Abstract

Excerpted From: Jessica Xu, Awarding Racial Segregation: the Low-income Housing Tax Credit as a New Racially Restrictive Covenant, 70 UCLA Law Review 596 (August, 2023) (224 Footnotes) (Full Document)

The federal government created public housing programs to address rapid population growth and the lack of available housing. In 1974, the U.S. Congress created the first comprehensive rental assistance program, known as Section 8, through which the federal government provided monetary compensation to private landlords who agreed to rent to eligible low-income families. In the 1980s and 1990s, Section 8 landlords who provided rental units to low-income tenants began to withdraw from the program to charge market-rate rent. In response to the dwindling supply of affordable housing, Congress created the Low-Income Housing Tax Credit (LIHTC) in 1986, through which the federal government grants tax credits to investors and developers who rent to low-income tenants for thirty years.

The LIHTC [Low-Income Housing Tax Credit] program has become the predominant form of government-subsidized affordable housing, surpassing Section 8. By 2018, the LIHTC [Low-Income Housing Tax Credit] program created approximately 3.23 million units of subsidized housing, while the U.S. Department of Housing and Urban Development (HUD) only administered one million units of public housing. As the LIHTC [Low-Income Housing Tax Credit] program continues to grow and the federal government moves away from the Section 8 program, it is important to compare the differences between LIHTC [Low-Income Housing Tax Credit] and Section 8 and examine how these differences impact the communities these programs are meant to serve: low-income tenants.

Racial discrimination and segregation have significantly influenced the contemporary housing landscape in the United States, as programs that strive to support low-income tenants disproportionately affect Black, Native, and Latinx communities. Black, Native, and Latinx people are more likely than white people to be extremely low-income tenants. Specifically, 19 percent of Black households, 17 percent of Native households, and 14 percent of Latinx households are extremely low-income renters, whereas only 6 percent of white households are extremely low-income renters. As a result, people of color are disproportionately forced to face the significant affordable housing shortage.

Despite the racial disparities among extremely low-income tenants, federal housing subsidy programs have historically offered little help. They have long been criticized for perpetuating racial segregation and fostering greater concentrations of low-income people in high-poverty neighborhoods. Federal and local governments officially and explicitly segregated these programs to group Black people into particular areas. As a result, the government fostered a physical separation of Black and white neighborhoods, which led to the exclusion of Black people from the economic, political, and social benefits of home ownership. Further, these disadvantages indicated social inferiority, exacerbating segregation in other areas, such as education and employment, and creating lasting consequences for generations.

The central objective of this Comment is to explore the gap between two federal subsidized housing programs--Section 8 and LIHTC [Low-Income Housing Tax Credit]--that provide dramatically different civil rights protections for low-income tenants, who are disproportionately people of color. Specifically, Section 8 tenants are entitled to civil rights protections under Title VI of the Civil Rights Act and Section 504 of the Rehabilitation Act, whereas LIHTC [Low-Income Housing Tax Credit] tenants are not. In addition, LIHTC [Low-Income Housing Tax Credit] tenants are deprived of the Section 8 due process protections that shield tenants from any changes to their terms of tenancy or termination pursuant to the administrative plans of each local housing authority. Given that only 27.7 percent of LIHTC [Low-Income Housing Tax Credit] tenants are white, these gaps in civil rights and due process protections disparately affect communities of color and perpetuate the government's history of racial segregation and subordination through housing.

This Comment examines how the LIHTC [Low-Income Housing Tax Credit] program and its structure deprive low-income tenants of civil rights and due process protections they would otherwise have under the Section 8 program and how these discrepancies disparately affect communities of color. Part I explores the history of federal housing assistance and, specifically, how race influenced the government's facilitation of these programs. Part II discusses how the use of a tax credit under the LIHTC [Low-Income Housing Tax Credit] program deprives LIHTC [Low-Income Housing Tax Credit] tenants of civil rights protections under Title VI and Section 504 of the Rehabilitation Act. Part III explains the differences in due process protections between the LIHTC [Low-Income Housing Tax Credit] and Section 8 programs. Part IV explores how Priscilla Ocen's term “new racially restrictive covenants” applies to the government's treatment of LIHTC [Low-Income Housing Tax Credit] tenants, who are predominantly low-income people of color. Throughout, this Comment strives to underscore how these discrepancies between LIHTC [Low-Income Housing Tax Credit] and Section 8 disproportionately harm low-income communities of color. The Comment concludes by arguing that the LIHTC [Low-Income Housing Tax Credit] program is a continuation of the government's historical practices of racial segregation through housing.

[. . .]

The LIHTC [Low-Income Housing Tax Credit] and Section 8 programs exist as a mechanism for the federal government to support low-income tenants through federally subsidized rent programs. Although the tenants' needs in these programs do not differ, the civil rights and due process protections afforded to tenants do. Further, because the federal government has increasingly relied on LIHTC [Low-Income Housing Tax Credit] as the primary form of federally subsidized housing, the government must explore feasible solutions to ensure the same protections. Low-income tenants who seek federal assistance with rent should not be differentiated and afforded different civil rights and constitutional protections. Because LIHTC [Low-Income Housing Tax Credit] tenants are predominantly low-income people of color, these deprivations disproportionately harm communities of color and continue the government's history of racial discrimination, segregation, and oppression through federally subsidized housing programs.

J.D., David J. Epstein Program in Public Interest Law and Policy, Critical Race Studies, UCLA School of Law, 2022; B.A., University of California, Santa Cruz, 2018.