US. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Fon Worth Regional Office of FHEO, Region VI Office of Fair Housing & Equal Opportunity 801 Chery Street, Unit #45 Suite 2500 Fort Worth. TX. 76102 Phone -388°S60-8913 » Fax (817) 9788876 www hud. go May 13, 2011 Kevin Hamby, Senior Counsel Texas Department of Housing and Community Affairs 221 Bast 11" P.O. Box 13941 Austin, TX. 78711-3941 Subject: HUD’s Office of Fair Housing and Equal Opportunity’s Review of the State of Texas ‘Submission for the Phase I Updated Analysis of Impediments to Fair Housing Choice Dear Mr. Hamby: ‘The U.S. Department of Housing and Urban Development (“HUD”) has conducted a review of the Phase I Updated Analysis of Impediments to Fair Housing Choice (“AI") for the State of Texas (“the State"), submitted on March 25, 2011. As required in a HUD approved Conciliation Agreement (“the Agreement”), dated May 25, 2010, between HUD, the State of ‘Texas, by and through the Texas Department of Rural Affairs and the Texas Department of Housing and Community Affairs, and two complainants, the State agreed to update its Al in two phases. The Agreement specifies Phase I of the updated AI covers those areas eligible to receive Hurricane Recovery Funds (including the entitlement jurisdictions within that area). The Agreement specifies that Phase II of the updated AI will commence after Phase I of the updated ATis accepted by HUD, and Phase Il of the updated AI will cover the balance of the State. The State agreed that the updated AI would (1) be done by a qualified consultant or organization with experience in development of Als; (2) be produced for public comment; (3) include and provide separately for the identification and analysis of impediments to fair housing in each of the following areas and shall recommend appropriate actions utilizing applicable Hurricane Recovery Funds to overcome the effects of the impediments identified in each area: (a) geographic area represented by the Houston-Galveston Area Council (“H-GAC"), with an assessment on any fair housing impediments related to the impact of the hurricane evacuce population within the City of Houston and Harris County, and related to rebuilding public, assisted, and affordable housing on Galveston Island that was destroyed by Hurricanes Dolly and Ike, (b) geographic area represented by the South East Texas Regional Planning Commission, (c) geographic area represented by the Deep East Texas Council of Governments, (d) geographic area represented by the Lower Rio Grande Valley Development Council, specifically including impediments to fair housing faced by farmworkers and residents of colonias, and (e) geographic area represented by the remaining areas eligible as Recipients. For program year 2010, Texas Department of Rural Affairs received $79,264,729 from HUD for the Community Development Block Grant (“CDBG”) non-entitlement program, $5,236,361 for Emergency Shelter Grant Program for the homeless (“ESGH"), $43,593,825 forHOME, and $1,103,927 for Housing Opportunities for Persons with AIDS (“HOPWA”). The State also received HUD funds in the amount of $60,830,696 of Round I funding for Hurricane Relief and $712,348,430 of Round 2 funding for Hurricane Relief. I. Standards and Observations The State, through the May 25, 2010 Agreement, agreed to revise its AI in two phases with Phase I identifying and analyzing impediments to fair housing choice in specific geographic areas, as described above, and recommending appropriate actions utilizing applicable Hurricane Recovery Funds to overcome the effects of the impediments identified in each area. It is duly noted that the State also obtained a statement from the complainants who were parties to the complaint for which the Agreement sought to resolve. ‘Those complainants fully endorsed the impediments, action steps, timeline and Fair Housing Activity Statement ~ Texas set forth in the State’s AL. The complainants believe that the State’s Interim AI accurately reflects the challenges that Texas and local jurisdictions face to achieving a truly open and fair housing market; proposes broad, aggressive, and concrete actions to achieve fair housing on a responsible timeline; and establishes a clear process for local jurisdictions administering disaster recovery funds to address identified impediments, setting clear and responsible timeframes for carrying out those actions. HUD's Fair Housing Planning Guide (the “Guide”) provides information to State, State- funded, and Entitlement jurisdictions on fulfilling fair housing requirements of the Consolidated Plan and in CDBG Regulations. The Guide discusses three components of fair housing planning, as follows: (1) Analysis of Impediments to Fait Housing Choice, (2) Taking Actions to Eliminate Identified Impediments, and (3) Maintenance of Records. HUD has completed its review of the State Phase I Al and has concluded that the State's updated AI for Phase I is approved. HUD’s Office of Fair Housing and Equal Opportunity has the following observations and recommendations for the State’s consideration. IL. HUD's Review of State’s Al A. Analysis of Impediments to Fair Housing Under Phase 1, the State identified 16 impediments to fair housing choice. The impediments fall into four categories: education, training, planning and enforcement. The AL addressed racial and national origin segregation and identified studies which were conducted and discussed in the AI regarding the effects of segregation on Texas communities. The AI covers the entire state, but the focus on Phase I of the AI in 63 counties which are the specified areas of the state receiving the majority of the disaster funding awarded to the State by Congress. The AL addresses actions to ensure that all available affordable housing, both in rental and ownership forms, are available for racial and ethnic minorities and persons with disabilities. The State has documented citizen participation in the process through use of a focus group including residents of the jurisdiction, fair housing and civil rights groups and real estate agents. The State held public meetings to encourage public comment on Phase I of the AI and the State published thosecomments as Appendix E of the Al. There were specific objections by the public regarding the public housing unit replacement on Galveston Island. The State also submitted the Phase I AI to an A Committee it formed for review and comment. The Committee consisted of representation by the complainants, the Texas Department of Housing and Community Affairs, Texas Department of Rural Affairs, Association of Real Communities in Texas and four councils of government most impacted by Hurricanes Dolly and Ike (ie. Deep East Texas Council of Governments, Houston-Galveston Area Council, Lower Rio Grande Valley Regional Development Council, and the South East Regional Planning Commission) Regarding LEP populations and persons with disabilities, the AI does not contain evidence regarding whether the materials and citizen review process for the proposed AI were offered in a language other than English, nor was there an indication that the information was provided in formats that would make them accessible to and usable by persons with disabilities. The State’s Phase II Al should include such evidence. The State utilized 2008 Home Mortgage Disclosure Act data, public housing data, foreclosure data by race and national origin, 1990 and 2000 Census data, 2005 American Community Survey (2006 — 2008), Councils of Government in Texas 200 and Projections to 2040, National Housing Task Force of Consortium for Citizens with Disabilities, Texas Office of the Attorney General, Border Colonia Geographic Data, and other data sources to compile data for the AL. The State also conducted surveys of the public and held a focus group to obtain data. The Al addresses impediments where minorities were treated unfairly while seeking HUD assisted housing/public housing and in the use of Housing Choice Vouchers. The AI analyzed, in depth, the existence of or lack of affordable housing choices outside areas of minority concentration. The Al also raised issues in which local laws and policies may be prohibitive to certain affordable housing. Texas should conduct a further review in Phase II of the Al of zoning and land use practices in the State which may have the effect of limiting opportunities for multifamily or affordable housing, including ordinances that limit or prohibit multifamily housing or affordable housing, and zoning actions which deny zoning approval or impose additional requirements on affordable housing and develop a policy that addresses those types of exclusionary practices and identifies actions that the State will take when subrecipient jurisdictions take actions that might exclude or limit opportunities for this housing. We also recommend that the State develop a policy that addresses actions that the State will take when subrecipients of State funding engage in actions that are found to violate fair housing and other civil rights laws or which are identified as failing to affirmatively further fair housing. We recommend that the State’s policy require that subrecipient jurisdictions report the following actions to the State and identify corrective actions that will be taken by the State wher at a minimum, specific actions have occurred against a subrecipient jurisdiction. Those action include circumstances where a subrecipient jurisdiction has (1) received a charge from HUD concerning a systemic violation of the Fair Housing Act or has received a cause determination from the Texas Workforce Commission/Civil Rights Division concerning a systemic violation of the Texas Fair Housing Act; (2) is named as a defendant in a Fair Housing lawsuit filed by the