HUD Issues Affirmatively Furthering Fair Housing Proposed Rule

Yesterday, the Department of Housing and Urban Development published the much-anticipated Affirmatively Furthering Fair Housing (AFFH) proposed rule, which would implement the statutory obligation HUD and its program participants have to affirmatively further fair housing, as required by the 1968 Fair Housing Act. The proposed rule is intended to build and improve upon HUD’s 2015 AFFH final rule adopted under the Obama Administration. The Trump Administration suspended implementation of the 2015 AFFH rule and later promulgated a final rule — the Preserving Community and Neighborhood Choice (PCNC) rule — repealing and replacing the 2015 AFFH rule. The Biden Administration in 2021 promulgated an interim final rule repealing the PCNC rule and restoring certain aspects of the 2015 AFFH rule as it reexamined the 2015 rule and developed a new proposed rule.

The proposed rule published yesterday would restore much of the 2015 AFFH rule’s structure with modifications to increase transparency and accountability and reduce burden on program participants with the goal of developing a process for more effective fair housing planning. More information about the proposed rule can be found in HUD’s fact sheet and quick reference guide.

Equity Plans and HUD Oversight

Under the proposed rule, HUD would require program participants — including states, local governments, and public housing authorities (PHAs) that administer HUD programs — to submit an Equity Plan once every five years. The Equity Plan is similar to the Assessment of Fair Housing (AFH) required by the 2015 AFFH rule in that it requires an assessment of fair housing issues and their underlying causes and the setting of fair housing goals and strategies for achieving those goals, but it eliminates the contributing factors analysis required by the AFH and streamlines and simplifies other questions program participants would need to address in their plans. In addition to the five-year Equity Plan, program participants would submit to HUD annual progress evaluations and incorporate fair housing goals from their Equity Plan into other HUD planning documents, such as the Consolidated Plan.

Once a program participant submits its Equity Plan to HUD, HUD will publish the plan on its website, allowing members of the public to submit comments for a period of 60 days. HUD will review the plan and any comments submitted, then determine whether to accept the plan within 100 days of receiving it from the program participant. If HUD does not accept the plan, it will provide written notification to the program participant of its decision and how the participant must revise the plan so that HUD may accept it. The proposed rule is intended to allow HUD to better work with program participants to improve initial submissions if needed without necessarily sacrificing participants’ access to their grants, rather than the all-or-nothing approach under the 2015 rule in which a participant would be unable to receive HUD grant funding if HUD did not accept the plan. However, should a program participant not comply with the AFFH rule, HUD may eventually make a referral to the Department of Justice or suspend or terminate grant funding, among other penalties.

Public Engagement at the State Level

As they do when undertaking their Consolidated Plans, in the development of their Equity Plans states must consult with other public and private agencies that provide assisted housing, health services, and social and fair housing services. Additionally, states must consult with state and regionally based organizations that represent protected class groups, including underserved communities, organizations that enforce fair housing laws, fair housing and nonprofit organizations receiving Fair Housing Initiatives Program funding, and other fair housing services agencies operating within their state. States also must adopt a citizen participation plan for their Equity Plans, which can be combined with the citizen participation plan states already must adopt as part of their Consolidated Plans. In addition to encouraging citizen participation, the state must encourage statewide and regional institutions, continuums of care, and other organizations to take part in the development and implementation of the Equity Plan, including by holding at least one public hearing (as is already required for purposes of the Consolidated Plan). The citizen participation plan must be made public and describe the state’s procedures for handling complaints from its residents.

Balancing Needs in High-Poverty Areas and Development in Areas of Opportunity

HUD seeks to implement a balanced approach to fair housing planning, meaning community planning and investment should balance a variety of actions to eliminate housing-related discrepancies in well-resourced areas of opportunity and to invest in racially concentrated areas of poverty and other high-poverty areas. To that end, the rule specifically calls out balancing place-based and mobility strategies.

Use of Data

HUD anticipates it will continue to provide program participants with data, maps, and tools they can use to support their planning efforts and is seeking ways to improve the current AFFH Data and Mapping Tool. In addition, program participants will be able to use “local data,” subject to the determination of reliability or statistical validity by HUD.

Other Highlights for States

Throughout the rulemaking process during both the Obama and Trump administrations, NCSHA strongly argued HUD should tailor its fair housing planning requirements by type of jurisdiction, in recognition of the fact that states have different needs, jurisdictional authority, and resources than local governments and PHAs. The proposed rule indicates that HUD is moving forward with this in mind, as it specifies in its definition of geographic area and geographic area of analysis that states will be expected to analyze the whole state on a county-by-county basis but not at the level of neighborhood, zip code, or census tract as would be required for local governments and PHAs.

Of importance to state HFAs, like the 2015 AFFH rule, the new proposed rule would require HUD program participants to affirmatively further fair housing with all housing and community development resources at their disposal. This includes affordable housing programs not under HUD’s jurisdiction, such as the Housing Credit.

Next Steps

HUD will issue additional guidance and provide technical assistance on how to conduct an Equity Plan analysis and set appropriate goals. It plans to tailor this guidance to the various types of program participants, noting it recognizes that different types of organizations administer HUD programs at the state and local levels and they have unique geographies, jurisdictional boundaries, and data-related needs.

NCSHA joined other leading civil rights and housing policy organizations on a statement applauding HUD for releasing the proposed rule and noting the rule “is an important step towards creating more equitable and affordable housing opportunities and stronger, more viable neighborhoods” and that “we look forward to working with HUD and the entire administration to ensure the final AFFH rule is effective and beneficial…”

Comments will be due 60 days after the proposed rule’s official publication in the Federal Register. Please send any input you would like NCSHA to consider for its comments to Jennifer Schwartz by February 28.