Biden Takes on Local Zoning Laws

I t’s another game of executive-order ping-pong. President Obama made a variety of efforts to insert the federal government into local zoning debates and make it easier to claim discrimination in housing. But Trump rolled them back. And now Biden is putting the old rules into effect again, albeit with some important tweaks and some new rules of his own.

The policies at issue here go to the heart of our housing and anti-discrimination laws. They should be set by Congress, not left to the White House to change every time a new party takes office. But it’s too late for that, and there’s a Democrat in the White House, so all conservatives can do at the moment is watch.

President Obama created the “Affirmatively Furthering Fair Housing” (AFFH) rule in 2015. The mouthful of a name, at least, came right from the federal statute books: The Fair Housing Act says that when federal agencies give housing grants to lower-level governments, the agencies must act “in a manner affirmatively to further” the purpose of the act, which prohibits racial discrimination in housing.

Obama used that vague language to impose major conditions on federal money. Essentially, to get access to the roughly $40 billion in housing and development subsidies that the federal government makes available each year — enough money to give every person in the country $120 — lower governments would need to go through an onerous process of analyzing racial and economic segregation in their regions and making concrete plans to socially engineer such problems away. In other words, the plan was to take Americans’ money through federal taxes, and then turn around and use that money to override their local laws, with the goal not of fighting illegal discrimination per se, but of remaking neighborhoods from the top down to have more economic and racial balance.

The plan never really got off the ground, though, because Donald Trump took over shortly after it had gone into effect. Ben Carson, Trump’s housing and urban development secretary, at first floated a replacement with a “YIMBY” — “yes in my backyard” — twist. The focus would be deregulation rather than social engineering and racial bean-counting. Some local zoning laws are an enormous burden on the economy, the thinking went, because they prevent people from moving to where the jobs are — and the federal government should not be giving affordable-housing funds to places that deliberately pass laws to make housing unaffordable. Carson’s plan could have achieved some of the same aims as Obama’s without such a divisive, prescriptive approach, though it still would have used federal tax dollars to change local laws.

Last year, though, Trump decided that this wasn’t the Suburban Lifestyle Dream either, and essentially scotched the whole thing. The final rule said that grant recipients could “affirmatively further” fair housing however they wanted, just as long as they were doing something.

Biden is getting rid of Trump’s change, albeit with a big concession to the old rule’s critics. The administration took its first big step today, publishing an “interim final rule” (which goes into effect July 31) in the Federal Register. The rule says jurisdictions need to actively reduce segregation in order to receive federal funds — but it no longer requires an elaborate, expensive analysis of current segregation patterns as part of the process. The administration reportedly “intends to undertake a separate rulemaking process to improve the rule to help communities achieve fair housing outcomes without additional burden,” however.

The range of policy options above is interesting to consider from a conservative perspective. As I’ve written before, many zoning laws — in the cities as well as the suburbs — really are an enormous burden to property rights, an impediment to social mobility and integration, a driver of ridiculous housing costs, and a limiter of economic growth. We on the right obviously shouldn’t support bad regulations, but it is better to handle these things at the state and local level than for the feds to step in and remake the country by fiat. And to the extent the federal government does need to be involved, concrete, bipartisan rules from Congress would be better than the executive branch making things up as it goes.

The same process is playing out regarding the legal doctrine of “disparate impact.” Basically, the civil-rights laws passed in the 1960s forbade racial discrimination in various areas of life — but courts eventually broadened this prohibition to include race-neutral rules that disproportionally affect one group or another, even if the rules were not enacted with any discriminatory intent.

Under the doctrine, when a business practice has a disparate impact, the burden of proof in a discrimination lawsuit “shifts” to the accused, who must show that the practice has a legitimate business purpose. This can make life difficult for businesses, because countless normal practices, from checking criminal records to requiring high-school degrees to giving raises to workers who are being courted by other employers, have a disparate impact by race or sex. For employment discrimination, Congress eventually wrote this rule right into the law, but for housing discrimination, it still stems fromcourt decisions and a 2013 Obama-administration rule. In 2015, the Supreme Court ruled that the Fair Housing Act implicitly allows disparate-impact suits, with Anthony Kennedy voting with the liberals in a 5–4 decision.

Last year, the Trump administration struck a blow at this thinking with a fairly technical rule that aimed to stymie disparate-impact allegations while staying within the Court’s interpretation. But the new rule was promptly held up in court, and Biden is soon proposing a replacement that is expected to more or less return to the Obama-era standard.

And that’s not all that’s happening in the realm of housing. The Biden administration is also going after home appraisers, based on a belief that appraisers undervalue homes that are owned by blacks or located in black neighborhoods. Edward Pinto and Tobias Peter of the American Enterprise Institute have challenged this notion, pointing out that it’s hard to account for all the variables that drive differences in home values across neighborhoods, and that human appraisers’ valuations roughly track those given by race-blind algorithms regardless of the homeowners’ race. Nonetheless, the administration promises “a first-of-its-kind interagency initiative” that will “utilize, quickly, the many levers at the federal government’s disposal, including potential enforcement under fair housing laws, regulatory action, and development of standards and guidance in close partnership with industry and state and local governments, to root out discrimination in the appraisal and homebuying process.”

On top of that, Biden has endorsed a sort of AFFH for transportation funding, though this is something Congress would have to sign off on. Places with “exclusionary” zoning rules could no longer fix their highways with federal money.

The Democrats have the White House until early 2025, and they have Congress, too, this year and next. For good or ill, it’s their turn to smack the ping-ping ball.