This article is from the archive of our partner National Journal

With an announcement from HUD Secretary Julián Castro this week, the civil rights-era Fair Housing Act might actually do what it has failed to for 47 years.

The Obama administration announced Wednesday the largest effort in decades to reduce racial segregation in communities across the country. New rules issued under the Fair Housing Act will require cities and planners to assess inequities in housing, and to develop plans to reduce segregation, which greatly contributes to poverty.

In the past, about every five years cities that received funding from the Housing and Urban Development Department came up for a type of review. But it wasn't clear what they needed to demonstrate in order to receive more money.

"It wasn't taken very seriously," says Philip Tegeler, executive director of the Poverty and Race Research Action Council. "And now we have that—the clear reporting and data."

The new rules will open data and mapping tools to local leaders and cities so they can better understand segregation in their communities. And cities that receive funding from HUD and don't live up to the higher expectations now risk losing out on the billions of dollars HUD distributes each year.

"Unfortunately, too many Americans find their dreams limited by where they come from, and a ZIP code should never determine a child's future," Castro said in a press release. "This important step will give local leaders the tools they need to provide all Americans with access to safe, affordable housing in communities that are rich with opportunity."

The Fair Housing Act of 1968 was supposed to ban outright segregation based on race. For example, "redlining" was a system used by the government for more than 30 years to systematically segregate black people into certain neighborhoods. But because of ambiguous and vague language, critics say the law set standards too low.

Partly because of this, economic disparity has grown, and blacks, who make up just 15 percent of the U.S.population, now account for 30 percent of those in poverty. This is nearly identical for Latinos.

In highly segregated areas such as Baltimore, Maryland, poverty and unemployment rates often rise in correlation with the percentage of African-Americans in the neighborhood. New studies show that what matters most to a person's success in life has less to do with ambition, and more to do with where that person is born and grows up.

Harvard economist Raj Chetty found that each year a young person spends in certain cities can decrease his or her future income (by 1.5 percent each year in Baltimore). Another study by Chetty looked at the Moving to Opportunity experiment in 1990s, where the government gave low-income families vouchers to move into better neighborhoods. Chetty's study found that a child who moved away from poor neighborhoods had much better economic success later in life. Additionally, the younger a child moved the more impact it made.

This and other recent research that examines the consequences of being born in high-poverty communities has started to unravel past thinking on why there are such racial disparities in poverty.

This is why the new ruling is so important, because critics have said that the Fair Housing Act of 1968 has done little to desegregate poor communities.

"This is tremendous," says Ed Gramlich, special adviser at the National Low Incomes Housing Coalition, a national advocacy group.

Gramlich says there was an effort at HUD in 1997 to accomplish something similar—though less comprehensive—and "they were chugging along pretty well. At the very last minute, the U.S. Conference of Mayors put up a stink, specifically Andrew Cuomo, squashed it. HUD was really devastated," Gramlich says.

Part of the new rules that will have a large impact, was a revision to the wording on how communities look at inequality in housing. Before, the Fair Housing Act called for planners to conduct an "analysis of impediments," (which had little meaning) but now it requires them to conduct "a fair housing assessment." That means cities will look at fair housing through several lenses: actual segregation, areas with high racial poverty, and areas with an absence of assets such as transportation, healthy food, and jobs. They will then be held accountable for improving those.

HUD seems to have taken the hint from the growing pile of research and writing that points to poverty not as some un-American lack of motivation, but as a symptom of place.

This article is from the archive of our partner National Journal.

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