Joshua Lott for The New York Times
Mary Susan Case in her apartment at Apache ASL Trails, a subsidized complex in Tempe, Ariz.
TEMPE, Ariz. — When the subsidized housing complex for senior citizens opened its doors here last year, it already had a waiting list. Designed by a deaf architect to fit the needs of the deaf, its units have video phones and lights that flash when the phone or the doorbell rings. Wiring in common areas pipes announcements made through loudspeakers into residents' hearing aids.
The complex, meant to foster a sense of community among residents who use sign language to communicate and socialize, was the first of its kind in the Southwest. For the Arizona Department of Housing, which allocated federal money to help pay for it, it was a milestone, one that advocates for the disabled hoped would be a model for similar projects.
Preference was given to deaf and hard-of-hearing applicants, who occupy 69 of the complex's 75 units. The arrangement seemed to make sense; the state and the project's developer were convinced that they stood on solid legal ground.
But after an audit last year, the federal Department of Housing and Urban Development began raising questions.
The project, named Apache ASL Trails in a reference to American Sign Language, now finds itself in an unlikely spot, facing charges of discrimination for favoring deaf and hard-of-hearing people over others, disabled or not. The federal agency released its finding in January after examining marketing materials and the project's criteria for tenant selection, even though the developer assured it that the documents in question had been misinterpreted or were outdated.
Last June, HUD drafted a compliance agreement limiting the number of units set aside for deaf residents, which seems to have only stoked the dispute. State officials said the agency at one point threatened to withhold money from the state if it did not continue with the plan. But the state housing director, Michael Trailor, did not back down, saying he had to "stand up for the rights of disabled people."
Advocates for the disabled fear that the finding might complicate other projects in which federal money would be used to build housing for adults with special needs. Already, the Southwest Autism Research and Resource Center, based in Phoenix, has scrapped plans to use federal grants to help pay for a development designed for autistic adults, opting instead to pursue private financing.
Through combative legal correspondence and in emotional meetings, the parties in the Tempe project, working to negotiate a compromise, have argued over the meaning of the federal statute governing fair housing practices and the word "discrimination" as it applies to the deaf.
John Trasviña, HUD's assistant secretary for fair housing and equal opportunity, said in a statement that "federal law prohibits facilities that receive HUD funds from providing separate or different housing for one group of individuals with disabilities because this practice denies or limits access to housing for other individuals based on the types of disabilities they have." (The agency did not make Mr. Trasviña or other officials available for on-the-record interviews.)
In interviews, Mr. Trailor and the developer, Erich Schwenker of Cardinal Capital Management, which is based in Milwaukee, said the units were advertised in publications that focused on the deaf population, but also in the state's largest newspaper and in a local magazine.
"Our intention has never been to exclude, but to make sure the units are utilized to the fullest extent possible, as the law requires," Mr. Schwenker said.
The demands from HUD mobilized advocacy groups across the country. Last week, 75 of them signed a letter from the National Association of the Deaf to the federal housing secretary, Shaun Donovan, accusing HUD of "forcing deaf and hard-of-hearing individuals to only live according to an ideological vision of forced integration."
In an interview, the association's chief executive officer, Howard Rosenblum, said the approach "ignores the unique communication needs" of the deaf, making them more isolated. Denise Resnik, a co-founder of the Southwest autism center, said the agency's attitude felt "like reverse discrimination."
By Friday, HUD had scaled back its efforts. A spokesman said the agency had decided to "take a pause" in the negotiations to give the state and the developer time to submit evidence demonstrating the housing needs of the deaf population to justify the use of federal money in the project.
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