On February 9, the U.S. District Court for the Western District of Washington denied a motion for preliminary injunction in a case challenging Washington’s Covenant Homeownership Program, a special purpose credit program designed to reduce racial disparities in homeownership. The program’s eligibility criteria require applicants to meet income limits, be first-time homebuyers, and show that they or their ancestors lived in Washington before April 1968 and belong to certain racial or ethnic groups. The plaintiff, a nonprofit organization, argued that the program violated the Equal Protection Clause of the Fourteenth Amendment by limiting eligibility based on race and ethnicity.

Although the court found that the plaintiff had standing because the plaintiff had sufficiently alleged that one of its members had met all of the program requirements except for the racial criterion, the court found the program was likely to withstand strict scrutiny — holding that remediating past racial discrimination is a compelling government interest and that remedial programs are not categorically excluded simply because they target socioeconomic goals. The court rejected the plaintiff’s argument to the contrary, citing 9th Circuit precedent in support. Further, the court cited evidence of historic and ongoing discrimination in housing, credit, lending and government policy.

The court determined the program was narrowly tailored, noting it is limited to groups affected by documented disparities and includes a built-in review process every five years to evaluate effectiveness. The court also found the state had considered race-neutral alternatives, including existing homebuyer programs, but concluded those were ineffective in addressing discrimination. Finally, the court found the plaintiff failed to demonstrate irreparable harm or that the balance of equities favored an injunction, concluding it is in the public interest to allow the program to continue assisting homebuyers.