortgages originated by S&Ls. These sources 
must in turn issue securities backed by their mort- 
gages and must guarantee purchasers of their obliga- 
tion in the capital markets that the mortgage 
instrument underlying the securities they have 
bought is acceptable under normal standards and has 
no special wrinkles. Therefore, a prospective home- 
buyer must "qualify" for the loan under normal 
underwriting criteria. 

Equal access to mortgage credit by minorities and 
women presumes that these individuals have the 
requisite creditworthiness to qualify for a loan under 
normal underwriting standards. That is, the income 
level, credit history, and stability of the borrower 
must be satisfactory to the lender. In addition, the 
borrower must be able to meet the monthly housing 
expense and other obligations within certain ratios 
established by the secondary market purchasers of 

Unfortunately, there are no special programs for 
higher risk buyers, and in their absence, S&Ls that 
deviate from sound lending practices are courting 
problems with their regulatory agencies. 


Affordability is the major housing problem and the 
reason that the American dream of homeownership 
is fast fading. In "The Challenges to Homeowner- 
ship in the 1980's," the U.S. League of Savings 
Institutions' Homeownership Task Force found that 
the decline in the ratio of homeownership has wiped 
out many of the gains registered during the previous 
10 years. They concluded: 

By 1984, even if median home prices remain constant — a 
highly unlikely event — and mortgage rates drop to 11%, 

• President, American Savings and Loan League, Inc., Washing- 
ton, D.C. 


the gap between what the typical first-time buyer can 
afford to pay and the price of the median-cost new home 
will still be $14,000. 

Looking at the National Association of Realtors 
"housing affordability index," in July 1983, "a family 
earning the U.S. median income of $24,617 had 83 
percent of the income necessary to qualify for the 
purchase of a median-priced existing home, which 
was $71,600 last month." What does this gap in 
affordability mean for those segments of the popula- 
tion that have had little homeownership opportuni- 
ty — the poor, economically disadvantaged and mi- 
norities? Is the outlook as "dreadful" as the Hom- 
eownership Task Force predicts? 

Of the black families in the U.S., 63.8 percent have 
incomes below the median income of $24,617; and 
58.5 percent Hispanic families are either at or below 
median income; 37.8 percent of Asian American 
families fall in this category; and 39.5 percent of the 
white population. Thus, minorities who comprise 
almost 20 percent of the population, have approxi- 
mately 60 percent of the median and below median 

Of the 40 million owner-occupied homeownership 
units, 7.2 percent are black; 3.3 percent are Hispanic, 
and 1.0 percent are Asian. The white population 
accounts for 88.4 percent of the owner-occupied 
units in the country. 

Thus, it is clear, that even with moderated interest 
rates and low inflation, a large percentage of the 10 
million households estimated to be renters by the 
end of the 1980s will be minority households. 

In their second discussion paper, "Homeowner- 
ship Affordability in the 1980s," the Homeowner- 
ship Task Force noted an alarming decline in the 
affordability of homeownership by the poor and 
near poor — young renters, minority and immigrant 
households, and large families that can't fit into 
rental housing. They concluded: "If the 1980s and 
future decades are going to mean a progressive 
closing of that door (homeownership), we may end 
up losing more than homeownership. We may rend 
the fabric of our social and economic system itself — 
leaving long-term damage not readily repaired." 

Aside from task force suggestion of some sensible 
approaches to reorienting current expenditures to 
better help groups that need help most, the balance 
of this discussion will explore actions that have been 
taken publicly and privately to bridge the affordabil- 

ity gap and possible solutions to what seems to be an 
insurmountable obstacle. 

Producing affordable homeownership opportuni- 
ties for low- and moderate-income people has 
always been a challenge to the Federal Government, 
local communities, and developers. 

With the demise of federally subsidized programs, 
and under a volatile interest rate environment, this 
task becomes all the more difficult. Recent experi- 
ence over the past 3 years has taught us that when 
rates rise, fewer people's incomes can support the 
resulting exorbitant housing cost. This situation gave 
rise to a number of creative financing programs, to 
devising ways of cutting construction costs, to tax- 
exempt mortgage financing programs, to alternative 
instruments that are interest rate sensitive, and to 
public-private partnership efforts. 

Because of the virtual shutdown of the housing 
market when interest rates soared to I6V2 percent, 
several innovative techniques were undertaken by 
builders and developers to sell newly built, unoccu- 
pied houses. I needn't go into too much detail on 
these vehicles, however, they did impact on the 
availability of housing for low- to moderate-income 

First, there were voluntary efforts undertaken to 
keep the mortgage market alive and to provide some 
means to financing homeownership. For instance, 
"sleepy seconds" and builder buydowns of the 
interest rates were provided sometimes by the 
builders themselves, sometimes by cities or through 
community development block grant funds. 

The graduated payment mortgage which allows 
lower monthly payments at first with a gradual 
increase over 5 to 10 years was offered. These 
GPMs permitted lower payments in the earlier years 
with any payment differences being deferred and 
added to the loan balance. 

Lenders also offered a shared appreciation mort- 
gage at below-market interest rates and smaller 
payments in exchange for a share of profits when the 
property is sold. The growing equity mortgage with 
below-market, fixed-rate interest rate and lower 
initial monthly payments followed by scheduled 
increases of 3 to 4 percent a year is another. 

The adjustable or variable rate mortgage began with 
a rate well below the standard fixed rate, with 
changes indexed to fluctuations in such instruments 
as Treasury bills. Caps were put on monthly pay- 
ments to minimize wide fluctuations, and deficien- 
cies added to principal as "negative amortization." 


Balloon mortgages with monthly payments based 
on a fixed interest rate were offered for a 3-5 year 
term. Payments covered interest only, or interest 
and some amortization. Principal is due in full at end 
of the term. 

The shared equity mortgage was finally created by 
law to give tax benefits to an investor who provides 
downpayment assistance to a borrower. 

Some of these creative alternatives have been 
effective; others, such as balloons and variable 
mortgages which might pose a serious problem of 
affordability by the homeowner, have been more 
risky. Some of them are coming back to haunt the 
parties involved. Overall, however, they allowed 
those qualified borrowers to attain homeownership 
who otherwise would have been priced out of the 
housing market. This applies equally to both low- 
and moderate- and upper-income borrowers. 

Government Supported Secondary Market 

The Federal National Mortgage Association's 
basic function is to provide a secondary market in 
residential loans. It buys, services, and sells mort- 
gages, and issues debt under its name to raise funds. 

The Federal Home Loan Mortgage Corporation 
was created in 1970 to promote the flow of capital 
into the housing market by establishing an active 
secondary market in mortgages. FHLMC gets its 
funds to finance its purchase through sale of mort- 
gage certificates which it guarantees. 

In its literature on "Affordability Plus" FNMA 
sets out an affordability program which includes the 
following mortgage plans. They are all designed to 
stimulate the mortgage market in this period of high 
interest rates and make them acceptable to lenders 
and borrowers. 

1. Buydown mortgage options. The buydown is 
a loan on which a lump sum is paid at the time of 
settlement to reduce initial monthly payments. Any- 
one can provide the funds— sellers, builders, buyers. 

2. Graduated plans for three types of FNMA 
adjustable rate mortgages: 

• Payments increase by TVs percent each year 
during period of adjustment. 

• During the first adjustment period, a portion 
of the monthly payment is deferred for later years, 
resulting in negative amortization — an increase rath- 
er than decrease in loan balance. 

• After the graduated payment period, the loan 
becomes a standard ARM, and payments change 
accordng to the index selected by the borrower. 

3. Land leases — under which the land is rented 
with an option to buy from the builder or investor 
within the first 5 years. The advantage to this 
method of financing is that the required downpay- 
ment is lowered because only the house is mort- 
gaged. Land leases can be combined with ARMs to 
make purchases more affordable. 

4. Mortgages for manufactured housing — Manu- 
factured homes are often more affordable than other 
types of housing. FNMA provides 30-year loans 
using the same underwriting and credit guidelines. 

On balance, the FNMA plans to tackle the 
problem of affordability, and carry out their role as a 
secondary source of mortgage financing. Their 
underwriting and credit guidelines determine wheth- 
er a person can afford a mortgage. Thus, without 
sufficient income to meet monthly payments, even 
these plans will not help since FNMA cannot 
provide any subsidy. 

Another FNMA program that has been created to 
provide a source of affordable mortgage credit, 
while at the same time providing a market rate of 
return to lenders and secondary market purchasers, 
is the Municipal Tri-Party Participation Program. 
The Municipal Tri-Party Participation plan is an 
innovative mortgage financing arrangement that 
provides to lenders access to a new customer base, 
helps borrowers, helps builders and developers 
finance their developments by providing below-mar- 
ket rates. 

For cities and municipalities, the Municipal Tri- 
Party Participation plan gives affordable housing to 
those who would otherwise be pressed out of the 
market. The municipalities are also given a way to 
leverage their money with other investors to gain 
greater purchasing power. These cities use commu- 
nity development block grant and urban develop- 
ment action grant funds as their participation in the 
undertaking, and forego interest or receive a low 
rate of interest on the principal to make lower 
mortgage rates possible. Cities also receive property 
tax revenues from new housing, and this provides an 
alternative to tax-exempt financing. This is a very 
innovative program which, once it's worked out, 
could be an invaluable means for addressing the 
housing needs of the minority community and low- 
income persons. Even with the Municipal Tri-Party 
Participation, however, the interest rates still play a 


significant role, and there are limitations on the 
amount of block grant funds available. 

The Federal Home Loan Mortgage Corporation, 
or Freddie Mac, likewise receives its funds through 
the capital markets, albeit their obligations (as well 
as Fannie Mae's) enjoy a special agency status. The 
government connection of these two agencies gives 
them a significant advantage in raising funds at 
lower rates. Freddie Mac, likewise, has been innova- 
tive in providing liquidity to the housing markets. 
The limitation on their programs is the same as 
FNMA's — there is no mortgage instrument for low- 
and moderate-income people. There will be times 
when those persons with insufficient incomes to 
meet the required debt service will be forced out of 
the market. 

Consumer Issues 

Under the 30-year, fixed-rate mortgage created 50 
years ago, lender and borrower had no problems so 
long as there were legal limits on the interest to be 
paid to savers and the rate of interest charged for 
mortgage loans. Because of the imbalanced deregu- 
lation of the savings side of the balance sheet within 
recent years, however, thrifts found themselves 
locked in with low-yielding mortgage portfolios and 
declining earnings and net worth. 

One solution to the imbalance problem has been 
the development of the adjustable or variable-rate 
mortgage instrument. These instruments were useful 
when this was the only game in town. However, 
there has been considerable reluctance and questions 
whether there were sufficient consumer protections 
involved. With the decline in interest rates business 
returned to the usual, fixed-rate, 30-year mortgage. 

Investors like the fixed-rate instrument, and will 
have to be assured that any adjustable product is 
equally as sound an investment. Homebuyers who 
have seen the widespread unemployment through- 
out the U.S. have been unwilling to take a chance, 
and would prefer to settle for a monthly payment 
they know they can afford at the time of loan 
closing. Moreover, most Americans are betting that 
interest rates will go up in the coming years, and are 
putting their bets on the fixed-rate mortgage. 

The convention wisdom, however, is that the 
adjustable rate product is the instrument of the 
future — that the thrift industry will fail if it relies on 
the fixed-rate mortgage. FNMA and Freddie Mac, 
therefore, have initiated marketing campaigns and 

other incentives to attract both homebuyers and 
lenders to the adjustable mortgage. 

The primary detractor to the two ARM programs 
now offered is that they are designed for the benefit 
of the investor and the lender. The investor must be 
assured that the security backed by ARMs is just as 
secure an investment as the fixed-rate product. 
Much energy has been devoted to this sector in the 
program information materials. The lender must be 
assured there is a secondary market purchaser for 
the ARM it originates, and that using the ARM 
reduces their interest rate exposure over time. There 
are no assurances that can be given the purchaser 
other than that at the time the loan is made, they 
were qualified to make the payments. Hence the 
reluctance on the part of those who don't see in their 
future a significant and steadily rising increase in 
their incomes. Lower income people are particularly 
interested in the fixed-rate mortgage, and might not 
be as willing to buy a house if only the ARM is 

Mortgage Revenue Bonds (MRBs) 

Federal tax provisions have been a major source 
of housing subsidies. The Federal Government 
annually provides indirect subsidies through tax 
deductions for mortgage interest and real estate 
taxes. These subsidies, which primarily assist middle 
and upper income homeowners, have been steadily 
increasing, while there is no such comparable 
assistance for lower income households. In 1983, for 
example, housing payments for lower income house- 
holds amounted to less than $8 billion, compared to 
the almost $40 billion in revenue that will be lost to 
the Treasury under the indirect subsidy. Moreover, 
these subsidized housing payments do not help 
lower income households to purchase — this is mere- 
ly for rental housing assistance. 

Presently, the Federal tax exemption on mortgage 
revenue bonds (MRBs) is the only direct homeown- 
ership assistance program for low- and moderate- 
income persons. Designed to assist families that 
otherwise might not be able to afford homeowner- 
ship, MRB proceeds are used to provide below- 
market interest rate single-family mortgages. The 
legislation providing for MRBs will expire Decem- 
ber 31, 1983. While there seem to be sufficient 
congressional votes to extend the law, other mea- 
sures have been offered as alternatives to MRBs. 

A GAO study concluded that MRBs are costly 
compared to the benefits to assisted homebuyers and 


to the costs of other alternatives. GAO also found 
that the public purpose objective of subsidizing low- 
and moderate-income households in need of assis- 
tance is not generally achieved under conventional 
financing. GAO suggested a tax credit or direct 
grant to lenders as a way of substantially reducing 
Federal costs. 

I am chairperson of the District of Columbia 
Housing Finance Agency. DCHFA is authorized to 
issue tax-exempt bonds to finance both multifamily 
rental housing and single-family homeownership 
programs. We are at the point of going to market 
with our first single-family issue, and will request 
reservations from lenders for the dollar amounts of 
mortgages they expect to originate and deliver to 
the DCHFA under the program. Our program is 
structured to allow for the maximum amount of $200 
million to be issued, so as to assure that the 
maximum demand can be achieved in the event the 
law is not extended. 

The DCHFA single-family program has special 
features to assure that priority goes to the lower 
income, first-time homebuyers in targeted areas that 
have been inadequately served, and to the purchase 
of houses that do not exceed $80,000. Thus, with our 
income limits, households in southeast, northwest, 
and other inner-city areas of the District where there 
has not been a lot of lending activity will get first 
crack at the tax-exempt proceeds from the bond 
issue. Other State agencies have similar program 
requirements, and seek to serve the intended benefi- 
ciaries of the program. 

In enacting the MRB legislation. Congress intend- 
ed to target subsidies to low- and moderate-income 
households. As the program is structured, however, 
the fixed-interest rate reduction to all buyers is 
inequitable. The GAO concluded that the higher the 
income of the buyer and the less likely the buyer 
needs help, the more they receive in subsidy and the 
greater the cost to the government. The study found 
that the majority of homebuyers in 1982 probably 
could have purchased homes without assistance. 
However, they were probably the only ones who 
qualified for loans, given the high interest rates even 
for the tax-exempt bonds. While this was not 
intentional and it was necessary to keep things 
operational, traditional low- and moderate-income 
beneficiaries were disadvantaged and were forced 
either to wait until rates declined or to remain 

Recently there has been much healthy discussion 
in Congress seeking to arrive at a MRB program 
structure that will be more equitable to lower 
income persons, provide a deeper subsidy, and be 
cost effective. We applaud these efforts and would 
urge that the MRB program be continued until an 
alternative has been tried and proven effective. 

The Future 

The foregoing discussion leads to the conclusion 
that there is indeed a public policy to make afforda- 
ble housing available for low- and moderate-income 
people. With the great demand for housing project- 
ed over the next few years, that policy should lead 
to the creation of some means of making homeown- 
ership equally available to them, even in times of 
high interest rates. 

Newly developed, government-supported secon- 
dary market programs have gone far toward making 
mortgage financing available even under the most 
difficult economic circumstances; however, they 
have had no real impact on low- and moderate- 
income persons. As presently structured, the ARM 
programs would expose the low- and moderate- 
income, first-time homeowner to interest rate fluctu- 
ation risk. Unfairness to these purchases would 
result if this were the ony product available and 
there were no insurance or backstop in the event the 
worst case interest rate scenario arrives. The ARMs 
should be left as-is and should not be modified to 
reach the low- and moderate-income home buyer. 

Some proposals which have appeal are the direct, 
deep subsidy to the home buyer or lender; 100 
percent insurance of long-term public deposits that 
are dedicated to originating mortgages for low- and 
moderate-income persons that could then be pack- 
aged and sold in the secondary market; or tax 
exemption of interest earned on long-term jumbo 
certificates of deposit if the funds go toward such 
homeownership opportunities. Chairman Gray is to 
be congratulated on his action authorizing Federal 
Home Loan Banks to offer 20-year advances, matur- 
ities which more closely track those of mortgages. 

For minority S&Ls to be able to offer low-cost 
mortgages to low- and moderate-income home 
buyers, there needs to be something similar to the 
FHLBB program that provided incentives to lenders 
to invest in inner-city and revitalizing neighbor- 
hoods — the Community Investment Fund. The 
Community Investment Fund was established in 
June 1978 as a 5-year, $10 billion program to make 


available incentives for S&Ls to invest in revitalizing was increased, it went a long way toward benefiting 
our Nation's urban and rural communities. This minority savings and loans in particular. The pro- 
program gave lenders the flexibility to use low-cost gram has expired, however, and the American 
advances received from the Federal Home Loan Savings and Loan League has written to the Federal 
Banks to provide lower interest mortgages in certain Home Loan Bank Board suggesting it be extended 
communities. The program was successful; and after because of the successful achievements obtained. 
the percentage of CIF Funds for smaller institutions 


Hispanics and Fair Housing: The Neighborhood 
Development Issue 

Jorge N. Hernandez* 

Housing and physical development initiatives in 
Hispanic neighborhoods throughout the country 
have been launched by individuals, private devel- 
opers, the public sector, and community-based orga- 
nizations. I would like to direct my talk today to the 
housing and neighborhood development efforts of a 
Hispanic community-based organization in New 
England and the local civil rights context. 

Hispanic migration to New England is a phenom- 
enon of the last 30 to 40 years. Initiated by Puerto 
Ricans, Dominicans, Cubans, Colombians, and other 
Latin Americans have followed suit. Today Hispan- 
ics number maybe as many as 500,000 out of 
12,500,000 New Englanders; roughly 4 percent 
Puerto Ricans comprise 50 percent to 60 percent of 
the total Hispanic population in the region. This 
young, fast growing, and highly urbanized popula- 
tion group is found in rundown neighborhood 
concentrations of anywhere from 2,000 to 25,000 
inhabitants. Hartford and Boston boast the bigger 
concentrations. Hispanics exceed 25 percent of the 
total population in places like Hartford, Lawrence, 
and Chelsea. 

Hispanic neighborhood activism has been a rele- 
vant and significant part of the energy that has led to 
the revival of many inner-city neighborhoods in 
New England. Witness Brightwood Development 
Corporation in Springfield's North End, Casa de 
Puerto Rico, San Juan Center, and Taino Develop- 
ment Corporation in Hartford, Nueva Esperanza 
CDC in Holyoke, and Nuestra Comunidad CDC in 
Boston's Dudley Street/Blue Hill Avenue neighbor- 
hood. In many instances Hispanic activism has been 
stimulated by an insensitive public sector as in the 
case of Nueva Esperanza CDC in Holyoke or the 
urban renewal fight waged by Inquilinos Boricuas 
en Accion (IBA) in Boston's South End. 

Boston's South End was developed on a specula- 
tive basis by 19th century entrepreneurs who want- 
ed to offer an alternative to the elegance of the Back 
Bay. The failure of the venture and economic 
decline of the neighborhood were fueled by inci- 
dents like the Panic of 1873 and the opening of the 

streetcar suburbs in the latter part of the century. 
The South End slowly became a neighborhood of 
rooming houses and a port of entry for the migrants 
of the last century which in the 1950s and 1960s 
included increasing proportions of Puerto Ricans 
and other Hispanics. Their arrival coincided with 
the last stages of physical and demographic decline 
in the neighborhood: its one square mile housed 
57,000 people in 1950 and only 22,000 in 1970. An 
urban renewal program was planned and launched 
in the 1960s for this historic neighborhood, possibly 
the largest depository of Victorian architecture in 
the country. This plan envisioned the relocation of 
the Puerto Rican community from the so-called 
urban renewal Parcel 19 in the geographic center of 
the neighborhood to make way for new housing and 
community facilities. 

To the cry of "We shall not be moved from Parcel 
19, or no nos mudaremos de la Parcela 19," a group 
of residents, with the backing of St. Stephen's 
Episcopal Church, launched a drive to oppose the 
plans of the Boston Redevelopment Authority 
(BRA) for Parcel 19. With financial help from the 
Episcopalians, a group of suburban Protestant 
churches called the Cooperative Metropolitan Min- 
istries, the Boston community foundation (the Com- 
mittee for the Permanent Charities Trust), and the 
VISTA program, the residents launched a protest 
followed by a research and design effort that led the 
city of Boston to change its plans. IBA, then known 
as the Emergency Tenants Council, was incorporat- 
ed in 1968 and a young new mayor by the name of 
Kevin White was instrumental in getting the BRA to 
appoint the group as tentative developers for all 
Parcel 19 in 1968. With the subsequent corlstant 
inspiration of activists and officials like then State 
representative Melvin H. King, this development 
designation decision resulted in a locally and nation- 
ally acclaimed community called Villa Victoria. 

Controlled legally by its residents through a 
complex web of corporations and partnerships. Villa 
Victoria is a small town within the city, a 15-acre 
development of 2,500 people occupying 815 apart- 

* Executive Director, IBA, Inquilinos Boricuas en Accion, 
Boston, Massachusetts. 


merit units in renovated historic rowhouses, garden- 
type apartments and 2 high rises of 7 and 19 stories, 
respectively. A central plaza flanked by small 
businesses anchors the north end of the site at Plaza 
Betances with the O'Day PlaygroundA'illa Victoria 
Community Center (All Saints Church) complex on 
the opposite end. IBA, the resident corporation, 
operates out of an office building it developed and 
owns on the site. With 400 dues-paying adult 
members, the corporation operates social services, 
arts and culture, and development assistance pro- 
grams. Its affiliate and neighbor organizations oper- 
ate real estate development, housing and commercial 
real estate management, child day care, credit union, 
and festival/performance programs that attract 
thousands every year and employ almost 100 full 
time. A political history full of productive activity 
helps explain why Villa Victoria is perhaps the most 
successful case of consolidation of power over turf 
to implement a comprehensive development strate- 
gy performed by any Hispanic community-based 
organization in New England. It is the most integrat- 
ed and inclusive minority-sponsored development in 
Boston, a model community to many Hispanics and 
other people in general, a valid development institu- 
tion model for communities of 2,000-25,000. 

So what is the problem? In spite of significant 
displacement, the South End remains the most 
diverse, integrated, and tolerant neighborhood in the 
city. However, urban renewal has strengthened a 
pattern of subneighborhoods dominated by a single 
racial or ethnic groups: Chinese, black, Syrian, 
Lebanese, Greek, Puerto Rican, white young profes- 
sionals, and others. High demand for desirable 
subsidized housing in 1982 created a controversy 
that ended with the questioning of the population 
makeup of Villa Victoria and the efforts of the 
organization. The controversy that ensued high- 
lighted one of the most sensitive and undefined civil 
rights policy areas. I bring it up because lack of 
definition breeds potential for abuse and neighbor- 
hood developers should be given clear guidance to 
avoid problems. 

Simply said, the bulk of the 15-20 percent of the 
residents of the South End who are Hispanic live in 
Villa Victoria and its immediacy much as the bulk of 
the Chinese live around Castle Square (another 
development), blacks around TDC, Methunion and 
Roxse, and whites on one side of Tremont Street. 
The reality of concentration around Villa Victoria 
results from two forces: the success of the organic, 

community-based development initiative and the 
displacement by market forces fueled with public 
funds of Hispanics and other poor from other parts 
of the neighborhood (Villa Victoria being the 
manner of mitigating the displacement). 

Since Hispanics make up 75 percent of the 
community-controlled developments in Villa Victo- 
ria while only 1 5-20 percent of the entire population 
of the neighborhood, some officials argued that 
Hispanic housing occupancy goals for Villa Victoria 
should be lowered to the 15-40 percent range to 
reflect the neighborhood context. These same offi- 
cials refused to link the proposed change with 
equivalent and complementary changes in other 
developments where the problem was similar but 
reversed with other predominant groups in a way 
where at least the total neighborhood context re- 
mained the same as far as public action was con- 
cerned; an integrated and open-access neighbor- 
hood. Because of this refusal, acquiescence and 
acceptance of the proposed lowering of occupancy 
goals would have resulted in an absolute and relative 
decrease in the number of Hispanics in Villa Victo- 
ria and the entire neighborhood (even theoretically 
triggering a geometric progression downward) and 
an overall lowering of housing opportunities for 
Hispanics in the neighborhood. Even worse, the 
proposed action seemed to negate the issues that 
gave rise to the movement that ended up in the 
development of Villa Victoria: the threat of whole- 
sale displacement and exclusion of Hispanics and 
elderly from housing opportunities in the South End 
as the urban renewal plan was being implemented. 
To the average community activist it seemed like the 
utmost irony: you give Hispanics a little corner 
while they are being displaced from the neighbor- 
hood by renewal and then, after they disappear from 
the rest of the neighborhood you declare their little 
corner illegal and move to displace the bulk of the 
remaining ones from the neigborhood. 

Somehow it seemed that laws created to protect 
people whose civil rights were being violated were 
also being used or manipulated to violate those civil 
rights. In this instance, enlightened public officials at 
the Federal, State, and local levels were ultimately 
successful in drafting a solution that maintained the 
integrity of the community and the uniqueness of the 
agency as a force of social welfare, development, 
and change while guaranteeing and promoting ac- 
cess for all. 



Sample Development 

Before renewal 

B is 25% 

After renewal 

renewal area 


whole sq. 


renewal area 

B is 25% 

B is 25% of 25% 

Assume A is redeveloped everywhere except at B. There 
is fear of displacement at B and a development corpora- 
tion is formed to combat displacement at B and to pro- 
vide B with housing opportunities denied elsewhere at /I. 
The community B renewal program starts. Absent new 
housing opportunities in non-community B areas of 

neighborhood A, mission, context and history variables 
of the community B renewal effort would lead one to ex- 
pect a very high goal (theoretically 100% if non-fi op- 
portunities in A are 0) in order not to destroy community 
B by shrinkage as shown in the figure at the right. 


The lesson of Villa Victoria is significant to the 
small and poor ethnic communities of New England 
where development programs may be planned or 
under development. Take a sample community B 
(2,500 population) within neighborhood A (10,000 
population) in city X. Assume great reinvestment 
triggered displacement has taken place throughout 
neighborhood A and now threatens community B. The 
community B development corporation starts a 
housing rehabilitation program aimed at preventing 
displacement at community B. Should one argue that 
only 25 percent of new community B housing go to 
the residents of community B because it is only 25 
percent of all of neighborhood A? If one did then, 
absent new opportunities in other parts of neighbor- 
hood A, one would also be arguing for the shrinkage 
oi community B to 25 percent of its original size as a 
goal with the consequent displacement of 75 percent 
of former community B residents by the antidisplace- 
ment program of community B's development corpo- 
ration. Doesn't this sound pyrrhic? 

This lesson is relevant to community development 
groups involved in ethnic neighborhoods and partic- 
ularly important to neighborhood renewal activists 
in Hispanic neighborhoods in those rundown sec- 
tions of our cities in New England. It is relevant to 
the definition of community control and to the 
operation of many program activities. Achievement 
of fair housing and community development goals 
requires clear policies, and close coordination. Clari- 
fication of conflicting policies, particularly by look- 
ing at the mission, history, and context variables of 
community development efforts, may result in en- 
hancement of community-based development activi- 
ties in general. There are many potential community 
development opportunities in those Hispanic and 
other inner-city neighborhoods of the cities of New 
England that may be affected by such clarifications. 
I am sure many organizations would appreciate 
some guidance as they implement programs. 

Thank you for the opportunity to address you 


Discrimination Against Women 

Discrimination Against Women in Housing Finance 

Dorothy S. Ridings* 

Thank you for inviting me to be with you to 
discuss discrimination against women in the housing 
market. More particularly, I want to focus on a part 
of this broader topic, discrimination against women 
in housing finance, particularly mortgage finance. 
At the Commission's request, I also would like to 
comment on housing discrimination against families 
with children, which often translates into discrimi- 
nation that has a devasting effect on women. 

First, a bit of background about the League of 
Women Voters. The League is a volunteer citizen 
education and political action organization made up 
of more than 1,300 State and local leagues in all 50 
States, the District of Columbia, Puerto Rico, and 
the Virgin Islands. The League was founded in 1920 
as a result of the successful drive for women's 
suffrage, and since that time we have had a multi- 
issue agenda of public policy issues, including equal 
opportunities in housing. 

I will divide my remarks today into two sections 
to address the two topics requested by the Commis- 
sion and will be glad to answer questions following 
my presentation. 

TTie League of Women Voters began its work on 
housing issues in 1968 when delegates to our 
national convention made clear our support for 
equality of opportunity for housing. That was 
spurred by the passage in the spring of 1968 of Title 

VIII of the Civil Rights Act. As a result of this act, 
leagues throughout the country began working on 
implementation of fair housing requirements and a 
commitment to an adequate supply of housing for all 
Americans. We have continued that dual commit- 
ment for the last 15 years, and we are now gearing 
up for full support of the Fair Housing Amendments 
Act of 1983 that has been introduced in both Houses 
during the 98th Congress. Building on our initial 
support for fair housing as enumerated in the 1968 
Fair Housing Act, we will push for the necessary 
enforcment measures included in both H.R. 3482 
and S. 1220 on which hearings are expected this fall. 
Over the years, the League also has worked on a 
number of related housing issues. We supported 
Federal housing assistance programs set up under 
categorical grants; in 1974 our support for housing 
was channeled into aspects of the Housing and 
Community Development Act, which consolidated 
Federal assistance under the block grant approach. 
We support reauthorization of the Home Mortgage 
Disclosure Act, but efforts to make it permanent 
failed. And we fought hard against congressional 
action on the budget that weakened the community 
development block grant (CDBG) program by 
making drastic cuts in the full range of authorized 
low- and moderate-income subsidies for both reha- 
bilitation and new housing. 

President, League of Women Voters of the U.S. 


In the hundreds of localities where local leagues 
are headquartered, league members have been ex- 
tremely active in housing issues — possibly the area 
that attracts more local leagues than any other 
except equal access to education. Many local leagues 
monitored CDBG programs, particularly to assess 
whether they are principally benefitting low- and 
moderate-income persons. They have worked to 
increase the supply of low- and moderate-income 
housing and to enforce fair housing laws in their 
own communities. Leagues have gone to court to 
challenge racial steering and other forms of housing 
discrimination; in one notable lawsuit, the League of 
Women Voters of Louisiana was amicus in Corpus 
Christi Parish Credit Union v. Martin (Supreme Court 
of Louisiana, May 1978), which effectively chal- 
lenged the State's "head and master" statute on the 
issue of the validity of the mortgage which the 
husband obtained over the objections of his wife. 
And, many leagues have worked to remove other 
obstacles to equal access to housing, such as discrim- 
inatory mortgage practices or restrictive covenants. 

Accordingly, there was strong interest among our 
members nationwide when in the spring of 1979 the 
League of Women Voters Education Fund began an 
18-month project on Women and Mortgage Credit. 
The project was grant-funded by the U.S. Depart- 
ment of Housing and Urban development (HUD) as 
part of its Project on Women and Credit. As the 
League's then housing chair, I served as chair of the 
League's Women and Mortgage Credit project. 

As part of the League's grant, pilot projects were 
carried out by local leagues in 10 communities: 
Arapahoe County, CO; Detroit, MI; Indianapolis, 
IN; Jonesboro, AR; Los Angeles, CA; Lynchburg, 
VA; New Rochelle, NY; Seattle, WA; Springfield, 
MO, and Wilmington, DE. Full reports on these 
pilot projects, plus information on the workshops, 
educational materials, radio and TV shows, newspa- 
per and magazine commentaries, telephone informa- 
tion services, and other facets of the grant, are 
available from the League. We believe the project 
was successful in helping meet the three stated goals 
of the overall HUD project: 

• To make sure women were aware of their 
rights under the Equal Credit Opportunity and Fair 
Housing Acts, 

• To improve women's ability to be well-in- 
formed housing consumers by providing them with 
basic information about the process of buying or 
selling a home, and 

• To increase the awareness on the part of 
lenders and women themselves of the full implica- 
tions and potential of women's credit rights and 
growing economic independence. 

The project demonstrated that discrimination in 
mortgage lending did indeed exist, and perhaps more 
importantly, that many women were unaware of 
their rights in the credit market. The project also 
served an informational purpose for lenders, some of 
whom were also in need of a better education on 
credit rights. 

But I would be less than candid if I did not admit 
that there were more than one raised eyebrow and 
expression of surprise from the public as we worked 
on this project. I need not remind this group what 
was happening in the mortgage market in 1979 and 
1980: mortgage rates skyrocketed and then dropped 
temporarily; the housing industry entered a severe 
slump; real estage activities ground to a halt in many 
communities; and steeply increased mortgage rates 
priced many marginal homebuyers out of the mar- 

Our response to the queries about why we were 
worried about discrimination in such a volatile — and 
at times, nonexistent — mortgage market was fairly 
simple: That an examination of the discrimination in 
lending was needed regardless of other circum- 
stances; that a tight mortgage market would only 
exacerbate discriminatory practices that did exist, 
and that our findings would become increasingly 
useful when the market turned around and more 
lendable money was available. 

What we could not predict was that by the end of 
the project, there would be a proliferation of new 
financing instruments created in response to tight 
market conditions. These new instruments made it 
impossible for us to provide women with adequate 
information on what kind of financing options they 
would face in even the next 6 months. I do not 
believe that adequate such information exists today 
even while financing options have burgeoned. And 
these funding options could have an adverse effect 
against women in the mortgage market, a matter that 
should be of concern to us. The League has not 
engaged in a study of this hypothesis, but I would 
like to raise those questions for your consideration. 

Those instruments include such features as vari- 
able rates, renegotiable rates, graduated payments, 
and shared equity, among others. Under such instru- 
ments, discrimination against women may be an 
effect resulting from what we know about women's 


earning capacities, rather than straightforward dis- 
crimination based solely on the sex of a mortgage 
applicant, but it is nonetheless worthy of our 
concern in light of two real facts: the condition of 
the mortgage market today and women's earning 

Let me illustrate. The mortgage instrument calling 
for graduated payments is based on the assumption 
that the earning capacity of the mortgage-holder 
will increase through the years, until retirement 
when the mortgage might likely be paid off. But 
statistics from the Women's Bureau of the U.S. 
Department of Labor show that statistically, a 
woman's income peaks between the ages of 30-34 
years. ("The Earnings Gap Between Women and 
Men," Women's Bureau, U.S. Department of Labor, 
1979.) The widest wage gap is between the ages of 
45 and 49, where men's income peaks. We are all 
aware of the interruptible pattern of a large number 
of working women, who may leave the work force 
at various periods for child-rearing or other family 
responsibilities, or who may reenter the job market 
after divorce or death of a spouse (reentry into 
typically low-paying jobs.) 

This widening gap in wages is as much a reflec- 
tion of women's dead-end careers, stagnant earnings 
pattern, and lack of mobility in a labor force still 
riddled with discrimination. I think I need not recite 
the scandalous statistics that document that there 
indeed is not comparale pay for work of comparable 
worth, a fact of special severity to working women, 
or the statistics we hear so often about the low 
earnings of most women — now at 61 cents for every 
$1.00 earned by men. My point is that the assump- 
tions on which the graduated mortgage is based 
simply won't work for most women attempting to 
buy homes. There are indications that similar danger 
signs may exist in the other "new" mortgage 
instruments that were created to meet economic 
conditions — but that were not created with the needs 
and realities of women in mind. 

I mention this subject without documentation 
because I believe it is a worthy area for further 
exploration. It is my understanding that the Wom- 
en's Legal Defense Fund plans to look at the effect 
of new mortgage instruments on women, as part of 
its revision of the Women's Mortgage Credit Hand- 
book, and their research should be instructive to us 
all as we grapple with issues of new forms of 
di.scrimination in a changing world. 

But we have not adequately addressed those 
instances of discrimination by design, either. Passage 
of the Equal Credit Opportunity Act (ECOA) in 
1976 was a landmark, but during the League's 
Women and Mortgage Credit project we found 
evidence that some banks and creditors were contin- 
uing to violate its provisions, more than 3 years after 
the act and the implementation of regulation B. Suits 
brought by the Federal Trade Commission and the 
Department of Justice, for example, were based on 
instances of failure to take the most rudimentary 
steps to assure equal opportunity — failure to give the 
reasons for denial of credit and failure to properly 
consider additional sources of income such as 
alimony and child support when determining an 
applicant's creditworthiness. Still, not many lawsuits 
were brought under the ECOA during those years, 
and in the intervening years the courts have not 
issued many rulings flushing out the statute's mean- 
ing. Hence the law is not settled in this area. 

Now, regulation B is up for review — and those of 
us who are interested in credit discrimination are 
interested in strengthening reporting requirements 
on race and sex in order to better monitor possible 
discriminatory denial of credit on those grounds. 

Since the passage of ECOA and regulation B in 
1976 it has contributed greatly to making credit 
available with fairness and impartiality. However, 
there are still areas in which the regulation could be 
strengthened for greater effectiveness. Here are 
some examples. 

Presently, the regulation does not require the 
collection of race and sex data on credit applications 
other than mortage or home improvement loans. As 
a result it is difficult to determine if other forms of 
credit are being denied on the basis of race or sex 
since the data is not available. 

Bank Scoring or Ranking System 

In most instances, banks, for the purpose of 
granting credit, have a number of points that must be 
acquired. These points are associated with different 
categories such as type of job, number of years at 
current address, ownership of an automobile, and 
other similar criteria. Because the scoring system is 
not public, minorities and women can be discrimi- 
nated against for irrational reasons. For example, a 
woman who is a secretary is awarded only 4 points 
when a man who is a T.V. repairman is awarded 7. 
There is no apparent reason for such a ranking 
disparity. Also, in an effort to deter banks from 


scoring women and minorities lower in certain 
categories than they do men and nonminorities, the 
banks' scoring or ranking system should be made 
public to individual applicants. 

Adverse Action Notice Under Regulation 

The League is most concerned with the vagueness 
of the language that states reasons for adverse 
actions (i.e., the checklist that requires an institution 
to check only the appropriate category. Sample 
categories include: Credit application incomplete, 
insufficient credit references, temporary or irregular 
employment, insufficient income, inadequate collat- 
eral, too short a period of residence, no credit file, 
and delinquent credit obligations). One possible 
improvement is to replace the checklist with a 
requirement of specific, individual explanations of 
loan denial; a second alternative is to add new 
reasons to the checklist. We would be in favor, for 
example, of adding a reason that would specify — 
especially in the area of mortgage lending — that the 
adverse action resulted from the fact that the 
appraised value of the property was too low for the 
loan value, or that an applicant's debt-to-income 
ratio failed to meet the institution's written under- 
writing standards. 

Exceptions to Adverse Notices 

The League opposes any circumstances under 
which a lending institution need not send an adverse 
action notice. In our view, there is a danger that in 
expanding the circumstances in which an adverse 
notice need not be sent to an applicant, additional 
opportunities will be presented for creditors to 
undermine the intention of the statute and regula- 
tions, and to avoid giving rejected applicants the 
specific reasons why they were denied credit. 

Aside from the problems women and minorities 
face in obtaining credit, they are still faced with 
overt discrimination in the renting and purchasing of 
homes. Fifteen years after the passage of title VIII, 
the evidence of unlawful housing discrimination is 
abundant. This is due to a lack of enforcement 
powers by the Department of Housing and Urban 
Development (HUD). HUD has estimated that 2 
million instances of housing discrimination occur 
each year. But due to the cost and time-consuming 
nature of litigation, very few complaints will be 
settled. In fact, complaints of discrimination against 
women and Asian Americans and Hispanics are 

increasing. In addition, handicapped people— of 
whom there are approximately 36 million — continue 
to be excluded from large segments of the housing 

But the discriminated class that has gone virtually 
unnoticed until recent years is families with children. 
In these times of concern about outside influences 
that are eroding the family structure and unity, we 
must come to grips with all the forces that are 
contributing to their deterioration. We are all famil- 
iar with the impact on families of unemployment, 
discrimination, and drug abuse, to name just a few. 
But in addition to these factors, there is another less 
well-known but equally as important issue that is the 
subject of my presentation here today. As hom- 
eownership becomes less financially possible for 
young families and as the number of divorced, 
widowed, elderly, and childless couples increases — 
all of which have altered the demand for housing — 
the availability of rental housing for families with 
children has turned into a salient issue. Most local 
and State governments fail to acknowledge that such 
a problem exists, and that this problem can have a 
detrimental impact upon the entire family structure. 

Landlords and apartment owners are quick to give 
the following reasons for excluding children from 
their complexes: 

1) children are destructive in general; 

2) children are noisy and unruly; 

3) parents leave the children to roam without 
supervision at all times of the day or night; and 

4) management's cost would increase because 
more doors are opened and toilets flushed, thus 
causing greater wear and tear on property. 

Good management on the part of owners and 
cooperation between tenant and management can 
alleviate many of these problems. 

Unlike discrimination based on race and sex, there 
is no national legislation that prohibits discrimina- 
tion against families with children. Most cities have 
no local ordinances that address this issue; thus this 
form of discrimination remains perfectly legal in 
most places. Some argue that the lack of such laws 
opens the door to race and sex discrimination, since 
a greater proportion of minority and female-headed 
households are in the rental market. Study after 
study has concluded that these policies can and do 
exclude more members of these groups from particu- 
lar buildings, apartment complexes, and neighbor- 


Just how critical is this problem? A 1980 survey 
undertaken by the Department of Housing and 
Urban Development revealed that: 

1) Seventy percent of all rental households have 
no children. 

2) Nearly one-fourth of all units are closed to 
families with one child. 

3) One-fourth of all units are closed to families 
with children because of cost. 

4) One-third of all units nationwide are closed to 
families with two children. 

5) The extent of discrimination varies according 
to the racial composition of the neighorhood, with 
white neighborhoods having a higher percentage 
of restrictive policies (20 percent) than do black 

6) Families with children pay higher rents than 
those without children, and often must live in 
substandard housing in inferior neighborhoods. 

7) The newer the rental complex, the more 
likely it is that restrictive policies exist. (Three out 
of every five units built since 1970 have restrictive 
policies against children.) 

In addition to policies that prohibit outright the 
renting of units to families with children, there often 
are other, less comprehensive limitations, such as 
restrictions on the ages of children allowed in units 
or the number of family members, prohibitions 
against the sharing of a bedroom by children of the 
opposite sex, and rules restricting children to certain 
floors in buildings. Among each of these restrictions 
variations can be found. For example, age restric- 
tions can limit children over or under specified ages, 
such as no children under 2, or none under 12. In 
most instances, age restrictions are not clearly 
defined and are left to the discretion of the building 
managers or rental agents. 

Discrimination against families with children was 
recognized as a problem by State governments as 
early as 1889. In that year the first antidiscrimination 
law against children was passed by the State of New 
Jersey. The State of Illinois followed with a similar 
law in 1908. 

Presently, six States and the District of Columbia 
prohibit discrimination against children in housing. 
These States are New Jersey, Illinois, New York, 
Arizona, Delaware, and Massachusetts. Three 
States — Montana, Connecticut, and New Hamp- 
shire — prohibit discrimination in housing on the 
ba.sis of age. 

One would think that these State laws would 
effectively prevent discrimination against families 
with children. Not so. Here are some of the 
problems with the current statutes: The Illinois 
statute is not widely known either by the general 
public or by those who are called upon to enforce it, 
even though the statute has been in existence since 

The New York, Illinois, and New Jersey statutes 
do not have effective enforcement mechanisms and 
only minimal fines can be levied if there is a 
violation of the law. 

The Massachusetts, Connecticut, and New Hamp- 
shire laws lack strong enforcement mechanisms, and 
the newest of them all, the District of Columbia law 
adopted in 1980, is not widely known by the general 
public. Enforcement is difficult because of a lack of 
manpower at the Human Rights Commission and of 
people willing to file complaints. 

Of all these laws, the Arizona and Delaware 
statutes are the most progressive. The Arizona 
statute provides for both fines and imprisonment, 
and for sentences that increase with each subsequent 
offense. Discriminatory advertising also is prohibit- 
ed in Arizona. The Delaware law is the only statute 
that offers prospective tenants the right to sue and 
obtain damages and thus such a provision does not 
have the deterrent effect of statutory punitive 

It must be emphasized that not one of the existing 
State statutes contains what many housing advocates 
consider to be essential elements for an effective law. 
These four ingredients are: 

1) A prohibition against discrimination in hous- 
ing because of family status, including prohibitions 
against discriminatory advertising and against 
higher rent charges for families with children. 

2) A permissible exclusion for buildings that 
contain three or less units. 

3) Criminal sanctions, including fines and prison 
sentences for violators. 

4) Mechanisms for effective enforcement. 

The fact that State laws banning discrimination 
against families with children in rental housing have 
been in existence since before the turn of the century 
indicates that this problem is not a new one. What 
has happened is that the problem has become more 
serious as attitudes toward child rearing have 
changed and as condominium and cooperative con- 
version has exacerbated the shortage of available 
rental housing. 


The high cost of new housing and cutbacks in In summary, I want to thank the Commission 

Federal support for moderate- to low-income hous- again for this opportunity to discuss with you the 

ing has created a national housing crisis, which very real issues of discrimination against women in 

makes the problem of discrimination against families housing finance and discrimination in housing 

with children even more acute. against families with children. These issues have 

Current discriminatory policies are forcing many been somewhat in limbo with the public in recent 

families into overcrowded and segregated housing. yg^^s, as our attention has been diverted to other 

Studies show that children living in these conditions pressing public policy questions. I commend you for 

feel unwanted and become prone to delmquent ^^^^.^^ ^^^^^ questions back into public attention, 

behavior. It is clear that this problem needs national j t n i. i j . j . 

^ and I will be glad to respond to your questions, 


Women with Children in Today's Housing Market 

Sue A. Marshall* 

This paper looks at the problems faced by female- 
headed households in today's housing market. There 
was a dramatic increase in the number of families 
headed by females during the 1970s, representing a 
major social phenomena with far-reaching implica- 
tions. Approximately 12.5 million children (or 1 in 
every 5) live with their mothers only.' This steady 
and continuing growth in the number of female- 
headed households is due for the most part to a rise 
in divorces and out-of-wedlock births. 

Families with children in general have special 
housing and financial needs not felt by other house- 
hold types in the population. They also face special 
circumstances in the housing market. Female-headed 
households have even more special needs and 
therefore represent a special set of families with 
children, as the following quote from a hearing on 
sex discrimination illustrates: 

. . .the woman alone with a child or children really has 
the worst time of all because of the entanglement of all 
kinds of discrimination, the layers of discrimination. And if 
the woman is of a minority group, it adds another layer 
and if she is "on welfare," it adds another layer, if she's got 
a large family, it adds another; it becomes impossible.^ 

In addition to highlighting such special problems 
of women as heads of households in the housing 
market as discrimination, income and the availability 
of suitable units, the quote also offers a useful notion 
for examining this issue. That is the notion of 
layering. Just as female-headed households represent 
a special subset of families with children, minority 
females who head households are an even more 
special set, likely to face double discrimination. And 
the layering continues as other special household 
characteristics such as family size, income level and 
sources, and employment status are considered. 

We shall begin by looking at changes in household 
composition which have contributed to the dramatic 

• Senior Research Associate, The Urban Institute. 

' U.S. Children and Their Families: Current Trends (Washington, 

D.C.: Child Trends, Inc., 1983). 

' Women and Housing: A Report on Sex Discrimination in Five 

American Cities, prepared by the National Council of Negro 

Women (Wa.shington, D.C.: Government Printing Office, 1975). 

' U.S., Depl. of Housing and Urban Development, Office of 

Policy Development and Research, "The Housing Needs of Non- 

rise in the number of female-headed households (see 
table 1). 

Due primarily to an increase in the divorce and 
separation rate, recent years have seen a dramatic 
increase in one-parent households. In 1970 one- 
parent households represented 5 percent of all 
family households. By 1982 the figure was more 
than double that at 10.7 percent. Nearly 90 percent 
of all single-parent households are headed by fe- 
males.' There are currently 5.87 families headed by 

The figures for blacks are far more dramatic. 
Almost half of all black families are headed by a 
woman due to higher divorce and separation rates 
and a significantly higher proportion of babies born 
outside of marriage. Blacks, as well as other non- 
Anglo household types, also experience lower rates 
of remarriage. 

As table 2 shows, female-headed households 
represent an increasing share of the population. 
According to data from the Annual Housing Sur- 
vey, female-headed households face a special set of 
problems in the housing market. Generally, female- 
headed households, minority households, and large 
households all face higher probabilities of being 
poorly housed and are much less likely to own their 
own homes.'' These households are also far more 
likely to live in central cities where the housing is 

One important result of the increase in the number 
of children living with mothers with no fathers 
present is economic difficulty. Female-headed 
households are more likely to be poor than other 
households. A recent study of poverty and housing 
deprivation found that nearly 60 percent of the poor 
households in their sample were headed by women 
and, further, the female-headed households tend to 

Traditional Households," by John Gonder and Steve Gordon 
(Washington, D.C.: Government Printing Office, 1979). 
* U.S., Dept. of Housing and Urban Development, Office of 
Policy Development and Research, "Families and Housing 
Markets: Obstacles to Locating Suitable Housing." by Margaret 
C. Simms (Washington, D.C.: Government Printing Office, 1980). 



Household Composition 1970 to 1982 

Household Type 

All households (thousands) 

Non-family Households 
Persons living alone 
Other non-family households 

Family Households 
Married couples — no children 
Married couples— with children 
One parent with children 
Other family households 


































Source: U.S. Bureau ot the Census 

be "persistently" poor whereas households headed 
by men are "transient" poor.'* Sixty percent of the 
women in the sample were permanently poor com- 
pared to 39 percent of the men. 

The implication of this for the children involved is 
dramatic. Nearly one in five children now live in 
poverty. Among blacks, one of every two children 
live in poverty as do one of every three Hispanic 
children. About 70 percent of all households headed 
by women live in poverty. Female-headed house- 
holds represent the fastest growing poverty group in 
the Nation." This is particularly significant because 
affordability has replaced physical inadequacy as the 
Nation's major housing problem. Far fewer female- 
headed households can afford to buy adequate 
housing for 25 percent of their income, the general 
rule-of-thumb. In 1978 only 53 percent (just over 
halO of all female-headed households could afford 
unflawed housing for 25 percent of their income, 
compared to 80 percent of all households. 

' Sandra J. Newman and Raymond J. Struyk, "Poverty. Housing 
Deprivation and Housing Assistance" (Washington, D.C.: Urban 
Institute), Working Paper No. 3089-01, 1982. 

Demographic changes such as the increase in the 
number of female-headed households, and an in- 
crease in the overall rate of household formation 
combined with economic forces have created diffi- 
cult circumstances for female-headed households. 
These circumstances are aggravated by the persis- 
tence of discrimination in the housing market. 

Female-headed households tend to reside in urban 
areas and they also tend to be renters as opposed to 
owners. Therefore, we shall first examine the extent 
of discrimination against single women with chil- 
dren in the rental market. Several studies have 
attempted to document the existence and extent of 
exclusionary and/or discriminatory practices. There 
is general agreement that although the nature and 
extent may vary, significant discrimination against 
female households persists in the rental market. 

' "Inequality of Sacrifice: The Impact of the Reagan Budget on 
Women" (Washington. D.C.: Coalition on Women and the 
Budget, March 1983). 



Proportion of Households Headed by Women 


All households 






1 1 .6% 



Source: U.S. Bureau of the Census. 

In a national study of exclusionary policies, 
Robert Morans found an increase in the incidence of 
no-children policies during recent years.' In 1980 
nearly one in four rental units had some sort of 
restriction on the presence of children compared to 
one in six units in 1975. No-children policies are 
more likely to be found in units built during the 

Restrictive policies towards children can take 
several forms.' In addition to the outright exclusion 
of children, some apartment complexes limit the 
number of children permitted, while others have 
minimum age requirements, other restrictive prac- 
tices include specifying particular floors or areas 
where children are permitted or restricting the 
sharing of bedrooms by children of the opposite sex. 
Such policies and practices are not always explicit 
and arc often left to the discretion of the managers of 
units. The Morans survey found that half of all 
complexes in the survey which allowed children had 

' Robert W. Morans and Mary Ellen Cohen, "Measuring 
Restrictive Practices Affecting Families with Children: A Nation- 
al Survey" (Ann Arbor: Survey Research Center, July 1980). 
• Dori.s Ashford and Pearl Esta, The Extent and Effects of 

a limitation on the number or age(s) of children 

Restrictive practices vary by the age of the 
apartment complexes. One-third of the managers 
interviewed, whose units were built between 1970 
and 1974, said their restrictive policies also began 
during that period. 

In 1981 there were a total of 28.8 million rental 
units in the U.S. Forty percent of them had two 
bedrooms, yet this was the most restricted size unit 
in the national survey. Twenty-five percent of the 
two-bedroom units were not available to families 
with one child; 33 percent of the two-bedroom units 
were not available to families with two children and 
60 percent were not available to those with three 
children. High rents are associated with restrictive 
practices. The proportion of two-bedroom units 
with age restrictions increases as rents increase. 
Units with higher rents are more likely to accept 
children with some restrictions on where they live. 

Discrimination Against Children in Rental Housing: A Study of 5 
California Cities (Santa Monica Fair Housing For Children 
Coalition, 1979). 


These practices are as widespread as they are 
partially because of the perceptions of managers and 
owners about children. Children were characterized 
as the cause of higher maintenance costs and 
nuisances. Four-fifths of all managers interviewed 
felt children caused increased maintenance and 
three-fourths of them said unsupervised children or 
teen parties caused problems for them as well as 
other tenants. 

This litany of restrictions applies to all families 
with children. When we consider the single female 
with a child or children, we have but to consider the 
opening quote to visualize the difficulty women with 
children encounter in the rental market if two-parent 
families face exclusion from at least 25 percent of all 
rental units. 

Far fewer female-headed households are home- 
owners, and the major barrier to their entry to this 
part of the market is economic. Given the variety of 
Federal, State, and local laws that make it illegal for 
lenders to discriminate on the basis of sex, race, 
marital status, or location, there is limited evidence 
of discrimination on the basis of sex or the presence 
of children in the determination of creditworthi- 

However, in the housing search process, there is 
evidence of significant discrimination. The Housing 
Market Practices Survey, which was a national 
study of discrimination against blacks in the sale and 
rental of housing found that blacks were discrimi- 
nated against 1 5 percent of the time they visited real 

' Robert Schafer and Helen F. Lada, "Equal Credit Opportuni- 
ty: Accessibility to Mortgage Funds by Women and Minorities" 
(Cambridge, Mass.: Joint Center for Studies, May 1980). 
'° Measuring Racial Discrimination in American Housing Markets: 

estate sales agents.'" The discrimination took the 
form of receiving less courteous treatment, receiving 
less information, or being shown fewer units. And 
the effect is cumulative; that is, if a black visits four 
sales agents, he or she could expect discrimination 
48 percent of the time. Although the study's focus 
was blacks, the estimates of discrimination can be 
considered the lower bounds for female-headed 
black households and other sets of nontraditional 


Discrimination against women with children has 
grown more subtle, but its effects are no less severe. 
With discrimination intertwined with the dramatic 
demographic and economic changes of recent years, 
female-headed households have been disproportion- 
ately and adversely affected. Whether it is as 
consumer of the final product or as a participant in 
the search process, women with children need an 
explicit set of protective laws and regulations which 
are vigorously monitored and enforced. This is of 
paramount importance as the administration con- 
tinues to press for market-based solutions to our 
housing problems. A national housing voucher 
program where women with children would be 
given certificates to be used like a rent subsidy in the 
open market, would be of little use so long as 
discrimination impedes these women as they search 
for housing. The market does not work for many 
female-headed households. 

The Housing Market Practices Survey, prepared by Ronald E. 
Wienk, et al. (Washington, D.C.: Government Printing Office, 


Discrimination Against Hispanic Women in Housing 

Irene Packer* 


Survival itself is a struggle for all low-income 
groups, but for Hispanic and other minority wom- 
en — particularly those who are heads of multiperson 
households — the problems involved in securing ade- 
quate, affordable shelter are almost overwhelming. 
Large numbers of low-income minority women are 
trapped in an impossible situation. Rapidly rising 
energy costs, property taxes, and maintenance ex- 
penses make it extremely difficult for low-income 
minority women to live in their own homes. Yet, 
they are unable to compensate for diminished home 
purchasing, home maintenance power by finding 
suitable and affordable alternative living arrange- 
ments. Women are additionally burdened by the 
obstacles of double discrimination, difficulties in 
obtaining financing and the restrictions imposed on 
female-headed families with children in rental units. 
Plagued by housing costs which are affordable only 
at great economic sacrifice, minority female-headed 
households face hardships resulting from these 
factors as well as from combined forces of displace- 
ment, deteriorating building, physically deficient 
housing units, overcrowding, and declining rental 
stock availability. 

The principle that households with limited in- 
comes should have safe, decent, and affordable 
housing has been recognized in Federal legislation 
since initial enactment of the U.S. Housing Act in 
the 1930s. Federal housing assistance programs 
currently prescribe that low-income households 
should be able to obtain adequate housing without 
spending more than 25-30 percent of their incomes. 

Nevertheless, this is not the case for the vast 
majority of female-headed households. For them, 
the financial burden of housing is becoming an 
increasingly severe problem. 

How Well Are We Housed? Female- Headed House- 
holds, published by the U.S. Department of Housing 
and Urban Development (HUD) in 1978, provides 
an overview of the situation. According to this study 
(see chart A), Hispanics represent 4 percent and 
blacks 17 percent of all U.S. households headed by 
women. Of all Hispanic households, 25 percent are 

headed by women; of all black households, 40 
percent are female-headed. The majority of these 
households in 1976 were widows; the next highest 
grouping consisted of divorced females, followed by 
lesser numbers of single women and married individ- 
uals with absent husbands. 

U.S. census information separates female heads 
into two distinct groupings: those who head single- 
person households and those who assume social and 
economic responsibilities for numerous family mem- 
bers. The 1980 census provides up-dated informa- 
tion, revealing that nationally there are: 

• 646,169 Hispanic and 2,283,777 black female 
heads of single-person households. 

• 457,823 Hispanic and 1,568,417 black female 
heads of multiperson households. 

The 1978 HUD study provides further insights into 
the female head-of-household profile: 

• Poor female-headed households have one 
chance in five of being inadequately housed. 

• Hispanic and black women have still higher 
probabilities of inadequate housing. 

• The effect of size on female-headed house- 
holds increases the probability of being ill-housed 
from one in five to better than one in three when 
the number of persons in the household is six or 

• While low-income, female-headed households 
suffer inadequate housing with about the same 
frequency as the general low-income population 
they must pay a substantially greater proportion 
of their incomes to maintain this status. 

• For all single-person households headed by 
women, almost 40 percent of those under 65 and 
almost 75 percent of those over 65 spend 25 
percent or more of their income on housing. 

• For all multiperson households headed by 
women over 25 percent of women under 65 and 
31 percent of those over 65 spend 25 percent or 
more of their income for shelter needs. Charts B, 
C, and D, reproduced from the HUD study, 
further illustrate the scope of the problem. 

* President, Companera, Inc., and Coast Coordinator, 
National Hispanic Housing Network. 



Profile of Female-Headed 
Households in 
the United States 

all U.S. households headed by women 

all single-person female-headed households 

all multiperson female-headed households 

Reproduced from How Well Are We Housed? Female-Headed Households 
U.S. Department of HUD, Washington, D.C., 1978, p. 5. 



The Probability of Being Ill-housed if You Are a Poor Woman Heading a Household' 

Black .28 





Total .20 

■Probabilities refer to a household with an adjusted income of less than $2,500 living in a North Central SMSA of under 250,000 
in 1976. In general, the confidence interval for these figures is .03 at the 90 percent confidence level. Thus there is no real dif- 
ference between the probabilities of being ill-housed for black and Hispanic female heads in this table. 

Reproduced from How Well Are We Housed? Female-Headed Households, U.S. Department of HUD, Washington, D.C., 1978, 
p 13. 

The impact of these statistics takes on greater 
meaning when elaborating further on the minority 
perspective. 1981 Current Population Statistics indi- 
cate the median income of Hispanic female-headed 
single-person households to be $7,586, with $7,221 
for female-headed multiperson households. For 
blacks, the median income of female-headed single- 
person households is $7,506, with $7,305 for female- 
headed multiperson households. 

The fact that the affordability crisis is even more 
salient among minority female-headed households 
become clearer when this data is studied along with 
statistics which show housing expenses as percent of 
income. Chart E, reprinted from a 1980 HUD study, 
demonstrates, for example, that 84.1 percent of 
Hispanic renter households with annual incomes of 
less than $3,000 (male- and female-headed) pay more 
than 25 percent of income for housing expenses; 76.5 
percent pay more than 35 percent. 

The hard facts are reinforced by general Hispanic 
housing data. A 1982 HUD research paper entitled 
Housing the Hispanic Population: Are Special Pro- 
grams and Policies Needed? states that Hispanics as a 
group experience housing deprivation in part as a 
result of low income and large family size. It notes 

that although the housing conditions of Hispanics 
are improving, the rate of improvement is lagging 
behind that of blacks. When common factors im- 
pacting on housing deprivation are considered, 
actual differences in housing conditions among 
whites, blacks, and Hispanics may be perceived. 
Blacks and Hispanics are twice as likely as whites to 
be inadequately housed or overcrowded even when 
they have similar financial resources. Differences 
between blacks and Hispanics are most noticeable 
among households with very low incomes. Among 
households with incomes below 50 percent of the 
local median, Hispanics are more likely than blacks 
to suffer overcrowding but less likely to suffer from 
physically inadequate housing. The 1982 HUD 
study examines the notion that Hispanics and blacks 
face common problems not shared by whites, such 
as housing discrimination as well as the adverse 
effects of segregation and social isolation. Clearly, 
both minority groups suffer housing deprivation as a 
result of paying an excessive share of their income 
for housing. 

These findings present a dim view of housing as it 
relates to Hispanic and other minority female-head- 
ed households. This paper is presented upon the 



Age and Household Size Also Affect a Poor Household's Chances of 
Living in Inadequate Housing* 

Demographic Characteristics 




of Head 



65 + 

1 person 
2-5 persons 



1 person 
2-5 persons 
6+ persons 


under 30 

1 person 
2-5 persons 


65 + 

1 person 
2-5 persons 



1 person 
2-5 persons 
6+ persons 


under 30 

1 person 
2-5 persons 


65 + 

1 person 
2-5 persons 



1 person 
2-5 persons 
6+ persons 


under 30 

1 person 
2-5 persons 


Sex of Head of Household 










'Probabilities refer to a household with an acjjusted income of less than $2,500 living in a North Cental SMSA of under 250,000 
in 1976. In general, the confidence interval for these figures is .03 at the 90 percent confidence level. 

Reproduced from How Well Are We Housed? Female-Headed Households, U.S. Department of HUD, Washington, D.C.. 1978, 
p. 16. 


Chart D 

Women Who Head Households Must Spend an Inordinately Large Proportion of 
Their Incomes to Live in Adequate Housing 

% Single- 


% Multiperson 



Ratio of adequate 


% all 

headed by 





housing cost to 






under 65 

over 65 

under 65 

over 65 

Under 10% 







Under 20% 







Under 25% 







Under 30% 







Under 35% 







Under 40% 







Under 50% 







Under 60% 







Under 70% 







Reproduced from How Well Are We Housed? Female-Headed Households, U.S. Department of HUD, V\/asfiington, D.C., 1978, 
p. 14. 

premise that housing is not a commodity but rather a 
social right. The following synopsis, therefore, 
serves two concurrent purposes. As a review of 
housing needs of Hispanic and other minority 
female-headed households, it is an endeavor (a) to 
relate these needs to the housing problems of low- 
income persons in general, especially with regard to 
the affordability crisis and (b) to identify the special 
problems which women as individuals, contributors 
to the family income and heads of households 
confront when seeking access to the housing mar- 
kets. As a component of a broad-based national 
housing consultation, this paper simultaneously rep- 
resents a call to advocate for change in housing 
policies and programs which impact women 
throughout the U.S. 

The Economics of Housing 

Housing problems are economic problems. The 
major barrier to quality housing is cost. There 
remains a significant gap between the cost of 
standard and appropriately sized housing for low- 
income, minority female-headed households and 
their ability to pay for such housing. The supply- 
demand gap is made worse by: 

1. A decreasing amount of standard rental housing 
for low-income residents. This is a result of: 

• substantial deterioration, abandonment, and 

• a diminishing nu;nber of newly constructed or 
substantially rehabilitated units that low-income 
individuals can afford; 

• increased competition for existing units. 

2. The fact that many recent housing rehabilitation 
efforts have focused on smaller ownership and rental 
structures and not on larger rental properties. 

3. A lack of focus on cost reduction strategies in 
new construction, substantial and moderate rehabili- 
tation which help to maintain sales and rental costs 
at affordable levels. 

4. The continuing lack of suitable employment 
opportunities, resulting in a lack of sufficient house- 
hold income to meet the rising costs of housing. 

5. The fact that many traditional incentive strate- 
gies offered in the past to induce private sector 
involvement in housing for low-income persons 
have not been effective (e.g., mortgage interest 
subsidies, federally tax-exempt bonding options, 
secondary market financing operations, property tax 
abatements, etc.). Economic strategies of a more 


Chart E 

Households Reporting Housing Expenses as Percent of Income, 1976 

More than 25% of Income 






Renter Households 

Less than $3,000 















Over 25,000 



All households 



Homeowner with Mortgage 

Less than $3,000 















Over 25,000 



All households 



Homeowners without 


Less than $3,000 















Over 25,000 



All households 







More than 35% of Income 
All Black Hispanic 






































"All households reporting housing as a percent of income, reported spending over 35 percent of income. 

Source: Annual Housing Survey, 1976. Part C: Financial Characteristics. 

Reproduced from Families and Housing Markets, Obstacles To Locating Suitable Housing, U.S. Department of HUD, Washington, 
D.C., 1980, p. 13. 


institutional nature are needed to respond to the 
housing dilemma facing minority-female households. 

Decreasing Housing Supply for Low-Income 


As previously indicated in this report, there is a 
decreasing amount of suitable and affordable hous- 
ing for low-income individuals. As the cycle of 
deterioration, abandonment, and demolition has 
proceeded in our Nation's neighborhoods, lost units 
have not been replaced by newly constructed or 
substantially rehabilitated housing. 

The increasing phenomenon of gentrification in- 
tensifies competition for scarce housing between 
middle/upper-income and low/moderate-income 
households. This increased competition for vacant 
housing units results in the subtraction of units from 
the supply which might otherwise have been avail- 
able for lower income minority female-headed 

Because these patterns persist, the rehabilitation of 
vacant and inhabited structures remains an impor- 
tant option if appropriate renewal programs are to 
be developed, implemented, and financed. This type 
of effort calls for: 

1 . The development of practical, feasible strategies 
which will allow current residents to remain in their 

2. The establishment of financial institutions which 
permit the county, ward, neighborhood, and block 
to profit collectively from appreciated values gener- 
ated through property transactions. 

3. Resident participation in planning, implementa- 
tion, and management of revitalization efforts. 

Rental Housing Cost Reduction 

Construction, rehabilitation, and carrying costs 
continue to increase at rates greater than increases in 
household incomes. With current land costs for new 
construction approaching $30 or more/square foot 
and those for substantial rehabilitation often more 
than $20/square foot — resulting sales prices general- 
ly range from $40 to $60/square foot, beyond the 
reach of most low-income households. Such costs 
affect rental properties as well. 

Elimination of cost-inflating factors in housing 
construction and design must commence. Curent 
"safe and sanitary condition" code requirements 
must be reexamined for validity. 

Recent neighborhood-based housing projects 
have demonstrated that, without some form of 

subsidy, it requires at least $175-$250 per unit per 
month rental for a multifamily property owner 
simply to support carrying costs (property taxes, 
utilities, property insurance, and modest mainte- 
nance). At least another $100-$200 per unit per 
month is required to support debt service costs for 
acquisition and rehabilitation. Most low-income 
renters cannot meet these "minimal" economic costs 
with 30 percent or even 35 percent of their monthly 
household income. 

The effects of this dilemma are felt simultaneously 
by renters and rental property owners. An insuffi- 
cient stream of rental payments to the property 
owner hinders his ability to maintain the property 
and the individual units in standard condition. 

As the property owner's costs increase, they are at 
first passed along to tenants. At some point, the 
property owner realizes that rent delinquencies 
increase with stepped-up rental expenses. The owner 
is then willing to receive less than what would be an 
economic rent in order to maintain occupancy. 

Subsequently, the property begins to suffer as a 
result of less-than-economic rental payments. Main- 
tenance may be diminished and there may be lags in 
mortgage, utility, and property insurance payments. 
This, in turn, paves the way for property deteriora- 
tion and possible abandonment. It also leads to 
mortgage and insurance redlining as a result of 
perceptions on the part of lenders that the property 
cannot manage economically. 

A full understanding of this phenomenon does not 
exist in county or city government or in the private 
financial community where broader, neighborhood- 
based services take priority over needed housing 

The result is that — in recently constructed, and 
substantially rehabilitated housing units — rental 
costs per unit are so high that low-income persons 
are not able to enter the "system" at any level. They 
are confined to choosing among units which are 
often substandard and of insufficient size to acom- 
modate housing needs. 

Only limited public subsidies are available to 
respond to this problem. Other solutions must be 
found to reduce the gap between per unit per month 
expenses and the inability of lower income individu- 
als to pay for such housing. 

Ownership Benefits 

Recent reports of the Board of Governors of the 
Federal Reserve System refer to the significant 


economic benefits which all households derived 
from homeownership. Not only does ownership 
allow for mortgage interest deductions on annual 
income tax returns, but it provides the means for 
generating cash through refinancing or resale as a 
result of property value appreciation. If low-income 
persons are to have a full stake in the maintenance of 
their housing and their neighborhoods, then they 
must retain control of their housing. Property 
ownership remains critical to the well-being of 
minority female-headed households, economically as 
well as sociologically. 

Summary of Low-Income Housing Needs 
Relating to Female-Headed Households 
and Recommendations 

Housing Need No. 1: Maintenance and Upgrading 
of Existing Housing Stock 

Reinvestment follows disinvestment. For the most 
part, low-income persons are living on unstable 
incomes and paying unusually high percentages of 
their incomes for rent or mortgage and utilities. 
Although innumerable renter- and owner-occupied 
housing units require maintenance and repair, the 
majority of households are unable to initiate even 
small-scale rehabilitation. Inadequacies of income, 
financing, and public services exacerbate the prob- 
lem. If present trends continue, neglected properties 
will be lost to fire, vandalism, the wrecker's ball, 
and — most alarmingly — to widescale outside inter- 


• Cities should expand the mandate and funding 
levels of weatherization assistance programs for 
low-income persons. Low-interest or no-interest 
revolving loan funds for more extensive home 
repair and rehabilitation should be created. 

• Most public housing authorities (PHAs) have 
waiting lists numbering in the thousands with the 
majority of applicants waiting more than 3 years 
for occupancy. PHAs should: (a) identify priori- 
ties for modernization of existing vacant or board- 
ed-up structures; (b) improve the program for 
systematic maintenance of occupied units; and (c) 
reassess the system for providing related social 
services. Continued professional management 
training should be made available to all onsite 
managers, district managers, and central office 

• Condominium and cooperative conversion 
must be controlled. Statutory tenancies for the 
elderly in any new conversion should be encour- 
aged and homeowner opportunities for tenants of 
all income levels should be encouraged. Educa- 
tional and technical assistance must be provided to 
tenants relative to the conversion process. Ten- 
ant/developer bargaining must be encouraged to 
increase homeownership opportunities, and as a 
strategy to prevent displacement. The conversion 
process must be closely regulated in order to 
minimize disruption in the lives of residents. 

Housing Need No. 2: Increased Housing Supply 

Many of the housing problems which have been 
described in this report result from a shortage in 
housing of decent condition, adequate size, and 
affordable cost for low-income households. The 
large percentage of minority female-headed house- 
holds living in housing with code violations, struc- 
tural deficiencies, and paying more than 30 percent 
of their income for rent and utilities is a result of this 
housing shortage. The housing crisis is not merely a 
result of low incomes. Many households which have 
been certified for the section 8 subsidy program 
have not been able to find housing of suitable size 
and condition at the prescribed fair market rent 
because of the insufficient number of such units, 
their high cost, or long occupancy waiting lists. The 
number of housing units for low-income households 
in recent years has not kept pace with the disappear- 
ance of low-cost housing as a result of abandonment, 
demolition, arson, and conversion. 

Present stock of housing for low-income house- 
holds often is limited to a few neighborhoods. 
Therefore, the poor are concentrated in these 
neighborhoods. This situation restricts the access of 
low-income persons to jobs, schools, shopping cen- 
ters, and other services. It also promotes disinvest- 
ment in those neighborhoods, a growing occurrence 
from which low-income minority residents suffer 


• Additional housing for low-income households 
must be created. In light of the recent reduction of 
resources available for this purpose at the U.S. 
Department of Housing and Urban Development, 
innovative financing strategies must be worked 
out with housing finance agencies, departments of 
housing and community development, and private 
investment. Housing should be located in various 


neighorhoods, especially in those which presently 
have little or no low-cost housing. These neigh- 
borhoods should have adequate shopping centers, 
schools, and access to public transportation. 
Neighborhoods which are experiencing displace- 
ment or a decrease in low-cost housing, as a result 
of abandonment and reinvestment, should also be 
considered as sites for new or rehabilitated low- 
cost housing. 

• The present supply-demand imbalance can be 
improved by expanded land and building banking. 
A cooperative venture between neighborhood 
organizations and city or county governments 
should be initiated for the express purpose of 
stimulating new construction or substantial reha- 

• Vacant public housing sites should be identi- 
fied throughout cities and counties and ranked 
according to potential for new construction or 
substantial rehabilitation. 

• Cities should undertake the following steps to 
nuture private sector involvement: 

— Create special mortgage risk pools with 
public funds to leverage private financing for 
low- and moderate-income housing construc- 
tion and rehabilitation. 

— Sponsor new legislation to require set-asides 
of units for low-income families in large con- 
dominium/cooperative and new apartment de- 

— Provide financing incentives (e.g., partial 
grants for land acquisition and guaranteed loans 
to investors) to develop privately owned vacant 
land, rehabilitate existing housing, and convert 
buildings, as appropriate. p3» There should be 
more HUD section 202/8 independent living 
facilities in minority neighborhoods. HUD must 
increase its funding of Hispanic and other 
minority sponsors to enable them to build 
adequate housing for their older constituencies. 
HUD must support continued management 
training of minority sponsors to insure ongoing 
minority control of section 202 housing 

• The increased development and implementa- 
tion of innovative housing alternatives for the 
elderly should be encouraged. 

Minority elderly should be provided a choice of 
housing in their own communities. Efforts such as 
the installation of accessory apartments should be 
programmatically and financially supported by 

local departments of housing and community 
development. In this approach, small, complete 
units are installed in surplus space in oversized 
single-family homes. Rent reductions are ex- 
changed for needed services and social reinforce- 
ment. Additional benefits include: 

— permitting older homeowners to stay in their 

homes in light of rising expenses for heat, taxes, 

and maintenance 

— stimulating new moderate cost rental housing 

— providing housing for a mix of income groups 

— preserving large older homes in inner-city 


• Shared housing programs for persons of all 
ages should be expanded. In this program, existing 
housing in good repair can be utilized without 

• Neighborhood conservation should be consid- 
ered as an important element in the spectrum of 
housing alternatives for low-income persons. 

• Shelter and nonshelter services for the ho- 
meless must be increased. Growing economic 
pressures on lower income people will increase 

Housing Need No. 3: Reduced Housing Cost 

The cost of newly created housing, including 
utilities, should be 30 percent or less of the income of 
low-income households. This low cost should be 
attained not only through subsidies but also by any 
means possible that reduced construction, mainte- 
nance, and management costs but does not jeopar- 
dize the quality of the living conditions. In rehabili- 
tated structures, there is both a need to develop 
strategies to reduce the cost of conventionally 
financed properties and a need to subsidize the cost 
of some properties below their replacement cost 
value. In both instances, cost reduction strategies 
should be developed in ways which limit the long- 
term financial impact on localities and on prospec- 
tive occupants. 


• Design innovations should be accomplished 
through annual local-sponsored design competi- 

• Extensive reviews of local construction, fire, 
and housing codes as well as zoning and subdivi- 
sion requirement should be coordinated. Exces- 
sive, unnecessary, and cost-infiating requirements 
can be eliminated in this way. 


• Displacement/replacement housing funds to 
be used for construction, fire, and housing codes 
as well as zoning and subdivision requirements 
should be coordinated. Excessive, unnecessary, 
and cost-inflating requirements can be eliminated 
in this way. 

• The use of interest write-downs to make 
privately offered Title I FHA home improvement 
loans affordable to moderate-income households is 

• Budgetary support for city-sponsored tax and 
rent abatement programs should be increased. 
These programs represent an integral component 
of comprehensive cost-reduction efforts. 

Housing Need No. 4: Expanded Research, Data 
Collection, and Documentation of Low-Income and 
Female-Headed Household Housing Needs 

There is a need for expanded research, data 
collection, and documentation of the housing needs 
of low-income persons and of minorities and female- 
headed households in particular. Complete, up-to- 
date data are not available. Records and surveys are 
maintained either by age, race, sex, or income; rarely 
are all four factors interrelated. Local service agen- 
cies should rewrite instructions on reporting to 
include all variables. Departments of housing and 
community development are advised to assist public 
housing managers in the ongoing maintenance of 
comprehensive, building-by-building resident pro- 
files. HUD is encouraged to fund indepth studies of 
the most recent characteristics and problems of 
minority female-headed households. 

Special Problems Which Female-Head of 
Households Confront When Seeking 
Access to the Housing Market 

The section on the economics of housing and the 
summary of low-income housing needs relating to 
female-headed households have been included to 
emphasize the fact that the housing affordability 
crisis that women face is part of the low-income 
housing crisis, in general. Solutions to the housing 
problems of female-headed households will be part 
and parcel of comprehensive housing innovations. 
However, economic constraints are not totally 
responsible for limitations on female-headed house- 
hold housing accessibility. Analysis of literature on 
the subject reveals three other factors which func- 

' U.S., Department of Housing and Urban Development, Women 
and Housing: A Report On Sex Discrimination in the American 
Cities. 1976, p. ii. 

tion as major obstacles to women attempting to 
secure appropriate housing. These additional factors, 
all forms of discrimination, are: (1) sex bias, which 
for Hispanic and other minority women represents 
double discrimination; (2) difficulties in obtaining 
financing; (3) restrictions imposed on female-headed 
families with children in rental units. Understanding 
the nature of these problems as well as those relating 
to income-related situations provides a total spec- 
trum of the housing obstacles female-headed house- 
holds are facing. 

Sex Bias 

It (sex bids in housing) is alive and well. The chronicle of 
instances of discrimination showed that from all points of 
view, women are having problems. It is clear that local 
agencies have been active on race discrimination, but have 
not recognized sex-discrimination.' 

Panel Member 
Atlanta Hearing 

One excellent source of information on sex bias in 
housing is the Women and Housing Study implement- 
ed by the National Council of Negro Women 
(NCNW) under contract to HUD in 1975-76. The 
NCNW study contends that American women are 
second-class citizens, both as consumers of housing 
products and participants in the shelter process. 
Replicated directly from the report are the follow- 
ing 10 findings:^ 

1. Women in the cities studied have faced, in the past, 
discrimination on account of their sex on a variety of 
fronts in their search for shelter. Much of this discrimina- 
tion continues to the present and includes sex bias in 
marketing, lending, and shelter-related services. Lack of 
equal rental opportunity represents an especially pressing 

2. Discrimination against women, historically, has been 
overt; today it is increasingly subtle, disguised by ruses or 
hidden behind superficially neutral criteria, such as marital 
status, which in practice have a discriminatory impact. 

3. Women, generally, are not aware of the nature or extent 
of sex discrimination. Nor have they been informed of 
existing legal remedies applicable to such conduct. 

4. Myths and stereotypes about women are the underpin- 
ning of prejudicial attitudes shared by many persons in the 
housing system. These myths and stereotypes have deep 
roots in the nation's history and have played key roles in 
the socialization or conditioning of women and men in this 

' Ibid. 


country. Many are not now, nor have been, factually 

5. Neither public agencies nor private organizations 
maintain and compile statistics pertinent to women's 
access to shelter or housing-related services and facilities. 
This absence of "hard data" represents an impediment to 
fashioning sure-footed solutions as well as raising the level 
of public awareness to the problem. 

6. Women outside a male-headed household represent a 
sharply growing demographic trend in the cities studied. 
They are disproportionately adversely affected by a 
shortage of decent housing, moderately priced, in the 
cities studied, and by the marketing practices of those who 
control this shelter. 

7. Discrimination on account of sex frequently is "layered" 
with discrimination on account of some other characteris- 
tics of a woman, e.g., her race, source of income, or 
marital status. 

8. Lending institutions have "discounted," partially or 
totally, a woman's income in making decisions on applica- 
tions for mortgage credit. Some lending institutions will 
condition a mortgage loan on sundry devices which 
discourage childbearing by the mortgagors. We found 
conflicting evidence on the extent to which these practices 
of lenders continue. 

9. Sex-based discrimination in the law, especially in laws 
relating to property, to family and to domicile, further 
reinforce sex discrimination in housing. Similarly, sex 
discrimination in other areas of American life, e.g., in 
employment, are interwoven with and reinforce such sex 

10. Women are virtually excluded from key policymaking 
jobs in the Nation's shelter system. This appears to be 
equally true in the public and private sectors. 

NCNW finds the basis for sex bias in changing 
family patterns; in the change of women's work 
force participation over the years; and in society's 
antiquated attitudes toward female equality which 
have resulted in a persistence of stereotyped think- 
ing toward female financial ability and responsibili- 
ty. NCNW's emphasis on changing family patterns is 
well-founded. An extremely large increase in one- 
person and single-parent households has occurred 
within the past 10 years. In 1978 these types of 
households represented over 29 percent of all 
American households. In 1978, 7 percent of all 
households and 18 percent of all families with 
children were headed by one parent. Important to 
note, too, is the fact that the rising divorce rate 
(approximately half the marriage rate) will cause at 
least 45 percent of all children born in 1978 to be 
members of one-parent households — mostly female- 

headed — for some period of their lives before they 
reach the age of 18. Lower fertility rates, later 
marriages, and larger numbers of never-married 
people are other factors which have produced more 
female-headed households. 

Difficulties in Obtaining Financing 

Dr. Margaret C. Simms of the Urban Institute, in a 
1980 HUD-funded study entitled Families and Hous- 
ing Markets: Obstacles to Locating Suitable Housing, 
cites three key groups in the area of financing 
discrimination: real estate agents, mortgage lenders, 
and landlords. Real estate agents can steer potential 
buyers toward certain types of neighborhoods or 
dwelling units by controlling the flow of information 
disseminated to consumers. They can also discrimi- 
nate by providing different information on mortgage 
availability and requirements to different groups. 
Landlords control the rent-up of available apartment 
units in a similar manner. By adjusting rental rates, 
security deposit requirements, and requirements on 
minimum numbers of bedrooms for different size 
families, landlords can impact on a desired tenant 
profile. A 1979 HUD study documented continued 
evidence of race and sex discrimination in housing 
markets. Mortgage lenders also have profound 
opportunities to influence minority and female hous- 
ing participation since few persons can pay cash to 
purchase a home. Redlining of neighborhoods that 
have higher concentrations of certain ethnic groups 
continues as does systematic underassessment of 
certain kinds of properties. Discrimination against 
women in the mortgage market was supported by 
government policy until 1973. The income of mar- 
ried women was discounted according to their age, 
occupation, and length of time in the labor force. 
Discounting formulas were based on a woman's age 
and her reproductive capacity. This kind of activity 
was practiced within two key Federal insurance 
programs: the Federal Housing Administration and 
the Veterans Administration. Females applying for a 
VA mortgage with a husband, until 1973, were 
informed that the wife's income would only be 
counted if she would sign an affidavit stating that 
she would practice birth control. Single and di- 
vorced women were treated inequitably when ap- 
plying for mortgages because it was widely thought 
that single women would not repay the debt upon 
possible marriage; divorced women had no credit 
since all credit had to be in the husband's name; 
alimony and child support could not be counted as 


income; insurance companies would not issue home- 
owner's policies in a woman's name. Even though 
the 1974 Fair Housing Status and the 1975 Equal 
Credit Opportunity Act deemed these practices 
illegal, evidence exists which supports the fact that 
inequitable practices continue in many instances in 
this country. A 1980 HUD study investigated equal 
credit opportunity and accessibility to mortgage 
funding by women and minorities in New York and 
California discovering and documenting substantial 

Restrictions Imposed on Female-Headed Families 
With Children 

This category of discrimination has received 
much attention in recent years. Two excellent HUD- 
funded sources of information are Measuring Restric- 
tive Rental Practices Affecting Families With Children: 
A National Survey and Housing Our Families, both 
published in 1980. 

Minorities and women are more likely to be 
renters, more likely to reside in central cities, and 
more likely to live in public housing. Evidence 
supports the notion that single-parent, minority-fe- 
male households prefer to live in housing which is 
close to child care and relatives, near social and 
school settings for children, and within a reasonable 
commute to work if employed. 

HUD documentation of discrimination against 
families with children reached its zenith in 1980 
when HUD contracted the University of Michigan 
Survey Research Center to conduct a national 
telephone survey on the subject. 1,007 renters and 
629 managers were interviewed, revealing location, 
size, and type of rental units with discriminatory 
practices toward families with children. The number 
one finding of this study was that "numerous 
management policies and restrictions limit the ability 
of families with children to find suitable rental 
housing." In addition to "no-children" policies, 
other restrictions include limitations on: 

• the ages and maximum number of children 
allowed in units, 

• the sharing of bedrooms by children of oppo- 
site sex, 

• designation of certain floors and buildings 
were not permitted, and 

• inconsistencies in rent levels between house- 
holds with children and those without. 

These restrictions are more prevalent in apartment 
buildings and complexes than in single-familiy rental 

units. Exclusions were found to apply more in one- 
bedroom units and less in units with three or more 
bedrooms. Large units were least likely to have 
restrictions on the ages of children in residence. The 
study revealed that vacancy rates, neighborhood 
location, and age of buildings had little to do with 
restrictions. Policies were associated by race in 
urban areas. 

When asked, managers offered the following 
justification for restrictions: tenants without children 
of their own preferred to live in dwellings which 
exclude children due to noise, destructiveness, prop- 
erty damage, and lack of parental supervision. 
However, most of the renters interviewed indicated 
that they would not object if children were admitted 
to their developments. The legal status of Federal 
and local housing policies which restrict access of 
families with children is now in question and as of 
yet remains unclear. The 1968 Fair Housing Act, 
Title VIII of the Civil Rights Act, prohibits discrim- 
ination in the sale or rental of housing on the basis of 
race, color, religion, or national origin, but does not 
address age or child discrimination. State constitu- 
tions and State statutes vary in their personal and 
property coverage and exclusions as well as in 
enforcement mechanisms, remedies, and sanctions. 
The latter are crucial to the effectiveness of these 
statutes. The small number of fair housing com- 
plaints filed by Hispanics is disturbing. Without 
enforcement, discrimination will persist. 


The attainment of safe, decent, sanitary, and 
affordable housing is a serious problem for Hispanic 
and other minority female-headed households. The 
cause of the crisis revolves around three major 
problems: availability, affordability, and accessibih- 
ty. Accessibility as used here means that people are 
still confronted with discriminatory practices which 
prevent them from entering the housing market 
either as renters or homeowners. Because of the 
pervasive double nature of housing and sex discrimi- 
nation and its impact on minority female-headed 
households' ability to acquire housing, any discus- 
sion on the resolution of the current housing crisis 
cannot exclude the issue of discrimination. Discrimi- 
nation is a reality which must be recognized as 
perservering and must be a topic which is included 
in any planned effort to resolve the inane problems 
of housing availability and affordability. Although 
the recommendations included in this synopsis rep- 


452-986 0-84-9 

resent possibilities and alternatives for action, the about their rights under Federal and State fair 

fact remains that the problems of availability, afford- housing laws and administrative and judicial proce- 

ability, and accessibility as they relate to both low- dures for protecting these rights under these laws, 

income and minority female-headed housing are The important role of local fair housing organiza- 

much greater than the resources currently available tions in combating discrimination in accessibility 

to resolve them. This must become, in essence, the JJ^^^^ ^o^ be negated. Education, outreach, investiga- 

most immediate and top priority issue for discussion ^jq^ documentation, and enforcement activities 

by the U.S. Commission on Civil Rights Housing ^^,^, continue full force to ascertain that change will 

Task Force. Simultaneously, better methods must be finallv occur 
developed to educate Hispanics and other minorities 



1. Housing the Hispanic Population: Are Special Programs and Policies Needed? 
by Jon Hakken. U.S. Department of HUD, December 1982. 

2. Housing Our Families, U.S. Department of HUD, Washington, D.C., 

3. Women and Housing: A Report on Sex Discrimination in Five American 
Cities. U.S. Department of HUD, Washington, D.C., 1975. 

4. Measuring Restrictive Rental Practices Affecting Families With Children: A 
National Survey. U.S. Department of HUD, Washington, D.C., 1980. 

5. Families and Housing Markets: Obstacles to Locating Suitable Housing. U.S. 
Department of HUD, Washington, D.C., 1980. 


Housing Discrimination Against Families with Children: 
A Growing Problem of Exclusionary Practices 

Carol Golubock' 

Another form of discrimination is taking its toll on 
families seeking housing: housing discrimination 
against families with children. Although it is not a 
new form of discrimination, it is a growing national 
problem. Unlike race, national origin, and sex 
discrimination, it is not a basis of discrimination 
against which there has formed a clear national 
consensus. However, the hardest hit victims of 
discrimination against families with children are the 
very groups that the fair housing laws are designed 
to protect: minority and female-headed households. 
This paper briefly discusses recent research that has 
been done on the problem of housing discrimination 
against families with children and analyzes the need 
for national action to alleviate the problem. 

The Problem and What It Means to 

Housing discrimination against families with chil- 
dren' is a serious and rapidly growing national 
problem. A study of the prevalence of discrimina- 
tion against families nationwide was commissioned 
by the United States Department of Housing and 
Urban Development. It showed that in 1980, 76 
percent of the rental apartment units in the country 
had exclusionary policies to keep out families with 
children. Twenty-six percent of all rental units 
totally excluded children and another 50 percent 
restricted the number of children or the age or sex of 
children in a unit or imposed similar sorts of 
restrictions which limited occupancy by families 
with children.' 

• Senior Staff Attorney, Children's Defense Fund. 
' Throughout this paper housing discrimination against families 
with children is sometimes simply referred to as discrimination 
against families. 

' R. Marans, M. Colten, et al., Measuring Restrictive Rental 
Practices Affecting Families with Children: A National Survey 
(1980), p. 24 (prepared for U.S. Department of Housing and 
Urban Development, Office of Policy Development and Re- 
search) (hereafter cited as Measuring Restrictive Rental Practices). 
' D. Ashford and P. Easton, The Extent and Effects of 
Discrimination Against Children in Rental Housing: A Study of Five 
California Cities (December 1979), p. 6 (Fair Housing Project, 
Santa Monica. California) (hereafter cited as Study of Five 
California Cities). 

' J. Greene, "An Evaluation of the Exclusion of Children from 
Apartments in Dallas, Texas" (1978), p. 9 (unpublished paper). 

Other studies in selected areas of the country 
show that discrimination is even more prevalent in 
some cities and counties. These locations have been 
predominantly areas of extremely tight rental mar- 
kets. For example, a study conducted in California 
of five major cities found exclusion rates ranging 
from 50 percent to 71 percent except in the one city, 
San Francisco, which had enacted an ordinance 
prohibiting discrimination.' An earlier study in 
Dallas showed that 60 percent of the apartments 
were closed to children.* 

What is more, discrimination against families is 
increasing at a rapid rate. The 1980 HUD study 
showed that the exclusion rate nationally jumped 
from an estimated 17 percent in 1974 to 26 percent in 
1980.^ Local studies confirm these findings: in 
Dallas newly constructed units excluded children at 
a rate of 85 percent, while older apartments had an 
exclusion rate of 51 percent.* Similarly, even in the 
cities in California where exclusion rates were 
extremely high, the rates were rising.' 

Commentators have suggested that there is a 
strong correlation between tight housing rental 
markets and child-exclusionary practices.' If the 
trends of low levels of construction of rental housing 
and the growing numbers of renter households' 
continue, as is likely, the rate of exclusion will rise 
throughout the country. The future looks increas- 
ingly grim, particularly for low-income renter fami- 
lies with children. 

' R. Marans, M. Colten, Measuring Restrictive Rental Practices, p. 


' J. Greene, "An Evaluation," p. 9. 

' D. Ashford and P. Easton, Study of Five California Cities, p. 6. 

' Note, IVhy Johnny Can't Rent — An Examination of Laws 

Prohibiting Discrimination Against Families in Rental Housing. 94 

Harvard Law Review 1829, 1835 n.37 (June 1981) (hereafter cited 

as Why Johnny Can't Rent): Children's Defense Fund, A Brief 

Overview of Housing Discrimination Against Families with Children 

(Washington, D.C.: Children's Defense Fund, 1981). 

" Note, Why Johnny Can't Rent, 94 Harvard Law Review at 



Exclusionary practices join with other factors to 
create the shocking reahty that 8,119,000 children in 
the United States live in inadequate housing.'" 

The other effects of exclusionary policies on 
families with children are more difficult to quantify, 
but equally or more pernicious. Such housing 
discrimination helps perpetuate employment and 
school discrimination and relegates the family — pur- 
portedly the bedrock of our society — to second-class 
citizenship in numerous respects. Summarizing the 
conclusions drawn from several studies that it 
commissioned on discrimination against families, 
HUD described the wide range of difficulties caused 
by families' limited access to housing: 

Associated problems reported by families include limited 
access to quality schools and day-care centers because 
they could not rent in a preferred area. Other families 
mentioned having to live where public transportation was 
inconvenient or non-existent, thus forcing them to walk or 
drive long distances for shopping or work. Not being able 
to live within reasonable distance of a job also put strains 
on a family because the family earner(s) had less time to be 
with the children than was considered desirable. 

Some of the most poignant emotions were expressed by 
parents who felt dehumanized and insulted by the assump- 
tions underlying exclusionary rental policies: that children 
are destructive, that parents are unable or unwilling to 
discipline their children, that families are simply undesir- 
able tenants. For many of these parents, the latest rhetoric 
preserving the family must seem rather hollow as they 
struggle to find the kind of housing that allows them to 
keep their families together." 

In addition, exclusionary policies force families to 
look longer and pay more for housing, to accept 
housing that is less attractive and often located in 
racially concentrated areas, or to endure the frustra- 
tion of being unable to find decent housing and thus 
having to move in with friends or relatives.'^ 

'" U.S., Department of Housing and Urban Development, 

Housing Our Families, p. 2-4 (1980). 

" Id, p. 5-4. 

" J. Green and G. Blake, How Restrictive Rental Practices Affect 

Families With Children, pp. 1-4, (1980) (prepared for the U.S. 

Department of Housing and Urban Development, Office of 

Policy Development and Research); D. Ashford and P. Easton, 

Study of Five California Cities, pp. 11-12. 

" The term "male-headed" household is used by the Census 

Bureau to include households where both a husband and wife are 


The Particularly Harsh Impacts of 
Exclusionary Policies on Minority and 
Female-Headed Families 

Minority and female-headed families are particu- 
larly hard hit by exclusionary policies for many 
reasons. Perhaps the most obvious is that they are 
more likely to be renters and to have children in 
their care than are nonminority and male-headed 
households." In 1977 while only 26.1 percent of the 
housing occupied by nonblack families with children 
consisted of rental units, 56.2 percent of the units 
occupied by black families with children were 
rented.'* Thus, black families with children were 
more than twice as likely as other families to be 
renting. For Hispanic families, the disparity is less 
startling, 34.1 percent of Hispanic families with 
children rent as opposed to 30 percent of the total 
population.'* However, these percentages mask the 
enormous differences among different national ori- 
gin groups within the designation Hispanic. For 
example, Cubans on the whole do much better in the 
housing market than Puerto Ricans.'® 

For female-headed households the numbers show 
the same phenomenon as for black households: while 
only approximately 25.7 percent of male-headed 
families with children rent, approximately 58.3 
percent of female-headed families with children rent 
their housing." And female-headed households are 
a rapidly growing percentage of all families with 
children under 18 years of age: in 1981 females 
headed 18.8 percent of all families living with 
children, nearly double the 1970 figure. For black 
families the percentage of females heading families 
with children is even higher, nearly half of all 
families living with children." 

Denial of access to housing because of the 
presence of children is also particularly detrimental 
to minority and female-headed families' search for 
adequate housing because they overwhelmingly 
tend to be low income. Clearly low-income families 
have a significantly higher probability of being 

'* U.S., Department of Commerce, Bureau of the Census, Annual 
Housing Survey: 1977 General Housing Characteristics, part A, 
series H- 150-77 (September 1979). 
" Id 

" U.S., Department of Housing and Urban Development, How 
Well Are We Housed? 1. Hispanics. (1978). 

" Bureau of the Census, 1977 General Housing Characteristics, p. 

'" U.S., Commission on Civil Rights, A Growing Crisis: Disadvan- 
taged Women and Their Children, p. 5 (1983) (Clearinghouse 
Publication 78). 


inadequately housed than their more affluent coun- 
terparts." And more minority and female-headed 
families are living at the poverty level. ^° HUD 
found that 21.4 percent of black families and 18.5 
percent of Hispanic families were living in housing 
units with physical deficiencies in 1976, rates almost 
twice those of white families.^' Similarly minority 
and female-headed families are less able to find 
adequate housing that they can afford, and they pay 
significantly larger percentages of their incomes for 
housing than does the population as a whole." In 
times of tight rental markets this means that the 
already small supply of affordable rental housing is 
often made negligible by no-children policies.^' 

Finally, exclusion because of the presence of 
children is being used by landlords who wish to limit 
or deny access to housing to minority and female- 
headed families but are constrained by law from 
engaging in the latter forms of discrimination. Using 
interviews of renters with children from 19 metro- 
politan areas, one study found: 

Among the respondents. . ., minorities were the most 
heavily burdened by serious problems caused by restric- 
tive rental policies. The severity of their burden may be 
the result of insufficient income. However, even among 
those with incomes of $15,000 and above, a statistically 
significant difference was found between the frequency of 
serious problems experienced by minority complainants 
and those experienced by white complainants. This raises 
the question as to whether at times no-children policies are 
a smoke screen for racial discrimination.^'' 

A study conducted for HUD by the Rand Corpora- 
tion found that, in selected cities, children were cited 
most frequently by blacks as a cause for discrimina- 

" U.S., Department of Housing and Urban Development, How 
Well Are We Housed? 1. Hispanics; U.S.. Department of Housing 
and Urban Development, How Well Are We Housed? 2. Female- 
Headed Households ( 1 978). 

" In 1977 a shocking 41.8 percent of female-headed households 
with children under 18 years of age were living at the poverty 
level over six times the rate for comparable male-headed 
households. Three-fifths of all black families headed by women 
were in poverty m 1977. Housing Our Families, p. 3-3. 
" Id., p. 2-4. 

" While 80.3 percent of all families spent under 25 percent of 
their income on housing in 1976, only 63 percent of black 
households were in this range, 70.7 percent of Hispanics, and 53 
percent of female-headed households. Id., p. 2-2. 
" For example, in Los Angeles, where the overall vacancy rate 
was 2.6 percent in 1979, the effective vacancy rate for families 
with children was less than eight-tenths of I percent. D. Ashford 
and P Easton, Study of Five California Cities; Note, 94 Harvard 
Law Review at 1832-1833. 
" J. Green and O. Blake, Restrictive Rental Practices, pp. 3-4. 

tion. Race was a close second, except for those 
without children." 

Additionally, several studies have shown that 
adults only housing is concentrated in predominant- 
ly white areas of the cities studied.^* The authors of 
these studies have suggested that new policies of 
excluding children from rental housing are designed 
to perpetuate, among other things, segregated 
school systems. Such evidence suggests that no- 
children policies are being used to exclude totally or 
limit the numbers of black or female-headed house- 
holds, although, as discussed in the next section of 
this paper, it is often difficult to prove that no- 
children policies are racially or sexually discrimina- 

It is difficult to ascertain any valid, nondiscrimina- 
tory social or economic forces behind the growing 
incidence of no-children policies. HUD found that 
landlords often cite higher maintenance costs as the 
reason for no-children policies, but that there are no 
empirical studies or other evidence to support such 
higher costs.^' Furthermore, managers who rent to 
children are much less likely to cite problems of 
higher maintenance costs or of noisy and unsuper- 
vised children than are managers who do not rent to 
children. HUD concluded that there is a great deal 
of "misperception" about problems in renting to 
children. ^^ 

While there is some evidence that landlords are 
able to charge a higher rent in buildings that restrict 
children,^' there is no way to determine exactly 
what motivates renters who choose an apartment 
that restricts children, and whether or not factors 
other than the presence of children (such as whether 
the family is on welfare, headed by only one parent, 

^' Housing Our Families, p. 4-3. 

" See, e.g., C. Reid, A. Keating, and L. Long. Patterns of 
Discrimination Against Children in Rental Housing in the Metro- 
Atlanta Area (1979) (43.7 percent of adults-only rental units 
located in predominantly white sections of Atlanta, while only 6.4 
percent located in minority areas); J.G. & Associates, Child 
Discrimination in Rental Housing: A Comparative Analysis of 
Apartment Policies in Dallas, Texas Regarding the Acceptance of 
School-Aged Childrcn(\919) (68 percent of all adults-only units 
located in predominantly white areas, while 1 1 percent located in 
minority areas); R. Marans, M. Colten, et. al.. Measuring Restric- 
tive Rental Practices, pp. 34-37 (rental units in predominantly 
white neighborhoods twice as likely to restrict families with 
children than rental units in predominately black areas). 
" Housing Our Families, p. 5-5. 
" Id 

'" The 1980 HUD study found that rents tended to be higher in 
buildings with restrictions on children. R. Marans and M. Colten, 
Measuring Restrictive Rental Practices, pp. 40, 43-44. 


or of a particular race or national origin) might also 
influence the decision. One study asked renters who 
lived in buidings with restrictions on children 
whether they chose to live in the building because 
children were not allowed to live there; only one- 
fifth answered yes. When asked if they would move 
out if families with children were allowed to move 
into their building, 81 percent of renters living in 
multiple unit dwellings with no children in the 
building indicated that they would not. Two percent 
said that it depended on the situation or the family 
moving in and 17 percent said that they would 

Inadequate Protection for Families with 

There is inadequate protection for families with 
children who are discriminated against in the hous- 
ing market. On the Federal level there is narrow and 
inadequate statutory protection. A small number of 
State and local jurisdictions ban such discrimination, 
but frequently their laws are written in a way that 
makes them ineffectual. 

The only Federal law which specifically prohibits 
discrimination against families with children is one 
that has extremely limited coverage. Discrimination 
against families is prohibited by Federal statute in 
two Federal mortgage insurance programs, the 
rental housing insurance program and the insurance 
in critical areas program. '' These programs com- 
prise a small share of the rental housing market. 

The Federal Fair Housing Act'^ prohibits dis- 
crimination in housing on the basis of race, color, 
religion, sex, or national origin but presently does 
not directly address discrimination against families 
with children. However, the act has been interpre- 
ted by courts to prohibit facially neutral housing 
policies or practices which have a discriminatory 

impact, even if the policy or practice was not 
undertaken with a discriminatory purpose or in- 
tent. '^ Thus, if a policy of excluding children has, 
for example, a racially discriminatory impact, it may 
constitute a violation of the Fair Housing Act. 

The difficulties of proving such a case of racial 
discrimination are many. They are well illustrated 
by the difficulties met by the plaintiff families with 
children in the case of Charles and Diane Betsey, et 
al, V. Turtle Creek Associates,'''* which is now on 
appeal to the United States Court of Appeals for the 
Fourth Circuit. In that case, families claimed that 
their evictions as the result of a newly instituted no- 
children policy were racial discrimination in viola- 
tion of the Fair Housing Act. The District Court 
judge refused to hold that there was a violation of 
the act despite his finding that the institution of a no- 
children policy in the apartment complex where the 
families lived would result in the eviction of 75 
percent of all black occupants and only 26.7 percent 
of all white occupants. Although recognizing that 
the families were not required to show that their 
evictions were racially motivated in order to prove a 
violation of the Fair Housing Act, the court still was 
unsatisfied with the overwhelming evidence of the 
racially discriminatory impact and held that the 
landlord had a nonracial justification for the evic- 
tions. This was so despite the fact that the landlord 
was unable to introduce any proof for his claims of 
higher maintenance costs or greater market demand 
for no-children housing, except for his own opin- 

Some States, cities, and counties have passed their 
own laws prohibiting discrimination against families 
with children. These include nine States, the District 
of Columbia, and several cities and counties includ- 
ing a few in California, and New Haven, Philadel- 
phia, and Seattle.'^ A common exemption from the 

'" R. Marans and M. Cotton, Measuring Restrictive Rental 
Practices, pp. 5''-62. 
^' 12U.S.C. § 1713(b), 1750b(a). 
« 42U.S.C. §§3601-3631. 

'" Smith V. Town of Clarkton, 682 F.2d 1055 (4th Cir. 1982); 
Robinson v. 12 Lofts Realty, 610 F.2d 1032 (2d Cir. 1979); 
Resident Advisory Board v. Rizzo, 564 F.2d 126 (3rd Cir. 1977), 
cert, denied. 435 U.S. 908 (1978); Metropolitan Housing Develop- 
ment Corp. V. Village of Arlington Heights, 558 F.2d 1283 (7th 
Cir. 1977), cert, denied. 434 U.S. 1025 (1978); United States v. City 
of Black Jack, 508 F.2d 1 179 (8th Cir. 1974), cert denied, 422 U.S. 

" United States Court of Appeals for the Fourth Circuit, No. 
82-1051 on appeal from ihe United States District Court for the 
District of Maryland. 

" Ariz. Rev. Stat. Ann. §33-1317 (Supp. 1980-1981); Conn. 
Gen Stat. §47a-2a (1981); Del. Code Ann. tit. 25, §6503; D.C. 
Code Ann. § 6-2231 (1980); Illinois Human Rights Act §3-104, 
111. Ann. Stat. ch. 68, §3-104 (Smith-Hurd Supp. 1980-1981); 
Mass. Gen. Laws Ann. ch. 15IB, §4(11) (West Supp. 1981); 
Mich. Comp. Laws Ann. §§37.2101-2806 (Supp. 1980-1981); 
Minn. Stat. Ann. §363.03, subd. 2(1) (West Supp. 1981); N.J. Stat. 
Ann. §2A:170-92 (West 1971); N.Y. Real Prop. LAW §§ 236- 
237 (McKinney Supp. 1980-1981); Berkeley, Cal., Municipal 
Code §§ 13.24.010-.070 (1976), as amended by Berkeley, Cal., 
Ordinance 5302-N.S. (Dec. 2, 1980); Davis, Cal., Ordinance 1036 
(Sept. 5, 1979) (amending Code of the City of Davis, Cal. 
§§ 12A-17 to -22 (1971); Fresno, Cal., Ordinance 80-91 (June 3, 
1980) (adding Fresno, Cal., Municipal Code §§ 12-245 to -245.2 
(1981)); Los Angeles, Cal., Ordinance 153,406 (Feb. 1, 1980) 


prohibition against discrimination contained in these 
laws appHes to housing for the elderly.^* Other 
exemptions such as housing that already contains its 
"fair share" of children are allowed in some jurisdic- 
tions.^' There appears to have been little problem 
addressing the substantive scope of the prohibition. 
Rather the problems have been in enforcement. 
Commentators agree that where the penalty for 
discrimination is criminal, prosecutors usually do not 
have the time to enforce the prohibition and rank it 
low on their list of priorities.^* In one State, a 
survey showed that 49 percent of those charged 
with enforcing the law did not even know it 
existed.'' States which provide administrative 
mechanisms also pose problems because the adminis- 
trative agency often is overworked or does not have 
effective enforcement power when it finds a viola- 

Despite the impact on the family unit, Federal and 
State constitutional provisions are unlikely to pro- 
tect families with children adequately against hous- 
ing discrimination. The first big obstacle is the 
difficulty of proving State action, a necessary pre- 
requisite for Federal and (usually) State constitution- 
al protection in this area. Commentators have 
suggested other difficulties.'" 

(adding Los Angeles, Cal., Municipal Code §§45. 50-. 55 
(1981)), as amended by Los Angeles, Cal., Ordinance 153,942 
(June 10, 1980); Oakland, Cal., Ordinance 9946-C.M.S. (July 15, 
1980) (adding Oakland, Cal., Municipal Code §§ 7-7.01, -9.02 to 
.10 (1981)); San Francisco. Cal., Municipal (Police) Code art. 1.2, 
§§100-108 (1981); Santa Clara County, Cal., Ordinance N.S.- 
628 (Feb. 20, 1979), as amended by Santa Clara County, Cal., 
Ordinance N.S.-631 (Aug. 14, 1979) (adding Santa Clara County, 
Cal., Ordinance Code tit. B, §§13-85 to -91 (1972)); Santa 
Monica, Cal., Ordinance 1139 (Oct. 9, 1979) (adding Santa 
Monica, Cal.. Municipal Code §§ 4700-4705 (1981); New Haven 
Conn. "Ordinance to Stop Discrimination Against Fami- 
lies/Single Parents with Children" (May 5, 1980); Philadelphia, 
Pa., Ordinance 130 (July 7. 1980) (amending Philadelphia, Pa., 
Code §§9-1102 to -1104 (1956); King County, Wash., Ordi- 
nance 5280 (Jan. 21, 1981); Mountlake Terrace, Wash., Ordinance 
1225 (Sept. 21, 1978); Seattle, Wash., Ordmance 108,205 (May 18, 
1979) (amending Seattle, Wash., Ordinance 104,839 (Aug. 15, 
1975)). as amended by Seattle, Wash., Ordinance 109,050 (May 
27, 1980), as cited in Note, 94 Harvard Law Review 1829-1830, 

"♦ Note, 94 Harvard Law Review 1842. 

" See. e.g.. Santa Monica Cal., Ordinance 1 139. § 4703(b) (Oct. 
9, 1979) (adding Santa Monica, Cal., Municipal Code §4703(b) 
(1981); Mass. Gen. Laws Ann. ch. 151B, §4(11) (West Supp. 

Generally State civil rights protection does not 
protect families with children from discrimination. 
A unique but promising decision was that of the 
California Supreme Court which interpreted a gen- 
eral California civil rights statute which made no 
mention of either housing or families with children 
to prohibit eviction of a family on account of the 
birth of a child." 

There is, thus, a clear need for improved protec- 
tion for families with children, as neither the Federal 
nor State law now provides adequate releief to them. 
As the problem is a growing one nationally, many 
have suggested that a national solution is appropri- 
ate. The most common proposal is to amend the Fair 
Housing Act to protect families with children."' 
This is particularly important because the women 
and members of minority groups presently intended 
to be protected from discrimination in housing 
opportunities by the Fair Housing Act are the very 
groups hardest hit by discrimination against families. 
Such an amendment could exempt certain kinds of 
housing from the prohibition; there seems to be a 
national consensus that housing for the elderly, for 
example, should be encouraged and allowed. How- 
ever, the pressing need of families all over the 
country from relief from discrimination deserves 
national attention. 

1981) (exemption for housing developments of over 100 units if 

the number of child residents equals one-half the number of units). 

" Note, 94 Harvard Law Review 1843; Children's Defense 

Fund, A Brief Overview of Housing Discrimination Against Families 

With Chidlren. 

" O'Brien and Fitzgerald, "Apartment for Rent — Children Not 

Allowed: The Illinois Children in Housing Statute — Its Viability 

and a Proposal for Its Comprehensive Amendment," 25 De Paul 

Law Review 64, 82-85 (1975). 

" Note, 94 Harvard Law Review 1844-1846; D. Ashford, J. 

Lowery, I. Woit, Monitoring Local Ordinances on Anti-Children 

Rental Practices, pp. 18-24 (Santa Monica, Calif: Fair Housing 

for Children Coalition, 1982). 

" Note, 94 Harvard Law Review 1839, n.60; Dunaway and 

Blied, "Discrimination Against Children in Rental Housing: A 

California Perspective," 19 Santa Clara Law Review 21, 40 


" Marina Point Ltd. v. Wolfson, 30 Cal. 3d 721, 180 Cal. Rptr. 

496, 640P.2d 115(1982). 

" Amendments to the Fair Housing Act have been introduced 

into Congress and include a new prohibition on discrimination 

against families with children. See, S. 1220, 98th Cong., 1st sess., 

129 Cong. Rec. S6152-6165 (daily ed. May 5, 1983). S. 1220 had 

39 cosponsors when introduced. 


Overview of Federal Housing Policy: Past 
and Present 

Federal Housing Policy and Equal Opportunity 

Martin E. Sloane* 


The Federal Government has been heavily in- 
volved in housing and urban development for half a 
century. During that time, its involvement has 
broadened and deepened, and the financial benefits it 
offers, including loans and grants, housing subsidies, 
and insurance and guarantees, have been relied upon 
increasingly by local governments, the housing and 
home finance industry, and the homeseeking public. 

These financial benefits have taken a variety of 
forms: Federal charters and insurance for mortgage 
lending institutions to generate private credit for 
housing; Federal insurance and guarantees of home 
mortgages to further stimulate the free flow of 
housing credit; loans and grants for water and sewer 
systems and other municipal facilities; loans and 
grants to help revitalize the Nation's cities and older 
suburbs; annual contributions and other forms of 
financial subsidy to stimulate construction of hous- 
ing for the poor; and most recently, block grants to 
local governments for community development. 

Typically, the Federal Government offers these 
substantial financial benefits subject to certain condi- 
tions — conditions which are designed to benefit the 
American people, to further national policy, and to 
achieve national goals. Measured by most standards. 

these Federal benefits, and the conditions attached 
to them, have served the American people well, 
through large-scale production of good housing 
within the economic reach of most families. Mea- 
sured by the standard of equal housing opportunity, 
however, they have not. Indeed, the net effect of 
Federal involvement in housing and urban develop- 
ment has been largely to perpetuate housing discrim- 
ination and patterns of housing segregation. In many 
cases, the Federal Government has been a major 
force in exacerbating those problems. 

A number of departments and agencies have been 
involved in administering Federal programs relating 
to housing and urban development in the 50 years 
since the Government first became an active partici- 
pant in the national effort to enable families to obtain 
decent housing in suitable living environments. 
Although the equal housing opportunity policies and 
practices of these agencies have varied over the 
years, they have generally fallen into several distinct 
chronological phases. 

1. From the early 1930s until 1950, the Federal 
Government was an active exponent of residential 
segregation and discrimination. 

2. From 1950 until 1962, Federal policy on equal 
housing opportunity was one of neutrality, leaving 

* Executive Director, The National Committee Against Dis- 
crimination in Housing, Inc. 


to private brokers, builders, and lenders with 
whom the Government dealt, the decision wheth- 
er Federal housing programs would be carried out 
in a discriminatory or nondiscriminatory manner. 

3. From 1962, when President Kennedy issued 
the Executive Order on Equal Opportunity in 
Housing, until 1980, the Federal Government, 
under increasingly strong legal mandates to pre- 
vent discrimination, both in the operation of its 
programs of housing and urban development and 
in the private housing market as well, took some 
actions to carry out those legal obligations. 

4. From 1981 until the present, the Federal 
Government has been in a period of retrenchment, 
severely lessening its activities in affirmatively 
enforcing or furthering fair housing. 

In 1971 I testified, as a member of the Commis- 
sion's staff, at a Commission hearing held in Wash- 
ington, D.C. concerning the history of Federal 
involvement in housing and urban development. My 
conclusion then was: 

The zeal with which Federal officials carried out policies 
of discrimination in the early days of the Government's 
housing effort has not been matched by a similar enthusi- 
asm in carrying out their current legal mandate of equal 
housing opportunity.' 

That conclusion must now be somewhat revised. 
The Federal Government currently exhibits no 
enthusiasm in carrying out its statutory and constitu- 
tional mandates of nondiscrimination in housing. 
Indeed, the Government, measured by its actions 
during the present administration, appears to be 
engaged in an effort to dismantle the very legal and 
programmatic structure by which the fragile founda- 
tion of fair housing has been painfully built over the 
past three decades. 

The Early Years 

Federal Policy From the Early 1930s Until 1950 

The Federal Government did not merely enter the 
housing scene in the 1930s; it burst upon it. Over a 6- 
year period, beginning in 1932, a series of congres- 
sional enactments created the basic agencies and 
machinery that would determine the scope and 
nature of Federal involvement in housing over the 
next 50 years. 

In 1932 Congress created the Federal Home Loan 
Bank System to provide assistance to the Nation's 
major home financing institutions: savings and loans 
associations. In 1933 Congress authorized Federal 
charters for savings and loan associations as a means 
of further facilitating the availability of mortgage 
credit. Congress also established the Homeowners 
Loan Corporation (HOLC) to refinance homes 
threatened with foreclosure. In 1934 Congress pro- 
vided insurance of accounts in savings and loan 
associations. As part of the same legislation 
Congress established the Federal Housing Adminis- 
tration (FHA) with authority to insure housing loans 
made by private lending institutions. The act was 
entitled, significantly, "The National Housing Act," 
suggesting, for the first time, that housing was a 
national concern deserving of national attention and 
action. In 1938 the Federal National Mortgage 
Association (FNMA) was created to provide a 
ready secondary market for FHA-insured loans as a 
means of strengthening the existing programs of 
mortgage insurance. 

Each of these measures provided for indirect 
involvement of the Federal Government in housing. 
That is, the Federal agencies were not involved in 
the construction of housing, nor even in the provi- 
sion of housing loans. Rather their function was to 
facilitate housing credit through the ordinary chan- 
nels of the housing market. Thus, the Federal Hoire 
Loan Bank Board was concerned with strengthening 
and assisting private mortgage lending institutions. 
The Federal Housing Administration was concerned 
with underwriting housing loans as an incentive for 
lending institutions to make them. An FNMA was 
available to purchase these loans from lending 
institutions that otherwise might be reluctant to 
make them. In short, these measures, enacted during 
the economic depression of the 1930s, sought to 
accomplish housing goals by revitalizing the Na- 
tion's credit machinery. 

In 1937 the Federal Government turned to a more 
direct approach in the effort to provide decent 
housing. The United States Housing Act of 1937 
established the low-rent, public housing program, 
providing for the construction, ownership, and 
operation of housing by State agencies (local public 
housing authorities) for families too poor to afford 
decent housing at market prices and rents. The 
Federal assistance was in the form of loans and 

■ Hearings before the United States Commission on Civil Rights, 
Washington, DC, at 731 (1971). 


annual contributions sufficient to pay off the cost of 
the projects. 

Thus, the Federal approach to assisting housing 
was an oblique one, concerned as much with 
bringing about economic recovery as with putting 
good roofs over people's heads. The principal aims 
of the 1932, 1933, and 1934 legislation, creating the 
Federal Home Loan Bank system and establishing 
FHA, were aimed primarily at revitalizing credit 
machinery and, only coincidentally, at enabling 
American families to securing good housing. Even 
the public housing program, established in 1937, was 
as much concerned with relieving unemployment in 
the construction industry as with meeting the hous- 
ing needs of America's poor. 

The emphasis of this early legislation established 
the focus of limitation of Federal concern with 
housing for years to come. Facilitation of private 
housing credit through traditional credit channels, 
not housing construction, would be the Federal 
Government's principal role. 

The short- and long-term results of these early 
New Deal efforts, for the most part, were very 
beneficial. The Federal Home Loan Bank system 
helped to stabilize a depressed savings and loan 
industry and restore confidence in these institutions. 
The HOLC helped save the homes of more than a 
million American families that otherwise would 
have lost them through foreclosure. 

The most far reaching beneficial impact was 
through FHA and its mortgage insurance programs. 
FHA established the traditional home financing 
vehicle that has prevailed for nearly half a century: 
fully amortized, long-term, low interest rate, high 
loan-to-value ratio loans. The practical effect can be 
demonstrated by the fact that in 1920 barely 40 
percent of the nonfarm housing units in the country 
were owned by the occupants. By 1980 nearly 70 
percent of nonfarm housing units were owned by the 
occupants. The enormous increase in homeowner- 
ship is attributable, in large part, to the pioneering 
efforts of FHA, soon followed by the private 
housing and home financing industry. 

But the benefits to the homeseeking public under 
these new programs were offered under the prevail- 
ing rules of the housing market place. To be sure, 
FHA revolutionized the housing and home finance 
industry by making available loans that carried low 

' Federal Housing Administration, Underwriting Manual, sec. 

interest rates, full amortization, long terms, and low 
down payments. But only those American families 
who could afford housing at market prices could 
possibly take advantage of these more liberal home 
loan terms. By the same token, HOLC, while it 
indeed saved the homes of more than a million 
Americans, made its benefits available only to those 
who could pay market rate. Public housing was 
unique in seeking to provide decent housing for 
families too poor to afford market prices and rents. 

By far the most severe limitation on the overall 
beneficial effects of Federal involvement in housing 
had to do with racial discrimination. By the early 
1930s, when the Federal Government first under- 
took long range involvement in housing, discrimina- 
tory practices by the private housing and home 
finance industry already were established. Previous- 
ly, however, discrimination had been carried on 
without Federal participation. Thus, the entrance of 
the Federal Government onto the housing scene 
provided an opportunity to alter, even eradicate, 
these practices. It was an opportunity that was 
entirely lost. The Federal Government became a 
willing and active participant in housing discrimina- 

FHA, which was the major Federal agency 
involved in housing, also was the leader in promot- 
ing housing discrimination and segregation. Its 
Underwriting Manual during the 1930s and early 
1940s spoke of the adverse effects on neighborhoods 
of the "infiltration. . .of inharmonious racial 
groups"^ and warned that "a change in social or 
racial occupancy generally contributes to instability 
and a decline in values."^ FHA was also concerned 
with the effect of the racial composition of schools 
on neighborhoods. Its manual contended: 

[If] the children living in such an area (otherwise favor- 
able) are compelled to attend schools where the majority 
or a considerable number of the pupils represent a far 
lower level of society or an incompatible racial element, the 
neighborhood under consideration will prove far less 
stable and desirable than if this condition did not exist.* 

As a means of ensuring against residential integra- 
tion, the manual insisted on the filing of restrictive 
convenants providing for the "prohibition of the 

' Ibid. 

* Id., sec. 951 (emphasis added). 


occupancy of properties except by the race for 
which they are intended."^ FHA was a principal 
proselytizer and popularizer of racially restrictive 
convenants, making them commonplace on deeds on 
many thousands of subdivision homes — those con- 
ventionally financed as well as those underwritten 
by FHA. FHA has been accurately described as "a 
sort of 'typhoid Mary' of racial convenants." 

In 1948 the United States Supreme Court, in the 
famous case of Shelley v. Kraemer, 334 U.S. 1 (1948), 
ruled that these racially exclusionary convenants 
were unenforceable by the courts. It took FHA (and 
its sister agency VA) an additional 2 years to change 
their policy on racially restrictive convenants. 

The only agency that deviated significantly from 
the policy of racial exclusion and discrimination was 
the United States Housing Authority which adminis- 
tred the low-rent public housing program. From the 
outset, this agency (and its successors) operated 
under a policy of assuring equitable participation by 
minorities, not only as tenants, but also in construc- 
tion and management. The agency established a race 
relations service with responsibility for reviewing 
public housing programs for the purpose of promot- 
ing racial equity. This policy, however, did not 
extend to insisting on racially integrated public 
housing projects. This was a matter left entirely to 
the discretion of local public housing authorities. 
Nonetheless, public housing policy, unlike the poli- 
cies of other federally assisted housing programs, did 
succeed in assuring that minorities' families were 
afforded opportunities for decent housing, even if 
under segregated conditions. 

The Middle Years 


If the early years of Federal involvement in 
housing and urban development were characterized 
by virulent racial discrimination, in the middle 
years — roughly 1950-1962 — the Federal Govern- 
ment assumed an official policy of neutrality. That 
is, while Federal agencies, particularly FHA, had 
insisted on racial discrimination in the operation of 
their programs during the first decade and a half, in 
the middle years they largely maintained an official 
hands-off policy. The impetus for this change in 
Federal policy came from the courts, specifically the 
landmark 1948 decision of the Supreme Court of the 

United States in Shelley v. Kraemer, holding that 
judicial enforcement of racially restrictive conven- 
ants violated the 14th Amendment of the United 
States Constitution. 

FHA and its younger sister agency, VA, which 
previously had encouraged and even insisted upon 
the filing of these covenants on property financed 
through their programs, reacted — slowly, to be sure, 
but dramatically — to this decision. The two agencies 
announced that they would refuse to insure or 
guarantee mortgage loans on property carrying 
racially restrictive convenants filed of record after 
February 15, 1950. Thus, it took these agencies 
nearly 2 years to respond to the announced law of 
the land. Moreover, the new policy had no applica- 
tion to housing which carried restrictive convenants 
filed before February 1950. 

FHA also announced that the racial composition 
of a neighborhood would no longer be a consider- 
ation in determining eligibility for FHA mortgage 
insurance. In 1951 FHA announced a policy that all 
housing repossessed by the agency through foreclo- 
sure would be administered and resold on a non- 
segregated basis. Two years later, FHA announced 
the intention of taking active steps to encourage the 
development of demonstration open occupancy 
projects. Still later FHA and VA both adopted 
policies of refusing to insure or guarantee loans for 
discriminatory builders in States that maintained fair 
housing laws. 

Thus in a period of less than a decade THA and 
VA, the key Federal housing agencies, made nearly 
a complete turnabout in official policy, from one of 
actively encouraging and insisting upon housing 
discrimination and segregation to one of encourag- 
ing open occupancy. The change, however, was 
more one of form than of substance. 

The decisions concerning housing discrimination 
were still left to individual builders and lenders, and 
neither FHA nor VA would interfere if these private 
builders and lenders chose to continue policies of 
racial discrimination. The new policy on repossessed 
housing also proved little more than a facade. 
Reposessed housing in white areas was assigned to 
white brokers for disposition to their white clientele, 
while the relatively few FHA- or VA-underwritten 
houses in minority areas were assigned to minority 
brokers for disposition to their minority clientele. 
Even in those States which maintained fair housing 

• /</., sec. 980{3Kg). 

laws, where FHA and VA policy both theoretically 
called for debarment of discriminatory builders, 
neither agency ever actually disqualified a builder 
for discriminatory practice. 

The practical ineffectiveness of the changes in 
official FHA and VA policy is demonstrated by the 
fact that as of 1959 it was estimated that less than 2 
percent of the new homes provided through FHA 
mortgage insurance since the end of the Second 
World War had been available to minorities. 

In 1961 the U.S. Commission on Civil Rights 
examined the policies of the four Federal agencies 
(Federal Home Loan Bank Board, Comptroller of 
the Currency, Federal Reserve Board, and Federal 
Deposit Insurance Corporation) that supervise and 
benefit lending institutions responsible for most of 
the conventional (non-FHA or VA) financing for 
housing. The institutions are savings and loan associ- 
ations, commercial banks, and mutual savings banks. 
Of the four agencies, only one — the Federal Home 
Loan Bank Board (which supervises savings and 
loan associations) — had taken any action to prevent 
discrimination among its member institutions. In 
June 1961 the Board adopted a resolution against 
racial discrimination in mortgage lending by its 
member institutions. The other three agencies not 
only had taken similar action but were uniformly 
opposed to taking it. 

During the same period, the Public Housing 
Administration (successor to the United States 
Housing Authority) continued its policy of permit- 
ting the establishment of segregated, low rent, public 
housing projects by local housing authorities. Since 
the 1954 decision in the School Desegregation Cases, it 
has been clear that legally compelled or sanctioned 
segregation by State agencies, including local public 
housing authorities, was in violation of the Constitu- 
tion. In fact, two United States Courts of Appeals 
expressly ruled that segregation in public housing 
violated the Constitution.* Nonetheless, the Public 
Housing Administration continued to permit this 
obviously unconstitutional practice. 

During this entire period of some 30 years, during 
which the Federal Government became a dominant 
factor in housing, its housing agencies and programs 
operated without reference to any specific goals or 
objectives. In 1949 Congress established the national 
housing goal of "a decent home and a suitable living 
environment for every American family." This 

° Detroit Housing Commission v. Lewis, 226 F.2d 180 (6th Cir. 
1955); Hayward v. Public Housing Authority, 238 F.2d 689 (5th 
Cir. 1956). 

noble pronouncement, however, was of too general 
and hortatory a nature to provide the specific 
guidance necessary. Moreover, nothing "turned" on 
it. That is. Federal housing programs, with the one 
exception of low-rent public housing, were still 
concerned primarily with easing the way for families 
who could afford market prices and rents. And 
housing discrimination and segregation remained the 
rule in the housing market with no realistic effort to 
intervene by Federal housing agencies. 

The Later Years 


Executive Order on Equal Opportunity in 

On November 20, 1962, President Kennedy issued 
the Executive Order on Equal Opportunity in 
Housing, directing all Federal departments and 
agencies having programs and activities related to 
the provision of housing to eliminate discrimination 
in federally assisted housing. The order was limited 
in at least two important respects. 

First, although its command of nondiscrimination 
was directed to all departments and agencies having 
housing functions, it did not include within its terms 
housing that was conventionally financed (non-FHA 
or VA) by federally supervised mortgage lenders. 
These institutions — savings and loan associations, 
commercial banks, and mutual savings banks — are 
responsible for the great majority of the Nation's 
home financing. As noted earlier, almost all are 
benefited and subject to close supervision by Federal 
agencies. The order, however, convered the prac- 
tices of these institutions and the housing provided 
through their funds only insofar as FHA and VA 
financing was involved. The bulk of the housing 
financed by these institutions is non-FHA or VA and 
was excluded for the order's requirement of nondis- 
crimination. Similarly, the lending practices of the 
institutions, themselves, were outside the scope of 
the order. 

Second, it drew a distinction between housing 
provided under Federal aid agreements executed 
after the date of the order and housing provided 
under agreements executed before the date of the 
order. With respect to the former, agencies were 
directed to "take all action necessary and appropri- 
ate to prevent discrimination." Regarding the latter, 


agencies were directed "to use their good offices and 
take other appropriate action permitted by law, 
including the institutions of appropriate litigation, if 
required, to promote the abandonment of discrimi- 
natory practices. . . .'" 

Experience under the "good offices" provision of 
the order demonstrated that no action more strin- 
gent than persuasion was ever taken to eliminate 
discrimination on the existing housing market. Even 
with respect to the direct command of the Executive 
order — "to prevent discrimination" — the agencies 
responded timidly and ineffectively. FHA and VA 
limited their enforcement activity to requiring assur- 
ances of nondiscrimination by assisted builders and 
processing the handful of complaints that came their 
way. The two agencies took no action of an 
affirmative nature to carry out the President's 
directive. The order had comparatively little impact 
in opening up new housing opportunities fo minority 
occupancy in subdivisions built after the date of the 
Executive order and subject to its provisions, found 
that of the more than 400,000 units surveyed, only 
3.3 percent had been sold to black families.' 

The Public Housing Administration (FHA) re- 
sponded to the Executive order by prohibiting 
deliberate segregation by local housing authorities, a 
practice already clearly in violation of the Constitu- 
tion. Instead, FHA recommended use of a "freedom 
of choice" plan of the kind that already had been 
demonstrated as ineffective in the area of education. 

The four agencies that supervised mortgage lend- 
ing institutions — Federal Home Loan Bank Board, 
Comptroller of the Currency, Federal Reserve 
Board, and Federal Deposit Insurance Corpora- 
tion — maintained their pre-executive order positions 
of neutrality. The Federal Home Loan Bank Board 
failed to implement its 1961 policy against discrimi- 
nation by its member institutions and the other three 
agencies remained entirely silent on this issue. 

Title VI of the Civil Rights Act of 1964 

Title VI prohibits discrimination in programs or 
activities receiving Federal financial assistance by 
way of loan or grant, but expressly excludes from 
coverage financial assistance provided solely 
through insurance or guarantee. The principal effect 
of Title VI was to broaden coverage of such 
programs as public housing and urban renewal to 
include projects for which Federal agreements were 

See Washington hearings at 741. 

TTiesc were the section 235 program of home ownership and 

executed prior to the effective date of the law. Title 
VI also had the value of providing clear congressio- 
nal support to the principle of nondiscrimination in 
federally assisted programs. 

Under Title VI, the Public Housing Administra- 
tion reversed it policy of encouraging "freedom of 
choice" tenant assignment plans and insisted instead 
on a form of first come, first served policy by local 
housing authorities. PHA also instituted site selec- 
tion policies seeking to avoid exclusive location of 
public housing in areas of existing racial concentra- 
tions. The Urban Renewal Administration carried 
out its mandate under Title VI by insisting on the 
filing of restrictive covenants against discrimination 
with respect to urban renewal land, to assure against 
such discrimination by private builders. FHA and 
VA, whose mortgage insurance and guarantee pro- 
grams were excluded from the mandate of Title VI, 
did nothing to strengthen their enforcement of the 
Executive order on Equal Opportunity in Housing. 
1968— The Great Fair Housing Year 
In 1968 the Federal Government, in a period of 
less than 4 months, took three major actions which, 
in combination, made 1968 the greatest year in fair 
housing history. 

• In April Congress passed the Federal Fair 
Housing Law, 42 U.S.C. 3601 et seq., establishing 
"the policy of the United States to provide, within 
constitutional limitations, for fair housing 
throughout the United States." 

• In June the Supreme Court of the United 
States issued its decision in Jones v. Alfred H. 
Mayer, Co., 392 U.S. 409 (1968), holding that an 
1866 Civil Rights Law (42 U.S.C. 1982) bars "all 
racial discrimination, private or public, in the sale 
or rental of property." 

• On August 1 Congress enacted the landmark 
Housing and Urban Development Act of 1968 
establishing two new programs of subsidized 
housing for lower income families.* These new 
programs were capable of and, indeed, did pro- 
duce massive numbers of lower income housing 
units — some 600,000 in 4 years. 

Moreover, as part of the Housing and Urban 
Development Act, Congress sought, for the first 
time, to "quantify" the 1949 national housing objec- 
tives of "a decent home and a suitable living 
environment for every American family" by estab- 

the section 236 program of rental housing for lower income 


lishing a 10-year housing production goal of 26 
million new units, of which 6 million were to be for 
lower income families. 

This combination of actions by the legislative and 
judicial branches offered great potential both for 
eliminating housing discrimination and providing an 
adequate supply of lower income housing with 
choice of location.^ This potential, however, was 
largely unfilled. 

Title VIII of the Civil Rights Act of 1968 

Title VIII, which went into full effect on January 
1, 1970, prohibits discrimination in most of the 
Nation's housing, public as well as private. The law 
also prohibits discrimination in mortgage lending 
and the advertising of housing. Further, it directs 
"all executive departments and agencies [to] admin- 
ister their programs and activities relating to housing 
and urban development in a manner affirmatively to 
further the purposes of this title." It specifically 
directs the Secretary of Housing and Urban Devel- 
opment to "administer the programs and activities 
relating to housing and urban development in a 
manner affirmatively to further the policies of this 

Little has been accomplished under these various 
"affirmative" Title VIII mandates. For example, the 
Federal financial agencies took no actions to moni- 
tor compliance with fair lending requirements for 
nearly 10 years following enactment of Title VIII. 
Finally, a lawsuit filed by NCDH and the Center for 
National Policy Review, representing virtually ev- 
ery national fair housing and civil rights organiza- 
tion in the country,"* resulted in settlement agree- 
ments under which the agencies agreed to require 
maintenance of race and sex data by member 
institutions and to establish examination procedures 
necessary to detect and prevent mortgage lending 
discrimination by their member institutions." 

HUD, itself, took little in the way of affirmative 
fair housing actions to implement its own Title VIII 

' Previous housing subsidy programs, such as pubUc housing, 
permitted local governments to veto operation of the programs. 
This local veto power was excluded from the 235 and 236 
programs. See Sloane, "Changing Shape of Land Use Litigation: 
Federal Court Challenges to Exclusionary Land Use Practices," 
51 Notre Dame Lawyer, at 52 (1975). 

'" National Urban League, et al. v. Comptroller of the Currency, 
et al., C.A. No. 76-718 (Settlement agreement, Mar. 22, 1977). 
" Later Congressional legislation, such as the Home Mortgage 
Disclosure Act (1975) and the Community Reinvestment Act 
(1977), served to impose additional fair lending requirements on 
mortgage lenders and their supervisory agencies with particular 
respect to redlining. 

obligations. Fully 4 years elapsed before HUD 
issued any fair housing regulations at all. These were 
affirmative fair housing marketing regulations, de- 
signed to attract the segment of the population least 
likely to apply for HUD-assisted housing in the area, 
and project selection criteria, designed to encourage 
location of HUD-subsidized housing in a way that 
fostered desegregation. The results of these belated 
HUD actions were not encouraging.'^ Further, 
HUD's efforts to eliminate segregation in public 
housing tenant assignment, through a form of "first- 
come, first-served" requirement, resulted almost 
invariably in adoption of "freedom of choice" plans 
by local public housing authorities." And this [Civil 
Rights] Commission has documented the failure of 
HUD, through HUD's FHA subordinate, to adhere 
to fair housing requirements in the operation of the 
section 235 program.'" This failure contributed 
significantly to the scandals associated with the 
program and its termination in 1973. 

Perhaps HUD's greatest failure was in not issuing 
any interpretative regulations on Title VIII. For 
more than 12 years following enactment of the 
Federal Fair Housing Law, HUD, the acknowl- 
edged expert agency on fair housing, issued no such 
regulations, nor any other form of guidance, for the 
courts or other Federal agencies to determine 
compliance with Title VIII. Indeed, on several 
occasions, the courts, including the United States 
Supreme Court, forced to decide particular cases, 
grasped at any utterance of HUD for authoritative 
guidance, absent official regulations by the Depart- 
ment." At last, in December 1980, detailed inter- 
prepretative regulations were issued in proposed 
form. The Reagan administration, which took office 
1 month later, immediately withdrew them. 

The Department of Justice, the one Federal 
agency with true enforcement authority — the au- 
thority to litigate — was active during the period. 
During the 10- year period of 1969 through 1978, 

" For an account of the results of these HUD regulations, see 

Citizens' Commission on Civil Rights, A Decent Home, at 31-33 


" Recently, a Federal court ruled such plans unconstitutional on 

that basis. Jaimes v. LMHA, C 74-68 (May 12, 1983, N.D. Ohio) 

appeal pending. 

" U.S., Commission on Civil Rights, Home Ownership for Lower 

Income Families (1971). 

" Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205 (1972); 

Laufman v. Oakley Bldg. & Loan Association, 408 F. Supp. 489 

(1974). Blackshear Residents Org. v. Housing Authority of the 

City of Austin, 347 F. Supp. 1 138 (WD. Texas 1971). 


Justice filed more than 300 cases, attacking such 
patterns and practices of discrimination as block- 
busting, steering, and rental policies. Justice filed 
only three cases, however, involving discriminatory 
exercises of municipal land use authority. The 
Department's strategy was to bring as many cases in 
as many geographical areas as possible for purposes 
of both demonstrating the Federal presence as an 
active fair housing enforcer and convincing those in 
the business of providing housing that the law was 
going to be vigorously enforced. 

Although these cases were almost uniformly 
successful on the merits, they accomplished little in 
changing housing and real estate practices or in 
bringing about dramatic changes in racial residential 

In 1978 Justice decided to give greater priority to 
cases which offered greater potential for bringing 
about reforms in the housing industry and in attack- 
ing municipal land use practices that had the 
purpose or effect of excluding housing in which 
minorities could live. These cases reflected a dra- 
matic shift from previous Justice Department policy 
in several respects: First, the cases were much more 
complex than those in which Justice had previously 
been involved; second, they did, indeed, offer 
greater prospect of bringing about institutional 
reform in the housing industry; third. Justice, for 
almost the first time in its history of civil rights 
litigation, determined to bring cases even though 
there was a prospect that they might not prevail; and 
fourth, the new strategy necessarily meant that 
Justice would bring fewer cases than it had brought 

This new policy was the cause of some disagree- 
ment within the Civil Rights Division. Some attor- 
neys believed that the previous policy of filing as 
many cases as possible in as many geographical 
sections of the country as possible — in effect to 
"show the flag" — was the best use of Justice 
resources. Others, however, were convinced that 
under the new policy Justice could "leverage" its 
small resources to achieve maximum impact in 
bringing about fair housing reforms nationwide. 
With the new administration in 1981, the issue 
became moot. Thereafter, Justice neither filed many 
cases, nor did they file cases of any special impor- 

Fair Housing in the Reagan 

The Reagan administration's policy and perfor- 
mance on fair housing have been, at best, those of 
retrenchment. This is reflected both through the 
administration's actions on fair housing enforcement 
and its policies on subsidized housing. 

Fair Housing Enforcement 

First, one of the initial steps taken by the adminis- 
tration after assuming office in January 1981 was to 
withdraw HUD's interpretative regulations on Title 
VIII, which the Department had finally proposed 12 
years after enactment of the Federal Fair Housing 
law. The regulations have not been reissued. 

Second, HUD is now openingly emphasizing 
voluntary compliance as the principal mechanism 
for enforcing Title VIII. A prime example is the 
amended Voluntary Affirmative Marketing Agree- 
ment (VAMA) entered into between HUD and the 
National Association of Realtors (NAR) in Septem- 
ber 1981. This agreement governs the operation of 
community housing resource boards (CHRBs), local 
organizations funded by HUD and aimed at bringing 
about progress in fair housing at the local level 
through the cooperative efforts of Realtors and 
persons and organizations with knowledge and 
experience in housing and fair housing. 

Under the amended agreement, publication of the 
names of Realtor signatories is barred — the informa- 
tion is not even made available routinely to HUD. 
Also, any member of the CHRB who is a party to 
litigation or complaints alleging violations of the fair 
housing law or the Realtors code of ethics may be 
required to withdraw from the CHRB. Thus, local 
fair housing groups, which have been accorded 
standing to bring fair housing suits by the Supreme 
Court of the United States,'* must, in effect, give up 
their right to initiate fair housing complaints or 
litigation as a condition to membership in the local 
CHRB. And finally, the CHRB itself is prohibited 
from sponsoring, conducting, or funding programs 
of real estate testing. This, despite the fact that HUD 
Secretary Pierce has frequently expressed his own 
vigorous support for the value and even the necessi- 
ty of fair housing testing. In short, the entire 
agreement is one that displays distrust on the part of 
Realtors for the fair housing community, a doubtful 
premise on which progress in fair housing can be 

'• Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982). 

based. At the same time, HUD has abandoned its 
"systemic" unit, previously estabhshed to attack 
institutional problems of discrimination rather than 
individual instances of housing discrimination, as a 
functioning arm of its enforcement effort. 

Third, the Department of Justice, the one Gov- 
ernment agency that has true enforcement powers — 
the power to institute litigation — has so curtailed its 
activities that it is no longer a major factor in fair 
housing enforcement. Indeed, for more than 1 year 
after the Reagan administration took office, the 
Department of Justice did not file a single fair 
housing law suit. In the nearly 3 years since the 
Reagan administration assumed office. Justice has 
filed a total of six fair housing law suits, only one of 
which can be said to be any potential importance 
measured by the standard of either establishing a 
significant legal precedent or bringing about some 
kind of institutional reform. 

Fourth, there is a Governmentwide effort to 
reduce, or even to eliminate, much of the data 
necessary to determine whether violations of the 
Fair Housing Act are occurring. These efforts are 
being undertaken in the name of, and under the 
authority of, the Paperwork Reduction Act and 
general regulatory reform initiatives. The most 
recent example is the challenge to race and sex data 
collection in the systems adopted by the Federal 
financial regulatory agencies. These are the agencies 
that, pursuant to a successful lawsuit against them, 
agreed, among other things, to institute monitoring 
and enforcement mechanisms featuring race and sex 
data collection and maintenance to assure compli- 
ance with fair lending requirements. So far, efforts 
by two of those agencies, the Federal Home Loan 
Bank Board and the Federal Deposit Insurance 
Corporation, to eliminate items of information im- 
portant to Title VIII enforcement have been held in 
abeyance in response to a sizeable negative reaction 
by the civil rights community. The pressure within 
the administration to cut back on paper and to 
deregulate continues, and may well ultimately result 
in the cutback or elimination of existing systems of 
data collection and maintenance. 

Subsidized Housing 

The second principal way in which the adminis- 
tration has sought to retrench on essential elements 

" See Citizens' Commission on Civil Rights Report, at 56-61. 
" See, e.g., Robert C. Weaver, "Fair Housing Policies," Trends 
in Housing, vol. 24, no. 4, p. 8 (1983). 

of fair housing is its efforts to cut back on subsidized 

Administration proposals would virtually elimi- 
nate all new construction of subsidized housing to be 
replaced by a "housing voucher" system which 
would make exclusive use of existing housing for 
purposes of providing decent shelter for lower 
income families. The proposals are based on the 
extremely doubtful assumption that there is a signifi- 
cant supply of decent housing, nationwide, to 
provide adequate shelter for the poor, given a 
modest subsidy. This assumption has been chal- 
lenged vigorously by housing and fair housing 
experts, including representatives of the National 
Committee Against Discrimination in Housing, 
Inc." The basic position of fair housing advocates is 
that without a sufficient supply of housing available 
to lower income families, a disproportionately large 
number of whom are racial and ethnic minorities, 
fair housing becomes an illusory objective. That is, 
without the basic bricks and mortar, an essential 
element to achieving fair housing is irretrievably 


The history of Federal involvement in housing is 
not one that gives fair housing advocates cause for 
optimism. After years of openly advocating housing 
discrimination and segregation, the Federal Govern- 
ment, under increasingly strong legal and constitu- 
tional mandates to prevent such discrimination, 
began to take some actions to honor its statutory and 
constitutional obligations. Over the years, beginning 
in 1962, the Federal Government gradually built up 
a legal and programmatic structure by which hous- 
ing and fair housing goals could be achieved. This 
development, to be sure, was slow and hesitant, but 
progress could be seen and, indeed, the structure 
was taking form. 

The experience under the Reagan administration, 
however, has been one of retrenchment and even of 
efforts to dismantle the legal and programmatic 
structure upon which fair housing rests. For nearly 3 
years, the principal burden of securing fair housing 
rights has fallen on the victims of housing discrimi- 
nation and the relative handful of private housing 
advocates. Most of these have limited resources and 


452-986 - 8A - 10 

cannot be expected, for the indefinite future, to ment. As a result, the goal of equal housing 

shoulder the burden alone. opportunity still remains far from achievement. 

For the time being, the Federal Government, with Indeed, the principal battle now is being fought over 

much to atone for because of its past history, has whether the basic legal and programmatic structure 

virtually abandoned the field of fair housing enforce- of fair housing will remain in place. 


Persistent Mechanisms of Racial and 
National Origin Discrimination 

A Sheltered Crisis: The State of Fair Housing 
Opportunity in the Eighties 

Diana Pearce* 

Introduction: Race and Housing in 
America Today 

The "bottom line" in assessing progress in race 
relations is, in many ways, to be found in America's 
residential neighborhoods. After we have opened up 
educational opportunities through elimination of 
school segregation, opened up occupational oppor- 
tunities with educational, vocational, and affirmative 
action programs and policies, and opened up politi- 
cal opportunities through widening the franchise, 
we would expect that the barriers to free choice as 
to where one lives would have fallen in turn. They 
have not. 

Economic progress in particular has been marked. 
By 1980 earnings of black men had risen from 61 
percent in 1956 to 71 percent of average white male 

* Director of Research, Center for National Policy Review, 
Catholic Law School. 

' F. Blau, "The Economic Status of Women in the Labor 
Market," Testimony before the Sub-Committee on Civil and 
Constitutional Rights of the House Judiciary Committee, Sept. 
14, 1983, table 1. 

' Ibid. It should be noted that income inequality has never 
accounted for the levels of racial segregation found in American 
cities. This is, on the basis of income alone, our cities would be 
much more integrated than they are. See A. Hermalin and R. 
Farley, "The Potential for Residential Integration in Cities and 
Suburbs," American Sociological Review, vol. 38, p. 596-610 

earnings (although the last couple of years of 
recession has undercut that gain somewhat).' Black 
women's earnings have increased even more al- 
though starting from a base of 33 percent (of average 
white, male earned income), they are still behind at 
54 percent in 1980.* This progress is particularly 
strong for black married couples who both worked; 
their earnings by 1979 averaged about 83 percent of 
similar white couples.^ And the ratio is even higher 
for younger and/or more highly educated persons. 
In addition, racial attitudes in the last two decades 
have experienced a steady increase in the propor- 
tions who support the right of all, regardless of race, 
creed, or color, to free choice in housing, con- 
strained only by their economic resources.* In 
recent years, laws and litigation have further bol- 

^ P. Glick, "A Demographic Picture of Black Families," in H. 
McAdoo, ed.. Black Families (Beverly Hills, Calif: Sage Publish- 
ers, 1981), as cited in D. Pearce and H. McAdoo, fVomen and 
Children: Alone and in Poverty (Washington, D.C.: National 
Advisory Council on Economic Opportunity, September 1981). 
* A. Greeley and P.B. Sheatsley, "The Acceptance of Desegre- 
gation Continues to Advance," Scientific American (December 
1981), p. 13-19; "A Study of Attitudes Toward Racial and 
Religious Minorities and Toward Women," prepared for The 
National Conference of Christians and Jews by Louis Harris and 
Associates, Inc. (November 1978); and D.G. Taylor, P.B. Sheats- 
ley, and A. Greeley, "Attitudes Towards Racial Integration," 
Scientific American (June 1978), p. 42-49. 


stered these rights beginning with the Fair Housing 
Act and Jones v. Mayer in 1968. 

In spite of these positive, barrier-reducing trends, 
segregation in housing remains the rule rather than 
the exception in American communities. The first 
analysis of 1980 census data yields disappointing 
news. Using a lOO-point scale on which zero is no 
segregation and 100 is total segregation or separation 
of 2 groups. Dr. Karl Taeuber examined the 28 
American cities with a population of at least 100,000 
blacks. Looking at the racial patterns on a block by 
block basis, he found that the average for these cities 
dropped 6 points over the decade of the seventies, 
from 87 to 81 points.^ At such a rate, it will take 
another half century to half desegregate these cities. 
Some cities, such as Chicago, St. Louis, and Wash- 
ington, will take centuries to be fully desegregated. 
Since these calculations were done on the central 
cities only, many of which have experienced sub- 
stantial reductions in segregation in other areas (such 
as schools, municipal and private employment, and 
public services) as well as housing, these statistics 
are likely to be an understatement of the 1980 levels 
of segregation found at the metropolitan level. Or, 
put another way, since more of the integrated 
housing areas in most metropolitan areas are found 
within the central city rather than the suburban ring, 
the addition of suburban residential areas to the 
calculations most probably will raise our estimates of 
the level of housing segregation in urban America. 

With declining income disparities between majori- 
ty and minority, we cannot account for the high 
levels of housing segregation that have persisted into 
the eighties. Despite apparent public support, as 
evidenced in attitudinal surveys as well as legisla- 
tion, for equal housing opportunities, they have not 
been achieved. This anomaly suggests that discrimi- 
natory barriers still exist. But we need not rely on 
such indirect inferences alone, for we have evidence 
of various kinds that documents directly the persis- 
tence of housing discrimination. In the remainder of 
this paper, I would like to concentrate on that 
evidence, first describing in detail the character of 
discriminatory housing market practices, and then 

' K. Taebuber. "Racial Residential Segregation: 1980," Appen- 
dix to Citizens' Commission on Civil Rights, A Decent Home. . .A 
Report on the Continuing Failure of the Federal Government to 
Provide Equal Housing Opportunity (April 1983). 
' For a more complete description of the study, see U.S., 
Department of Housing and Urban Development, Measuring 

putting that behavior in the context of the way in 
which American housing markets operate. 

The Nature of Housing Discrimination 

Two themes will run through the discussion of 
various housing market practices that follow. The 
first is that the discrimination practiced post-fair 
housing laws is subtle but effective. The second is 
that housing discrimination is persistent but not 
consistent. That is, while the methods used change, 
the overall fact of discrimination remains. 

In addition, I will describe housing market prac- 
tices as falling into two broad categories. Keeping in 
mind that these divisions are somewhat arbitrary and 
thus some behaviors will fall into both groups, I 
have labeled these two groups "interpersonal" and 
"areal." The first category refers to behaviors 
towards the homeseekers themselves which, either 
quantitatively or qualitatively, favor the white hom- 
eseeker over the minority homeseeker. "Areal" 
discrimination, on the other hand, is the differential 
treatment of areas as a function of the racial makeup 
of the area as well as the homeseeker's race, such 
that customers are guided toward choices along 
lines that reinforce racial segregation. 

For this discussion I will be drawing in the main 
on data gathered by the United States Department 
of Housing and Urban Development's Housing 
Market Practices Survey (HMPS). In brief, this 
study "sampled" the behavior of housing agents in 
both the sales and rental markets in 40 metropolitan 
areas in the Spring of 1977.* The method used is 
known as the audit and consists of sending out two 
homeseekers, one white and one black, who have 
similar financial resources, housing needs and de- 
sires, family size, and so forth. In short, they are 
matched as closely as possible in every way except 
race so that differences in treatment on the part of 
the housing agents is thus due to race. 

I will also refer to other audits including those 
conducted more recently by various municipal and 
fair housing groups as well as those carried out by 
myself in the course of the research for my disserta- 
tion (the latter were done in Detroit during 1974 and 
1975).' As both my dissertation and my analysis of 

Racial Discrimination in American Housing Markets: The Housing 

Market Practices Survey ( 1 979), 

' D. Pearce, Black, White and Many Shades of Gray: Real Estate 

Brokers and Their Racial Practices, unpublished PhD dissertation. 

University of Michigan, 1976 (hereafter cited as Black, White and 



the HMPS data to date have focused on the sales 
market, most of the findings reported below refer to 
real estate agents and the sales market. 

Interpersonal Behavior Towards Black and White 

The most comprehensive measure of the differen- 
tial treatment of black and white homeseekers is the 
length of interview. Black homeseekers are given 
less of an agent's time than are white homeseekers, 
an average of 85 minutes compared to that of 97 
minutes for the average white homeseekers's audit. 
(That difference is statistically significant at the .001 
level, i.e., that difference in treatment by race would 
occur by chance less than one in a thousand times). 
It should also be noted that this difference is based 
on a comparison of only those interviews that were 
completed in a single day; again, significantly more 
of the black homeseekers than white homeseekers 
had to return a second time to finish the audit, 16 
percent compared to 10 percent (p< 0.001). In my 
own study of Detroit real estate agents, the home- 
seekers were instructed to complete the interview in 
one visit; with this variation in method, the result 
was an even larger discrepancy in the amount of 
time spent with the homeseekers by race, of an 
average of 74 minutes for blacks and 199 minutes for 
whites (or approximately an hour and a quarter for 
blacks and 2 hours for whites). 

One factor that accounts for this difference in time 
spent with the homeseekers is that part of the 
interview spent actually seeing homes for sale. 
Almost twice as many black as white homeseekers 
were not shown any homes at all: 28 and 15 percent 
respectively. (Perhaps because of the restraints of 
single-day completion described above, the Detroit 
study differences were much greater, with approxi- 
mately three-fourths of the black homeseekers, 
compared to one-fourth of the white homeseekers, 
not seeing any houses at all.) If shown one or more 
homes, given the maximum of three, there is less 
discrepancy between black and white in the number 
of homes shown. The total number of houses seen 
(up to 3 per homeseeker) by blacks in the 40 cities is 
3,458 which is 82 percent of the white total of 4,210. 

Obviously, if one is unable to see any homes for 
sale, one is virtually unable to purchase a home. But 
the process by which homes are not made available 
on an equal basis to black and white homeseekers is a 
subtle one. As can be seen in table 1 , at each stage of 
the process of informing homeseekers about avail- 

able homes, whites are favored over blacks. That is, 
significantly more whites than blacks are shown the 
multiple listings book, or are told of and invited to 
see homes for sale, or are told that one or more 
suitable homes are available, or are invited to 
actually see homes (items 1 through 4 in table 1). 

In table 2, results are reported for the "back 
pages" of the instrument used to record this data. 
Information on the back pages is quite informative 
about the process underlying the differences above, 
for it is on the back pages that unanticipated 
behaviors or additional information about particular 
events, was recorded. Because provision of such 
information was optional, the numbers involved are 
small but the differences by race are quite large; 
nevertheless, this data is presented primarily to 
indicate the variety of means, but similarity of 
results, that limit minority access to homes for sale. 
As can be seen, agents tend to deny that the desired 
housing is on the market or limit access to it on 
apparently reasonable grounds (e.g., no key), or by 
not facilitating the buyer's inspection of homes. 
Thus, by either putting off to another day (see table 
2) or indefinitely the inspection of homes, the agent 
decreases his/her chance of selling a home to that 
prospective customer. Note that no statements or 
behaviors mention race; although not every coding 
category is reported here, of the 30 or so developed 
in this area, none mentioned race. That is, no one 
was told that they were or were not being shown, or 
told about, homes on the basis of race. Rather, the 
limited access experienced by blacks to house 
listings and inspections is done via rationales that are 
neutral on their faces. It is only by comparison with 
the white experience that differences in treatment 
that are discriminatory in their impact, become 

The quantitative difference in amount of time 
spent with black as opposed to white homeseekers is 
probably accounted for, in large part, by the 
differential access to homes for sale. But there are 
important qualitative racial differences as well. Not 
only were black interviews shorter, they were 
different in content. To anticipate the discussion 
below, housing agents spent more time with blacks 
determining if they were financially able to buy a 
home and more time with whites selling themselves, 
selling homes, and helping with financing. These 
differences occurred within the context of nearly 
equal amounts of courtesy and respect for black and 
white homeseekers. 



Access to Homes for Sale 

Black White LeveP 

Saw listing book. 62.6% 67.9% 

Did not see listing book, but told about listings with offer to show. 23.5 26.8 *** 

Sub Total 86.1% 94.7% 

Agent told homeseeker that one or more suitable houses 

was available. 
One or more houses suggested by agent to homeseeker. 
Agent invited homeseeker to inspect one or more houses. 
Homeseeker actually saw one or more homes. 

3 Significance levels are indicated as follows: 

* p<.05 That is, the likelihood (or probability, thus "p") that the observed racial difference in 
* * p< .01 treatment could occur by chance is less than 5 out of 100 where there is one asterisk, 
*** p< .001 1 out of a 100 where there are two asterisks, and 1 out of 1000 where there are three 









Source: All data are from HUD's 1977 Housing Market Practices Survey; analysis and calculations are by the author. See foot- 
note 6 for source of further detail about the study. 



Access to Listings and Homes for Sale (Back page reports) 

Number Reporting Behavior 
Blacks Whites 

Additional listings given (beyond three recorded on the form). 20 26 

Agents stated nothing, or very little, available in area or price range 

requested. 84 52 

Agent told homeseeker that she/he could not see homes because agent 
needed to obtain key, contact the owner, agent wanted homeseeker's 
spouse present, etc. 57 23 

Agent told homeseeker to first drive around and look, or gave homeseeker a 
list of homes, and told homeseeker to look at them first. 42 1 1 

Agent did not make appointment for inspection of houses. 23 7 

3 Significance levels are indicated as follows: 

* p<.05 That is, the likelihood (or probability, thus "p") that the observed racial difference in 
** p<.01 treatment could occur by chance is less than 5 out of 100 where there is one asterisk, 
*** p<.001 1 out of a 100 where there are two asterisks, and 1 out of 1000 where there are three 

Source: All data are from HUD's 1977 Housing Market Practices Survey; analysis and calculations are by the author. See foot- 
note 6 for source of further detail about the study. 


In the initial interview between a sales agent and a 
prospective homebuyer, the agent must ascertain 
that the homeseeker is financially qualified to buy a 
house and must simultaneously convince the cus- 
tomer that this agent/agency is able to obtain for 
them the housing desired. To determine how agents 
divided their time between these two activities, I 
grouped items into two tables, and created scales for 
those items for which there were significant differ- 
ences by race. 

Behaviors that indicate that the agent wishes to do 
business with the customer are totalled together as 
the "do-business" scale. Even though these include 
such minimum standard practices as introducing 
oneself giving the customer a business card, and 
obtaining the customer's name and phone number, 
there are consistent differences by race. As can be 
seen from the individual items in table 3 and the 
summary do-business scale,* agents' behavior indi- 
cates more serious interest in white than black 
potential homebuyers. 

In contrast, black homeseekers receive more 
inquiries about their financial resources, income 
stability, and so forth. Put another way, less is taken 
for granted, or at face value, for black than for white 
homeseekers. Thus agents sought each kind of 
information used for qualifying significantly more 
often from black than white homeseekers. (See table 
4 items and qualifying scale). In addition, additional 
information was asked of 55 of the black and 24 of 
the white homeseekers (as recorded on the back 
page). Of course, it is not known how this informa- 
tion was elicited, whether agents conveyed the 
message that they sought to disqualify, or alterna- 
tively, to help homeseekers obtain housing they 
could afford. Even assuming the best interpretation, 
the greater emphasis on qualifying for blacks re- 
duced the amount of time available for discussion of 
other topics, such as financing, neighborhoods, and 
so forth. 

It should not be surprising, therefore, to find that 
blacks do receive less information about financing 
(see table 5). Perhaps more interesting is the kind of 
help received. Blacks are more often told about 
FHA financing while whites are given information 
about conventional financing more often. Although 
most homeseekers know little about financing, hous- 
ing agents are more likely to offer to help obtain 

• The two items referring to later contact — "agent requested 
homeseeker to call again," and "agent contacted homeseeker 
again" — have not been included in the scale at this point, as they 

financing to whites, while black customers are 
requested to tell the agents how they will finance a 
home purchase. Additional advice on financing and 
home buying was noted on the back pages by 144 of 
the white and 101 of the black homeseekers. 

The interpersonal context of the above behaviors 
shows much less differentiation by race and there is 
even a reversal in the area of use of a courtesy title 
(more blacks than whites are addressed as Mr., Miss, 
etc.). In several areas as well (not shown in table 6) 
there were no difference, including such things as 
giving the homeseeker literature on homebuying, 
chatting informally, and so forth. On the back pages, 
equal numbers of blacks and whites (126 and 128, 
respectively), reported the agent being generally 
nice and helpful and/or a specific act of courtesy or 
kindness. There was even equality in the encounter- 
ing of incompetence: nearly equal numbers of blacks 
and whites report arriving at a house to inspect it 
only to find it locked, sold, etc., and nearly the same 
numbers report encountering agents unable, as op- 
posed to unwilling, to help them. Overall, there is 
nonetheless a racial difference favoring the white 
homeseekers and, though small, it is statistically 
significant. What these findings suggest is that there 
is the least racial discrimination in the area least 
important to buying a house. 

What these findings do not tell us is also impor- 
tant. In ways not picked up by counting cups of 
coffee or polite conversation, black homeseekers are 
informed that they are not desired customers. As can 
be seen in table 7, in which back page comments are 
tabulated, this message was effectively sent in a 
variety of ways. 

Area! Discrimination 

Much of this discrimination, but not all of it, can 
be captured under the term "steering." Steering, or 
racial steering, refers to the practice of referring 
white homeseekers to housing in all-white neighbor- 
hoods and minority homeseekers to housing in 
mixed or all-minority areas. It is a qualitative, as 
opposed to a quantitative difference; that is, the 
agent may spend an equal amount of time and show 
the same number of houses to both the black and 
white homeseekers but still be practicing discrimina- 
tion. Because it is qualitative rather than quantitative 
and because it is often hard to detect (e.g., it may not 

may refer to completing the interview (i.e.. home inspections), 
rather than genuine ongoing contact. 



Measures Concerning Seriousness of Agent's Interest in Doing Business with 

X Agent introduced him/herself. 

X Agent offered his/her business card. 

X Agent asked for homeseeker's name. 

Agent shook hand of homeseeker. 
X Agent asked for homeseeker's phone number. 
Agent requested homeseeker to call back. 
Agent contacted homeseeker again. 

Agent requsted, regarding housing sought, information about: 
The price desired; 
The size desired; 
X The location or neighborhood desired; 
The style or other features desired; 
Special features desired (house); 
X Special features desired (neighborhood). 

Do-Business Scale^ 4.1 4.4 *** 

^ Significance levels are indicated as follows: 

* p< .05 That is, the likelihood (or probability, thus "p") that the observed racial difference in 
* * p< .01 treatment could occur by chance is less than 5 out of 100 where there is one asterisk, 
*** p<.001 1 out of a 100 where there are two asterisks, and 1 out of 1000 where there are three 

^ Items included are indicated with an x in the left hand column. 

























* * 



















Source: All data are from HUD's 1977 Housing Market Practices Survey; analysis and calculations are by the author. See foot- 
note 6 for source of further detail about the study. 



Information Sought by Agent Used to "Qualify" Homeseekers as Potential Homebuyers 

Agent inquired of homeseeker: 
How much down-payment able to make; 
For references (credit or personal); 
Information about his/her income; 
Information about his/her spouse's income; 
Information about debts or obligations; 
Information about his/her occupation; 
Information about his/her place of employment; 
Information about his/her length of employment; 
Information about spouse's employment; 
Homeseeker's address. 


































Qualifying Scale 3.2 


^ Significance levels are indicated as follows: 

' p< .05 That is, the likelihood (or probability, thus "p") that the observed racial difference in 
* * p< .01 treatment could occur by chance is less than 5 out of 100 where there is one asterisk, 
*** p<.00l 1 out of a 100 where there are two asterisks, and 1 out of 1000 where there are three 

Source: All data are from HUD's 1977 Housing Market Practices Survey; analysis and calculations are by the author. See foot- 
note 6 for source of further detail about the study. 



Information and Help With Financing 

Agent would obtain, or would help obtain, financing. 

Agent told homeseeker about'': 
FHA financing only; 
Conventional financing only; 
Both FHA and conventional financing; 
Neither FHA nor conventional. 

Information on the current interest rate. 

Agent asked homeseeker what financing desired. 

3 Significance levels are indicated as follows: 

* p<.05 That is, the likelihood (or probability, thus "p") that the observed racial difference in 
** p<.01 treatment could occur by chance is less than 5 out of 100 where there is one asterisk, 
*** p<.00l 1 out of a 100 where there are two asterisks, and 1 out of 1000 where there are three 

^ This item refers to discussions about financing of particular houses being shown, rather than financing 
in general. 



Level a 


51 .8% 

* * 










Source: All data are from HDD's 1977 Housing Market Practices Survey; analysis and calculations are by the author. See foot- 
note 6 for source of further detail about the study. 



Courtesy Measures 

Waited less than 5 minutes. 

Was offered something to drink, cigarette, etc. (Yes). 
Was asked to be seated (by someone). 
Was shown other courtesy. 
Was asked to be seated (by agent). 
Address by a courtesy title (Mr. /Miss/Ms.). 




Level ^ 

81 .0% 








* * 






* * * 




Courtesy Scale 



Significance levels are indicated as follows: 

* p< .05 That is, the likelihood (or probability, thus "p") that the observed racial difference in 
** p<.Ol treatment could occur by chance is less than 5 out of 100 where there is one asterisk, 
* * * p< .001 1 out of a 100 where there are two asterisks, and 1 out of 1000 where there are three 

Source: All data are from HUD's 1977 Housing Market Practices Survey; analysis and calculations are by the author. See foot- 
note 6 for source of further detail about the study. 

be apparent that the neighborhood is mixed), racial 
steering is subtle. But it is also effective: if one 
channels all black housing demand into racially 
mixed areas at the edge of areas of minority 
concentration and all-white demand into all-white 
areas, the racially mixed areas will become all 
minority, while the all-white ones will remain 
racially homogeneous. 

In the HUD study, most of the houses shown both 
black and white homeseekers in 1977 were located in 
census tracts that were all white in 1970. There was, 
however, a small but statistically significant differ- 
ence in racial composition, with more of the black 
than the white homeseekers being shown homes in 
census tracts that were not all white. But complete 
analysis of that issue must await the addition of 1980 
data, a task which I was unfortunately unable to 
complete in time for this presentation. 

That most of the census tracts were all white in 
1970 for homes shown black as well as white 
homeseekers did not surprise me, for the Detroit 
study had similar findings.' Closer examination of 
the Detroit data, however, revealed several patterns. 

Briefly, it was found that homes shown black 
homeseekers averaged a mile closer to the center of 
Detroit's ghetto than those shown whites. More- 
over, in certain large geographic areas no homes at 
all were shown blacks, although whites were shown 
homes in virtually every suburb (as well as central 
city, white neighborhoods). Homes shown blacks 
were thus concentrated nearer racially-mixed and 
all-black areas and in the path of previous expansion 
of those areas. 

Data from the back page reports reveal the ways 
in which racial steering is done, as well as ways in 
which auditor attempts to deviate from this pattern 
are dealt with by housing agents. Agents refuse to 
show homes in some areas and promote integrated 
areas much more among blacks while discouraging 
them to white homeseekers. Although not always 
couched in explicitly racial terms, such differential 
treatment of areas is racial in its effects on housing 
choices. As can be seen from table 8, this aspect of 
steering is areal rather than personal in nature. It is 
areas with particular racial compositions that are 
differentially treated, sometimes in connection with 

• TTiesc results are more fully reported in D. Pearce, "Gatekeep- 
ers and Homeseekers: Institutional Patterns in Racial Steering," 
Social Problems, vol. 26, p. 325-42 (February 1979), 



General Behavior Toward Prospective Customers (Back page reports) 

Homeseeker was ignored or kept waiting. 

Agent not available to homeseeker. 

Homeseeker was told to call back, or return at a later time. 

Homeseeker reported that the agent was generally uninterested in doing business 

with him/her. 
Agent discouraged homeseeker, e.g., saying buying a house was very difficult, etc. 
Agent did not return homeseeker's calls. 
Agent did not make appointments to see houses. 
Office locked/agent would not come to door. 

Black White 

















the race of the homeseeker. Regardless of the 
sources of this behavior, its impact is to make the 
creation and maintenance of stably integrated com- 
munities very difficult. In the Detroit study, later 
interviews with the real estate agents revealed their 
awareness of this fact, as less than half believed that 
most of racially mixed Detroit's areas would stay 
racially integrated.'" 

Finally, schools are used to reinforce housing 
choices along racial lines. Though speaking directly 
about race and racial composition can lead to 
charges of racial discrimination, the same is not true 
of schools. Of course, when schools have been 
desegregated throughout an urban housing market, a 
school's racial composition is not likely to reflect 
that of the neighborhood; thus use of schools as a 
steering method is much more prevalent where the 
schools are segregated than where there is little 
variation in school segregation." This use of 
schools for steering even appears in advertising, 
where the naming of public schools in real estate ads 

'° Black. While and Gray, chap. VI, table 6.4. 

" D. Pearce. Breaking Down Barriers: New Evidence on the 

Impact of Metropolitan School Desegregation on Housing Patterns. 

is disproportionately found in housing markets with 
racially identifiable schools.'^ Steering via schools is 
also more common with white than black homeseek- 
ers; schools and such topics as busing and (school) 
integration are mentioned more often with black 
than whites. 

New Kinds of Discrimination 

Reports about two new kinds of discrimination 
are increasing. The first of these is discrimination 
against families with children and is predominately a 
problem in the rental market. Sometimes it is 
straightforward, as when families with children are 
barred outright; sometimes it is more subtle exclud- 
ing families with more than two children from even 
quite spacious three-bedroom units. Because of its 
disproportionate impact on minority families, espe- 
cially Hispanics, it is racial in its effect but not 
illegal. It is easy to see than an apartment complex 
wishing to exclude minority households can do so 
almost as effectively with a legal bar on families 

final report submitted to the National Institute of Education 
under grant No. NIEG-78-0125, November 1980. 
■^ Ibid. 



Areal Discrimination, Including Steering 

Agent refused to show houses in area requested. 

Agent only showed homes in white areas. 

Agent told auditor wouldn't want his/her children in that area. 

Agent discouraged auditor from looking in integrated areas. 

Auditor was steered to integrated and/or racially transitional areas. 

Agent reluctant to show homes in expensive areas and/or steered auditor to less 

expensive areas. 
Other steering. 
Agent promoted a Sfiecific suburb or city neighborhood. 

















with children as with illegal discrimination on the 
basis of race. 

A second kind of discrimination is a byproduct of 
the difficult housing market we have experienced 
the last few years. As owners have become more 
anxious to sell their homes but buyers have been 
unable to meet the mortgage payments dictated by 
high interest rates, various means of seller-financed 
deals have come into being. The involvement of the 
seller, usually an "amateur," in the financing of a 
home purchase creates many opportunities for dis- 
crimination. In such situations, the seller, alone or 
along with a bank, must make an assessment of the 
buyer's financial wherewithal, yet the seller does not 
have the experience or expertise to make such a 
judgment in a professional way. 

Little is known about the extent or nature of either 
of these new types of discrimination or others not 
detailed (such as discrimination against Hispanics or 
against single parents). But enough is known to state 
that they are serious problems. Moreover, like the 
"traditional" discrimination against blacks detailed 
above, it is subtle but effective, persistent but 
nonconsistent in form. 


In one sense, the descriptions of encounters with 
housing agents detailed above should be heartening 
for it is clear that certain kinds of discriminatory 
behavior are rarely encountered. Blatant and de- 
grading actions such as doors slammed or racial 
exhibits were rarely encountered; marketing tech- 
niques that play upon racial fears and prejudices 
such as block busting and panic selling were not in 
evidence in the late seventies or early eighties. Most 
homeseekers, black as well as white, are treated 
politely and given at least a minimum of advice and 

But in another sense these data point a picture that 
is not at all encouraging. In spite of an improved 
atmosphere and apparently more equal treatment, 
there has not been a significant breakdown in the 
levels of housing segregation or discrimination. 
Indeed, the observed of the more obvious forms of 
discrimination makes clear that much of housing 
discrimination today is enbedded in the ordinary 


marketing tactics of ordinary housing agencies and 
agents.'^ In addition, it is widespread; no geographi- 
cal region or particular type of agent or agency has a 
"corner" on discrimination. In the Detroit study, 
moreover, it was found that the larger agencies and 
the more successful agents tended to be more 
discriminatory on the average. 

Housing discrimination does not occur in a vacu- 
um. But whether individual agents are aware of or 
intend to treat prospective customers differently on 
the basis of race is not relevant. What is important is 
that we know, as a society, that it happens and, as I 
have said before, in ways that are subtle but 
effective, persistent but not consistent. And we 

" Though not detailed here, an important Umitation on minority 
housing opportunities stems from the organization of the metro- 
politan housing market into discrete real estate boards. This 

know its effects: the perpetuation of segregation, the 
maintenance of a society divided along racial lines. 
These conclusions suggest that we must refocus our 
energies. Important as it is to prosecute the block 
busters and bigots who continue to operate, it is 
even more important to pinpoint and correct the 
institutional practices that continue to limit the 
housing opportunities of minorities. A first step 
towards that action is to better understand the 
nature of housing discrimination, a task which I 
sincerely hope I have helped today. I sincerely hope 
that it is, indeed, not the last step taken to end the 
continuing patterns of housing discrimination. 

makes it difficult for the central city buyer who is represented by 
a central city broker to obtain access to suburban homes listed for 
sale through suburban multilist services. 


Housing Discrimination: A New Technology 

William R. Tisdale* 

The Metropolitan Milwaukee Fair Housing Coun- 
cil (MMFHC) was organized in October 1977 to 
combat illegal forms of housing discrimination 
throughout the four-county Metropolitan Milwau- 
kee Area. The Housing Market Practices Survey 
(HMPS) was conducted in 1977 by the Department 
of Housing and Urban Development (HUD) to 
measure the extent of housing discrimination occur- 
ring throughout the United States, 9 years after the 
passage of Title VIII (the Federal Fair Housing 
Law) of the Civil Rights Act of 1968. 

The HMPS investigated housing practices in 40 
metropolitan areas; Milwaukee was one of those 
areas. This survey utilized "testing" as an investiga- 
tive technique to determine the nature and extent of 
illegal forms of housing discrimination employed by 
housing providers in these selected metropolitan 

Testing is a controlled investigatory technique 
that matches a team (of two) individuals on every 
socioeconomic characteristic except for that (char- 
acteristic) being tested for. For example, in the case 
of a test for race discrimination, a black woman who 
is 30 years old, single with no children, working as a 
welder, earning $30,000 annually, at the same place 
of employment for 12 years, $2,500 in debt, would 
be matched with a white woman who is approxi- 
mately 30 years old, single with no children, work- 
ing as a lathe machine operator (blue collar factory 
position), earning $30,000 annually at the same place 
of employment for 12 years, and $2,500 in debt. In 
essence, this process presents a housing provider 
with two identical homeseekers; the only difference 
between the two individuals is race. 

The HMPS only tested for race discrimination in 
the metropolitan areas surveyed and only to ascer- 
tain the differences in treatment between black and 
white homeseekers. This survey did not attempt to 
measure discriminatory differences found in the 
other protected classes under Title VIII (i.e., reli- 
gion, sex, color, national origin). 

Nine years after the passage of Title VIII, the 
general perception was that an individual's desirabil- 
ity as a potential homeowner or tenant was based on 

his/her qualifications and not his/her inalterable 
characteristics. The HMPS indicated that this as- 
sumption was far from accurate. 

In Milwaukee, tester teams visited 120 rental units 
and 80 real estate offices throughout Metropolitan 
Milwaukee. Of the rental units and real estate visited 
by matched teams of black and white testers, 63 
percent (50 of the 80) involved some form of 
discriminatory treatment against the black tester. 
The differences involved information regarding the 
availability of housing, location of available housing, 
housing costs, buyer qualification criteria, and fi- 
nancing availability. 

In the case of the 120 visits to rental units, 43 
percent (52 of the 120) indicated discriminatory 
differences in treatment between the black tester and 
his/her white partner. As in the cases of the real 
estate (sales) visits, these differences were significant 
discriminatory actions by the housing providers 
tested (i.e., differences in rent prices quoted, avail- 
ability of the unit, application fee differences, differ- 
ences in the information offered relating to the 
existence of waiting lists, different terms and condi- 
tions of tenancy, etc.). 

The HMPS resulted in two significant develop- 
ments in the Milwaukee area. First, it lead to the 
filing of a major lawsuit against four of the largest 
real estate firms in the Metropolitan Milwaukee area 
for discriminatory housing practices in violation of 
Title VIII of the Civil Rights Act of 1968. Secondly, 
it lead to the organization of the Metropolitan 
Milwaukee Fair Housing Council (MMFHC). 

The Metropolitan Milwaukee Fair Housing Coun- 
cil was organized in October 1977 by concerned 
individuals and participants in the HMPS to combat 
the continuing discriminatory housing practices 
detected by that survey. The purpose of the Council 
is to ensure that all residents are afforded equal 
access to housing opportunities and locational 
choice. To accomplish these objectives, the 
MMFHC developed and implemented an aggressive 
enforcement and education program, operating 
throughout the four-county Metropolitan Milwau- 
kee area. The MMFHC utilizes testing to investigate 

• Executive Director, Metropolitan Milwaukee Fair Housing 


complaints of alleged violations of Federal, State, 
and local fair housing laws. 

There are two types of testing employed by the 
MMFHC (and most other private fair housing 
groups). "Patterns testing" is the technique of testing 
selected housing units in nontraditional housing 
areas or rental units with little or no minority 
residents. Patterns testing supports the philosophy 
that it should not be necessary to wait until an 
individual's rights have been violated before a 
violator can be forced to comply with fair housing 

"Complaint response testing" is employed in 
response to a complaint by individuals who feel they 
have been the direct victims of illegal housing 

The Fair Housing Council has trained almost 300 
citizens to become testers as part of the MMFHC 
fair housing testing program. This pool of trained 
volunteers allows the MMFHC to investigate com- 
plaints lodged under each category of protected 
class (i.e., race, religion, color, sex, etc.). Testers are 
utilized in both the investigation of complaints and 
in research studies into the patterns and practices of 
housing providers. 

Throughout the investigation of over 1,200 com- 
plaints received and investigated by the MMFHC, 
testing has proven to be the most viable means to 
effectively uncover even the most insidious forms of 
illegal housing discrimination. 

One of the major obstacles facing advocates of fair 
housing is that, in many instances, victims of housing 
discrimination are not even aware that they have 
been discriminated against. Although blatant forms 
of discrimination still occur, subtle forms of discrimi- 
nation in housing has, in some cases, been fine tuned 
to a science. Most of use are familiar with the blatant 
forms of discriminatory activities of block busting, 
panic selling, redlining (insurance and mortgage), 
refusal to negotiate, or discriminatory advertising. 
But present day violators employ illegal forms of 
discrimination against those persons they have la- 
beled as "undersirable" with highly sophisticated 
techniques designed to discourage or wear down 

We have entered into an era of the "new technolo- 
gy of discrimination." The "slammed door" discrim- 
inatory activities have, in some cases, been replaced 
with the "revolving door." Discrimination has 
moved from the, "We don't want your kind living 
here," to "We have nothing available in your price 

range" type. Both forms are effective; both forms 
are illegal; but only one form is obvious. 

People (victims) are not going to complain about 
being discriminated against if they don't know that 
they've been discriminated against. Anemic numbers 
of complaints received by government agencies, 
established with enforcement powers at the Federal, 
State, and local levels are not indicators that 
conditions are improving and the rights of every 
individual are being observed by housing providers. 
On the contrary, discrimination has gone under- 

Officials of the Wisconsin State Department of 
Industry, Labor, and Human Relations (the Equal 
Rights Division) and the area office of the Depart- 
ment of Housing and Urban Development (Milwau- 
kee) offered "compliance" with existing State and 
Federal laws as an explanation for the reason so few 
individuals had filed complaints with their respec- 
tive agencies. In 1978 the Wisconsin Equal Rights 
Division received 24 complaints and the (Milwau- 
kee) area office of HUD received 4 complaints, for a 
total of 28 complaints alleging violations of Federal 
or State fair housing laws for the State of Wisconsin, 
a State with a population of approximately 4.7 
million. It was obvious, at least to these officials, that 
there was no problem with housing discrimination, 
using the number of reported incidents as an indica- 
tor of compliance with fair housing laws. 

However, June of 1978 was the first year that the 
Metropolitan Milwaukee Fair Housing Council re- 
ceived funding to implement its fair housing enforce- 
ment and education programs and, during that year, 
the Council received and investigated 192 com- 
plaints alleging violations of fair housing laws from 
only 4 counties in Wisconsin. And that's just the tip 
of the iceberg. 

The pervasiveness of housing discrimination is 
analogous to rape incidents (only those reported are 
recorded; these figures never represent an accurate 
assessment of the problem). One hundred and 
ninety-two cases, out of the countless scores of 
complaints that are never reported, is a sad commen- 
tary. Yet people will not complain of a violation of 
law if they are not aware that they have been 
illegally discriminated against. 

In the early summer of 1978, a white male 
coworker, (approximately 28 years old), and I (a 
black male, approximately 28 years old) visited a 
rental complex that had advertised the availability of 
a two-bedroom apartment for immediate occupancy. 


452-986 - 8A - 11 

MMFHC testers never communicate with each 
other and are seldom aware where their partner is 
for a particular test until the investigation they've 
been assigned has been completed. But in this 
particular instance, the white coworker and I rode 
to the rental complex in the same vehicle (since this 
was only a practice test). This investigation was not 
in response to a complaint but designed specifically 
to determine possible snags in the MMFHC's testing 
techniques before employing those techniques as 
part of the regular investigation strategy utilized. 

When we arrived at the rental complex, the "open 
for inspection" sign and a large sign in the shape of a 
finger, directing the way to the manager's of- 
fice/apartment were posted in front of the main 
building. I was to obtain information about the 
availability of a two-bedroom unit first. I rang the 
doorbell and was greeted by a white male who 
indicated he was the manager of the complex. I 
advised the manager that I was interested in inspect- 
ing the two-bedroom apartments he had advertised 
in the newspaper. The manager paused for a moment 
and then invited me into his apartment. He told me 
that he wasn't sure if he still had any two-bedroom 
units available and that his wife had possibly rented 
the last available two-bedroom unit 2 days before. 
The manager asked to have a seat in the living room 
and offered me a cup of coffee while he checked in 
the kitchen (within my view) for possible available 
units. The manager checked through index card files 
and lease files and other documents for almost 15 
minutes while making small talk with me about my 
interests, his interests, what a pleasant rental com- 
plex he managed, and how I (as a tenant) would 
enjoy living there. The manager walked slowly from 
the kitchen and, with disappointment in his voice, 
advised me that all of the two-bedroom units had 
been rented. The manager further stated that he 
could not understand why the classified ad (advertis- 
ing the two-bedroom unit) was continuing to run in 
the newspaper. He apologized ("sincerely") for the 
inconvenience I had experienced through this "ad- 
vertising error." The manager further stated that a 
check of his records indicated that there would not 
be a two-bedroom unit available for at least 2 or 3 

I advised the manager that, although my first 
choice was a two-bedroom unit, I could possibly 
squeeze my belongings into a one-bedroom unit until 
a two-bedroom unit became available; and since the 
last two-bedroom unit had only recently been 

rented, I should be first in line for the next 
availability. I further advised the manager that I had 
a large number of books and that I had planned to 
use the second bedroom as a study, so it would not 
be inconvenient to leave my books boxed for a 
couple of months until I could move into a two- 
bedroom unit. 

The manager advised me that he would check on 
the availability of one-bedroom units, but suspected 
that his wife had probably rented the last one- 
bedroom unit during the previous weekend. The 
manager returned to the kitchen, took out a different 
set of files, and diligently pondered over lease 
agreements forms and index card files. He returned a 
short time later and advised me that, as he had 
suspected, the last one-bedroom unit had been 
rented during the previous weekend. 

I explained to the manager that I was really 
interested in renting a unit in that complex. I asked if 
I could inspect a model apartment to get some idea 
of the floor plan and space arrangements. The 
manager advised me that most of the units had 
similar floor plans and didn't differ greatly from his 
unit (the one we were in). He offered to show me 
around and I accepted. I was shown, not only every 
room in his apartment, but the complex grounds, 
parking facilities, storage areas, and laundry facili- 

At the end of the tour, the manager, again, 
apologized for my inconvenience and expressed his 
disappointment in not having an availability for me 
at that time. He told me that he thought I would 
really enjoy living there and that he would really 
enjoy having me as a tenant. 

As I was leaving, the manager asked me to leave 
my name and telephone number with him, and that 
he would contact me as soon as he could determine 
which tenants would not be seeking lease renewals. 
He stopped me just as I was walking away and said, 
better yet, I should contact him in a couple of 
months (if I was still interested) and he gave me his 
business card with his home number, handwritten on 
the back. I thanked the manager and returned to my 
coworker who was waiting around the corner in the 

I relayed the entire story to my partner (also a 
practice not exercised in actual testing situations) 
and advised him that there was, in my opinion, no 
problem at this complex; the manager was courte- 
ous, encouraging, professional, and wanted to adopt 


My partner stated that we might as well go 
through with the second part of the test, even 
though I had received wonderful treatment from the 

My partner left the car, walked up to the 
manager's apartment/office and was greeted by the 
same man I had talked with only 10 minutes earlier. 

About 20 minutes later my partner returned to the 
car where I was waiting and advised me that he had 
been shown three vacant two-bedroom apartments 
and had been offered a lease to commence tenancy 
within 2 weeks (the beginning of the month). I told 
my partner that either three households had com- 
pletely vacated their units in the space of 10 minutes 
time, or I had been discriminated against. Both my 
partner and I opted for the latter explanation. 

This is an example of the "new technology" of 
discrimination. This discrimination is subtle, it's 
sophisticated, it's humiliating, it's demeaning, and it's 

In many ways the "slammed door" style of 
discrimination is preferable to the "revolving door" 
to me as a minority person. The revolving door 
gives hope and confidence while disguising the same 
slammed door that has always existed. 

In the example I cited, had I been a legitimate 
homeseeker at that time, with all the pressures 
involved in attempting to locate ah apartment (in a 
metropolitan area, where, at that time, the vacancy 
rate was quite low) within a specific time period, I 
would have never reported this incident. Why 
should I have? I had no notion that I had been 
discriminated against. It is not surprising that the 
Wisconsin Equal Rights Division and the (Milwau- 
kee) area office of HUD had a combined total of 
only 28 complaints for 1978 and even fewer com- 
plaints in previous years. People are not going to 
complain if they don't know it's happening! 

In sales discrimination, many minorities are too 
humiliated or embarrassed by the notion that they 
were discriminated against to report the violation. 
This attitude is particularly prevalent among those 
minority group members who are in the socioeco- 
nomic position to purchase a home. Some minorities 
who have attained this level of success feel that they 
have assimilated into the American social system. 
They have deliberately accomplished every require- 
ment necessary to be (in their estimation) a good, 
respectable, up-right citizen of the community. After 
receiving an advanced education, respectable em- 
ployment, and an active position in the community. 

many minorities cannot accept the harsh reality that 
they too have been discriminated against and that 
their social status, income, education, etc., is no 
vindication for having been born a member of a 
minority group. 

The experience I've cited is also one of the more 
elaborate designs which serves to effectively deny 
equal opportunity and equal access to the housing 
market. The following provides a few select exam- 
ples of subtle forms of discrimination designed to 
discourage homeseekers and/or deny them equal 
opportunity in housing: 

1) A waiting list that is presented to prospective 
minority applicants but not shown to white 
applicants. In some cases, the waiting list(s) 
presented to minority applicants only contains the 
names of previous minority applicants. Many 
times waiting lists presented to minority home- 
seekers are not a condition for application for 
white homeseekers. 

2) Minority applicants required to place exorbi- 
tant application fees while white applicants are 
charged minimal fees or none at all. For example, 
minority applicants are required to pay the first 
month's rent and the security deposit before 
placing an application; white applicants are sub- 
ject to less expensive requirements. 

3) Minority applicants are required to place an 
application to be considered for tenancy; white 
applicants are not required to place an application. 

4) More stringent application requirements for 
minority applicants (i.e., higher income require- 
ments, time on the job, 10 or more references, 

5) Excuses by housing providers, placing their 
reasons for denial on another housing industry 
factor (i.e., "I'd like to sell that home to you, but 
you can't qualify for a mortgage/insurance in this 

6) A prospective tenant must be recommended 
by a person who is presently a tenant in that 
building or a resident of a particular mobile home 
park (very effective in an all-white building or 
mobile home park). 

7) Advertising available units in publication of 
limited circulation (e.g., religious newspapers, 
suburban newspapers, or other publications with 
predominantly nonminority reader- 

8) Advertising rental units or homes for sale by 


9) Advertising availabilities on index cards 
placed on bulletin boards where a very selective 
group of persons and nonminorities have access to 
(e.g., clubs, organizations, etc., with nonwhite 

10) Advertising available housing units (rental or 
sales) on the bulletin boards or in bulletins of all- 
white congregations/churches. 

1 1) The on-site manager allowing minorities to go 
through the entire application process (the same 
process required of white applicants). Except 
when submitted to the main office for review and 
evaluation, the applications of the minority appli- 
cants are marked/checked on the backs with 
pencil while the applications of white applicants 
are marked/checked with pen; thus, coding the 
applications for the landlord. Only those applica- 
tions marked in pen are considered for tenancy. 

12) The use of the telephone answering machine. 
When an applicant is detected as being a member 
of a minority group or other "undesirable," the 
housing provider simply does not return their call. 
If the address and/or telephone exchange left on 
the machine by a minority/undesirable homeseek- 
er is identified as being in a nonwhite area of the 
community, the inquiry regarding housing avail- 
ability is not responded to. 

13) Minorities sometimes are told that there is no 
application fee; the housing provider can then 
disregard the application with no further contact 
with the minority applicant. Whites are required 
to put money down and, thus, are taken more 
seriously than the minority applicants. 

14) In sales, homes in white areas are given more 
intensive advertising by sales agents than are 
homes located in integrated or predominantly 
minority areas. 

15) In rental units, minorities are segregated by 
building (e.g., the minorities and other "trouble 
makers" are relegated to one building of a com- 
plex) or minorities are segregated by floors within 
a particular rental unit. In high-rise apartment 
buildings, upper floors with more desirable units 
and/or views are reserved for white tenants. 

16) Quota systems are employed which allow 
only a certain percentage of minority applicants 
the opportunity to rent available units. 

17) Exclusionary zoning practices are employed 
which have a disproportionate effect on minorities 
or women (e.g., minimum lot size requirements — 6 

acres, at $50,000 an acre — elaborate floor plan 
requirements, fixture standards, etc.). 

1 8) Racial steering perpetuating existing segregat- 
ed housing patterns by limiting the information 
concering available housing units offered to mi- 

19) Housing providers giving legal reasons for 
denial to minority homeseekers (legal forms of 
discrimination), but setting different standards for 
nonminority homeseekers (a no-children rule in 
effect for minority homeseekers with children; but 
children are permitted for white homeseekers). 
These are just a few examples of the "revolving 

door" form of discrimination operating throughout 
the housing industry. The list of techniques is 
inexhaustive. The qualified minority, handicapped 
individual, or woman seeking to obtain suitable and 
affordable housing the location of his/her choice on 
his/her qualifications alone face a formidable force 
working against equal access and equal opportunity 
in the housing market. 

It is often reported that "things are getting better" 
and "anyone can live anywhere they can afford to 
live." I caution those making such blanket state- 
ments, or hearing them, not to be fooled by the 
meager sprinkling of minorities living in nontradi- 
tional areas. Instead, consider how many qualified 
minorities and women have been subtlely and 
illegally denied housing opportunities in those areas 
so as not to "integrate too fast," thereby creating 
panic on the part of long-time homeowners that 
their neighborhoods will be soon engulfed by a sea 
of (those they see as) "irresponsible, puerile" indi- 
viduals bound on the destruction of everything 
they've (homeowners) worked for. 

Homeseekers must be judged as individuals, not as 
stereotyped members of particular groups. Strict 
enforcement of fair housing laws is a key component 
toward the realization of equal housing opportunity 
for all citizens. It is apparent that individuals who 
comprise the protected classes under fair housing 
laws cannot be relegated to the long wait associated 
with voluntary compliance. Discriminatory housing 
practices have been illegal since 1866; the Housing 
Market Practices Survey conducted in 1977 demon- 
strated that voluntary compliance is an ineffective 
process in the struggle to eradicate practices of 
illegal housing discrimination. Unless the techniques 
of fair housing enforcement keep pace with the 
subtle and sophisticated techniques of discriminatory 


housing practices, these "badges of slavery" will 
continue to weigh as heavily as shackles. 


America's Blind Spot: The Devastating Impact of 
Residential Segregation 

Christine Klepper* 


I am consistently surprised by the number of 
individuals, including those otherwise educated and 
politically aware, who have no real understanding of 
racial issues in our society. When we begin to talk 
about race and housing in particular we, as fair 
housing advocates, generally get one of two re- 
sponses. The first is a tense silence perhaps prompt- 
ed by a fear some have of exposing their own racism 
or ignorance as the case may be. The second is an 
emotional diatribe filled with stereotypical refer- 
ences and misinformation. We, as a society, seem to 
have a very difficult time in discussing rationally one 
of the most critical urban issues of our time: housing 
segregation, with all its attendant evils. 

It's no wonder that discrimination, which has 
perpetuated housing segregation for six decades, is 
still so pervasive. The majority of Americans prefer 
to believe that discrimination has been eradicated 
and that separate neighborhoods for blacks and 
whites is natural. Until the general public and 
government leaders discuss and understand the 
economic and social ramifications of residential 
segregation and its cause, housing discrimination 
will continue unabated. Until we determine as a 
Nation that integrated communities are a valued and 
necessary component in our society, we will con- 
tinue to give lip service to the fight against discrimi- 
nation. Until we decide that interracial neighbor- 
hoods are something that benefit individuals, com- 
munities, business, schools, the financial community, 
and others, we will continue to move in the 
direction of apartheid. Until discrimination is no 
longer viewed as a minority issue alone but rather 
something that affects the white institutional base in 
this country as well, I fear the worst. I hope to make 
a compelling case for integration as a solution to 
many of our urban problems. I will detail the types 
of discrimination occurring in the southern suburbs 
of Chicago resulting in the subtle manipulation of 
the marketplace that fuels segregation and resegre- 
gation of entire areas. I will also discuss the activities 
necessary to attack these problems. 

The South Suburban Housing Center 

I bring the views and experience of the South 
Suburban Housing Center (SSHC), a relatively small 
nonprofit community organization located in Park 
Forest, Illinois. The agency is in its eighth year of 
operation and services 37 communities south of the 
City of Chicago. The purpose of the Housing Center 
is to promote a unitary housing market by encourag- 
ing racial diversity. We are convinced that residen- 
tial integration offers the best opportunity minorities 
have in guaranteeing equal participation in our 
society. We feel also that stable patterns of diversity 
are the only way to eliminate the "changing neigh- 
borhood" situation particularly familiar to residents 
of the southern suburbs. 

To accomplish our goals, we must eliminate dual 
housing market forces including discrimination, ille- 
gal racial steering by the real estate industry, and the 
selfsteering that is the result of ingrained segregato- 
ry housing patterns developed over six decades. 
These forces combine to severely limit options of 
black and white homeseekers based on racial consid- 

The Housing Center has developed an aggressive 
and comprehensive program strategy to address 
identified problems. We continue to provide the 
traditional fair housing counseling guided by a clear 
pro-integration policy. Both blacks and whites are 
encouraged to consider nontraditional options. We 
have an education program to make housing provid- 
ers aware of the law and affirmative marketing 
techniques necessary to mend the severely divided 
market we find ourselves operating in. We have a 
research arm at SSHC also. We recently completed 
a study of lending patterns and another study, using 
computerized results from our testing program, is 
nearly complete. Our testing program and the legal 
work we do are probably what we're most noted 
for. We've done over 500 tests on 70 real estate 
offices and 47 apartment complexes during the past 4 
years. We've organized an intergovernmental orga- 
nization, the Fair Housing Legal Action Committee 
consisting of 13-member municipalities, to provide 

• Executive Director, Metropolitan Milwaukee Fair Housing 


legal resources necessary to act on evidence collect- 
ed through testing. We've retained one of the largest 
law firms in the Nation, Sidley and Austin, and have 
recently filed two major pattern and practice suits 
against real estate companies in our area. Finally, we 
have developed a formal consultation relationship 
with Alexander Polikoff, executive director of the 
public interest law firm, Business and Professional 
People for the Public Interest (BPI). Mr. Polikoff 
was lead counsel for the plaintiffs in the landmark 
public housing case, Gautreeaux v. CHA. This 
relationship developed around the issue of "integra- 
tion maintenance," an often controversial and misun- 
derstood set of activities necessary to preserve racial 
diversity in the few places it exists. I will discuss this 
issue in more detail later in this report. Before we 
move further, however, we must look at demo- 
graphics as they currently exist in the Chicago metro 
region to understand the framework within which 
we operate. 

Residential Patterns 

The Chicago area, which has one of the most 
segregated housing markets and school systems 
among the Nation's large urban areas, is more 
typical than atypical of continuing urban discrimina- 
tion and segregation patterns. 

Fifteen years after the passage of the Fair Housing 
Act, Title VIII, in Chicago as elsewhere, blacks 
remain highly concentrated in central cities and in a 
few suburban enclaves. In 1980, 99 percent of 
Chicago's (SMSA) blacks lived in 33 of the area's 
more than 200 municipalities. According to an 
October 1980 article in the Chicago Reporter regard- 
ing public school enrollment for the six-county 
metropolitan Chicago area, while minority suburban 
enrollment grew by 57.4 percent, the growth "has 
not triggered wider integration for black students in 
the predominantly white suburban school district. 
Most black students remain clustered in about a 
dozen school districts, while 143 suburban school 
districts have five or fewer black pupils each." 
Further, "suburban Cook County, which has the 
largest number of black students, has significant 
bastions of segregation. Nearly one-fourth of all 
suburban Cook County school districts have no 
black children on their rolls." Of Cook County's 115 
elementary school districts, 70 have less than 1 
percent black enrollment. 

Subregionally segregation is apparent in that, 
compared with other suburban areas surrounding 

Chicago, the south Cook County area has provided 
opportunities for minorities and low-income people 
in numbers far greater than its neighbors. Half of the 
area's blacks live in south Cook County, which 
includes six of the seven metro area's suburbs that 
are predominantly black. The black population in 
the region grew 77 percent between 1970 and 1980 
from 11 percent overall to 17 percent. South Cook 
has nearly half of all subsidized housing in suburban 
Cook County. The minority population in the 
schools is approximately 30 percent as compared 
with a minority school enrollment in the rest of the 
metro area of approximately 2 percent. 

Within the southern suburbs as well, we can see 
the extent to which a segregated housing market has 
advanced. By examining 1980 census figures and 
comparing this data to census figures from 1970, we 
find that white areas have tended to remain white 
while integrated areas have tended to increase 
sharply in minority residents. For example, one 
white segregated community had a black population 
in 1970 of 0.12 percent. In 1980 the same community 
had a black population of 0.3 percent, a growth in 
raw numbers of only 19 black residents. In 1970 an 
integrated community in the region posted a 30.9 
percent black population which increased by 1980 to 
65.6 percent. One of its school districts, reflecting 
housing patterns, went from an integrated 30 percent 
minority enrollment to an essentially resegregated 
minority enrollment of 96.7 percent in only 6 years. 

The south region, however typical it is of segrega- 
tion, has to its credit a growing number of communi- 
ties that are integrated or are in the early stages of 
integration. They are the communities that make up 
the Fair Housing Legal Action Committee. These 13 
municipalities have black populations ranging from 
only 1.4 percent to 44.3 percent as of the 1980 
census. They all share a geographic position in the 
middle corridor of the region where all the predomi- 
nantly black communities are located, surrounded 
historically by white enclaves. These 13 communi- 
ties exist as open communities in a sea of closed 
communities. They recognize the undertow, the 
current system that threatens to rob them of the 
benefits of interracial living. They have come 
together to fight for open housing and against illegal 
real estate practices, especially steering that might 
otherwise result in a (re)segregated housing market. 

Clearly, segregated housing and school district 
patterns are evident on a metropolitan, subregional, 
and local level. These patterns are repeating them- 


selves in the suburbs as they did in the city of 
Chicago where some of our county's worst ghettos 
exist. Unless segregatory forces are challenged with 
significant resources we can look forward to "two 
societies, one black and one white, separate and 
unequal" as reported by the Kerner Commission 
some 1 5 years ago. 

Factors That Perpetuate Segregation 


The fear of not being welcome in certain commu- 
nities, plus the tendency for black people to seek out 
those communities where they are already represent- 
ed to some degree and in which they perceive they 
would feel comfortable, confines blacks to compete 
in the relatively few housing markets that are, in 
reality, open to them. This situation produces an 
unnaturally disproportionate black demand in cer- 
tain neighborhoods and communities. Whites, on the 
other hand, have a great many housing choices and 
often cross off integrated communities because of 
perceptions of or past experiences with rapid racial 
change. This pattern is termed self-steering and 
results in softened white demand in areas that, at the 
same time, are experiencing unnaturally high black 
demand. Resegregation is likely to occur in these 

The pervasiveness of the dual housing market is 
partially due to attitudes built upon the present 
effects of past discrimination. Because housing infor- 
mation channels have been so controlled by the real 
estate industry and because of the relative inexperi- 
ence of the minority homeseeker in the marketplace, 
blacks have had to rely on friends or relatives for 
housing information. Blacks have historically been 
confined to certain geographic locations so the 
obvious result is a continued limitation of housing 

Another factor is the increasing subtlety of dis- 
crimination in the eighties and the difficulty in 
detecting it. Blacks are generally offered as many 
courtesies as whites and are often told that "we 
don't have what you're looking for today but check 
back in, we may have something in a couple of 
months." Unless the homeseeker is very aware of 
racial patterns he has no real way of knowing that 
his white counterpart was told something totally 
different. The homeseeker is dependent upon the 
rental or real estate agent's word. Even if the 
homeseeker suspects discrimination, he or she may 

be reluctant to pursue it. The experience was 
probably not a glaring insult; no door was slammed 
in his/her face; he/she was greeted with a smile. 
Because there are some options available in the 
suburbs and because of Title VIII and the progress 
blacks have made in employment and socioeconom- 
ic levels, many tend to believe discrimination has 
been eradicated or at least severely reduced. Conse- 
quently, the tenacity of the dual housing market has 
been underestimated. The black homeseeker con- 
tinues his search for housing elsewhere and general- 
ly finds it in a traditional transitional area. The 
housing choice may be considered a free one but in 
reality it is a manipulated one. Patterns that develop 
from these individual encounters are manipulated as 
well resulting in the segregatory trends just dis- 

The white experience is much different though 
white residents are victimized by these historical 
trends as well. Many white residents of the southern 
suburbs moved from rapidly changing neighbor- 
hoods on the south side of the city. They identify 
those areas as "integrated" when in fact they were in 
the process of resegregation. They tend to believe 
the in-movement of blacks begins a process, con- 
trolled only by God himself, that brings about social 
upheaval and economic loss. There is a lack of 
understanding relative to the complex set of circum- 
stances that took their neighborhood from the area 
they knew it to be, to the ghetto and often slum that 
it had become. 

Because the scenario has been set from 60 years, a 
more passive practice by Realtors exists now that 
simply encourages white self-steering. If a white 
buyer is aware of some blacks in a neighborhood, 
they may ask about stability or they may express a 
reluctance. If the Realtor acts out his traditional 
role, based on bias or a perception of people's 
attitudes, he may act to discourage the buyer. He 
may say, "You have to be careful there," or 
"Property values don't increase as much there." 
This kind of response reinforces fears and precipi- 
tates a self-fulfilling prophecy. Another response by 
the Realtor might be, "I can't discuss race." This 
again does not answer the concern. If, however, the 
Realtor responds in a positive way, "Yes, the 
neighborhood is stable, integrated, and very desir- 
able," he may in fact prompt a different kind of self- 
fulfilling prophecy. 

The dual housing market is well entrenched 
however, and changing institutional practices is not 


easy. Educating the general public may be a begin- 
ning. We must build integrated neighborhoods to 
increase the confidence of whites so that withdrawal 
does not occur. Whites must be kept in the market- 
place, in the neighborhood, and in the community. 
White self-steering will continue until some positive 
examples of interracial living can be sustained. 

To summarize, closed information channels, a lack 
of awareness by black and white homeseekers to the 
subtle manipulation of the marketplace, and a lack of 
confidence in integrated living in limiting choices 
for individuals. These factors perpetuate segregatory 
housing patterns and cause the pressures of resegre- 
gation to be felt in a number of south suburban 

Discrimination and Steering 

Historically, we are well aware that the real estate 
industry has played a major role in perpetuating 
segregation. To learn the full extent to which 
current practices impact our communities, SSHC 
developed a comprehensive testing program. 

SSHC has conducted, on behalf of its municipal 
clients (numbering 13 currently) over 500 tests of 
real estate activity beginning in 1979. The program 
is specifically designed to determine if white and 
black homeseekers with carefully matched housing 
preferences and budgets are treated equally and 
shown the same housing. The program is ongoing 
and is not only complaint oriented but also seeks to 
reduce systemic violations of fair housing law. All 
procedures and recording forms used are similar to 
or variations of practices and materials developed by 
the National Committee Against Discrimination in 
Housing in conjunction with the U.S. Department of 
Housing and Urban Development. 

Rental Testing 

SSHC has conducted nearly 200 rental tests over 
the 4-year period, 1979-82. Many tests were con- 
ducted to assist bona fide individuals homeseekers in 
obtaining units, a relatively traditional activity for 
fair housing centers. Recently, a black client of the 
Housing Center was awarded $28,000, the largest 
cash settlement in a rental discrimination case in the 
State of Illinois. Testing in 1982, however, was 
structured to begin systemic investigations into 
practices at large apartment complexes in white 
segregated parts of our area. Individual cases filed in 
Federal court have tended to be the only avenue of 

redress to an entire systemic problem and this 
approach is simply far from adequate. 

The 1982 Supreme Court ruling in Havens v. 
Coleman clarified the standing of fair housing 
centers as well as testers in Title VIII actions. 
Havens provides expanded opportunity to combat 
racial discrimination that should not be underesti- 
mated as a tool for change. Consider these circum- 
stance: We find ourselves in a climate in 1983 where 
"pioneers" are no longer chic, where fighting the 
system is often more time consuming and difficult 
than its worth, where discrimination has become so 
subtle that it is difficult to detect, and when public 
awareness is probably at an all-time low. We, as fair 
housing advocates, must uncover these widespread 
violations of the law so that fewer black families 
suffer the devastating experience of discrimination. 
If adequate resources are allocated, systemic testing, 
followed up by Havens cases seeking affirmative 
remedies, could be a more effective means of 
uncovering violations of Title VIII. 

Our experience with systemic rental testing has 
been that apartment availability information is as- 
toundingly different for blacks and whites. During 
our 1981 series for example, in seven different 
matched tests (one black tester and one white) on 
seven different rental complexes, rental units were 
available for the white tester while the black tester 
who followed a few hours (or in some cases minutes) 
later, was told no units were available. On an 
additional four matched tests, white testers were 
told units were definitely available and blacks were 
told that there "may be a vacancy" or that the agent 
"didn't know" if there would be a vacancy. Statisti- 
cally in 1981 white testers were told units were 
available on 23 of 26 occasions, or 88 percent of the 
time, while their black counterparts were told units 
were available on only 10 of 23 occasions, or 43 
percent of the time. 

In 1982, 19 black testers were matched with 19 
white testers, visiting a total of 6 rental complexes 
throughout the region. Again the category of avail- 
ability shows glaring differences. Of the 19 blacks 
who tested complexes only 6, or 31 percent, were 
told something would be available. Seventeen white 
testers, 89 percent of the total, were told something 
was available. In 1 white community where 17 tests 
were conducted (9 black and 8 white), all 8 whites 
were told something was available while blacks 
were never told that an apartment would definitely 
be available for them. Although black testers were 


often shown model apartments as well as vacant 
units on occasion, they were then given nebulous 
answers regarding availability. Black testers were 
told: the agent would call back and let them know of 
vacancies; applications were being taken for a time 
in the future; the agent would put their name on a 
waiting list; nothing was available for the date the 
tester asked for but there might be something later; 
or the agent "wasn't sure" if something was avail- 
able. These test results are a shocking reminder of 
the level of discrimination in rental housing. 

Sales Market Testing 

SSHC began systemic testing of real estate offices 
of 1979. The program represents one of the few 
operating in the country to investigate in-depth sales 
market activity. Since our service area is predomi- 
nantly made up of single-family owner-occupied 
housing, discrimination in the sales market most 
critically impacts south suburban residential pat- 

Our beginning testing revealed dramatic results. 
We found discrimination or steering occuring 95 
percent of the time. Twenty-three percent of our 
black testers were told there was nothing available 
at all, while whites were always given options. 
Racial comments were made to white testers an 
alarming 27 percent of the time. "We don't have any 
green people here, if you know what I mean," is an 
example. Several times blacks were discouraged 
from considering particular all white areas because 
of potential "troubles." 

The most significant results are illustrated in an 
examination of the location of options offered. 
Whites were offered housing options in all white 
areas 88 percent of the time. Blacks were offered 
housing options in these same areas only 29 percent 
of the time. Of the whites actually taken to inspect 
housing, none were shown housing in integrated 
areas, while 71 percent of the black testers who were 
shown housing were shown only in integrated areas 
SSHC documented 17 black testers offered options 
in 1 integrated community while not 1 white tester 
was offered anything in that community. 

After the 1979 series was complete (a lawsuit 
against 15 real estate companies resulted), we began 
computer work with a local university to see if 
trends were apparent with more sophisticated analy- 
sis. We also wanted to store information so that, as 
we continued our program, we would have cumula- 
tive data available. The most interesting result of this 

initial effort was relative to school districts. A 
portion of the computer work broke listings offered 
by race into elementary school districts. Housing in 
1 district with a 30 percent minority enrollment in 
1975 was offered to 18 black testers and to only 1 
white. Overall, 67 percent of the blacks were shown 
housing in the 9 districts with the highest number of 
black students (total of 28 districts). Forty percent of 
the white testers were shown housing located in the 
eight districts with less than a 2 percent black 
population. These figures illustrate the clear rela- 
tionship between segregated housing patterns and 
segregated schools. 

As we continued our testing, we identified a 
number of trends. Realtors, where a major lawsuit 
was filed, have improved. Also, Realtors in the 
integrated corridor of the region where SSHC has 
been the most visible have improved their behavior 
considerably. Although blacks were still told 25 
percent of the time that no housing was available 
(whites were never told this), blacks are being given 
more options in white areas. In 1980, 32 percent of 
our black testers were given options in white areas 
while the 1981 series showed blacks given listings in 
white areas 52 percent of the time. Less improve- 
ment is evident relative to the white experience. 
Whites were given options in integrated communi- 
ties only 13 percent of the time in 1980, improving to 
31 percent by 1982. Racial comments were still 
made however in 30 percent of the tests, discourag- 
ing integrated areas. The one final trend apparent 
going into our 1982 series was that Realtors in the 
all-white southeast corridor of the south suburbs 
were steering blacks out of that area and into the 
integrated middle corridor of the region while 
keeping whites in the white enclave. 

The results from our most recent testing confirm 
general trends found in previous investigations: less 
time is spent with black testers; financing is dis- 
cussed less often; blacks are offered and shown 
fewer housing options; and blacks are given less 
positive school district information. 1982 testing 
documented that 67 percent of options given black 
testers were in white segregated areas, again an 
improvement, although 57 percent of the total were 
in one community, possible signaling the beginning 
of a targeting process. Conversely, however, we 
found that whites were shown white areas 88.9 
percent of the time while integrated areas (here 
defined as areas 3 percent black and over) were 
shown only 11.1 percent of the time. Racial remarks 


and discouraging comments about particular com- 
munities and school districts continued to be made 
an alarming percentage of the time to white testers. 
Negative school district information was given to 
white testers on a significant number of tests, 23 
percent. Busing was most frequently mentioned as a 
negative and was most often discussed with whites. 
One agent mentioned busing to all the white testers 
he served. Clearly, the predominant trend over the 
years is improved behavior relative to blacks be- 
cause of testing but an almost total reluctance to 
show whites options in integrated areas. 

The 1982 testing series resulted in two major 
pattern and practice lawsuits filed in December 1982 
and March of 1983. The first suit, SSHC et al. v. 
Santefort Cowing, involved 26 tests on 4 offices of the 
firm, the largest in our region. The other involved 17 
tests on 2 offices located in the southeast white 
enclave. SSHC and several resident plaintiffs allege 
that these firms engaged in differential treatment by 
race, discouraging comments to promote segrega- 
tion, and illegal racial steering. 

Finally, SSHC with the University of Illinois, has 
computerized results of 3 years of testing 1979-81. 
The results of this extensive analysis are that 
discrimination and racial steering are happening at a 
statistically significant level and it can be said that 
there is only a 5 percent chance that it is occurring 
as a matter of chance. Sixty-five offices, over 200 
agents, and 318 individual tests were analyzed. 
Overall, of 129 variables analyzed, 37 showed severe 
disparate treatment and almost all (31 of 37, or 84 
percent) came down on the side of discriminatory 
treatment against blacks. 

In a complimentary study of testing narratives 
completed by SSHC, further evidence of steering 
was uncovered. Nineteen types of behavior or 
comments made by Realtors were identified that 
blatantly steered or discouraged testers from select- 
ing housing in particular areas. The frequency of 
these comments was astounding. Two hundered and 
sixty-one instances or comments were documents by 
testers. The types of comments and/or behavior 
cited by black testers most often includes: 

1. Realtors made specific encouraging refer- 
ences to black testers about black areas. 

2. The testers was unable to inspect houses on 
the day of the visit to the office. 

3. The tester had the feeling that the Realtor did 
not want to service them. p34. The tester was 
told to "drive around and look at houses." 

5. Testers phone calls were not returned. 

6. Tester was not allowed to examine MLS book 
or print out. 

7. No listings were available in price range or to 
fit preference of the tester. 

White testers most often cited the following: 

1 . Realtor referred white tester to white commu- 
nity with subtle commentary or away from specif- 
ic areas of black residency. 

2. Integrated school districts referred to in a 
negative manner or the existence of busing men- 
tioned by agent (20 times with whites; once with a 

Clearly, as study after study has documented, 
discrimination and steering are occuring in the 
southern suburbs at an astounding level even with 
ongoing monitoring. As our testing and analysis 
become more sophisticated we see that these pat- 
terns are statistically significant and cannot be 
occurring by chance. 

Discrimination in Lending 

The Housing Center completed a study of lending 
patterns in the region using the Community Rein- 
vestment Act (CRA) statements and Home Mort- 
gage Disclosure Act (HMDA) information from 36 
financial institutions. The number of loans made 
during 1980 in each of 69 census tracts in the area 
was noted along with a variety of other variables. 
To summarize the results of this extensive study in 
one sentence, we can say that census tracts with 20 
percent or more black residency received a dramati- 
cally lower number of loans. Given that census 
tracts in suburban areas tend to be very large with 
segregated areas within themselves, it is suprising 
that such a dramatic pattern is discernable. 

Twenty-four is the average number of mortgage 
loans made per census tract. Twenty-six census 
tracts received more than the average. The average 
black residency of these tracts was 5.7 percent. 
Forty-three tracts received fewer than 24 loans and 
their average black residency was 29 percent. Thirty 
percent of all census tracts in the south suburbs are 
20-100 percent black and yet they received only 7 
percent of the total mortgage loans made. Table 1 
gives a good picture of the overall results. 

Trends are apparent relative to race and lending in 
our region. Red-lining and discrimination are likely 
reasons for the trends. We hope to further document 
our initial findings to prompt affirmative action to 


Percent black 





Percent of total 
census tracts 





Percent of 
loans made 





remedy the devastating effects of this activity (or 
lack thereoO- 

Resulting Consequences 

The obvious first reaction to the level of segrega- 
tion and discrimination just discussed is to the 
violation of individual civil rights. The emotional 
harm caused even one individual is painful to see and 
can be a life-changing event for the victim. We are 
just beginning to document, in discrimination cases, 
the psychological impact on individuals and families. 
Psychologists are now being used as expert wit- 
nesses in trials so that, to whatever extent it's 
possible, victims can be adequately compensated. 
Awards in fair housing cases have been far too small 
either to compensate victims or to deter others from 
engaging in discriminatory behavior. While I do not 
want to minimize the harm caused to people, I do 
want to focus attention on what these collective 
actions do to society. 

I speak from a position of concern about the 
choice of pluralism in our neighborhoods and 
communities. I speak also from a position as an 
observer of racial change, watching as one area 
became integrated and then completely resegregat- 

ed. I listen to a large number of white residents who 
truly believe all black people know each other and 
conspire to take over and ruin one neighborhood 
after another. There is an unbelievable lack of 
knowledge about institutional racism and white 
withdrawal from the marketplace and community. 
What happens when blacks move into an area? 
Some residents panic and move, but most do not. 
They are relatively accepting, usually not hostile, 
but maybe not overly sociable either. The neighbor- 
hood is "integrated." A few more black families 
move in and soon the neighbors don't see any whites 
looking at homes that are for sale. The traffic is all 
black. Testing tells us what is happening. Whites 
with more options choose other areas and Realtors 
both subtley and blatantly fuel white withdrawal 
from the market. As 80 percent of the demand for 
the housing is withdrawn (the percentage of whites 
in the Chicagoland region), property values begin to 
decline and homes do not sell as rapidly. More 
whites now decide its time to move. As property 
values decline (or do not rise as quickly as othe 
comprative areas), the community's tax base is 
affected. The schools don't get the money they need 
to remain quality schools. City services may be 


withdrawn by a white controlled governmental base 
or services may decline because of a revenue loss. 
Whatever the cause, the result is the same — a 
neighborhood in transition and possible economic 
decline. Black middle-class residents, with other 
choices, move on now too. 

Lets take the scenario a little further. We begin to 
see redlining and home improvements and repairs 
aren't possible. Housing begins to look a little 
shabby. Businesses have lost demand too as 80 
percent of their market (the white market) is no 
longer in the neighborhood. They move. New 
businesses don't move in. Jobs go. We have created 
another ghetto and probably another slum. 

And what is the common denominator? Not in- 
movement of blacks but white individual and institu- 
tional withdrawal, assisted at a critical point in time 
by the Realtor. The only group to benefit financially 
in this whole scenario is the real estate industry and, 
even then, only in the short run. Essentially, the real 
estate market in the racially changed neighborhood 
is reduced as well. Realtors as inviduals are not 
necessarily evil and plotting to bring about racial 
change. Most are simply caught in a monstrous 
system that simply follows the path of least resis- 
tance and the shortest point between two dollar 
signs. Whatever the circumstance, the result is 
segregation where racial fears and tensions can 
continue and where blacks can be erased off the map 
by a white controlled institutional base. Opportuni- 
ties for education and jobs are not shared and the 
status quo is maintained. 

Integration as a Valued Principle 

If we look at the early stages of the road we've 
just traveled, we can see a fork — where whites begin 
moving in the direction of all those other options 
available to them. If we can keep whites competing 
in the marketplace with blacks, we get 100 percent 
of the demand for the housing. We get optimum 
property value increases, a solid tax base, good city 
services, and good schools. Businesses and jobs 
remain; and in such a healthy atmosphere, what 
financial institution would deny itself the benefit of a 
good investment? Schools are naturally integrated 
and understanding between the races is more likely, 
reducing fears and tensions. The courts, as well as 
sociologists, have long recognized the benefits to be 
derived from interracial association. It seems to be a 
simple concept but we all know the reality — integra- 
tion is difficult. We can be arm-chair liberals only so 

long then we must face up to the fight. Taking on 
the battle is exactly what is happening in the 
southern suburbs of Chicago. 

Recommendations for Action 

Communities in our region and the people in them 
have educated themselves to the point of under- 
standing the complex set of actors who prey upon 
the integrated community. They understand their 
self-interest in supporting open housing everywhere. 
It may not be popular to say, but as long as there are 
white "havens" for refuge, they will be utilized. 
Without white enclaves there would be no place to 
run. Conversely, if black demand were not so 
manipulated into a few isolated areas but was, in 
fact, diversified, the problems again could be re- 
duced. This premise is the first ingredient thrown in 
the pot of "integration maintenance" activities. 

Promoting and maintaining residential integration 
where it exists is a logical next step in our movement 
toward a unified society. Given all the factors 
working against successful integration, we must 
have competing forces that nurture integration as a 
valued principle of government. Integration doesn't 
just happen because of the enormous detrimental 
effects of past and present discrimination. We need 
affirmative action to mend the wounds and make the 
market whole again before it can operate in a truly 
free manner. 

In the south suburbs, we've put together a 
regional approach to deal with an entrenched dual 
housing system. Vigorous enforcement of fair hous- 
ing law is combined with a variety of other mecha- 
nisms to ensure that people of all races compete for 
housing throughout the region. The basic ingredient 
is affirmative marketing. 

Affirmative marketing as defined by HUD is an 
attempt to outreach to that racial group which is 
underrepresented in traffic and demand. For exam- 
ple, in an area of majority concentration outreach 
would be to whites. This concept, however, often 
gets translated into somehow denying blacks hous- 
ing opportunities in integrated communities where 
outreach is needed to retain whites in the market- 
place. Affirmative marketing is often described as a 
type of quota. Nothing could be further from the 
truth. The real estate industry has had much to do 
with spreading this interpretation. The real issue is 
that communities in the south suburbs are telling 
Realtors they can not practice business as usual. 
Controls are being developed on an industry that has 


had virtually no control and a major part of the 
offensive is being fought in Chicago. The National 
Association of Realtors would have you believe that 
we are the ones opposing open housing and that they 
are the ones cheering for "equal access." 

Other ingredients that are included in the recipe 
for integration maintenance are: 1) public relations 
to overcome perceptions about the quality of life in 
integrated areas; 2) counseling of homeseekers, black 
and white, regarding all the options available to 
them; 3) racial data collection because a positive 
race-conscious approach to marketing cannot be 
done without knowing the racial makeup of areas 
and/or the demand for housing in a given location; 
4) anti-solicitation provisions in ordinances to con- 
trol panic-peddling; 5) for sale sign bans to control 
any potential panic; 6) preferred Realtors programs 
to reward those Realtors who obey the law and 
practice affirmative marketing; 7) economic incen- 
tive programs that encourage pro-integration moves 
(mortgage and rental assistance to blacks and whites 
making nontraditional choices); and 8) education 
programs for residents, Realtors, and other major 
institutional actors in the region. These activities, 
combined with agressive enforcement of fair hous- 
ing law, we think, can provide the option to those 
who choose interracial living and will ultimately 
move us closer to a whole society. After all, as a fair 

housing poster contest winner wrote, "We share the 
same world, why can't we share the same street?" 


It is clear that housing segregation exists. It exists 
because of the past and present effects of discrimina- 
tion. The housing market continues to exhibit as- 
tounding levels of subtle discrimination and racial 
steering. Segregation damages individuals, commu- 
nities, and institutions such as schools and businesses. 
Residential integration has the potential to alleviate 
many of our urban problems and discussion of these 
issues is critical to the advancement of civil rights in 
the eighties. 

A real governmental commitment to ending dis- 
crimination is one step toward a better society. 
Passing the Fair Housing Amendments Act spon- 
sored by Kennedy and Mathias this year is impera- 
tive to a more effective enforcement mechanism. 
Also, adequate funding of systemic investigations is 
critical to the future of truly free housing choice. It 
is not enough, however. 

The new "issue of the eighties" is integration or 
(re)segregation as a way of life. The National 
Association of Realtors must be monitored in their 
efforts to undermine the racial balance of communi- 
ties and a positive race-conscious approach must be 
taken to mend a severely divided system of housing 
delivery so that all people can participate equally. 



W. Scott Davis* 

I am pleased to provide the U.S. Commission on 
Civil Rights with information on HUD efforts to 
enforce the prohibitions against discrimination in 
housing contained in Title VIII of the Civil Rights 
Act of 1968. We believe that progress has been made 
in providing equal housing opportunity, but we also 
recognize reality. 

In the administration enforcement of the provi- 
sions of the Federal Fair Housing Law, the Office of 
the Assistant Secretary for Fair Housing and Equal 
Opportunity has experienced a substantial increase 
in complaint activity. 

The numbers of fair housing complaints received 
increased from 3,039 in FY '80 to 5,1 12 in FY '82, an 
increase of 68 percent. During that same period, 
HUD increased its referral of Title VIII complaints 
to State and local agencies for processing. In FY '80, 
HUD referred 13 percent, or 410 of its complaints. 
In FY '81 the percentage of complaints referred 
increased by 305 percent to 1,661, or 39 percent, of 
the HUD Title VIII complaints. In FY '82 we 
experienced still another increase — 2,679, or 52 
percent of the complaints received, were referred to 
State and local agencies. This represents a 61 
percent increase over FY '81. 

Overall, the percentage increase of complaint 
referrals to State and local agencies from FY '80 to 
FY '82 was 553 percent. 

In FY '80 a total of 2,860 Title VIII complaints 
were closed by HUD and recognized State and local 
agencies. In FY '81, 3,756 complaints were closed. 
In FY '82 a total 4,360 complaints were closed. 
Closures by HUD and State and local agencies have 
increased by 52 percent over the period. 

In cases where HUD has conducted an investiga- 
tion, determinations to resolve matters through 
conciliation are made in approximately one-third of 
the cases and conciliation is successful in about 60- 
70 percent of these cases. The success rate for State 
and local agencies is comparable. 

Successful conciliations conducted in FY '80 
resulted in 250 housing units being obtained. Be- 
tween FY '80 and FY '82 the number of units 
obtained through conciliation efforts increased to 

340. Additionally, HUD negotiated resolutions in a 
number of cases have resulted in the provisions of 
housing through rapid response processing. In 1982 
HUD obtained housing for complainants in 71 cases 
through this process. In FY '80, HUD secured 
$442,434 in monetary relief for complainants 
through conciliation. In FY '82, notwithstanding the 
dramatic increase in cases referred to State and local 
agencies, HUD secured $601,163 in monetary relief 
for complainants. 

Not only has there been an increase in complaint 
activity, there has also been a significant change in 
the nature of the conduct involved in complaints. 
The substantive character of discrimination has 
become more complicated and reflects pervasiveness 
and sublety. While steering, blockbusting, and red- 
lining continue to exist, these forms of discriminato- 
ry housing practices have developed to a level of 
sophistication that makes detection and recognition 
difficult because of the myriad of activities that are 
carried out in association with these practices. 

Historically, blockbusting was most commonly 
used to describe a phenomenon that occurred in a 
neighborhood experiencing racial transition — from 
white to black. These areas were primarily older 
urban areas and areas on the fringes of suburbia. 
Blockbusting was most frequently associated with 
rumors of racial change and solicitation for panic 
selling. Today, rapid transition in neighborhoods is 
encouraged through more subtle means and the lack 
of overtly discriminatory conduct in connection 
with commencement of blockbusting not only makes 
it difficult for persons to detect, but it also makes it 
difficult to halt the blockbusting trend. In addition, 
blockbusting practices are no longer confined to 
older or decaying neighborhoods. The practice now 
knows no boundary either in geography or social 

We encounter similar problems with steering. 
Steering involves efforts actively undertaken to 
influence the choice of a prospective home seeker 
because of race. This practice can occur in further- 
ing another form of discrimination such as block- 
busting in a neighborhood or stand alone. In either 

* General Deputy Assistant Secretary for Fair Housing and 
Equal Opportunity, HUD. 


form, it represents a major obstacle to the exercise of 
choice in housing. The sophistication associated 
with steering has developed to almost unparalleled 
levels. The likelihood that a person will be told that 
they should not live in an area because of their race, 
color, religion, sex, or national origin or the race, 
color, religion, sex, or national origin of persons 
living there is remote today. However, we know 
that it is very likely that the range of housing 
choices made available to a person may vary 
significantly based on such considerations as race or 
national origin. 

Soon after the passage of Title VIII, HUD 
recognized the need to address problems involving 
housing choice in programs administered by the 
Department. In response to this need, the Depart- 
ment issued its Affirmative Fair Housing Marketing 
Regulation in 1972. This regulation sets forth the 
policy of the Department to administer its FHA 
housing programs affirmatively in order to achieve a 
condition in which individuals of similar income 
levels in the same housing market area (usually the 
SMSA) have a like range of housing choices 
available to them regardless of race, color, religion, 
sex, or national origin. 

The basic objective of our Affirmative Marketing 
Program is to assure that all persons are given an 
equal opportunity to be informed about the availabil- 
ity of housing. In order to achieve this, the market- 
ing programs approved by HUD are designed to 
attract buyers and tenants from among all minority 
and nonminority groups. However, special market- 
ing activities are undertaken to attract the persons 
least likely to apply for the housing. 

Some may criticize the effectiveness of this pro- 
gram, but it has opened the door for all persons to 
obtain information about available housing through- 
out a housing market area regardless of their race, 
color, religion, sex, or national origin. 

In July of 1977, the Assistant Secretary for FHEO 
conducted a fair housing administrative meeting on 
redlining and disinvestment. When the report of the 
meeting was published, its cover depicted a picture 
of a neighborhood that was partially encircled by a 
red line. At that time, the scene accurately portrayed 
the way that lending institutions had historically 
reflected the areas that were to be redlined. As years 
passed, the red line disappeared, but its devastating 
consequences have not diminished. 

Secretary Pierce often has expressed his support 
of fair housing enforcement. He has also expressed 

his support of the use of testing data when it is 
received in connection with a complaint and has 
reaffirmed his belief that testing data is one of the 
more important tools in battling discrimination in 

We are strengthening our enforcement efforts by 
actively cooperating with States and localities that 
also administer fair housing laws. Thirty States and 
52 localities administer laws that have been deemed 
to be substantially equivalent to Title VIII. Just this 
past July, 12 of these localities were granted equiva- 
lency. We are now referring Title VIII complaints 
to 29 States and 38 localities for processing pursuant 
to their laws. Currently, we are financially reimburs- 
ing these States and localities for processing those 

Secretary Pierce, as well as previous secretaries of 
HUD, has recognized that the major obstacle to the 
Department ineffectively administering the Federal 
Fair Housing Law is the lack of a strong enforce- 
ment mechanism. 

President Reagan, in his 1983 State of the Union 
Message, pledged "to strengthen enforcement of the 
Fair Housing Law for all Americans." In July the 
President submitted to Congress an administration 
bill designed to enhance the Secretary of HUD's 
ability to deal with discriminatory housing practices 
through conciliation. As now provided in the Fair 
Housing Law, the Secretary of HUD receives and 
investigates complaints and proceeds to conciliation 
where it appears that the allegations in the complaint 
are substantiated. However, where conciliation fails, 
under the administration bill, unlike the process 
under the present law, the Secretary would be 
authorized to refer individual cases as well as pattern 
or practice cases directly to the Attorney General 
for judicial enforcement. The bill also provides stiff 
penalties against offenders up to $50,000 for a first 
offense and $100,000 for a second — in addition to 
injunctive relief 

The administration bill would make bigotry in 
housing a very expensive proposition for those who 
discriminate. The new law would not only deter 
discrimination but would provide offenders with 
powerful incentives to enter into conciliation, which 
we have found to be the fastest and most effective 
procedure. On the average, HUD conciliation pro- 
duces a settlement within 100 days, which is much 
faster than any court or administrative hearing 
process is likely to be. Moreover, in 50 percent of 
these cases complainants are provided with a dwell- 


ing. From my point of view, that's the most practical 
measure of the success of the concihation process. 

A similar bill to strengthen the Fair Housing 
Law — Mathias-Kennedy, or S.1220, in the Senate — 
has also been proposed, and the debate between the 
two is currently shaping up. A key difference 
between these bills is that S.1220, in addition to 
strengthening judicial enforcement, would establish 
an alternative administrative hearing process. 

The Administration has rejected this alternative 
because it sets up an additional layer of bureaucracy 
and thus trips over its main purpose — speedy justice. 
In fact, the EEOC has an administrative hearing 
process in place — it is used for charges of employ- 
ment discrimination by the Federal Government, 
not by private employers — and it takes an average of 
440 days to reach a resolution. Compare that with 
the 100-day average we have achieved through 

Clearly the conciliation process provides the 
speediest relief. That's why the main thrust of the 
administration's bill is to bring the parties to the 
negotiating table as soon as possible, not to set up 
cumbersome, extra-judicial bureaucratic machinery. 

The administration bill also expands the coverage 
of the existing Fair Housing Law to make it 
unlawful to discriminate in housing on the basis of 
handicap. The bill would extend the period of time 
available to individuals to bring civil suits, remove 
restrictions in the existing law relating to the award 
of attorney fees, and lift the ceiling on punitive 
damages that can be awarded in civil actions. 

In enacting Title VIII of the Civil Rights Act of 
1968, Congress embodied in our Federal Laws the 
concept of fair housing. Today more than 15 years 
after the passage of the Federal Fair Housing Law, 
to many, equal housing opportunity remains more of 
a dream than a reality. The enhancement of the 
informal conciliation process through an effective 
judicial enforcement mechanism will not only estab- 
lish a deterent to discrimination, but also an aware- 
ness of the governmental interest in the achievement 
of fair housing. The coupling of these principles, in 
my opinion, will reduce not only overtly discrimina- 
tory actions, but the incidence of subtle discrimina- 
tory conduct which are the backbones of practices 
such as blockbusting, steering, and redlining. 


452-986 0-84 

Hispanic America: Limited Housing Options 

Jose S. Garza* 

Theoretically, housing takes into account the 
needs of people. Design, location, facilities, and 
maintenance are all key factors in meeting the 
housing needs of millions of people across the 
Nation, and it is assumed that the best way to 
determine these needs is to ascertain what people 
want. In making this determination, a myriad of 
factors have to be considered and their influence on 
one another must be examined. 

Foremost among these factors is the environment 
created by those housing efforts. This environment 
will reflect the life that individuals communicate to 
others and transmit to succeeding generations, there- 
by charging housing efforts with much more impor- 
tance than "just" the erection of buildings. Housing 
is a part of the total environment which affects 
humans in the way they feel and behave, and the 
characteristics of this environment are important 
because they condition the development of young 
people and, thereby, of society. 

It is precisely because housing has such profound 
effects on individuals that it is important that 
everyone have decent housing. Present housing 
trends in America are not representative of what 
people want; rather, they represent the limited 
choices people have. Thus, instead of being able to 
create an environment through wants that reflect 
their civilization, people across the country are 
finding themselves surrounded by an unsupporting 
and stifiing environment. 

Hispanics are especially affected by the present 
housing situation because of their particular charac- 
teristics. Although problems in housing have unique 
aspects that may vary among diverse Hispanic 
subgroups (Mexican Americans or Chicanos,' Puer- 
to Ricans, Cubans, and persons of Central or South 
American origin) in different geographic regions of 
the country, the Hispanic population, overall, is 
especially vulnerable in the present housing situation 
because of several characteristics — generally lower 
levels of income, education, employment, and hom- 
eownership; overwhelming concentration in metro- 
politan areas and inner-city areas with greatly 

• Coordinator, National Hispanic Housing Network. 

' TTie terms "Mexican Americans" or "Chicano" are used 

interchangeably in this report. This is to accommodate prefer- 

limited housing choices; a substantial number of 
families larger than the national average, with many 
of these families at low-income or poverty levels; 
and a rapid incrase in the number of Hispanic 
children and youth requiring adequate housing in 
safe and healthy environments. As a result, among 
Hispanics there is a significantly large, and growing, 
subpopulation that is underhoused, ill-housed, over- 
crowded, and heavily influenced by a constrictive, 
often adverse living environment. 

The relocation of industries to suburbia has left 
central cities with fewer jobs and with an insufficient 
tax base to provide necessary municipal services. 
Housing left behind by "white flight" is older, in 
worse condition, and in less desirable neighborhoods 
than its counterpart in suburbia. As a result, financial 
institutions and even residents have disinvested in 
the urban housing stock. Many of our barrios (i.e., 
neighborhoods where the predominant population is 
Hispanic) have become wastelands where crime, 
pollution, poverty, and psychological deterioration 
are common occurrences. 

Housing, community development, and civil 
rights laws have had only minimal impact on 
Hispanic and other minority communities because 
there has been no real commitment to integrated 
housing or to the development of adequate housing 
in these communities. The early administration of 
mortgage insurance and loan programs established a 
pattern detrimental to these communities. The Fed- 
eral Housing Administration's Underwriting Manual 
from 1935 to 1950 warned of". . .the infiltration of 
inharmonious racial and national groups. . .a lower 
class of inhabitants. . .(or the) presence of incom- 
patible racial elements in new neighborhoods." 
Zoning and racial covenants were used as devices 
for exclusion. Thus was established a discriminatory 
system with a bias against Hispanics and other 
minorities. Despite some recent efforts to address 
this well-rooted problem, the patterns and practices 
of this system have not yet been eliminated — in fact, 
many would argue they are still quite common. 

ences among Americans of Mexican descent or origin for 
designation by one or the other term. 


Segregation into barrios affects the cost and 
quality of Hispanic housing. The roots of segrega- 
tion are multiple. To some degree Hispanic prefer- 
ence of living in ethnic enclaves promotes segrega- 
tion as it has for other ethnic groups. But mere 
preference alone is an unsatisfactory explanation. 
Indeed Hispanic preference itself is conditioned by 
the anticipation of discrimination and animosity in 
non-Hispanic neighborhoods. Traditionally there 
has been an historical pattern of exclusion by whites. 
In the Southwest, for example, it was common for 
city ordinances to establish areas of the city in which 
Chicanos could live, and restrictive covenants ex- 
cluding Chicanos were often employed. Overt dis- 
crimination of this type is now illegal; however, 
Realtor "steering" of Hispanic homeseekers to His- 
panic neighborhood remains a formidable problem. 

The available evidence suggests that Hispanics 
tend to reside in segregated communities. In the 
New York and New Jersey areas in 1960, Puerto 
Ricans were so segregated that 75 to over 80 percent 
would have had to move in order to create an 
integrated environment. And in the Southwest in 
1960, roughly 50 to 60 percent of Mexican- Ameri- 
cans would similarly have had to relocate to pro- 
duce desegregation. Analyses indicate that the de- 
gree of residential segregation had abated somewhat 
by 1970, with Chicano segregation, for example, 
reduced by an average of over 7 percent. Nonethe- 
less, segregation was still predominant and several 
communities had actually increased their levels of 
Hispanic segregation. 

There are several ways in which segregation 
impacts on Hispanic housing. Indirectly, segregation 
reduces employment and educational opportunities, 
which in turn limit income and restricts housing 
choices. This reduction of housing alternatives 
renders Hispanics less able to take advantage of 
"trickle-down" housing in other neighborhoods. In 
addition, Hispanic housing options are severely 
constrained due to both financial institution choices 
which lead to investment in higher social-class areas 
and to "redlining" which limits investment in bar- 
rios. Finally, the laws of supply and demand play a 
role. If there is a large and growing demand by 
Hispanics seeking housing and a sharply limited 
supply of housing in residentially circumscribed 
barrios, then the cost of housing to Hispanic con- 
sumers tends to be higher. This pattern helps to 
explain why Hispanics pay about as much for 

housing as do whites but obtain units which are 
considerably less satisfactory. 

Federal housing programs have done an excellent 
job of providing single family housing for middle 
income families. Hispanics who disproportionately 
come from lower income households are not expect- 
ed to now live in these new homes, although they 
share the American dream of homeownership. They 
are expected to improve their housing conditions 
primarily through the trickle-down process. There- 
fore, the provision of hand-me-down housing is 
totally dependent upon the demand for housing by 
the affluent. Housing for the lower income groups, 
then, is only an indirect result of housing policy 
directed at the middle class and the construction 
industry. Housing normally does not filter down 
since residential discrimination prevents much of the 
used housing from becoming available to Hispanics 
and other minorities. Additionally, it appears that 
the preoccupation with single family residential 
units prevents the adequate provision of satisfactory 
rental units which may be within the financial 
capabilities of most Hispanics. 

The national economy is experiencing serious 
inflation and recession. While these conditions nega- 
tively affect all American families, their impact on 
Hispanics is especially severe. First, as unemploy- 
ment grows, large numbers of Hispanics in the 
secondary labor market, which is characterized by 
low skill jobs of minimal security, find themselves 
without steady income. The "last-hired, first-fired" 
truism accurately describes the marginal position of 
Hispanics in our economic system. Whereas the 
inverse relationship between income and housing 
problems is obvious, less recognized are the inflation 
created problems. Inflation, with its high mortgage 
rates, prevents the nonhomeowning Hispanic popu- 
lation from entering into the housing market because 
of the limited amount of available mortgage money. 
As interest rates increase, so do the qualifying 
criteria as well as the cash required to purchase a 
home. The end result is what can best be termed as 
"rational redlining." This completely understand- 
able attempt on the part of financial institutions to 
avoid high risk in economically unstable times 
means that the poor, many of them Hispanics, must 
bear a large and unfair proportion of the total 
economic burden. 

Two issues related to the present tax structure 
deserve comment. One deals with the collective 
implications of the tax code and the other pertains to 


the impact on individual families. At the collective 
level, local tax policy can play a significant role in 
impeding the rehabilitation of distressed neighbor- 
hoods. Unlike construction costs which can be 
amortized over a long period of time, rehabilitation 
expenditures include, in many cases, a substantial 
and immediate property tax increase which must be 
supported by higher rents. Additionally, the tax 
treatment of repairs as capital improvements and not 
as operating expenses often acts as a deterrent to 

On the individual level, the present tax structure 
prevents the deduction of property taxes and mort- 
gage interest by most Hispanics because most His- 
panics are renters. Moreover, the poor normally do 
not file itemized tax returns required to secure such 
tax advantages. 

The section 8 program does not allow Hispanic 
renters who do not wish to move the opportunity to 
upgrade the quality of their housing. Even for more 
mobile families, it imposes significant consumption 
costs since they have to seek and find appropriate 
housing which will qualify for this particular subsi- 
dy. It, therefore, presumes the possession of consid- 
erable psychic, informational, and economic re- 
sources not normally associated with low-income 
populations. This is at least partially responsible for 
the low participation rates of Hispanics in the 

Exclusionary zoning has impacted negatively on 
housing opportunities for minorities generally and 
the Hispanic community in particular. Many types 
of exclusionary land use controls have been used, 
including such devices as large-lot zoning, prohibi- 
tion of multiple family dwellings, minimum floor 
space, subdivision regulations, frontage and setback 
requirements, adult-only complexes, and the prohibi- 
tion of mobile homes. 

The result has been exclusion and the perpetuation 
of racially, culturally, socially, and economically 
homogeneous communities. Such policies have also 
exacerbated the already high cost of housing for 
Hispanics. As a consequence, new subsidized hous- 
ing has seldom been built where it is most needed in 
suburban areas experiencing the greatest expansion 
in employment opportunities for Hispanic workers. 

Hispanics are more susceptible to housing dis- 
placement than most segments of the population 
because a disproportionate number of them are 
located in low rent and declining central city 

neighborhoods. These barrios have been targets for 
redevelopment because residents, many of whom are 
poor, lacked the political or economic clout to resist 
the destruction of their neighborhoods. 

The Hispanic displacement experience mirrors 
that of blacks. A study conducted by the National 
Hispanic Housing Coalition revealed cases of His- 
panics' displacement in such cities as Phoenix, 
Arizona; Albuquerque, New Mexico; and Newark, 
New Jersey. This displacement is a result not only of 
private market action but the Community Develop- 
ment Block Grant Program and Urban Develop- 
ment Action Grant Program are prime contributors 
to the problem. In Phoenix 70 percent of displaced 
persons were Hispanics resulting from Community 
Development Block Grant Programs. 

Many Hispanics have and are experiencing dis- 
crimination in the housing market. A Department of 
Housing and Urban Development study showed that 
Mexican-Americans are discriminated against in the 
housing rental market in the Dallas area. The study 
finds that dark-skinned Chicanos encountered bla- 
tant forms of housing discrimination much more 
often than light-skinned Chicanos. The study also 
finds that, at least in the Dallas rental market, light- 
skinned Chicanos appear to encounter discriminato- 
ry treatment about as often as blacks, while dark- 
skinned Chicanos appear to encounter discriminato- 
ry treatment more often than blacks. That dark- 
skinned Chicanos in Dallas are discriminated against 
significantly more often than either blacks or light- 
skinned Chicanos is clearly the most important 
finding of the study. There are several possible 
explanations why dark-skinned Chicanos encounter 
more discrimination. 

One explanation could be that different rental 
agents discriminate for different reasons and that 
dark-skinned Chicanos, as a groups, are discrimi- 
nated against not only by agents who discriminate 
against Chicanos, per se, but also by agents who 
discriminate because of skin color. Another explana- 
tion could be that rental agents are more averse to 
renting to Chicanos with dark skins because they 
consider them to be less assimilated or of lower 
socioeconomic status than those with light skins. It is 
also possible that dark-skinned Chicanos are more 
likely to be thought of as illegal immigrants. 

It is the writer's opinion that the Dallas experience 
is not an exception to the general treatment of 
Hispanics in the housing market. 



1. Congressional Research Service, "The Hispanic Population of the U.S.: 
An Overview," Mar. 1, 1983. 

2. Bribes, R.A. and Karnig, Albert K., "Hispanic Housing," unpublished 

3. Fishman, R.P., Housing For All Under Law: New Direct in Housing. Land 
Use and Planning Law. Cambridge, Massachusetts: Ballinger, 1978. 

4. U.S., Department of Housing and Urban Development. Office of Policy 
Development and Research. Discrimination Against Chicanos in the Dallas 
Rental Housing Market. August 1979. 


Urban Revitalization or Gentrification and 

The Extent, Causes, and Consequences of Urban 

Daphne Spain* 

Urban gentrification refers to the renovation of 
deteriorated inner-city housing by young middle- 
class residents. It is a highly visible process and thus 
has attracted more media attention than its actual 
numbers may warrant. A newly painted row of 
houses in the midst of a former slum makes good 
press after decades of urban decline. "Urban pio- 
neers" were coming back to the city in the 1970s to 
create an urban renaissance (Newsweek, 1978; 
Peirce, 1978; Sutton, 1978; Williams, 1977). Implicit 
in the tone of these stories was that whites would 
come back to "save" cities from becoming more 
black. This has not happened, as later statistics will 
demonstrate. Even calling the phenomenon "back to 
the city" is a demographic misnomer because it 
suggests renovators have moved back to central 
cities from suburbs. In fact, most renovators were 
central city residents before they moved to their 
new neighborhoods (see Laska and Spain, 1980). 

The typical renovator is a highly educated white 
homeowner, middle-to-upper income, and has a 
professional or managerial occupation. He or she is 
probably part of a dual-earner household (whether 
married or unmarried) and is usually childless. The 
household the renovator replaces is harder to classi- 

fy. It may be white, black, Hispanic, or white ethnic, 
but it is undoubtedly poorer than its successor. 
Sometimes the elderly are hardest hit by changing 
housing values; sometimes renters are the first to feel 
the brunt (see Cicin-Sain, 1980; Myers, 1982; Nation- 
al Urban Coalition, 1978; U.S. Department of Hous- 
ing and Urban Development, 1979). This side effect 
of gentrification, known as displacement, has impli- 
cations for urban housing policy. This paper at- 
tempts to summarize current knowledge about gen- 
trification and displacement by describing the extent, 
some causes, and some consequences of the phenom- 

How Prevalent Is Gentrification? 

The Statistics 

The earliest and most often cited reference to a 
national trend in gentrification is the 1975 Urban 
Land Institute survey of public officials and real 
estate experts in 143 cities (Black, 1975). The survey 
found some form of private-market renovation in 
older deteriorated areas taking place in almost one- 
half of sample cities with populations of 50,000 or 
more; the proportion rose to 73 percent among cities 

• Consullant, U.S. Deparlment of Commerce. Bureau of the 


of 500,000 or over. A followup survey conducted in 
1979 indicated renovation had accelerated and was 
occurring in 86 percent of cities with over 150.000 
residents, compared with 65 percent in 1975 (Black, 

An Urban Institute study of housing and popula- 
tion trends in major metropolitan areas from 1970 to 
1975 used the Annual Housing Survey and the 
Survey of Residential Repairs and Alterations to 
measure the extent of gentrification. Analysis 
showed that for the first time in 1973-75, median 
housing values and median gross rents rose faster in 
central cities than in suburbs. There were also small 
but significant increases in homeownership in central 
cities between 1970 and 1975. During the same 
period, median home improvement expenditures by 
central city homeowners rose abruptly and actually 
exceeded suburban expenditures rates (James, 1977). 
Since housing values, homeownership, and improve- 
ment expenditures traditionally are higher in suburbs 
than central cities (U.S. Bureau of the Census, 
1981a), these shifts were taken as indicators of 
increased renovation activity in the early 1970s. 

Starting around 1977, a series of books and articles 
documenting the extent of gentrification began to 
appear on an almost yearly basis. The Urban Land 
Institute conducted another survey of renovation 
which focused on five cities (Black, et al., 1977). 
Census data of a sample of the 20 largest metropoli- 
tan areas in 1970 provided weak support for an 
increase in the number of central city, middle-class 
neighborhoods between 1960 and 1970 (Lipton, 
1977). A study using Polk City directory data for 
nine middle-sized cities found renovation in such 
places as Cincinnati, Rochester, and Milwaukee 
(Henig, 1980). A survey of public officials and 
citizen groups in the country's 30 largest cities found 
home improvements in 53 core neighborhoods 
(Clay, 1979). 

National Annual Housing Survey data for all 
central cities indicates support for "uplifting" of 
housing for the first time in the mid-1970s. Whereas 
traditional urban theory predicts that housing "filter 
down" to households of lower socioeconomic status 
(Lansing, et al., 1969; Lowry, 1960), white central 
city households were more likely to have higher 
education and income than the black households 
they replaced in 1975 than in 1967 (Spain, 1980). 

A series of case studies added details for individu- 
al cities like Philadelphia (Levy, 1978), Washington, 
D.C. (Gale, 1979; Goldfield, 1980; Henig, 1981a), 

New Orleans (Laska and Spain, 1979; Laska et al., 
1982; O'Laughlin and Munski, 1979), Boston (Au- 
ger, 1979; Goetze, 1979; Pattison, 1977), Atlanta 
(Bradley, 1978; Chernoff, 1980); Seattle (Hodge, 
1980), Columbus, Ohio (Fusch, 1980), and Charles- 
ton, S.C. (Tournier, 1980). Recently completed 
research indicates that gentrification continues to be 
highly visible in such cities as Boston (McDonald, 
1983), Nashville (Lee and Mergenhagen, forthcom- 
ing 1984), New Orleans (Laska and Spain, 1983) and 
Washington, D.C. (Lee et al., 1983). 

The Statistics in Perspective 

There is little doubt now that gentrification is 
occurring in some form in almost all large cities. But 
are the numbers of renovators large enough to offset 
years of population decline? Census statistics show 
that they are not; central cities are still losing 
population. More people continue to move out of 
cities than move in. The 1980 census recorded a net 
loss of over 7(X),000 persons (1 percent of the total) 
from all central cities in the past decade (Spain, 
1981). Table 1 shows the population loss of central 
cities at the beginning and end of the 1970s. 

One interpretation of the table is that population 
loss has at least slowed, particularly among whites. 
Although true, the changes are not statistically 
significant (U.S. Bureau of the Census, 1981b), and 
do not lend support to the image of a back-to-the- 
city movement. Part of the publicity surrounding 
gentrification was that whites were coming back to 
central cities, yet the data do not support the media 
myth. There is Ittle evidence of an increase in the 
proportion of whites in gentrifying neighborhoods 
of major U.S. cities (Spain, 1981). The proportion of 
whites replacing central city black households was a 
growing but still minor portion (4 percent) of all 
central city housing successions in the mid-1970s, 
and there was a net gain in the proportion of black- 
occupied housing units in central cities in the 1970s. 
There were still numerically and proportionately 
more blacks replacing whites than whites replacing 
blacks (Spain, 1980). From a purely demographic 
perspective, "the urban crisis has not left town." 
(See Allman, 1978). 

There appear to be continuing problems from a 
financial standpoint as well. One of the hypotheses 
regarding gentrification is that rich renovators will 
bring high incomes back into cities. On the local 
level, renovators have been shown to have incomes 
higher than the average for their cities (Gale, 180; 



Mobility of the Population Into and Out of Central Cities, by Race, 1970-75 and 1975-80 

(Numbers in millions) 







Movers out of central cities 







Movers into central cities 







Net change 







Source: U.S. Bureau of the Census, 1975: Table 1; 1981a, Table 1 

Laska and Spain, 1979; Leach, 1978). However, 
national data do not show a narrowing of the 
traditional income difference between cities and 
suburbs. To the contrary, Long and Dahmann 
(1980) found that the median income gap between 
central city and suburban families actually widened 
between 1959 and 1977. Realizing that many reno- 
vating households may not fit the Census Bureau's 
definition of a family, the authors also measured 
changes in per capita income. They found limited 
support for a smaller per capita gap between cities 
and their suburbs but concluded that, "In none of 
the 20 largest SMSA's was there evidence of 
narrowing the city-suburb income gap on both a per 
person and a per family basis." (Long and Dahmann, 
1980:20). Their conclusion was that there may exist 
"pockets of plenty" (see Nathan, 1979) in some large 
cities, but they are not yet numerous enough to raise 
overall city income in relation to suburban income. 
This review of the existing literature has docu- 
mented the extent of gentrification and attempted to 
place it in demographic perspective. But what of its 
causes and consequences? The next two sections 
address those issues. 

What Causes Gentrification? 

The Baby Boom 

The large increase in the number of household 
formations which accompanied the aging of the 
baby boom is one strictly demographic explanation 
for renewed interest in city living. Young and single 
adults traditionally have chosen cities over suburbs 
for school, job, or recreational reasons (Frey and 
Kobrin, 1982; Long and Glick, 1976). Young per- 
sons who formed their own households in the 1970s 
were thus not acting differently from previous 
generations; there were just proportionately more of 
them than in the past (Newitt, 1983). The baby boom 
cohort of 1950-55, for example, was aged 20 to 25 in 
the mid-1970s. Not only were baby boomers reach- 
ing prime household formation years at the time 
when gentrification began, but age at marriage was 
being postponed so that more single person house- 
holds were being formed (U.S. Bureau of the 
Census, 1981c). 

One theory is that the pace of gentrification will 
slow as the baby boom ages (Newitt, 1983). Another 
theory is that renovators will leave the city for the 
suburbs when they begin to have children. Yet 


studies in at least two cities report a sizeable 
proportion of renovating households with school- 
age children (Laska and Spain, 1979; McDonald, 

Historic Preservation 

The Bicentennial celebration in 1976 gave the 
historic preservation movement a big boost. Ameri- 
cans were reminded of the value of their heritage, 
and old houses were one tangible artifact that could 
be salvaged. The first spotty efforts at renovations 
preceded the Bicentennial by almost 10 years, yet 
the mood of the country was more receptive to 
genetrification in the 1970s. Whereas the 1960s were 
characterized by urban renewal that demolished 
many old neighborhoods, the 1970s were marked by 
a preservation effort. 

Designation of a building as an historic landmark 
often serves as a catalyst from which private 
renovation proceeds. Cities like Alexandria, Virgin- 
ia; Savannah, Georgia; and Charleston, South Caro- 
lina have experienced extensive residential rehabili- 
tation after developing historic districts (Tournier, 
1980; Williams, 1980). The Urban Land Institute 
survey mentioned earlier found that 65 percent of its 
sample cities experienced renovation in historic 
areas (Black, 1975). 

Many renovators cite the architectural quality of 
old houses as among the reasons they choose city 
living. Real plaster walls, hardwood floors, high 
ceilings, fireplaces, and original ornate mouldings 
are features that cannot be purchased in newer 
suburban homes. The fact that extensive (and expen- 
sive — sometimes exceeding the original cost of the 
house) repairs have to take place before these 
qualities are restored are part of the charm of the 
renovation experience. The Realtor's term "handy- 
man's dream" took on new meaning in the heyday of 


The neighborhoods in which most gentrification 
occurs are within 2 to 3 miles of the central business 
district (CBD) (Lipton, 1977; Spain, 1981), or near 
mass transit that makes the CBD easily accessible. 
Some renovators prefer to walk to work (McDon- 
ald, 1983). 

Many large cities have lost employment to their 
suburbs (Black, 1978), but there is evidence that 
downtown office space increased between 1970 and 
1975 and that service and government employment 

expanded (Black, 1978; Myers, 1982). Capital cities 
such as Washington, D.C., Atlanta, Georgia, and 
Boston, Massachusetts often provide the stable 
white-collar employment characteristic of renova- 

A central location and high proportion of white- 
collar jobs make it esier for two-earner households 
to work and live in the same area. The proportion of 
women in the labor force grew rapidly in the 1970s 
and was accompanied by a decline in fertility (Spain 
and Bianchi, 1983). Households without children 
have a greater proportion of disposable income to 
spend on housing. Although one income might have 
been sufficient to buy an empty shell at the begin- 
ning of the decade, by the end of the 1970s two 
substantial incomes were usually needed to finance 
the elegantly renovated townhouse off Dupont 

Urban Amenities 

"Amenities" encompass a wide variety of factors 
that go into the decision about where to live. Urban 
amenities include such things as good theater, 
museums, and libraries. The advantages of a wide 
variety of cultural activities are usually mentioned 
first, but urban amentities can also include good 
restaurants, shopping, parks, playgrounds, and hos- 
pitals. Many renovators have listed easy access to 
such goods and services as reasons for their choice 
of city over suburb (Laska and Spain, 1979; McDon- 
ald, 1983). Some of the "disamenities" include fear 
of crime (Gale, 1980; Laska and Spain, forthcoming 
1983; McDonald, 1983), but renovators seem willing 
to cope with such problems. 

Gentrification has had both positive and negative 
consequences. The benefits are often most visible 
from a city's appearance, while the costs tend to 
accrue to displaced individuals. 

Consequences of Gentrification 

Consequences For Cities 

Most tourists would agree that cities are prettier 
to look at now than 10 or 20 years ago. Blocks of 
slum or abandoned housing have been converted to 
stylish townhouses. Rundown waterfronts and old 
produce stalls have been developed: Harborplace 
(Baltimore) and Faneuil Hall (Boston). Referred to 
by one ascerbic observer as "the butcher-block and 
ferning of America," gentrified neighborhoods tend 
to share a certain common appearance. 



Local officials were initially optimistic that higher 
income households might strengthen the city's finan- 
cial base. By replacing "dependent" citizens with 
"productive" ones, the tax coffers would be en- 
larged. Existing evidence suggests this has not 
occurred, however. In Washington, D.C., for exam- 
ple, property assessments rose by 150 percent be- 
tween 1977 and 1981, yet taxes increased by only 49 
percent (Myers, 1982). 

A further complication is that renovators often 
demand more than their predecessors in the way of 
city services. Once the property is improved, new 
homeowners want regular trash pickup, well main- 
tained roads, and good police and fire protection 
(Laska and Spain, 1979). Low-income residents 
undoubtedly want the same services but have less 
political clout with which to achieve their prefer- 

One question associated with gentrification is how 
it will affect racial residential segregation. It might 
lower segregation if whites move into black neigh- 
borhoods or it might raise segregation if whites 
displace blacks completely. Little empirical work 
has been done on this issue. Ten cities with high 
visible gentrification experienced black population 
losses inconsistent with black gains in other cities. In 
1970, 52 percent of blacks living in these 10 central 
cities lived within 3 miles of the central business 
district; by 1980 that figure had declined to 43 
percent. In contrast, about one-third of central city 
whites lives near the CBD at both dates. The rates of 
black deconcentration was, therefore, greater that 
the rate of white deconcentration (Spain, 1981). 

Since the 10 sample cities had large proportions of 
blacks, a decrease in the proportion black and 
stability in the proportion white should result in 
decreased levels of segregation (Taeuber and Taeu- 
ber, 1965). Recently completed research on Wash- 
ington, D.C., supports this hypothesis. An examina- 
tion of census block and tract data indicated that 
between 1970 and 1980, "the revitalizing core of the 
city became substantially whiter and less segregated, 
consistent with the displacement and, temporarily, 
the integration hypothesis." (Lee et al., 1983:24). 
The temporary nature of the decline in segregation 
is stressed because these neighborhoods may still 
have been in transition in 1980; there is no way to 
know whether they will eventually become more 
white and more segregated. 

The consequences of population change, whether 
racial or ethnic, have resulted in conflict in some 

transition neighborhoods. Newcomers want to re- 
store old housesto their original appearance, while 
oldtimers have worked hard to modernize their 
houses with aluminum siding (Levy, 1978). Parking 
suddenly becomes a problem when two-car house- 
holds move in and youngsters don't have access to 
the same turf they once did (Levy and Cybriwsky, 
1980). Even businesses change in character, from 
mom and pop stores and corner bars to boutiques 
and quiche restaurants (Chernoff, 1980). This "clash 
of cultures" reflects differing definitions of what a 
neighborhood should be. 

The economic benefits generated by places such 
as Detroit's Renaissance Center (RenCen), Atlanta's 
Plaza, and Baltimore's Harborplace are hard to 
assess. They have attracted private investment and a 
large number of visitors. But they have received 
varying degrees of positive press. Harborplace, as 
one of the newest efforts, is popular now, but so was 
RenCen in its day. Rumors of high vacancy rates, 
deserted shops, and dangerous corridors raise the 
suspicion that the Renaissance Center may be the 
Pruitt-Igoeof the 1980s. 

The economic benefits of gentrification for cities 
may not be immediately evident. What is more clear 
is that gentrification can have very abrupt effects on 
individuals who are displaced. 

Consequences For People. 

Although not much easier to measure than eco- 
nomic development, displacement seems to occur 
almost immediately in the wake of gentrification. 
Published reports of the problems associated with 
displacement began to appear simultaneously with 
those applauding the urban revival. Preservation 
News (March 1978) was one of the first to ask, "Is 
Preservation Bad for the Poor?". A brief review of 
the literature on displacement uncovered at least 16 
other publications in 1978 and 1979 (Cybriwsky and 
Levy; Dolbeare; Eckert; Gale; Grier and Grier; 
Hartman; Kollias; National Urban Coalition; Savings 
and Loan News; Schnare; Seller/Servicer; Sternlieb 
and Ford; Sumka; Washington Urban League; Weil- 
er; Zeitz). Such widespread public concern was 
instrumental in generating the U.S. Department of 
Housing and Urban Development's interim Displce- 
ment Report by February 1979. 

The HUD report summarized the difficulties 
associated with research on displacement but failed 
to reach a conclusion about the number of people 
affected. Estimates from their own Annual Housing 


Survey were that more than 500,000 households 
nationally were displaced by private and public 
action each year between 1974 and 1976, the largest 
proportion of whom were central city residents 
(U.S. Department of Housing and Urban Develop- 
ment, 1979). Fourteen percent were displacement by 
government action and the remaining 86 percent by 
private action (Meek, 1978). This means that approx- 
imately 430,000 households were displaced annually 
by private action between 1974 and 1976. The HUD 
Report estimated that all displaced households ac- 
counted for only 4 percent of the 14 million recent 
movers between 1974 and 1976. 

An updated report to Congress placed the number 
of displaced persons between 1.7 and 2.4 million in 
1979 (U.S. Department of Housing and Urban 
Development, 1981). If we divide the number of 
persons by average household size (2.8 in 1979), the 
number of households displaced in 1979 was 607,000 
to 857,000, or almost double what it was at the 
middle of the decade. 

The HUD report included estimates from the 
Griers' "reconaissance" of displacement in 22 major 
cities. Their definition of displacement included 
involuntary moves beyond the household's ability to 
control despite the household's compliance with 
requirements of tenancy, and/or those moves caused 
by hazardous or unaffordable conditions (U.S. De- 
partment of Housing and Urban Development, 
1979:5). This definition resulted in estimates of 100 
to 200 households displaced annually in each city 

In-depth case studies place the numbers of dis- 
placed much higher than the figures cited by HUD. 
LeGates and Hartman (1982) report that 2,000 to 
7,000 persons per year have been displaced in 
Denver, New Orleans, Portland, and Seattle since 
the mid-1970s. Their own national estimate is that 
"total annual displacement in the United States is 
approximately, and conservatively, 2.5 million per- 
sons." (LeGates and Hartman, 1982:53). 

There are several reasons for the lack of agree- 
ment in the numbers of people displaced by renova- 
tion. The first is purely definitional. Is an older 
person who has watched his neighborhood decline 
over 30 years "displaced" when a renovator offers 
to buy his house at a good price? Not as clearly as 
when a low-income renting household has to leave a 
multifamily dwelling because it has been sold to a 
real estate speculator. In some cases displacement 
may precede renovation, particularly if maintenance 

of housing and neighborhoods has suffered years of 
neglect and resulted in high vacancy rates. 

However, probably the most compelling reason 
for the lack of good data is the difficulty of tracing 
displaced households. A few researchers have man- 
aged it in places like New Orleans (Rosenberg, 1977) 
and Boston (Pattison, 1977), and the Panel Study of 
Income Dynamics of 5,000 households has been used 
to attempt national estimates (Newman and Owen, 
1981), but no survey or census adequately follows 
displacees at the national level. 

Given the difficulties associated with measuring 
displacement, there can be no definitive answer to 
the question of how many people are affected. It 
should not be surprising, therefore, to find that it is 
equally difficult to describe the type of household 

The only consensus seems to be that elderly 
households experience a high risk of being displaced 
(Eckert, 1979; Henig, 1981; LeGates and Hartman, 
1982; Myers, 1982; Rosenberg, 1977; U.S. Depart- 
ment of Housing and Urban Development, 1979). 
There is less agreement on almost every other 
demographic characteristic. 

For example, there is a common assumption that 
whites displace minorities, yet there is mixed evi- 
dence on the issue. Blacks have not been affected in 
neighborhoods that were predominantly white eth- 
nic before gentrification occurred. These include the 
Irish Channel and Lower Garden District in New 
Orleans (Rosenberg, 1977), Queen Village and Fair- 
mont in Philadelphia (Levy and Cybriwsky, 1980), 
and Inman Park in Atlanta (Bradley, 1978; also see 
Henig, 1980). At least two studies have found 
increases in black occupancy rates in gentrifying 
neighborhoods (Lee and Mergenhagen, forthcoming 
1984; O'Laughlin and Munski, 1979). Still others 
have found definite evidence of a decline in the 
black population in renovating areas (Clay, 1979; 
Tournier, 1980; Washington Urban League, 1979; 
Zeitz, 1979). 

Renters, those with low incomes, female-headed 
households, and blue-collar households are also at 
risk of being displaced (Clay, 1979; LeGates and 
Hartman, 1982; U.S. Department of Housing and 
Urban Development, 1979; Washington Urban 
League, 1979). There might be exceptions to these 
categories in any one city, but the common denomi- 
nator among those at risk of displacement is power- 
lessness in the face of market forces. Some house- 
holds displaced by renovation in the 1970s appear to 


have been displaced by urban renewal a decade 
earlier (Nager, 1980; U.S. Department of Housing 
and Urban Development, 1979). Whether subject to 
public or private action, poor, elderly, and minority 
households have fewer resources with which to 
exercise their housing choices. 

Various studies have shown that displaced house- 
holds move only short distances and thus may be 
subjected to repeated displacement (Cicin-Sain, 
1980; Rosenberg, 1977; U.S. Department of Housing 
and Urban Development, 1979). Involuntary moves, 
even from a neighborhood defined as a slum, take a 
psychological toll. Urban renewal in the West End 
of Boston forced the displacement of several hun- 
dred households, disrupting the social network of 
family and friends. Fried (1963) found that these 
people were "grieving for a lost home" that outsid- 
ers could not understand. The social and psychologi- 
cal consequences are even more difficult to measure 
than the numbers or types of households displaced, 
but they are often the only conseqences that matter 
to those involved. 

Summary and Conclusions 

Gentrification is taking place in some neighbor- 
hoods of almost every city in the country. National 
surveys, census data, and case studies all verify that 
the socioeconomic status of renovating neighbor- 
hoods has increased in the last 10 years. These are 
encouraging signs after decades of urban decline. 
However, optimism for the future must be tempered 
with the reality of numbers. Central cities are still 
losing population, and there is no hard evidence that 

whites are coming back to the city in significant 

Displacement of households has been one of the 
costs of gentrification. Just as the number of renova- 
tors appears to be a overestimated, the number of 
displaced households is only a small proportion of 
all movers. However, displacement affects a 400,000 
to 800,000 households annually, and appears to be a 
growing problem. This many households include 1.4 
to 2.4 million persons. Their housing and social well- 
being should not be ignored since they are charac- 
teristically households with the fewest resources. 

What of the future of gentrification? Inflated 
housing prices and the difficulty of getting mort- 
gages had slowed the rush of renovation by 1980. 
Some analysts think it is an urban issue of the 1970s, 
not of the 1980s. But the long-lasting effect of 
gentrification, and the sense in which it is symboli- 
cally a movement back to the city, is that a decade of 
positive press had made people reconsider cities as 
good places to live. 

People of all ages are probably more likely now to 
at least consider living in cities rather than immedi- 
ately rejecting them for the suburbs. Gentrification 
may prove to have been the product of baby-boom 
housing preferences combined with suitable housing 
and income sufficient to fulfill those preferences. But 
if it reintroduced the advantages cities have to offer, 
it will have served a useful purpose. Some people's 
tastes will have been permanently changed. After 
all, they're not building any more 19th century 
townhouses, and people who want them will con- 
tinue to look to the city. 



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Urban Revitalization or Gentrification and Dislocation? 

George R. Genung, Jr.* 

I am pleased to have been selected by the U.S. 
Commission on Civil Rights to prepare this paper as 
my 30-year professional career in housing and 
community development has been intrinsically 
linked to urban revitalization and dislocation. My 
paper is written after experiencing "hands on" 
relocation activities and policy-related responsibility 
at the local level in addition to policy and program 
development and review at the national level. 

I have relocated displacees from New York City 
public housing sites in Harlem. I have supervised the 
relocation activities of urban renewal redevelopers 
from the New York City Committee on Slum 
Clearance. I was on the Relocation and Racial 
Relations staff of the Urban Renewal Administration 
in the Housing and Home Finance Agency (HHFA, 
now HUD), New York Regional Office. As execu- 
tive director of the East Orange, N.J. Redevelop- 
ment and Housing Authority for 10 years, I oversaw 
the relocation of families and businesses from 3 
urban redevelopment sites and 3 public housing sites. 
The Authority contracted with the New Jersey 
State Highway Department to perform the reloca- 
tion of families and businesses in the path of a 
Federal highway that passes through the center of 
the community. 

I thoroughly understand the problems of dislocat- 
ed families and businesses and am proud of my track 
record for effectively dealing with their needs. I also 
understand the problems of those persons responsi- 
ble to see that they are adequately provided for 
within the limitations of available resources. 

In 1970 I moved to Washington as I accepted a 
professional staff position with the National Associa- 
tion of Housing and Redevelopment Officials 
(NAHRO). I had the responsibility for working on 
these and other related issues at the national level. 
Since 1978 I have been on the staff of the National 
Association of Home Builders, where I have had 
staff responsibility for urban revitalization issues. I 
understand the national policy issues that pertain to 
urban revitalization and dislocation and am prepared 
to share with you the benefit of my experience. 

Dislocation has been a problem of significant 
concern for the past 50 years. It has impacted 
primarily upon the poor, minorities, the elderly, and 
female-headed families, who have been primarily 
renters. Before we can look at the problem in the 
1980s, we should first track the critical path that 
local and national government has taken to deal with 
displacement. What have we learned from the past 
that should be applied to the future? What resources 
exist to assist with the dislocation problems of 

Public Housing Dislocation 

In the 1930s the Slum Clearance and Public 
Housing Act was passed by the Congress. It is 
designed to bring about the demolition of substan- 
dard buildings and replace this inadequate housing 
with low-rent public housing units. The replacement 
housing is designed and built by local housing 
authorities using tax-exempt bonds for its financing. 

During the first two decades of the public housing 
program, little direct attention was given to the 
dislocation problem. Those families who qualified 
for admission to a public housng project were given 
a top priority for vacancies in existing developments 
or to return to the new units when they were 
completed. Many persons did not qualify for admis- 
sion because they were single, had not achieved ] 
citizenship, made too much income, were living out 
of wedlock, had a prison record, or had undesirable 
social habits, etc. These dislocatees were requested 
to relocate themselves. 

Past studies have indicated that many of the 
ineligible displacees moved to other substandard 
housing nearby. Often they were forced to accept 
overcrowded conditions and higher rents. Those 
who could not find new housing were often relocat- 
ed by the housing authority to other buildings on the 
site with a later schedule for demolition. When they 
needed to be demolished, the dislocatees were often 
relocated to other slum clearance sites in the 

In large cities there emerged a group of nomads 
who kept moving from site to site. This group 

• Assistant Staff Vice President, National Assocation of Home 


included a high percentage of minorities and elderly 
who quickly developed a sense of no hope. The low- 
income housing for the elderly program was not 
adopted until many years later. Discrimination in 
housing limited the availability of housing vacancies 
for minorities and the poor who were ineligible for 
public housing. 

Many displacees could not afford the cost of 
moving or available new rents. Some stopped paying 
rent, abandoned their housing unit and furnishings, 
and either moved in with friends or relatives or 
became "street people." Only those who could 
afford available private rental units or relocated into 
public housing were able to escape the effects of 
dislocation as slum clearance families. 

Urban Renewal Dislocation 

After World War II an acute national housing 
shortage and the public policy to redevelop our 
major cities brought about an expansion of family 
and business dislocation. The Housing Act of 1949 
ushered in the urban redevelopment program. It was 
deigned to clear slum areas and redevelop them with 
higher and better land uses. This program grew 
quickly, as illustrated by the city of New York 
undertaking 10 initial projects which required the 
displacement of several thousand families. This 
statute contained a unique provision that required 
the relocation of displacees and the payment of their 
moving expenses. This gave birth to the formal 
process of relocating families and business as we 
know it today. 
,'j Under the urban renewal planning process the 

'' local government was required to identify in its 
application to Housing and Home Agency (HHFA) 
the characteristics of families who would require 
relocation. This included size, financial capacity, 
housing type, location, etc. It was also necessary to 
deal with the special problem facing minorities. It 
was then necessary to establish that there would be 
adequate housing resources in the existing supply to 
meet all of the relocatees need. If this could not be 
done then the locality had to show that additional 
housing would be built to meet this need. 

In addition to establishing relocation feasibility, it 
was also necessary for the locality to develop a 
formal relocation plan that dealt with the adminis- 
tration of the relocation program. A typical plan 
provided for a relocation office in the clearance area 
that was staffed by a director and sufficient assistants 
to handle the anticipated volume. The staff was also 

responsible for the satisfactory management of the 
acquired properties until they became vacant and 

The relocation staff was responsible for actually 
working as social case workers who identified each 
family's needs and worked closely with them until 
they were safely relocated into a satisfactory hous- 
ing unit. In cases of emergency, families were 
located to other housing units on the clearance site. 
In all cases their relocation expenses were paid. 
Although this process did not always work perfect- 
ly, it was a vast improvement over the hands-off 
approach that had been used on public housing sites. 
The press liked to blow up any horror stories it 
could find and spent little time reporting on the 
many sound responsible relocation programs that 
took place across the country. 

Relocation was not always performed by the staffs 
of local government. In New York City, for exam- 
ple, it was the responsibility of the redeveloper. 
Under that program redevelopment sites were ac- 
quired by the city under a blanket condemnation 
procedure and immediately sold to the redeveloper. 
As a part of the sales contract, the buyer assumed 
the responsiblity for meeting all of the relocation 
requirements of the approved relocation plan. Sever- 
al relocation real estate firms were formed which 
specialized in urban renewal relocation. They con- 
tracted with the redevelopers and carried out the 
relocation plan. The city provided on-site inspection 
staff to see that this work was done satisfactorily. 

In the late 1950s when the urban redevelopment 
process was expanded to include rehabilitation and 
conservation areas, it was renamed urban renewal. 
The rehabilitation of older buildings in the surround- 
ing neighborhood provided a ready relocation re- 
source for some displaced families. Lower income 
families often could not afford the new rents in these 
refurbished buildings. This was later overcome to a 
degree with the advent of the HUD rental assistance 
programs, section 23 and later, section 8. 

As a requirement for urban renewal program 
funding, each community was required to develop a 
"workable program." This required the community 
to make a complete study of all its relocation needs. 
Dislocation by code enforcement, highway con- 
struction, private development, and nonrenewal 
public improvements had to be evaluated. A plan for 
the development of needed new housing was re- 
quired, as well as careful consideration to the special 
relocation problems of minorities, very low income, 


and the elderly. The workable program concept 
required local communities to deal with the reloca- 
tion problem in its totality. When these programs 
were conscientiously carried out, the process of 
effectively dealing with the total dislocation prob- 
lem was vastly improved. 

Several large communities established a central 
relocation service to approach the dislocation prob- 
lem in total. These agencies provided assistance on a 
communitywide basis and served as a catalyst for the 
development of new housing resources to meet the 
anticipated relocation needs. Although the need for 
relocation is down somewhat from the highs of the 
1960s and early 1970s, a number of these central 
relocation agencies are still functioning today. Some 
continue to function in order to meet the require- 
ments of State and local legislation. 

Problems of Minorities 

The problems related to dislocation and gentrifi- 
cation during this early period were more serious for 
minority families. Prior to the enactment of Federal 
and State fair housing laws and even thereafter, 
many minorities were denied the right to rent or buy 
housing in certain neighborhoods. Although the 
process of relocation served to eventually open up 
many of these areas, the process of locating a new 
home was a difficult one. Landlords often charged 
higher rents to minorities because they had to find 
housing in a much tighter housing market. They 
were victims of supply and demand. It, therefore, 
became the responsibility of the relocation agency to 
work for the increase of housing for the minority 
community. This was slowly achieved in many 
areas, and the result was often the gradual abandon- 
ment of these neighborhoods for the suburbs by their 
former occupants. 

The problem of the minority family in relocation 
was twofold, both racial and economic discrimina- 
tion. It was doubly hard to find a decent, safe, and 
sanitary unit at a rent they could afford that was 
reasonably accessible to their place of employment. 
Some wound up in overcrowded conditions and 
paying higher rents. Adequate housing was found 
for many others. In the initial stages of relocation in 
the 1950s and 1960s, the chief problem was racial 
discrimination. As racial acceptance grew through 
the 1970s and inflation grew rapidly, the chief 
problem had now become affordability. Many mi- 
norities simply cannot afford the cost of adequate 
housing, even though they would not be prohibited 

from renting or buying. On the other hand, the 
emergence of a large minority middle class in the 
1970s has broken many of the racial barriers that 
existed in our housing markets, as they have over- 
come economic discrimination barriers. 

The common thread that has existed throughout 
the 50-year relocation process is that poor people 
cannot afford to pay the price for decent standard 
private housing. The supply of subsidized and 
assisted standard housing is still not adequate to fully 
provide for our lower income population. 

Uniform Relocation Act 

The Congress adopted the Uniform Relocation 
Assistance and Real Property Acquisition Policies 
Act of 1970 to mandate uniform relocation require- 
ments for all Federal and federally assisted pro- 
grams. It requires and directs the heads of Federal 
agencies to consult together to establish uniform 
procedures for the administration of relocation 
activities across all the Federal programs. Each of 
the Federal agencies have published similar regula- 
tions in the Federal Register which have improved 
the consistency of treatment of affected property 
owners and displaced persons. Although the pro- 
grams of the Department of Housing and Urban 
Development (HUD) and Department of Transpor- 
tation (DOT) have traditionally been the chief 
source of dislocation it is essential that all persons 
being displaced by Federal programs be given equal 
treatment under the law. 

These uniform regulations are very comprehen- 
sive and some of their provisions require that. . . 

1. owners be offered just compensation for their 

2. owners and renters be charged fair rent until 
they are relocated. 

3. there be fair appraisal practices used to estab- 
lish property value. 

4. a comparable replacement dwelling be pro- 

5. replacement dwellings be within a person's 
financial means. 

6. property negotiations be conducted in a for- 
mal manner. 

7. the dislocation agency must establish reloca- 
tion feasibility and develop a satisfactory reloca- 
tion program. 

8. a notice of relocation eligibility be served on 
every occupant. 


9. there be an availability of comparable replace- 
ment dwellings before displacement. 

10. there be provided a relocation assistance 
advisory service. 

1 1 . there be a 90-day notice to vacate after 
suitable replacement housing has been made avail- 

12. moving expenses be paid for actual moving 

13. replacement housing payments be made for 
1 80-day homeowners. 

14. rental assistance payments be made for a 4- 
year period. 

I believe the present regulations to be fair and 
reasonable when properly administered. Certainly, 
we have come a long way from the days where 
people were just asked to moved for the public 

Recognizing that everything can be improved 
upon, the Congress has been considering proposed 
amendents offered by HUD to the Uniform Reloca- 
tion Act that would make the program more 
acceptable. The proposed 1983 amendments would: 

1. Reduce administrative burdens on State and 
local governments by establishing one lead Feder- 
al agency, which would write a single uniform 
regulation; delegate substantial administrative 
powers to the State for more flexibility to meet 
local needs and to allow States to develop their 
own implementing regulations. 

2. Broaden coverage to promote greater fairness 
and equity. 

would include persons displaced from federally 
funded rehabilitation programs, 
would include persons displaced by private 
entities that have been granted the power of 
eminent domain. 

create an entitlement for businesses and non- 
profits, up to $10,000, to help them reestablish 
at the new site. 

3. Raise payment ceilings to compensate for 

remove dislocation allowance ceilings for indi- 

raise maximum homeowners payment from 
$15,000 to $22,500. 

raise maximum tenant payment from $4,000 to 

raise business payment ceiling, in lieu of moving 
expense, from $10,0(X) to $20,000. 

4. Provide language clarification to improve 
administration in areas of: 

mortgage interest rate differential. 

allow property to be donated to Federal Gov- 

allow for public utility compensation. 

direct HUD Secretary to give high priority 

under federally assisted housing programs to 

displaced families. 

improve definition of "acceptable replacement 


protect against persons moving into an eligible 

area in order to obtain benefits. 
Certainly, any or all of these recommended changes 
will strengthen and improve the relocation process. 
I personally hope the Congress sees fit to adopt them 
in this session. 

Community Development Block Grant Program 

In the mid-1970s the HUD urban renewal pro- 
gram was phased out in favor of the community 
development block grant (CDBG) program. The 
level of Federal involvement in the planning and 
implementation of urban revitalization at the local 
level has been greatly reduced. Although the Uni- 
form Relocation Act is in full force and effect, the 
workable program concept no longer exists. 

Local governments are still being required to meet 
their relocation responsibilities, however, there are 
very limited resources at the national level to 
monitor this activity. It has, therefore, become a 
matter of local responsibility. HUD and the other 
Federal agencies are in a position of responding to 
complaints against poor program administration. 
Very often the poor do not know how and to whom 
to complain. It is, therefore, not easy to get up-to- 
date readings on the state of the art. 

Congress Directs a Displacement Report 

In response to concerns expressed about gentrifi- 
cation and dislocation problems in some of our 
major cities, the Congress in the Housing and 
Community Development Act of 1978 directed 
HUD to: 

1. Report on the nature and extent of displace- 

2. Submit recommendations for the formulation 
of a national policy both to minimize involuntary 
displacement under HUD programs and to allevi- 
ate the problems caused by displacement due to 


publicly and privately financed development and 


In February of 1979 HUD submitted an interim 
displacement report to the Congress in response to 
that mandate. It highlighted the problems of defin- 
ing and measuring the extent of displacement, 
presented some limited available data on the number 
of displacement related moves, discussed causes for 
displacement (especially private revitalization, disin- 
vestment and government programs), and discussed 
relocation assistance under Federal programs. 

The HUD report focused on the issue of displace- 
ment as a by-product of the development and 
rehabilitation of urban neighborhoods. It summa- 
rized the limited information available on the char- 
acteristics of "in-movers" and "out-movers" in case 
studies of revitalizing neighborhoods. In-movers 
tended to be white young professionals, who are 
single, or have small families. Out-movers generally 
were elderly households, minority households, and 
renters. The out-movers generally had fewer re- 
sources to compete within a costly and increasingly 
competitive housing market. 

HUD recognized that displacement is a serious 
problem in some areas of major cities and is having 
substantial impact on the neighborhoods and indi- 
viduals involved. They stated that public policy 
must seek to eliminate the adverse effects of revitali- 
zation and reinvestment on those with the least 
resources to cope with increasingly competitive 
housing markets. They called upon local govern- 
ments to develop overall community development 
strategies which achieve a constructive balance 
between revitalization and the housing needs of 
existing residents. In effect, they are calling for the 
reestablishment of a "workable program." 

Displacement can be a traumatic experience for 
any family, but it is especially difficult for lower 
income families whose housing choices are con- 
strained by their income and by an inadequate 
supply of decent housing in a tight housing market. 
If the family must move far away to find decent, 
affordable housing, loss of neighborhood ties and 
familiar surroundings can create a sense of deteriora- 
tion, which may have long-term effects. 

While the data available to HUD suggests that 
highly-publicized, intensive displacement occurring 
in many specific neighborhoods may not be a 
national phenomenon, trends suggest that the gener- 
al position of low- and moderate-income households 
in the housing market is likely to worsen in the 

future. The continued reduction in the supply of 
available low and moderate cost housing due to 
abandonment and disinvestment has further reduced 
the housing alternatives of those who are displaced 
as a result of reinvestment. The consequence of these 
trends will be most unfortunate if a more concerted 
effort is not made to preserve and expand the supply 
of decent housing available to low- and moderate- 
income households. 

Reinvestment represents a dilemma for those 
concerned about cities and their residents. Does 
revitalization have to impact adversely on the poor, 
the elderly, and minorities? Should it be slowed or 
stopped when it does? How can the hardships to 
disadvantaged displacees be minimized? 

Several factors play a role in stimulating reinvest- 
ment in older residental areas occupied by lower 
income households. Some conditions are specific to 
a given city, such as the existence of attractive, 
reclaimable housing stock and the location of em- 
ployment centers as has been evidenced in Washing- 
ton, D.C., over the past decade. Others are the local 
manifestations of national, social, and economic 
trends such as the rising number of households and 
smaller families, concern about energy and transpor- 
tation, etc. 

The effect of revitalization on lower income 
families is directly related to local conditions. In- 
come levels, whether they own or rent, the availabil- 
ity of affordable, decent replacement housing for 
those persons forced to move are especially impor- 
tant. The displaced family is usually the one with the 
least resources to compete in a competitive housing 
market. Again the key groups affected are minori- 
ties, lower income families, the elderly, and female- 
headed households. The degree of hardship is, 
therefore, directly related to the housing market and 
the adequacy or inadequacy of the supply of decent, 
safe, and sanitary rental housing for low- and 
moderate-income families. 

The new attraction of center city housing has 
generated secondary forces that are further increas- 
ing its appeal. For example, reports of windfall 
appreciation contribute to the attractiveness of 
urban homeownership. Media coverage of the "re- 
birth of neighborhoods" softens anti-urban attitudes 
and contributes to the erosion of traditional fears 
about inner-city neighborhoods. Many cities which 
have had little reinvestment activity recently may 
well be ripe for a return to the central city 
movement. This would certainly have a significant 


impact on the present residents and exacerbate the 
problems of dislocation. 

Condominium Conversions 

The increased rate of condominium conversions is 
a visible outgrowth of the present market trends. 
Significant displacement from these conversions has 
taken place in major cities, such as Philadelphia, 
Chicago, San Francisco, and Washington, D.C. A 
recent HUD study of these trends indicates that the 
pressure for converting rental units to condominium 
or cooperative housing occurs or will occur in urban 
areas with the following characteristics: 

1. Available land for new development is scarce. 

2. High single family home prices. 

3. High cost residentially zoned land. 

4. Development obstacles, such as sewer mora- 

5. Militant tenant group in a rental apartment. 

6. Good quality rental projects exist in housing 

7. Rent control is in effect or in process. 

8. Conversion regulations don't exist or aren't 

Resident displacement was found by the study to 
be the most serious problem of a conversion. Its 
degree of seriousness is related to the availability of 
housing alternatives, the needs of the displacees, and 
the time given to relocate. 

The study concluded that the tenants most affect- 

' ed by displacement are those who would find 

relocating difficult under any conditions. Again, this 

i group would include low- or fixed-income tenants — 

"' the elderly and minorities — and also, long-term 

renters who are tied to that neighborhood. The 

tenant displacement problem is likely to occur in any 

community where the conditions exist to motivate 

conversion and is an unfortunate byproduct of the 

conversion process. 

HUD Residential Displacement Update 

The Housing and Community Development Act 
of 1980 required HUD to "continue to study 
involuntary displacement and its effect." HUD 
advertised for recent studies in the Federal Register 
and received 50 responses to its notice. After an 
analysis of these studies in conjuction with existig 
HUD research, the following conclusions were 
made on the incidence of displacement: 

1. The incidence of displacement is not large at 
the national level. In 1979 between 0.8 and 1.1 

percent of the U.S. households, 1.71-2.4 million 
persons, were displaced by private activity that 

2. The incidence of displacement was in larger 
cities and neighborhoods experiencing revitaliza- 

3. Of households that move, the percentage that 
are displaced is substantially greater in revitalizing 
cities and neighborhoods than nationally. 

In the HUD study they have addressed two 
separate but related issues with regard to the 
characteristics of displaced households, the types of 
households disproportionately affected by displace- 
ment, and the household characteristics most strong- 
ly associated with being displaced. They have 
concluded that: 

1. Displacement disproportionately affects mi- 
norities, low-income households, female-headed 
families, and renters. These households are often 
overrepresented among displacees in comparison 
with nondisplaced movers. (Note: The finding did 
not include the elderly, which I believe must be 

2. Household with high housing cost burdens, 
short-term occupants, living in or close to the 
central city of an SMSA receiving welfare, having 
low levels of education, and with young heads of 
household are most susceptible to displacement. 
Minorities are especially vulnerable to the degree 
that they have these characteristics. 

Of particular interest in HUD's findings are their 
determinations on the "effects of displacement." 
They bear directly on the purpose of this consulta- 
tion. They have concluded that: 

1 . Displacees tend to move short distances. 

2. There was strong evidence of repeated dis- 
placement by some of the families. 

3. Displaced households experience significant 
increases in crowding and housing cost burden. 

4. Older displacees and the lower income experi- 
ence greater increases in crowding than similar 
households who are not displaced. 

5. The effect of displacement on specific house- 
holds is not always predictable. (Note: I would 
attribute this conclusion to the variations that exist 
in the local relocation housing markets.) 

Annual Housing Survey (AHS) 

The U.S. Department of Commerce, Bureau of 
the Census, is another source to consider in evaluat- 
ing dislocation and its impact. It has modified its 


Annual Housing Survey to improve its estimates of 
the extent of private market-induced displacement. 
Rather than lump moves into a single category, they 
are now broken down as found in table 1. 

Through these modifications the AHS has identi- 
fied an increased in the incidence of displacement. 
Preliminary results from the 1979 AHS indicate that 
displacement resulting from private activity (includ- 
ing greatly increased housing costs) affected be- 
tween 0.8 and 1.1 percent of all households and from 
4.5 to 5.7 percent of all movers. This is equal to 
between 600,000 and 850,000 households or from 1.7 
to 2.4 million individuals. The single most important 
reason is the cost of housing or affordability. 

What Has Been Learned from 50 Years of 

The most prominent factor that stands out in our 
critical path of displacement activity during the past 
50 years is that nothing changes. The types of 
problems related to relocation are neither new nor 
have they changed significantly. What has changed 
is the people and the factors that cause the disloca- 
tion. It is safe to conclude that there has been a 
subtle shift from the public sector to the private 
sector. Although goverment programs were the 
predominant cause for family displacement, nongo- 
vernmental actions or the economics of private real 
estate demand is having a steadily increasing impact. 
The deemphasis by the Federal Government on 
Federal domestic spending has made the private 
sector involvement even more prominent. 

The undeserving displacees have remained the 
same. They include the poor, the elderly, female- 
headed households, those with limited education, 
the unemployed, the handicapped, and a high 
percentage of minorities in each of these categories. 
Although considerable effort has been made to 
provide housing for this segment of the community, 
we still have a long way to go. 

The overall national housing stock has been vastly 
improved since 1930; however, the cost of standard 
housing units are high and going higher. They are 
out of the reach of those families whom we identify 
as tomorrow's dislocatees. The number of available 
and affordable subsidized and assisted units is still far 
behind the need. The effects of inflation and the 
present high unemployment level has increased the 
percentage of Americans who cannot afford stan- 
dard housing at today's prices. 

What Can Be Done? 

The Uniform Relocation Act provides adequately 
for the dislocatees from Federal and federally 
assisted programs. When the 1983 provisions are 
adopted, a full set of tools will exist to conduct a 
sound program of relocation. Careful monitoring 
needs to take place to see that program benefits are 
fully and adequately utilized. 

In HUD's October 1981 Residential Displacement 
Update Report they correctly made the point that 
the total solution to the relocation problem cannot 
be found at the national level. There are many forces 
at work in the community that cause dislocation that 
are not involved with Federal programs. These 
families do not qualify for the benefits provided 
under the Uniform Relocation Act. For example, the 
Federal Government has no authority to institute 
regulations on condominium conversions that are 
privately financed. HUD can only regulate FHA- 
insured mortgages. The most effective role the 
Federal Government can play in minimizing the 
adverse effects of displacement is to assist States, 
local governments, neighborhood organizations, and 
the private sector to develop their own displacement 
strategies. State and local governments have the 
authority to establish requirements for relocation. 

State Level Programs 

The State of New Jersey passed a statewide 
relocation law several years ago. Pennsylvania, 
Wisconsin, and California have also adopted reloca- 
tion requirements for their States. The remaining 
States with urban displacement problems need to be 
encouraged to adopt similar legislation that will 
meet local relocation needs. 

The District of Columbia adopted the D.C. Rental 
Housing Act in 1977. Funds have been made 
available to assist tenants in buildings proposed for 
condominium conversion to exercise their first right 
to purchase their housing unit. This program is 
designed to facilitate direct ownership by lower 
income tenants facing displacement in an attempt to 
preserve lower income housing resources in revital- 
izing neighborhoods. 

The new Iowa State housing code requires cities 
with a population of 15,000 or more to adopt either a 
national housing code or their own local code if it is 
more stringent than the model code. One of the 
provisions of this State law is "the enforcement 
procedures shall be designed to improve housing 



Households Displaced by Private Activity: Distribution by Reasons for Move 
Preliminary 1970 Annual Housing Survey Estimates 
(Unweighted data) 

Main Reason for Move 

Housing costs greatly increased* 

Owner sold building 

Owner converted to condonninium 

Building closed for rehabilitation 

Rents were raised 

Building converted to nonresidential use 

Building closed; no reason 


Specific reason not given** 













Incidence of Displacement 

Percent of households affected by 

private displacement: 
Percentage of movers affected by 

private displacement: 



Reasons Omitted 


'This reason was not included in the question on displacement by private activity. It is a subcategory of moves to obtain lower 
rent or less expensive housing. 

* 'The last two categories (other, specific reason not given) contain an unknown number of households who moved as a result of 
evictions or mortgage defaults, and who should not be included in the displacement estimate. These categories are, never- 
theless, included because they may also contain households who moved for legitimate displacement reasons other than those 
specified. The table shows the estimated incidence of displacement both with and without these non-specific categories. 


conditions rather than displace persons from their 

Local Level Programs 

In late 1979 HUD awarded Innovative Grants 
under the community development block grant 
program to 12 local governments to demonstrate 
creative antidisplacement activities. They were de- 
signed to develop models of ways to assist low- and 
moderate-income residents of revitalizing neighbor- 
hoods to remain in their communities. A summary of 
these demonstration projects are as follows: 

Baltimore, Maryland is providing low- and moder- 
ate-income residents with homeownership and 
cooperative housing opportunties through a non- 
profit real estate corporation as a vehicle for 
"intervention buying." 

Brookline, Massachusetts has established an equity 
transfer assistance program to assist low- and 
moderate-income households to purchase their 
apartment units that are undergoing condominium 
conversion. A household counseling component 
provides additional assistance. 
Charlottesville, Virginia has developed a program 
of deferred and short-term revolving loans for 
home purchase and rehabilitation, in addition to 
housing counseling and temporary relocation as- 
sistance, to enable low-income families to remain 
in the 10th and Page neighborhood. 
Columbia, South Carolina is assisting low-income 
residents to remain in neighborhoods through the 
conversion of 18 houses into at least 42 smaller, 
more affordable units. No-interest, deferred pay- 
ment loans will be used for the rehabilitation. The 
units will be kept affordable through the use of the 
HUD section 8, Moderate Rehabilitation Pro- 

Denver, Colorado is combatting displacement in 
the city and county through such measures as 
interim financing, mortgage payment assistance, 
referral services, and public education. 
Fairfax County, Virginia has undertaken the im- 
provement of the Woodley-Nightingale mobile 
home park which is slated for reconstruction and 
expansion under a city redevelopment plan. De- 
spite numerous deficiencies, the park is, for many 
of its residents, the only feasible and affordable 
housing alternative within Fairfax County. The 
plan will improve housing conditions in the park, 
reduce overcrowding, and provide residents with 
the opportunity to purchase their mobile homes 

and share in the ownership of the mobile home 
park on a cooperative basis. 

King County, Washington is purchasing condomi- 
num units for rental to low-income elderly house- 
holds facing displacement as a result of the 
conversion of their apartments to condominiums. 
Los Angeles, California is converting an industrial 
building to 150 units of transitional housing for 
displaced persons and homeless indigents in the 
downtown, central business district, redevelop- 
ment project area. 

Minneapolis, Minnesota is using funds to acquire 
and rehabilitate 104 vacant and/or absentee- 
owned single, duplex, or multifamily units for 
rental and/or resale to low- and moderate-income 
families in order to minimize displacement in the 
Phillips neighborhood strategy area. 
Santa Barbara, California is taking steps to acquire 
and rehabilitate a 13-unit complex which will be 
converted to a model limited equity housing 
cooperative. The project includes a down-pay- 
ment loan fund to assist individual low- and 
moderate-income households to join the coopera- 

Seattle. Washington is rehabilitating a vacant three- 
story hotel for use as permanent single room 
occupancy for low-income persons (on the second 
and third floor) and for commercial purposes (on 
the first floor). 

Three other cities have worked with the private 
sector and neighborhood groups to develop revitali- 
zation strategies that minimize displacement. A 
summary of these strategies is as follows: 

Boston, Massachusetts — The proposed strategy re- 
flects that the city needs to change its order of 
priorities. The lack of recognition of the negative 
side of revitalization was identified as a problem. 
The general attitude existed that displacement was 
only occurring when the government was involved. 
The following actions were, therefore, recommend- 

1. Assisting households to remain in place — 
passage of the right of first refusal legislation; 

development of an inner-city industrial park to 
create jobs. 

2. Development of additional housing — 
rehabilitation of existing public housing; and 
support of community development corpora- 
tions from the city. 



3. Steps to reduce hardships to families facing 
displacement — 

establishment of a displacement mediation ser- 
vice; and 

development of a mechanism to intervene in the 

disposition of defaulted property before the 

owner loses title. 

Jersey City, New Jersey — Due to the revitalization 

occurring in downtown neighborhoods, other areas 

in the city have received an influx of displacees 

causing overcrowding and under maintenance of 

multifamily dwellings. The housing market is tight 

in this city and most potential displacees desire to 

remain in Jersey City. Several initiatives were 

developed to achieve these goals, which will be 

financed through the local community development 


1. Neighborhood planning to involve neighbor- 
hood residents as a comprehensive and continuing 

2. A housing clinic and resource center to 
conduct an active outreach effort to inform 
residents who are likely to face displacement 
regulations and their rights. 

3. An antidisplacement ombudsman in the hous- 
ing clinic to establish the displacement strategy 
tracking system and review the potential displace- 
ment with all housing programs. 

San Francisco. California — This community has 
experienced extensive private sector revitalization 
and, as a result, low-income residents thoroughout 
the city are susceptible to displacement. The multi- 
family stock continues to be threatened by condomi- 
nium conversions. White-collar workers are moving 
into the city and taking over the limited amount of 
available low- and moderate-income housing units. 

Their strategy focused on the retention of the 
existing affordable housing supply and creating new 
permanently affordable housing for low- and moder- 
ate-income households. The strategy recommenda- 
tions include the following: 

1. Reallocating community development 
(CDBG) funds to provide subsidies for the reten- 
tion of a supply of affordable housing for low- and 
moderate-income residents. 

2. Reevaluating public efforts to stimulate fur- 
ther neighborhood revitalization that does not 
increase the supply of needed housing resources. 

4. Establishing a nonprofit land trust to hold 
sites until a developer and financing are identified. 

5. Development of limited equity co-ops and 

6. Establishment of a CDBG funded revolving 
loan fund for housing development corporations 
for predevelopment costs. 

Other positive steps that have been taken by cities 
to deal with private dislocation include: 

1. The city of Cincinnati passed an ordinance in 
June 1980 which provides for relocation assis- 
tance to any person displaced as the result of any 
city program involving a UDAG or housing 
revitalization program. The maximum payment is 
$2,500. (These families are not now eligible for the 
provisions of the Uniform Relocation Act.) 

2. The city of St. Louis requires redevelopers to 
submit a comprehensive relocation plan for poten- 
titally displaced persons. A relocation clearing 
house, funded by the city, has been established in 
conjunction with local social agencies to assist 
relocatees. Its program is geared toward assisting 
families needing relocations as a result of code 
enforcement and private sector revitalization. 

In cities experiencing spot revitalization and dis- 
placement, affirmative marketing techniques can be 
used to spread the demand among a larger number 
of neighborhoods and ease the pressure on a few 
desirable areas. 


The problem of assisting families who are forced 
to move because of public and private action is still 
with us 50 years later. When Federal programs are 
involved, the public sector has recognized its re- 
sponsibility and developed a systematic approach to 
assist families to relocate and to reimburse them for 
their expenses. In some communities the limited 
supply of available low- and moderate-income hous- 
ing makes relocation difficult. Effective use of rental 
assistance programs, such as section 8, "Finders 
Keepers," can help to overcome this problem. HUD 
has proposed to the Congress a new program for 
housing vouchers and matching grant rehabilitation 
that could also be used in conjunction with a 
relocation program. Local governments needs to be 
more creative in order to find good relocation 

When dislocation results from private revitaliza- 
tion activities, a different type of problem exists as 
these families are not provided for under the 
Uniform Relocation Act. HUD must continue to 
share the responsibility for dealing with private 


displacement. Because each city and each neighbor- more that can be done and should be done. An 

hood face different circumstances, such as market effective relocation program cannot be achieved 

factors, condition of housing stock, household ten- unless there is a conviction on the part of those 

ure mix, etc., there can be no uniform strategy for involved to make it work. Therefore, it is essential 

local action. that we bring about a better national understanding 

In this paper, I have described just a few of the of the problem and stimulate a desire for its full 

actions that have been taken by local governments resolution, 
to lessen private sector dislocation. There is a lot 


Displacement and Dislocation of Low-Income Asians 
From Low-Cost Housing Units Due To Urban 
Redevelopment — San Francisco and Oakland Experience 

Edwin M. Lee* , 

The Housing Situation and Demograpliics 

The Chinatowns of San Francisco and Oakland 
are unique communities. They serve as one of the 
State's — perhaps one of the country's — major tourist 
attractions as well as home and workplace for 
thousands of Chinese Americans in the region. 

A basic feauture of these Chinatowns is over- 
crowding. As a result of liberalized immigration 
laws and policies in the mid-1960s, Asian families 
that had been separated for years have been able to 
reunite in the United States. Due to the language 
handicap, new and old Chinese immigrants have 
come and remained in Chinatown for adequate 
services and job opportunities. 

The population in Chinatown has remained ex- 
tremely dense over the past several decades. In 1970 
the ratio was 228 persons per acre, or 7 times greater 
than that of the city's average. The density per 
residental acre was 12 times the city's average (912.4 
persons per residential acre) which ranks San Fran- 
cisco's Chinatown as the second most dense neigh- 
borhood in the United States (next to Manhattan). 

Such high concentration of monolingual immi- 
grants has produced a labor-intensive work force 
filling the restaurant and garment industries' ranks of 
Chinatown. Additionally, neighborhood shops 
abound with food products and items catering to 
ethnic tastes. These shops and restaurants and the 
commercializing of foreign products has historically 
pushed the Chinatown community into a major 
tourist attraction. 

Yet, behind the facade of the exotic trinket shops, 
extravagant restaurants, and jewelry stores, there 
exists the only sources of low-cost housing available 
to the elderly and immigrant popoulation who must 
reside in this neighborhood. In San Francisco's 
Chinatown, such housing consists primarily of resi- 
dential hotels where living units average 60-100 
square feet and rents range from $80-$ 120 per 
month. Generally, between 15-20 such units will 
share one community kitchen and one community 
washroom facility. Where for many years the 

tenancy of these buildings was primarily single 
elderly, the trend has in recent years resulted in four- 
to six-member families occupying one or two such 
units together. 

During the past 5 years there has been a tremen- 
dous influx into Chinatown of immigrants and 
refugees. As a result, a growing number of residen- 
tial hotels have whole families with children who 
are crowded into 100-square-foot units having no 
heat. Yet their incomes prevent them from moving 
to more spacious apartment quarters, if they are 
fortunate enough to find any available. If they are 
displaced, it is not uncommon that they might find a 
more spacious unit, but crowd in another or several 
other families to share the rent as well as facilities. 

The residential hotels have become the primary 
source of low-cost housing due to a number of 
different factors including the nonavailability of 
space in Chinatown, the constant expansion of 
bordering financial districts (downtowns), and past 
discriminatory laws and practices which literally 
forced Asians to live in crowded conditions within 
the boundaries of Chinatown. 

Study estimates indicate that in Chinatown, San 
Francisco, there is approximately 150 such residen- 
tial hotels, housing perhaps over 10,000 persons. 
Tenants in these hotels have traditionally been the 
monolingual elderly who are on social security 
payments. There are also a number of mid-year 45- 
65-year-old single immigrants who work as kitchen 
workers, waiters, and seamstresses. Due to their 
language handicap, they are as dependent as the 
elderly on bilingual services provided in Chinatown. 
These hotels provide long-term housing for its 
tenants. Average tenancies will range from 10-20 
years. In some cases, tenants have lived in the same 
hotel for over 40 years. 

Many of these hotel buildings remain in poor 
condition. Rebuilt after the earthquake of 1906, 
some of them continue to operate without heat or 
hot water facilities. Due to lack of space, tenants will 
cook and eat in their 7' x 9' rooms causing tremen- 

Director, Housing Project, Asian Law Caucus. 


dous vermin and sanitation problems. Owners have 
rarely considered rehabilitation for their buildings 
because the income from ground level commercial 
storefronts prove lucrative enough for them. 

Despite the conditions of the residential units, the 
demand for them is very high and even increasing 
since they provide the only affordable housing for 
most residents of Chinatown. Yet, in the last 10 
years, 5 major residential hotels in S.F.'s Chinatown 
alone became casualties of other forms of gentrifica- 
tion — commercial gentrification and "touristifica- 
tion" — the destruction of housing for office and 
tourist hotel development. In each of these cases the 
displacement and dislocation of low-income Asian 
tenants has been without replacement of lost units. 
Furthermore, all indications point toward a contin- 
ued trend of displacement. 

In Oakland, the indications are similar except that 
the majority of low-income Asians reside in low-cost 
apartment buildings in and around Chinatown. 
These apartments also suffer from overcrowding 
and substandard conditions and yet remain the sole 
source of affordable housing. 

Sources of Displacement and Dislocation 

As with all Chinatown communities throughout 
the country, land-use battles between high-rise 
developers and housing activists have become criti- 
cal. One common geographic factor is that most 
major Chinatown communities border along the 
downtown financial district of a core urban area. As 
the need for office space increases, land values and 
speculation rise in surrounding neighborhoods and 
residential properties are bought and exchanged for 
millions of dollars. In the cases of San Francisco's 
and Oakland's Chinatowns during the last 10 years 
to the present, residential hotels have been pur- 
chased from long-time family owners for millions of 

The majority of private purchasers have included 
downtown office developers, financial institutions, 
real estate speculators, and faceless overseas inves- 
tors and developers. In each instance such high- 
priced purchases were the first indicators of the 
displacement of low-income Asian tenants and the 
eventual demolition of what has become rare, 
affordable housing stock. 

The most glaring example in the Bay area of the 
brutal displacement and dislocation of tenants and 
irresponsible destruction of vital housing was the 
mass eviction and demolition of San Francisco 

Chinatown's International Hotel in 1976. This site, 
which bordered the downtown district, housed 295 
units of low-cost housing for Chinese, Filipino, and 
Caucasian tenants, most of whom were elderly. 

The International Hotel's 10-year legal battle, 
which culminated in the 1976 eviction, revealed the 
severe limitations of the legal system and Federal, 
State, and local housing programs to prevent dis- 
placement. Private purchase, eminent domain. State 
and Federal rehabilitation programs, community 
block grant fundings, and rezoning were all tried 
and failed. The political machinery fared no better. 

The midnight mass eviction in August 1976 was 
finally carried out, only by using 400 police and 
sheriffs deputies to break through a crowd of 2,000 
protecting the tenants. The eviction dispersed these 
low-income tenants throughout the city's slum ho- 
tels to live out their meager lives. 

From 1976 to this day, the International Hotel site 
has sat as an embarrassing and empty I'A blocks 
along the border of Chinatown and the financial 
district. No housing; no development; no plans; no 
people. The overseas corporations who own the 
blocks seem content to wait out the time needed to 
forget their moral obligation to the displaced ten- 
ants. Meanwhile the site's excavated holes beneath 
the streets serve only as temporary shelter for a few 
of San Francisco's "street dwellers." 

There have since been 17 other such residential 
hotels and apartments which have been destroyed 
and low-income Asian tenants displaced without 
replacement or adequate assistance. As of this year 
alone, there are 7 additional major residential hotels 
and low-cost apartment buildings in San Francisco's 
Chinatown, whose new owners have applied to 
demolish some 350 additional low-cost housing 
units. This displacement is taking place in spite of 
local ordinances designed to prevent their destruc- 

A case in point is the San Francisco residential 
hotel coversion and demolition ordinance passed by 
the board of supervisors in 1979. The original 
version passed the board as a permanent ordinance 
essentially freezing the number of residential units 
and placing a moratorium on conversions unless 
one-for-one replacement was provided by a convert- 
ing developer. However, in 1981, bowing to real 
estate industry pressure, the board modified this 
ordinance and weakened its protection. The ordi- 
nance's present major loophole is its "buy-out" 
provision whereby the developer may pay a certain 


amount of money (40 percent of construction costs) 
to an unregulated city fund and be allowed to 
convert the whole building. Furthermore, each 
displaced tenant will only be given a maximum of 
$300 for moving expenses. The tenant is given no 
choice nor realistic options. Since the construction 
costs are only partial, displaced tenants will perhaps 
never see the day when the buy-out monies will 
result in the construction or rehabilitation of housing 
units. They would certainly be unable to afford such 
units if they are ever built. 

A recent case highlighting this problem is the 
plight of 16 elderly Asians on fixed incomes residing 
at the 647 Clay Street residential hotel in China- 
town, San Francisco. They are fighting their dis- 
placement by a new owner who desires corporate 
office space and who is willing to do nothing for 
these tenants. These elderly tenants have no re- 
course but to defend against their displacement. 
Their case is viewed as the "trend setter" in 
predicting how other property owners will attempt 
to convert their low-cost hotels to more lucrative 

Oakland's Chinatown housing stock has faced 
gentrification resulting from urban redevelopment 
and the city's need to bring in corporate invest- 
ments. The Chinatown TransPacific Center Project, 
located on two blocks of redevelopment land on the 
border between downtown and Chinatown, has 
failed to meet its obligatons to provide jobs and 
housing for the community. The effect of the 
commercial office project has been to stimulate the 
construction of market rate condominums and drive 
up commercial and residential rent values in the 
whole Chinatown neighborhood. Low-rent apart- 
ments throughout the area have begun to squeeze 
the elderly and poor Asians who have little options 
at hand. 

Oakland redevelopment officials have stated that 
there is no land available for constructing subsidized 
housing. Yet they continue to sell off parcels and 
acres of surrounding land to corporate entities for 
offices and more lucrative investments. It is common 
knowledge that promises of mitigation for housing 
or jobs, made between city officials and project 
sponsors, are often changed and in some cases 
forgotten, without review by authorized community 
representations. In the case of the Transpacific 
Center, the project sponsored gave $1 million to the 
city of Oakland. Since that transaction, housing 
mitigation, job training for Asians, and affirmative 

action requirements and guidelines have all been but 
apparently forgotten. 

Resulting higher rents in Oakland's Chinatown 
have caused a number of displacements among low- 
income Asians. There has not been adequate re- 
sponse to this problem. 


The housing situation in San Francisco and 
Oakland Chinatown is, at best, grim. For low- 
income Asians who are elderly, who are restricted 
by language and therefore job opportunities, and 
who must reside in these communities in order to 
survive, their displacement will, without better 
control, be disastrous. 

A cursory scan of city permit applicaton records 
show that hundreds of elderly and poor Asian 
tenants are targets for displacement projects this 
year alone. These projects will gentrify the delicate- 
ly balanced Chinatown community with a massive 
tourist hotel, financial institution headquarters, cor- 
porate offices, and luxury condominiums. It can be 
safely said, from my view as a tenant-defense lawyer 
in the Asian community, that the poor, displaced 
Asian tenants who are without their affordable 
homes in Chinatown, will have no place to go. 
Furthermore, dislocation for the elderly, away from 
their close-knit, cultural community can result in 
severe mental and health problems. It has been 
further said by more than several social workers in 
Chinatown that if there is no place to go, these 
tenants will simply die — and they have. 

The sources of displacement and dislocation, 
although varied, are definite. Displacement in Chi- 
natown has come in the form of overcrowding, 
deterioration of habitable conditions, exorbitant rent 
increases, intimidation, and demolition. Due to the 
economic strains in Hong Kong and other Far East 
countries, Chinatown properties have proven to be 
fertile recipients for overseas investment and specu- 
lation. These investors and speculators will, often 
times, purposely allow buildings to deteriorate so 
that tenants will eventually vacate allowing them to 
freely demolish or convert. Threats of eviction 
coupled will small cash sums have also worked to 
trick tenants into leaving. 

An interesting example of this heavy-handed type 
of displacement in the face of local controls in- 
volved yet another Chinatown residential hotel. 
There, the tenants were informed by an attorney of 
pending eviction. They were offered a sum of 


money to move, a small portion which they received at all levels of government, and flexible funding to 

when they agreed to move and the rest upon the rehabilitate and preserve affordable housing. With- 

total vacation of the building. This resulted in those out such a varied package of response to our housing 

who were more mobile "persuading" the others to crisis, displacement and dislocation will continue 

move upon fear that the rest of the money would not against low-income Asians and they will continue to 

be dispersed. The building was empty within 3 be denied the human right to decent, safe, and 

months. It is now the site of banking headquarters. affordable housing. 

What is lacking in response to all of this is 
adequate planning for housing needs, better controls 


Fair Housing Advocacy in the Crucible of Urban 

John O. Calmore* , 


In 1971 the NAACP saw black survival in terms 
of an ability to move from the inner city to the 
suburbs.' In 1974 this Commission stated that 
suburban "economic-racial exclusion may well be 
called the racism of the seventies."^ Now, in the 
1980s, blacks are fighting to remain in inner cities 
and to resist a "reverse exclusionary zoning" — the 
effort, through urban revitalization, to prevent the 
low income and nonwhite from remaining in their 
own neighborhoods.' Reverse exclusionary zoning 
is tied to the processes euphemistically labeled 
"gentrification" and "spatial deconcentration."* 

The difficulties providing legal representation to 
the nonwhite poor in controversies over urban space 
and dislocation are many, some legal and some 
extra-legal. The cases brought and the claims made 
usually extend far beyond the traditional model of 
litigation in that the lawsuit is not a dispute between 
private parties over individual rights but, rather, a 
grievance about the operation of social policy.^ As 
such, cases are not well received by the courts in 
light of the increasingly restricted standards and 
practices of judicial review. Moreover, the scope of 
rights and remedies are being curtailed both by 
court interpretation and legislation. 

The expertise of lawyers goes only so far in these 
cases because extra legal factors are often as material 
as the legal ones. Beyond rights and duties, the 
following factors also affect urban development and 
displacement litigation: 

1. the effect of race in class formation, and in 
turn, the influence of class on racial dynamics; 

2. the correlation between racism and general 
policies of social neglect; 

• Director of Litigation, Legal Aid Foundation of Los Angeles. 

' See Johnson, NAACP Parley Ties Black Survival to Ability to 

Move to Suburbs, N.Y. Times, July 1 1, 1971, at 43, col. 4. 

' U.S., Commission on Civil Rights, Equal Opportunity in 

Suburbia (\974). 

" McDougall, Gentrification: The Class Conflict Over Urban Space 

Comes Into the Courts. 10 Fordham Urb. L.J. 1977, 180(1981-82). 

* See Henig, Gentrification and Displacement Within Cities: A 
Comparative Analysis, 61 Soc. Sci. Q. 638 (1980); Calmore, Fair 
Housing V. Fair Housing: The Problems With Providing Increased 
Housing Opportunities Through Spatial Deconcentration. 14 Clear- 
inghouse Rev. 7 (1980). 

3. the inadequacy of integration to relieve the 
housing problems of the nonwhite poor; 

4. the excessive baggage placed on housing 
programs in an attempt to improve educational 
and employment opportunities as well as to 
achieve racial and economic integration; 

5. the increasing inability of legal representation 
to redress the problems of shelter poverty, partic- 
ularly in the face of massive cutbacks in low- 
income housing production and subsidy programs. 
The following discussion will address these issues 

in general terms. The supplementary oral presenta- 
tion before the Commission on September 27, 1983, 
will focus on some illustrative specific cases in 
which I have been involved. 

The Race-Class Puzzle 

The problems associated with urban development 
and the future of this Nation's cities are directly 
linked to public policy on racial issues.* Professor 
Wilson, however, has traced changes in the struc- 
ture of the American economy and has concluded 
that the net effect is a growing class division among 
blacks in which economic class is now of greater 
importance than race in determining individual 
black opportunities and life styles.' While I do not 
adhere fully to the Wilson thesis, I recognize a 
substantial degree of class stratification and diver- 
gent value orientations among Afro-Americans. 
Indeed, in housing, the problems of racial integra- 
tion and socioeconomic integration are compounded 
in a manner which makes the predicament of the 
black poor much more complex than the integration 
of the white poor into economically mixed settings, 
on one hand, or the integration of upwardly mobile, 
moderate to middle-income blacks into racially 

' See generally, Chayes, The Role of the Judge in Public Law 
Litigation, 89 Harv. L. Rev. 1281 (1976). 

" See generally, Krushner, Apartheid in America: An Historical 
and Legal Analysis of Contemporary Racial Segregation in the 
United States, 11 How. L.J. 547 (1979). (Demonstrating that racial 
segregation has been government created, assisted, and perpetuat- 

' W. Wilson, The Declining Significance of Race: Blacks and 
Changing American Institutions {191&). 


mixed settings, on the other hand. Too often the 
plight of the nonwhite poor is inappropriately 
analyzed in terms applicable to either nonwhites or 
the poor generally and, as a result, policies which 
would most effectively address the needs of the 
black poor get misdirected because they take into 
account tangential or irrelevant factors or ignore 
material factors. 

It must be recognized, however, that often the 
best, if not the only, proof of racial discrimination is 
proof of the correlation between economic inequali- 
ty and race. According to Professor Horwitz: 

Since the official American ideology accepts inequality as 
both an incentive and a reward for talent and industry, we 
are forced to distinguish between the indistinguishable. 
We are expected to accept social and economic inequality 
at precisely the moment that it is the best evidence of the 
existence of racial discrimination.' 

Thus, for nonwhites it is important to see poverty as 
a race-linked, secondary characteristic of discrimina- 
tion.' Failure to see this is to whitewash history. 
Even Professor Wilson sees the disproportionate 
number of blacks in poverty as a result of the 
historical consequences of racial oppression. 

In various lawsuits involving a claim of relief 
under the Civil Rights Act of 1866, 42 U.S.C. §1982, 
the claims have alleged that the challenged action 
exploited "a situation created by socioeconomic 
forces tainted by racial discrimination."'" This is an 
apt description of the urban revitalization linked 

Racism's Connection with Social Neglect 

Economist Robert Heilbroner observed that ra- 
cism is tied to America's politics of social neglect: 

Programs to improve slums are seen by many as programs 
to "subsidize" Negroes; proposals to improve conditions 
of prisons are seen as measures to coddle black crimi- 
nals. . . .In such cases, the fear and resentment of the 
Negro takes precedence over the social problem itself 
The result, unfortunately, is that the entire society suffers 

' Horwitz, The Jurisprudence of Brown and the Dilemmas of 
Liberalism. 14 Harv. C.R.-C.L.L. Rev. 599, 61 1 (1979). 
° See Abrams, Primary and Secondary Characteristics in Discrimi- 
nation Cases. 23 Vill. L. Rev. 35, 51-55 (1977). 
'° Concerned Tenants Association of Indian Trails Apartments 
V. Indian Trail Apartments, 496 F. Supp. 522, 527 (N.D. 111. 1980). 
" Heilbroner, "The Roots of Social Neglect in the United 
States," in Is Law Dead? 288, 296 (E. Rostow, ed. 1971). See also 
1980), where the court held that the city had violated the Fair 
Housing Act by pursuing a policy of substantially preventing 
blacks from becoming residents and by taking actions with the 
purpose and effect of perpetuating the city's virtually all-white 

from the results of a failure to correct social evils whose ill 
effects refuse to obey the rules of segregation." Neilbron- 
er's observation is reinforced by the new myth that 
poverty in America has been abolished. It should cause 
particular concern that President Reagan's former chief 
domestic affairs advisor, Martin Anderson, would declare: 
"The 'War on Poverty' that began in 1964 has been won; 
the growth of jobs and income in the private economy, 
combined with an explosive increase in government 
spending and income transfer programs has virtually 
eliminated poverty in the United States."'^ This, too, 
appears to be the position of the present administration. 

Fair Housing and Integration 

Fair housing advocates must reassess whether, for 
the nonwhite poor, integration is an effective way to 
press for spatial equality. It has been stated that civil 
rights advocates have found themselves "unable to 
argue simultaneously against Jim Crow and for the 
improvement of the Negro community."" 

In Burney v. Housing Authority of City of Beaver,^* 
legal services lawyers brought suit on behalf of low- 
income blacks barred from public housing because 
the local housing authority sought to avoid "tip- 
ping" the project by imposing an integration quota 
restricting the numbers of blacks admitted. In 
enjoining the housing authority, the court recog- 
nized that Title VIII, the Fair Housing Act, had 
come to reflect an inherent conflict between anti- 
segregation and antidiscrimination policies. Accord- 
ing to the court, 

The legislative history. . .shows that at the time that Title 
VIII was enacted. Congress believed that strict adherence 
to the antidiscrimination provisions of the act would 
promote the policy of antisegregation; abolition of racially 
discriminatory housing practices ultimately would result 
in residential integration. In other words. Congress per- 
ceived antisegregation and antidiscrimination to be com- 
plementary. Unfortunately, this is not the case where a 
housing project is likely to tip, absent some kind of action 
by a local housing authority. Imposition of a quota would 
promote the antisegregation (or integration) policy of 
Title VIII; refusal to impose a quota would promote the 
antidiscrimination (or freedom of choice) policy. Neither 
the language of, nor the legislative history behind. Title 

character. Those actions included decisions not to participate in 
conventional public housing, federally assisted leased housing, 
federally subsidized housing (even though whites needed such 
housing), and to utilize community development funds to pre- 
serve a segregated community. 

'= National Advisory Council on Economic Opportunity, 12th 
Report: Critical Choices for the 80s, at 8 (1980) (quoting M. 
Anderson, Welfare 15 (1978)). 

" Silberman, "Beware the Day They Change Their Minds," 
Fortune. November 1965, at 152. 
" 551 F. Supp. 746 (N.D. Pa. 1982). 


VIII resolves the question of which policy must yield 
when the two conflict." 

The court found that the housing authority failed 
to show that "no alternative course of action could 
be adopted that would enable [its legitimate] interest 
to be served with less discriminatory impact."" 
This case is significant because the challenge saw 
integration as a dysfimctional goal that had to give 
way to providing housing to the plaintiffs. This 
litigation, then, illustrates the position I think fair 
housing advocates must take oji behalf of the 
nonwhite poor: Decent housing and community 
enrichment for them must be viewed as a primary 
goal and not a secondary result of integration. We 
simply cannot continue to allow ineffective rules 
intended to promote integration to interfere with 
meeting the overwhelming need for housing in the 
cities." In the words of the late Senator Robert F. 

To seek a rebuilding of our urban slums is not to turn our 
backs on the goal of integration. It is only to say that open 
occupancy laws alone will not suffice and that sensitivity 
must be shown to the aspirations of Negroes and other 
non-whites who would build their own communities and 
occupy decent housing in neighborhoods where they now 
live. And, in the long run, this willingness to come to grips 
with blight of our center city will lead us to an open 
society. For it is comparability of housing and full 
employment that are keys to free movement and to the 
establishment of a society in which each man has a real 
opportunity to choose whom he will call neighbor.'* 

Integration of the nonwhite poor is further frus- 
trated by the cross purposes of Federal housing and 
community development programs. Section 8, the 
Nation's current primary federally assisted housing 
program, is also the primary vehicle for achieving 
the Housing and Community Development Act of 
1974's goal of "reducing the isolation of income 
groups within communities and promoting neigh- 
borhood diversity and vitality through the spatial 
deconcentration of housing opportunities for per- 
sons of lower income and the attraction of persons 
of higher income."" It is now evident that noncon- 
centrated areas will continue to resist providing 

'• Id. at 769. 

'* Id. al 770, citing Resident Advisory Board v. Rizzo, 564 F.2d. 

126. 149(3dCir. 1977). 

" See generally, Travis. The Black Ghetto: The New White 

Frontier, Real Estate Issues I (Summer 1979); Phillips and 

Agelasto. Housing and Central Cities: The Conservation Approach. 

4 Ecology L.Q. 797 (1975); and Note. Symbolic Gestures and False 

Hopes: Low Income Housing Dispersal After Gautreaux and the 

federally assisted low-income housing and when this 
is combined with the site selection pressures against 
building in impacted areas, there is a real possibility 
that new housing opportunities for the poor will 
remain undeveloped and those most in need will 
continue to be shut out. Moreover, under these 
circumstances, the "revitalized" communities' at- 
traction of higher income persons will continue to 
exacerbate this situation by contributing to the 
displacement of the urban poor and nonwhites. 
Saving cities for whom has become one of today's 
most pressing questions. As one commentator has 

Those who interpret the history of the cities through a 
class conflict paradigm see in gentrification the culmina- 
tion of an effort by white upper-income and business 
interests, publicly supported through urban renewal, loan 
subsidies and tax incentives, to regain control of the 
political and economic resources that, in the rush of 
suburbanization, were nearly ceded by default to a new 
urban majority consisting of the poor, Hispanic and 

The typical reverse exclusionary zoning lawsuit is 
often brought by the affluent gentrifiers who es- 
pouse fair housing concepts to prevent "undue 
concentration" of nonwhite or low-income persons 
in the neighborhood which would result if low- 
income housing were constructed. As the new 
residents oppose racial and economic concentration 
in the name of desegregation "they may prevent the 
racial and economic reintegration of neighborhoods 
which have been converted from ethnically and 
economically diverse communities into upper-mid- 
dle class preserves."*' 

An illustrative case of this problem is Haakmat v. 
Pierce.'''' The city of New York and HUD had 
supported the new construction of 140 units of 
section 8 housing in New York City's borough of 
Richmond, but a group of homeowners and civic 
associations from that area sued to prevent the 
private developer from proceeding with the final 
approvals and construction. The site approved for 
construction was located in an area undergoing 

Housing and Community Development Act, 21 St. Louis U.L.J. 759 


'" Quoted in note. Public Housing and Urban Policy: Gautreaux v. 

Chicago Housing Authority, 79 Yale L.J. 712. 718 (1970). 

'• 42 U.S.C. §530l(c)(6). 

'" Henig. Gentrification and Displacement, at 649. 

" McDougall, The Class Conflict, at 180. 

" No. CV-82-I6I4, (E.D.N.Y.. July 12, 1982). 


urban revitalization. The neighborhood was found 
to be integrated and stable, with 50 percent non- 
whites. It was anticipated that the 140 proposed 
units would house approximately 500 occupants, all 
or most of whom the plaintiffs seemed to fear would 
be nonwhite. 

HUD's decision was upheld, nonwithstanding 
plaintiffs' claims that it was an abuse of discretion. 
The court ruled that HUD is permited to locate 
assisted housing in areas of nonwhite concentration 
when, inter alia, it is determined that there is an 
overriding need." It is significant that the "tipping" 
issue was not allowed to detract from the overrid- 
ing-need analysis." Had the housing not been built 
on this site, the 140 units would have been lost not 
just to this neighborhood but also to the entire New 
York City area. In this case, there was no persuasive 
indication that a mere 140 units would create a 
"pocket ghetto." Judge Weinstein declared: "There 
is a great shortage of homes for the poorest people in 
the city. They too must be served. In this case they 
can be given decent homes without any untoward 
harm to their more fortunate future neighbors. The 
whites, blacks and Hispanics who have lived togeth- 
er so well in New Brighton may look forward with 
considerable optimism to an even more pleasant 
community if they do not allow unreasoning trepida- 
tion to overwhelm good sense." 

Among the overriding needs HUD cited were (1) 
the City Housing Assistance Plan, which showed 
that over 7,000 households in Staten Island were 
eligible for and in need of section 8 housing; (2) a 
vacancy rate of 2.9 percent, which indicated that 
new construction was the best method to meet the 
need for housing; (3) the project would help revital- 
ize the area; and (4) there was a need to provide an 
opportunity to return to the neighborhood for 

" See Shannon v. HUD, 436 F.2d 809, 822 (3d Cir. 1970). 
" See note. Tipping the Scales of Justice: A Race Conscious 
Remedy for Neighborhood Transition. 90 Yale L.J. 377 (1980); 
Note, NEPA, Tipping and Low-Income Housing, 6 Colum. J. of 
Envt'I. L. 31 (1979); Ackerman, Integration of Subsidized Housing 
and the Question of Racial Occupancy Controls, 26 Stan. L. Rev. 

"' See also Business Association of University City v. Landrieu, 
660F.2d817(3dCir. 1981). 

" See C. Harman, D. Keating, and D. Legates, Displacement: 
How to Fight It (1982) (a product of the Legal Services Anti- 
displacement Project; available through the National Housing 
Law Project); LeGates and Hartman, Displacement, 15 Clearing- 
house Rev. 207 (1981); C. Weiler, Reinvestment Displacement: 
HUD's Role in a New Housing Issue (1978); "Direct and Indirect 
Displacement of Lower-Income Tenants and Homeowners Due 

households that were displaced when former struc- 
tures were demolished." 

Displacement Beyond Legal Redress 

Displacement has various manifestations, ramifica- 
tions, and causes." In characterizing displacement, 
a good working definition is provided by George 
and Eunice Grier: 

Displacement occurs when any household is forced to 
move from its residence by conditions which affect the 
dwelling or its immediate surroundings, and which: 

1. move beyond the household's reasonable ability to 
control or prevent; 

2. occur despite the household's having met all previ- 
ously imposed conditions of occupancy; and 

3. make continued occupancy by that household im- 
possible, hazardous, or unafTordable.^' 

LeGates and Hartman point out that the nature of 
displacement has undergone fundamental changes 
during the past decade as there has been a shift from 
the government-related displacement primarily 
caused by Federal urban renewal and highway 
programs to displacement caused primarily by rent 
increases, purely private action (condominium con- 
version and unassisted gentrification), hybrid pub- 
lic/private displacement, and displacement which 
occurs indirectly due to governmental actions. 

This means that many statutory benefit programs 
and other protective legislation will no longer be as 
neatly counterweigh ted against displacement as if it 
were the direct result of federally assisted projects. 
For example, in the St. Louis case of Young v. 
Harris,^^ Judge McMillian's concurring opinion, 
defeating plaintiffs' claims, pretty much summarizes 
the predicament: 

to CDBG-Assisted Neighborhood Revitalization," in An Advo- 
cacy Guide to the Community Development Block Grant 
Program, 12 Clearinghouse Rev. 601, 636-40; St. Hilaire, Public 
Housing Tenants' Anti-displacement Strategy, 15 Clearinghouse 
Rev. 250 (1981); Roisman, Preventing or Ameliorating Displace- 
ment in Connection with Section 8, 14 Clearinghouse Rev. 303 
(1980); Hanson, Applicability of Federal Statutory Remedies in 
Housing Displacement Cases: How Much Federal Involvement is 
Necessary? 59 Det. J. Urb. L. 341 (1982); Roisman, Combatting 
"Private" Displacement XIII Hous. L. Bull. 1 (January-April 
1983) (also available from the National Clearinghouse for Legal 
Services, no. 31,964). 

" G. Grier and E. Grier, Urban Displacement: A Reconnais- 
sance 8 (1978), quoted in Le Gates and Hartman, Displacement, at 
" 599 F.2d 870 (7th Cir. 1979). 


While I concur with the result of the legal reasons 
discussed by the majority, I am saddened by the expedien- 
cy and callousness exhibited by this rehabilitation scheme 
toward the original residents of the neighborhood. The 
federal, state and local governments' attempts to garnish 
the assistance of private developers in rebuilding the inner 
cities is laudable. The dislocation of lower income families 
as exhibited in this case reveals, however, the shortsigh- 
tedness in most urban redevelopment planning which, 
rather than alleviating the inner city ghetto, will merely 
cause it to geographically shift. . .Congress did not intend 
[the Uniform Relocation Act] to apply to relocations 
effectuated by private developers, even though these 
developers may be assisted financially by the federal 
government. In light of the recent trend in government 

programs of enticing private enterprise to undertake 
endeavors once assumed solely by the governmental 
entities, I question whether the original scope of the URA 
is still appropriate." 


While the foregoing overview raises many of the 
issues that must be addressed in considering urban 
revitalization and dislocation, the ultimate issue is 
whether this Nation will continue to plaque public 
policy with "samaritrophia" — the hysterical indiffer- 
ence, if not malice, toward the plight of those less 
fortunate than oneself.^" 

"° See K. Vonnegut, God Bless You Mr. Rosewater 41 (1965). 


Zoning: Affirmatively to Include or Exclude 


Carl Bisgaier* 

The State of New Jersey is now engaged in a bold 
experiment in the provision of affordable housing for 
lower income persons. The goal of the experiment is 
for every municipality to provide a realistic housing 
opportunity for its indigenous poor and for those 
municipalities in growth areas of the State to 
provide a realistic opportunity for their fair share of 
their region's present and prospective lower income 
housing needs. The experiment is to be implemented 
by local government with or without State or 
Federal financial assistance. No municipality is 
exempt, and there are little or no defenses to 

This massive undertaking was launched without 
legislative or executive consideration or approval 
and is virtually the exclusive product of the New 
Jersey judiciary. However, while it was born in the 
context of litiation, it went through a birthing 
process far more lengthy, deliberate, and profound 
than most legislation. 

On January 20th of this year, the Supreme Court 
of the State of New Jersey decided what is common- 
ly known of as the Mount Laurel case. The 217-page 
decision was, in fact, the resolution of six separate 
land use cases consolidated, for the first time, for 
purposes of supreme court argument. The 6 cases 
represented, together, almost half a century of 
litigation involving almost 20 municipalities. The 

oral argument before the supreme court lasted for 3 
days. Presentations were made by approximately 30 
attorneys with extensive briefing and argument by 
diverse interested parties such as the State's Republi- 
can legislators, the Department of Community Af- 
fairs, the Manufactured Housing Association, the 
American Planning Association, and the Environ- 
mental Defense Fund. The court's deliberations 
lasted over 2 years and its ultimate decision in all six 
cases was unanimous. 

The Mount Laurel case itself was begun in 1971 
and had reached the New Jersey Supreme Court for 
a decision once before in 1975. This was then the 
court's first major land use statement in almost 15 
years. However, since Mount Laurel /, the court had 
spoken several times on related land use issues 
searching for a definitive, constitutional statement 
while urging legislative action. 

Finally, in the absence of legislation and in the 
face of extensive litigation throughout the State, the 
court was forced with what was, in reality, a 
constitutional crisis: its 1975 mandate was being 
ignored as no arm of government had acted to 
enforce it. Thus, the court faced the option of 
abandoning the mandate or establishing an enforce- 
ment mechanism. 

The significance of Mount Laurel II lies both in 
the newly articulated mandate and in the mechanism 

Director, New Jersey Department of Public Interest Advoca- 


adopted by the judiciary to insure its implementa- 
tion. The key to understanding the mandate is to 
understand that Mount Laurel II is neither a zoning 
case nor a land use case, and it is only secondarily a 
housing case. Primarily, it is a case which defines the 
proper role of government in the context of the 
fundamental needs of the citizenry. In short, the case 
is a profound social statement of the obligations of 
local governmental entities in caring for their con- 
stituent's basic needs. 

The decision begins with a recognition that 
adequate shelter is a fundamental need and that the 
provision of adequate shelter, while a complicated 
undertaking, is one which is and must be infused 
with governmental action. The court came to 
acknowledge two fundamental principles: 

1. the provision of adequate shelter for lower 
income persons can be and has been constrained, 
encumbered, and often prevented by overt gov- 
ernmental action; and 

2. the provision of adequate shelter for lower 
income persons cannot be accomplished without 
overt governmental action. 

Thus, the mandate of Mount Laurel II is two-fold: 
first, local government may not act to unnecessarily 
constrain, encumber, or prevent the production of 
lower income housing; and, second, local govern- 
ment must undertake all such action as is necessary 
and appropriate for local government to take which 
will make the production of such housing a reality. 

The first aspect of the mandate addresses the more 
universally acknowledged areas of municipal action 
which have historically been identified with discrim- 
ination against lower income households. Generical- 
ly encompassed in the term "exclusionary zoning," it 
includes such obvious types of governmental con- 
straints as: large lot, single-family zoning; minimum 
house sizes; prohibitions against multifamily and 
manufactured housing uses; and less obvious con- 
straints such as excessive on and off-site develop- 
ment costs and exactions imposed on builders. 

Excessive site development costs run the gamut 
from overly wide streets to unnecessarily high 
concrete specifications for curbing and sidewalks. 
Excessive inspections, water/sewer hookup fees, 
and more exotic demands such as construction of 
firehouses, donations of ambulances, and even fines 
against the developer for each school-age child who 
occupies a unit in the development over a prescribed 

The second aspect of the mandate addresses the 
less obvious areas of municipal action or inaction 
which effectively preclude the development of 
affordable housing for lower income persons. These 
include refusal to undertake actions which are 
necessary prerequisites to participation in a State or 
federally financed development such as adoption of 
a resolution of need, agreement to enter into a 
payment in lieu of taxes contract, designation of a 
local public agent, and actions necessary to encour- 
age or mandate that private developers participate in 
the effort to provide affordable housing such as 
"floating" zones, density bonuses, and mandatory 
percentages of affordable units. 

While the first aspect of the mandate dealt with 
"exclusionary zoning," the second aspect deals with 
a spectrum of potential governmental action now 
referred to generically as "inclusionary" zoning: that 
is, actions by local government carefully designed to 
attract a specific type of land use. In this case, the 
type of use in question is affordable housing for 
persons of low and moderate incomes. 

We come to the only truly novel aspect of the 
Mount Laurel mandate: That is, a governmental 
obligation to attract housing for the poor. Inclusion- 
ary zoning, itself, is not novel. As the New Jersey 
Supreme Court recognized, governmental entities, 
for decades, have been engaged in both exclusionary 
and inclusionary land use practices. Thus, it has been 
common practice in New Jersey to purposefully 
exclude housing for lower income persons and such 
other land uses perceived as undesirable such as 
heavy impact industrial plants, solid waste disposal 
facilities, land fills, and the like. On the other hand, it 
has been the common practice to purposefully 
include housing for middle and upper income per- 
sons and light industrial and commercial ratables. 
Most municipalities in the State, in fact, have 
economic development commissions and go to great 
lengths to attract such ratables. Thus, what the New 
Jersey Supreme Court did in the most simple terms, 
was to move affordable housing for the poor from 
the exclusionary to the inclusionary side of the 

The bottom line of the mandate is the court's 
withdrawal of the traditional grant of municipal 
discretion in land use practices, at least in so far as 
affordable housing is concerned, thus, a panoply of 
potential governmental action which, in the past, 
was considered discretionary is now either unlawful 


in its exclusionary aspect or mandatory in its 
inclusionary aspect. 

The court, having articulated what local govern- 
ment cannot do and having mandated what it must 
do in the area of affordable housing then turned to 
an even more difficult problem: enforcement. Expe- 
rience had shown the court that local government, 
left alone, would not abide by its rulings despite the 
constitutional nature of the mandate and the funda- 
mental needs involved. 

The only enforcement mechanism available to the 
court was through litigation and that had proven 
ineffective for several reasons: 

First, there were few private litigants willing to 
undertake the litigation and virtually no public 

Second, litigation was costly and endless in 
duration, lower court decisions lacked consistency, 
and a serious question was raised as to the will- 
ingness of some of the lower court judges to tackle 
the issues. 

Third, there was little or no exposure for a 
recalcitrant municipality: that is, they did not fear 
the consequences of losing as they existed prior to 
Mount Laurel II. 

The court's solution to this problem was relatively 
novel and dramatic. First, it recognized that litiga- 
tion was the only enforcement mechanism available 
to it and that a prerequisite to litigation was a willing 
plaintiff. Since the public interest bar was small, 
private litigants had to be encouraged to litigate. 
There were three ways this might be done: award 
attorney's fees and costs; award money damages; or 
provide what has been referred to as a "builder's 
remedy." The court chose the latter device. 

The concept of the builder's remedy, already used 
in other States, is that builders who bring Mount 
Laurel-type cases and who prevail will be granted, 
subject to certain limitations, approval of their 
development proposals. Thus, the builder's incentive 
to challenge a vulnerable municipality became enor- 
mous and, quite suddenly, a large class of potential 
plaintiffs was created. 

The problem of the cost and duration of litigation 
and a lack of judicial consistency and resolve was 
addressed with a novel approach. The court ap- 
pointed three trial court judges, each with a separate 
geographic responsibility, to handle exclusively all 
Mount Laurel-type cases. The effect is to insure 
consistency. Furthermore, the judges assigned are 
obviously clothed with responsibility of carrying 

forth the court's mandate. The cases are all to be 
fast-tracked and all issues, including rezoning, re- 
solved prior to any appeal. The impact of this device 
should be felt quite dramatically shortly after the 
first decisions are rendered. 

The last and most difficult problem was one of 
exposure: that is, in order to encourage voluntary 
compliance and discourage litigation, the court had 
to find a device to make the risk of losing great 
enough to have those effects. This was done in 
several ways, some of which have already been 

First, there had to be a realistic possibility that a 
recalcitrant municipality would be sued. The build- 
er's remedy and the assigimient of the three judges 
did that. 

Second, there had to be a significant exposure if 
the municipality lost. This was done by the builder's 
remedy and the use of an independent master. The 
fear created by the builder's remedy is that a builder, 
not the municipality, will control where and when a 
substantial number of residential units will be built. 
The master's role is to supervise the rezoning 
process so as to insure that by the end of the 
litigation, the municipality will be in full compliance. 
Thus, the municipal exposure is significantly en- 
hanced by the potential loss of substantial control 
over the local land use process. 

Another speaker will address the practical impli- 
cations of the court's decision, what has occurred 
since it was rendered and how the issues have been 
addressed in other States. 

Providing the type of affordable housing that 
lower income people need is not, conceptually, a 
difficult problem. No one can possibly believe that 
our government would fail if it seriously committed 
itself to creating this oportunity. In fact, government 
has successfully accomplished this to a limited 
degree. The issue is not whether we can or even 
how we can; fundamentally, the question is whether 
we want to. Most of the problems which arise today 
are the result of a lack of governmental commit- 
ment, whether due to a lack of necessary financing, 
improper regulation (that is, overregulation in some 
areas and a lack of regulation in others), or intention- 
al governmental acts to preclude the opportunity 
from occurring. 

We must acknowledge that we are dealing with a 
pervasive hypocrisy when we discuss these issues, or 
we will never adequately address them. The fact is 
that we provide decent shelter only to the extent 


that we want to, and the extent to which it is not 
provided is the measure of our lack of desire to 
provide it. Deregulation, for example, has become a 
focus of political efforts to spur economic growth 
and, presumably, housing production. We cannot 
address an issue like deregulation without first 
acknowledging that much of the regulating has been 
motivated by racism and classism. Given the exis- 
tence of such motives, talk of eliminating exclusion- 
ary or undue cost generating regulations may be 

In the Mount Laurel case, the court recognized 
that discrimination against the poor was, for the 
most part, intentional. As has been previously 
detailed, the court embarked on its own effort to 
cure this wrong. Now, as a result of that effort, one 
of the important issues being raised is the role of the 

It must be remembered that originally the courts 
refused to permit any but the most essential form of 
governmental interference with land use decisions. 
It was the judiciary in the 1920s which ultimately 
unleashed government to enter this field of regula- 
tions. The courts did this fully cognizant of the 
potential impact on lower income persons and 
warned that regulations would be permitted only if 
the general welfare was protected. We all know 
what happened, yet it took over half a century for 
the courts to deal with it. We now have, in several 
States such as New York, Pennsylvania, and New 
Jersey some type of formal judicial declaration that 
governmental regulation of the housing industry 
must not effectively discriminate against lower 
income persons. 

Concerns have been heard that the courts should 
not be involved or that the extent of their involve- 
ment should be limited. My initial reaction to such 
concerns is that I find it hard to believe that the 
people articulating them are serious. If a governmen- 
tal entity unreasonably discriminates against a class 
of citizens in their ability to obtain decent habitation, 
that class, obviously, must have access to the courts 
for redress. 

Thirteen years have passed since we first went to 
court in the Mount Laurel case. I do not need anyone 
to tell me that litigation is a difficult way to enforce 
basic substantive rights and that the legislature is the 
more appropriate forum for many of these issues. 
However, I would like someone to tell me what 
realistic alternative my clients had in 1970 and 
whether any has arisen since. We are dealing with a 

situation where racism and classism have produced a 
desperate situation for millions of our citizens. 
Government has not only refused to comprehensive- 
ly address this problem but it often acts to exacer- 
bate it. Fortunately, certain jurists have been willing 
to step in and call a halt to such practices. They are 
not and will not be as effective as legislatures would 
be if they chose to act. But, since the legislatures are 
not really trying, we are hardly in a place to 
condemn the courts for doing so. 

I have already stated that we are dealing with a 
fundamental hypocrisy by those in power who 
regulate land use decisions. Let me cite a specific 
example which perhaps will explain some of my 

There cannot be a serious question that mobile 
homes provide adequate shelter at the lowest cost 
known today. The Federal Government has, since 
1974, preempted local control over this industry 
with regard to construction and on-site placement of 
the units. This form of governmental regulation has, 
in large measure, been beneficial. It centralized 
regulation over an industry which was suspect and 
which required little or no special deference as to 
production standards due to State or regional differ- 
ences. Yet local governments continue to prohibit 
their use. New Jersey, for example, has experienced 
widespread municipal exclusion of mobile homes. 
The effect of this form of governmental regulation 
has been to eliminate a source of lower cost housing 
and deprive our needy citizens of adequate shelter. 
Two questions: First, why did the Federal Govern- 
ment refuse to preempt this aspect of local regula- 
tion; that is, having insured that post- 1974 units are 
safe, decent, and sanitary, why not prohibit land use 
discrimination between them and conventionally 
built units? Second, why do local governments 
exclude them despite the fact that they are federally 
certified as fit? The answers to both questions are 
pretty much the same — these units are symbolically, 
if not factually, associated with lower income 
people. Their exclusion is an indirect way of keeping 
lower income people out of a community. 

As a Commission dedicated to the protection of 
our citizen's civil rights, you must recognize that 
first and foremost the existence of geographic class 
and racial polarities in this country is a function not 
of private choice but of governmental action. Prior 
commissions have well documented the plight of 
minorities and the poor in this Nation and have 
acknowledged the role government has played. It is 


a sorry statement that it has been necessary for the rendered it, only to the extent that it represents the 

judiciary, on the State level, to act to protect and willingness of at least one arm of government in one 

preserve the constitutional rights of our poor and State to act. We certainly cannot take any pride in 

minorities against government. We can take pride in the fact that such action was necessary, 
the Mount Laurel decision, and the court which 


Report on the Question of Zoning 

Richard F. Bellman* 

The recent ruling by the Supreme Court of New 
Jersey in Southern Burlington NAACP v. Township of 
Mt. Laurel. 92 N.J. 158 (1983), is by far the most 
comprehensive statement on the ramifications of 
exclusionary zoning. This ruling followed upon the 
court's earlier Mt. Laurel holding, Southern Burling- 
ton NAACP V. Township of Mt. Laurel. 67 N.J. 151, 
391 A.2d 935, cert. den. 423 U.S. 808 (1975). In the 
recent decision, the court considered issues of 
exclusionary zoning in six separate municipalities 
and, in a unanimous decision, presented an indepth 
review and analysis of the implications of restrictive 
zoning and the problems of securing meaningful 
remedies for low- and moderate-income persons. 
This decision certainly will stand as a benchmark for 
future judicial rulings in this area. 

Carl Bisgaier, in his paper, is summarizing the 
various aspects of the Mt. Laurel II holding. This 
paper will focus on efforts to bring the Mt. Laurel 
decision into the State of New York and perhaps 
other jurisdictions. In addition, a review of the 
proceedings in the Mahwah, New Jersey, zoning 
case (one of the Mt. Laurel II cases) is undertaken in 
order to focus on the difficulties of implementing the 
Mt. Laurel II holding in the absence of public 
housing subsidies. 

The Effort to Import Mt. Laurel II into 
New York 

The attack on exclusionary zoning is, of course, 
not limited to the State of New Jersey. Because of 
the receptivity of the New Jersey Supreme Court to 
challenges in this area, the focus of attention has 
been on the holdings by the New Jersey judiciary. 
Nonetheless, courts in other States, most notably 
New York, Pennsylvania, and Michigan, have all, at 
one time or another, considered the legality of 
zoning actions that limit housing opportunities for 
low- and moderate-income persons. In general 
terms, however, it must be recognized that no State 
court at this time has approached the sophistication 
and awareness of the problem of exclusionary 
zoning as has been shown by the New Jersey 
Supreme Court. 

Housing advocates in New York currently are 
pressing an appeal in an exclusionary zoning suit 
involving the town of Brookhaven, located on Long 
Island.' It is hoped that the ultimate ruling in the 
Brookhaven case will be built upon the Mt. Laurel II 
foundation. The New York challenge is undergirded 
by the court of appeals (New York's highest court) 
decision in Berenson v. Town of New Castle, 38 
N.Y.2d 102 (1975). The Berenson decision constitutes 
the strongest statement by the New York courts 
prohibiting exclusionary zoning. The Brookhaven 
plaintiffs are attempting to have the court expand 
upon Berenson and, indeed, read Mt. Laurel II 
standards into this holding. 

In Berenson. the court of appeals considered the 
nature of a town's responsibility in exercising its 
zoning and housing policies with respect to insuring 
that the housing needs of low- and moderate-income 
persons are met. Noting that the exercise of local 
zoning powers involved "highly significant public 
policy considerations," the court held that local 
governments must be responsive to the needs of 
their own low- and moderate-income populations 
and also to low- and moderate-income persons 
residing in the larger metropolitan region. 

With respect to the housing needs of local 
residents, the court stated that the "primary goal of a 
zoning ordinance must be to provide for the devel- 
opment of a balanced cohesive community which 
will make efficient use of the town's available land." 
38 N.Y.2d at 109. A trial court must ascertain if the 
required balance exists and if "new construction is 
necessary to fulfill the future needs of [local] 
residents, and if so, what forms the new develop- 
ments ought to take." 38 N.Y.2d at 1 10. 

With respect to a town's regional responsibility, 
local officials must address the needs of low- and 
moderate-income persons residing in the region who 
may seek housing in a suburban growth community 
such as Brookhaven, for employment, social, or 
economic reasons. The court stated that while the 
town of New Castle might have sufficient multiple- 
dwelling units to satisfy both the present and future 
needs of its own populations, there was still a 

• Attorney, Steel and Bellman. 

' The author of this paper is serving as counsel for the plaintiffs 

in the Brookhaven case. 


responsibility generally to the residents of the 
county of which New Castle is a part and to 
residents of the larger New York City metropolitan 
region who may be searching for multiple-family 
housing in New Castle. 

Although we are aware of the traditional view that zoning 
acts only upon the property lying within the zoning 
board's territorial limits, it must be recognized that zoning 
often has a substantial impact beyond the boundaries of the 
municipality. Thus, the court in examining an ordinance 
should take into consideration not only the general welfare 
of the residents of the zoning township, but should also 
consider the effect of the ordinance on the neighboring 
communities. 38 N.Y.2d at 1 10-1 11. 

The Berenson court thus confirmed that a munici- 
pality in a suburban growth area may not ignore the 
needs of its less affluent citizens nor isolate itself 
from the needs of disadvantaged residents of neigh- 
boring towns and the inner city. To emphasize this 
responsibility, the court stated that by upholding 
time growth restrictions in Matter of Golden v. 
Planning Board of Town ofRamapo. 30 N.Y.2d 359, it 
had been "careful to note that 'community efforts at 
immunication or exclusion' would not be counte- 
nanced." 38 N.Y.2d at 108. 

The Berenson court, in fashioning its standards for 
dealing with suburban zoning practices, noted that 
its holding was consistent with the approach taken 
by the New Jersey Supreme Court in Mt. Laurel I. 
In the first Mt. Laurel decision, the New Jersey 
court, in forceful language, held that suburban 
communities could not foreclose housing opportuni- 
ties to low- and moderate-income persons and that a 
town's zoning regulations must "affirmatively afford 
that opportunity, at least to the extent" of the 
municipality's fair share of the regional housing 
needs. Mt. Laurel I. 67 N.J. at 174. 

Unfortunately, since the Berenson holding, the 
New York Court of Appeals has had extremely little 
to say concerning the problem of exclusionary 
zoning and there has been no significant interpreta- 
tion of the Berenson language. Thus, unlike the 
situation in New Jersey, New York litigants must 
deal with very general language which does not give 
clear direction as the duty of a trial court. 

With respect to the Berenson case itself, the court 
of appeals remanded the proceeding for trial. The 
trial court in Westchester County found that New 
Castle's zoning failed to meet both tests outlined by 
the court of appeals and fashioned a broad remedial 
order directing, among other things, that New 

Castle allow for the construction of 3,500 multifami- 
ly housing units. New Castle appealed from that 
order, contending that the trial court did not have 
the authority to enter a ruling of such broad scope. 
The appellate division agreed with New Castle to 
the extent of holding that the trial court should not 
have set a fixed number of multifamily units to be 
provided for by the town. Instead, New Castle was 
to be given a 6-month period during which time the 
town was to revise its ordinance on its own and 
attempt to design its zoning so as to be responsive to 
lower income housing needs. Berenson v. New Castle, 
67 A.D.2d 506. 

The appellate division, in considering the scope of 
a proper remedy following a finding of exclusionary 
zoning practices, was particularly concerned that 
plaintiff Berenson was not a low-income person in 
need of housing, but rather a housing developer 
whose principal interest related to a particular parcel 
of land. In light of that situation, the court ques- 
tioned the trial court's remedy as going well beyond 
Berenson's interest in the litigation. In fact, Berenson 
did not appeal from the appellate division ruling 
cutting back on the trial court's remedy. The 
appellate division had directed that Berenson himself 
was to be given full relief with respect to his parcel 
of land (i.e., a builder's remedy) and no economic 
incentive existed thereafter for Berenson to pursue 
the litigation. 

Subsequently, the New York Court of Appeals 
dealt with another exclusionary zoning matter in 
Matter of Kurzius v. Upper Brookville. 51 N.Y.2d 338 
(1980). Again, the Kurzius case had nothing to do 
with the rights of low-income persons seeking 
decent housing opportunities in compliance with 
Berenson. The plaintiff in Kurzius was a landowner 
challenging Upper Brookville's zoning ordinance 
which required 5-acre sites for single-family homes 
on the plaintiffs land. The plaintiff sought an order 
reducing the requirements to one unit for every 2 
acres. The housing to be produced, therefore, would 
still have been only for the affluent. The court of 
appeals upheld the 5-acre zoning, stating there was 
no proof that the zoning sought by the plaintiff had 
anything to do with meeting local or regional 
housing needs for low-income people. The court 
also held that it may be appropriate in some 


circumstances for a town to maintain some large lot 
zoning in order to protect open spaces.^ 

The Brookhaven case involves the first across-the- 
board challange to a municipality's zoning practices 
as exclusionary and discriminatory against low-in- 
come people. The plaintiffs are, in fact, low-income 
residents of Brookhaven, low-income residents liv- 
ing outside of Brookhaven, and several civil rights 
organizations, including the NAACP. The plaintiffs 
contend that several Brookhaven zoning policies are 
in violation of Berenson and New York State town 

Most importantly, the Brookhaven plaintiffs chal- 
lenge the method by which multifamily housing is 
built in this town. While multifamily housing is 
permitted in Brookhaven and a substantial number 
of units have been constructed, the town does not 
premap any vacant land for multifamily use. Instead, 
developers are required to submit applications for 
rezoning of their parcels to the multifamily catego- 
ries. The town board then considers the rezoning 
application and either grants the request by enacting 
a new ordinance affecting the zoning on the specific 
parcel involved or rejects the application, leaving 
the zoning unchanged. 

The plaintiffs argue that under this discretionary 
system, housing which would meet the needs of 
lower income persons, and particularly subsidized 
housing, does not and cannot get approval. The 
reason for this is that low-cost housing is always 
controversial and local officials are reluctant at best 
to jeopardize their political careers by sanctioning 
such development. In fact, Brookhaven officials 
have vetoed subsidized housing in recent years. It is 
argued that the purpose and effect of Brookhaven's 
method of zoning for multifamily housing is discrim- 
inatory and exclusionary. 

The Brookhaven plaintiffs also challenge the 
town's procedure of imposing covenants in conjunc- 
tion with rezoning for multifamily use, restricting 
the number of units with more than one bedroom. A 
common covenant that has been imposed requires 
that 80 percent of the approved multifamily devel- 
opment be one-bedroom or efficiency units and only 
20 percent two-bedroom units. These covenants bar 
altogether three-bedroom units. Some of these co- 
venants have actually limited development exclu- 

' The Kurzius court did outline procedures to be followed in 
evaluating challenges to specific zoning requirements. It held that 
where a zoning provision is shown to have an exclusionary 

sively to efficiency and one-bedroom units. The 
plaintiffs also challenge a practice whereby devel- 
opers of multifamily housing are compelled to agree 
that all their units will be for sales (condominimums) 
and none for rental. Finally, the Brookhaven plain- 
tiffs challenge the town practice of not premapping 
any land for mobile home use (the town has a mobile 
home park provision in its ordinance but no such 
units exist in the community) and its failure to map 
land for smaller lot single-family development. 

The trial court in Brookhaven, in a ruling issued in 
September 1982, upheld all of the town's zoning 
practices. This method of creating multifamily hous- 
ing was sustained on the basis that it was done 
throughout Long Island. The court did not address 
the issues of the restrictive bedroom covenants, the 
covenants requiring apartment sales, the method of 
zoning for mobile homes, or the lack of zoning for 
small lot single-family developments. An appeal has 
been taken to the appellate division which should 
hear argument early in 1984. 

A principal argument being pressed by the Brook- 
haven plaintiffs is that the Berenson language requir- 
ing a trial court to ascertain whether new construc- 
tion is necessary to fulfill the future needs of 
residents and to determine what form that construc- 
tion should take, does actually establish a Mt. Laurel 
obligation. Plaintiffs argue that the trial court should 
have determined the low-income housing need 
among Brookhaven residents and this need in the 
region. The trial court should then have acted to 
insure that Brookhaven's zoning laws will lead to 
the fulfillment of that need. Contrary to the appel- 
late division's holding in Berenson after remand, a 
trial court would have to determine the number of 
multifamily and low-income units a suburban munic- 
ipality must work to achieve. Thus, the fair share 
notion articulated in Mt. Laurel would be applicable 
to New York. 

The Brookhaven case is significant as it will 
provide an opportunity in New York to test the 
impact and reach of Mt. Laurel outside of New 
Jersey. Should the New York court indicate a 
willingness to adopt the approach articulated in Mt. 
Laurel II, this would have profound impact in 
establishing the New Jersey holding as a national 
standard in the area of exclusionary zoning. If the 

impact, the burden of proof then shifts to the defendant 
municipality which must justify its procedures. Kurzius, 51 
N.Y.2d at 343-45. 


New York courts endorse Mt. Laurel II, a significant 
national trend at the State court level will have been 

Can Mt. Laurel II Housing Remedies 
Provide Actual Housing Units for Low 
Income Persons? — Implementation in 
Mahwah, New Jersey 

What does it all mean? Can exclusionary zoning 
litigation actually lead to housing production for 
low-income persons? It is clear that the New Jersey 
Supreme Court, in handing down Mt. Laurel II, was 
going to take whatever steps it thought necessary in 
an effort to achieve meaningful remedial action. The 
court acknowledged that results under Mt. Laurel I 
were discouraging and that new standards for 
compliance and instructions to the lower courts 
were necessary. Most importantly, the New Jersey 
Court stated that affirmative governmental devices 
were required to make the opportunity for low-cost, 
low-income housing realistic and that a municipality 
must cooperate with private developers who at- 
tempt to build housing for low- and moderate- 
income persons. 

Mt. Laurel II was certainly a response to the 
argument pressed by housing and civil rights advo- 
cates that the results under the first decision were 
totally unaceptable. In one of the Mt. Laurel II 
cases, involving the township of Mahwah, for 
example, the town had simply rezoned areas for 
planned unit developments involving low density, 
multifamily housing. The housing resulting from the 
Mahwah rezoning was expensive condominimum 
units selling well in excess of $100,000. The dilemma 
confronting the court, however, was what to do in 
terms of remedy in the absence of Federal subsidies 
for low-and moderate-income housing construction. 

The next few years will determine the fate of Mt. 
Laurel II. The issue will be whether the recent 
decision, like its predecessor, will merely increase 
the supply of multifamily housing in New Jersey 
while having little to do with low-income persons, 
or whether truly low-income housing opportunities 
will be created. 

Of the six Mt. Laurel II cases remanded by the 
supreme court, the Mahwah case is the one most 
advanced at this time in terms of remand hearings.'' 

' The author of this paper represents the plaintiffs in the 

Mahwah Utigation. 

* The expert appointed by the court is Phihp Caton, a former 

A review of the status of the Mahwah case may, 
therefore, be helpful in understanding the Mt. Laurel 
II process and may provide some indication as to 
whether meaningful relief is possible. 

Almost immediately after the supreme court 
remand, the trial court in Mahwah appointed an 
expert to assist the court in determining a fair share 
number.'' In July the expert submitted his report. In 
it, he found that Mahwah's fair share housing 
responsibility through 1990 was for 469 low-income 
units and 230 moderate-income units, for a total of 
699 units. An evidential hearing was held on 
September 6-7, where this recommendation was 
reviewed and considered. On September 16 the trial 
court issued an order adopting the expert's fair share 

Under the terms of Mt. Laurel II, Mahwah is now 
required to rezone to accomplish its fair share 
housing obligation. As part of its September 16 
order, the trial court appointed the same individual 
who served as the fair share expert to now serve as 
special master to assist the township in the rezoning 
process. Under Mt. Laurel II, Mahwah will have 90 
days from September 16 to accomplish the rezoning. 
In the event the town does not rezone within this 
time or presents a revised ordinance which is 
insufficient to accomplish the fair share number, the 
trial court must order rezoning. 

Given the absence at this time (and probably for 
the immediate future) of Federal housing subsidies, 
the real question is whether the affirmative devices 
mentioned by the Supreme Court will lead to the 
provision of low-cost housing. Unfortunately, there 
has not been extensive experimentation with incen- 
tive zoning and mandatory set-asides. It is antici- 
pated, therefore, that the special master will play a 
critical role in contacting landowners and devel- 
opers in Mahwah in an effort to identify those who 
would be interested in implementing the Mt. Laurel 
II fair share remedy in exchange for permission to 
develop their land with substantially increased den- 
sities. The plaintiffs also will be performing this 

One developer has already come forward in the 
Mahwah case seeking rezoning of his parcel from a 
single-family classification, promising in exchange 
that 20 percent of his development will be for low- 
State official and currently a private housing and planning 
consultant with offices in Trenton, New Jersey. 


and moderate-income families. This developer owns 
a 26-acre site in a prime section of Mahwah adjacent 
to an already developed condominimum project. In 
July the trial court granted the developer's motion 
to intervene in the zoning case and the developer is 
now looking to the special master for assistance in 
securing rezoning. This developer needs densities of 
10 to 14 units to the acre to make possible a Mt. 
Laurel II remedy. 

Initial studies of the intervenor's proposal indicate 
that it is possible to create low- and moderate- 
income housing units through Mt. Laurel II incen- 
tive zoning and absent Federal subsidies. Of funda- 
mental importance to achieving such a result is that 
the land was purchased while in a single-family 
zoning classification, a fact which dictated a lower 
sales price. Rough calculations show that if the 
developer were allowed to build 283 units on this 
site, the development costs including land, site 
improvements, profit, and risk contingencies, would 
total about $19.1 million. Projected sales prices for 
the nonsubsidized units (i.e., 80 percent of the 
development) would range from $75,000-85,000 for 
condominium units and from $90,000-100,000 for 
single family units. The low- and moderate-income 
units (i.e., 20 percent of the project) would sell from 
$20,000-27,000. Based on these prices, the developer 
can project total sales of about $22 million, thus 
assuring a reasonable profit on the undertaking. 

Developers are, of course, asking the question 
whether they will be able to market the standard 
units at these projected prices while including the 
low- and moderate-income units. The standard units 
are priced below what is being charged for compa- 
rable condominium units in Mahwah. The fear is, of 

course, that the presence of the internally subsidized 
units will turn away the regular homeseeker. One 
answer to this problem is that if most future 
development building in New Jersey is to include 
lower income units, there will be a greater receptivi- 
ty to and acceptance of this type of housing. 

Civil rights advocates will be watching to see that 
sufficient checks are written into Mt. Laurel II 
rezonings to insure that the low-income component 
is actually built. Also, mechanisms must be devised 
to insure that the low-income units remain in that 
status in the years to come. On condominium (sales) 
units, covenants must be written into the original 
deeds to insure that, upon resale, the units are sold 
only to other low-income persons and that the 
original purchasers do not reap profits. 

Should the Mahwah intervenor obtain his rezon- 
ing, which appears extremely likely, and is able to 
proceed in a successful fashion with his develop- 
ment, the Mt. Laurel II doctrine will begin to have 
real meaning for low- and moderate-income families. 
Obviously, the process will be greatly simplified if 
public subsidies reappear. In any event, New Jersey 
landowners and developers, concerned for maximiz- 
ing the profit in their development projects, have 
shown substantial interest in injecting themselves 
into the Mt. Laurel II process. 

This Commission on Civil Rights would be 
performing a valuable service if it undertook to 
monitor, over the next several years, the private 
efforts to implement the Mt. Laurel II doctrine. 
Evidence of success in New Jersey will be extremely 
important with respect to the efforts to import the 
Mt. Laurel II holding into other States. 


Special District Zoning in New York City's Chinatown: 
A Design for Destruction 

Margaret Fung* 


New York City's Chinatown, located on Manhat- 
tan's Lower East Side, is the major residential and 
commercial center for the city's Chinese population. 
It is a stable, vibrant, and diversified ethnic commu- 
nity, both socially and economically. However, in 
recent years, Chinatown has been facing unprece- 
dented development pressures, in part because of its 
proximity to the Wall Street financial district and 
the critical housing shortage in Manhattan. The 
demand for luxury housing has led to growing real 
estate speculation and inflated land values in the 
Chinatown area. However, a major force in precipi- 
tating plans for luxury development in Chinatown 
has been New York City's zoning policies and, in 
particular, the creating of the Special Manhattan 
Bridge District in August 1981. 

The Chinatown Community — An Overview 

Since the abolition in 1965 of discriminatory 
immigration quotas,' there has been a continuing 
influx of Asian immigrants to the United States. Of 
the 315,000 Chinese immigrants who entered the 
country between 1965 and 1979, about one-fifth 
have settled in New York City.^ As a result. New 
York City's Chinese population has nearly quadru- 
pled in the past two decades to almost 125,000 in 
1980, making it the largest Chinese community in 
the United States.' 

According to the 1980 census, Chinatown has 
about 35,000 residents." However, commmunity 
agencies estimate that because of the census under- 
count, the actual Chinatown population is closer to 
80,000. Because of language barriers, limited job 
skills, and a long history of discrimination against 
Asian Americans, a majority of Chinese residents 
live in Chinatown and work in the hundreds of 

* Program Coordinator, Asian American Legal Defense and 
Education Fund. 

' Pub. L. No. 89-236, 79 Stat. 911 (1965). 

' U.S., Department of Justice, Immigration and Naturalization 
Service, Annual reports for 1965 to 1979. 

' Abeles, Schwartz, Haeckel and Silverblatt, Inc., The China- 
town Garment Industry Study 89 and n.29, 238 (1983). 

* U.S., Department of Commerce, Bureau of the Census, U.S. 
Census of Population, 1980. 

" Id. 

garment factories, restaurants, and small businesses 
located in the neighborhood. 

The Chinatown population is comprised largely of 
the working poor. Twenty-three percent of the 
families living in Chinatown had incomes below the 
poverty Hne, as compared to 17.2 percent of the 
families city wide.' With two wage earners in the 
typical Chinatown family, the 1979 median house- 
hold incme was relatively low, ranging from $8,093 
to $14,527.« 

Given the large proportion of working poor living 
in Chinatown, the lack of decent and affordable 
housing is of major concern to community resi- 
dents.' Chinatown is one of the most densely 
populated neighborhoods in New York City with 
overcrowding in 25 percent of all dwelling units.* 

Eighty-five percent of Chinatown's housing stock 
consists of "old law" tenements built before 1901.* 
Because rent control and rent stabilization laws offer 
long-time Chinatown residents greater protection 
against rent increases, median rents in Chinatown 
are low at $135 per month.'" However, these 
statistics understate the cost of apartment rentals for 
new tenants, who pay between $250 to $350 for 
unrenovated tenement apartments, as well as "key 
money" of up to $5,000." Most of these tenements 
are in poor condition, with antiquated plumbing and 
heating systems and deteriorating windows, roofs, 
and plaster walls.'' Despite these substandard 
housing conditions, the City Planning Commission 
has projected that Chinese families, especially new 
immigrants, will continue to reside in Chinatown's 
existing housing stock, in view of their low-income 
status. '^ 

• Id. 

' See U.S., Commission on Civil Rights, Civil Rights Issues of 

Asian and Pacific Americans: Myths and Realities 571 (1979). 

' Chinatown Garment Industry Study, note 3, at 127. 

' New York City Planning Commission, Manhattan Bridge Area 

Study: Chinatown 41 (1979). 

'° Chinatown Garment Industry Study, note 3, at 128, 

" Id at 129. 

■^ /^. at 132-33. 

" Manhattan Bridge Area Study, note 9, at 44-45. 


The Special Manhattan Bridge District — 
The Design 

In the past two decades, the City Planning 
Commission has increasingly used the technique of 
special district zoning to regulate development in 
aeas of unique interest. There are presently about 30 
special districts, covering such areas as Little Italy, 
South Street Seaport, the United Nations, and the 
theatre district. These special districts, conceived 
with specific planning and urban design objectives, 
have often utilized zoning incentives which encour- 
age private developers to provide certain amenities 
in return for increases in the floor area of new 

The Special Manhattan Bridge District (SMBD)" 
was prompted by a planning study published by the 
City Planning Commission in 1979.'^ This study 
revealed serious overcrowding in Chinatown result- 
ing from sharp increases in Asian immigration. The 
city also noted the presence of several vacant sites in 
Chinatown on which new construction was econom- 
ically unfeasible because of existing zoning regula- 

At approximately the same time, the Overseas 
Chinese Development Corporation approached the 
City Planning Commission, requesting a zoning 
change in order to build a 33-story, luxury apart- 
ment building in Chinatown. The plans were ulti- 
mately rejected as inappropriate for the neighbor- 
hood. However, the developer's application, togeth- 
er with the city's new planning study, led the 
commission to draft legislation for a new special 
zoning district in Chinatown. The Special Manhat- 
tan Bridge District, which received final approval 
from the New York City Board of Estimate in 
August 1981, was specifically designed to encourage 
new residential development consistent with the 
existing urban design character of the neighborhood. 

The SMBD limits new construction to sites 
requiring "minimal residential relocation" (i.e., sites 
that were vacant or "substantially vacant" as of the 
district's date of enactment). Floor area bonuses are 
available to developers who provide certain ameni- 
ties to the community: construction of low- and 
moderate-income housing units, rehabilitation of 
existing substandard housing units, and community 

'* Zoning Resolution of the City of New York, §§ llb-OO^rie^. 
" Manhattan Bridge Area Study, note 9. 

" New York City Department of Investigation, East-West 
Towers: Report of the Department of Investigation's Inquiry Into 
Certain Events Preceding the Board of Estimate's Grant, on 

facility space. The special district specifically pro- 
vides that before a developer may evict tenants from 
a substantially vacant site, it must have a plan to 
relocate displaced tenants, comply with legal evic- 
tion requirements, and affirm that no harassment of 
tenants has occurred. Proposed projects within the 
SMBD must go through a special permit application 
process in order to gain city approval. 

In theory, the SMBD seemed to offer a favorable 
solution to ameliorate the housing shortage and 
overcrowding problems in Chinatown. At the same 
time, it promised to preserve the character of the 
Chinatown community and minimize the potential 
displacement of tenants. In addition, it seemed to 
provide an example of incentive zoning at its best: 
private capital would be used to create or rehabili- 
tate new housing and provide space for community- 
based programs. However, the flaws in the SMBD 
became readily apparent within a matter of months. 
Luxury housing, not apartments for low-income 
people, was proposed; demolition, not rehabilitation, 
was the result. The practice fell far short of the 

The Special Manhattan Bridge District — 
The Destruction 

Overseas Chinese Development Corporation, 
whose requests for a zoning change had previously 
been rejected, became the first beneficiary of the 
SMBD's new zoning provisions. The developer, 
financed by investors in Hong Kong and Kuwait, 
proposed to build an 18-story, luxury condominium 
building, known as East-West Towers, with apart- 
ments priced at $150,000 each. This application was 
submitted well before the SMBD had been enacted 
and was approved on the same day that the special 
district was created. 

The developer had certified to the City Planning 
Commission that the site was vacant; however, 
tenants were in fact living in two rent-controlled 
buildings on the site. Several months after the permit 
for East- West Towers had been approved, the New 
York City Department of Investigation issued a 
report, documenting the developer's concerted cam- 
paign of tenant harassment.'* 

August 20, 1981 of a Special Zoning Permit, Pursuant to the 
Special Manhattan Bridge District, to Overseas Chinese Develop- 
ment Corporation to Build the East-West Towers Apartmetit 
Complex (1982). 


The department's report showed that in attempt- 
ing to clear the site for construction, the developer 
had cut off heat and hot water during the winter and 
had failed to make repairs of broken windows, fallen 
ceilings, and defective plumbing. The report also 
confirmed that several suspicious fires had been set 
in the building. After enduring several months of 
increasingly intolerable conditions, all of the tenants 
finally left the building when the developer offered 
them various sums of money. The Department of 
Investigation concluded that the developer had 
bought the two apartment buildings with the intent 
of vacating and demolishing them, and that the 
tactics of harassment had eventually driven the 
residents from their homes. 

Although the City Planning Commission ultimate- 
ly revoked the special permit for East- West Towers 
in September 1982," this action provided little 
consolation for the Chinatown residents who had 
been forced out of their neighborhood. 

The harassment of tenants at the East-West 
Towers site is the most dramatic and concrete 
example of how the SMBD has led to the displace- 
ment of low-income minority residents from China- 
town. The anti-harassment provisions of the SMBD 
provided little protection to tenants, since the city 
made no serious attempts to enforce these measures. 
Moreover, it is obvious that allowing new construc- 
tion on "substantially vacant" sites in the SMBD 
will inevitably create incentives for tenant harass- 
ment of the kind which occurred in connection with 
the proposed East-West Towers project. 

This experience, together with the widespread 
community protests which followed, has helped to 
focus attention on other substantive flaws with the 
special district. First of all, despite the lip service 
that is given to the need for low-income housing, the 
SMBD actually encourages high density, luxury 
housing in the midst of a minority community of 
immigrants and working poor. This is confirmed by 
the fact that 5 months after the SMBD was ap- 
proved, another developer applied for a special 
permit to build Henry Street Tower, a 21 -story 
luxury condominium building with apartments sell- 
ing for up to half a million dollars. 

Moreover, the SMBD actually contains disincen- 
tives for the construction of low-income housing. Of 

" The revocation of this special permit, the first in the City 
Planning Commission's history, was based on the developer's 
misrepresentations to the city. See The New York Times, Sept. 21, 

the three amenities a developer can provide in return 
for a new building of increased density, the smallest 
bonus is given for the construction of low-income 
housing units. By comparison, the bonus floor area 
for community space is over three times greater. 
Thus, the developer of Henry Street Tower re- 
ceived 107,000 square feet of additional floor area in 
exchange for providing the Chinatown YMCA with 
space to build a new swimming pool — a community 
facility of dubious importance, given the critical 
housing shortage in Chinatown. 

The widespread prevalence of deteriorating tene- 
ments in Chinatown, together with the high costs of 
new construction suggests that the SMBD's intent to 
give bonuses for rehabilitating housing was a good 
one. However, these provisions are potentially 
dangerous since they offer no protections for tenants 
living in the buildings to be rehabilitated. For 
example, there are no controls on the future rents for 
newly rehabilitated units, and prior tenants are not 
guaranteed a right to return to their previous homes. 
The absence of such guidelines will merely result in 
the displacement of low-income Chinatown resi- 
dents and their replacement by a new, affluent elite 
which can afford to lease renovated tenement 
apartments at escalating rents. 

Finally, the SMBD allows new construction that 
is double the density of the area, as presently 
zoned." It is highly questionable whether such 
increased population density is desirable in a neigh- 
borhood that is already one of the most overcrowd- 
ed in New York City. As a matter of urban design, it 
is obvious that 20-story buildings, such as the 
proposed Henry Street Tower project, are clearly 
out of scale and character with a community of 5- 
and 6-story tenements and several historic land- 

Compounding these problems are the procedural 
irregularities which accompanied the passage of the 
SMBD. Under New York City's Uniform Land Use 
Review Procedure, the city is required to conduct 
public hearings in advance of any action on propos- 
als such as the SMBD. This is designed to encourage 
community participation at initial stages of the 
planning process and to ensure governmental ac- 
countability to local community needs. With few 
exceptions, Chinatown residents knew nothing 

" The SMBD raised the maximum allowable floor area ratio for 
this area from 3.4 (135 dwelling units per acre) to 7.5 (248 
dwelling units per acre. 


about the SMBD or the pubHc hearings held to 
discuss it, until after they read stories about its 
enactment in Chinese-language newspapers. The 
lack of notice to this predominantly nonEnglish- 
speaking community is the basis for a legal challenge 
to the SMBD, currently pending in the New York 
Court of Appeals, the State's highest court.'* 

Moreover, under the New York State Environ- 
mental Quality Review Act, the city is required to 
prepare an environmental impact study whenever a 
proposed action may have adverse effects on the 
environment — which includes such factors as popu- 
lation density, socioeconomic considerations, and 
the existing character of the community. The city's 
failure to conduct environmental impact studies on 
the SMBD^" or on the proposed Henry Street 
Tower project,*' which was approved by the city in 
April 1983, is also being challenged in the New York 
State courts. 

The issues raised in these lawsuits go to the heart 
of the problems described above. The deft manipula- 
tion of technical zoning mechanisms, the exclusion 
of genuine community participation in governmental 
decisionmaking processes, and the extreme demands 
upon a limited supply of housing — these are all 
factors which effectively deny Asian Americans 
equal opportunity of access to private housing in 
New York City. If zoning provisions such as the 
SMBD are allowed to remain in effect, Chinatown 
residents will eventually be forced out of their 
homes to make way for the luxury developments 
favored by powerful real estate interests. 

'• Jin V. Board of Estimate, 115 Misc. 2d 774 (S. Ct. 1981), rev'd, 
92 A.D.2d 218 (1st Dep't 1983), appeal pending. 


Ultimately, of course, zoning is only a limited tool 
which does not provide a comprehensive solution to 
the desparate shortage of decent and affordable 
housing for minorities and the poor. Other means to 
encourage the construction of new, low-income 
housing units, such as tax incentives to private 
developers and substantial increases in government 
subsidy programs, must be explored and implement- 
ed. However, the experience with New York City's 
Special Manhattan Bridge District has demonstrated 
that zoning policies, despite their laudable purposes, 
may have precisely the opposite effect by destroying 
minority communities. 

If the intent of the Special Manhattan Bridge 
District was to generate incentives for the creation 
of new, affordable housing — as proponents claimed 
at its inception — then it has failed to do so. In fact, 
its net effect has been to diminish the existing 
housing supply for low-income Chinatown residents. 
It is zoning as a design for destruction. 

The task of enlightened planners in the next 
decade will be to develop new zoning techniques — 
with effective enforcement mechanisms — that can 
withstand the manipulation of avaricious developers. 
Such zoning laws, formulated after consultation 
with community residents, will hopefully bring us 
closer to the goal of providing decent and affordable 
housing for all people in this country. 

Id.. Index no. 28394/81 (S. Ct. N.Y. Co.) (Gammerman, J.). 
Chinese Staff and Workers Association v. City of New York. 


Housing and Development Restrictions and Social Equity 

H.M. Franklin* 

The separation of people in metropolitan areas by 
racial and economic characteristics has concerned 
most thoughtful observers of our urban society. 
Those worried by the social implications of this 
pattern are joined by others who regard existing 
ways of allocating land resources in our metropoli- 
tan areas as ecologically irresponsible and economi- 
cally wasteful. 

Inequities in the existing system of metropolitan 
development are insidious to the average consumer. 
The family in a central-city apartment that would 
like to "graduate" to a modest suburban house, for 
example, is not a party to suburban zoning hearings, 
nor is it aware that a sewer moratorium might 
ultimately affect its interests. On the other hand, the 
suburban homeowner does not recognize that the 
location of a new industrial plant in a neighboring 
suburb, or that suburb's exclusionary housing policy, 
may create a surge of modest-income housing 
construction in his area, overloading his schools and 
other public services. The system for allocating land 
for housing is therefore quite invisible to those who 
are most disadvantaged by it. This retards the 
emergence of a broad based political consensus to do 
anything about changing the system. 

Accordingly, the actual process of urbanization 
has rarely, if ever, been the focus of political 
grievance in American society. The continuing 
pressure of metropolitan population growth and the 
shortage of affordable housing, however, could set 
the stage for a new attitude toward urban land in 
which the Federal Government may have to take 
the lead. This new attitude must address systemic 
problems that affect the provision of lower income 
housing opportunities generally, rather than concen- 
trating only on opportunities for racial minorities. 
The future of lower income minority housing oppor- 
tunities is inextricably linked with the fate of lower 
income housing generally. 

Historically, urban development in America has 
been largely a private affair, and the forces of the 
marketplace, combined with citizen attitudes, have 
shaped the physical and social destinies of American 
urban areas. There was a brief period, however, 

when the Federal Government emerged as the 
leading urban planner. 

The New Deal created the National Resources 
Planning Board (NRPB) in the 1930s. The board's 
1937 report, entitled "Our Cities — Their Role in the 
National Economy," recited a litany of urban prob- 
lems that is still familiar: traffic congestion, substan- 
dard housing, the concentration of the poor in 
blighted areas, lack of public open space, undue 
concentration of land values, and inequitable appor- 
tionment of local tax burdens. The only item that 
could be added to the 1937 list today is increasing 
racial separation. The presence of blacks in the cities 
of the 1930s had not yet become so deeply intertwin- 
ed with the presence of poverty. The metropolitan 
areas themselves had become so fragmented politi- 
cally and economically that the NRPB urged "an 
enlargement and development of local government 
areas, powers, and techniques, irrespective of the 
political boundary lines which crisscross these com- 
plex urban districts." The focus of the physical 
problem, as well as the resource for properly 
planning metropolitan areas, was land. "The nonex- 
istence or nonenforcement of rational land policies," 
it concluded, "are the underlying factors in some of 
the most acute problems of urban life." 

The Federal Government, early in the New Deal, 
was acting upon some of these approaches and 
conclusions and crossing the traditional barrier of 
assumed State power by directly involving itself in 
city and regional planning and building. Indeed, 
under pressure of the unemployment emergency, 
both State and local governments invited such 
action. The Public Works Administration not only 
financed construction of schools, sewage systems, 
bridges, roads, and dams, but also took over the 
actual building of housing for low-income people. 

Since then many Federal programs, of course, 
have influenced settlement and land-use patterns 
without overtly claiming to do so. The Federal 
highway and housing and community programs, 
airport development, open space, development of 
sewer and sewage treatment programs all have 
affected the character of metropolitan areas. In the 

* Consulting Director, Metropolitan Housing Program, Poto- 
mac Institute. 


19th century, the disposal of public lands for 
homesteading, railroads, and municipal development 
directly afTected the shape of America. When the 
Nation was spurred to conquer the wilderness and 
overcome the economic and human crises of earlier 
days, the Federal Government was planner and 
builder of housing and communities. Today, in this 
area it has retreated to the role of financier and 
insurer, and with diminishing conviction and re- 
sources even in that limited function. 

This brief history is recited to indicate that a more 
active, and perhaps more direct. Federal role in 
dealing with our metropolitan problems would not 
be novel. Conditions today, however, intrude ques- 
tions of race into already complex policy choices. 
And general perceptions of environmental values 
are far more developed. A sense of "crisis" on these 
issues does not exist, and is unlikely to emerge in the 
absence of calamitous domestic difficulties. Never- 
theless, despite substantial cutbacks in Federal aid, 
the volume of grants directly or indirectly affecting 
metropolitan development amount to many billions 
of dollars and could provide enormous leverage for 
reform and innovation in dealing with metropolitan 
problems if a decision were made to do so. 

A more equitable distribution of housing opportu- 
nities throughout a metropolitan area would avoid 
the increasing separation of the Nation's population 
by race and economic status. In the absence of 
constraints and incentives stemming from court 
action or national policy, communities will tend not 
to plan or zone to accommodate housing needed by 
lower income households in their region. Land use 
and related controls do not produce housing and 
rarely create incentives for it. They can greatly 
inhibit housing, however. In the present state of land 
use planning and zoning in the United States, and for 
the foreseeable future, the regulation of land use will 
remain largely ad hoc, highly localized, and less and 
less receptive to needed lower income housing. 

Development patterns in the suburbs today are the 
legacy of legislative actions and judicial doctrines 
that developed during the first three and a half 
decades of this century, policies that guided the 
explosive growth of the suburbs following the end of 
the Second World War. The zoning power of local 
governments to separate land uses is a practice that 
swept the Nation in the 1920s under a significant 
Federal initiative: model legislation drafted under 
the sponsorship of the U.S. Department of Com- 
merce. Ironically, that such power would be used 

for socially and economically exclusionary purposes 
was accurately predicted in 1924 by the Federal 
district judge in the famous Eculid case. In holding 
that zoning was invalid under the Federal Constitu- 
tion, he remarked that "in the last analysis, the result 
to be accomplished is to classify the population and 
segregate them according to their income or situa- 
tion in life." The U.S. Supreme Court reversed that 
decision and upheld the zoning power of local 
government. In doing so the opinion of Justice 
Sutherland turned the lower court's concern with 
exclusion on its head by describing an imagined evil 
scenario (no doubt influenced by the character of 
immigrant-filled New York City tenements of the 
day) in which: 

The development of detached house sections is greatly 
retarded by the coming of apartment houses, which has 
sometimes resulted in destroying the entire section for 
private house purposes; that in such sections very often the 
apartment house is a mere parasite, constructed in order to 
take advantage of the open spaces and attractive surround- 
ings created by the residential character of the district. 

He concluded that for these and other reasons the 
zoning power could not be found to be so arbitrary 
and unreasonable, and without any relation to the 
public health, safety, and morals, as to be declared 
an invalid exercise of the State's police powers. In 
effect he recognized that socioeconomic exclusion 
was the fundamental rationale for zoning in the first 

The simple separation of incompatible land uses 
that characterized zoning in its early days has in 
recent years been supplemented by more sophisticat- 
ed land use controls embodied in zoning and 
subdivision ordinances and building regulations. The 
specific practices having exclusionary intent or 
impact have been exhaustively documented: exclu- 
sively large-lot zoning, minimum house size require- 
ments, exclusion of multifamily housing and mobile 
homes, restrictions on numbers of bedrooms, high 
infrastructure specifications in subdivisions, discrim- 
inatory withholding of special exceptions or refusals 
to permit sewer and water connections, and others. 
Following the cue provided by the Supreme Court's 
opinion in Euclid, for decades these were usually 
viewed by courts as matters of local regulatory 
discretion. Legal challenges have come mainly from 
local landowners seeking greater profits from a more 
intensive use of their property, or from neighbors 
complaining that newly authorized uses would ruin 


their peaceful neighborhood. The needs of outsid- 
ers — lower income families and others likely to live 
in the newly developed housing — were typically not 
given judicial recognition. 

In the absence of any likely forceful regulatory 
intervention by the Federal Government to over- 
come local exclusionary land use policies, the social 
housing movement has therefore had to live in 
alliance with the only supportive political forces of 
any strength: the private developer, the homebuild- 
er, and to some extent the construction labor unions. 
The goals of the social housing movement do not 
seem reachable except through a program of vigor- 
ous production and rehabilitation of housing, which 
in turn depends primarily on private market and 
Federal monetary and subsidy policies. But the 
Federal Government has now withdrawn from an 
actively interventionist position by severely reduc- 
ing subsidies for housing construction and rehabilita- 
tion; it has adopted a freemarket, trickle-down 
posture with respect to meeting the housing needs of 
the less advantaged. 

Social values of our society have deep roots in 
basic notions of equality and the increase in individu- 
al choices and opportunities. Few people seek an 
American future of an aristocracy of wealth housed 
in palatial suburbs and a peasantry of wage earners 
confined to declining neighborhoods, crowded into 
sterile, monotonous, multifamily projects, or as- 
signed to pockets of dilapidated housing on the 
urban fringe. Most would instead embrace another 
vision: the extension of the urbane values of the 
cities into the suburbs without the overcrowding, 
the social tensions, and the other negative facets 
associated with older, larger cities. The variety, the 
color, and the cultural stimulation of the city could 
invigorate suburban areas of the future, given a 
higher density urban form and the dropping of 
barriers to settlement by people of diverse back- 
grounds and economic circumstances. 

Any doubts about the strength of claims of 
inclusionary values on the American conscience are 
laid to rest by decisions of Federal and State courts. 
Local zoning practice may not meet the standards of 
our egalitarian credo, but the credo is enforced 
frequently in the courts. The Federal courts have 
been in the forefront of the effort to overcome 
racially exclusionary practices, and some leading 
State courts have lead the attack on economic 
exclusion. Just as an individual cannot refuse to sell a 
home to another because of his race under civil 

rights legislation, a locality cannot use its govern- 
mental power to regulate land uses so as to prevent 
the construction of a housing development by reason 
of the race of its prospective occupants. Such power 
used for economic exclusion is also coming into legal 

A frontal attack on exclusionary land use practices 
in the suburbs was begun in the courts in the mid- 
1960s. Its leading edge was the conventional home- 
builder who found that the market for single-family, 
tract-built homes was slipping. Unexpectedly, he 
became the champion of high density apartment and 
townhouse living, largely because of Federal subsi- 
dies. After the enactment in 1968 of major, federally 
subsidized housing programs, conventional devel- 
opers and homebuilders were joined by sponsors of 
lower income housing in the fight against suburban 
exclusionary practices. With subsidized lower in- 
come housing then freed from the shackles of local 
government approval as a prerequisite to Federal 
funding of a project, with the increased Federal 
appropriations that contrasted those programs from 
their predecessors, and with the emphasis of the first 
Nixon administration on high production, the pres- 
sure to construct lower income housing in the 
suburbs became intense. Public interest groups, 
seeing these pressures as providing an opportunity to 
overcome suburban barriers, took on the cause of 
builders and sponsors of subsidized housing and 
invested the necessary time, money, and energy to 
mount a relatively steady attack in the courts. 

The result was a large body of law that, through 
dozens of cases, imposed a standard of specific 
nondiscriminatory conduct on both HUD and local 
government. The most ambitious goals sought by 
proponents of social housing, however were not 
reached: beginning in the early 1970s the Supreme 
Court began a moderate retreat on tangential issues 
affecting the role of the judiciary in such disputes. 
The ability of certain interests (other than "testers") 
to become cognizable parties to lawsuits has been 
limited, far-reaching systemic remedies that were 
sought were not granted, and the standards for 
proving discrimination were tightened. But overt 
race discrimination in the housing and land use area 
became a far greater risk to local governmental 
authorities than ever before. 

Where racial discrimination was not involved, the 
Federal courts have broken little new substantive 
ground in the last decade. For example, the Supreme 
Court has held that there is no right to housing 


guaranteed by the Constitution, and lower Federal 
courts have held that neither the Federal Govern- 
ment nor local government has any constitutional or 
statutory duty to construct low- and moderate-in- 
come housing. The Supreme Court has also held 
that local government actions that discriminate 
against housing for lower income persons — as distin- 
guished from housing for a racial minority — do not 
violate the equal protection clause of the Federal 
Constitution, and such actions can include the 
requirement for voter approval of public housing 
projects or changes in land use controls. 

A potentially more powerful inclusionary stan- 
dard may come from seminal decisions of leading 
State courts. New Jersey in particular, whose 
Supreme Court is a traditional pace setter in land use 
jurisprudence nationally. Reversing a long line of its 
own precedents on the basis of changes noted in 
demographic patterns in metropolitan areas of the 
State, the New Jersey court held in its famous Mount 
Laurel decisions (1975 and 1983) that every develop- 
ing municipality in New Jersey must by its land use 
regulations, presumptively make realistically possi- 
ble an appropriate variety and choice of housing. It 
held that a developing municipality cannot foreclose 
the opportunity of people for low- and moderate- 
income housing, and in its regulations must affirma- 
tively afford that opportunity, at least to the extent 
of the municipality's fair share of the present and 
prospective regional need for such housing. 

The New Jersey doctrine is significant for these 

1. It recognizes that the injury sustained by the 
plaintiffs stems from economic rather than racial 

2. The legal basis of the doctrine is an interpreta- 
tion of the State constitution rather than the 
State's zoning enabling act, which means that a 
State constitutional amendment would be required 
to overrule the decision (and attempts at such an 
amendment have failed). It further insulates the 
State doctrine from potentially adverse treatment 
by the U.S. Supreme Court. 

3. The measure of a developing locality's affir- 
mative land use obligation is its "fair share of the 
present and prospective regional need" for low- 
and moderate-income housing, giving regional 
housing-allocation planning potentially significant 
legal meaning in New Jersey. 

4. The typical municipal practice of premising 

the exclusion of uses on the avoidance of fiscal 

burdens is specifically prohibited. 

In addition, the New Jersey decision specifies that 
the new standard for regulating land use consistent 
with the region's general welfare is also consistent 
with the protection of legitimate ecological values. 
This was recently demonstrated by the court's 
decision that New Jersey's Department of Environ- 
mental Protection has the statutory authority to 
impose fair share housing quotas on developers 
seeking to develop coastal areas under State regula- 
tions protecting the coastal zone. 

An "inclusionary" lessor for growth-management 
decisionmaking may be learned from cases such as 
Mount Laurel, reinforced to some extent by other 
judicial decisions dealing specifically with compre- 
hensive growth-management programs. When a 
locality adopts a comprehensive, articulated pro- 
gram to control its population growth over the 
foreseeable future, it places its public policy inten- 
tions visibly on the table for judicial scrutiny if 
challenged, and the inclusionary nature of its pro- 
gram may be essential to its legal success. 

There emerge from these cases, particularly in the 
State courts, guidelines of potential significance for 
land use decisionmaking. Comprehensive local regu- 
lations that limit population densities in growing 
suburban areas may be found invalid unless the 
community is absorbing a reasonable part of the 
region's housing needs. The community's fair share 
of anticipated regional growth will depend on many 
factors, but absorption of significant low- and 
moderate-income demand for housing is likely to be 
a major one. 

Balancing and accommodating conflicting eco- 
nomic, environmental, and social values must take 
place within a growth management decision-making 
process. Most of these decisions are taken, however, 
on a case-by-case basis, and frequently no general 
standards guide the decision-makers. A process for 
accommodating conflicting values and judging per- 
formance on the wide array of decisions can be 
devised by a conscious reevaluation of the existing 

Fifty years of experience with Euclidean zoning 
have taught us that a detailed premapping of land 
areas — or frozen "end state" planning — does little to 
produce rational land-use decisions. Legislative fore- 
sight is not strong enough to translate relative values 
into absolutes, and the assumed prescience of plan- 


ners easily falls prey to overriding economic forces 
and political interests. Land use controls are a rare 
example of a regulatory scheme that must be 
designed to contemplate and accommodate continu- 
ous change in contrast with almost all other local 
regulatory schemes, which are intended to be 
relatively static. 

But what, then, is to guide case-by-case decision- 
making if premapped solutions have failed? By what 
criteria do we judge how much growth is good 
growth? By what standards do we decide how many 
low- and moderate-income families (and, of course, 
minority households) are to be housed in order to 
provide diversity and equal opportunity? Can these 
objectives be defined with enough precision to guide 
case-by-case decisionmaking rather than escaping 
into the general and amorphous, though pleasant 
sounding cliches that abound in so many master 
plans? The answer to these questions must be 
affirmative, and it is vital that urban areas be 
provided with the incentives to make the attempt. 

Case-by-case land use decisionmaking will always 
remain most difficult, simply because even if a 
weighing of competing principles might suggest a 
clear policy in the abstract, the facts supporting a 
specific development proposal must be carefully 
sifted. The immediate effects of a proposed develop- 
ment are often in legitimate dispute, and the more 
far-reaching effects of a proposed development are 
often virtually unknown. For, in assessing the 
impacts — both positive and negative — of a proposed 
development, decisionmakers are often not dealing 
in establishable facts but in predictions, and are often 
measuring these predictions against a range of 
acceptability rather than a received truth. 

In most major land use decisions, those who 
decide must, therefore, have the insight of Sherlock 
Holmes, the foresight of the Delphic Oracle, and the 
wisdom of Solomon. 

The existing system of decisionmaking would 
frustrate anyone with these qualities. Generally 
there is no agreed upon limit to the qualities. 
Generally there is no agreed upon limit to the 
quality or quantity of "evidence" that may be 
provided by the proponents or opponents of charge. 
Hearings can continue indefinitely. Attempts to 
influence the decisionmaker take on the aura of a 
political campaign. And this is not surprising, since 
the decider is legally "legislating," and even the 
most diligent, unbaised, and thoughtful decisionmak- 
er is caught up in a maelstrom of contention. 

Unfortunately most jurisdictions consider rezon- 
ings — the major method of land use decisionmak- 
ing — to be "legislative" in character even if a 
specific site is involved. As such the decisions are 
subjected to only rudimentary procedural require- 
ments and often are "political" in the worst sense of 
that term. 

A small but growing number of jurisdictions, 
however, regard such decisions as "quais-judicial" 
determinations. So characterized, all site specific 
development decisions are required to be resolved 
by application of predetermined planning norms and 
appropriate findings of relevant facts. Judicial scruti- 
ny is potentially much greater than is the case with 
"legislative" decisions, and thus judicial review is far 
less frequent because those who decide are guided 
by fair and thorough standards. This introduces a 
greater degree of rationality and reduces the oppor- 
tunity for discrimination, abuse, plain ignorance, and 
surrender to parochial political or financial pres- 
sures. A process that accommodates growth, equity, 
change, planning, and reason can be more readily 
fashioned if it is not immunized from the standards 
applied by the society to quasi-judicial decisioimiak- 

The twin objectives of racial inclusion and envi- 
ronmental protection can be sought most effectively 
by a reformed growth management decisionmaking 
process that the Federal Government could encour- 
age at the local and metropolitan area. Model 
standards are at hand; the work of the American 
Law Institute, the 10-year old recommendations of 
the Rockefeller Task Force on Land Use, and the 
1978 American Bar Association's report ("Housing 
For all Under Law") provide useful guidance, 
which are embedded in our system, but would 
structure the local decisionmaking process to more 
likely take regional needs — both social and environ- 
mental — into account. 

Federal resources might be applied to encourage 
new forums and processes for such decisionmaking 
just as a Federal model legislation brought into 
being State zoning legislation. This must grapple 
with new methods for dealing with development 
decisions that shape urban regions fiscally, environ- 
mentally, and socially while allowing for local 
experimentation and creativity. Racial and economic 
justice is now thwarted by a system that also inflicts 
environmental damage and stimulates lawless regu- 
lation and decisionmaking. 



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