Category: Fair Housing Act

The duty to provide “reasonable accommodations” under the Fair Housing Act Amendments does not extended to alleviating downstream economic effects of a handicap.

Gary Taylor

by Gary Taylor

Klossner v. IADU Table Mound MHP, LLC and Impact MHC Management, LLC

Federal 8th Circuit Court of Appeals, April 10, 2023

Suellen Klossner has lived in a mobile-home park in Dubuque, Iowa, since 2009. The park is owned by IADU Table Mound MHP, LLC, which is controlled by Impact MHC Management, LLC (Impact). Tenants in the park pay rent for a lot where they can situate a mobile home. Klossner receives income from government programs that she used to pay her rent for ten years. She is unable to work full-time due to psychiatric and physical disabilities.

In 2019, the City of Dubuque approved a measure allowing the local public housing authority to provide residents of mobile-home parks with housing choice vouchers that could be used to supplement their rent payments. Under this voucher program, the federal government provides funds to local public housing agencies, which in turn may distribute them to low-income tenants. As the rent on Klossner’s lot increased, she received a voucher and sought to use it to supplement her rent payments, but the companies declined to accept the voucher. Federal law does not require landlords to accept housing choice vouchers, and Impact declines to do so except (1) where state law requires acceptance, or (2) where the company has purchased property where a prior owner accepted vouchers from a holdover tenant—a total of approximately forty tenants out of more than twenty thousand under Impact’s management. Impact cited the administrative burdens of accepting vouchers.

The FHAA makes it unlawful to discriminate in housing or make unavailable a dwelling “because of a handicap of [a] buyer or renter.” “Handicap” is a “physical or mental impairment which substantially limits one or more of such person’s major life activities.” “Major life activities” means “functions such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning and working.” The statute prohibits “a refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford [a handicapped] person equal opportunity to use and enjoy a dwelling.” Klossner sued Impact and IADU Table Mound, alleging that the companies violated the Fair Housing Amendments Act by refusing to accept her voucher. Her theory was that she is a person with a “handicap” under the FHAA, and that the law required the companies to accept the housing voucher as a “reasonable accommodation” that was “necessary” to afford her “equal opportunity to use and enjoy a dwelling.”

The companies argued that although the FHAA calls for reasonable accommodations that directly ameliorate the effect of a handicap, the statute does not require a landlord to accommodate a tenant’s economic circumstances by accepting housing vouchers, and cited similar cases from the Federal 2nd and 7th Circuits in support of their defense. In the 2nd Circuit case the court reasoned that “the duty to make reasonable accommodations is framed by the nature of the particular handicap,” for example, providing a preferred parking space for tenants with difficulty walking, or lifting a no-pets rule to allow the use of a service dog by a blind person. The court concluded, however, that economic discrimination “… is practiced without regard to handicap,” and that the accommodation sought was not “necessary” to afford handicapped persons an “equal opportunity” to use and enjoy a dwelling. The court emphasized that the FHAA “does not elevate the rights of the handicapped poor over the non-handicapped poor,” and that “economic discrimination” is “not cognizable as a failure to make a reasonable accommodation” under the FHAA. In the 7th Circuit case a developer of a community designed for tenants using wheelchairs asked a municipality to grant a zoning variance to allow the construction of more structures on a plot of land, arguing that the proposed variance was necessary as a “reasonable accommodation” under the FHAA because it would reduce the cost of each housing unit, and thereby alleviate the economic impact of handicaps on prospective tenants who needed inexpensive housing. In rejecting the developer’s argument the 7th Circuit pointed out that if the reasonable accommodation provision required consideration of a tenant’s financial situation, then the statute would allow developers not only to ignore zoning laws, but also to obtain a “reasonable accommodation” that suspended a local building code that increased the cost of construction, or a minimum wage law, or regulations for the safety of construction workers. The statute did not call for these results, the court explained, because the duty of “reasonable accommodation” is limited to modifying rules or policies that hurt handicapped people by reason of their handicap, rather than by virtue of circumstances that they share with others, such as limited economic means.

The 8th Circuit found these cases persuasive in the present situation and ruled against Klossner. In interpreting the predecesor statute to the FHAA courts called for accommodations that provided the “direct amelioration of a disability’s effect,” but nothing in the law suggested that the duty of “reasonable accommodation” “extended to … alleviating downstream economic effects of a handicap.”

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Fed 6th Circuit reviews use of miniature horse as service animal under ADA and FHAA (Part II – FHAA claims)

Gary Taylor

by Gary Taylor

Anderson v. City of Blue Ash
Federal 6th Circuit Court of Appeals, August 14 2015

[Note: This is Part II of a lengthy case.  Yesterday’s post gives the facts of the case and reviews the decision on the Americans with Disabilities Act claims.  Today’s post is on the Fair Housing Act Amendments claims.]

The FHAA makes it unlawful to “discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such a dwelling because of a handicap,” which includes “refusal to make reasonable accommodations in rules, policies, practices, or services when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling.”  The courts have interpreted this to allow three different types of claims: (1) reasonable accommodation, (2) disparate treatment, and (3) disparate impact.  The Anderson made arguments on all three.

Reasonable accommodation. Unlike the ADA, the FHAA does not have minimum regulatory requirements for animals to qualify as a reasonable accommodation.  Under this FHAA claim, a municipality has an affirmative duty…”to afford its disabled citizens reasonable accommodations in its municipal zoning practices if necessary to afford such persons equal opportunity in the use and enjoyment of property.” The city argued that C.A. did not need therapy with a horse at her house but rather could travel to a local farm or stable.  It also argued that accommodation at the house was unnecessary because C.A. can ambulated and otherwise function without the horse.  The Andersons contended that the accommodation was necessary for C.A. to play independently in her backyard as a non-disabled child could, and that therapy at a farm or stable is no substitute for therapy at home.

The 6th Circuit found that summary judgment for the city (as was granted by the district court) was inappropriate because there were sufficient facts to indicate that the Andersons might win at trial.  In so ruling, the 6th Circuit observed that the FHAA requires accommodations “that are necessary to achieve housing equality, not just those accommodations that are absolutely necessary for the disabled individual’s treatment or basic ability to function.”

As to the “reasonableness” of the accommodation, the 6th Circuit found that factual issues “pervade the question of the accommodation’s reasonableness.”  The record needs more development on whether C.A.’s therapy would be diminished by traveling to receive therapy at another location, and whether the city’s zoning scheme would be “fundamentally altered” by allowing the horse.  “Requiring public entities to make exceptions to their rules and zoning policies is exactly what the FHAA does…[it doesn’t mean that] any modification permitting a horse necessarily amounts to a fundamental alteration.”

Disparate treatment.  This claim failed for the same reason that the Anderson’s claim for intentional discrimination under the ADA failed: there was no evidence that the city harbored discriminatory animus against the disabled.

Disparate impact.  This claim also failed.  The Andersons failed to recognize that the ordinance in question specifically exempts any animals protected by federal law, including the FHAA; thus it has less of an impact on disabled individuals than on the general public.

The 6th Circuit reversed the district court’s grant of summary judgment and remanded for further proceedings.

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Fed 6th Circuit reviews use of miniature horse as service animal under ADA and FHAA (Part I – ADA claims)

Gary Taylor

by Gary Taylor

Anderson v. City of Blue Ash
Federal 6th Circuit Court of Appeals, August 14 2015

[Note: This is a lengthy case, but it is a good review of issues with “unusual” service animals that occasionally arise.  Today’s post is on ADA.  Next post will be on FHAA]

Ingrid Anderson’s minor daughter (initials C.A.) suffers from a number of disabilities that affect her ability to walk and balance independently.  She keeps a miniature horse at her house as a service animal.  The horse enables C.A. to play and get exercise in her backyard without assistance from an adult.

Since acquiring the horse in 2010 the Andersons and the city of Blue Ash, Ohio have had continual disagreements about allowing the horse on the property.  In 2013 the city passed an ordinance banning horses from residential property, then criminally prosecuted Anderson for violating it.  Anderson’s defense was that the Americans with Disabilities Act (ADA) and the Fair Housing Amendments Act (FHAA) both entitle her to keep the horse at her house as a service animal.  The Hamilton County Municipal Court found Anderson guilty of the criminal complaint.  Andersons brought their own action federal district court on ADA and FHAA claims, but the district court granted summary judgment for the city finding that the claims were barred by the determination of the issues (res judicata) in Anderson’s criminal conviction in municipal court.  Andersons appealed.  After reversing the district court’s conclusion on the res judicata claim (for various reasons beyond the interest of most readers of this blog) the 6th Circuit went on to consider the specifics of the Andersons’ ADA and FHAA claims.

ADA – Miniature horses as service animals. The ADA prohibits entities from discriminating against individuals with disabilities by, including other actions, “failing to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities….” The regulations governing miniature horses allow them for use as service animals if the horse “has been individually trained to do work or perform tasks for the benefit of the individual with a disability,” provided that the horse and the requested modification also satisfy certain “assessment factors.”  The assessment factors to be considered are:

  1. the type, size, weight of the horse, and whether the facility can accommodate these features;
  2. whether the handler has sufficient control of the horse;
  3. whether the horse is housebroken; and
  4. whether the horse’s presence in a specific facility compromises legitimate safety requirements that are necessary for safe operation.”

The ADA thus requires a highly fact-specific inquiry, and decisions must be made on a case-by-case basis.  After lengthy discussion of each of these factors, the 6th Circuit concluded that the district court had not sufficiently developed the factual record concerning the Anderson’s situation, and thus summary judgment for the city was inappropriate.

ADA – Intentional discrimination. The Andersons also raised an intentional discrimination claim under the ADA.  For such a claim to succeed the Andersons need to have proven that:

  1. C.A. has a disability;
  2. she is otherwise qualified; and
  3. she was being … subjected to discrimination because of her disability.

Courts have interpreted this to mean that “animus against the protected group was a significant factor in the position taken by the municipal decision-makers themselves or by those to whom the decision-makers were knowingly responsive.”  Further, it must be shown that the discrimination was “intentionally directed toward him or her in particular.”

After examining the evidence the 6th Circuit concluded that the intentional discrimination claim failed because the Andersons could not prove factor #3.  The city’s actions were brought about by citizen’s complaints of the unsanitary conditions caused by animal waste in the Andersons’ backyard.  The city council decided not to take action on these complaints until the Andersons acquired a second horse and neighbors made additional health complaints. The sequence of events was consistent with the city responding to legitimate concerns of its citizens, and provided no basis for an inference that the city’s actions were “because of C.A.’s disability.”

 

 

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US Supreme Court validates disparate impact standard for FHA cases

Gary Taylor

by Gary Taylor

Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.
U.S. Supreme Court, June 25, 2015

The Texas Department of Housing and Community Affairs (Department) is the agency responsible for distributing federal low-income housing tax credits to developers in Texas. the Inclusive Communities Project (ICP) is a Texas-based nonprofit that assists low-income families in obtaining affordable housing.  ICP brought a claim under Sections 804(a) and 805(a) of the Fair Housing Act (FHA) alleging that the Department had caused continued segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas, and too few in predominantly white suburban neighborhoods.  These sections of the FHA provide that it shall be unlawful…

“..to refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin. (804(a)).

“…for any person or other entity whose business includes engaging in real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin. (805(a)).

The question before the U.S. Supreme Court was whether the above-cited language in the FHA requires that plaintiffs in such cases prove a discriminatory intent (improper motive) on the part of the defendant, or merely that a disparate impact (that the outcome had a disproportionately adverse effect on minorities) resulted from the action of the defendant.  This question has been simmering in the federal courts for many years, with federal circuit courts concluding that disparate impact (with minor variations) was sufficient.

In a 5-4 decision the Court determined that, with certain conditions proven, disparate impact claims are valid under the FHA. The Court looked to other federal statutes – and the Court’s interpretations of those statutes – for guidance.  Both Title VII of the Civil Rights Act of 1964 (Title VII) and the Age Discrimination in Employment Act of 1967 (ADEA) were interpreted by the Court to allow disparate impact claims because their texts refer to the consequences of actions and not just to the mindset of actors, where that interpretation is consistent with the overall statutory purpose. Carrying that logic to the FHA, the phrase “or otherwise make unavailable” in Section 804(a) is results-oriented, and refers to the consequences of an action rather than the actor’s intent.  It is functionally equivalent to “otherwise adversely affect” language found in both Title VII and AEDA.  In all three these phrases act as a catchall, located at the end of a lengthy sentence that begins with prohibitions on disparate treatment.  The word “otherwise” signals a shift in emphasis from an actor’s intent to the consequences of his actions.  The Court found it relevant that Congress passed the FHA within four years of both Title VII and AEDA, and that therefore Congress must have chosen words that bear the same basic meaning and serve the same basic purpose.

The Court also found it highly relevant that when Congress made significant amendments to the FHA in 1988 they left the language in 804(a) and 805(a) alone, at a time when all nine federal circuit courts had interpreted that language to allow disparate impact claims.  If Congress was dissatisfied with the courts’ interpretations of the language they could have changed it at that time.  Furthermore, three exemptions from FHA liability that were added in 1988 would have been meaningless had Congress assumed that disparate impact liability did not exist under the FHA.

The Court, however, also recognized that disparate impact liability “has always been properly limited in key respects to avoid serious constitutional questions” that might arise if, for example, liability were imposed based solely on a showing of “statistical disparity.”  A disparate impact claim relying on a statistical disparity must fail if the plaintiff cannot point to a policy or policies of the defendant that causes that disparity.  In other words, discriminatory intent need not be shown, but a “robust” showing of a cause-effect relationship is required.  Furthermore, defendants must be given leeway to explain the valid interest served by their policies or practices, and such policies should be allowed to stand – without liability therefore – if it they can be proven to be necessary to achieve a valid interest.  Policies and practices do not run afoul of the disparate impact standard unless they are “artificial, arbitrary, and unnecessary barriers.”

The Court also cautioned that disparate impact should not be interpreted so broadly as to inject racial considerations into every housing decision.  “The FHA does not decree a particular vision of urban development; and it does not put housing authorities and private developers in a double bind of liability, subject to suit whether they choose to rejuvenate a city core or to promote new low-income housing in suburban communities….Disparate impact liability does not mandate that affordable housing be located in neighborhoods with any particular characteristic.”

The Court affirmed the right of local housing authorities to design race-neutral efforts to encourage revitalization of communities that have long suffered the harsh consequences of segregated housing patters.  Such authorities may choose to foster diversity and combat racial isolation race-neutral tools.  The mere awareness of race in attempting to solve the problems facing inner cities does not doom such endeavors.

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Requiring conditional use permit for residential substance abuse service facilities does not violate ADA

Gary Taylor

by Gary Taylor

Get Back Up, Inc. v. City of Detroit
Federal 6th Circuit Court of Appeals, March 13, 2015

Get Back Up operates a 160-bed all male residential facility in downtown Detroit, providing substance abuse treatment and counseling, education, and job training opportunities.  In August 2007 it purchases an unused school building from Detroit Public Schools for approximately $500,000.  The building is located in B4-H, General Business/Residential Historic zoning district.  The B4-H District allows boarding schools, child care institutions, nursing homes, religious residential facilities, adult day care centers, hospitals, libraries and religious institutions (among other uses) by right.  It lists “residential substance abuse service facilities” as one of several conditional uses requiring the satisfaction of 15 stated criteria before being allowed.  Get Back Up originally received approval of its conditional use application for the building in the B4-H District from the Building Safety and Engineering Department, but the Russell Woods-Sullivan Area Homeowners Association appealed the approval to the Board of Zoning Appeals (BZA).  The BZA voted to reverse the decision.  Get Back Up appealed the BZA decision to Wayne County Circuit Court, and after bouncing around between circuit court and the BZA several times the circuit court affirmed the BZA’s denial.  Appeals to the Michigan Court of Appeals and Supreme Court were unsuccessful.  After this, Get Back Up filed a complaint in federal court, claiming that the denial violated the American’s with Disabilities Act, the Rehabilitation Act, and the Fair Housing Act.  The federal district court also ruled in favor of the city, and Get Back Up appealed.

Get Back Up argued that requiring residential substance abuse service facilities to obtain a conditional use permit when other similar uses are allowed by right is discriminatory.  The 6th Circuit disagreed, finding that the ordinance does not allow any materially similar use to operate by right in any B4 zoning district.  Residential substance abuse service facilities are treated the same as many other residential uses such as multi-family dwellings, emergency shelters, rooming houses, and fraternities and sororities.  Furthermore, the court found that the other uses cited by Get Back Up in support of their case (nursing homes and hospitals) are not materially similar to residential substance abuse service facilities.  Hospitals are not residential uses, and they tend to have substantial impact on their immediate surroundings and are particularly well suited for busy commercial districts like B4 districts.  While nursing homes are residential uses, their residents are “often physically disabled and they rarely leave the premises….[They are a] uniquely sedate and unburdensome use, having relatively little impact on traditional zoning concerns like noise and traffic.”

The court also found no merit in Get Back Up’s argument that the 15 criteria for approving a conditional use permit are unconstitutionally vague.  The phrases “detrimental to or endanger the social, physical, environmental or economic well being of surrounding neighborhoods,” “use and enjoyment of other property in the immediate vicinity,” and “compatible with adjacent land uses” are terms with “common-sense meanings” and are not so vague as to fail to provide fair notice to applicants of what is prohibited.”

The 6th Circuit Court of Appeals affirmed the ruling in favor of the City of Detroit.

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Supreme Court update

Gary Taylor

We’ve had a bit of action on the four land use related cases pending before the US Supreme Court, discussed here and here.  Oral arguments are being held today in the case of Marvin M. Brandt Revocable Trust v. United States.  The issue in the case:

Whether the United States retained an implied reversionary interest in rights-of-way created by the General Railroad Right of Way Act of 1875 after the underlying lands were patented into private ownership.

Tomorrow, oral arguments will be held in McCullen v. Coakley, the issues of the case being:

(1) Whether the First Circuit erred in upholding Massachusetts’s selective exclusion law – which makes it a crime for speakers other than clinic “employees or agents . . . acting within the scope of their employment” to “enter or remain on a public way or sidewalk” within thirty-five feet of an entrance, exit, or driveway of “a reproductive health care facility” – under the First and Fourteenth Amendments, on its face and as applied to petitioners; (2) whether, if Hill v. Colorado permits enforcement of this law, Hill should be limited or overruled.

The case of Mount Holly v. Mount Holly Gardens Citizens in Action was settled prior to oral arguments.  A copy of a press briefing about the terms of the settlement is here.  The issue of the case was whether disparate impact claims are cognizable under the Fair Housing Act.  An interesting audio article about the case is here (approximately 6 minutes).

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Brief run-down of local government cases before the US Supreme Court this fall

Gary Taylor

Several cases involving local government law are being heard by the US Supreme Court this fall.  The three that are most significant to BLUZ readers are:

Town of Greece v. Galloway

Argument scheduled for November 6, 2013

The Town of Greece, New York, followed the fairly common policy of allowing a person of any or no denomination to conduct an opening prayer at its Town Board meetings.  The Town did not preview or approve the prayer in advance; however, the Federal 2nd Circuit Court of Appeals declared the Town’s practice a violation of the Establishment Clause of the United States Constitution.  The Court’s holding could affect the longstanding prayer practices of many local governments.

Mount Holly Gardens Citizens in Action v. Township of Mount Holly

Argument scheduled for December 4, 2013

The question presented by this case is whether a policy or action (here, a plan to redevelop a low-income minority neighborhood in New Jersey) that disproportionately impacts a protected class of citizens without intentionally discriminating on the basis of race or other factors can give rise to a Fair Housing Act (FHA) claim.  It has long been understood in at least nine federal circuit courts that such claims will stand.  A ruling to the contrary would significantly restrict the types of claims brought under the FHA.

McCullen v. Coakley

Not currently scheduled for oral arguments

The issue is the constitutionality of Massachusetts’s selective exclusion law, which makes it a crime for speakers other than clinic “employees or agents . . . acting within the scope of their employment” to “enter or remain on a public way or sidewalk” within thirty-five feet of an entrance, exit, or driveway of “a reproductive health care facility” – under the First and Fourteenth Amendments, on its face and as applied to petitioners. If the Court decides the issue on broad constitutional grounds, the constitutionality of similar buffers for clinics, funerals, political gatherings, and other events could be called into question or even overturned.

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Statistical evidence sufficient to move Fair Housing Act anti-discrimination claim forward

Gary Taylor

Note:  We do not seem to see as many Fair Housing Act cases in the Federal circuit courts of the Midwest, so I think it’s helpful to occasionally reach outside the domain of the BLUZ to keep FHA cases on our radar.  This summary comes from the American Bar Association’s Media Alerts service.

Mount Holly Gardens Citizens in Action, Inc. v. Township of Mount Holly
(Federal 3rd Circuit Court of Appeals, September 13, 2011)

Mount Holly Township in New Jersey is pursuing a redevelopment plan which demolishes the existing homes in its Gardens neighborhood and replaces them with significantly more expensive housing units. Current and former residents of the Gardens area filed suit against the Township in the United States District Court for the District of New Jersey, arguing that the redevelopment plan violated the Fair Housing Act. The trial judge in the case granted a summary judgment in favor of the Township, holding that the residents’ statistical evidence of discrimination was inadequate and that there was no reasonable alternative to the Township’s redevelopment plan. The residents appealed this ruling to the Third Circuit Court of Appeals.

The Fair Housing Act makes it unlawful to “refuse to sell or rent . . . or otherwise make unavailable or deny, a dwelling to any person because of race… or national origin.” This provision can be violated either by intentional discrimination or by a practice that has a disparate impact on a protected class. Although no single test controls for measuring disparate impact, a disparate impact is often demonstrated by statistics.  A dwelling can be made “otherwise unavailable” for purposes of the statute by actions that limit the availability of affordable housing.

The residents asserted that the redevelopment plan had an unlawful disparate impact. Through statistical evidence presented by an expert, they showed that African-Americans would be eight times more likely to be affected by the project than Whites, and Hispanics would be eleven times more likely to be affected, because both African-Americans and Hispanics were disproportionately represented amongst those living at the housing complex being destroyed and because members of neither group would be able to afford the replacement housing being built or any other available housing in the Mount Holly area. The Third Circuit concluded that this evidence, when viewed in the light most favorable to the residents, was sufficient to satisfy the burden of creating a case which was sufficient as an initial matter to proceed to trial.

Nevertheless, even though the plaintiffs were able to establish a prima facie case, the defendant Township could still have escaped liability by offering a legitimate reason for its actions and by showing that there was no less discriminatory alternative to those actions. Here, the Third Circuit concluded that alleviating blight and unsafe living conditions was a legitimate reason for the Township’s action. However, the court also said that the Township had failed to show that there was no less discriminatory alternative to its plan. The residents’ expert argued that a more gradual redevelopment plan would have allowed existing residents to move elsewhere in the neighborhood during each stage of the redevelopment, and then move back once that stage was completed. He also argued that an approach that relied primarily on rehabilitating the existing housing stock instead of demolishing and rebuilding it would have been a practical way to produce housing units that the current residents could have afforded. Because there was an ongoing dispute between the parties as to whether the plaintiff’s proposed approach was a viable one, the Third Circuit concluded that the case should have been allowed to continue for the further development of evidence. Accordingly, the Third Circuit reversed the trial court’s grant of summary judgment for the Township and remanded the case to the lower court for further proceedings.

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City failed to establish injury in Fair Housing Act claim

Gary Taylor

by Gary Taylor

City of Kansas City v. Yarco Company and Churchill Properties
(Federal 8th Circuit Court of Appeals, November 9, 2010)

Yarco runs an apartment complex in Kansas City. Its lease agreement with its tenants reads, “CURFEW time for everyone under the age of 18 will be 8:30 p.m. nightly.” The city filed a complaint with the Department of Housing and Urban Development (HUD) alleging that the curfew discriminated against “families with children under the age of eighteen,” in violation of the Fair Housing Act (FHA).   Yarco opted for judicial proceedings, and the city sued in state court, alleging violation of the FHA. Yarco removed the case to the District Court for the Western District of Missouri on federal question grounds. Finding that the city could not make a plausible showing of discriminatory intent, the district court granted Yarco’s Motion for Judgment on the Pleadings, and the city appealed to the Federal 8th Circuit Court of Appeals.

On appeal, the 8th Circuit found that the federal courts lacked subject matter jurisdiction to hear the case, because the city could not make the requisite showing of standing.  “The constitutional minimum of standing requires an ‘injury in fact,’ a causal connection between the injury and the conduct complained of.”  The city did not allege injury to itself, but rather that “families with children and children under the age of 18 years of age are aggrieved,” and that the city has a sovereign interest in enforcing the FHA.  The 8th Circuit disagreed, noting that the FHA does not assign claims of aggrieved parties to state and local agencies.  “The city is silent about harm to its particular interests.”  The case was remanded to district court, for further remand to state court.

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St. Paul’s aggressive housing code enforcement may result in Fair Housing Act violation

Gary Taylor

by Gary Taylor

Thomas J. Gallagher, et. al v. Steve Manger, et. al.
(Federal 8th Circuit Court of Appeals, September 2, 2010)

In 1993, St. Paul, Minnesota (city) enacted a Property Maintenance Code (Code), that established “minimum maintenance standards for all structures and premises for basic equipment and facilities for light, ventilation, heating and sanitation; for safety from fire; for crime prevention; for space, use and location; and for safe and sanitary maintenance of all structures and premises.” In 2002, the City established the Department of Neighborhood Housing and Property Improvement (DNHPI) to administer and enforce the Code.  DNHPI was empowered to inspect all one- and two-family dwellings and administer and enforce laws regulating maintenance of residential property. 

Andy Dawkins was the director of DNHPI from 2002 to 2005. The evidence presented at trial showed that Dawkins favored owner-occupied housing over rental housing “for the sake of the neighborhood.” Toward that end, he increased the level of Code enforcement targeted at rental properties. In addition to responding to citizen complaints about particular properties, DNHPI inspectors conducted proactive “sweeps” to detect Code violations. Furthermore, Dawkins raised inspection standards by directing DNHPI inspectors to “code to the max,” that is, writing up every violation—not just what was called in—and writing up all the nearby properties—not just the reported properties. DNHPI also increased its Code enforcement efforts on “problem properties.”  DNHPI employed a variety of strategies for renter-occupied dwellings, including orders to correct or abate conditions, condemnations, vacant building registration, fees for excessive consumption of municipal services, tenant evictions, seizures, revocations of rental registrations, and if necessary, court actions.  DNHPI coordinated its efforts with the city police and an assistant city attorney. In addition, the city used “Code Compliance Certification” to require rental properties to meet current housing and building standards. Through this certification the city required rental property owners to acquire Code Compliance Certification if a property was remodeled or deemed a dangerous structure, a nuisance building, or vacant. Code Compliance inspections were conducted by the City’s Office of License, Inspections, and Environmental Protection, which would evaluate the building’s structure, plumbing, electrical condition, and mechanical condition. Code Compliance Certification forced property owners to undertake often-expensive renovations, especially with regard to older properties that were exempt from current building codes under Minnesota law.

Gallagher and others (Appellants) own or formerly owned rental properties in the city. They rented primarily to low-income households, and a majority of their tenants received federal rent assistance. The parties agree that African-Americans generally made up a disproportionate percentage of low-income tenants in private housing in the city, and specifically, Appellants claim that they rented to a higher-than-usual percentage of African-Americans. Appellants’ properties were subject to the City’s Housing Code enforcement from 2002 to 2005. They received code enforcement orders that, in many cases, cited between ten and twenty-five violations per property for conditions including rodent infestation, missing dead-bolt locks, inadequate sanitation facilities, inadequate heat, inoperable smoke detectors, broken or missing doors and screens, and broken or missing guardrails or handrails. Several of Appellants’ properties were designated as problem properties, subject to Code Compliance Certification, or, in a few cases, both. As a result of the City’s Housing Code enforcement, Appellants suffered increased maintenance costs, fees, condemnations, and were forced to sell properties in some
instances. 

Appellants filed several suits against the city in 2004 and 2005 that were consolidated into the present case.  Included were three claims under the Fair Housing Act (FHA) for disparate treatment, disparate impact, and retaliation. 

Disparate treatment.  For a disparate treatment claim to survive summary judgment, Appellants are required to show that the city treated Appellants less favorably than others based on race, color, religion, sex or national origin.  This is done through proving (1) direct evidence of discriminatory intent or (2) indirect evidence creating an inference of discriminatory intent.  The record showed that Dawkins made statements that demonstrate his desire and intent to reduce the amount of low-income tenants in the city; however, all of Dawkins’ statements were facially race neutral.  “Facially race-neutral statements, without more, do not demonstrate racial animus on the part of the speaker.” Merely calling these statements evidence of racial animus is not enough to create a genuine dispute of fact.  Therefore, the Court affirmed summary judgment in favor of the city.

Disparate impact.  For a disparate impact claim to survive summary judgment, Appellants must establish “that the objected-to action[s] result[ed] in . . . a disparate impact upon protected classes compared to a relevant population. Stated differently, Appellants “must show a facially neutral policy ha[d] a significant adverse impact on members of a protected minority group. Appellants are not required to show that the policy or practice was formulated with discriminatory intent.  The Court found evidence that supported the following assertions: (1) the city experienced a shortage of affordable housing; (2) racial minorities, especially African-Americans, made up a disproportionate percentage of lower-income households in the city that rely on low-income housing; (3) the city’s aggressive Code enforcement practices increased costs for property owners that rent to low-income tenants; and (4) the increased burden on rental-property owners from aggressive code enforcement resulted in less affordable housing in the city.

According to caselaw, the city must counter the showing by demonstrating that its policy or practice had “‘manifest relationship’” to a legitimate, nondiscriminatory policy objective and was necessary to the attainment of that objective.  Appellants concede that enforcement of the Code has a manifest relationship to legitimate, non-discriminatory objectives, which is providing minimum property maintenance standards to , keep housing habitable; however, caselaw also allows Appellants to show that alternative policies are available that accomplish the same objectives, yet lessen the discriminatory impact.  The Court found that Appellants met this showing by highlighting the success of the city’s previous Code enforcement program, known as PP2000.  PP2000 was based on a set of strategies that included identification of properties with a history of unresolved or repeat Code violations, meeting with the owners individually, encouraging the owners to take a more business-like approach to managing their properties, keeping closer tabs on changes of ownership, and using consistent inspectors at each property. These strategies resulted in “owners working hard to be pro active in maintaining their properties.  The Court concluded that sufficient evidence existed to warrant remand of the disparate impact claim to the District Court.

Retaliation.  The FHA prohibits retaliation against any person on account of his having exercised or enjoyed a right granted or protected by the FHA. The Court found that Appellants “vaguely asserted” that the city’s code enforcement actions were retaliatory; however, the Court refused to allow the retaliation claim to go forward because the Appellants had not identified how they exercised or encouraged others to exercise rights under the FHA or how the city retaliated.

Appellants raised nine other claims unrelated to the FHA claims, that were all dismissed by the Court.  As a result, the only claim remanded to the District Court was the disparate impact claim.

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