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Affordable housing provision has been a major dimension of social policy across developed economies over the last century. Though often a national priority, the development of public housing is by definition a local enterprise: municipal governments decide whether and where to develop housing projects, and are accountable to local residents. When the motivations of national and local governments are not aligned, affordable housing may be undersupplied. In this paper, I study how the spatial distribution of income and ethnic identity shapes local governments’ decision to comply with national public housing construction targets. To examine this empirically, I use a regression discontinuity (RD) design leveraging the 2000 Urban Solidarity and Renewal (SRU) Law in France, which mandates that every urban municipality above a certain population threshold meet a 20% of affordable housing units quota. I create a spatial segregation index for every urban municipality in the country, and test two predictions about the treatment effect heterogeneity of the RD’s causal estimates: 1) because of the relative ease of preserving segregation patterns, municipalities with starker spatial inequalities will be more likely to comply with the national mandate; 2) because of the expected in-migration following the construction of public housing units, municipalities that are homogeneously white will be less likely to comply with the national mandate.