Somewhat quietly, the city councils of Minneapolis and St. Paul are approving a settlement of complaints that the two cities are violating federal fair housing law — an agreement that could result in broad changes to how the region builds affordable housing.

The Minneapolis City Council voted 10-2 Friday to approve the settlement of a legal complaint brought by the Metropolitan Interfaith Council on Affordable Housing (MICAH) alleging the cities failed to follow a federal requirement to “affirmatively further fair housing.” The requirement calls for governments that accept federal housing money to not only lessen factors that lead to segregated neighborhoods, but to take steps to foster integration.

Minneapolis’ approval of the deal came after a closed-door session that followed a regular city council meeting. The closed session, held in a small meeting room near the council chambers, was officially “reopened” before the vote was taken, though it was not televised and there was no indication given during the regular meeting that a formal vote would be taken on the settlement. Council Members Lisa Goodman and Jacob Frey were the two “no” votes, and Council President Barbara Johnson was not present, having been excused from Friday’s meetings.

A spokesperson for Minneapolis Mayor Betsy Hodges said she supports the settlement.

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The St. Paul City Council has the same settlement terms on the consent agenda for its Wednesday meeting. Mayor Chris Coleman agrees with the settlement and expects to sign it after it passes, said a spokesperson.

Complaint: cities glossed over fair housing failures

MICAH’s complaint, submitted to the federal Department of Housing and Urban Development, argued that the two cities were acting to place affordable housing in areas of the region that had already absorbed a high percentage of such housing. In addition, the complaint alleged that an assessment of how the region performed in furthering integration was substandard, giving the cities passing grades that they did not deserve.

The settlement deal, mediated by HUD officials, contains no admissions by either Minneapolis or St. Paul that they violated federal fair housing law. It even includes a clause that HUD, which received the complaint more than a year ago, did no investigation of the issues raised in the complaint. But the substance of the settlement requires that the cities undergo another, more-thorough assessment of their performance on fair housing and take steps to cure any flaws discovered.

St. Paul Public Housing Authority Hamline Hi-Rise at 777 North Hamline Ave., in St. Paul.

That assessment, known as the “Analysis of Impediments to Fair Housing Choice” in HUD parlance, is supposed to identify actions — both private and public — that impede integration. Examples of private actions could be redlining by banks or realtors. Public actions could be building affordable housing primarily in already segregated areas.

The core of the MICAH complaint is that the cities violated federal law by submitting an analysis of local housing that glossed over the governments’ own failures. Such a finding, had HUD reached it, could have put the cities at risk of losing tens of millions of dollars in federal housing grants.

As part of the settlement, HUD will give the cities $100,000 to do a more-thorough analysis and public outreach. The report will be an addendum to an already submitted analysis and must be completed by May of 2017, with an eye toward complying with new fair housing rules released by HUD last summer.

“I am optimistic that a broad, regional fair housing planning process, supported by cutting-edge tools and informed by meaningful community outreach and participation, will result in an [Analysis of Impediments report] that addresses fair housing issues and sets constructive goals for the Minneapolis-St. Paul region,” wrote HUD regional director Maurice McGough.

Settlement could affect entire metro

Michael Allen, the Washington, D.C. attorney who brought the complaint, said MICAH and the other complainants are pleased with the terms. “The cities are committed to a process that studies long-term discrimination and segregation in the region in ways that have not been studied before,” Allen said.

The settlement requires the cities to look specifically at several issues raised in the complaint. Those are: how the region distributes its affordable housing; whether the way the region distributes low income housing tax credits “reinforces existing racial or ethnic concentrations of poverty or perpetuates racial or ethnic segregation”; whether zoning codes reinforce existing concentrations; and how the region’s other housing policies reinforce those concentrations.

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Relman, Dane & Colfax Michael Allen

Finally, the analysis is required to determine the “appropriate balance” between spending housing dollars on existing low-income housing areas and spending on new construction. In other words: How much housing money should be spent to improve areas of concentrated poverty, and how much should be spent giving people who live in such areas a choice of living elsewhere?

Once the analysis is completed, the two cities pledge to identify the fair housing issues within their jurisdictions “including patterns of integration and segregation, racially or ethnically concentrated areas of poverty, disparities in access to opportunity, and disproportionate housing needs.” They then pledge to take whatever actions are necessary to “overcome the impediments identified in the the analysis.”

The “Analysis of Impediments” is conducted by something called Fair Housing Implementation Council, which is made up of the 13 government entities in the region that receive federal housing money. Besides Minneapolis and St. Paul, the other members of the Fair Housing Implementation Council are Anoka County, Dakota County, Hennepin County, Ramsey County, Washington County, Bloomington, Coon Rapids, Eden Prairie, Minnetonka, Plymouth and Woodbury.

Because of the structure of the Fair Housing Implementation Council, however, any problems identified in the new analysis could impact more than St. Paul and Minneapolis. In fact, Allen called this a key aspect of the settlement. “It extends the study to the entire Metro to see if every jurisdiction is doing its fair share to further integration,” he said.

The settlement also creates an advisory committee to advise HUD and the cities, select a consultant for the analysis, and to make sure the work is done according to the settlement details. MICAH will have at least one person on the committee, as will the two cities and the other local jurisdictions in the region. Allen said this will help assure that the new study is more robust than previous ones.

Another complaint still being investigated

The complaint was filed March 30, 2015 by MICAH and three Minneapolis neighborhood groups: the Webber-Camden Neighborhood Organization, the Whittier Alliance and the Folwell Neighborhood Association. The complaint alleged that the cities limit development of affordable housing in what it termed “high-opportunity, majority-white” communities and instead steer it to “low-income, high-poverty” areas.

The complaint was supported by demographic analyses performed by the Institute on Metropolitan Opportunity at the University of Minnesota. One finding was that in high-minority census tracts in Minneapolis there is an affordable housing unit for every block, on average, while in low-minority tracks there is one affordable housing unit every 6.5 miles.

People of color are significantly more likely to rent their homes and significantly more likely to use affordable housing programs. Concentrating those programs in already segregated areas diminishes opportunities for minority and low-income people in the region “to live in stable, integrated neighborhoods,” the complaint stated.

The settlement covers just one of two complaints filed by MICAH with HUD. The other, filed along with the cities of Brooklyn Center, Brooklyn Park and Richfield, makes similar claims against the Metropolitan Council and the Minnesota Housing Finance Agency, and is still being investigated.

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Both St. Paul and Minneapolis have denied that they were violating federal housing and civil rights laws. Tonya Tennessen, the communications director for St. Paul Mayor Chris Coleman, said the mayor is proud of the city’s affordable housing efforts. “We are fully committed to ensuring equity in our community and across the entire Metropolitan area – including access to affordable housing,” she said. “The mayor believe it’s time to evaluate the practices throughout the region and ensure a proper balance across jurisdictions. This agreement helps us get there.”