Affirmatively Furthering Fair Housing

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 91, 92, 93, 570, 574, 576, 903 and 983

[Docket No. FR-6250-P-01]

RIN 2529-AB05

Affirmatively Furthering Fair Housing

AGENCY:

Office of the Secretary, Department of Housing and Urban Development (HUD).

ACTION:

Proposed rule.

SUMMARY:

Through this rulemaking, HUD proposes to implement the obligation to affirmatively further the purposes and policies of the Fair Housing Act, which is title VIII of the Civil Rights Act of 1968, with respect to certain recipients of HUD funds. The Fair Housing Act not only prohibits discrimination, but also directs HUD to ensure that the agency and its program participants will proactively take meaningful actions to overcome patterns of segregation, promote fair housing choice, eliminate disparities in housing-related opportunities, and foster inclusive communities that are free from discrimination. This proposed rule builds on the steps previously taken in HUD's 2015 Affirmatively Furthering Fair Housing (AFFH) final rule to implement the AFFH obligation and ensure that Federal funding is used in a systematic way to further the policies and goals of the Fair Housing Act. This rule proposes to retain much of the 2015 AFFH Rule's core planning process, with certain improvements such as a more robust community engagement requirement, a streamlined required analysis, greater transparency, and an increased emphasis on goal setting and measuring progress. It also includes mechanisms to hold program participants accountable for achieving positive fair housing outcomes and complying with their obligation to affirmatively further fair housing, modeled after those processes under other Federal civil rights statutes that apply to recipients of Federal financial assistance.

DATES:

Comment due date:

April 10, 2023.

ADDRESSES:

Interested persons are invited to submit comments regarding this proposed rule to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 10276, Washington, DC 20410-0500. Communications must refer to the above docket number and title. There are two methods for submitting public comments. All submissions must refer to the above docket number and title.

1. Submission of Comments by Mail.

Comments may be submitted by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 10276, Washington, DC 20410-0500.

2. Electronic Submission of Comments.

Interested persons may submit comments electronically through the Federal eRulemaking Portal at

www.regulations.gov.

HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Comments submitted electronically through the

www.regulations.gov

website can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically.

Note:

To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the rule.

No Facsimile Comments:

Facsimile (FAX) comments are not acceptable.

Public Inspection of Comments.

All properly submitted comments and communications submitted to HUD will be available for public inspection and copying between 8 a.m. and 5 p.m. weekdays at the above address. Due to security measures at the HUD Headquarters building, an advance appointment to review the public comments must be scheduled by calling the Regulations Division at 202-402-3055 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with communication disabilities. To learn more about how to make an accessible telephone call, please visit

https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

Copies of all comments submitted are available for inspection and downloading at

www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Tiffany Johnson, Director, Policy and Legislative Initiatives Division, Office of Fair Housing and Equal Opportunity, Department of Housing and Urban Development, 451 7th Street SW, Room 5250, Washington, DC 20410-8000, telephone number 202-402-2881 (this is not a toll-free number). Individuals who are deaf or hard of hearing and individuals with speech impairments may access this number via TTY by calling the toll-free Federal Relay Service during working hours at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

Purpose of the Regulatory Action

Housing plays a central role in American life. Where children live and grow up is inextricably linked to their level of educational attainment, their relationship with policing and the criminal justice system, what jobs they can obtain as adults, how much wealth their family can attain, whether they will someday purchase their own home, whether they will face chronic health conditions or other lifelong obstacles, and ultimately the opportunities they will be able to provide for their own children and grandchildren. As the United States Supreme Court noted recently, in enacting the Fair Housing Act more than fifty years ago, Congress recognized the critical role housing played and continues to play in creating and maintaining inequities based on race and color.

See Tex. Dep't of Housing and Cmty Affairs

v.

Inclusive Cmtys Project, Inc.,

576 U.S. 519, 546 (2015) (“The [Fair Housing Act] must play an important part in avoiding the Kerner Commission's grim prophecy that `our Nation is moving toward two societies, one [B]lack, one [W]hite—separate and unequal.' The Court acknowledges the Fair Housing Act's role in moving the Nation toward a more integrated society.”) (internal citations omitted).

Notwithstanding progress in combatting some types of housing discrimination, the systemic and pervasive residential segregation that was historically sanctioned (and even worsened) by Federal, State, and local law, and that the Fair Housing Act was meant to remedy has persisted to this day. In countless communities throughout the United States, people of different races still reside separate and apart from each other in different neighborhoods, often due to past government policies and decisions. Those neighborhoods have very different and unequal access to basic infrastructure (streets, sidewalks, clean water, and sanitation systems) and other things that every thriving community needs, such as access to affordable and accessible housing, public transportation, grocery and retail establishments, health care, and educational and employment

opportunities—frequently because government itself has intentionally denied resources to the neighborhoods where communities of color live. And this segregation is perpetuated by policies that effectively preclude mobility to neighborhoods where opportunity is greater.

Moreover, inequities in real housing choice do not exist solely on race or color lines, but across all the classes the Fair Housing Act protects. Individuals with disabilities too frequently are excluded not just from buildings but from whole communities because of lack of accessible and affordable housing. The widespread lack of quality affordable housing shuts out families with children and members of other protected class groups.

This proposed rule implements the Fair Housing Act's Affirmatively Furthering Fair Housing (AFFH) mandate across the Nation to address these inequities and others that cause unequal and segregated access to housing and the platform it provides for a better life. The proposed rule is intended to foster local commitment to addressing local and regional fair housing issues, both requiring and enabling communities to leverage and align HUD funding with other Federal, State, or local resources to develop innovative solutions to inequities that have plagued our society for far too long. The proposed rule is meant to provide the tools that HUD—together with other Federal, State, and local agencies, as well as public housing agencies—can use to overcome centuries of separate and unequal access to housing opportunity. In line with the Nation's current reckoning with racial and other types of inequity, the proposed rule is designed to assist HUD and its program participants to take advantage of a unique opportunity to fulfill the promise made when the Fair Housing Act was enacted on April 11, 1968.

This proposed rule takes as its starting point the fair housing planning process created by the 2015 AFFH Rule (80 FR 42272, July 16, 2015), which was a significant step forward in AFFH implementation. It then proposes refinements, informed by lessons HUD learned from its implementation of the 2015 AFFH Rule, by feedback provided by States and localities across the country, and by stakeholder input. For example, the proposed rule is designed to reduce burden on program participants by streamlining the analysis of fair housing issues that they must perform, allowing them to focus more directly on the setting of effective fair housing goals and strategies to achieve them. It also would provide greater accountability mechanisms and increase transparency to and participation by the public.

Ultimately, this proposed rule would provide a framework under which program participants will set and implement meaningful fair housing goals that will determine how they will leverage HUD funds and other resources to affirmatively further fair housing, promote equity in their communities, decrease segregation, and increase access to opportunity and community assets for people of color and other underserved communities.

Summary of Legal Authority

The Fair Housing Act (title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3601-3619) declares that it is “the policy of the United States to provide, within constitutional limitations, for fair housing throughout the United States.” See 42 U.S.C. 3601. Accordingly, the Fair Housing Act prohibits, among other things, discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions because of “race, color, religion, sex,

1

familial status,

2

national origin, or handicap.”

3

See 42 U.S.C. 3604 and 3605. Section 808(d) of the Fair Housing Act requires all executive branch departments and agencies administering housing and urban development programs and activities to administer these programs in a manner that affirmatively furthers fair housing. See 42 U.S.C. 3608. Section 808(e)(5) of the Fair Housing Act (42 U.S.C. 3608(e)(5)) requires that HUD programs and activities be administered in a manner that affirmatively furthers the policies of the Fair Housing Act.

1

Consistent with established practice, HUD interprets the term “sex” to include gender identity, sexual orientation, and nonconformance with gender stereotypes.

See

Memorandum from Damon Y. Smith, Principal Deputy General Counsel to Jeanine M. Worden, Acting Assistant Secretary for Fair Housing and Equal Opportunity, “Application to the Fair Housing Act of the Supreme Court's decision in

Bostock

v.

Clayton County, GA”

(Feb. 9, 2021),

available at https://www.hud.gov/sites/dfiles/ENF/documents/Bostock%20Legal%20Memorandum%2002-09-2021.pdf.

2

The term “familial status” is defined in the Fair Housing Act at 42 U.S.C. 3602(k). It includes one or more children who are under the age of 18 years being domiciled with a parent or guardian, the seeking of legal custody, or pregnancy.

3

Although the Fair Housing Act was amended in 1988 to extend civil rights protections to persons with “handicaps,” the term “disability” is more commonly used and accepted today to refer to an individual's physical or mental impairment that is protected under Federal civil rights laws, the record of such an impairment, and being regarded as having such an impairment. For this reason, except where quoting from the Fair Housing Act, this preamble and proposed rule use the term “disability.”

Summary of Major Provisions of the Rule

The proposed rule retains much of the framework of the 2015 AFFH Rule. Under the proposed rule, as under the 2015 AFFH Rule, program participants will identify fair housing issues, prioritize the fair housing issues they will focus on overcoming in the next three to five years, and develop the goals they will implement to overcome those fair housing issues. The proposed rule contains refinements based on HUD's experience implementing the 2015 AFFH Rule and input from many stakeholders. It is structured to simplify and provide greater flexibility: regarding the analysis that program participants must perform as part of their Equity Plans (which are a modified version of the Assessments of Fair Housing performed under the 2015 AFFH Rule), to allow more time and energy to be spent on effective goal setting; to provide clarity, direction, and guidance for program participants to promote fair housing choice; to provide more transparency to the public and greater opportunity for public input; and to provide accountability, a mechanism for regular progress evaluation, and a greater set of enforcement options to ensure that program participants are meeting their planning commitments and to provide them the opportunity to revise commitments where circumstances change. The proposed rule will advance these objectives in a manner that is informed by the lessons HUD learned from the implementation of the 2015 AFFH Rule by:

a.

Giving underserved communities a greater say in the actions program participants will take to address fair housing issues.

When HUD implemented its 2015 AFFH Rule, program participants and community members alike consistently reported to HUD that community engagement (then called community participation) was an extremely effective and important part of identifying fair housing issues and figuring out how best to prioritize and address them. The proposed rule makes that process more inclusive and robust, for example by requiring program participants to consult with a broad range of community members, to hold meetings in diverse settings, ensure that individuals with disabilities and their advocates have equal access to those meetings, and partner with local community-based organizations and stakeholders to engage with protected class groups and underserved communities. The proposed rule

empowers broader segments of the community by, for example, requiring program participants to engage with a broad cross-section of the community, which could include advocates, clergy, community organizations, local universities, resident advisory boards, healthcare professionals and other service providers, and fair housing groups. HUD will also make the data HUD provides to program participants publicly available, including maps and other information demonstrating the existence of fair housing issues such as segregated areas, to facilitate public engagement throughout the process. HUD specifically seeks comment below regarding how it can best ensure that community engagement is effective in informing the Equity Plan. The proposed rule also requires program participants to submit, along with their Equity Plans, more information regarding their community engagement efforts than was required by the 2015 AFFH Rule. Additionally, as described further below, the proposed rule allows the public to submit information directly to HUD regarding submitted Equity Plans, providing HUD greater ability to ensure that community engagement requirements are satisfied. HUD also intends to supply more technical assistance for program participants on effective ways to conduct community engagement.

b.

Streamlining the Equity Plan's required fair housing analysis, while providing easy-to-use data to support that analysis.

HUD will help program participants and their communities understand the data HUD provides them. Aided by that data and more comprehensive community engagement, program participants will be empowered to identify key fair housing issues more effectively and efficiently without unnecessary burden. Under HUD's 2015 AFFH Rule, HUD provided program participants with considerable data and then required program participants to conduct extensive data analysis in response to a large number of questions. This data-driven analysis was very useful for identifying fair housing issues such as patterns of segregation, but some program participants, particularly smaller ones that lacked relevant expertise, found it more difficult to complete than HUD had intended. The 2015 AFFH Rule used an Assessment Tool that contained approximately 100 questions program participants were required to answer in a prescribed format, as well as about forty contributing factors that program participants were required to consider for each fair housing issue they identified. Some program participants, working on their own or with technical assistance from HUD, conducted successful fair housing analyses using the Assessment Tool. Other program participants, however, struggled to properly interpret the data provided by HUD, and several program participants retained consultants to perform the bulk of the fair housing analysis for them. In HUD's experience reviewing the fair housing plans submitted pursuant to the 2015 AFFH Rule, the fair housing analyses conducted by program participants themselves or with technical assistance from fair housing groups, universities, or HUD were typically of much better quality than the fair housing analyses prepared for program participants solely by consultants. Put differently, the fair housing plans prepared by program participants themselves typically reflected better analysis that gave greater consideration to local fair housing issues and history rather than more generic approaches taken by consultants that prepared analyses for multiple program participants in different geographic areas of the country. The proposed rule, therefore, reflects improvements on the 2015 AFFH Rule framework and is designed to reduce burden for program participants in conducting the fair housing analysis portion of their Equity Plan and identifying fair housing issues, leaving program participants more time to establish meaningful fair housing goals and making them more likely to conduct their own analyses. Under the proposed rule, program participants will conduct their fair housing analyses to identify fair housing issues by responding to questions in a few broad areas (seven for consolidated plan recipients, five for public housing agencies) that HUD is proposing to constitute the core areas of analysis. While HUD anticipates providing program participants with flexibility on the format of their Equity Plans, HUD will expect program participants to answer all required questions, including those that assess the reasons fair housing issues exist, as in the 2015 AFFH Rule. Under this proposed rule, HUD is considering ways to reduce burden for program participants by, for example, providing the program participant with not only raw data and maps, but is also considering providing technical assistance that helps highlight key takeaways and fair housing issues. HUD will also provide technical assistance on common fair housing issues, potential fair housing goals that could overcome fair housing issues, and additional training on how to identify and prioritize fair housing issues. Finally, HUD will make all program participants' Equity Plans available on a HUD-maintained web page, allowing program participants to review other program participants' Equity Plans that have been accepted by HUD and learn from the experiences of those who already have been through the process. While HUD believes these changes will make it easier for many program participants and their communities to effectively use HUD-provided data, it also understands that the raw data and the AFFH Data & Mapping Tool (AFFH-T) made available under the 2015 AFFH Rule have proven invaluable for researchers and high-capacity program participants, and HUD will continue to make such data available.

c.

Placing greater focus on fair housing goals.

A key difference between the proposed rule and the 2015 AFFH Rule is a much greater focus on HUD's review of program participants' goals that will contribute to positive fair housing outcomes. While the proposed rule sets out questions for program participants to answer, it does not specify the content or length of responses. In some cases, the answer to the question will be relatively clear based on the HUD-provided data and technical assistance, and the program participant will only then need to assess the causes and circumstances that result in fair housing issues. In other instances, program participant may need to do more analysis, including assessing local data, local knowledge, and information obtained through community engagement, in order to sufficiently respond to the question. HUD is making clear here, and will continue to do so with technical assistance and guidance, that the purpose of the questions is not to generate an extensive written analysis of local conditions for its own sake, but to require program participants to give serious consideration to the specific local conditions (such as the existence of segregation, or the lack of housing choice throughout a jurisdiction) that are likely to implicate fair housing issues faced by different protected class groups. Accordingly, HUD's review of program participants' answers to those questions will entail confirming that the program participant did an adequate job of identifying the fair housing issues revealed by the HUD-provided data and by information provided during community engagement. HUD's review of fair housing goals, meanwhile, will entail determining whether the program participant's goals have been designed

and can be reasonably expected to overcome the fair housing issues that the program participant has identified and prioritized for action in the next three to five years. Stated plainly, HUD's review will focus primarily on whether the Equity Plan appropriately identifies the relevant fair housing issues and establishes fair housing goals that can realistically be expected to address them and produce meaningful fair housing outcomes for various protected class groups in the program participant's underserved communities; HUD's review will not focus on the volume of written analysis underlying the identification of the fair housing issues.

d.

Providing HUD more flexibility to work with program participants to improve a submitted Equity Plan and ensure it meets regulatory requirements.

HUD's experience implementing the 2015 AFFH Rule demonstrated that a robust back and forth between HUD and program participants regarding the content of submitted plans was important to the rule's success; in many instances, a submitted plan improved substantially as a result of HUD engagement. However, the structure of the 2015 AFFH Rule limited HUD's practical ability to do this work. HUD was required to either accept or not accept a plan within 60 days of submission. If an Assessment of Fair Housing (AFH) was not accepted by HUD after the initial submission, HUD provided the program participant an opportunity to revise and resubmit the plan for HUD review; however, HUD then had a limited amount of time to review the revised plan, work with the program participant to address remaining issues, and then accept that plan before a decision on a submitted consolidated plan or public housing agency (PHA) plan needed to be rendered. If the program participant could not achieve an accepted AFH by the time the program participant's consolidated plan or PHA Plan was due, the automatic consequence was a cut-off of Federal funding. Faced with that consequence, HUD ultimately accepted every plan, although many of the plans that HUD accepted could still have benefited from improvements if there had been additional time for HUD to work with the program participant. This proposed rule provides HUD more time—100 days, with the ability to extend that time for good cause—to review a submitted Equity Plan and work with a program participant to ensure the plan meets the requirements of this proposed rule. In addition, the proposed rule provides that, if a program participant does not have an accepted Equity Plan by the time a consolidated plan or PHA Plan must be approved, to have that plan approved it must provide HUD with special assurances that it will achieve an Equity Plan that meets regulatory requirements within 180 days of the end of HUD's review period for its consolidated plan or PHA Plan. At the end of the 180-day period, if the program participant still does not have an Equity Plan that has been accepted by HUD, HUD will seek the most serious of remedies by initiating the termination of funding and will not grant or continue granting applicable funds. HUD believes this structure will provide it with the necessary enforcement authority and the flexibility to work with program participants to achieve an Equity Plan that meets this proposed rule's requirements. By obtaining special assurances, HUD will continue to have the ability to enforce this proposed rule by initiating the termination of funding for program participants that do not provide the required special assurances or that do not achieve an Equity Plan that is accepted by HUD in the time allotted. HUD believes the addition of the procedures relating to special assurances provide a stronger yet more flexible mechanism for HUD to compel compliance with the requirements of this proposed rule beyond what it could require under the 2015 AFFH Rule.

e.

Creating a more direct linkage between the Equity Plan's fair housing goals and the planning processes in the consolidated plan, annual action plan, or PHA Plan.

The proposed rule requires the program participant to establish concrete fair housing goals that are designed and can be reasonably expected to achieve meaningful fair housing outcomes. In the process, program participants will identify the funding and any contingencies that must be met for the program participant to achieve the goal. The proposed rule then requires program participants to incorporate the fair housing goals from their Equity Plans into their consolidated plan, annual action plan, or PHA Plan. The direct linkage between the Equity Plan and subsequent program planning documents will enable program participants to make more informed decisions about how to overcome circumstances that cause, increase, contribute to, maintain, or perpetuate fair housing issues. By incorporating their fair housing goals, strategies, and actions into their planning documents, program participants will be better positioned to build equity and fairness into their decision-making processes for the use of resources and other investments, live up to the commitments they have made in Equity Plans, and ultimately fulfill their obligations to affirmatively further fair housing.

f.

Implementing a more transparent process for program participants' development and HUD's review of Equity Plans.

The proposed rule will enable members of the public to have online access to all submitted Equity Plans; to provide HUD with additional information regarding Equity Plans that are under HUD review; and to know HUD decisions on Equity Plan acceptance and on program participants' annual progress evaluations. HUD will use information submitted by the public in its review of the Equity Plan. This transparency is intended, in part, to assist program participants with understanding how other similarly situated program participants conducted their analyses. HUD believes that this transparency will allow the public to be more engaged in the local fair housing planning process, the implementation of fair housing goals, and ultimately in assisting their local leaders in determining how to allocate resources to address fair housing issues.

g.

Tracking progress on fair housing goals.

The proposed rule requires program participants to conduct annual progress evaluations regarding the progress made on each goal. These progress evaluations will be submitted to HUD, and HUD will make them publicly available on a HUD-maintained website. This annual progress evaluation ensures that goal implementation stays on track and that progress (or lack thereof) is disclosed to the public. In conducting this evaluation, a program participant must assess whether to establish a new fair housing goal or whether to modify an existing fair housing goal because it cannot be achieved in the amount of time previously anticipated. The proposed rule allows program participants, with HUD's permission, to submit a revised Equity Plan that modifies goals or set new goals if circumstances changed or if the established goals have been accomplished. HUD believes this ability to account for changed circumstances will make program participants more willing to set ambitious, creative goals that may be dependent on certain contingencies, since the goals can be updated if the contingencies are not met. However, HUD will not grant permission to alter goals if the program participant is simply choosing not to take necessary steps. The annual progress evaluation will allow for public

awareness that a goal is not being met before it is too late to change course to meet it.

h.

Increasing accountability by creating a mechanism for members of the public to file complaints and for HUD to further engage in oversight and enforcement.

Under the proposed rule, HUD will have the ability to open compliance reviews, and members of the public will be able to file complaints directly with HUD regarding a program participant's AFFH-related activities. While these processes are new to AFFH compliance, the proposed regulatory provisions relating to the filing and investigation of complaints and HUD's procedures for obtaining compliance are consistent with the oversight and enforcement mechanisms that exist for other Federal civil rights statutes that HUD implements. Accordingly, HUD anticipates that the agency, program participants, and the public should be able to readily acclimate themselves to these processes and that the associated burden will be manageable.

These improvements are intended to result in tangible fair housing outcomes that advance equity and increase opportunity for people of color and other underserved communities while minimizing burden and constraints on program participants in how those outcomes are determined and achieved. Ultimately, those tangible fair housing outcomes will be locally driven based on the fair housing issues that are presented by local circumstances. This proposed rule does not dictate the particular steps a program participant must take to resolve a fair housing issue. Rather, the proposed rule is intended to empower and require program participants to meaningfully engage with their communities and confront difficult issues in order to achieve integrated living patterns, overcome historic and existing patterns of segregation, reduce racial and ethnic concentrations of poverty, increase access to homeownership, and ensure realistic and truly equal access to opportunity and community assets for members of protected class groups, including those in historically underserved communities.

As previously noted, this proposed rule is intended to ensure that program participants set and achieve meaningful fair housing goals while reducing program participant burden in performing the required analysis in the planning stage. The proposed rule reduces burden compared with the 2015 AFFH Rule for program participants through the provision of HUD data and assistance in interpreting the data and other modifications such as not prescribing a particular format for the written analysis. It is HUD's intention to allow program participants to spend less time on data analysis and more time on setting meaningful fair housing goals that are based on that data and other information, including conversations with their local community regarding the most effective means of advancing fair housing and equity. This does not diminish the key role that interpretation of maps and other objective data will continue to play in the required analysis, but rather enables program participants to focus more of their time and energy on the fair housing goals and strategies and actions they will employ to overcome the fair housing issues identified using the data. HUD will continue to provide program participants datasets, including maps, and tools that contain at least as much data as is currently provided in the AFFH-T Data & Mapping Tool. HUD will continue to make these data publicly available, including for use by program participants in conducting their Equity Plans, at

https://www.hud.gov/program_offices/fair_housing_equal_opp/affh.

HUD will explore ways to build on and improve the current AFFH-T Data & Mapping Tool and will continue to evaluate whether these data or other data may be helpful to program participants and the public in undertaking an analysis of how to advance fair housing outcomes within local communities.

HUD is contemplating making its provision of these data more user friendly in ways that will reduce burden for smaller program participants and those with fewer resources while increasing their understanding—and their communities' understanding—of what those data signify. Along with updating and improving the current AFFH-T Data & Mapping Tool, HUD is contemplating providing technical assistance that would highlight key points to help program participants understand what those maps and tables show. For example, technical assistance may include identification of racially or ethnically concentrated areas of poverty (R/ECAPs) in the jurisdiction and demographic information about the R/ECAPs' residents, making it simpler for the program participant to answer the relevant question in the required analysis. HUD anticipates that these efforts will reduce the burden for program participants to answer the required analysis questions and identify fair housing issues, while providing information critical to the fair housing analysis in a format that also can be understood by the community.

The proposed rule is less burdensome compared to the 2015 AFFH Rule. While this proposed rule continues to require program participants to review and understand the data and their fair housing implications, including for purposes of setting fair housing goals, program participants will not be required to submit responses in the form of data analysis. Except as specifically instructed in the proposed analysis questions (in instances where HUD expects its own provision of data to make it simple to do so), program participants would not need to reference specific percentages or calculations, for example, regarding demographics or segregation, but would be required to show the connection between their data analysis, their identification of fair housing issues, and the establishment fair housing goals. Instead, the data provided by HUD, along with local data and local knowledge, should be sufficient to drive the program participant's analysis and ultimate identification of goals and strategies. The program participant's answers should be informed by data but need not be written in that form. These improvements will make it easier for smaller program participants and those with fewer resources to complete the written analysis, and also make it easier for the community to engage in the process, understand the analysis of fair housing issues in a submitted Equity Plan, and provide additional relevant information to facilitate HUD's review. Program participants will have the opportunity to engage with HUD staff to help ensure that consultants, contractors, or complex data analysis are not required to produce an Equity Plan that can be accepted.

4

4

HUD is aware that during implementation of the 2015 AFFH Rule, many university-based researchers (along with fair housing groups and other non-profit organizations) assisted program participants in analyzing and understanding HUD-provided data for purposes of identifying fair housing issues and establishing fair housing goals in their AFHs.

This proposed rule features much greater transparency for the public to see and participate in the decisions program participants make and HUD's responses to them. HUD expects to publish all Equity Plan submissions and decisions as to whether HUD has accepted the Equity Plan on its AFFH web page to further increase transparency and reduce burden for program participants. This transparency is intended, in part, to assist program participants with understanding how other similarly situated program participants conducted their analyses. HUD believes that by publishing this

information, not only will local officials be able to learn from other jurisdictions' Equity Plans, but also the public will be more engaged in the local fair housing planning process and implementation of local fair housing goals. HUD anticipates that this approach may also lead to collaboration with other government entities as well as the private sector with respect to housing and community development activities and investments in a program participant's jurisdiction. In addition, this more robust community engagement process to discuss fair housing issues and potential fair housing goals will lead to more transparent fair housing planning and greater ability to influence equitable outcomes for members of protected class groups, including people of color, individuals with disabilities, and other underserved communities.

HUD expects that the refinements made to this proposed rule compared with the 2015 AFFH Rule will help program participants more easily identify where equity in their communities is lacking and how they can affirmatively further fair housing by advancing equity for protected class groups through the use of HUD funds, other investments, and policy decisions. HUD's commitment to be a partner in the planning process for program participants and the public alike should result in a reduction of burden and greater transparency and public participation, and result in program participants undertaking meaningful actions to fulfill the promise of the AFFH mandate established in 1968. HUD is soliciting comment on this proposed rule and also seeks comment on specific topics in Section IV of this preamble.

Summary of Benefits and Costs

As detailed in the Regulatory Impact Analysis, HUD does not expect a large aggregate change in compliance costs for program participants as a result of the proposed rule. As a result of increased emphasis on affirmatively furthering fair housing within the planning process, there may be increased compliance costs for some program participants, while for others the improved process and goal setting, combined with HUD's provision of foundational data, is likely to decrease compliance costs. Program participants are currently required to engage in outreach and collect data in order to support their certifications that they are affirmatively furthering fair housing. As more fully addressed in the Regulatory Impact Analysis that accompanies this rule, HUD estimates that compliance with these additional planning requirements would collectively cost program participants a total of $5.2 million to $27 million per year, once the Equity Plan cycle is fully implemented, a sum that is offset by the societal benefits accruing to fair housing goals that decrease segregation and the lack of equal access to housing and related opportunities throughout society.

Further, HUD believes that the proposed rule has the potential for substantial benefit for program participants and the communities they serve. The proposed rule would improve the fair housing planning process by providing greater clarity regarding the steps program participants must undertake to meaningfully affirmatively further fair housing, and at the same time provide better resources for program participants to use in taking such steps, thus increasing AFFH compliance more broadly. Through this rule, HUD commits to provide States, local governments, PHAs, the communities they serve, and the general public with local and regional data, as well as assistance in understanding that data, as discussed further below. From these data, program participants should be better able to evaluate their present environment to assess fair housing issues, identify the primary determinants that account for those issues, set forth fair housing priorities and goals, and document these activities.

The rule covers program participants that are subject to a great diversity of local preferences and economic and social contexts across American communities and regions. For these reasons, HUD recognizes there is significant uncertainty associated with quantifying outcomes of the process, as proposed by this rule, to identify barriers to fair housing, the priorities of program participants in deciding which barriers to address, the types of policies designed to address those barriers, and the effects of those policies on protected classes. In brief, because of the diversity of communities and regions across the Nation and the resulting uncertainty of precise outcomes of the proposed AFFH planning process, HUD cannot estimate the specific benefits and costs of policies influenced by the rule. HUD does recognize that segregation, combined with the legacy of discrimination against protected class groups and longstanding disinvestment in certain neighborhoods, has imposed and continues to impose substantial costs on members of protected classes and society in general by reducing employment, education, and homeownership opportunities as well as the costs associated with reduced health and safety in neighborhoods that have long faced disinvestment and other adverse environmental impacts.

5

HUD is confident, as discussed more fully below, that the rule will create a process that allows for each jurisdiction to not only undertake meaningful fair housing planning, but also build capacity and develop a thoughtful strategy to affirmatively further fair housing and make progress towards a more integrated society with more equitable access to opportunity. The benefits of undertaking meaningful actions to produce an integrated, just, and prosperous society and otherwise further fair housing objectives far outweigh the costs.

5

See

Acs, Pendall, Trekson, et al., “The Cost of Segregation: National Trends and the Case of Chicago 1990-2010,”

Urban Institute

and

The Metropolitan Housing and Communities Policy Center

(2017),

available at https://www.urban.org/sites/default/files/publication/89201/the_cost_of_segregation.pdf

(finding that higher levels of racial segregation were associated with lower incomes for Black residents, lower educational attainment levels for White and Black residents, and lower levels of public safety for all residents).

II. Background

A. Legal Authority

The Fair Housing Act (title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3601-3619), enacted into law on April 11, 1968, declares that it is “the policy of the United States to provide, within constitutional limitations, for fair housing throughout the United States.” See 42 U.S.C. 3601. Accordingly, the Fair Housing Act prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions because of race, color, religion, sex, familial status, national origin, or disability. See 42 U.S.C. 3601

et seq.

In addition to prohibiting discrimination, the Fair Housing Act (42 U.S.C. 3608(e)(5)) requires that HUD programs and activities be administered in a manner to affirmatively further the policies of the Fair Housing Act. Section 808(d) of the Fair Housing Act (42 U.S.C. 3608(d)) directs other Federal agencies “to administer their programs . . . relating to housing and urban development . . . in a manner affirmatively to further” the policies of the Fair Housing Act, and to “cooperate with the Secretary” in this effort.

The Fair Housing Act's provisions related to “affirmatively . . . further[ing]” fair housing, contained in sections 3608(d) and (e), require more than compliance with the Act's anti-discrimination mandates.

NAACP, Boston Chapter

v.

HUD,

817 F.2d 149

(1st Cir. 1987); see,

e.g., Otero

v.

N.Y. City Hous. Auth.,

484 F.2d 1122 (2d Cir. 1973);

Shannon

v.

HUD,

436 F.2d 809 (3d Cir. 1970). When the Fair Housing Act was originally enacted in 1968 and amended in 1988, major portions of the statute involved the prohibition of discriminatory activities (whether undertaken with a discriminatory purpose or with a discriminatory effect) and how private litigants and the government could enforce these provisions.

In sections 3608(d) and (e) of the Fair Housing Act, however, Congress went further by mandating that “programs and activities relating to housing and urban development” be administered “in a manner affirmatively to further the purposes of this subchapter.” This is not only a mandate to refrain from discrimination but a mandate to take the type of actions that undo historic patterns of segregation and other types of discrimination and afford access to opportunity that has long been denied. Congress has repeatedly reinforced and ratified this uncontradicted interpretation of the AFFH mandate, requiring in the Housing and Community Development Act of 1974, the Cranston-Gonzalez National Affordable Housing Act, and the Quality Housing and Work Responsibility Act of 1998, that covered HUD program participants certify, as a condition of receiving Federal funds, that they will affirmatively further fair housing. See 42 U.S.C. 5304(b)(2), 5306(d)(7)(B), 12705(b)(15), 1437C-1(d)(16).

6

6

Section 104(b)(2) of the Housing and Community Development Act (HCD Act) (42 U.S.C. 5304(b)(2)) requires that, to receive a grant, the state or local government must certify that it will affirmatively further fair housing. Section 106(d)(7)(B) of the HCD Act (42 U.S.C. 5306(d)(7)(B)) requires a local government that receives a grant from a state to certify that it will affirmatively further fair housing. The Cranston-Gonzalez National Affordable Housing Act (NAHA) (42 U.S.C. 12704

et seq.

) provides in section 105 (42 U.S.C. 12705) that states and local governments that receive certain grants from HUD must develop a comprehensive housing affordability strategy to identify their overall needs for affordable and supportive housing for the ensuing 5 years, including housing for persons experiencing homelessness, and outline their strategy to address those needs. As part of this comprehensive planning process, section 105(b)(15) of NAHA (42 U.S.C. 12705(b)(15)) requires that these program participants certify that they will affirmatively further fair housing. The Quality Housing and Work Responsibility Act of 1998 (QHWRA), enacted into law on October 21, 1998, substantially modified the United States Housing Act of 1937 (42 U.S.C. 1437

et seq.

) (1937 Act), and the 1937 Act was more recently amended by the Housing and Economic Recovery Act of 2008, Public Law 110-289 (HERA). QHWRA introduced formal planning processes for PHAs—a 5-Year Plan and an Annual Plan. The required contents of the Annual Plan included a certification by the PHA that the PHA will, among other things, affirmatively further fair housing.

Courts have found that the purpose of the affirmatively furthering fair housing mandate is to ensure that recipients of Federal funds used for housing or urban development and certain other Federal funds do more than simply not discriminate: recipients also must take actions to address segregation and related barriers for members of protected class groups, as often reflected in racially or ethnically concentrated areas of poverty. The U.S. Supreme Court, in one of the first Fair Housing Act cases it decided, acknowledged that the Act was intended to make significant change in addition to outlawing discrimination in housing, noting that “the reach of the proposed law was to replace the ghettos `by truly integrated and balanced living patterns.' ”

Trafficante

v.

Metro. Life Ins. Co.,

409 U.S. 205, 211 (1972);

see also Client's Council

v.

Pierce,

711 F.2d 1406, 1425 (8th Cir. 1983) (“Congress enacted section 3608(e)(5) to cure the widespread problem of segregation in public housing”);

see also Crow

v.

Brown,

332 F. Supp. 382, 391 (N.D. Ga. 1971),

affirmed in part without op. and reversed in part without op. by Banks

v.

Perk,

473 F.2d 910 (6th Cir. 1973) (“It is also clear that the policy of HUD requires that public housing be dispersed outside racially compacted areas . . . and [is] part of the national housing policy.

7

Indeed, relief has been granted to plaintiffs and against HUD for failing to comply with this affirmative duty to disperse public housing which is implicit in the Housing Act of 1949, the Civil Rights Act of 1964, and the Civil Rights Act of 1968.”). The Act recognized that “where a family lives, where it is allowed to live, is inextricably bound up with better education, better jobs, economic motivation, and good living conditions.” 114 Cong. Rec. 2276-2707 (1968). As the First Circuit has explained, section 3608(e)(5) and the legislative history of the Act show that Congress intended that “HUD do more than simply not discriminate itself; it reflects the desire to have HUD use its grant programs to assist in ending discrimination and segregation, to the point where the supply of genuinely open housing increases.”

NAACP, Boston Chapter

v.

HUD,

817 F.2d at 154; see also

Otero,

484 F.2d at 1134 (section 3608(d) requires that “[a]ction must be taken to fulfill, as much as possible, the goal of open, integrated residential housing patterns and to prevent the increase of segregation, in ghettos, of racial groups whose lack of opportunity the Act was designed to combat”).

7

Reflecting the era in which it was enacted, the Fair Housing Act's legislative history and early court decisions refer to “ghettos” when discussing racially concentrated areas of poverty. In addition, much of the litigation during this period related to the siting of public housing; however, HUD notes that the holdings of these courts apply to all programs and activities administered by HUD and are not limited to the public housing program.

The Act itself does not define the precise scope of the affirmatively furthering fair housing obligation for HUD or HUD's program participants. Over the years, courts have provided some guidance for this task. In the first appellate decision interpreting section 3608, for example, the U.S. Court of Appeals for the Third Circuit emphasized the importance of racial and socioeconomic data to ensure that “the agency's judgment was an informed one” based on an institutionalized method to assess site selection and related issues.

Shannon,

436 F.2d at 821-22. In multiple other decisions, courts have set forth that section 3608 applies to specific policies and practices of HUD program participants.

See e.g., Otero,

484 F.2d at 1132-37;

NAACP, Boston Chapter,

817 F.2d at 156 (“. . . a failure to `consider the effect of a HUD grant on the racial and socio-economic composition of the surrounding area' ” would be inconsistent with the Fair Housing Act's mandate);

Langlois

v.

Abington Hous. Auth.,

207 F.3d 43 (1st Cir. 2000);

U.S. ex rel. Anti-Discrimination Ctr.

v.

Westchester Cnty.,

2009 WL 455269 (S.D.N.Y. Feb. 24, 2009). The U.S. Court of Appeals for the First Circuit, in evaluating how the AFFH mandate applies to HUD and its program participants, including the decisions made in the administration of their programs and activities, further provided that “the need for such consideration itself implies, at a minimum, an obligation to assess negatively those aspects of a proposed course of action that would further limit the supply of genuinely open housing and to assess those aspects of a proposed course of action that would increase that supply. If HUD is doing so in any meaningful way, one would expect to see, over time, if not in any individual case, HUD activity that tends to increase, or at least, that does not significantly diminish the supply of open housing.”

NAACP, Boston Chapter,

817 F.2d at 156.

More recently, in examining why regional solutions to segregation may be necessary, a United States District Court declared that “[i]t is high time that HUD live up to its statutory mandate to consider the effect of its policies on the racial and socioeconomic composition of the surrounding area . . . The Court finds it no longer appropriate for HUD,

as an institution with national jurisdiction, essentially to limit its consideration of desegregative programs . . .”

Thompson

v.

HUD,

348 F. Supp. 2d 398, 409 (D. Md. 2005). The court emphasized the importance of using the AFFH mandate to afford choice to individuals and families about where they live by stating that, “[i]n this regard, it is appropriate to note that there is a distinction between telling a person that he or she may not live in [a] place because of race and giving the person a choice so long as the place in question is, in fact, available to anyone without regard to race.”

Thompson,

398 F. Supp. 2d at 450. As recently as 2015, the U.S. Supreme Court explained that “[m]uch progress remains to be made in our Nation's continuing struggle against racial isolation . . . The Court acknowledges the Fair Housing Act's continuing role in moving the Nation toward a more integrated society.”

Tex. Dep't of Hous. Cmty. Affairs

v.

Inclusive Cmtys. Project, Inc.,

576 U.S. 519, 546-47 (2015). As the Supreme Court held in

lnclusive Communities,

the Fair Housing Act's broad remedial purposes cannot be accomplished simply by banning intentional discrimination today.

Id.

In addition to the statutes and court cases emphasizing the requirement of recipients of Federal housing and urban development funds and other Federal funds to affirmatively further fair housing, executive orders have also addressed the importance of complying with this requirement.

8

8

Executive Order 12892, entitled “Leadership and Coordination of Fair Housing in Federal Programs: Affirmatively Furthering Fair Housing,” issued January 17, 1994, vests primary authority in the Secretary of HUD for all Federal executive departments and agencies to administer their programs and activities relating to housing and urban development in a manner that furthers the purposes of the Fair Housing Act. Executive Order 12898, entitled “Executive Actions to Address Environmental Justice in Minority Populations and Low-Income Populations,” issued on February 11, 1994, declares that Federal agencies shall make it part of their mission to achieve environmental justice “by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations.” Executive Order 13985, “Advancing Racial Equity for Underserved Communities Through the Federal Government” issued on January 25, 2021, establishes that it is the policy of the Federal Government to pursue a comprehensive approach to advancing equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality. Executive Order 13985 makes clear that affirmatively advancing equity, civil rights, racial justice, and equal opportunity is the responsibility of the whole of our Government, and that doing so requires a systematic approach to embedding fairness in decision making processes, and as such, executive departments and agency must recognize and work to redress inequities in their policies and programs that serve as barriers to equal opportunity. Furthermore, President Biden's Memorandum to the Secretary of HUD dated January 26, 2021, titled “Memorandum on Redressing our Nation's and the Federal Government's History of Discriminatory Housing Practices,” obligates HUD to examine its programs and activities and empowers the Secretary to take any necessary steps, as appropriate and consistent with applicable law, to implement the Fair Housing Act's requirements that HUD administer its programs and activities in a manner that affirmatively furthers fair housing.

B. HUD's July 16, 2015 Final Rule, HUD's 2020 Preserving Communities and Neighborhood Choice Rule, and HUD's June 10, 2021 Interim Final Rule

On July 16, 2015, the Department published a final AFFH regulation (2015 AFFH Rule) at 24 CFR 5.150 through 5.180, which required program participants to conduct and submit to HUD an Assessment of Fair Housing (AFH).

9

The 2015 AFFH Rule reflected HUD's efforts to more fully and meaningfully effectuate the AFFH mandate of the Fair Housing Act. The promulgation of the 2015 AFFH Rule was a significant and important step toward realizing the promise of the AFFH mandate.

9

Prior to HUD's 2015 AFFH Rule, beginning in 1996, HUD required program participants to undertake an “Analysis of Impediments to Fair Housing Choice,” (AI) which was the mechanism for supporting their AFFH-related certifications. HUD issued guidance in the form of the Fair Housing Planning Guide for how to conduct an AI. HUD did not require the AI to be submitted, though HUD would review AIs in connection with compliance reviews. The 2015 AFFH Rule replaced the AI process with the AFH process.

To implement the 2015 AFFH Rule, the Department developed and required the use of Assessment Tools for different types of program participants (which were subject to public comment through the process required under the Paperwork Reduction Act), created fact sheets and guidance to assist program participants in conducting their AFHs, and provided a data and mapping tool (AFFH-T) that remains publicly available. While the promulgation of the 2015 AFFH Rule marked a substantial improvement to HUD's implementation of the AFFH mandate with respect to certain recipients of Federal financial assistance from the Department, it was not perfect, and HUD learned important lessons about how the 2015 AFFH Rule could be improved.

The required use of Assessment Tools delayed implementation of the 2015 AFFH Rule because of the need to adhere to the Paperwork Reduction Act process, which includes publication of two

Federal Register

notices and two rounds of public comment solicitation.

10

When implementation began, between October 2016 and December 2017, HUD received, reviewed, and issued initial decisions on forty-nine AFHs. HUD's experience with the implementation of the 2015 AFFH Rule highlighted some areas for improvement, including ways in which the identification of fair housing issues could be streamlined. Furthermore, due to the complexity of the assessment required and the need to adhere to the specific format required, many program participants utilized outside contractors to complete their AFHs, others misunderstood the questions asked, and some failed to identify fair housing issues or set meaningful goals to affirmatively further fair housing. Many submissions merely recounted what the HUD-provided data showed, rather than providing an analysis of the actual fair housing issues program participants' communities were and are facing. In some instances, this resulted in goals that consisted of a program participant merely continuing with actions that would maintain existing conditions rather than advancing equity for members of protected class groups and underserved communities. Similarly, the 2015 AFFH Rule's requirement that program participants identify and prioritize factors that contribute to fair housing issues (from a list of over forty potential factors) proved confusing and, in some instances, program participants were not able to translate identified factors into meaningful goals that could be reasonably expected to result in material progress.

10

See, PRA approval process at

https://pra.digital.gov/clearance-process/.

At the same time, the 2015 AFFH Rule demonstrated that its basic planning structure had considerable promise for assisting local communities to achieve meaningful fair housing ends that are responsive to local needs. Program participants and members of the community reported that, because program participants were required to answer specific questions regarding longstanding segregation and other fair housing issues, they had productive conversations about important issues they otherwise would not have confronted. Moreover, some AFH submissions contained creative fair housing goals, including by collaborating across different sectors (

e.g.,

public housing agencies and school districts working together), to find ways to overcome disparities for protected class groups in specific geographic areas. HUD believes this demonstrates that the required focus on core fair housing topics and goal setting required by the 2015 AFFH Rule remain appropriate, even as it also heard from many stakeholders of the need for a

greater emphasis on goals and outcomes tied to a streamlined analysis. As more fully explained below, this proposed rule seeks to build on these lessons learned. HUD specifically invites comment on this proposal in Section IV of this preamble.

In 2018, HUD suspended implementation of the 2015 AFFH Rule by withdrawing the operative assessment tool that program participants were required to use for conducting an AFH. See 83 FR 23927 (Jan. 5, 2018). Then, on August 7, 2020, at 85 FR 47899, HUD promulgated a final rule—Preserving Community and Neighborhood Choice (PCNC Rule)—which repealed the 2015 AFFH Rule. The PCNC Rule redefined the AFFH mandate in a manner that was a substantial and substantive departure from decades of judicial and administrative precedent interpreting the AFFH mandate in the Fair Housing Act.

On June 10, 2021, HUD promulgated an interim final rule, “Restoring Affirmatively Furthering Fair Housing Definitions and Certifications” (AFFH IFR), in order to repeal the PCNC Rule and restore legally supportable definitions and certifications for program participants. See 86 FR 30779 (June 10, 2021). The AFFH IFR restored relevant definitions from the 2015 AFFH Rule and created a process for program participants to certify to HUD that they will affirmatively further fair housing. At that time, HUD did not reinstate other provisions from the 2015 AFFH Rule, but committed to further implementation of the AFFH mandate at a future date, which is the purpose of this proposed rule.

HUD invited and considered public comments on the AFFH IFR. HUD also undertook multiple listening sessions to inform this proposed rule. These listening sessions included a variety of stakeholders including HUD program participants, fair housing and civil rights advocates, community organizations, and other interested members of the public. These stakeholders provided their views about what worked and what did not with respect to the implementation of the 2015 AFFH Rule, recommended additional features and refinements that they believed a new rule should include, and identified certain fair housing- and equity-related issues prevalent in their communities that they hoped a proposed rule would address. HUD thanks these stakeholders for this valuable input and has taken it into account in formulating this proposed rule.

This proposed rule, as more fully described below, restores much of the structure of the 2015 AFFH Rule, but with modifications and improvements to increase transparency and accountability, and to reduce burden, while retaining flexibility for program participants to establish fair housing goals based on their local circumstances. The proposed rule generally tracks the structure of the 2015 AFFH Rule because HUD believes program participants are familiar with that structure; however, HUD is open to considering changes to this proposed regulatory scheme to effectively and meaningfully implement the Fair Housing Act's AFFH mandate. HUD specifically seeks comment on this topic in Section IV of this preamble.

C. HUD Proposes To Restore Much of the Structure of the 2015 AFFH Rule, While Streamlining the Required Analysis for Program Participants, and Adding Features That Will Bolster the Effective Implementation of the AFFH Rule

HUD now proposes to restore much of the structure of the 2015 AFFH Rule, while proposing modifications that HUD believes will lead to a more effective fair housing planning process while reducing burden for program participants and providing the public more transparency and opportunities to influence both planning and implementation. HUD is responsible for ensuring that the Fair Housing Act's AFFH mandate is implemented and that it drives the change that Congress intended in 1968—the undoing of vestiges of segregation, unequal treatment, and inequitable access to opportunity that the Federal Government itself helped create—and helps combat the unequal access to housing and related opportunities because of race, color, national origin, religion, sex, familial status, and disability that persists in our society today.

For change to occur throughout the Nation, HUD must help the states and localities it serves to bring it about, arming them with the relevant information and establishing a process that assists in identifying fair housing issues and then implementing meaningful actions to remedy them. To that end, the 2015 AFFH Rule created a robust and data-driven analytical scheme for program participants to use when engaging in fair housing planning and determining what actions were necessary in their local communities to affirmatively further fair housing. Under the 2015 AFFH Rule, HUD provided program participants with considerable raw data, in part through an interface known as AFFH-T that the program participants were expected to use to access data relevant to their geographic areas of analysis, and then required program participants to analyze this data in answering questions contained in the AFH Assessment Tool designed to drive the identification of fair housing issues. It was HUD's intention that the AFH Assessment Tool's User Interface would import the data from the AFFH-T. HUD now recognizes that this approach, while achieving a major step forward in fair housing planning and providing an invaluable source of publicly available data, particularly for researchers and better-resourced program participants, created some unnecessary burden and confusion particularly for smaller program participants and those with fewer resources. For instance, HUD is aware that program participants struggled to use the AFH Assessment Tool's User Interface and perform the required data-driven analysis. Accordingly, while HUD is using the 2015 AFFH Rule as a model for this proposed rule, this proposed rule streamlines the questions in the required analysis and HUD proposes to make it more user-friendly. This would enable program participants to more readily use HUD-provided data, including during community engagement, to identify fair housing issues and set goals that will result in meaningful change. HUD continues to consider whether other changes to the structure set out in the proposed rule would further reduce burden and maximize material positive change and seeks comment to that effect in Section IV, below.

HUD notes that the proposed rule is not intended to conflict with or interfere with program participants carrying out existing programmatic responsibilities including maintenance of affordable housing. It remains a top priority for HUD to preserve and maintain the existing stock of long-term affordable rental housing, including the federally assisted stock. HUD recognizes the overwhelming need for affordable and accessible housing and the inadequate supply of HUD-assisted housing to meet that need. The most recent HUD report on Worst Case Needs for Affordable Housing (issued July 2021) found there were over 7.77 million unassisted very low-income renter households facing either severe rent burden (paying more than half their incomes for rent) or severely inadequate housing conditions, or both. This does not include persons facing homelessness, nor does it include lower income (but not very low-income)

cost burdened households. HUD believes and expects that program participants can act in recognition of this urgent need to maintain and add to existing affordable and accessible housing stock consistent with the fair housing principles and requirements set forth in this proposed rule.

HUD recognizes that, notwithstanding its efforts to make refinements in this proposed rule to reduce burden and simplify the Equity Plan analysis for all program participants, some smaller program participants may benefit from additional flexibility and technical assistance. In particular, HUD is aware that small PHAs and consolidated plan participants may have significantly fewer personnel and financial resources available to complete the analysis contemplated in this proposed rule when compared to larger entities, especially if they are unable to identify another entity they can work with to submit a joint Equity Plan.

As compared to the 2015 AFFH Rule, HUD has significantly streamlined the analysis that would be required for a program participant's Equity Plan from what was required in the Assessment of Fair Housing and has eliminated the analysis of contributing factors required by the 2015 AFFH Rule. This streamlined analysis would still require program participants to assess the underlying causes of the identified fair housing issues as a basis for designing effective fair housing goals. In addition, by providing simpler, standard questions for all program participants in the regulatory text itself, HUD would not be continually revisiting those questions through revised assessment tools, which would be subject to changes under the Paperwork Reduction Act (PRA) (a Federal law discussed later in this preamble) at least every three years, thereby giving program participants long-term certainty about the analysis they would be required to undertake and reducing the burden involved in preparing subsequent Equity Plans.

Importantly, HUD has sought to design the questions, and its anticipated review of answers, such that the complexity and burden of satisfactory answers will scale based on the size of a program participant. For example, the largest PHAs (under the proposed rule, a PHA that administers 10,000 or more combined public housing and voucher units) and the largest consolidated plan participants (under the proposed rule, a program participant that receives a total of $100 million or more in formula grant funds) are likely to operate in large metropolitan areas with multiple local government entities, various categories of publicly supported housing and other affordable housing, many different types of community assets across the geographic area of analysis, and millions of community residents with significantly more complex demographic patterns. Conversely, the smallest PHAs and smallest consolidated plan participants are likely to operate in rural areas, newly suburban areas, or other localities with far fewer community assets, more limited public infrastructure, and more homogenous demographic patterns among significantly smaller populations (

e.g.,

50,000 residents). As a result, smaller program participants, though responding to the same questions, would be expected to have less to analyze and HUD anticipates that it would be acceptable for them to provide briefer answers. As described below, in rare instances and typically with smaller program participants, program participants may respond that much or all of the question is not applicable to them, as long as this response is supported by realities on the ground, including through HUD-provided data and insights drawn from local knowledge and community engagement.

During the implementation of the 2015 AFFH Rule, HUD's efforts to address the issue of burden on small program participants by requiring simplified analyses were largely unsuccessful. HUD created inserts within the Assessment Tools for small PHAs and consolidated plan program participants but found that this process still resulted in confusion. Moreover, the smaller program participants that submitted AFHs to HUD generally either did not use the inserts or submitted essentially the same analysis as would have been required by the standard questions. Nonetheless, HUD is committed to exploring ways to further reduce the burden of preparing an Equity Plan for small PHAs and small consolidated plan program participants while ensuring that they engage in fair housing planning that is sufficient to meet their AFFH obligations. HUD solicits comment in this proposed rule on whether it should take an alternative approach for smaller program participants, including whether it should require such participants to analyze fair housing issues in a different manner.

Additionally, HUD is aware that some small PHAs (such as those that operate only Public Housing but do not participate in the Housing Choice Voucher (HCV) program, including many of those in rural areas) and some small consolidated plan participants (such as those that only receive Community Development Block Grant (CDBG) funds) may have limited ability to impact housing choice or mobility, making it harder for them to establish mobility-related goals as discussed in the definition of “balanced approach” in § 5.152. In those circumstances, a collaborative approach with other entities to address issues outside their control may be warranted and may allow them to set goals that would enable them to pursue a balanced approach. For example, HUD expects such small, public housing-only PHAs could undertake collaboration and outreach efforts with local governments, the private sector, non-profits, and other applicable governmental entities to address fair housing issues and formulate appropriate fair housing goals. Specific examples include working with a local government to address exclusionary zoning, coordinating with local or State agencies to increase public transportation options, addressing lead contamination or other environmental hazards, ensuring appropriate emergency response coverage, or partnering with an adjacent PHA or other larger PHAs that have HCV programs to increase mobility, including through portability programs. Similarly, small PHAs (and all PHAs as well) could review and make revisions to their PHA Admissions and Continued Occupancy Policy and other policies to positively impact underserved communities beyond fulfilling existing requirements,

e.g.,

modifying preferences or doing specific outreach to organizations that support underserved communities. Through such actions, HUD believes that even the smallest PHAs can meaningfully impact fair housing outcomes within their sphere of influence, even as it recognizes that their options and resources may be limited compared to those of larger PHAs. HUD does not propose to exempt smaller, public housing-only PHAs from efforts to use a balanced approach or their obligation to affirmatively further fair housing, but it is committed to providing guidance regarding how the AFFH obligation and the balanced approach apply when a public housing-only PHA has limited ability to directly control issues that involve mobility-related goals as discussed in the definition of balanced approach.

Nonetheless, HUD seeks comment on the extent to which smaller PHAs and consolidated plan participants can set goals that constitute a balanced approach as defined in this proposed rule, including examples of goals that such PHAs and consolidated plan

participants can appropriately and reasonably set. To the extent that commenters believe some smaller PHAs and consolidated plan participants may not be able to set goals consistent with a balanced approach, HUD seeks comment on what are appropriate expectations for smaller PHAs and consolidated plan participants that ensure that meeting their regulatory planning requirements will put them on the path to comply with their affirmatively furthering fair housing obligation.

Please see specific requests for comment in Section IV of this proposed rule related to reducing burden on small program participants.

HUD is also proposing other changes to the 2015 AFFH Rule that are designed to make the fair housing planning processes more transparent to the public and responsive to local fair housing issues. For example, HUD is considering how it can better support its program participants during the community engagement process in order to ensure that representatives from the entire community have the chance to provide their important perspectives, including members of protected class groups and underserved communities. HUD continues to consider and evaluate ways to eliminate unnecessary burden for program participants to incorporate public feedback they receive so they can develop effective goals to address local fair housing issues. HUD anticipates that the more transparent process articulated in this proposed rule for publication of Equity Plans will help reduce burden by allowing program participants to learn from and build upon the experiences of others.

HUD acknowledges that implementation of the AFFH mandate will not and cannot occur without burden for program participants, though HUD is committed to ensuring that program participants experience less burden than the 2015 AFFH Rule imposed. Under the proposed rule, program participants would continue to be required to submit certifications that they will affirmatively further fair housing in connection with documents such as their consolidated plan, annual action plan, or PHA Plan (or any plan incorporated therein), and it will continue to be HUD's responsibility to ensure that these certifications are accurate. Furthermore, HUD is committed to advancing equity for protected class groups and underserved communities, as well as assisting its program participants in doing the same. To truly honor Congress' intent, any regulation to implement the Fair Housing Act's AFFH mandate must help program participants move away from the status quo with respect to planning approaches and facilitate the development of innovative solutions to overcome decades, if not centuries, of housing-related inequality throughout American communities.

The need for change remains urgent; many of the problems the Kerner Commission Report

11

identified are still with us today, even as other barriers to equal access to housing opportunities have taken on increased attention. In particular, the Nation remains highly segregated by race, communities continue to have vastly different access to critical resources because of historic disinvestment in communities of color, there is still a large wealth gap between people of color and White persons, and the lack of choice for many about where to live persists notwithstanding that the Fair Housing Act barred discrimination based on race and other protected characteristics as a formal matter more than 50 years ago. Both anecdotal evidence and empirical research continue to demonstrate that many low-income families in all protected class groups face barriers to obtaining or keeping housing in well-resourced, low-poverty areas that provide access to opportunity and community assets, such as desirable schools, parks, grocery stores, and reputable financial institutions, among others. Ample research demonstrates that ongoing discrimination and exclusionary practices, not preferences among low-income families and members of protected class groups, drives residential and income segregation today.

12

In addition, continued disinvestment not only in housing, but in community assets in areas that are not well-resourced perpetuates this residential and income segregation.

11

Report of the National Advisory Committee on Civil Disorders,

Mar. 1, 1968,

available at https://www.hud.gov/sites/dfiles/FHEO/documents/kerner_commission_full_report.pdf.

12

See for example, Bergman, Chetty, DeLuca, Hendren, Katz, and Palmer, “Creating Moves to Opportunity: Experimental Evidence on Barriers to Neighborhood Choice,” August 2019,

available at https://opportunityinsights.org/wp-content/uploads/2019/08/cmto_paper.pdf.

Research also shows that this lack of choice as to where families can live has serious consequences. Children who move to low-poverty neighborhoods have increased academic achievement, greater long-term chances of success, and less intergenerational poverty.

13

Children who move to low-poverty neighborhoods have also been shown to experience lower rates of hospitalization and lower hospital spending.

14

Meanwhile, adults given the chance to move to low-poverty neighborhoods experience reductions in extreme obesity and diabetes.

15

For example, the Opportunity Atlas examines a change in the way the literature has studied and measured poverty and neighborhood conditions by looking at longitudinal information rather than snapshots in time, which allows an evaluation of the root causes of long-term outcomes by looking back at where children grew up.

16

One finding from the Opportunity Atlas suggests that if a child moves from a “below-average to an above-average neighborhood at birth,” it could increase the child's lifetime earnings by $200,000.

17

Another study concluded with respect to income disparities that “initiatives whose impacts cross neighborhood and class lines and increase upward mobility specifically for Black men hold the greatest promise of narrowing the [B]lack-[W]hite gap. There are many promising examples of such efforts: mentoring programs for [B]lack boys, efforts to reduce racial bias among [W]hites, interventions to reduce discrimination in criminal justice, and efforts to facilitate greater interaction across racial groups.”

18

Furthermore, researchers have found that even low-income individuals can have an increased life expectancy if they reside in more affluent and educated cities.

19

13

Chetty, Hendren, and Katz, “The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment,”

American Economic Review,

April 2016. Chetty and Hendren, “The Effects of Neighborhoods on Intergenerational Mobility I: Childhood Exposure and II: County-Level Estimates,”

Quarterly Journal of Economics,

2018.

14

Pollack, Blackford, Du, et al. “Association of Receipt of a Housing Voucher With Subsequent Hospital Utilization and Spending,”

JAMA,

322(21):2115-2124. doi:10.1001/jama.2019.17432, 2019.

15

Ludwig, Sanbonmatsu, Gennetian, et al. “Neighborhoods, obesity, and diabetes—a randomized social experiment,”

New England Journal of Medicine;

365(16):1509-1519. doi:10.1056/NEJMsa1103216, 2011.

16

Chetty, Friedman, Hendren, Jones, Porter, “The Opportunity Atlas: Mapping the Childhood Roots of Social Mobility,” NBER Working Paper No. 25147 (Jan. 2020),

available at https://opportunityinsights.org/paper/the-opportunity-atlas/.

17

Id.

18

Chetty, Hendren, Jones, and Porter, “Race and Economic Opportunity in the United States: An Intergenerational Perspective,”

Quarterly Journal of Economics,

Vol. 135, Issue 2, 711-783 (May 2020),

available at https://opportunityinsights.org/paper/race/.

19

Chetty, Stepner, Lin, Scuderi, Turner, Bergeron, and Cutler, “The Association Between Income and Life Expectancy in the United States, 2001-2014,”

The Journal of the American Medical Association,

315(16): 1750-1766 (2016).

For these reasons, the proposed rule requires program participants to not only identify areas that are segregated based on race and other protected characteristics, but also areas (many of

them the same ones) that lack critical community assets. Such an inquiry is vital to understanding how the neighborhood where someone grows up in many ways determines their life outcomes, including for example by perpetuating significant wealth gaps and health and educational disparities and limiting the overall opportunities that person may have. This is not intended to be a burdensome inquiry. In many cases, it will be clear from local knowledge (including what is gathered through community engagement) that disparities in community assets exist.

This proposed rule also recognizes that there is a need to take a balanced approach when devising ways to overcome fair housing issues. The affirmatively furthering fair housing mandate is intended to increase fair housing choice for persons of all protected class groups, including those with limited income and economic resources. HUD also recognizes that there are often economic factors affecting fair housing choice, which include rising rents and displacement from existing housing due to gentrification. Program participants, in undertaking a balanced approach to overcome fair housing issues should consider the impact of these economic factors. Affirmatively furthering fair housing can involve both bringing investments to improve the housing, infrastructure, and community assets in underserved communities as well as enabling families to seek greater opportunity by moving to areas of the community that already enjoy better community infrastructure and community assets. Therefore, HUD's proposed rule supports program participants' choice to engage in place-based activities, such as preserving affordable housing in particular neighborhoods while making complementary investments in other infrastructure and assets in those neighborhoods, as well as those choices that promote mobility, including housing mobility programs, in order to increase access to well-resourced areas and opportunity for protected class groups that have historically been housed in underserved neighborhoods.

The proposed rule calls on program participants to identify, and over time remedy, unequal access to homeownership opportunities—which is a more direct focus than was required under the 2015 AFFH Rule—because of race, color, national origin, disability, or other protected characteristics. Inequality in access to homeownership has created a ballooning wealth gap among racial and ethnic groups. Homeownership is generally the most traditional and stable way for a family to accumulate wealth; however, this advantage has primarily been made available only to White families, even today.

20

As one researcher described the results of a 2019 study, the median White family had eight times the wealth of the median Black family and five times the wealth of the median Latino or Hispanic family.

21

It is clear that eliminating discrimination from housing-related transactions today will be insufficient to reduce the wealth gap created over many years.

22

While some efforts are underway to remedy this wealth gap, research also shows that current programs that incentivize homeownership may not be designed in a manner that would result in a closing of the wealth gap and an increase in access to homeownership opportunities for persons of color, other protected class groups, and underserved communities.

23

There are myriad ways to reimagine how homeownership incentives can be created and utilized to promote these opportunities more fairly. Evaluating how homeownership can be incentivized, including through public-private partnerships, and made a reality for members of protected class groups and underserved communities may be one way that program participants can affirmatively further fair housing, and this proposed rule explicitly creates space for them to do so.

20

See

McCargo and Choi, “Closing the Gaps: Building Black Wealth through Homeownership,”

Urban Institute

(2020),

available at https://www.urban.org/research/publication/closing-gaps-building-black-wealth-through-homeownership/view/full_report.

21

Schuetz, “Rethinking Homeownership Incentives to Improve Household Financial Security and Shrink the Racial Wealth Gap,”

Brookings Blueprints for American Renewal & Prosperity

(2020),

available at https://www.brookings.edu/research/rethinking-homeownership-incentives-to-improve-household-financial-security-and-shrink-the-racial-wealth-gap/.

22

Id.

23

Id.

In addition to the wealth gap, other barriers to homeownership exist for other protected class groups. For example, program participants may identify—and then set goals to remedy—a lack of accessible housing that prevents individuals with disabilities from experiencing housing choice. A 2015 analysis of 2011 American Housing Survey data found that this was a widespread challenge.

24

24

Accessibility of America's Housing Stock: Analysis of the 2011 American Housing Survey (AHS),

https://www.huduser.gov/portal/publications/mdrt/accessibility-america-housingStock.html.

D. Summary of Proposed Changes to HUD's July 16, 2015 Final Rule

a. Streamlined Analysis Will Reduce Burden

Under the 2015 AFFH Rule, program participants were required to use an Assessment Tool to conduct their Assessments of Fair Housing (AFHs). The Assessment Tool required them to address more than ninety questions and rely on HUD-provided data, local data, and local knowledge to answer all questions. The Assessment Tool also contained a list of over forty contributing factors.

25

The factors had to be identified and prioritized for each fair housing issue based on the responses to the questions and data analysis conducted.

25

Under the 2015 AFFH Rule, a contributing factor or fair housing contributing factor was defined as “a factor that creates, contributes to, perpetuates, or increases the severity of one or more fair housing issues. Goals in an AFH are designed to overcome one or more contributing factors and related fair housing issues. . .” 24 CFR 5.152 (2015).

While the Assessment Tool had the worthwhile goal of ensuring that program participants conducted a thorough analysis in accordance with a standardized process, HUD now proposes a modified approach that is intended to make it simpler for program participants to identify fair housing issues and thus allow them to focus more of the planning process on setting meaningful fair housing goals. While HUD continues to believe that an analysis and evaluation of current and historic circumstances in a program participant's community is necessary to determine appropriate fair housing goals, and that such analysis must be informed by data as well as local knowledge and community input, such objectives can be achieved without requiring program participants to undertake as much independent burden.

Accordingly, this proposed rule eliminates the required use of an Assessment Tool and instead, in § 5.154, sets out a streamlined analysis that program participants must follow to develop their Equity Plans. The required content, which is different for consolidated plan participants and PHAs, consists of fewer questions than the Assessment Tool, and HUD proposes to allow program participants to determine the format for responding to the questions. HUD believes these questions constitute the core of the fair housing inquiry that is required to identify fair housing issues, including what may be causing those issues, and set meaningful fair housing goals. HUD specifically solicits comment below on

whether the questions in § 5.154 are easily understood to require this type of response and whether different or additional questions are needed. HUD believes that a more flexible format will allow program participants to tailor responses to local needs and priorities. The proposed rule still requires program participants to ground their analysis in HUD-provided data, local data, and local knowledge (including information obtained during the community engagement process), but does not require a program participant to provide a complete description of the data analyzed in response to each question. Instead, the written responses to the questions should describe the fair housing issues and their causes present in the program participant's geographic areas of analysis, and describe the key sources of information relied upon in fair housing issues and their causes sufficiently to ensure that responses are grounded in data and local knowledge.

By streamlining the written analysis, HUD believes the proposed rule will reduce burden for program participants in conducting their Equity Plans, will result in clearer and more direct identification of fair housing issues, and will allow program participants and their communities to place greater focus on the real task at hand—setting and implementing fair housing goals that are tailored to overcome the fair housing issues they collectively face. HUD also believes that the streamlined written analysis that focuses more on identifying fair housing issues and related causes will enable more program participants to establish meaningful fair housing goals that are concrete and measurable without the need for consultants and contractors.

For similar reasons, HUD is also eliminating the need to identify and prioritize factors contributing to fair housing issues as part of the required analysis within each section of the Assessment Tool provided under the 2015 AFFH Rule. While the lists of contributing factors included in the 2015 AFFH Rule's Assessment Tool were intended to help program participants set meaningful goals to remedy fair housing issues by first requiring them to identify the causes of those issues, HUD's experience in implementing the 2015 AFFH Rule showed that this step led to confusion without leading to the development or implementation of meaningful fair housing goals. Program participants are still required to assess the underlying reasons for the fair housing issues they face as part of determining the best and most effective approaches for overcoming them, though HUD believes the approach taken under the 2015 AFFH Rule did not function as initially envisioned.

Ultimately, because of this proposed rule's emphasis on outcomes, HUD believes it will be unnecessary for program participants to rely on contractors, consultants, or other experts that may be needed for a heavily data-driven written analysis. At the same time, HUD believes the simplified analysis still requires the core fair housing analysis—including engagement with the data provided by HUD—to drive meaningful goal setting.

b. Revised Fair Housing Planning Procedures Will Simplify Implementation, Reduce Burden, and Increase Transparency

This proposed rule modifies many of the procedures for how fair housing planning is implemented by program participants and their submissions reviewed by HUD compared to the 2015 AFFH Rule based on HUD's own experiences and the feedback of stakeholders regarding their experience with the 2015 AFFH Rule worked in practice.

First, while HUD's 2015 AFFH Rule was designed to provide program participants with maximum flexibility for how to collaborate on an AFH, the two different types of collaboration (joint program participants and regionally collaborating program participants) proved unnecessarily confusing. HUD is proposing to maintain the flexibilities for program participants to collaborate on their Equity Plans, while simplifying the actual procedures for those collaborations.

Second, the 2015 AFFH Rule provided for only 60 days for HUD's initial review of a submitted AFH and required program participants to have an accepted AFH for their consolidated plan, annual action plan, or PHA Plan to be approved, which in turn meant that the failure to have an accepted AFH could result in the loss of funding for program participants and their communities. In practice, this created unnecessary pressure on HUD and program participants to ensure that an AFH was accepted in a relatively short period of time to avoid risking funding that is designed to help low-income families and underserved communities. This timing also limited the extent to which HUD could work with program participants to revise a submitted plan to ensure full compliance with the rule and put program participants on a path to meaningful fair housing achievements. HUD has revised these procedures in several ways to allow a fuller review and revision process that ultimately results in compliant Equity Plans and meaningful actions by program participants that implement fair housing goals. HUD proposes to increase the review period for submitted plans from 60 to 100 days, providing HUD with more time to work with all program participants to improve their Equity Plans after submission to ensure the Equity Plan meets the regulatory requirements set forth in this proposed rule. The proposed rule provides that HUD can extend that review period for good cause. The proposed rule provides that if a program participant does not have an accepted Equity Plan, HUD may approve a consolidated plan or PHA Plan but only if the program participant furnishes special assurances that require the program participant to achieve an Equity Plan that meets the requirements of this proposed rule within 180 days of the end of HUD's review period for the consolidated plan or PHA Plan, as applicable, and that require the program participant to then amend the consolidated plan, annual action plan, or PHA Plan upon HUD's acceptance of the Equity Plan. As a result, HUD will have a clear mechanism to remedy noncompliance with the requirement to have an accepted Equity Plan, including the ability to take a range of actions (up to and including the cut-off of Federal funding where appropriate) against program participants who fail to provide or comply with such special assurances. HUD's expectation is that review of most Equity Plans will conclude with an acceptance, but the additional available procedures contained in this proposed rule provide mechanisms for HUD to take a progressive series of steps to obtain compliance in cases where this expectation is not met.

Third, while the 2015 AFFH Rule endeavored to align the AFH with program participants' other planning cycles, HUD recognizes that this approach led to difficulty for program participants in determining the date by which their AFHs were required to be submitted. This proposed rule, while still generally aligning Equity Plan cycles with other program cycles, contains clearer submission deadlines to allow program participants and the public to know with certainty when an Equity Plan will be due to HUD. Furthermore, program participants will have more time to prepare and refine their Equity Plans. HUD also expects to provide more robust technical assistance throughout the planning process. Based on this, and the changes to the required analysis explained throughout this preamble, HUD believes

it will be unnecessary for program participants to rely on contractors, consultants, or other experts that they may have chosen to use under the 2015 AFFH Rule. HUD is committed to building stronger partnerships with its program participants in order to fully implement the AFFH mandate.

Fourth, the 2015 AFFH Rule required program participants to report on their progress in subsequent AFHs—essentially, once every five years. HUD believes both that program participants should provide more regular progress updates and that they may need greater flexibility to adjust, revise, or reposition their fair housing goals on a more regular basis, particularly if program participants achieve their goals and need to establish new ones. HUD also believes that transparency around this progress evaluation is necessary to ensure that the community and members of the public are aware of the progress being made, including whether there are obstacles preventing progress from occurring. For this reason, HUD has included the requirement that, as part of their Equity Plans, program participants submit to HUD annual progress evaluations that summarize the status of the implementation of the fair housing goals. HUD does not anticipate that these progress evaluations will be long documents and expects many program participants could meet this requirement in a one- or two-page summary. HUD will also post these annual progress evaluations on its public AFFH web page to maximize the transparency of the progress being made. At the same time, the proposed rule provides a mechanism for program participants to seek revision of their established goals at these annual checkpoints.

Finally, the 2015 AFFH Rule's review process was not transparent enough to allow the public to know why HUD accepted or did not accept an AFH. This proposed rule creates a more transparent review process, pursuant to which submitted Equity Plans will be posted on HUD's AFFH web page, the public will have the opportunity to comment on submitted plans (as described further below), and HUD will publish its decisions on Equity Plan submissions. HUD believes that increasing the transparency around its review of Equity Plans will promote engagement by members of the public in the fair housing planning process and will serve to keep HUD and its program participants accountable for meeting their obligation to affirmatively further fair housing. Ultimately, HUD believes that, by having a transparent process, program participants will be better positioned to implement the fair housing goals established in their Equity Plans because their communities will be better equipped to contribute and hold program participants accountable.

c. Modified Community Engagement, Consultation, and Publication Requirements Will Increase Transparency

HUD recognizes that transparency and inclusion are necessary components of implementing the AFFH rule in a manner that ensures that the people the rule is meant to help have a significant voice in shaping outcomes. In this proposed rule, HUD offers modifications to what the 2015 AFFH Rule termed “community participation”—in the now revised “community engagement” section at § 5.158—to include requirements that HUD believes are more likely to lead to broader engagement, particularly by members of protected class groups and other underserved communities who have historically been excluded from these types of discussions. The proposed rule would also require consultation with various types of organizations, such as Fair Housing Assistance Program agencies and Fair Housing Initiative Program grantees, and other groups representing underserved communities, which include organizations that advocate on behalf of individuals with disabilities such as Centers for Independent Living, Protection & Advocacy Agencies, Aging and Disability Resource Centers, and Councils on Developmental Disabilities, among others. In addition, HUD will require program participants to hold multiple community meetings, at different times of day, and in different locations throughout the jurisdiction to account for the needs of shift workers, families requiring childcare, and individuals with disabilities, among others. Ensuring that all members of a community have a say in the identification of fair housing issues and deciding how available resources are allocated is the first step toward advancing equity for everyone.

HUD intends to maintain an AFFH web page where all submitted Equity Plans will be posted for public view. The AFFH web page will include public posting of whether HUD has accepted or has not accepted a plan, as well as the annual progress evaluation that program participants submit. HUD believes that creating a central public site where all of this information can be easily viewed will improve public engagement in the planning and implementation process by enabling community members to provide HUD with additional information that may be pertinent to its review, and to hold program participants accountable for implementing the fair housing goals established in their accepted Equity Plans. HUD may publish submitted Equity Plans or portions of such plans on other HUD-maintained web pages for the purposes of disseminating best practices and in a searchable information clearinghouse to benefit program participants and the general public.

d. New Complaint and Enforcement Mechanisms Will Enhance HUD's Ability To Ensure AFFH Compliance

While the proposed rule continues to focus on planning and goal setting, HUD is proposing to add a complaint and enforcement mechanism to help ensure that program participants comply with their duty to affirmatively further fair housing. This proposed rule, at §§ 5.170 through 5.174, would permit the filing of complaints, and for HUD to open a compliance review in response to a complaint or on its own initiative, about: a program participant's failure to comply with the requirements of the proposed rule; failure to comply with an Equity Plan commitment; or any action that is materially inconsistent with the obligation to affirmatively further fair housing as defined in this proposed rule. This proposed rule would set out how HUD will investigate complaints and conduct compliance reviews and the available mechanisms for HUD to enforce compliance when a program participant is found in noncompliance and voluntary resolution cannot be obtained. HUD has modeled these procedures after existing regulations that implement Federal civil rights laws, particularly those that apply to recipients of Federal financial assistance such as title VI of the Civil Rights Act of 1964 and section 504 of the Rehabilitation Act of 1973, and therefore are familiar to program participants, all of whom are recipients of Federal financial assistance from HUD.

See

24 CFR parts 1 (Title VI) and 8 (Section 504).

The 2015 AFFH Rule did not include any explicit mechanism for members of the public to file complaints with HUD regarding a program participant's failure to comply with the requirements of the regulation or for HUD to undertake a review of a program participant's compliance. Instead, the primary enforcement tools were HUD's ability to reject a submitted Assessment of Fair Housing or challenge a program participant's certification that it would affirmatively further fair housing. These tools alone proved to be insufficient

because they triggered drastic remedies (such as the suspension or termination of funding) that limited their practical use for ensuring compliance. HUD uses complaint and compliance review processes as one of the standard ways it ensures that program participants satisfy other civil rights obligations that attach to Federal funding and has used complaint processes in other HUD programs as a means to increase compliance. HUD proposes to establish a complaint and compliance process for AFFH, based on its experience implementing the 2015 AFFH Rule, feedback it received from stakeholders in listening sessions, the urgent need to address the systemic inequities in housing, and HUD's belief that community members are well positioned to provide important information regarding whether program participants are meeting their commitments made in the planning process and their duty to affirmatively further fair housing more generally. While HUD proposes to implement an enforcement mechanism for program participants who fail to fulfill the AFFH obligation, HUD understands that certain enforcement mechanisms such as withholding funds could have substantial impacts on consolidated plan program participants and PHAs and the people that they serve. The proposed rule would provide HUD with the ability to tailor remedies appropriately for particular circumstances. In particular, HUD does not intend to take actions that would adversely impact families participating in HUD's assisted housing programs, and is cognizant of the potential for such adverse effects from conditioning the disbursement of funds for public housing programs under section 8 or section 9. HUD would maintain a range of enforcement options that can ensure compliance, including finding a PHA in default of the Annual Contributions Contract if the circumstances require.

HUD does not intend this complaint and compliance review process to supplant the planning process as the principal means by which HUD and its program participants will implement the AFFH obligation and by which the community will have input into how AFFH compliance takes place. The proposed rule provides for public input at multiple points in the planning process, including while the program participant is developing its Equity Plan and while HUD is reviewing a submitted Equity Plan. HUD expects that interested members of the public will actively participate in the community engagement process and raise concerns in that forum about a program participant's identification of fair housing issues or establishment of fair housing goals. It also expects that any concerns the public has regarding a submitted Equity Plan will be provided during HUD's review of the Equity Plan, since the proposed rule permits members of the public to submit such information at that time. HUD will not treat information submitted regarding an Equity Plan HUD is reviewing as a complaint to be investigated; rather it will consider it as additional information that may be relevant to HUD's review of whether the Equity Plan conforms to this rule's requirements. HUD anticipates that these opportunities for the public to participate in the Equity Plan process will reduce the need to resort to the complaint process.

HUD also does not intend the complaint process to be a forum to challenge program participants' day-to-day activities that have little nexus to the AFFH obligation. Program participants are on notice of the types of actions that would be materially inconsistent with their obligation to affirmatively further fair housing because of prior guidance provided by HUD (

e.g.,

the 2015 AFFH Rule, the Fair Housing Planning Guide, the 2015 AFFH Rule Guidebook, and caselaw, including that cited above, interpreting the AFFH mandate).

26

HUD, nonetheless, also commits to providing further guidance as to the alleged conduct that HUD will accept as meriting an investigation. HUD's experience in administering other civil rights statutes with similar complaint and compliance review processes indicates that program participants will not be subject to investigations or sanctions arising from frivolous complaints regarding actions that do not actually implicate AFFH compliance. Additionally, HUD observes that the lack of an explicit administrative process that both permits the public to file complaints and authorizes HUD to investigate and take necessary corrective action has not always permitted program participants to avoid such claims. Rather, such allegations have been channeled into False Claims Act suits and other lawsuits or complaints of violations of other laws against program participants that sometimes required enforcement of AFFH in unpredictable ways. HUD has also used its authority to ensure program participant compliance with the Fair Housing Act to investigate and conciliate complaints of AFFH obligations even in the absence of an explicit process. HUD believes it will benefit program participants and the Department to have a regular and defined administrative process for its consideration of such complaints. As described below, HUD is specifically soliciting comment on how it can most effectively institute a complaint and compliance review process to provide as much notice as possible regarding the proper subjects of complaints and compliance reviews and ensure that program participants will not be subjected to frivolous complaints that are not directly tied to the program participant's obligation to affirmatively further fair housing.

26

The Fair Housing Planning Guide and 2015 AFFH Rule Guidebook are available at the Office of Fair Housing and Equal Opportunity's (FHEO) AFFH web page

https://www.hud.gov/AFFH.

e. Changes in Definitions Related to the Fair Housing Analysis Will Add Clarity to and Focus on Core Fair Housing Concepts

As described above, the proposed rule eliminates the need for a separate Assessment Tool and instead sets out the simplified fair housing analysis required of program participants. Many of the definitions in this proposed rule therefore reflect some aspects of that analysis. HUD has eliminated or modified certain definitions from the 2015 AFFH Rule in this proposed rule to provide program participants and the public greater clarity regarding what the obligation to affirmatively further fair housing encompasses and what HUD's expectations are for its funding recipients. Additionally, HUD believes that by creating these new definitions that they will provide additional information and clarity regarding this proposed rule and the topics that program participants are expected analyze. The new definitions include:

• “Affordable housing opportunities,” which refers to whether members of protected class groups and underserved communities have equitable access to housing that is affordable to them, including with respect to where such housing is located, whether it meets the needs of families of different sizes, whether it meets the accessibility needs of individuals with disabilities, whether it affords access to opportunity, including community assets, and whether there are factors that adversely affect access to affordable housing, specifically, but not limited to, rising rents, evictions, source of income discrimination, loss of existing affordable housing;

• “Balanced approach,” which refers to HUD's acknowledgement of the balancing of various approaches

program participants can employ when undertaking community planning and investments, which results in the balancing of a variety of actions to eliminate the housing-related disparities that result from persistent segregation or lack of integration, the lack of affordable housing in well-resourced areas of opportunity, the lack of investment in community assets in R/ECAPs and other high-poverty areas, and the loss of affordable housing to meet the needs of underserved communities. The proposed definition would make clear that both place-based and mobility strategies are part of a balanced approach necessary to achieve positive fair housing outcomes. A program participant that has the ability to create greater fair housing choice outside segregated, low-income areas should not rely on solely place-based strategies;

• “Community assets,” which refers to the types of assets that are often not equitably distributed and available within communities, such as high quality schools, equitable employment opportunities, reliable transportation services, parks and recreation facilities, community centers, community-based supportive services, law enforcement and emergency services, healthcare services, grocery stores, retail establishments, infrastructure and municipal services, libraries, and banking and financial institutions;

• “Equity or equitable,” which refers to the consistent and systematically fair, just, and impartial treatment of all individuals, including individuals who are members of protected class groups or parts of underserved communities that have been denied such treatment, as well as persons otherwise adversely affected by persistent poverty or inequality;

• “Publication,” which refers to how HUD will maintain web pages to publicly post Equity Plan materials to enhance transparency and provide opportunities for communities to learn from one another and benefit from the innovative thinking of others;

• “Underserved communities,” which refers to the remedial nature of the AFFH mandate so that groups or classes of individuals, as well as geographic communities who have historically had inequitable access to housing, education, transportation, economic, and other important opportunities, including community assets, within the program participant's jurisdiction, and HUD would require program participants to take them into account to ensure communities overcome the systemic perpetuation of inequity.

HUD believes that building these definitions and others into the proposed rule itself more directly articulates HUD's expectations for how program participants can comply with this proposed rule and the AFFH mandate than leaving such matters to a separate assessment tool as the 2015 AFFH Rule did.

f. Conforming Amendments to Program Regulations Are Necessary for Consistency With This Proposed Rule

This proposed rule contains conforming amendments to program regulations at 24 CFR parts 91, 92, 93, 570, 574, 576, 903, and 983 in order to ensure consistency between this proposed rule and the implementation of programmatic requirements for States, local governments, insular areas, and PHAs. Because HUD and its program participants are required to administer all programs and activities in a manner that affirmatively furthers fair housing, establishing consistent mechanisms in these regulatory provisions is necessary to ensure that program participants are positioned to fulfill this obligation.

E. Conclusion

The opportunity to choose where one lives free from barriers or inequities related to race, color, religion, sex, national origin, familial status, or disability is at the very heart of the Fair Housing Act's AFFH mandate. That obligation is meant to ensure that Federal money, which for too long was used to perpetuate segregation and impose discriminatory policies, is instead used to dismantle the enduring legacy of that history. This proposed rule's implementation of the Fair Housing Act's AFFH mandate requires that communities confront and commit to changing historic and ongoing discriminatory practices and policies, engage in proactive planning for the use of Federal funds to ensure funds are used equitably, and implement meaningful actions that affirmatively further fair housing. The new regulation carries forward the core planning process of the 2015 AFFH Rule, and HUD anticipates that the plans generated by this proposed rule will drive how HUD funds will be used to advance equity and affirmatively further fair housing. The proposed rule also modifies some aspects in order to make the process more user-friendly and less burdensome for program participants, and more accessible and transparent to the public. HUD's objective in this proposed rule is to provide greater support for program participants in performing the necessary analysis and otherwise meeting their obligations, while requiring more inclusion in the planning process for communities that historically have had too little say in it; more transparency for the public as to the decisions that have been made; and more regular progress reporting and opportunity to change course to reflect changed circumstances.

HUD is committed to taking active measures to work with its program participants to develop innovative and consequential ways to affirmatively further fair housing. For those program participants that take the AFFH obligation seriously, HUD anticipates that this rule will be simpler and less burdensome to follow, and that program participants will find HUD to be a helpful partner as they engage their communities and seek creative ways to remedy fair housing issues that have too long been ignored. For those that do not, HUD proposes changes that are intended to make its review process more robust and to otherwise provide for vigorous enforcement to ensure that the AFFH mandate is implemented. Based on the lessons learned from the implementation of the 2015 AFFH Rule, this proposed rule builds on that rule's successes and offers a more streamlined, effective approach to empower program participants and their communities to make informed decisions based on local circumstances to advance equity and affirmatively further fair housing.

III. Summary of Proposed Rule

This rule proposes to amend the regulations in 24 CFR parts 5, 91, 92, 93, 570, 574, 576, 903, and 983 as discussed in this section.

Affirmatively Furthering Fair Housing Regulation

This proposed rule would amend HUD regulations in 24 CFR part 5, subpart A, which contains generally applicable definitions and requirements that are applicable to all or almost all HUD programs. This rule proposes to amend existing subpart A by adding new §§ 5.150 through 5.180 under the undesignated heading of “Affirmatively Furthering Fair Housing.” These revised or new sections will provide the regulations that will govern how States, local governments, insular areas, and PHAs comply with their statutory obligation to affirmatively further fair housing, but reserves additional sections in subpart A for HUD to continue to provide regulations that will assist all HUD program participants in more effectively affirmatively furthering fair housing.

Affirmatively Furthering Fair Housing: Purpose (§ 5.150)

Revised § 5.150 states that the purpose of the AFFH mandate in the Fair Housing Act is to ensure that Federal funds are used in a manner to overcome the legacy of public and private policies and practices that intentionally or unintentionally have created segregated communities and inequities for people of color and other groups because of the characteristics the Act protects. The purpose of HUD's AFFH regulation is to provide program participants with an effective approach to aid program participants in identifying and taking meaningful actions to overcome historic patterns of segregation, promote fair housing choice, eliminate inequities in access to housing and related opportunities caused by policies or actions that discriminated on the basis of protected class, and foster inclusive communities that are free from discrimination. The new AFFH regulation is intended to provide a straightforward approach for program participants to advance equity in their communities using Federal financial assistance from HUD, while ensuring that HUD has a mechanism to enforce the mandate.

Affirmatively Furthering Fair Housing: Application (§ 5.151)

New § 5.151 provides the general applicability of AFFH requirements as it applies to all of HUD's programs and activities and makes clear that §§ 5.150 through 5.180 in subpart A also imposes a planning requirement on certain program participants.

Definitions (§ 5.152)

New § 5.152 provides the definitions that are used for purposes of the AFFH regulation and conforming amendments to existing program regulations. HUD has preserved and modified some of the following definitions that were included in the 2015 AFFH Rule (and in certain instances the AFFH IFR), which include “Affirmatively furthering fair housing,” “Community engagement” (formerly “Community Participation”), “Data,” “Disability,” “Fair housing choice,” “Fair housing issue,” “Geographic area,” “Integration,” “Local knowledge,” “Meaningful actions,” “Protected characteristics,” “Protected class,” “Racially or ethnically concentrated areas of poverty,” “Region,” “Segregation,” and “Significant disparities in access to opportunity.” New terms defined in this section include “Affordable housing opportunities,” “Analysis of Impediments to Fair Housing Choice,” “Balanced approach,” “Community asset,” “Equity or equitable,” “Equity Plan,” “Fair housing gals,” “Fair housing goal categories,” “Fair housing strategies and actions,” “Funding decisions,” “Publication,” “Publicly supported housing,” “Responsible Civil Rights Official,” “Reviewing Civil Rights Official,” “Siting decisions,” “Underserved communities,” and “Well-resourced areas.”

The definition of “affirmatively furthering fair housing” explains program participants' obligations under the Fair Housing Act as described throughout this preamble. This definition provides greater clarity than the definition contained in the 2015 AFFH Rule and the AFFH IFR by expressly stating that the duty to affirmatively further fair housing extends to all of a program participant's activities, services, and programs relating to housing and community development; it extends beyond a program participant's duty to comply with Federal civil rights laws and requires a program participant to take actions, make investments, and achieve outcomes that remedy the pervasive segregation and disparities the Fair Housing Act was designed to redress.

The definition of “affordable housing opportunities” is included in this proposed rule to assist program participants in identifying whether and in which areas of their communities members of protected class groups lack access to affordable housing opportunities. The definition also includes that the housing must comply with affordability and habitability requirements. This definition also includes the broader concept of whether members of protected class groups and underserved communities have equitable access to housing that is affordable to them, including with respect to where such housing is located and whether it affords access to opportunity, including community assets. HUD anticipates that this definition, as incorporated into the analysis required by § 5.154, will provide a connection between housing affordability, protected characteristic, and access to other opportunities, such as community assets. This definition accounts for whether housing stability for protected class groups is adversely affected by various factors, including rising rents, loss of existing affordable housing, displacement due to economic pressures, evictions, source of income discrimination, or code enforcement. This definition also contemplates that individuals with disabilities who need accessible housing have affordable housing opportunities that meet their needs in areas of their community that also afford access to opportunity. HUD notes that HUD is not changing the standard for HUD-assisted housing in program regulations with the inclusion of this definition for purposes of the Equity Plan analysis. By assessing where affordable housing is located in a community, as well as who has been successful in accessing that housing, program participants can better understand how the location of such housing, in relation to community assets, promotes integration, provides access to opportunity or is a barrier to such access, and whether there are laws, policies, or practices in their jurisdictions that may impede the provision of affordable housing in certain areas, such as well-resourced areas. With this understanding, program participants will be better positioned to set fair housing goals that can be designed and reasonably expected to result material positive change. This definition is not intended to align with HUD's programmatic requirements, and so whether housing meets this definition does not speak to whether it complies with programmatic rules.

The definition of “Analysis of Impediments to Fair Housing Choice” provides context for the manner in which program participants will meet their obligations to affirmatively further fair housing until such time as they are required to submit an Equity Plan to HUD.

The definition of “balanced approach” is added to articulate HUD's acknowledgement that different strategies for remedying fair housing issues can be employed based on the facts and circumstances specific to a program participant's community. Where a community has been starved of investment, some may want to leave for other communities, while others will want to bring those resources to bear to improve the circumstances of where they live. Accordingly, HUD has added this definition to ensure that program participants can adopt different types of strategies that will meaningfully increase fair housing choice in their communities, including by choosing from an array of place-based strategies (

e.g.,

the preservation of existing affordable housing or increased investments in community assets) and mobility strategies (

e.g.,

improved housing counseling, assessing how school assignments are made, or building affordable housing in well-resourced areas). A combination of actions will likely be necessary in most communities, which would include both place-based and mobility strategies. The proposed rule requires

that a program participant's goals, taken together, meet the definition of a balanced approach. HUD provides that place-based and mobility strategies must be designed to achieve positive fair housing outcomes (including accessibility for individuals with disabilities) and that a program participant that has the ability to create greater fair housing choice outside segregated, low-income areas should not rely solely on place-based strategies. HUD believes that the vast majority of, if not all, program participants will be able to set goals that rely on both place-based and mobility-based strategies. HUD seeks specific comment on whether this is a reasonable requirement for every program participant and, if not, the specific circumstances under which it would not be.

The definition of “community assets” is added to describe the sorts of high-quality assets that are characteristic of communities that have not suffered from disinvestment and that affect the quality of housing opportunities. It is meant to be a non-exhaustive but illustrative list of assets. Consideration of the location of and access to community assets, by protected class, is an integral part of the analysis of the Equity Plan, which HUD anticipates will allow program participants to be better positioned to understand the specific fair housing issues within their local communities. HUD does not intend to require analysis of community assets to be particularly burdensome and will provide data and technical assistance to support this analysis.

The definition of “community engagement” is included to provide program participants with a baseline understanding of what the obligation, more specifically delineated at § 5.158, entails.

The definition of “disability” in this proposed rule, as in the 2015 AFFH Rule, is intended to be consistent with other Federal civil rights laws with which program participants must comply, such as section 504 of the Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990 (ADA), as amended by the ADA Amendments Act of 2008. HUD incorporates by reference the definition of disability under section 504 and the ADA, consistent with the Attorney General's interpretations of that definition, see 28 CFR 35.108, for purposes of the affirmatively furthering fair housing obligation under section 808(e)(5) so as to provide consistency and clarity to HUD program participants, which are all already bound by the same definition under those statutes.

The definition of “equity or equitable,” which is consistent with Executive Order 13985, is intended to provide program participants with a framework for how to assess their communities in a manner that is fair, just, and impartial.

The definition of “Equity Plan” provides a less burdensome and more straightforward approach to fair housing planning and replaces the Assessment of Fair Housing that was required by the 2015 AFFH Rule. The Equity Plan consists of the content included in § 5.154, is submitted to HUD for review, and includes an annual progress evaluation. Program participants may submit an individual Equity Plan or may partner with other program participants to submit a joint Equity Plan, as provided for in § 5.160.

The definition of “fair housing goals” sets forth how program participants will overcome the fair housing issues identified in their Equity Plans. “Fair housing goals” are designed to go beyond the status quo in the program participant's community and result in tangible, positive, and measurable fair housing outcomes. Each fair housing goal will include a description of the fair housing issue it is designed to overcome.

The definition of “fair housing goal categories” details the seven categories for which program participants must establish fair housing goals to overcome fair housing issues. The purpose of this definition, and related provisions, is to help focus program participants' prioritization of which identified fair housing issues they will set goals to remedy. HUD understands that, in many cases, it will be beyond the capacity of program participants to set goals to remedy every identified issue in a single 5-year cycle. The fair housing goal categories are intended to provide program participants with a reasonable number of specific areas in which to focus their goals. Program participants may address multiple fair housing issues through a single goal, and doing so need not be difficult. Accordingly, the proposed rule does not require a goal to be set for every identified fair housing issue, but does require that a goal be set that addresses issues in each of the seven fair housing goal categories, which are outlined in § 5.154(f). HUD believes these to be at the core of the AFFH obligation.

The definition of “fair housing issues” is modified from the definition in the 2015 AFFH Rule and provides the substantive areas of analysis that program participants will assess in their Equity Plans before setting fair housing goals. “Fair housing issues” now also include such conditions as ongoing local or regional segregation or lack of integration, racially or ethnically concentrated areas of poverty, significant disparities in access to opportunity, inequitable access to affordable housing opportunities and homeownership opportunities, laws or ordinances that impede the provision of affordable housing in well-resourced areas, evidence of discrimination or violations of civil rights law or regulations related to housing, and inequitable distribution of local resources, which may include municipal services, emergency services, community-based supportive services, and investments in infrastructure.

The definition of “fair housing strategies and actions” helps clarify how program participants will implement the fair housing goals established in their Equity Plans, including with respect to the allocation of funding that may be necessary for purposes of achieving the fair housing goals.

The definitions of “funding decisions” and “siting decisions” refer to a set of decisions that program participants make about the allocation of HUD funds and other investments in their communities, decisions that have contributed to inequity and segregation in the past and that this proposed rule seeks to reorient in order to advance equity and undo patterns of segregation going forward.

The definition of “geographic area” delineates the specific levels of geographic areas of analysis that certain types of program participants must undertake when conducting the analysis required in the Equity Plan by § 5.154. These largely restate the geographic areas of analysis that were established by the 2015 AFFH Rule and the various Assessment Tools that implemented it. HUD flags that while the expected geographic area of analysis for State and insular areas includes the whole State or insular area, including entitlement and non-entitlement areas, this does not change existing requirements that restrict States to using CDBG and other Community Planning and Development funds only in non-entitlement areas.

The definitions of “integration,” “segregation,” “racially or ethnically concentrated areas of poverty,” and “significant disparities in access to opportunity,” are included because they are necessary components of the required analysis in order to set and implement meaningful fair housing goals. When appropriate, they identify cross-references to other legal standards that are also relevant to how these terms apply to specific classes protected under

the Fair Housing Act (

e.g.,

integration and individuals with disabilities).

27

27

In 1999, the United States Supreme Court issued the landmark decision in

Olmstead

v.

L.C.,

527 U.S. 581 (1999), affirming that the unjustified segregation of individuals with disabilities is a form of discrimination prohibited by title II of the ADA. Following the

Olmstead

decision, there have been increased efforts across the country to assist individuals who are institutionalized or housed in other segregated settings to move to integrated, community-based settings. As a result of the

Olmstead

decision and the integration mandate of section 504 of the Rehabilitation Act included in HUD's section 504 regulation at 24 CFR part 8, HUD has consistently recognized the great need for affordable, integrated housing opportunities where individuals with disabilities are able to live and interact with individuals without disabilities, while receiving the health care and long-term services and supports they need.

The definition of “homeownership opportunities” is included in this proposed rule so that program participants, in conducting their analyses, consider whether members of protected class groups have equitable access to homeownership in their jurisdictions, and if not, to determine what barriers exist to attaining homeownership so that fair housing goals can be established.

The definition of “publication” encompasses the posting of the Equity Plan materials for review on a HUD-maintained web page, which will facilitate transparency of the local decisions made and the HUD review process. The public will be able to track the status of HUD's review and provide feedback to HUD directly, and communities will be able to learn and benefit from the innovative ideas of others.

The definition of “publicly supported housing” sets forth the types of assisted affordable housing that program participants will analyze. HUD is providing data regarding the location and demographics of certain types of such housing, and program participants will also rely on local data and local knowledge for other types of assisted housing operated in the jurisdiction.

The definitions of “Responsible Civil Rights Official” and “Reviewing Civil Rights Official” clarify the Departmental official with the authority to make determinations regarding a program participant's Equity Plan and its compliance with its obligation to affirmatively further fair housing under the Fair Housing Act.

The definition of “underserved communities,” which is consistent with Executive Order 13985, includes groups or classes of individuals, as well as geographic communities that disproportionately include members of particular protected class groups, who have historically had inequitable access to housing and other community assets.

The definition of “well-resourced areas” is included to emphasize that program participants must assess which areas and whether the residents who reside in such areas have high-quality and well-maintained community assets (in view of local economic circumstances), as defined in § 5.152, which afford residents genuine access to opportunity (

e.g.,

infrastructure, high performing schools, economic opportunity, etc.) as a result of public and private investments.

Equity Plan (§ 5.154)

New § 5.154 sets forth the substantive requirement for program participants to evaluate their communities in order to more effectively affirmatively further fair housing and advance equity. This section sets forth the seven areas of analysis, which will also serve as fair housing goal categories for which program participants must establish fair housing goals. HUD seeks comment on whether it is appropriate to require every program participant to establish goals in each of the seven categories.

The process described in this section consists of fewer questions than previously required by the 2015 AFFH Rule to which program participants must respond. The specific required questions are codified in this section, but program participants have the flexibility to conduct their Equity Plan in a manner and format that best suits their local needs, so long as the required content is submitted to HUD. HUD will provide program participants with data that include maps, tables, and may include technical assistance that aids program participants in conducting their analysis. HUD will also continue to provide the existing mapping tools, first provided under the 2015 AFFH Rule, and is exploring ways to improve those offerings and provide additional relevant data. In addition, for purposes of the analysis related to access to affordable housing opportunities, HUD will continue to provide data to assist program participants in assessing disparities among protected class groups based on factors of cost burden, severe cost burden, overcrowding (particularly for large families), and substandard housing conditions. HUD believes this approach will better facilitate the discussions in communities around how to develop and implement meaningful fair housing goals. While HUD's approach under the 2015 AFFH Rule often yielded meaningful fair housing goals, HUD now understands that requiring all program participants to perform extensive data analysis themselves and show their work in a written submission (

i.e.,

requiring program participants to recite back to HUD what the HUD-provided data showed) may have impeded some program participants' ability to focus on outcomes. HUD is now proposing to simplify the required analysis and assist program participants in understanding how to use the relevant data to identify fair housing issues. This will allow program participants to place a greater emphasis on developing fair housing goals, making investment and funding decisions in furtherance of those fair housing goals, and listening to members of the community who have historically lacked equitable participation in such decisions. When establishing fair housing goals, program participants may adopt a small number of goals if such goals could ultimately result in outcomes that have a significant impact toward advancing equity for protected class groups by reducing the adverse effects of fair housing issues. HUD recognizes that fair housing goals may be short-term, in that they can be achieved relatively quickly, or long-term, in that they may take more than one funding cycle, and that program participants may set both short- and long-term goals in order to ensure that they ultimately affirmatively further fair housing.

Paragraphs (a) and (b) of § 5.154 provide the general requirement to conduct and submit an Equity Plan, including the obligation to engage the community in the development of the Equity Plan. Paragraph (b) makes clear that certain portions of the analysis may rely on local data, local knowledge, and information obtained through community engagement, particularly if HUD is unable to provide data for a specific topic required to be included as part of the analysis. Paragraph (c) provides the general content that must be included in a program participant's Equity Plan and the requirement to incorporate the Equity Plan into subsequent planning documents such as the consolidated plan, annual action plan, and PHA Plan (or any plan incorporated therein) so that program participants can appropriately allocate necessary funding for the implementation of fair housing goals. Paragraph (d) provides the specific content the Equity Plan must contain for local governments, States, and insular areas, including the questions to which these program participants must respond. The questions consist of: (1) demographics; (2) segregation and integration; (3) R/ECAPs; (4) access to community assets; (5) access to affordable housing opportunities; (6) access to homeownership and economic

opportunity; and (7) local policies and practices impacting fair housing. Paragraph (e) provides the specific content the Equity Plan must contain for PHAs, including the questions to which PHAs must respond. The questions consist of: (1) demographics; (2) segregation and integration; (3) R/ECAPs; (4) access to community assets and affordable housing opportunities; and (5) local policies and practices impacting fair housing. As noted above, HUD welcomes comment on whether these questions should be modified for the purposes of small PHAs or if HUD should consider increased flexibilities PHAs can use to comply with the Equity Plan requirement or alternative approaches HUD can use to ensure that small PHAs comply with their obligations to affirmatively further fair housing.

To assist program participants in conducting their Equity Plans' analysis, HUD intends to continue providing data that program participants can rely on to answer most of the questions that guide the proposed rule's required analysis. Many program participants and others, including researchers, found the raw data HUD provided under the 2015 AFFH Rule to be invaluable. HUD is committed to continuing to provide such data, to improving its current data and mapping tools (

e.g.,

the AFFH-T Data & Mapping Tool), and to building additional tools and data products to further facilitate the fair housing analysis. For example, HUD is contemplating developing a flexible data tool for comparing the locations and demographics of publicly supported housing with patterns of segregation and R/ECAPs. A version of this tool is currently available in the AFFH-T Data & Mapping Tool, in the “Query Tool” option, and HUD would welcome feedback on potential improvements to this functionality. Additionally, as previously described, HUD is contemplating various ways to present this data to program participants outside the AFFH-T interface and to provide technical assistance, which may include explanations that assist program participants in understanding how to use the data to identify fair housing issues.

In addition, HUD intends to issue guidance and technical assistance on how to conduct an Equity Plan analysis and set appropriate goals. HUD intends to tailor this guidance to the various types of program participants, including State agencies and smaller and rural PHAs and consolidated planning agencies. HUD recognizes the wide range of different types of housing and community and economic development agencies that administer these vital programs at the State and local level, and that many of them have unique geographies and jurisdictional boundaries as well as unique data-related needs.

Program participants will already be familiar with several of the key Equity Plan questions. For example, HUD notes that almost all program participants will already be familiar with the analysis of disparities in access to community assets and affordable housing opportunities, including for protected class groups. To the extent the proposed rule's analysis of “affordable housing opportunities” overlaps with analysis already conducted for the consolidated plan, and often adopted also by PHAs, there is little additional burden on program participants in conducting this part of the analysis in the new Equity Plan. Similarly, new analysis conducted for the Equity Plan can also inform similar parts of the consolidated plan and PHA Plans. HUD recognizes that some program participants may not have direct expertise to be able to fully answer some questions in the Equity Plan analysis section, for example those asking about access to schools, transportation, or employment opportunities. HUD expects that in addition to HUD-provided data, program participants' use of local data and local knowledge, including that gathered though the community engagement process, will assist program participants with conducting these analyses.

Many of the questions are intended to be an opportunity to solicit informed feedback from the community, including local organizations that already work in these spaces, to assist the program participant in assessing disparities in access to community assets by protected class groups. HUD expects the community engagement process may be particularly helpful in consideration of certain aspects of the analysis. HUD does not anticipate that questions relying primarily on input from local data and local knowledge, which may be obtained through the community engagement process, should pose any major additional burden. As provided for in the proposed rule's definition of “local data” in § 5.152, the proposed rule requires consideration only of such data that “can be found through a reasonable amount of search [and] are readily available at little or no cost.” To provide one example, questions asking about “underserved communities” may not require a granular, data-driven analysis in order to identify fair housing issues. Rather, program participants are encouraged to actively engage with these communities in order to obtain the information necessary to conduct the analysis and to identify fair housing issues. This includes opening dialogues and engaging with individuals experiencing homelessness, survivors of domestic violence, people with criminal records, persons identifying as Lesbian, Gay, Bisexual, Transgender, Queer + (LGBTQ+), individuals with disabilities, and others who often have no established forum to inform local policymakers of their issues and needs.

Some of the proposed rule's questions, in asking about changes in demographics or economic trends, ask about a concept known to many stakeholders as “gentrification.” The term is used here because of its common colloquial use to facilitate the program participant's and community's ease of understanding the concepts at issue in order to have required discussion about community trends. HUD notes the robust debate around the term “gentrification” and its impact on communities in both social science research and among communities themselves, and program participants can also consider such discussions in their review. This proposed rule does not establish a HUD definition of “gentrification,” nor will program participants be required to precisely define the term.

For questions that ask about “livable wage jobs,” while HUD provides several data points that relate to employment, labor participation, and proximity to jobs, it acknowledges that the data may not capture the full picture. Program participants may have local data and local knowledge that addresses this, including information obtained from local organizations that participate in the community engagement process.

As noted above, HUD does not intend for program participants to document the performance of an extensive data-driven analysis for most questions, and instead intends for program participants to focus on effective goal setting to address identified issues. The analysis in the proposed rule is intended to facilitate a balanced approach by permitting the identification of fair housing issues susceptible to being remedied through a variety of policies. For example, if disparities by protected class group are identified in the questions regarding homeownership opportunities, responsive goals could include specific policies to assist first-time homebuyers and expand availability of affordable homeownership opportunities, such as new construction of affordable single-family homes, downpayment assistance

using the HOME Investment Partnerships (HOME) program, or zoning code reform. Similarly, an identified issue regarding lack of affordable housing opportunities in certain areas could be remedied through goals such as expanding rental availability through new placements of HOME, Housing Trust Fund (HTF), and Low-Income Housing Tax Credits (LIHTC) units, geographically targeted project-based vouchers, improved Housing Choice Voucher mobility, or addressing unnecessary regulatory barriers to affordable housing production, strengthening tenant protections, and preservation efforts.

Paragraph (f) describes how program participants must identify and prioritize the fair housing issues for each fair housing goal category. In determining how to prioritize fair housing issues within each fair housing goal category, program participants shall give highest priority to fair housing issues that will result in the most effective fair housing goals for achieving material positive change for underserved communities, taking into account that different protected class groups may be impacted by different fair housing issues. Paragraph (g) sets the requirements for fair housing goals and for including fair housing goals in the Equity Plan. This paragraph is intended to provide program participants with greater clarity on what HUD will look for when an Equity Plan is submitted for review, including whether the fair housing goals, when taken together, are designed to overcome the effects of each prioritized fair housing issue.

Broadly, the proposed rule requires program participants to set and implement fair housing goals that are designed and can be reasonably expected to result in a material positive change relating to the fair housing issues that they are intended to address. HUD expects that, in subsequent progress reports and planning cycles, program participants will be able to point to the changes that have resulted from implementation of the goals established in their Equity Plan. For example, if a program participant has identified as an issue segregation in certain areas of its jurisdiction and has set fair housing goals to reduce that segregation, it should be able to point to ways in which implementation of the fair housing goals have resulted in or are in the process of resulting in a decrease in such segregation. This does not mean that program participants must be able to report changes that are occurring with statistically significant data.

HUD recognizes that fully remedying a fair housing issue will often take substantial time and occur in incremental steps, spanning multiple funding and Equity Plan cycles. Thus, HUD expects the fair housing goals will result in material positive change even if that change will be incremental, and it will take multiple funding cycles to fully remedy the fair housing issue. For example, a program participant might set a goal in its Equity Plan to supply 100 units of affordable housing in a well-resourced area. Completing this fair housing goal might not completely remedy the underlying fair housing issues (

e.g.,

segregation) due to the size of the total population and existing segregated residential patterns in the jurisdiction and region. In such circumstances, if HUD accepts the program participant's Equity Plan and the program participant accomplishes its fair housing goal of building the 100 units, the program participant will have complied with its Equity Plan obligation, but it will still be required to set additional fair housing goals in future Equity Plan submissions to continue tackling the fair housing issue of segregation.

HUD also understands that, with respect to many fair housing issues, forces other than the program participant's actions may influence the course of change. A program participant's fair housing goal can be successful on its own terms even as it fails to accomplish material positive change in terms of the underlying issue it was designed to address. For example, a program participant might identify the lack of affordable housing in well-resourced areas as an issue and set a fair housing goal to eliminate barriers to the siting of affordable housing in well-resourced areas. It might achieve that goal by eliminating the identified barriers, and yet affordable housing is not built in the areas in question for other reasons. In such circumstances, the program participant will have satisfied its obligation with respect to that fair housing goal and will not be deemed to be out of compliance with its Equity Plan obligations. The program participant will be expected to continue to set goals in subsequent planning cycles to address the still existing fair housing issue in ways that will accomplish the required material positive change.

Paragraph (h) consists of additional content that is required for the Equity Plan, including the community engagement process and the submission of certifications and assurances. Paragraph (i) provides for program participants and their communities to engage in an evaluation of progress toward advancing equity following the acceptance of the Equity Plan. For each Equity Plan submitted following the first Equity Plan, program participants are permitted to provide their annual progress evaluations in the aggregate as part of the overarching progress evaluation required for each new Equity Plan. Paragraph (j) provides for the publication requirement of the Equity Plan, which HUD will facilitate, in order to increase transparency and allow for program participants and the public to view all Equity Plan submissions and view the Department's decisions regarding such plans. This will allow communities to discover and consider the innovative ideas and strategies other communities may be employing to advance equity in meaningful ways. This paragraph also provides for a mechanism for the public to submit information to HUD regarding the content of a published Equity Plan.

Affirmatively Furthering Fair Housing Through Equity Plan Incorporation Into Subsequent Planning Documents (§ 5.156)

New § 5.156 more closely and directly ties the fair housing goals established in the Equity Plan to the subsequent planning processes program participants are required to undertake to ensure that program participants adequately and appropriately undertake and fund programs, services, and activities in a manner that advances equity and affirmatively furthers fair housing. This will provide a more holistic approach to the implementation of the AFFH mandate by requiring program participants to embed fairness and equity into their decision-making processes.

Community Engagement (§ 5.158)

New § 5.158 sets forth the requirements for community engagement as a key component of the development of the Equity Plan. This section, along with conforming amendments to applicable program regulations, provides program participants the flexibility to conduct this process differently from how they conduct citizen participation for the consolidated plan or annual action plan or the policies and procedures PHAs use for the PHA Plan if they so choose. Program participants' engagement with their communities in the development of the Equity Plan requires the confrontation of difficult issues, and so HUD is providing program participants with fl

This text is long and has been trimmed here. Open the source document for the complete record.