Trump's New Fair Housing Rule Prioritizes Toxic Culture War Politics Over Deregulation

The president has ditched a promising, free market-influenced revamp of Obama-era fair housing regulations in favor of a legally dubious new rule that's heavy on local control.

President Donald Trump's recent comments about saving the suburbs from new development appear to be more than just talk. A new fair housing rule released by the Trump administration this week prioritizes local control of housing policy in place of federal interventions to address the legacy of segregation (which progressives prefer) or incentivizing the deregulation of housing construction, which his own administration proposed earlier this year.

On Thursday, the U.S. Department of Housing and Urban Development (HUD) released its new Preserving Community and Neighborhood Choice rule, which establishes the standards jurisdictions receiving HUD grants have to meet in order to satisfy the 1968 Fair Housing Act's requirement that federal housing programs be administered in a way that "affirmatively furthers fair housing."

The new rule, which goes into effect in 30 days, essentially guts the 2015 Obama-era affirmatively furthering fair housing (AFFH) rule that has long been derided by conservatives as an example of federal bureaucratic overreach, and which the Trump administration has been trying to unwind for the past two years.

"We are tearing down the Obama Administration's Affirmatively Furthering Fair Housing rule which was an overreach of unelected Washington bureaucrats into local communities," said HUD Secretary Ben Carson on Twitter. "The AFFH rule was a ruse for social engineering under the guise of desegregation, essentially turning [HUD] into a national zoning board."

The AFFH rule was a ruse for social engineering under the guise of desegregation, essentially turning @HUDgov into a national zoning board.

— Archive: Ben Carson (@SecretaryCarson) July 23, 2020

The new rule's release comes on the heels of numerous attacks by Trump on the old AFFH rule as a federal assault on the suburbs, and specifically single-family zoning; an assault the president warns that would only be escalated by a Joe Biden Administration.

Democrats' reimposition of the old AFFH rule would "eliminate single-family zoning, bringing who knows into your suburbs, so your communities will be unsafe and your housing values will go down," said Trump at an internet town hall event, reports The Washington Post.

"The Suburban Housewives of America must read this article. Biden will destroy your neighborhood and your American Dream. I will preserve it, and make it even better!" said Trump yesterday in a tweet that linked to a New York Post op-ed warning about the pernicious effects of the Obama AFFH rule.

The Suburban Housewives of America must read this article. Biden will destroy your neighborhood and your American Dream. I will preserve it, and make it even better! https://t.co/1NzbR57Oe6

— Donald J. Trump (@realDonaldTrump) July 23, 2020

The 2015 regulation required HUD grant recipients—which includes states, cities, counties, and public housing authorities—to complete lengthy, 92-question assessments that required them to collect data and report on everything from labor market outcomes to educational quality and access to public transportation. Jurisdictions that failed to complete their assessments to HUD's satisfaction were required to do them again.

In place of those requirements, the new rule published by the Trump administration only requires that recipients of federal housing funds take some action "rationally related to promoting fair housing." In addition, the rule establishes a rather broad definition of fair housing that includes not only the absence of discrimination, but also that housing is affordable, "decent, safe, and sanitary."

So long as jurisdictions take any action that can be rationally tied to one of those goals, Trump's HUD will consider them in compliance with the Fair Housing Act.

Both the very limited requirements of this new regulation and the rhetoric Trump has used to sell it have sparked a fierce reaction from progressive fair housing advocates, who argue that the federal government is essentially giving a green light for localities to discriminate.

"This is not a fair housing rule," says Debby Goldberg of the National Fair Housing Alliance. "What [Trump] is doing here is strictly political. It's about revving up his base and fanning the flames of racial division in this country in advance of the election."

The original purpose of inserting language about "affirmatively furthering fair housing" in the Fair Housing Act was to ensure that "regardless of where people live, they have access to the kinds of things we all need to flourish," Goldberg tells Reason, listing "healthy grocery stores, good transportation, well-performing schools, clean air, clean water, etc. things that are really connected to opportunity."

The reporting requirements in the 2015 AFFH rule gave HUD and HUD grantees the information they needed to further this expansive vision of fair housing, she says, arguing that Trump's replacement rule "takes the country backwards to a time when discrimination is not only rife, but legal."

But the administration's new rule has drawn the ire of not just progressive proponents of the old AFFH regulation, but also conservative critics of the Obama-era rule who had been working to replace it with something that managed to be both deregulatory while still making a good faith effort to enforce the Fair Housing Act.

"The new rule has proved Donald Trump's critics right by gutting AFFH," says Michael Hendrix of the Manhattan Institute. "What the Trump administration is pitching as a deregulatory measure actually reinforces local regulatory burdens."

Hendrix says there's a factional dispute both within the White House and the wider conservative movement over whether to prioritize local control, which empowers homeowners and local governments to maintain policies like single-family zoning, minimum lot-sizes, and parking requirements, or deregulation, which would allow for denser housing development, more mixed-use zoning, and other policies likely to drive down housing prices by increasing the supply of housing stock.

The Trump administration's efforts to reform the Obama-era AFFH rule was initiated and dominated by the latter camp, he says.

When Carson announced that the Trump administration would be rescinding and reissuing the AFFH rule, he justified it by saying that the new rule would use federal housing funding to incentivize local governments to repeal restrictions they have on housing construction.

"I want to encourage the development of mixed-income multifamily dwellings all over the place," Carson told The Wall Street Journal in 2018. "I would incentivize people who really would like to get a nice juicy government grant" to reform their zoning codes.

In January 2020, HUD released the text of a proposed replacement rule that would require recipients of HUD funds to report on more narrow measures of housing affordability and quality, and then propose three concrete steps for improving those measures. Jurisdictions that showed improvement on these metrics over time could be rewarded with additional grant money.

Progressive defenders of the old AFFH considered the January HUD rule to be much too narrow, focusing on housing affordability at the expense of all the other components of fair housing. The NFHA, alongside other fair housing groups, launched an (ultimately unsuccessful) lawsuit against HUD in 2018 over its rollback of the Obama-era rules.

Hendrix counters these progressive critics by arguing that the January 2020 rule's focus on housing affordability actually zeros in on the most important component of fair housing. By becoming more affordable, communities become more accessible to people regardless of their race, national origin, or ability; all classes protected by the Fair Housing Act.

Because local land use regulations are the primary drivers of high housing costs, local governments would ultimately have to loosen said land-use regulations if they wanted to make progress on the metrics the January 2020 HUD rule would be focusing on, he says.

That gave the January rule a deregulatory character. Its more narrow focus also made it more enforceable, says Salim Furth, a housing policy researcher at George Mason University's Mercatus Center.

"If you take this extremely broad view of furthering [fair housing], then it's not clear how HUD is supposed to test" whether grantees are actually making progress on their fair housing obligations, says Furth.

By asserting that everything is related to fair housing, Furth says the old AFFH rule meant that nearly all jurisdictions would fall short of their obligations under the Fair Housing Act in some way. The Trump administration's new rule ironically leans on this same expansive view of fair housing to say that practically any action jurisdictions take satisfies their mandate to further fair housing.

Neither helps HUD identify bad actors, or reward good ones, says Furth, telling Reason that "you ultimately have to draw some lines if you are going to have a test that doesn't make everyone guilty or everyone innocent."

The January HUD rule's more narrow focus on affordability did just that, he says. But the very fact that the January 2020 rule would actually make the Fair Housing Act enforceable in a reasonable way is ultimately what doomed it with certain parties on the right end of the spectrum.

Since it was first proposed, the January 2020 AFFH-replacement rule attracted heated criticism from some conservatives who viewed it as an attack on local government's control of land use policy and suburban single-family zoning policies in particular.

"All the administration's proposed HUD rule does is change the AFFH requirement from a left-wing social engineering experiment to a right-wing attack on local control," wrote Jordan Bloom in The Daily Caller in February.

Then at the beginning of July, National Review published an article by Stanley Kurtz of the Ethics and Public Policy Center which warned ominously that Joe Biden and Democrats wanted to use the AFFH to "abolish the suburbs."

"Once Biden starts to enforce AFFH the way Obama's administration originally meant it to work, it will be as if America's suburbs had been swallowed up by the cities they surround," Kurtz wrote. Suburban communities, he continues, "will even be forced to start building high-density low-income housing. The latter, of course, will require the elimination of single-family zoning. With that, the basic character of the suburbs will disappear."

That article was later retweeted by Trump, who has since been seemingly convinced that casting himself as a defender of suburbs and suburban-style low-density zoning is a winning campaign issue. It nestles neatly in his broader strategy of painting Democrats as wanting to visit urban dysfunction on orderly and tidy conservative communities.

The text of the Trump administration's new rule makes it explicit that it is rejecting both the old Obama-era AFFH rule, as well as the deregulatory rule HUD put forward in January.

"That proposed rule took steps to reduce federal control of local housing decisions and lessen the burden of data requirements imposed on local governments," it reads. "However, when the President reviewed the proposed rule, he expressed concern that the HUD approach did not go far enough on either prong. For example, grantee jurisdictions were still presented with a HUD list of 'inherent barriers' to overcome, 12 of which directly interfered with local land development decisions."

The new rule is a victory for local control-supporting conservatives. It could well prove a pyrrhic one.

The administration is asserting that because the new rule involves federal grants, and because it has already been the subject of so much attention, it can skip the normal notice-and-comment requirements normally mandated by the Administrative Procedure Acts.

"They are doing it by a process I can only call executive fiat. It is just a complete end-run around the rulemaking process. There's no notice-and-comment. it's just put out as a final rule," says Goldberg.

That could make the new Preserving Community and Neighborhood Choice rule vulnerable to legal challenges on procedural grounds alone, she says. Failure to properly follow the APA is partially what doomed Trump's attempt to rescind Obama's DACA order.

Hendrix says that both the president's comments defending the rule, and the text of the rule itself make it vulnerable to legal challenges on substantive grounds as well.

"When Trump himself said, and this rule says, this is not about fair housing, this is about defending the suburbs, I think a court could rightfully determine you are missing the point of the Fair Housing Act," Hendrix says.

Fair housing groups are already asserting that the rule will not pass legal muster. Goldberg says that while its too early to say whether the NFHA will take legal action, all options are on the table.

Furth cautions that we shouldn't overinterpret the impact of the Obama-era AFFH rule.

"People on the right and on the left are both willing to say the Obama AFFH was this big power thing, and it either powerful and scary or powerful and just," he says. "They both have an interest in making it appear more powerful than what it is."

But by reversing course on its own proposed rule, the Trump administration has passed on an opportunity to impose a fair housing rule that would do a better job of fulfilling the purpose of the fair housing act, while also incentivizing freer markets in land use across the country.

It's a symbolic defeat for those who had hoped that Trump's deregulatory promises and the explicitly YIMBY-inflected rhetoric coming from administration officials would prevail over his toxic culture war politics.