City anticipates legal challenges to race-based grants, including Live Music Fund

The city may need to roll back or adjust race-based considerations in some of its grant programs over concerns that the U.S. Supreme Court and lower federal courts may in the coming months rule against the use of such criteria. One of the city programs most under threat from that possibility is the long-planned and still-evolving Live Music Fund that would use Hotel Occupancy Tax dollars to award grants to applicants in the live music industry, with race and equity one of the primary determinants in the scoring system. The city’s Equity Office, Small Business Division, Economic Development Department, Purchasing Department, and Small and Minority Business Resources Department also have or are considering programs that use race as part of the scoring matrix. Last week the Music Commission received a presentation from Neal Falgoust, an attorney in the Law Department, who explained that race-based criteria have received the highest level of legal scrutiny based on about 30 years of case law, with sex, gender, age, disability and socioeconomic factors being much easier to enact and withstand legal challenges.

With the Supreme Court indicating it will hear a case that could end race-based considerations in college admissions, Falgoust said that change could pave the way for lawsuits against the city for any of its programs that rely too heavily on race in determining how grants and contracts are awarded. “Our concern is that in this environment if someone should decide to file suit against the city and the case ended up in the courts, that cases like (City of Richmond v. J.A. Croson Company) could put the city at risk not only for the city but for all cities across the country,” he said. “It would provide the court with an opportunity to overturn settled law for the entire country.” Falgoust said one of the questions courts will look at in these cases is whether race-neutral programs have been tried and proven unsuccessful at remedying proven problems around racial discrimination and inequity. Another key requirement is that municipalities complete a comprehensive disparity study around the specific program, which Falgoust said can take years to complete and cost more than $1 million. He said a study related to programs in the Small and Minority Business Resources Department has been underway for years and is expected to be ready for presentation in April. City Council received Falgoust’s presentation earlier this month in an executive session, with programs tied to the Arts Commission and Historic Preservation Fund also set to be briefed soon.