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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

tfu

CONTENTS . , \.

,U5

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
words:

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-
ty.«

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
values.*

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-
pleted.'"

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-
cy.

• 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
value.

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.

62.

^^ 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
minorities.

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
precepts.

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
laws.

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
Policy

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
million.

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
University.

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

TABLE 1

States With Majority Black Incorporated Places
1980

Number of

Number of Blacks

Percent of Blacks

State

Places

Blacks

in State

Alabama

269,918

995,623

27.2

Arkansas

38,832

373,192

10.4

California

249,043

1,819,282

13.7

Delaware

35,858

95,971

37.4

Florida

42,789

1,342,478

3.2

Georgia

101

704,769

1,465,457

48.1

Illinois

88,061

1,675,229

5.3

Indiana

107,644

414,732

26.0

Louisiana

386,975

1,237,263

31.2

Maryland

443,983

958,050

46.3

Michigan

824,155

1,198,710

68.8

Mississippi

172,749

887,206

19.5

Missouri

30,925

514,274

6.0

New Jersey

385,666

924,786

41.7

New York

55,502

2,401,842

2.3

North Carolina

61,504

1,316,050

4.7

Ohio

51,770

1 ,076,734

4.8

Oklahoma

2,092

204,658

1.0

Pennsylvania

26,890

1,047,609

2.6

South Carolina

62,859

948,146

6.6

Tennessee

1,027

725,949

0.1

Texas

10,522

1,710,250

0.6

Virginia

144,089

1,008,311

14.3

West Virginia

1,020

65,061

1.6

Total

553

3,998,642

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.

i_
o
u

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LU >.

UL S

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• •

TABLE 2

Indexes of Dissimilarity Between Blacks and Whites Over Central Cities,

Suburbs and Non-Metropolitan Areas, 1950-1980

Dissimilarity Index

Year

1950
1960
1970
1980

13.1
21.4
30.3
32.8

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

-yj).

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.

Results

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.

TABLE 3

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

Black

Percent of Total

Index of Dissimilarity

Percentage

Central Cities

Population

1970

1980

Point Change

Ann Arbor

9,957

9.2

41.1

Battle Creel<

8,087

22.6

—

60.6

—

Bay City

737

1.8

67.8

45.8

-22.0

Benton Harbor

12,581

85.5

—

33.6

—

Detroit

754,274

62.7

78.2

67.4

-10.8

Flint

65,596

41.1

77.7

77.2

- 0.5

Grand Rapids

28,233

15.5

80.0

69.5

-10.5

Jackson

6,053

15.2

67.1

61.4

- 5.7

Kalamazoo

12,327

15.5

72.9

57.4

-15.5

Lansing

16,919

13.4

59.2

38.7

-20.5

Muskegon

8,671

21.2

70.8

42.3

-28.5

Saginaw

27,339

35.3

78.4

77.6

- 0.8

Mean

69.3

56.0

-12.7

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

TABLE 4

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

1970

1980

Index Change

Number Blacks

Percent

Suburb

Index

Percentage Point

1970

1980

Change

Oak Park

7.4

49.2

+ 41.8

3,814

5,197

Dearborn

50.2

72.8

+ 22.6

538

Garden City

26.1

47.6

+ 21.5

140

Madison Heights

57.8

79.0

+ 21.2

240

1,500

Southfield

31.5

46.4

+ 15.1

102

6,976

6,739

Royal Oak

25.9

36.1

+ 10.2

116

346

Taylor

57.5

65.2

+ 7.7

1,266

6,230

Dearborn Heights

52.8

60.5

+ 7.7

425

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.

TABLE 5

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
6).

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

TABLE 6

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

Detroit

Flint

Grand Rapids

Jackson

Kalamazoo

Lansing

Muskegon

Saginaw

Median Value

-.23

-.44

.32

-.11**

306

-.24

-.43*

-.39

-.56*

-.13

-.69**

-.74*

.34**

.61**

.40

.39

.34*

310

.33**

.25**

.40

.21**

.31**

.54

,77*

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

TABLE 7

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

Correlation Coefficients

Michigan Suburbs

Median Value

Median Rent

Ypsilianti City

-.55

-.48

Ypsilianti Township

-.20

-.00

Clinton Township

-.42

-.63*

East Detroit

.93*

.88**

Roseville

.07

-.42

St. Clair Shores

.12

-.61**

Shelby Township

-.50

.31

Sterling Heights

-.47**

.01

Warren

-.25

-.36**

Bloomfield Township

-.74**

-.59

Farmington Hills

.35

-.16

Pontiac

-.47**

-.34

Royal Oak

-.12

.10

Southfield

-.04

.28

Troy

-.07

.22

Waterford Township

-.03

.06

Port Huron

-.37

-.26

Canton Township

-.03

-.45

Dearborn

-.12

.68**

Dearborn Heights

.24

.02

Inskster

-.52

-.50

Lincoln Park

-.34

.23

Livonia

-.63*

-.12

Bedford Township

.08

.36

Taylor

-.28

-.32

Westland

-.43**

-.23

Wyonning

-.00

.13

East Lansing

-.33

-.61**

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

TABLE 8

Housing Rental Discrimination in Detroit, Saginaw and Other Selected SMSAs

White

Black

Discriminatory

Rank

SMSA

Difference

Favored

Treatment

Detroit, Ml (30)

57***

Monroe, LA (29)

52***

Springfield-Chicopee-

Holyoke, MA-CT (29)

52***

Vallejo-Napa, CA (29)

52***

Indianapolis, IN (28)

50***

San Bernardino-Riverside-

Ontario, CA (29)

49***

Los Angeles-Long Beach, CA (30)

46***

Dayton, OH (29)

41***

Tulsa, OK (30)

40***

Canton, OH (29)

38***

Nashville-Davidson, TN (29)

38***

Macon, GA (30)

37***

Fort Lauderdale-Hollywood, FL (28)

36**

Tampa-St. Petersburg, FL (30)

36**

York, PA (29)

35**

Peoria, IL (30)

30**

Fort Wayne, IN (30)

30**

Louisville, KY-IN (30)

30**

Columbus, OH (29)

28*

Cincinnati, OH-KY-IN (29)

27*

Akron, OH (26)

27*

Saginaw, Ml (30)

27*

Stockton, CA (28)

25*

Fort Worth, TX (28)

25*

Asheville, NC (29)

24*

Boston, MA (110)

24***

New York, NY (29)

24*

Oklahoma City, OK (30)

24*

Lexington, KY (30)

24*

Hartford, CT (30)

23*

Lawton, OK (30)

Savannah, GA (15)

Atlanta, GA(119)

16**

Dallas, TX (114)

16**

Sacramento, CA (118)

15**

Milwaukee, Wl (108)

14**

Greenville, SC (30)

Harrisburg, PA (28)

Patterson-Clifton-Passaic, NJ (29)

-3

Albany-Schenectady-Troy, NY (30)

-13

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

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.

TABLE 9

Housing Sales Discrimination in Detroit, Saginaw and Other Selected SMSAs

White

Black

Discriminatory

Rank

SMSA

Difference

Favored

Treatment

Cincinnati, OH-KY-IN (48)

50***

Columbus, OH (40)

48***

Detroit, Ml (51)

42***

Lexington, KY (30)

40***

Fort Worth, TX (29)

38***

New York, NY (50)

38***

Asheville, NC (28)

36**

York, PA (29)

35**

Indianapolis, IN (50)

34***

Milwaukee, Wl (80)

33***

Akron, OH (40)

32**

Tulsa, OK (29)

31**

Savannah, GA (30)

30**

Canton, OH (30)

30*

Paterson-Clifton-Passaic, NJ (30)

26*

Fort Lauderdale-Hollywood, FL (45)

25**

Los Angeles-Long Beach, CA (50)

24**

Macon, GA (45)

22*

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)

-7

Stockton, CA (30)

-7

Lawton, OK (30)

-17

Fort Wayne, IN (25)

-24

Springfield-Chicopee-

Holyoke, MA-CT (30)

-13**

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

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
Segregation

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

TABLE 10

Hispanic Population and Segregation in Central Cities of Michigan, 1980

Central Cities

Ann Arbor

Battle Creek

Bay City

Benton Harbor

Detroit

Flint

Grand Rapids

Jackson

Kalamzoo

Lansing

Muskegon

Saginaw

Mean

Index of

Hispanic

Percent of Total

Dissimilarity

Population

H vs. W

2,251

2.1

25.9

679

1.9

26.9

1,948

4.7

26.6

139

39.7

28,970

2.4

52.2

3,974

2.5

30.6

5,751

3.2

49.8

807

2.0

31.9

1,487

1.9

27.3

7,978

6.3

30.7

1,216

3.0

23.2

6,987

9.0

60.0

35.4

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
tract.

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
cities.

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

TABLE 11

Hispanic Population and Segregation in Selected Suburbs of Michigan, 1980

Suburbs

Ypsilanti City

Ypsilanti Township

Clinton Township

East Detroit

Roseville

St. Clair Shores

Shelby Township

Sterling Heights

Warren

Bloomfield Township

Farmington Hills

Pontiac

Royal Oak

Southfield

Troy

Waterford Township

Port Huron

Canton Township

Dearborn

Dearborn Heights

Inkster

Lincoln Park

Livonia

Radford Township

Taylor

Westland

Wyoming

East Lansing

Mean

Index of

Hispanic

Percent of Total

Dissimilarity

Population

H vs. W

372

1.5

20.2

578

1.3

19.8

781

1.1

18.7

304

18.2

633

1.2

20.6

561

13.5

281

24.3

934

14.4

1,483

13.6

435

1.0

17.2

495

10.8

5,007

6.5

24.0

566

17.3

609

15.2

664

1.0

15.9

1,176

1.8

10.0

1,007

3.0

23.3

649

1.2

9.0

1,642

1.8

22.3

1,215

1.8

14.0

412

1.2

22.2

1,154

2.6

10.5

980

18.3

577

1.0

13.6

1,779

2.3

11.0

1,244

1.5

14.1

1,218

2.0

17.1

926

1.8

24.8

20.4

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

TABLE 12

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

Detroit

Flint

Grand Rapids

Jackson

Kalamazoo

Lansing

Muskegon

Saginaw

Median Value

Median Rent

.45

-.10

-.47

.18

-.63*

-.48**

-.62

.12

-.17*

306

-.21*

310

-.40*

-.20

-.47*

-.32*

-.56**

-.50**

-.69*

-.67*

-.54*

-.50*

-.86*

-.49

-.73*

-.62*

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

TABLE 13

Correlation Coefficients Between Percent Hispanic and Median Housing Value and

Rent— Suburbs

Correlation

Coefficients

Michigan Suburbs

Median Value

Median Rent

Ypsilanti City

.35

.17

Ypsilanti Township

.14

-.02

Clinton Township

-.55*

-.06

East Detroit

-.28

-.21

Roseville

-.48

-.38

St. Clair Shores

-.77*

.16

Shelby Township

-.03

.46

Sterling Heights

-.00

-.26

Warren

-.58*

-.27

Bloomfield Township

-.29

-.40

Farmington Hills

-.08

-.13

Pontiac

-.26

-.00

Royal Oak

-.06

-.01

Southfield

-.34

.29

Troy

-.28

-.05

Waterford Township

-.43

-.13

Port Huron

-.65**

-.58**

Canton Township

.34

.49

Dearborn

-.85*

-.19

Dearborn Heights

.61**

-.66**

Inskster

.49

.53

Lincoln Park

-.14

-.08

Livonia

-.41**

.04

Redford Township

.02

-.31

Taylor

.13

.47**

Westland

.13

.19

Wyoming

-.26

-.19

East Lansing

-.40

-.53**

'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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15. Massey, D.S. "Hispanic Residential Segregation: A Comparison of
Mexicans, Cubans and Puerto Ricans." Sociology and Social Research 65
(April 1981), pp. 311-22.

16. National Advisory Commission on Civil Disorders. A Report of the
National Advisory Commission on Civil Disorders. New York: Bantam Books,
1968.

17. National Commission for Employment Policy. Hispanics and Jobs: Barriers
to Progress, Report No. 14. Washington: A Report of the Commission,
September 1982.

18. Nelson, Kathryn P. "Recent Suburbanization of Blacks." Journal of the
American Planning Association. July 1980, pp. 287-300.

19. New York Times. April 7 and 9, 1976.

20. Pearce. Diana M. "Gatekeepers and Home Seekers: Institutional Patterns
in Racial Steering." Social Problems. 26 (3) February 1979, pp. 325-42.

21. Pettigrew, Thomas. "Attitudes on Race and Housing: A Social
Psychological View" in Segregation in Residential Areas. Edited by Amos
Hawley and Vincent P. Rock. Washington, D.C.: National Academy of
Sciences, 1973, pp. 21-84.

22. Spear, Allen H. Black Chicago: The Making of a Negro Ghetto. 1880-
1920. Chicago: University of Chicago Press, 1967.

23. Taeuber, K. "Residential Segregation." Scientific American. 213 (August),
1965, pp. 12-19.

24. U.S., Bureau of the Census. Age, Sex and Race and Spanish Origin of the
Population by Regions, Divisions and States: 1980. PC 80-Sl-l, 1981a.

25. U.S., Bureau of the Census. Census of Population and Housing: 1970
Census Tracts Final Report. PHC (1), 11, 21, 58, 70 80, 93, 98, 106, 138,
179, 1972.

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of the United States: 1978 Series P-20, No. 336, 1979.

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Colonial Times to 1970. Bicentennial Edition, Part 1, 1975.

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Standard Metropolitan Statistical Areas and Standard Consolidated Areas:
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1-A. Michigan, 1982.

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Part C, 1981a.

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Advance Reports Michigan. PHC 80-V-24, 1981b.

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Development and Research. Measuring Racial Discrimination in American
Housing Markets. The Housing Market Practices Survey, Washington, D.C.
Office of Policy Development and Research, 1979.

34. U.S., Department of Housing and Urban Development. 1980 President's
National Urban Policy Report, 1980.

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Immigration Component of Population Turnaround in Non-Metropolitan
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36. Wolf, Eleanor P. Trial and Error: The Detroit School Segregation Case.
Detroit: Wayne State University Press, 1981.

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

Yale Rabin*

Introduction

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-

TABLE 1

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

Inside Central
Population (Millions) Total Cities

Black

1960 12.3 9.6

1970 16.3 12.9

1980 21.5 15.3

White
1960
1970
1980

Percent Change
Black
1960-70
1970-80

White
1960-70
1970-80

104.2
118.9
138.1

32.5
31.9

14.1
16.1

48.8
48.9
47.0

34.4
18.6

0
3.9

Outside Central
Cities

2.7
3.4
6.2

55.3
70.0
91.1

28.3
82.3

26.6
30.1

'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-

TABLE 2

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
1,000)

1980
Total SMSA
1970 1980 Change % Change Pop

* New York

217

156

-61

-28.1

9120

Los Angeles-Long Beach

241

398

157

65.1

7478

Chicago

126

231

105

83.3

7102

Philadelphia

191

246

28.8

4717

* Detroit

131

35.1

4353

San Francisco-Oakland

109

146

33.9

3253

* Washington

166

405

239

144.0

3060

Boston

54.5

2763

Pittsburgh

13.8

2264

* St. Louis

125

201

60.8

2355

Baltimore

126

80.0

2174

Cleveland

108.9

1899

* Houston

33.3

2905

Newark

141

226

60.3

1965

* Minneapolis-St. Paul

300.0

2114

* Dallas

73.7

2975

Seattle-Everett

266.7

1607

Annaheim-Santa Anna-

Garden Grove

333.3

1932

Milwaukee

300.0

1397

* Atlanta

216

161

292.7

2030

Cincinnati

59.3

1401

-1- Patterson-Clifton-Pasaic

-25

-96.1

448

San Diego

200.0

1862

Buffalo

35.7

1243

Miami

114

193

69.3

1626

* Kansas City

28.2

1327

* Denver

466.7

1620

San Bernadino-Riverside-

70.4

1557

Indianapolis

66.7

1167

San Jose

114.3

1295

New Orleans

38.6

1187

Tampa-St. Petersburg

73.9

1569

Portland, OR

200.0

1242

Totals

2,134

3,416

1,282

60.1

85.007

* 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.

TABLE 3

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

1970

1980

166,033
404,813

240,247
398,020

190,509
245,527

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

Percent of SMSA black
pop. outside central city
1970

1980

23.6
47.4

31.5
42.2

22.6
27.8

10.4
16.2

40.5
54.1

17.9
43.3

32.9
49.4

Black pop. outside central
city but in concentrated
areas**
1970
1980

63,657
169,328

162,218
211,330

75,746
83,056

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
1970
1980

38.3
41.8

67.5
53.1

39.8

67.2

62.4

17.3

56.1

33.8

55.8

70.1

46.2

50.0

Percent change in total
SMSA population 1970-80

5.2

6.2

-2.2

1.8

-4.5

27.2

■2.3

•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
Actions

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
expand.

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
follow.

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
remain.

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

FIGURE I

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

19551 I ^956

'm'm

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

II lit 957-

Hamtramck

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

FIGURE II

Demolished Residential Structures

JI!!IL..»_J.J!JJLJUJI.JIJI.,JU1JU>

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
Transition

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
government.

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.

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

None

n^n

Under

2V2%

(R«a

21/2%

- 4%

t.^i!

5% -

BXl

10% -

29%

(Bin

30% -

49%

50% -

100%

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\ //

i;M.-:::-:r>"/

_ 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

1960

Philadelphia Census Tracts

Philadelphia City Planning Commission

MAP 7

Distribution of Non-White Population 1970

• Public Housing Projects
Each Dot represents
Approximately 100 Persons

1970

Philadelphia Census Tracts

Philadelphia City Planning Commission

MAP 8

Housing Units In Philadelphia Housing Authority Scattered-Site and Leasing

Programs

As of December 31, 1969

o Scattered-Site Public
Housing Units Completed

D Leased Public Housing Units

Symbol = 10 Units

Philadelphia

Planning Analysis Sections

Philadelphia City Planning Commission

Percent Black, 1980

Non-Residential
Less Than 5.0

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

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.

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.

References

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,

1981.
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

1975.
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
Private

The Effects of the Recession and Housing Supply on
Fair Housing

Henry Schechter*

Introduction

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
Development.

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
rate.

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
pressures.

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
mid-seventies.

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

TABLE 1.

Median Family Income

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

1982 Income

$24,433
13,398
16,227
1 1 ,484
16,118

1982 Income

as percent of

all-family

income

100.0%
57.2
69.2
50.6
68.8

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
groups.

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-
partment.

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
unemployment.

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;

TABLE 2.

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

Overall

Number

Rate

White

Number

Rate

Black

Number

Rate

Hispanic origin

Number

Rate

Women who maintain families

Number

Rate

uly 1981

August 1983

7,850

10,699

7.2%

9.5%

5,975

8.029

6.3%

8.2%

1,640

2,347

14.9%

20.0%

595

790

10.0%

12.9%

619

670

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)—
100,000.^

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
Summaries.

would have been added if the 1980 level had
continued.

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
Summaries.

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
rents.

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
locations.

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
advocates.

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.

TABLE 3.

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

Total

47%
29
9

13
3

100%

40%
30
9

16
5

100%

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
certificates.

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
allowance.

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.

TABLE 4

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

Renters

14%
27%
27%
11%
21%

Percent of All Repairs

St. Joseph County
Owners Renters

21%
30%
18%
13%
18%

12%
28%
26%
12%
22%

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

TABLE 5

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-
able.

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
better.

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

John Palffy*

Introduction

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
housing.

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,
1979.

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
passed.

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-
place.

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
housing.^

' 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
way.*

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
housing.

' 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
repaired.'

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

rate).

" 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
Programs

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.

TABLE 1

Housing Allowances Compared with Public Housing

Factor

(percentage of subsidy to each factor)

PHA Housing Allowance

Housing consumption increase
Nonhousing consumption increase
Nonsubsidy cost
Total

.054

.288

.658

1.000

.134

.710

.151

1.000

Cash

.073

.816

.111

1.000

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
increa.ses 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
concentration.

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-
ers.

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.

Conclusion

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
spectrum.

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
housing.

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-
cent."

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
foreclosure.

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-
ment.

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.

Id.

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,
1982.

" 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,
1979.

" 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
percent.

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.

TABLE 1

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

1980
Tax subsidies
Budget authority
Housing payments

1981
Tax subsidies
Budget authority
Housing payments

1982
Tax subsidies
Budget authority
Housing payments

1983
Tax subsidies
Budget authority
Housing payments

(Billions of dollars)

$26.5

$26.7
$ 4.5

$33.3
$30.2

$ 5.7

$36.6
$17.4
$ 6.9

$39.8
$ 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
households.

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
homelessness.

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

452-986 0

TABLE 2

Income of Renter Households, By Race, 1981

Income

Below $3000
Total
Whites
Blacks
Hispatiics

$3000-4999
Total
Whites
Blacks
Hispanics

$5000-6999
Total
Whites
Blacks
Hispanics

$7,000-9,999
Total
Whites
Blacks
Hispanics

$10,000-14,999
Total
Whites
Blacks
Hispanics

$15,000-19,999
Total
Whites
Blacks
Hispanics

$20,000-24,999
Total
Whites
Blacks
Hispanics

$25,000 or more
Total
Whites
Blacks
Hispanics

Households
Number Percent

2,284,000

1,376,000

665,000

243,000

7.9

6.5

13.0

9.7

3,546,000

2,289,000

949,000

308,000

12.3
10.8
18.6
12.3

2,986,000

2,031,000

641,000

314,000

10.4

9.6

12.6

12.5

3,685,000

2,574,000

735,000

376,000

12.8
12.1
14.4
15.0

5,711,000

4,272,000

888,000

551,000

19.8
20.1
17.4
21.9

3,911,000

3,082,000

506,000

323,000

13.6

14.5

9.9

12.8

2,775,000

2,253,000

342,000

180,000

9.6

10.6

6.7

7.2

3,935,000

3,339,000

375,000

221,000

13.6

15.7

7.4

8.8

TABLE 3

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

1970 1980 Change

Median renter income

$6,810

$8,316

$1,506

22.1%

Median rent

117

191

63.2%

Median owner income

$10,486

$15,682

$5,196

49.6%

Median value

$18,486

$40,630

$22,144

119.8%

Median monthly cost

Unmortgaged

104

60.0%

Mortgaged

186

291

105

56.5%

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
Housing

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
administration.

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
housing.

• 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.)

TABLE 4

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

(Households in thousands)

Characteristic

Total
Households

Poor Households

Number in

Subsidized

Housing

Percent in

Subsidized

Housing

All households

83,527

1 1 ,676

1,510

12.9%

Residence
Metro, central city
Metro, other
Nonmetro

24,668
32,232
26,627

4,211
2,911
4,554

841
299
371

20.0%

10.3%

8.1%

Black households

8,961

2,974

659

22.2%

Married couple families
Female householder

49,630
9,403

3,394
3,252

195
706

5.7%
21 .7%

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

32,886
15,172
50,641

5,247
2,997
6,430

840
496
670

16.0%
16.5%
10.4%

Elderly householders

17,312

3,185

433

13.6%

Single-person households

22,508

4,826

589

12.2%

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
action.

• 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
standards.

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

[1976]).

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
market.

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
1936).

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
lenders.

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
pursued.

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,

§340(e).

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
community?

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
lender?

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
markets.

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
profit.

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

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
choice.

Conclusion

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)
(1982).

Address

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-
gages.

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.

TABLE 1

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

At- 8% - $440.26

9% -

482.78

10% -

526.55

11% -

571 .40

12% -

617.17

13% -

663.72

14% -

710.93

15% -

758.67

16% -

806.86

17% -

855.41

Annualized
$ 5,283.12
5,793.36
6,318.60
6,856.80
7,406.04
7,964.64
8,531.16
9,104.04
9,682.32
10,264.92

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

TABLE 2

Calculations

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
plan;

(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-
gages.

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
mortgages.

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

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
population.

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
persons.

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
Innovations

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
available.

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
renters.

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.

100

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.

101

FIGURE 1

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.

102

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
today.

103

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.

104

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-
ket.

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

105

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
histories.

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

106

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
B

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
market.

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-
hoods.

107

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
neighborhoods.

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
1908!

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
damages.

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.

108

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,
attention.

109

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
women.

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
older.

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).

110

TABLE 1

Household Composition 1970 to 1982

Household Type

All households (thousands)
percent

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

1970

1978

1982

63,401

76,030

83,527

100.00%

18.8%

25.1%

26.9%

17.1

22.0

85.9

1.7

3.1

14.0

81.2

74.9

73.0

30.3

29.9

41.2

40.3

32.4

40.0

5.0

7.3

10.7

5.6

5.3

7.9

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).

Ill

TABLE 2

Proportion of Households Headed by Women

1970

All households
White
Black
Spanish

10.7%

8.9%

28.0%

15.3%

1980

14.6%
1 1 .6%
40.3%
20.1%

1982

15.4%
12.4%
40.6%
22.7%

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
1970s.

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
permitted.

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).

112

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-
ness.®

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
households.

Conclusion

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,
1979).

113

Discrimination Against Hispanic Women in Housing

Irene Packer*

Introduction

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
more.

• 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 Ea.st Coast Coordinator,
National Hispanic Housing Network.

114

CHART A

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.

115

CHART B

The Probability of Being Ill-housed if You Are a Poor Woman Heading a Household'

Black .28

White

Hispanic

.18

.26

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

116

CHART C

Age and Household Size Also Affect a Poor Household's Chances of
Living in Inadequate Housing*

Demographic Characteristics

Race/Ethnicity
Black

White

Hispanic

Age
of Head

Household
Size

Fen

65 +

1 person
2-5 persons

.27
.33

30-64

1 person
2-5 persons
6+ persons

.31
.26
.37

under 30

1 person
2-5 persons

.25
.28

65 +

1 person
2-5 persons

.13
.16

30-64

1 person
2-5 persons
6+ persons

.15
.17
.31

under 30

1 person
2-5 persons

.19
.18

65 +

1 person
2-5 persons

.18
.24

30-64

1 person
2-5 persons
6+ persons

.30
.24
.35

under 30

1 person
2-5 persons

.27
.29

Sex of Head of Household
Male

.43
.27

.38
.25
.36

.34
.27

.27
.13

.29
.17
.21

.25
.20

.56
.21

.37
.25
.31

.40
.23

'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.

117

Chart D

Women Who Head Households Must Spend an Inordinately Large Proportion of
Their Incomes to Live in Adequate Housing

% Single-

person

% Multiperson

households

Ratio of adequate

% all

headed by

women

headed

women

housing cost to

total

female-headed

income

U.S.

households

under 65

over 65

under 65

over 65

Under 10%

44.0%

16.9%

19.8%

4.7%

22.0%

25.1%

Under 20%

74.3

44.0

51.6

16.8

55.6

58.3

Under 25%

80.3

53.0

60.5

25.3

64.7

69.0

Under 30%

84.4

60.5

66.8

34.0

71.9

77.2

Under 35%

87.5

67.7

72.8

45.0

77.5

82.8

Under 40%

89.9

73.5

77.3

53.4

82.3

88.5

Under 50%

92,9

81.2

83.3

65.4

88.7

93.0

Under 60%

94.7

86.1

87.0

74.7

91.9

94.9

Under 70%

96.0

89.7

82.2

93.8

96.4

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
demolition;

• 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

118

Chart E

Households Reporting Housing Expenses as Percent of Income, 1976

More than 25% of Income

Hispanic

84.1%
76.3
42.6
15.9
3.6

Income

All

Black

Renter Households

Less than $3,000

78.0%

74.6%

3,000-6,999

57.5

65.5

7,000-9,999

46.2

42.4

10,000-14,999

16.9

12.1

15,000-24,999

4.9

2.7

Over 25,000

1.1

—

All households

43.9

49.0

Homeowner with Mortgage

Less than $3,000

64.6

76.5

3,000-6,999

77.0

77.7

7,000-9,999

53.6

45.6

10,000-14,999

31.7

26.7

15,000-24,999

13.2

10.1

Over 25,000

2.9

2.0

All households

23.0

34.5

Homeowners without

Mortgage

Less than $3,000

54.1

53.4

3,000-6,999

23.3

15.5

7,000-9,999

4.8

6.1

10,000-14,999

0.6

—

15,000-24,999

0.1

—

Over 25,000

—

All households

12.4

19.1

49.8

76.6
56.4
31.7
14.9
2.3
33.2

37.9
6.3

2.8
5.9

More than 35% of Income
All Black Hispanic

68.3%

64.0%

76.5%

47.8

42.1

53.8

12.9

9.2

10.1

3.1

1.2

2.5

0.6

0.5

27.0

63.3
54.8
23.6
7.9
1.5
0.3
9.4

36.7
9.0
0.7
0.1

6.3

31.3

74.8

57.3

17.8

7.6

1.2

19.9

33.8
3.7

9.5

32.1

67.6

44.7

26.3

6.6

3.1

14.3

13.8

1.4

"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.

119

institutional nature are needed to respond to the
housing dilemma facing minority-female households.

Decreasing Housing Supply for Low-Income

Persons

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
households.

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
properties.

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
services.

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

120

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-
vention.

Recommendations

• 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
staff.

• 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
most.

Recommendations

• 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

121

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-
bilitation.

• 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-
velopments.

— 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
projects.

• 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

districts

• Shared housing programs for persons of all
ages should be expanded. In this program, existing
housing in good repair can be utilized without
renovation.

• 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
homelessness.

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.

Recommendations

• Design innovations should be accomplished
through annual local-sponsored design competi-
tions.

• 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.

122

• 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
encouraged.

• 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
problem.

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.

123

country. Many are not now, nor have been, factually
accurate.

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
discrimination.

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

124

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
discrimination.

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.

Conclusion

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-

125

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

126

Bibliography

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.,
1980.

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.

127

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
Families

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.

46-47.

' 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

1830-1831.

128

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

present.

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.
4.

'" U.S., Commission on Civil Rights, A Growing Crisis: Disadvan-
taged Women and Their Children, p. 5 (1983) (Clearinghouse
Publication 78).

129

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-
tory.

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.

130

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
move.'"

Inadequate Protection for Families with
Children

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-
ions.

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.
1042(1975).

" 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)

131

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-
tion."

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,
n.4.

"♦ 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

(1979).

" 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.

132

Overview of Federal Housing Policy: Past
and Present

Federal Housing Policy and Equal Opportunity

Martin E. Sloane*

Introduction

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.

133

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).

134

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.
937(1938).

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-
tion.

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).

135

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

1950-1962

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).
136

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

1962-1980

Executive Order on Equal Opportunity in
Housing

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,

137

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
families.

138

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
title."

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

(1983).

" 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).

139

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
patterns.

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
before.

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-
tance.

Fair Housing in the Reagan
Administration

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).
140

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
housing."

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
lost.

Conclusion

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

141

452-986 0 - 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.

142

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
(1973).

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.

143

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

Gray).

144

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
Homeseekers

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
apparent.

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.

145

TABLE 1

Access to Homes for Sale

Significance
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
asterisks.

68.4

82.2

87.0

95.6

80.4

89.8

71.9

84.6

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.

146

TABLE 2

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
asterisks.

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.

147

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.

148

TABLE 3

Measures Concerning Seriousness of Agent's Interest in Doing Business with
Homeseeker

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
asterisks.

^ Items included are indicated with an x in the left hand column.

Significance

Black

White

LeveP

75.1%

83.4%

***

74.2

78.7

88.1

91.0

—

30.7

30.9

—

82.4

85.7

86.7

92.4

***

32.7

38.0

* *

91.7

91.4

87.0

89.1

—

81.4

86.6

***

53.7

53.5

—

34.1

3.9

10.1

12.3

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.

149

TABLE 4

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.

Significance

Black

White

Leveia

54.6%

49.8%

...

4.0

1.3

...

30.9

17.7

...

32.5

20.5

13.2

10.9

...

49.2

40.3

...

33.8

25.6

...

12.9

8.4

...

55.7

49.4

...

43.7

37.3

...

Qualifying Scale 3.2

2.7

^ 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
asterisks.

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.

150

TABLE 5

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
asterisks.

^ This item refers to discussions about financing of particular houses being shown, rather than financing
in general.

Black

White

Significance
Level a

43.9%

51 .8%

* *

3.8
19.5
29.9

16.9

1.8
27.5
24.4
15.6

...

85.7

93.6

...

45.6

36.4

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.

151

TABLE 6

Courtesy Measures

Homeseeker:
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.).

Significance

Black

White

Level ^

81 .0%

85.4%

21.5

26.8

77.6

82.1

* *

5.1

6.9

—

79.6

85.1

* * *

46.5

42.9

Courtesy Scale

3.2%

3.4%

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
asterisks.

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),

152

TABLE 7

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.

153

TABLE 8

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.

Black

White

123

151

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.

Conclusion

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
help.

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

154

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.

155

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
areas.

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
Council.

156

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
laws.

"Complaint response testing" is employed in
response to a complaint by individuals who feel they
have been the direct victims of illegal housing
discrimination.

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
homeseekers.

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-
ground.

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.

157

452-986 0 - 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
months.

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-
ties.

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
car.

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

1S8

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
manager.

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
illegal.

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,
etc.).

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
neighborhood.").

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-
ship/circulation).

8) Advertising rental units or homes for sale by
word-of-mouth.

159

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
memberships).

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-
norities.

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

160

housing practices, these "badges of slavery" will
continue to weigh as heavily as shackles.

161

America's Blind Spot: The Devastating Impact of
Residential Segregation

Christine Klepper*

Introduction

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-
erations.

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
Council.

162

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-

163

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

Self-Steering

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
areas.

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
choice.

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-
cussed.

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

164

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
communities.

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

165

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-
terns.

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

166

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
black).

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

167

Percent black
residency

0-5%

6-20%

21-50%

51-100%

Percent of total
census tracts

55%

14%

13%

17%

Percent of
loans made

69%

22%

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

168

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

169

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?"

Conclusions

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.

170

Presentation

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
strata.

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.

171

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
housing.

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
complaints.

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-

172

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
conciliation.

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.

173

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.

174

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

175

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
rehabilitation.

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
program.

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.

176

Bibliography

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
paper.

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.

177

Urban Revitalization or Gentrification and
Dislocation

The Extent, Causes, and Consequences of Urban
Gentrification

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-
enon.

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
Census.

178

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,
1980).

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;

179

TABLE 1

Mobility of the Population Into and Out of Central Cities, by Race, 1970-75 and 1975-80

(Numbers in millions)

Total

1970-1975
White

Black

Total

1975-1980
White

Black

Movers out of central cities

13.0

11.8

1.0

13.2

11.8

1.2

Movers into central cities

6.0

5.2

0.7

6.9

6.0

0.7

Net change

-7.0

-6.6

-0.3

-6.3

-5.8

-0.5

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

180

studies in at least two cities report a sizeable
proportion of renovating households with school-
age children (Laska and Spain, 1979; McDonald,
1983).

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
gentrification.

Employment

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-
tors.

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
Circle.

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.

181

452-986 0

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-
ences.

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

182

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
studied.

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
displaced.

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

183

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
numbers.

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.

184

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188

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
today?

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
community.

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
Builders.

189

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
demolished.

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,

190

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
property.

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-
vided.

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.

191

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-
able.

12. moving expenses be paid for actual moving
cost.

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
good.

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
inflation

remove dislocation allowance ceilings for indi-
viduals.

raise maximum homeowners payment from
$15,000 to $22,500.

raise maximum tenant payment from $4,000 to
$4,500.

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-
ernment.

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

dwelling."

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-
ment.

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

192

publicly and privately financed development and

rehabilitation.

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

193

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-
toriums.

5. Militant tenant group in a rental apartment.

6. Good quality rental projects exist in housing
supply.

7. Rent control is in effect or in process.

8. Conversion regulations don't exist or aren't
workable.

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
year.

2. The incidence of displacement was in larger
cities and neighborhoods experiencing revitaliza-
tion.

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
added.)

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

194

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
Dislocation?

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

195

TABLE 1

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

Other**

Specific reason not given**

TOTAL

Percent

41.8

22.9

3.9

2.2

2.0

20.4

5.6

100.0

Incidence of Displacement

Percent of households affected by

private displacement:
Percentage of movers affected by

private displacement:

All
Reasons

1.1
5.7

Non-specific
Reasons Omitted

.8
4.5

'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.

196

conditions rather than displace persons from their
homes."

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-
gram.

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-
tive.

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-
ed:

1. Assisting households to remain in place —
passage of the right of first refusal legislation;
and

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.

197

A52-986 0

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

program:

1. Neighborhood planning to involve neighbor-
hood residents as a comprehensive and continuing
process.

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
condos.

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.

Conclusions

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
solutions.

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

198

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

199

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.

200

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
dollars.

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-
tion.

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

201

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
operations.

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.

Summary

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

202

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

203

Fair Housing Advocacy in the Crucible of Urban
Revitalization

John O. Calmore* ,

Introduction

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-
ed.)

' W. Wilson, The Declining Significance of Race: Blacks and
Changing American Institutions {191&).

204

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
displacement.

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).

205

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.
Kennedy:

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
observed:

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
black."

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

(1978).

'" 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).

206

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.
245(1974).

"' 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
214.
" 599 F.2d 870 (7th Cir. 1979).

207

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."

Conclusion

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).

208

Zoning: Affirmatively to Include or Exclude

Statement

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
compliance.

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-

209

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
maximum.

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
equation.

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

210

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
litigants.

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
discussed.

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

211

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
futile.

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
judiciary.

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
cynicism.

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

212

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

213

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.

214

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

215

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
law.

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.

216

New York courts endorse Mt. Laurel II, a significant
national trend at the State court level will have been
established.

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
recommendation.

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
function.

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.

217

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.

218

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

Margaret Fung*

Introduction

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.

219

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
buildings.

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-
tions.

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
promise.

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).

220

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,
1982.

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-
marks.

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.

221

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.

Conclusion

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.

222

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.

223

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
place.

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

224

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
question.

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

225

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
reasons:

1. It recognizes that the injury sustained by the
plaintiffs stems from economic rather than racial
discrimination.

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
system.

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-

226

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-
ing.

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.

U.S. GOVERNMENT PRINTING OFFICE : 1984 O - 452-986

227

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Full text of "A Sheltered crisis : the state of fair housing in the eighties : presentations at a consultation sponsored by the United States Commission of Civil Rights, Washington, D.C., September 26-27, 1983"

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