GWEN IFILL: The Obama administration this week announced plans to step up scrutiny under the 1968 Fair Housing Act that the Supreme Court upheld at the end of its term. The new rules require cities and towns to document patterns of racial bias in their neighborhoods, and publicly report the results every three to five years.

The communities would then set and track goals to reduce segregation. In extreme cases, the Department of Housing and Urban Development could withhold federal funding.

Secretary of Housing and Urban Development Julian Castro made the announcement in Chicago yesterday, and he joins me now.

Explain to me, Mr. Secretary, what is the connection between this and the Supreme Court ruling?

JULIAN CASTRO, Secretary of Housing and Urban Development: Well, the Supreme Court ruling that upheld the use of disparate impact under the Fair Housing Act was also a very significant development.

The relationship is that America has always prided itself on being the undisputed land of opportunity, and one of our challenges is, how do we ensure that that remains true in this 21st century?

With housing, we know that where you live matters, and we want to make sure nobody's destiny is determined by their zip code, so that people have fair housing opportunity. The disparate impact case was about ensuring that you didn't absolutely have to show intention. You could just show a disparate impact in order to bring a claim under the Fair Housing Act.

What we unveiled yesterday was something called Affirmatively Furthering Fair Housing. That's a rule that basically guides cities as they think about how to ensure that there is good, fair housing opportunities throughout their community. It really is a — this is a collaborative tool that will help communities plan better and connect housing opportunity to things like where a library's located, where a school is located, where's the nearest bus stop or train stop, so that folks can access jobs and education.

GWEN IFILL: So, how do you measure that? How do you decide which cities are — where discrimination — or segregation patterns are caused by discrimination or are the cities or the urban areas where it's just caused by choice?

JULIAN CASTRO: Well, one of the things that we do is not just work with cities that have had deep patterns of racial segregation, but we work with all cities that get Community Development Block grant money, for instance.

So, we're looking, more than anything else, for cities that are making best efforts to ensure that everybody in their community has a fair shot at opportunity.

GWEN IFILL: Give me an example of a city and of a fix under these rules that you're talking about.

JULIAN CASTRO: Yes.

Yesterday, we were in Chicago, and I stood with Mayor Emanuel to make this announcement about the Affirmative Furthering Fair Housing rule. And what they did there at a place called Park Boulevard is not just create a housing community that's going to ensure that more folks have good, decent housing, but connect that to a place for folks to recreate, a recreation center, connect it to transit options so that folks can get to jobs.

We will know when cities are making progress when they put all those components together, when they put housing together with better educational opportunities, better transit options so people can get to jobs, better infrastructure investment.

GWEN IFILL: Flip side of this, social engineering, critics say. They say this is another example of executive overreach, that it's the Obama administration trying to engineer outcome.

JULIAN CASTRO: It's without merit.

The fact is that we're collaborating with communities. We're not dictating to communities what they have to do.

GWEN IFILL: Except that you say you're going to withhold federal funding. Isn't that kind of a stick with the carrot?

JULIAN CASTRO: Enforcement is a last resort.

The fact is that enforcement has always been one tool, always a last resort. Every single year, we have enforcement situations. We're approaching this, this rule, Affirmatively Furthering Fair Housing, in the spirit of collaboration.

And the fact is that the vast majority of communities out there know that they have challenges with respect to trying to create more opportunity for people of modest means, and they want to do the right thing, and HUD stands ready to help them do the right thing.

GWEN IFILL: And yet some housing advocates say this is like slow motion change. As you pointed out, the enforcement mechanisms have been in place before.

And you're asking for cities, or municipalities or communities to account for their own behavior every three to five years. That's not immediate.

JULIAN CASTRO: It's correct to say that this is not going to be an overnight change.

However, we really are in it for the long haul, and these communities will now be required to put together a plan on how they're making efforts to affirmatively furthering fair housing every five years, when they submit what's known as their consolidated plan.

We're confident that, over the long haul, that's going to mean that more families have good housing opportunities, both because these opportunities invest in older, distressed neighborhoods, and they're smarter about how they use their housing choice vouchers to help communities — help families that want to move to areas of higher opportunity to be able to do that.

GWEN IFILL: If a community does this, to demonstrate this, they have to show that, for instance, they have made an investment in an underserved community by doing what, by giving tax breaks to developers? How?

JULIAN CASTRO: It might be one of several things.

It might be demonstrating that with respect to housing choice vouchers they're ensuring that families who have a voucher can move to different parts of the community, that affordable housing is being developed in different parts of the community. It may be showing that their community development block grant, or CDBG money, is going to reinvest, revitalize older distressed parts of the community, that they're conscious about access to transportation options or libraries.

So it's not any one thing. It's a number of decisions that demonstrate that these cities understand how to expand opportunity for people who are low-income, folks of modest means.

GWEN IFILL: When it comes to enforcement, how much federal money hangs in the balance?

JULIAN CASTRO: Well, that depends on the community.

Different communities receive different amounts of HUD assistance. But, again, this is a last-resort option. There are instances — and we're not afraid to enforce when we need to, but we want to do every single thing that we can to collaborate with communities, to work with them and follow the lead of local leaders who want to put better policies in place to ensure that people who are low-income in this 21st century can make it if they're willing to work hard.

GWEN IFILL: Housing Secretary Julian Castro, thank you very much.

JULIAN CASTRO: Thank you.