Washington sued over ‘racially conscious’ home ownership program

Foundation Against Intolerance and Racism (Fair) filed a complaint on Tuesday against the Washington State Housing Finance Commission (WSHFC) for its Agreement Homeownership Program, which expressly bars certain applicants from being eligible based on race. Commission quotes 2024 year Exploring the Covenant Homeownership Program as an empirical justification for its “racial” special purpose loan program, but it is unlikely to stand up to rigorous scrutiny.

The Washington State Legislature passed Law on housing ownership in May 2023 to address “past and current discrimination and its impact on access to credit and homeownership for Black, Indigenous, and Colored people.” The past discrimination includes 50,000 clauses in housing and homeowner association contracts that were used “between the 1920s and 1960s throughout Washington state to restrict housing based on race, religion and ethnicity.” according to the commission. Covenant Homeownership’s special loan program offers some first-time homebuyers a zero-interest down payment loan and closing assistance to address discrimination and reduce racial disparities in homeownership.

The program increases its income by collecting $100. US appraisal documentation for real estate transactions that the commission predicted will “generate $75 million to $100 million annually.” The program is limited to those Washington residents whose ancestors (or themselves) experienced state-based racial discrimination in housing contracts before federal Fair Housing Act 1968.

Additional requirements for the program include earning the area median income or less, being a first-time home buyer, and either being or having an ancestor who was Hispanic, Native American, Alaska Native, Native Hawaiian, Other Pacific Islander, Korean, or Asian Indian. and lived in this state until April 1968. Restricting access to a special purpose credit program in this way “manifests personal discrimination on the basis of race,” according to the complaint.

The WSHFC acknowledges the program’s racial demands, describing it as going “beyond ‘colorblind’ or ‘race-neutral’ aid” to allow Washington to “redress directly the harm caused by its discriminatory policies.” Although the commission insists the program is “not a formal reparations effort,” the U.N., whose definition the commission cites, disagrees. One of the UN’s four measures of reparation is “compensation…awarded for any economically quantifiable loss, loss of earnings, loss of property, loss of economic opportunity or (or) non-pecuniary damage.”

The Exploring the Covenant Homeownership Programpublished National Fair Housing Alliancea nonprofit advocacy group that fights housing discrimination justifies racial discrimination in the program by saying that “public agencies have played both active and passive roles in perpetuating housing discrimination against a range of marginalized groups.” In their racial matching recommendations, the researchers also factored in disparities in homeownership rates: 68 percent of non-Hispanic white households are homeowners, compared to just 49 percent of Hispanic and non-white households and 31 percent of black households.

Japanese- and Chinese-Americans are ineligible for the Covenant Homeownership Program, despite a study of the program that found discrimination against both groups: “Anti-Japanese sentiment led to the Washington Legislature’s passage of the Alien Land Bill of 1921,” which limited opportunities for Japanese residents “to own and lease land”; and the Chinese were excluded from land ownership because of the “prohibition of “foreign land ownership” in the 1889 State Constitution.”

Although the Compromise Act states that its purpose is to remedy past and current discrimination, it excludes certain “Asian subgroups who … have home ownership levels equal to or … higher than whites.” Still, excluding Japanese- and Chinese-Americans from the program undermines the entire rationale of historical injustice, says Joshua Thompson, director of the Pacific Legal Foundation’s (PLF) Equality and Opportunity Program, which is representing FAIR in its lawsuit.

Historical discrimination is rightly recognized as an evil, as is modern discrimination, which is unconstitutional except when it serves a compelling state interest. Thompson explains that there are only two such interests: “If you need to be racially classified for a short time to avoid a prison riot … and to correct past discrimination.” While this second interest seems to open the door to race-based programs like the one in Washington, Thompson explains, “that the person receiving the medicine is the person who has been harmed.” In other words, it is unconstitutional to use race as a substitute for individual harm resulting from unlawful discrimination.

Commission describes The Compact Homeownership Act is “the first programmatic use by a government agency to address persistent structural barriers to homeownership,” but many strategies have already been adopted at the federal, state, and local levels to reduce intergroup disparities based on discrimination. Thompson says PLF has about fifty ongoing cases against preferential treatment of low-income/minority/women-owned businesses on state contracts, racial and gender quotas for state boards and commissions, federal contracts favoring minority-serving agencies, and preferential licensing for certain racial groups, such as marijuana licenses for black New Yorkers.

One might wonder how these programs can even exist if they are flatly unconstitutional. The answer is that even unconstitutional programs must be discovered and challenged by someone with legal standing—some individual or group of people affected by exclusion from a particular program—in order for courts to enjoin them through a final injunction.

Still, Thompson is optimistic that the endless game of legal Whac-A-Mole can be ended within the next five years, not just through appellate rulings, but through a change of hearts and minds. Ending race-based policies is a “moral outcome that will eventually happen,” Thompson says, but “it won’t happen without work that needs to be done.”