County of Westchester v US Department of Housing and Urban Development, 2015 WL 5616304 (2nd Cir.) was a challenge under the Federal Administrative Procedures Act by Plaintiff County against the Department of Housing and Urban Development (“HUD”), a federal agency that could dispense housing funds under the Community Planning and Development Formula Grant Programs, but did so under certain conditions. This challenge was the culmination of litigation begun in 2006 by the Anti-Discrimination Center of Metro New York, which brought a Qui Tam case against Plaintiff, alleging that it had falsely certified its housing program to receive federal housing funds from 2001-06 by falsely setting out an “analysis of impediments” to fair housing (“AI”) and develop strategies to overcome the same, both of which actions are required by federal law.
Bloomingburg Jewish Education Center v. Village of Bloomingburg, 2015 WL 3604300 (S.D.N.Y.) involved the purchase of property and moving in of Hasidic Jews in Bloomingburg, the adjacent defendant community of Mamakating, the resistance of existing community members, and their elected officials to these efforts, allegedly in violation of the First Amendment, the Equal Protection Clause, the federal Religious Land Use and Institutionalized Persons and Fair Housing Acts and New York law. Defendants seek dismissal of those claims. Specifically, Plaintiffs allege Defendants obstructed a housing development marketed to potential Hasidic buyers, impeded a private Hasidic religious school and mikvah (a Hasidic ritual bath used for purification), and engaged in a program of harassment and discriminatory code enforcement aimed at Hasidic Jews.
Over the last two years, I have been speaking locally and around the country about affordable housing. My focus has been on the exploration of affirmatively furthering fair housing and disparate impact, through analysis of case law development. One of the themes that has become clear is the need to look at housing as part of our infrastructure. The way to plan for equitable neighborhoods is to plan for affordable housing in neighborhoods with access to good schools, grocery stores with fresh fruits and vegetables, quality public transit, and job opportunities.
The Department of Housing and Urban Development (HUD) wasted no time in finalizing the new affirmatively furthering fair housing rules the day after the U.S. Supreme Court upheld disparate impact claims under the Fair Housing Act in Texas Department of Housing Affairs v. Inclusive Communities Project, Inc. (see last week’s post for a summary of that case). Disparate impact results from governmental policies that may not have been intended to create segregation, but do in fact result in segregation. The Supreme Court’s ruling upholds the Fair Housing Act’s prohibition on discrimination caused by policies or practices that have an unjustified disparate impact because of race, color, religion, sex, familial status, national origin, or disability.
The new rule requires certain public entities (“entitlement jurisdictions” that receive federal funding for housing) that have, under previous HUD rules, been required to prepare an Analysis of Impediments to Fair Housing (AI) to prepare an Assessment of Fair Housing Report (AFH). The AFH meets standardized reporting requirements, and is drafted to assist program participants in reducing disparities in housing choice, and to provide access to housing opportunities, particularly for those with protected status. The overall goal of the new reporting requirement is to expand economic opportunity and enhance quality of life.
These rules are a game changer for land use planning. HUD is proactively getting involved in the business of zoning for fair housing, not just financing units. HUD recognizes that fair housing issues may arise from factors such as zoning and land use, including the proposed location, design, and construction of housing; public services that may be offered in connection with housing (e.g., water, sanitation); and related issues. According to HUD, the AFH approach focuses primarily on assisting program participants in being better informed, and better able to set goals and priorities. In particular HUD wants to ensure that the following conditions will be taken into consideration when making funding decisions in a particular jurisdiction - patterns of integration and segregation; racially or ethnically concentrated areas of poverty; disproportionate housing needs; and housing-related barriers in access to education, employment, and transportation, among others.
While local jurisdictions will remain in local control of land use decisions and adoption of zoning regulations under the new rules, entitlement jurisdictions are called on to provide a specific analysis of land use programs that may inhibit affirmatively further fair housing. In addition to HUD’s final rule, HUD’s Assessment Tool, adopted in 2014, and guidance to be issued in the near future, will assist recipients of federal funding to use that funding and, if necessary, adjust their land use and zoning laws in accordance with their existing legal obligation to affirmatively further fair housing.
Zoning and land use laws that are barriers to fair housing choice and access to opportunity can be quite varied and the determination of whether a barrier exists often depends on the factual circumstances in specific cases. One example is zoning and land use laws that were intended to limit affordable housing in certain areas in order to restrict access by low-income minorities or persons with disabilities. The City of Black Jack took egregious zoning actions in the 1970s that prevented construction of low-income multifamily housing that had a racially discriminating effect and was found to violate the Fair Housing Act. U.S. v. City of Black Jack, 508 F.2d 1179 (1974). An example of a positive zoning action that would further fair housing would be the removal of such an ordinance. HUD intends to include additional examples in its guidance for its affirmatively furthering fair housing regulations.
Closer to home, Oregon’s 2015 legislature had a clear path to a remove a barrier to affirmatively furthering fair housing, but the Oregon Senate would not even take a public vote on House Bill 2564 to remove the constitutional ban on mandatory inclusionary zoning. Instead, the bill died in committee after having passed the House. Inclusionary zoning is a tool that requires new developments of housing to construct a particular percentage of new units for qualifying low-income home seekers. While the Oregon Senate failed to move forward, the State’s Draft Fair Housing Report 2016-2020 contains a finding that the state’s ban on inclusionary zoning “limits housing choice for persons of color and low income persons.” The AI included in the report states:
Disallowing inclusionary zoning as part of a community’s affordable housing toolkit limits the provision of affordable housing in general. In addition, limits on the use of inclusionary zoning may disproportionately affect members of protected classes to the extent that they have a greater need for affordable housing. This situation is called discriminatory effect or disparate impact.
With the fuel from the Supreme Court’s decision, as well as the new HUD regulations, Oregon’s leaders would be wise to avoid potential challenges and pick off low-hanging fruit like overturning the ban on inclusionary zoning. Such action is an easy first step to remove barriers for protected classes and avoid disparate impact challenges.
Although not garnering the rallies and applause given to the U.S. Supreme Court’s recent decisions dealing with the Affordable Care Act or same-sex marriage, the Court’s ruling considering the scope of the Fair Housing Act is likely to have just as much impact in how neighborhoods develop and in the choices protected classes of people – such as those protected by race, disability and familial status - have about where to live.
In Texas Department of Housing Affairs v. Inclusive Communities, Inc., the Inclusive Communities Project (ICP), a non-profit organization that seeks to promote racial integration in Dallas, sued a state agency charged with allocating HUD-issued low income housing tax credits to developers who build low-income housing projects. The ICP accused the Texas agency of disproportionately allocating the tax credits to properties in poor areas in violation of the Fair Housing Act of 1968 that makes it illegal to refuse to sell, rent “or otherwise make unavailable” housing to anyone because of race, sex or other protected categories. Between 1995 and 2009, the state did not award tax credits for any family units in predominantly white census tracts, and instead awarded tax credits to locations “marked by the same ghetto conditions that the FHA was passed to remedy,” ICP’s pleading states. ICP did not allege intentional discrimination, but rather whether the fact that issuance of tax credits within solely high-poverty areas that results in a disparate impact on minorities is sufficient to show a violation of the FHA.
Justice Kennedy, writing for the majority, noted that while de jure racial segregation in housing has been unlawful for over a century, de facto segregation remains. Congress passed the Civil Rights Act of 1968 and amendments to the Fair Housing Act in 1988 (the Fair Housing Amendments Act or FHAA) as well as cases applying Title VII of the Civil Rights Act of 1964, which banned many acts of housing discrimination, as antidiscrimination laws that focus not just on the “mind-set of the actors” but also on the “consequences of the actions.” By its terms, the FHA and its amendments were enacted to provide for fair housing and to prohibit unfair discriminatory housing practices. The Court added: "These unlawful practices include zoning laws and other housing restrictions that function unfairly to exclude minorities from certain neighborhoods without any sufficient justification. Suits targeting such practices reside at the heartland of disparate-impact liability."
The Court emphasized at some length that the disparate impact test was not formulaic and must be applied flexibly and specifically expressed concern over the use of racial quotas. The test must require a “causal link” in a case such as the one before it, between the policy and discrimination so as to remove “artificial, arbitrary and unnecessary barriers” to housing. The Court concluded:
Much progress remains to be made in our Nation’s continuing struggle against racial isolation. In striving to achieve our “historic commitment to creating an integrated society,” we must remain wary of policies that reduce homeowners to nothing more than their race.
Justice Alito writing for the dissent, joined by Chief Justice Roberts, Justice Thomas and Justice Scalia, focused on the statutory language “because of race” and concluded that only intent or motive mattered. As a result, Congress intended to cover disparate treatment — not claims of disparate impact. Quoting from another case, Alito pointed out: “The Court acknowledges the risk that disparate impact may be used to ‘perpetuate race-based considerations rather than move beyond them.’”
This case highlights the equity associated with giving all individuals choices in selecting appropriate housing rather than focusing solely on their quantity. But calling HUD’s Section 8 program “Housing Choice” is entirely undermined if families really have no choice about where they are going to live. As importantly, it illustrates the link between affordable housing and land use planning. The land use choices that planners and housing advocates make that results in segregation can violate the Fair Housing Act even though it may be entirely inadvertent.
As President of Housing Land Advocates (HLA), I am pleased to announce that HLA and the American Planning Association have filed a joint amicus brief in the latest case to challenge the Fair Housing Act’s (FHA) disparate impact standard. The Texas Dept. of Housing and Community Affairs case questions whether state administrators of federal low income housing tax credits (LIHTC) programs must consider the location of the housing and whether the location has a disparate impact on protected classes. Ed Sullivan, HLA Board Member and APA Amicus Committee member submitted the brief on behalf of the amici.
Here is an excerpt of the summary of the argument:
From the perspective of professional planners engaged in development efforts across the United States, the benefits of continued recognition of a disparate impact-standard under the FHA substantially outweigh the minimal costs that the standard imposes. Decades of operation under a legal framework that has uniformly recognized disparate-impact claims has taught the institutions and professionals engaged in development to work within the standard’s requirements. Those requirements have proven to be fully consistent with efficient project planning and execution efforts. Reversing course at this point would be disruptive to established practices and, ultimately, would thwart just and effective planning efforts.
The benefits that flow from compliance with the FHA’s disparate-impact standard have been substantial. The legitimacy of public institutions depends, in significant part, on transparent decision making. In the context of urban and rural development efforts, it is inevitable that certain projects will affect some groups of persons more than others. Responsible planners consider the unintended consequences of development projects, explain to the public why a project is necessary and beneficial notwithstanding its disadvantages, and engage in dialogue with affected community members to minimize a project’s drawbacks. Institutions that properly explain the reasoning behind their decisions enjoy greater public support for and participation in their long-term objectives.
The FHA’s disparate-impact framework furthers transparency and legitimacy by committing planning professionals and public institutions to a dialogue with those affected by their actions. Under the most pervasive articulation of the standard, housing plans must serve legitimate, nondiscriminatory interests through the least discriminatory means available. This includes development efforts that are part of the federal low income housing tax credit (LIHTC) program. Over the course of decades, that norm has become an accepted component of the planning process. Today, responsible developers share their objectives with potentially disadvantaged persons and groups and together develop plans to minimize projects’ adverse effects. This kind of transparency makes affected groups more apt to lend their support to projects, view such projects as fair, and regard planners and public institutions as legitimate actors in the public space.
The costs, meanwhile, of the disparate-impact framework have proven to be minimal. Over the course of four decades, complying with the existing legal regime has not thwarted economically beneficial development efforts, including those made as part of the LIHTC program. That is because, properly understood, the possibility of a disparate impact does not make a development project unlawful—it simply requires that institutions provide and articulate nondiscriminatory justifications for projects that adversely affect protected groups.
In sum, the FHA’s disparate-impact standard has promoted just and efficient planning and development efforts for decades. Overturning that standard now would decrease the legitimacy of public institutions and the planning profession, disrupt practices that have advanced under the standard, and ultimately disadvantage the public interests that development projects are designed to serve.
You can read the entirety of the brief here.
On June 10, 2014, the City of San Jacinto, in Riverside County, California, entered into a consent decree with the Department of Housing and Urban Development (HUD) to resolve a lawsuit alleging disability discrimination under the Fair Housing Act (FHA) and Americans with Disabilities Act (ADA). The City agreed to change its land use laws governing group home living, and to pay a total of $746,599 in compensatory damages to housing providers and former residents with disabilities, as well as a $10,000 civil penalty to the United States. The damages also include private plaintiffs’ attorneys’ fees and costs.
The settlement marks an end to an almost two-year-old complaint, but a six–year-old battle, where private group home operators claimed the City enacted an ordinance intended to exclude unlicensed and some licensed homes for persons with disabilities, and by targeting homes for persons with disabilities for enforcement of the ordinance and other local laws.
On October 3, 2008, the City Council amended the San Jacinto Zoning Code (the “Zoning Code") by approving Ordinance 08-14 (the “ordinance"), which was passed by unanimous vote of the council. The ordinance amended the Zoning Code's definition of "Group Home" or "Group Housing" to "[a] residence or dwelling, other than a hotel, wherein two (2) or more rooms, with or without individual cooking facilities, are rented to individuals under separate rental agreements or leases, either written or oral, whether or not an owner, agent, or rental manager is in residence, in order to preserve the residential character of the neighborhood." The ordinance specifically exempted certain state-licensed congregate living facilities, such as "community care facilities," from its definition of "group homes," making those with six or fewer residents permitted uses in residential zones.
Prior to and after the City's enactment of the ordinance, the city's zoning code defined "family" as "an individual or two (2) or more persons related by blood, marriage or legal adoption, or a group of not more than 6 persons who are not related, living together as a single house-keeping unit in a dwelling unit."
In conjunction with the passage of the ordinance, the City’s code enforcement officers, including uniformed officers of the County Sherriff’s Department, investigated group homes. These actions included intrusive and direct questioning of residents about whether they were on parole, on medication and/or recovering from addiction. After these investigations, the City continued to cite providers of group homes for persons with disabilities for illegal operation of a group home in a residential zone.
Thereafter, the City allowed for a reasonable accommodation process to consider placing group homes in residential neighborhoods, but its proposed conditions were not acceptable to group home providers and they filed a complaint.
HUD’s investigation led to findings that the City had, in fact, discriminated against people with disabilities under the FHA and ADA. The consent decree provides the following injunctive relief:
- The City shall not impose restrictions on housing for persons with disabilities not imposed on housing for an equal or greater number of persons without disabilities. Actions prohibited include, but are not limited to, the imposition, through any provision or practice, of numerical occupancy limits on group housing for unrelated persons with disabilities that is more restrictive than numerical occupancy limits for families or other unrelated persons.
- The City was required to adopt new ordinances to establish a new zoning classification, "Group Homes for Persons with Disabilities," and amend the City's reasonable accommodation procedure.
- The City is required to maintain records of all oral and written requests for reasonable accommodation or modification and the City's responses thereto for a period of three (3) years following the date of the request and the group home’s response, as applicable.
- The City shall not impose any additional fees, costs, or otherwise retaliate against any person who has exercised his or her right under the FHA or ADA to make one or more requests for reasonable accommodation or modification.
- Immediately upon entry of the consent decree, the City shall cease any efforts to close or bring other enforcement actions against housing for persons with disabilities operated in accordance with the FHA and the ADA, including but not limited to, homes for persons with disabilities operated by the complainants (City by Aurora Beltran and Rajeeyah Bilal-Vamey located at 325 East Third Street and 1835 Rogers Way, respectively), so long as these homes continue to operate in compliance with all laws.
- The City is required to appoint a Fair Housing Compliance Officer, and City staff, City Council members, Planning Commissioners, and the Sherriff’s officers are required to undergo fair housing training.
HUD’s investigations of fair housing violations are taking an expensive toll on local governments. If you advise a city that is considering restrictive zoning; or differential treatment of the number of family members as compared to the number of unrelated people with disabilities that can live together in the same zone, then consider the San Jacinto consent decree as a warning to take such actions cautiously. If the ordinance ultimately results in unfair treatment to group home providers, then do not be surprised if fair housing advocates complain to HUD.
Nikolich v. Village of Arlington Heights, 870 F Sup 2d 556 (N.D. Ill., 2012) involved Defendant’s denial of 30 units of housing for those with mental illness, and a Motion for Summary Judgment by Defendant. The Complaint in this case had three theories, including the Fair Housing Act (“FHA”), the Americans With Disabilities Act (“ADA”) and the Rehabilitation Act. Plaintiffs were either developers or prospective users of such housing. Defendant’s housing plan showed an unmet need for 180 units for those with special needs. Upon Staff advice, Plaintiffs applied for nine amendments or variances from the underlying zone, including a Comprehensive Plan Amendment and rezoning. The applications had no historic precedent; nevertheless the Planning Staff recommended approval. The Planning Commission recommended approval by a 4-3 vote; however, the Village Board denied the application on a 4-3 vote.
The Court stated that there was not enough evidence to show that mentally ill residents would be better off at the residential density Plaintiffs proposed and also observed that 16 units could be built without variances; however, Plaintiffs could not have secured public financing to pursue that option. The Court was unimpressed by the notion of charging higher rents to make up the difference. Moreover, the housing tax credits had expired by the time the suit was brought and there were no financial arrangements in place to fund the housing. The court proceeded to test the three theories advanced against Defendant’s action.
Plaintiffs advanced three separate theories under the FHA – disparate treatment, disparate impact, and failure to make reasonable accommodation. Disparate treatment can be intentional (however, there was no such evidence under existing zoning patterns or from what was allowed under the existing zoning – i.e., 16 units without variances). The Court did not find that the dimensional requirements of the underlying zones were unreasonable or aimed at the disabled. The court noted that it was the plaintiff who asked for discretionary amendments and variances and then found that the ordinance was on its face, “fairly debatable.” Thus, there was no showing that the Plaintiffs were treated differently from other applicants. The Defendant was shown to provide housing for some mentally ill now, and proposed to do more in the future. There was also evidence that the Defendant did not, and would not, have made a different decision if the proposed housing did not involve the disabled. The Court concluded:
“In short, Arlington Heights cannot be said to have treated [this project] differently than any other project involving non-disabled residents because no one has ever been granted zoning variances of this scope. Moreover, there are a number of supportive housing projects already serving mentally ill residents in Arlington Heights, and more are planned for the near future * * * facts that buttress the determination that the Village Board is not biased against such projects but rather denied the project at hand for the legitimate zoning reasons identified at the May 17 meeting. Thus plaintiffs’ disparate treatment contention is doomed.”
As to the disparate impact claim, which was to show a facially neutral ordinance, fell disproportionately on a protected class, the Court said that the neutral policy (i.e., the zoning scheme which would require amendments and variances, to get to Plaintiffs’ objective) did not fall disproportionately on the handicapped.
As to Plaintiffs’ failure to accommodate claim, Plaintiffs must show the accommodation was reasonable and also necessary to ameliorate the effects of renters’ disabilities. The rule to which accommodation was requested must be shown to limit the disabled by reason of their handicap. Plaintiffs could not show that this was the result (“but for”) or their hardship – i.e., the variances for density, minimum unit size, and number of parking spaces – if all potential tenants would have been affected, the reasonable accommodation provision does not apply. None of the variances were shown to ameliorate the effects of Plaintiffs’ disabilities, but would only make the project more financially feasible for the developer. The Court rejected this financially feasibility test because it did not apply to any specific disability. The Court also questioned whether an “interactive process” of reasonable accommodation applied to local governments in the exercise of their land use regulatory authority. The fact that the handicapped could live elsewhere, albeit more expensively, was of no matter, particularly if alternatives existed on the very site without variances. The Defendant’s Motion for Summary Judgment was thus granted.
This case may be correctly decided on the facts and the contentions made. However, it may well be true that if there are economies of scale that allows for provision of affordable housing to the disabled, the purposes of the three enumerated acts may be unmet. The realities of development may exclude the disabled from access to housing – apparently with the blessing of the law.
Nikolich v. Village of Arlington Heights, 870 F Sup 2d 556 (N.D. Ill., 2012).
Many urban local governments in Oregon have adopted housing codes to regulate substandard housing. These local codes ensure that dwellings remain healthy and safe for habitation and authorize government planning or development managers to pursue enforcement remedies where nuisance conditions exist such as insufficient fire protection, lack of heating, unsanitary conditions or overcrowding. Enforcement activities include property inspections, mandatory abatement and improvements, and sometimes the evacuation or demolition of structures. Although often solely complaint driven and significantly hampered by budgetary constraints, these codes authorize local governments to pursue nuisance abatement programs as they deem appropriate.
We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.