But things started changing in the 1980s, Orfield says. In a sense, the community’s commitment to integration was too successful. Developers and nonprofits in the cities of Minneapolis and St. Paul didn’t like seeing all the money for affordable housing going to the suburbs. They wanted more construction, housing, and dollars closer to home. Centrally-located housing agencies and developers started to push back against the longstanding policy, demanding more funds for housing in the inner city.
Partially as a response, in 1980, Minneapolis and St. Paul created an entity called the Family Housing Fund, which focused on creating subsidized housing in the central cities. The Family Housing Fund built tens of thousands of units, the majority of which were clustered in central cities and high-poverty census tracts, according to Orfield. The Family Housing Fund was swayed by affordable-housing developers who believed that building up distressed neighborhoods was the best way to help people out of poverty, Orfield says. As developers focused on building up inner-ring areas, plots of suburban land that had been zoned for affordable development went back to their original use: single-family, market-rate homes.
It was no accident that neighborhood-based development gained favor in the Twin Cities of the 1980s and 1990s. In 1986, Congress passed a law creating the Low-Income Housing Tax Credit program, which essentially allowed the private sector to get into affordable housing. These tax credits made it possible for developers to build affordable housing and actually make money—prior to the passage of the credits, affordable housing was almost totally the purview of the government. Government housing had to follow much stricter rules about integration. Private developers could skirt some of those rules.
Private developers will build where there is less opposition, and in the Minneapolis of the 1980s and 1990s, that was often in dilapidated center-city neighborhoods hungry for development. The Twin Cities allocated the low-income-housing tax credits in such a way that the cities would get a higher share of tax-credit projects, thus ensuring that affordable housing, and the money that came with it, would go to the cities, not the suburbs.
To be sure, on its surface, there’s nothing wrong with investing in building housing in a distressed neighborhood in the hope that it will create economic activity. But to solely invest in those neighborhoods, without providing opportunity in other neighborhoods, violates the Fair Housing Act. That, at least, was the gist of a Supreme Court decision last June, which said that the way the state of Texas distributed its low-income-housing tax credits, concentrating them in high-poverty neighborhoods, violated the law. Continually building in central neighborhoods “manifestly does not offer residents of distressed neighborhoods new housing opportunities in more affluent areas, or promote racial or economic integration,” Orfield writes.