Wisconsin homeowner aid program removes racial component after facing challenge

By MITCHELL SCHMIDT

Click here for updates on this story

    WISCONSIN (madison.com/Wisconsin State Journal) — Gov. Tony Evers has reversed a decision to steer federal funds toward people of color as part of a more than $92 million mortgage-assistance program after a conservative law firm contended the move would be unconstitutional.

The Democratic governor first announced the Wisconsin Help for Homeowners program in August. The program is set to provide about $92.7 million in federal American Rescue Plan Act funds to eligible homeowners across the state to help mitigate financial hardships associated with the ongoing COVID-19 pandemic by preventing mortgage delinquencies, defaults and foreclosures and loss of utility and energy services.

However, a component of the initial proposal drew criticism from the nonprofit Wisconsin Institute for Law and Liberty, which claimed the state’s plan to follow federal guidelines would constitute discrimination under the U.S. and state constitutions.

The federal government directs states to provide the grants to homeowners with incomes equal to or less than 100% of the area median income for their household size. However, states were allowed to increase the income eligibility pool to those earning 150% of the area median income if funding was being allocated to “socially disadvantaged” individuals, defined by the federal government as Black Americans, Hispanic Americans, Native Americans, and Asian Americans and Pacific Islanders. Other individuals earning between 100% and 150% would be ineligible.

The program formally launched last week and focuses only on those with an income equal to or less than 100% of the area median income for their household size

“It’s a relief the Evers administration recognized the clear constitutional and legal problems we identified in the design of this program and fixed them before any money was distributed,” WILL deputy counsel Dan Lennington said in a statement. “The program is now open to all Wisconsinites, regardless of race, and that’s great news.”

The state Department of Administration estimated there are more than 914,000 Wisconsin households earning between 100% and 150% of the area median income, according to a letter WILL sent Evers earlier this year. Almost 60,900 of those households meet the federal government’s definition of “socially disadvantaged,” while the remaining more than 850,000 households are white.

Evers’ office did not respond to a request for comment Monday. The Democratic governor said in a statement last week the program “will provide a lifeline to homeowners who might otherwise be at risk of losing their homes because of hardships created by the pandemic.”

DOA has partnered with Wisconsin Community Action Program Association agencies and Take Root Wisconsin to help assist with the grant application process. Applications are open on a first-come, first-served basis at homeownerhelp.wi.gov.

WILL has previously challenged the federal government’s reasoning for allocating federal funds based on race, including a lawsuit brought forward last year on behalf of a handful of residents in several states including Wisconsin challenging President Joe Biden’s proposal for allocating grants to farmers and ranchers, including $4 billion to more than 20,000 Wisconsin farmers.

The lawsuit alleged the Biden administration was engaging in unconstitutional race discrimination through a provision in the American Rescue Plan to provide debt relief to “socially disadvantaged” farmers and ranchers. A temporary restraining order was granted last June.

WILL, on behalf of a handful of businesses, also successfully sued the U.S. Small Business Administration for the agency’s prioritization of businesses owned by women, veterans and socially disadvantaged individuals when allocating $28.6 billion in Restaurant Revitalization Fund grants last year.

A federal appeals court ultimately ruled in favor of WILL, issuing a 2-1 opinion that said the government cannot allocate limited coronavirus relief funds based on race and sex. As a result, SBA notified 2,965 business owners who had originally been approved for grants that those funds would now be denied and the application process shifted to a first-come, first-served basis.

Please note: This content carries a strict local market embargo. If you share the same market as the contributor of this article, you may not use it on any platform.