WATERLOO - A fair housing report shows a lot of work remains to integrate the city's neighborhoods.

"Historical patterns of racial segregation persist in Waterloo," said the report completed by Mullin & Lonergan Associates Inc. "Of the 20 cities in Iowa with populations exceeding 25,000, Waterloo ranks as the most segregated."

The observation was part of an "Analysis of Impediments to Fair Housing Choice" commissioned by the Waterloo Community Development Board and received this week by the City Council. The document detailing a variety housing issues in Waterloo and Cedar Falls is required so both cities can continue receiving federal HOME program funds through the U.S. Department of Housing and Urban Development.

"I think this is a fair analysis," said Rev. Jim Carstensen, a member of the city's Community Development Board. "It gives us a better grasp of where we need to go."

Based on the most recent census information, the Pennsylvania-based consulting firm found Waterloo's black households continue to be concentrated in census tracts on the city's near east side. Some 62.3 percent of black households would need to move to other census tracts for the city to achieve full integration.

That's the highest percentage in the state and "far outranks the much larger cities of Des Moines (55.3) and Cedar Rapids (45.9)," the consultant found. Cedar Falls ranked 13th on that scale, with a dissimilarity index of 35.0.

The consultant noted census data also shows black households earn significantly less than white households, which severely limits their housing choices, including location.

Recommendations to improve housing integration included encouraging Section 8 housing voucher holders to move to "non-impacted" neighborhoods; expand affordable housing opportunities outside census tracts with large concentrations of minority residents; and provide incentives for employment training and apprenticeships aimed at residents of racially impacted neighborhoods.

Among other findings, the consultants found:

• While blacks make up about 14 percent of the Waterloo population, about 30 to 41 percent of black households get housing-related assistance from the city's Community Development Block Grant and HOME program funds each year.

"Overall, the city of Waterloo has demonstrated a significant commitment to assisting low- and moderate-income households who are members of protected classes," the consultant said.

• Both Waterloo and Cedar Falls include members of protected classes on appointed governments boards and commissions.

• Mortgage application denials disproportionately affect racial and ethnic minorities in Waterloo. Those groups also are more prone to have high-cost mortgages.

• There is an inadequate supply of accessible dwelling units for persons with disabilities.

Carstensen said the Community Development Board will consider recommendations from the consultant, but may not be able to move forward with them all.

"There has just been a general decline in the dollars we have," he said. "We just can't grant funds to everybody who comes with an application."

But, he added, "we need to do a better job of letting people on the east side of the river know that there's money available."