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Volume 24, Number 2 2015
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American Bar Association
o f
Affordable Housing
& Community
Development Law
Volume 24, Number 2 2015
Racial Justice
■
The Making of Ferguson
From Ferguson to Baltimore: The Fruits of Government-Sponsored Segregation
Welcome to the Village: An Analysis of How St. Louis County Occupancy Permit Schemes
Perpetuate Segregation and Violate the Constitution
Southeast Ferguson: The Transformation Opportunity or Is Decent and Affordable Good
Enough?
Journal of Affordable Housing & Community Development Law
Published by the American Bar Association Forum on
Affordable Housing and Community Development Law
Disparate Impact and Integration: With TDHCA v. Inclusive Communities the Supreme Court
Retains an Uneasy Status Quo
Winfield v. City of New York: Testing the Limits of Disparate-Impact Liability after Texas
Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc.
State Land Use Regulation in the Era of Affirmatively Furthering Fair Housing
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling
Introduction to Worker Cooperatives and Their Role in the Changing Economy
Journal of
Affordable Housing
& Community Development Law
VOLUME 24, NUMBER 2
2015
From the Editor-in-Chief
Opportunity to Bring About Meaningful and Long-Lasting Change
Laurie J. Hauber ....................................................................................................... v
From the Chair
Affordable Housing and Community Development Fifty Years After
the 1968 Riots
J. William Callison................................................................................................... ix
Articles
The Making of Ferguson
Richard Rothstein ................................................................................................. 165
From Ferguson to Baltimore: The Fruits of Government-Sponsored
Segregation
Richard Rothstein ................................................................................................. 205
Welcome to the Village: An Analysis of How St. Louis County
Occupancy Permit Schemes Perpetuate Segregation and Violate
the Constitution
Zachary Schmook and Lauren Verseman ............................................................. 211
Southeast Ferguson: The Transformation Opportunity or Is Decent
and Affordable Good Enough?
Sandra M. Moore.................................................................................................. 257
Disparate Impact and Integration: With TDHCA v. Inclusive
Communities the Supreme Court Retains an Uneasy Status Quo
Rigel C. Oliveri..................................................................................................... 267
Winfield v. City of New York: Testing the Limits of Disparate-Impact
Liability after Texas Department of Housing and Community
Affairs v. The Inclusive Communities Project, Inc.
Andrea McArdle ................................................................................................... 287
State Land Use Regulation in the Era of Affirmatively Furthering
Fair Housing
Thomas Silverstein ............................................................................................... 305
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling
LeighAnn M. Smith ............................................................................................. 329
Introduction to Worker Cooperatives and Their Role in the Changing
Economy
Priya Baskaran ..................................................................................................... 355
The name of one of the authors, Meryl Kanofsky, Attorney-Advisor at the U.S. Department
of Housing and Urban Development, of “HUD General Counsel Reflects on the Department’s Fifty-Year History,” which was published in Volume 24-1, was inadvertently omitted.
The editors regret the error and would like to acknowledge her contribution to the article.
The Journal of Affordable Housing & Community Development Law is the
official quarterly publication of the Forum on Affordable Housing & Community Development of the American Bar Association. It is targeted
toward attorneys and other housing and community development specialists. It provides current practical information, public policy, and scholarly
articles of professional and academic interest.
Disclaimer: The opinions expressed in the articles published in the Journal of Affordable Housing & Community Development Law are those of the
authors and do not reflect those of the American Bar Association or the
Forum on Affordable Housing and Community Development Law.
Membership: For information about membership in the Forum, please
contact the ABA Service Center, 321 North Clark Street, Chicago, Illinois
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© 2015 American Bar Association.
Journal of Affordable Housing & Community Development Law (ISSN
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ii
FORUM ON AFFORDABLE HOUSING
AND COMMUNITY DEVELOPMENT LAW
EDITORS
Editor-in-Chief
Laurie J. Hauber
Staff Attorney
Community Economic Development Program
Legal Services of Eastern Missouri, Inc.
St. Louis, Missouri
[email protected]
Associate Editors
Laura Schwarz
Reno & Cavanaugh LLP
Washington, D.C.
[email protected]
Brandon Weiss
UCLA School of Law
Los Angeles, California
[email protected]
Senior Editor
James J. Kelly, Jr.
Clinical Professor of Law
University of Notre Dame
South Bend, Indiana
[email protected]
Managing Editor
Wendy J. Smith
ABA Publishing
Chicago, Illinois
[email protected]
Forum Manager
Dawn R. Holiday
American Bar Association
Chicago, Illinois
[email protected]
iii
From the Editor-in-Chief
Opportunity to Bring About
Meaningful and Long-Lasting Change
Laurie J. Hauber
I am honored to have been asked to serve as editor-in-chief of the Journal.
It is both a daunting and exciting time to assume this position—our country has been in crisis for the past fifteen months over race relations, in part
due to the history of racially segregated housing policies in America. Yet
from this crisis there is tremendous hope and opportunity to bring about
meaningful and long-lasting change. It is imperative that all of us as lawyers, advocates, teachers, and policy makers play a role in influencing
housing policies and practices to create a more integrated and equitable
society where the overconcentration of poverty and race no longer exist.
As EIC, my goal is for the Journal to contribute to this national dialogue
and movement for change by providing a safe place for practitioners, academics, students, and others to share their views.
Before I move into a discussion of this issue, I would like to introduce
the Journal’s invaluable associate editors, Laura Schwarz and Brandon
Weiss. Both of them have been instrumental in shaping the content of
this issue and will continue to play an active role with future issues. I
also would like to thank Jim Kelly for his tireless commitment to the Journal over the past six years. Not only has he brought us compelling and relevant content, he has established practices and procedures that will benefit our current and future editorial boards. Fortunately, he has graciously
agreed to remain involved as a senior editor.
Following the May 2015 Annual Meeting in Washington, D.C., it was
clear that a special issue on racial justice would be a logical and important
follow-up, particularly in light of the thought-provoking and engaging
plenary session, “The Making of Ferguson.” Moderator Toni Jackson
very adeptly led a discussion with three nationally recognized experts
as panelists on the public policies that have shaped Ferguson and how
Ferguson represents one example of communities all around the country
facing similar challenges. Based on the plenary and several panel sessions,
Laurie J. Hauber is Program Director and Staff Attorney of the Community Economic Development Program of Legal Services of Eastern Missouri in St. Louis. She
welcomes comments from Forum members and other readers and can be reached at
[email protected].
v
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Journal of Affordable Housing
Volume 24, Number 2
2015
we were reminded that decades of intentional and inadvertent housing
policies have contributed to the racial tension that has exploded around
the country, ignited by the shooting of Michael Brown in August 2014.
As a follow-up to this lively discussion, Richard Rothstein, a panelist at
the plenary and author of the must-read, “The Making of Ferguson,”
agreed to let us reprint his report, together with his blog based on his
presentation, “From Ferguson to Baltimore: The Fruits of GovernmentSponsored Segregation.” These reprints are followed by two pieces focused
on St. Louis. In “Welcome to the Village: An Analysis of How St. Louis
County Occupancy Permit Schemes Perpetuate Segregation and Violate
the Constitution,” Zachary Schmook and Lauren Verseman provide a thorough analysis of how occupancy permit requirements in many municipalities in St. Louis County, many of which require photo identification, lead to
racial segregation and create barriers to entry. The authors compare these
local policies to occupancy permit schemes elsewhere in the country that
achieve the same policy goals without racially discriminatory effects. Sandra Moore’s report, “Southeast Ferguson: The Transformation Opportunity
or Is Decent and Affordable Good Enough?,” shares the contours of a proposal to transform the living conditions in Southeast Ferguson, the housing
developments where Michael Brown lived. She advocates the necessity of
taking a comprehensive approach toward affordable housing by including
the development of human capital. As she explains, not only physical housing needs but the social, economic, health, and educational needs of families must be fully integrated from the initial planning stages. Her recommendations for Southeast Ferguson have widespread applicability that
can be used by fair housing experts around the country. As with Richard
Rothstein’s report, these two articles, although focused on Ferguson and
St. Louis County, are relevant to other areas where intentional and unintentional policies have led to the suburbanization of poverty.
While much uncertainty remains about the recent Supreme Court decision, Texas Department of Housing and Community Affairs v. The Inclusive
Communities Project, Inc., we are fortunate that two authors were able to
contribute articles that examine its aftermath and how it could play out
in different contexts. In “Disparate Impact and Integration: With
TDHCA v. Inclusive Communities the Supreme Court Retains an Uneasy
Status Quo,” Professor Rigel Oliveri introduces the case, which was decided by the U.S. Supreme Court in June 2015. She explores the reasons
that the fair housing advocacy community has celebrated this decision, focusing on the Court’s support for the use of disparate impact theory in
cases brought under the Fair Housing Act. At the same time, she looks
at the practical application of this decision in resolving the historical tension between affordable housing development and integration. While fair
housing advocates have celebrated Inclusive Communities as a victory, Professor Andrea McArdle considers the implications of the opinion for
achieving racial justice as lower courts, housing advocates, local governments, and private developers seek to apply it to specific contexts. “Win-
From the Editor-in-Chief
vii
field v. City of New York: Testing the Limits of Disparate-Impact Liability
after Texas Department of Housing and Community Affairs v. The Inclusive
Communities Project, Inc.” describes one of the first cases that may test
the application of Inclusive Communities to other communities and suggests some of the challenges of using the logic of the decision in other
contexts.
In “State Land Use Regulation in the Era of Affirmatively Furthering
Fair Housing,” Thomas Silverstein makes the case that state governments
as a whole rather than individual state agencies are responsible for affirmatively furthering fair housing. He makes this point as it relates to the
critical role states can play in creating policies to address the impact exclusionary zoning has had in creating racially segregated communities.
LeighAnn Smith examines a different aspect of this issue in “Affirmatively
Further Fair Housing—and Potentially Further Fair Schooling,” in which
she focuses on the close relationship between well-developed housing
policies and improved educational outcomes.
In “Introduction to Worker Cooperatives and Their Role in the Changing Economy,” Priya Baskaran describes what is meant by worker cooperatives and provides brief case studies to illustrate the wide range of effective models in the United States. She explains the pivotal role these
cooperatives often play in protecting and empowering vulnerable and disenfranchised workers, many of whom are low-income persons of color.
We learn about the tremendous life-changing benefits for individual vulnerable workers as well as the impact worker cooperatives can have on
local economies.
In closing, I would like to encourage those of you who enjoy writing to
submit your ideas to us, whether a short commentary or a longer article.
For those of you who prefer to critique what others write, we welcome
your involvement in reviewing submissions. Finally, we appreciate feedback to ensure the Journal remains relevant and engaging for each of you.
Enjoy reading!
From the Chair
Affordable Housing and Community
Development Fifty Years after the 1968
Riots
J. William Callison
In the 1968 campaign for the Democratic presidential
nomination, Robert Kennedy and Eugene McCarthy
took very different positions on housing and urban
policies. Kennedy argued that the focus should be
on investment in the “ghetto” such that economic, educational and other opportunities would be available
to those who reside there. McCarthy argued that there
should be a mixing-bowl approach in which residents
would move to the opportunities. To further stylize
the positions, Kennedy would have supported things
J. William Callison
like New Markets Tax Credits (indeed his BedfordStuyvesant focused legislative program was a precursor of NMTCs) and qualified census tracts. McCarthy might have taken a
different approach and focused on disparate impact, affirmatively furthering, and financial incentives to desegregate neighborhoods.
Now, almost fifty years after that year of high tension, engagement and
tragedy (and perhaps being in our own such year), these issues and approaches continue to resonate. This issue of the Journal continues the conversation, and is extremely valuable. Thank you to the authors and editors.
All of this points to the fact that affordable housing and community development policy is inherently political in that it involves positions, negotiation and choice. It also involves pre-political virtues such as honesty,
integrity and civility. Lawyers who practice in the affordable housing
and community development area are highly competent to express positions, assist in political negotiation and facilitate choice. One might argue
that we have an obligation to do so. Without being excessively preachy,
J. William Callison ([email protected]) is a partner in the Denver office of Faegre Baker Daniels LLP where his practice includes, among other things, lowincome housing tax credit syndications, historic rehabilitation tax credits, and New
Markets Tax Credits.
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I encourage the Journal’s readers to get into, and stay in, this game. There
is no more important domestic issue and, even if the moral arc might bend
toward justice, it does not do so without the application of thought and
tension. If, as argued by Ta-Nahesi Coates, the arc bends to chaos, it is
even more important that political will be mustered for order to come.
The Forum will assist in facilitating these conversations about justice, including at February’s mid-year meeting/bootcamp in New Orleans and at
May’s Annual Meeting. Please join in.
Articles
The Making of Ferguson
Richard Rothstein
In August 2014, a Ferguson, Missouri, policeman shot and killed an unarmed black teenager. Michael Brown’s death and the resulting protests
and racial tension brought considerable attention to that town. Observers
who had not been looking closely at our evolving demographic patterns
were surprised to see ghetto conditions we had come to associate with
inner cities now duplicated in a formerly white suburban community:
racially segregated neighborhoods with high poverty and unemployment,
poor student achievement in overwhelmingly black schools, oppressive
policing, abandoned homes, and community powerlessness.
Media accounts of how Ferguson became Ferguson have typically explained that when African Americans moved to this suburb (and others
like it), “white flight” followed, abandoning the town to African Americans who were trying to escape poor schools in the city. The conventional explanation adds that African Americans moved to a few places
like Ferguson, not the suburbs generally, because prejudiced real estate
agents steered black homebuyers away from other white suburbs. And
in any event, according to this line of thinking, those other suburbs
were able to preserve their almost entirely white, upper-middle-class environments by enacting zoning rules that required only expensive single
family homes.
No doubt, private prejudice and suburbanites’ desire for homogenous
affluent environments contributed to segregation in St. Louis and other
metropolitan areas. But these explanations are too partial, and too conveniently excuse public policy from responsibility. A more powerful cause
of metropolitan segregation in St. Louis and nationwide has been the explicit intents of federal, state, and local governments to create racially segregated metropolises.
Richard Rothstein ([email protected]) is a research associate of the Economic
Policy Institute. Reprinted with permission from Richard Rothstein, The Making
of Ferguson: Public Policies at the Root of Its Troubles, Economic Policy Institute
report, October 15, 2014; www.epi.org.
165
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Many of these explicitly segregationist governmental actions ended in
the late twentieth century but continue to determine today’s racial segregation patterns. In St. Louis, these governmental policies included zoning
rules that classified white neighborhoods as residential and black neighborhoods as commercial or industrial; segregated public housing projects
that replaced integrated low-income areas; federal subsidies for suburban
development conditioned on African American exclusion; federal and
local requirements for, and enforcement of, property deeds and neighborhood agreements that prohibited resale of white-owned property to, or occupancy by, African Americans; tax favoritism for private institutions that
practiced segregation; municipal boundary lines designed to separate
black neighborhoods from white ones and to deny necessary services to
the former; real estate, insurance, and banking regulators who tolerated
and sometimes required racial segregation; and urban renewal plans
whose purpose was to shift black populations from central cities like
St. Louis to inner-ring suburbs like Ferguson.
Governmental actions in support of a segregated labor market supplemented racial housing policies and prevented most African Americans
from acquiring the economic strength to move to middle-class communities, even if they had been permitted to do so.
White flight certainly existed, and racial prejudice was certainly behind
it, but not racial prejudice alone. Government policies turned black neighborhoods into overcrowded slums and white families came to associate
African Americans with slum characteristics. White homeowners then
fled when African Americans moved nearby, fearing their new neighbors
would bring slum conditions with them.
That government, not mere private prejudice, was responsible for segregating greater St. Louis was once conventional informed opinion. A federal appeals court declared forty years ago that “segregated housing in the
St. Louis metropolitan area was . . . in large measure the result of deliberate racial discrimination in the housing market by the real estate industry
and by agencies of the federal, state, and local governments.” Similar observations accurately describe every other large metropolitan area. This
history, however, has now largely been forgotten.
When we blame private prejudice, suburban snobbishness, and black
poverty for contemporary segregation, we not only whitewash our own history but avoid considering whether new policies might instead promote an
integrated community. The federal government’s response to the Ferguson
“Troubles” has been to treat the town as an isolated embarrassment, not a
reflection of the nation in which it is embedded. The Department of Justice
is investigating the killing of teenager Michael Brown and the practices of
the Ferguson police department, but aside from the president’s concern that
perhaps we have overly militarized all police forces, no broader inferences
from the events of August 2014 are being drawn by policymakers.
The conditions that created Ferguson cannot be addressed without
remedying a century of public policies that segregated our metropolitan
The Making of Ferguson
167
landscape. Remedies are unlikely if we fail to recognize these policies and
how their effects have endured.
How Ferguson Became Ferguson
In 1968, Larman Williams was one of the first African Americans to buy
a home in the white suburb of Ferguson, Missouri. It wasn’t easy—when
he first went to see the house, the real estate agent wouldn’t show it to
him. Atypically, Mr. Williams belonged to a church with a white pastor,
who contacted the agent on Williams’s behalf, only to be told that neighbors objected to sales to Negroes. The pastor then gathered the owner and
his neighbors for a prayer meeting, after which the owner told the agent
he was no longer opposed to a black buyer.
Williams had been living in the St. Louis ghetto and working as an assistant principal of a school in Wellston, an all-black St. Louis suburb.1 His
wife, Geraldine, was a teacher in a Missouri state special education school.
Together, they could afford to live in middle-class Ferguson and hoped to
protect their three daughters from the violence of their St. Louis neighborhood. They expected that their children would get better educations in Ferguson than in Wellston because Ferguson could afford to hire more skilled
teachers, have a higher teacher-pupil ratio, and have extra resources to invest in specialists and academic enrichment programs.
Larman Williams chose Ferguson because he was vaguely familiar
with the town. Ferguson adjoined the very poor, all-black suburb of Kinloch where Williams had once lived (California Congresswoman Maxine
Waters and the comedian and activist Dick Gregory grew up there). There
was a tiny black section of Ferguson, geographically isolated from the
main town, but it was the white Ferguson that Williams had come to admire, although he had been permitted to enter only during daytime. Until
the mid-1960s, Ferguson was a “sundown town” from which African
Americans were banned after dark. Ferguson had blocked off the main
road from Kinloch with a chain and construction materials but kept a second road open during the day so housekeepers and nannies could get
from Kinloch to jobs in Ferguson.2
1. Throughout this report, the terms “all-white” and “all-black” are employed
loosely to describe communities whose populations are close to but not necessarily
precisely 100 percent white or black. For example, population counts of many “allwhite” communities include live-in black domestics working for white families.
Some “all-white” communities contain small clusters of black residents, usually
originating with domestic servants.
2. JOHN A. WRIGHT, SR., KINLOCH, MISSOURI’S FIRST BLACK CITY 39, 128 (2000) [hereinafter WRIGHT, MISSOURI’S FIRST BLACK CITY]; JOHN A. WRIGHT, SR., ST. LOUIS: DISAPPEARING BLACK COMMUNITIES 115–17 (2005); Telephone Interview with John A.
Wright (Aug. 27, 2014); COLIN GORDON, MAPPING DECLINE, ST. LOUIS AND THE FATE
OF THE AMERICAN CITY 146 (2008) [hereinafter GORDON, MAPPING DECLINE]. Suburban
Avenue was the blocked-off thoroughfare. The smaller Carson Road remained
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Kinloch and the middle-class white neighborhoods that also adjoin
Ferguson were once indistinguishably part of unincorporated St. Louis
County, but in the late 1930s, the white neighborhoods formed the city of
Berkeley to ensure their schools would remain separate from Kinloch’s.
With a much smaller tax base, the Kinloch schools were far inferior to
those in Berkeley and Ferguson, and Kinloch took on even more of the characteristics of a dilapidated ghetto. This arrangement persisted until 1975—
several years after the Williams family moved into their white Ferguson
neighborhood—when federal courts ordered Berkeley, Ferguson, and other
white towns to integrate their schools into a common district with Kinloch.3
Other African Americans followed the Williams family by purchasing
homes in Ferguson, but the African American community grew slowly. In
1970, shortly after the family moved to Ferguson, the city’s population
was less than 1 percent black. But it had some multifamily buildings
that attracted renters from St. Louis. Then, as public housing in
St. Louis was demolished in the 1970s, the St. Louis Housing Authority
gave relocation assistance to displaced families. It is likely that some of
those families moved to Ferguson and other inner-ring suburbs. By
1980, Ferguson was 14 percent black; by 1990, 25 percent; by 2000, 52 percent; and by 2010, 67 percent. Other northern and northwestern suburbs
near St. Louis were similarly experiencing an increasing share of black residents during this period. Meanwhile, suburbs beyond the first ring to the
south and west of St. Louis have remained almost all white, while the
white population share of the City of St. Louis itself has been stable and
has even started to grow. St. Louis’s downtown area and neighborhoods
west of it to the city border went from 36 percent white in 2000 to 44 percent white in 2010. Within that area, whites are now a solid majority in
some neighborhoods for the first time in decades.4
The following pages tell the story of how St. Louis became such a segregated metropolis, where racial boundaries continually change but communities’ racial homogeneity persists. Neighborhoods that appear to be integrated
open. The barricade on Suburban Avenue was removed in April 1968 after a demonstration by Kinloch residents in the wake of the assassination of Dr. Martin Luther King, Jr. See U.S. Comm’n on Civil Rights, Hearing Before the U.S. Commission on
Civil Rights Held in St. Louis, Missouri, at 610 ( Jan. 14–17, 1970) [hereinafter U.S.
Comm’n on Civil Rights, Hearing]. “Sundown towns” were once commonplace
across the entire United States. They are described in JAMES W. LOEWEN, SUNDOWN
TOWNS (2005), with more detail online at Loewen online web project. See James W.
Loewen, Sundown Towns: A Hidden Dimension of American Racism (online web project), available at http://sundown.afro.illinois.edu/sundowntowns.php.
3. WRIGHT, MISSOURI’S FIRST BLACK CITY, supra note 2. Wright Interview, supra
note 2; LOEWEN, supra note 2, at 349.
4. Data, from the U.S. Census Bureau’s American Community Survey, are for
zip codes 63101, 63103, 63104, 63108, 63110, and 63112. Whites are now a majority
in 63108 and 63110.
The Making of Ferguson
169
are almost always those in transition, either from mostly white to mostly
black (like Ferguson), or from mostly black to increasingly white (like St.
Louis’s gentrifying neighborhoods). Such population shifts in St. Louis
and other metropolitan areas maintain segregation patterns established by
public policy a century ago. Whereas twentieth century segregation took
the form of black central cities surrounded by white suburbs, twenty-first
century segregation is in transition—to whiter central cities with adjoining
black suburbs, while farther out, white suburbs encircle the black ones.
I tell this story with some hesitation. I do not mean to imply that there
is anything special about racial history in Ferguson, St. Louis, or the
St. Louis metropolitan area. Every policy and practice segregating
St. Louis over the last century was duplicated in almost every metropolis
nationwide. Yet this story of racial isolation and disadvantage, enforced
by federal, state, and local policies, many of which are no longer practiced,
is central to an appreciation of what occurred in Ferguson in August 2014
when African American protests turned violent after police shot and
killed an unarmed black eighteen-year-old. Policies that are no longer in
effect and seemingly have been reformed still cast a long shadow.
Larman and Geraldine Williams told their story at a 1970 hearing of the
U.S. Commission on Civil Rights.5 They were accompanied to the witness
table by another middle-class black integration pioneer, Adel Allen, an engineer who came to St. Louis in 1962 to work at the McDonnell Space Center. Mr. Allen was ready to quit and return home to Wichita, Kansas, after
no realtor would sell him a suburban home. He was unwilling to live in a
small apartment in the overcrowded St. Louis ghetto, apparently his only
alternative.
Allen finally succeeded in getting a white friend to make a “straw purchase” (where the true buyer was hidden) of a home in Kirkwood, another
nearly all-white St. Louis suburb; a second friend gave him $5,000 towards
the $16,000 purchase price. Allen didn’t say, but the friend’s funds were
probably needed because the Federal Housing Administration would not insure mortgages for African Americans in Kirkwood, and no bank would
issue them. Allen’s income at the time was higher than the incomes of the
thirty white homeowners on his block; he alone had a college degree as
did a previously settled black homeowner. Once Adel Allen moved in,
“for sale” signs sprung up on neighboring lawns; eight years later, when
Allen testified before the Civil Rights Commission, the racial ratio on his
block had reversed, with thirty black and two white homeowners.
Adel Allen described life in Kirkwood when he first moved there in 1962:
I don’t know if [the police] were protecting me or protecting someone
from me. We had patrols on the hour. Our streets were swept neatly,
monthly. Our trash pickups were regular and handled with dignity.
5. U.S. Comm’n on Civil Rights, Hearing, supra note 2, at 301–14.
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Volume 24, Number 2
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The street lighting was always up to par. All of the services were—the
streets were cleaned when there was snow, et cetera.
But things had changed by 1970, when Allen’s neighborhood had become
an African American outpost in an overwhelmingly (93 percent) white
South St. Louis County. Allen testified:
We now have the most inadequate lighting in the city. . . . Now we have
the people from the other sections of town that now leave their cars
parked on our streets when they want to abandon them. . . . What
they are making now is a ghetto in the process. The buildings are maintained better than they were when they were white but the city services
are much less. Other sections of the city I believe are being forced to take
sidewalks, for example. We are begging for sidewalks. Other portions of
the city are being forced to get curbs. We can’t even get them to come
out and look at the curbs.
The commission’s general counsel then asked Adel Allen if he had ever
been stopped by the local police. Allen responded,
Yes. I don’t think there’s a black man in South St. Louis County that hasn’t
been stopped at least once if he’s been here more than 2 weeks. . . . There’s
an almost automatic suspicion that goes along with being black. . . . There
is an obvious attempt toward emasculation of the black man. I’ve been
stopped, searched, and I don’t mean searched in the milder sense, I
mean laying across the hood of a car. And then told after they found nothing that my tail light bulb was burned out, or I should have dimmed my
lights, something like that.6
Nearly three years before Larman Williams and Adel Allen gave their
accounts, African Americans had rioted in scores of cities. President Lyndon Johnson then asked a group of prominent Americans, headed by Illinois Governor Otto Kerner, to investigate the riots’ causes. The Kerner
Commission concluded that conditions described by the Williamses and
Adel Allen were typical nationwide: discriminatory provision of municipal services, police practices reflecting “attempts toward emasculation of
the black man,” housing discrimination, and much more. Kerner and his
colleagues concluded that the nation was “moving toward two societies,
one black, one white—separate and unequal.”
The August Troubles in Ferguson suggest that less has changed since
1968 than many Americans think. Yet the government’s response has
been to examine Ferguson as an isolated embarrassment, not a reflection
of the nation in which it is embedded. The Department of Justice is conducting civil rights investigations into the death of Michael Brown and
into the racial practices of Ferguson’s police department. Attorney General
Eric Holder was reported to have said that anecdotes he heard on a visit to
Ferguson influenced his decision to open the more general investigation.7
6. Id. at 306.
7. Matt Apuzzo, Federal Inquiry of Ferguson Police Will Include Apparent Racial
Profiling, N.Y. TIMES, Sept. 5, 2014.
The Making of Ferguson
171
But aside from reports that the president is considering whether the federal
government has armed local police forces too heavily, there has been no
suggestion that the administration regards the recent events in Ferguson
as reflecting anything broader than unique problems of that community
or of the St. Louis metropolitan area.
Federal, State, and Local Policy Segregated Ferguson and St. Louis
Efforts of the public to understand the Troubles in Ferguson after the
shooting of unarmed black teenager Michael Brown have also been limited.
Media reports have explained that suburbs once barred African Americans
with private agreements among white homeowners (restrictive covenants),
with discriminatory practices of private real estate agents, and with racially
neutral zoning rules that restricted outer-ring suburbs to the affluent. Innerring suburbs, according to these reports, have flipped from white to black
because of “white flight.” Modern segregation, in other words, is attributable to private prejudices of white homeowners who abandoned neighborhoods when blacks arrived and to the inability of African Americans to afford communities restricted to single-family homes on large lots.8
No doubt, private prejudice and suburbanites’ desire for homogenous
middle-class environments contributed to segregation in St. Louis and
other metropolitan areas. But these explanations are too partial, and too
conveniently excuse public policy from responsibility. A more powerful
cause of metropolitan segregation nationwide was the explicit intents of
federal, state, and local governments to create racially segregated metropolises. In the case of St. Louis, these intents were expressed in mutually
reinforcing federal, state, and local policies that included:
• Racially explicit zoning decisions that designated specific ghetto
boundaries within the City of St. Louis, turning black neighborhoods
into slums;
• Segregated public housing projects that separated blacks and whites
who had previously lived in more integrated urban areas;
• Restrictive covenants, excluding African Americans from white
areas, that began as private agreements but then were adopted as explicit public policy;
• Government subsidies for white suburban developments that excluded blacks, depriving African Americans of the twentieth century
home-equity driven wealth gains reaped by whites;
• Denial of adequate municipal services in ghettos, leading to slum
conditions in black neighborhoods that reinforced whites’ conviction
that “blacks” and “slums” were synonymous;
8. N.Y. Times Editorial Bd., The Death of Michael Brown: Racial History Behind the
Ferguson Protests, N.Y. TIMES, Aug. 13, 2014; Tanzina Vega & John Eligon, Deep Tensions Rise to Surface after Ferguson Shooting, N.Y. TIMES, Aug. 17, 2014.
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• Boundary, annexation, spot zoning, and municipal incorporation
policies designed to remove African Americans from residence
near white neighborhoods or to prevent them from establishing residence near white neighborhoods;
• Urban renewal and redevelopment programs to shift ghetto locations, in the guise of cleaning up those slums;
• Government regulators’ tacit (and sometimes open) support for real
estate and financial sector policies and practices that explicitly promoted residential segregation;
• A government-sponsored dual labor market that made suburban
housing less affordable for African Americans by preventing them
from accumulating wealth needed to participate in homeownership.
That governmental action, not mere private prejudice, was responsible
for segregating greater St. Louis was once conventional informed opinion.
In 1974, a three-judge panel of the Eighth Circuit concluded that “segregated housing in the St. Louis metropolitan area was . . . in large measure
the result of deliberate racial discrimination in the housing market by the
real estate industry and by agencies of the federal, state, and local governments.” Similar observations accurately describe every other large metropolitan area; in St. Louis, the Department of Justice stipulated to this truth
but took no action in response. In 1980, a federal court order included an
instruction for the state, county, and city governments to devise plans to
integrate schools by integrating housing. Public officials ignored this aspect of the order, devising only a voluntary busing plan to integrate
schools, but no programs to combat housing segregation.9
Although policies to impose segregation are no longer explicit, their effects endure in neighborhoods segregated by race in the North, South,
East, and West. When we blame private prejudice and snobbishness for
contemporary segregation, we not only whitewash our own history, but
avoid considering whether new policies might instead promote an integrated community.
Examining the Distinct Public Policies
That Have Enforced Segregation
From the Civil War to the early twentieth century, the black population
of St. Louis was small, but somewhat integrated with white low-wage
workers and their families, including European immigrants. There were
blocks with greater or lesser concentrations of African American families,
9. United States v. City of Black Jack, 508 F.2d 1179, 1186 (8th Cir. 1974); Liddell
v. Bd. of Educ., 491 F. Supp. 351, 354 (E.D. Mo. 1980); Gary Orfield, The Housing Issues
in the St. Louis Case: A Report to Judge William L. Hungate, U.S. District Court of Eastern
Missouri 3–4, 9, 14 (Apr. 21, 1981) (reporting on Liddell v. Bd. of Educ., 491 F. Supp.
351 (E.D. Mo. 1980)).
The Making of Ferguson
173
but neighborhoods as a whole were integrated; blocks with greater concentrations of African Americans were interspersed with other blocks concentrating various white immigrant and ethnic groups.10
But then, as elsewhere in the nation, segregationist sentiment and activity increased nationwide, reflected by the presidential election of the Virginia native, New Jersey governor Woodrow Wilson, who succeeded the
more moderate (on racial matters) William Howard Taft. Wilson not only
took steps to segregate the federal civil service, but set a tone that encouraged antiblack activities across the land.
Racial Zoning
In 1916, the St. Louis Real Estate Exchange, the city’s Realtors’ association, sponsored an organization to draft and campaign for a ballot referendum to prohibit blacks from moving onto blocks where at least 75 percent of existing residents were white (and whites from moving onto
blocks where at least 75 percent were black). The referendum passed,
but before it could have much effect, the U.S. Supreme Court overturned
a similar ordinance in Louisville, Kentucky. The court’s 1917 decision
didn’t rely primarily on a claim that a racial zoning ordinance violated
equal protection principles, but rather that it infringed on property owners’ rights to sell to whomever they wished.11
Some other cities, mostly in the South, ignored the court’s ruling and
continued to enforce racial zoning ordinances, but St. Louis, like many
others, took a different approach. Before the court’s ruling, it had begun
to develop zoning rules that defined boundaries of industrial, commercial,
multifamily residential, and single-family residential property. It developed these new rules with racial purposes unhidden, although race was
not written into the text of the zoning rules themselves.
St. Louis appointed its first City Plan Commission in 1911 and hired
Harland Bartholomew as its full-time planning engineer in 1916. His assignment was to supervise a survey of every building in the city to determine into which of the property types it fell and to propose rules and
maps to prevent future multifamily, industrial, or commercial development from impinging on single-family neighborhoods. A neighborhood
filled with single-family homes whose deeds prohibited black residence
or prohibited resale to blacks was almost certain to receive a “first residential” zoning designation that prohibited future construction of multifamily, commercial, or industrial buildings.
According to Bartholomew, a St. Louis zoning goal was to “preserv[e] the
more desirable residential neighborhoods” and to prevent movement into
10. Joseph Heathcott, Black Archipelago: Politics and Civic Life in the Jim Crow City,
38(3) J. SOC. HISTORY 708 (2005) [hereinafter Heathcott, Black Archipelago].
11. Id. at 714–16; GORDON, MAPPING DECLINE, supra note 2, at 70–71; Buchanan v.
Warley, 245 U.S. 60 (1917).
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“finer residential districts . . . by colored people.” He noted that without a
previous zoning ordinance, such neighborhoods have become run down;
“where values have depreciated, homes are either vacant or occupied by colored people.” The survey Bartholomew supervised prior to drafting the new
zoning rules collected, among other information, the race of occupants of
each residential building in the city, and Bartholomew estimated the future
direction of African American population expansion so that the zoning ordinance could attempt to direct and circumscribe it. The Bartholomew Commission’s first zoning ordinance was adopted in 1919, two years after the Supreme Court banned explicit racial zoning, but the St. Louis ordinance, with
no explicit mention of race, was apparently in compliance. The new ordinance designated zones for future industrial development if they were in
or adjacent to neighborhoods with substantial black populations.
Once the first zoning ordinance was adopted, City Plan Commission
meetings were consumed with requests for variances. Race was an important consideration. One meeting in 1919 was devoted to a proposal to
reclassify a single-family property from first residential to commercial because the area to the south had been “invaded by negroes.” Bartholomew
persuaded the commission to deny the variance because, he said, keeping
the first residential designation would preserve homes in the area as unaffordable to blacks and thus stop the encroachment. On other occasions
the commission changed an area’s zoning from residential to industrial if
black families began to move into it. In 1927, violating its normal policy,
the commission placed a park and playground in an industrial, not residential area, in hopes that this placement would draw black families to
seek housing nearby.
Similar policy continued through the middle of the twentieth century.
In a 1942 City Plan Commission meeting, commissioners explained that
they were zoning an area in a commercial strip as second residential (multifamily) because it could then “develop into a favorable dwelling district
for Colored people.” In 1948, commissioners explained that they were designating a U-shaped industrial zone to create a buffer between black residences inside the U and white residences outside it.12
In addition to promoting segregation, zoning decisions contributed to
degrading St. Louis’s African American neighborhoods into slums. Not
only were these neighborhoods zoned to permit industry, even polluting
industry, but taverns, liquor stores, nightclubs, and houses of prostitution
were permitted to locate in African American neighborhoods, but prohibited as violations of the zoning ordinance in residential districts elsewhere. Houses in residential districts could not legally be subdivided,
12. Barbara J. Flint, Zoning and Residential Segregation: A Social and Physical
History, 1910–1940 at 49–50, 93, 103, 114, 119, 207, 345–47, 352–53, 355 (unpublished
Ph.D. dissertation, University of Chicago) (on file with author); GORDON, MAPPING
DECLINE, supra note 2, at 122–24.
The Making of Ferguson
175
but those in industrial districts could be, and with African Americans restricted from all but a few neighborhoods, rooming houses sprung up to
accommodate the overcrowded black population. Once the Federal Housing Administration (FHA) was established during the New Deal, these
zoning practices rendered African American homes ineligible for mortgage guarantees because FHA underwriting principles considered “inharmonious uses” of neighboring properties to threaten the security of property value. But such homes were eligible a quarter century later for slum
clearance with urban renewal funds, zoning practices having made them
unfit for habitation.13
Urban zoning set patterns for subsequent zoning in the suburbs. Jurisdictions farthest from the City of St. Louis typically were zoned for singlefamily homes with large lots only. Communities closer to the city were
more likely to have zones for multifamily residences. Some inner-ring
suburbs, like Ferguson, were initially zoned only for single-family
homes, although without requirements for large minimum lot sizes that
would make them unaffordable to working and lower-middle-class families. During the World War II housing shortage, Ferguson and towns like
it allowed some multifamily construction, although when Ferguson revised its zoning ordinance a decade after the war, it eliminated any provision for multifamily units. Other inner-ring suburbs, however, increasingly permitted apartment development because of the increased tax
revenue the higher assessment on such properties would bring.14
Suburban zoning rules were on their face race-neutral, and the communities using them did not have nationally prominent planners like Harland Bartholomew to boast about their racial implications. In a few
cases, scholars have unearthed suburban planning documents with similarities to Bartholomew’s public pronouncements about race. In 1940, for
example, officials in Kirkwood (the town to which Adel Allen later
moved) prepared a document referring to “several scattered Negro developments” and recommending that this be “corrected” in the city plan.
Urging that ways be found to shift black families back to the City of
St. Louis, the planning document stated it was “much more desirable
for all of the colored families to be grouped in one major section where
they could be provided with their own school and recreational facilities,
churches, and stores.”15
A 1963 planning document in Webster Groves, a suburb between the
City of St. Louis and Kirkwood, identified commercial and multifamily
zones as “100% Negro or very close” and took steps to prevent enlargement of a “developing ghetto” across a rail bed it termed the “Great
13. Flint, supra note 12, at 355–57, 394; GORDON, MAPPING DECLINE, supra note 2, at
125–28.
14. GORDON, MAPPING DECLINE, supra note 2, at 134, 137–38, 144–45.
15. Id.
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Divide.”16 Such documents were exceptions to suburban zoning plans
that were apparently racially innocuous. But it is difficult to consider
St. Louis County’s exclusive suburban zoning as merely an expression
of economic snobbishness if we keep in mind the racial motivation behind
the earliest urban zoning policies, both in St. Louis and elsewhere.
Segregated Public Housing
Zoning rules in St. Louis could affect future development, but had little
impact on previously integrated neighborhoods. To eliminate these, federal and city officials employed early public housing development to increase and solidify the city’s segregation.
At the beginning of the New Deal, Congress adopted a public housing
program to simultaneously put Americans back to work and address a national housing shortage. Part of the National Industrial Recovery Act, the
Public Works Administration (PWA) housing efforts were headed by a
confidante of President Franklin D. Roosevelt, Harold Ickes, who specified
a “neighborhood composition rule”: public housing projects could not
alter the racial composition of neighborhoods in which they were located.
Projects located in white areas could house only white tenants, those in
black areas could house only black tenants, and projects in integrated
neighborhoods could be integrated. Going further, the PWA segregated
projects even in neighborhoods where there was no such previous pattern.
As Roosevelt’s biographer James MacGregor Burns concluded, cities “in
which prewar segregation was virtually unknown . . . received segregated
housing, starting a new ‘local custom’ still in force many years later.” In its
segregation policy, the PWA was consistent with other New Deal agencies. The Works Progress Administration, for example, segregated its
work crews in St. Louis and elsewhere in the nation.17
At first, the PWA attempted to enlist private developers to build federally subsidized but privately owned nonprofit housing. It was not successful because few builders could be induced, even with subsidies, to provide housing for low-income families. Only seven of these “limited
dividend” projects were built nationwide, one of which, Neighborhood
Gardens, was placed in St. Louis. Each of the seven was reserved for
whites only, and Neighborhood Gardens was no exception, designed to
16. Id. at 147.
17. ARNOLD R. HIRSCH, MAKING THE SECOND GHETTO: RACE AND HOUSING IN CHICAGO,
1940–1960 14 (1983) [hereinafter HIRSCH, MAKING THE SECOND GHETTO]; Arnold R.
Hirsch, Choosing Segregation Federal Housing Policy Between Shelley and Brown in
FROM TENEMENTS TO THE TAYLOR HOMES: IN SEARCH OF AN URBAN HOUSING POLICY IN
TWENTIETH CENTURY AMERICA 209 (John F. Bauman, Roger Biles & Kristin M. Szylvian
eds., 2000) [hereinafter Hirsch, Choosing Segregation]; GAIL RADFORD, MODERN HOUSING FOR AMERICA: POLICY STRUGGLES IN THE NEW DEAL ERA 89–91 (1996); James MacGregor Burns, ROOSEVELT: THE SOLDIER OF FREEDOM, 1940–1945 466 (1970); Heathcott,
Black Archipelago, supra note 10, at 712.
The Making of Ferguson
177
provide housing for white workers who could walk from the project to
jobs in the downtown garment district.18
Following the failure of nonprofit subsidies to spur a housing boom,
the PWA changed its approach to publicly financed and publicly owned
housing. In 1934, the City of St. Louis proposed to raze the DeSoto-Carr
area, a racially integrated low-income tenement neighborhood on the
near-north side whose population was about 55 percent white and 45 percent black. The city said it would construct a whites-only low-rise project
for two-parent families with steady employment in DeSoto-Carr. When
the PWA objected to the city’s failure to accommodate African Americans,
St. Louis proposed an additional blacks-only project removed from the
white one, but also in the previously integrated area. This met the federal
government’s conditions, insisted upon by liberals and civil rights leaders,
for nondiscriminatory funding.19
Bureaucratic obstacles delayed construction until 1940. During the interim, public housing needs grew as thousands of rural black and white
workers flocked from the Ozarks to take jobs in St. Louis’s rapidly growing armaments industry. War workers packed themselves into already
crowded tenements in central St. Louis, subdividing apartments, converting them to rooming houses, or simply taking in boarders. In some cases,
the federal government placed segregated Quonset huts near defense
plants as dormitories for workers. The apartment vacancy rate in
St. Louis during World War II fell below one percent.20
The city revised its public housing plans and designated the DeSotoCarr project (renamed Carr Square Village) for African Americans only,
with the separate project (called Clinton-Peabody) designated for whites
south of downtown. The area cleared for Clinton-Peabody was also integrated, but with fewer African Americans than the DeSoto-Carr area had
contained. The segregated projects were opened in 1942 with initial preferences for war workers and later for veterans.21
18. RADFORD, supra note 17, at 93, 97; Joseph Heathcott, ‘In the Nature of a Clinic,’
The Design of Early Public Housing in St. Louis, 70 (1) J. SOC’Y OF ARCHITECTURAL HISTORIANS 87–88 (2011) [hereinafter Heathcott, Design of Early Public Housing]. Two of
the whites-only limited dividend projects were in New York City (one in the Bronx
and the other in Queens). The other four (in addition to Neighborhood Gardens in
St. Louis) were in central Virginia (near Roanoke); Euclid, Ohio (near Cleveland);
Philadelphia; and Raleigh, North Carolina.
19. Heathcott, Design of Early Public Housing, supra note 18, at 89–90, 94.
20. Joseph Heathcott, The City Quietly Remade: National Programs and Local Agendas in the Movement to Clear the Slums, 1942–1952, 34 (2) J. URB. HIST. 222, 224 (2008)
[hereinafter Heathcott, The City Quietly Remade].
21. Heathcott, Design of Early Public Housing, supra note 18, at 89–90; Davis v. St.
Louis Hous. Auth., Civ. No. 8637 (E.D. Mo. 1955) (reported in 1 Race Relations Law
Reporter 354–55 (1956)).
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With a continuing critical nationwide civilian housing shortage after
World War II, newly elected President Harry Truman proposed a massive
public housing effort. Republican opponents of the bill proposed a “poison pill” amendment to prohibit racial discrimination in public housing.
They knew that if their amendment were adopted, southern Democrats
who otherwise supported public housing would kill the legislation. Liberal proponents, led by Illinois Senator Paul Douglas, had to choose between enacting a segregated public housing program or no program at
all. On the Senate floor, Douglas said
I should like to point out to my Negro friends what a large amount of housing they will get under this act. . . I am ready to appeal to history and to
time that it is in the best interests of the Negro race that we carry through
the housing program as planned, rather than put in the bill an amendment
which will inevitably defeat it.
The Senate and House each then considered and defeated the poison
pills and the 1949 Housing Act, with its provisions for federal finance
of public housing, was adopted. It permitted local authorities to design
separate projects for blacks and whites or to segregate blacks and whites
within projects. The federal government did not require segregation, but
neither did it require integrated projects. It financed each, respecting
local policy.22
St. Louis then applied for and received federal funds for segregated
public housing under the new program. In 1952, a second project for
whites only, the John J. Cochran Garden Apartments, was opened on
land that, like Carr Square and Peabody-Clinton, had been cleared of
both black and white residences.23
As Joseph Heathcott, a scholar of the St. Louis urban landscape, has observed (referring to Carr Square Village and Clinton-Peabody), “the City
Plan Commission, the St. Louis Housing Authority, the mayor’s office,
and the Board of Aldermen conspired to transform two multiethnic
mixed-race neighborhoods—one on the north side and one on the south
side—into racially homogenous projects.”24
Several African American World War II veterans (with other low-wage
workers) sued the St. Louis Housing Authority when they were denied
placements solely because of their race in the more desirable whitesonly Clinton-Peabody and Cochran Garden apartments. In 1955, a federal
judge concluded that the conspiracy to segregate public housing extended
beyond these local officials: “The limitation of the Clinton-Peabody
22. RICHARD O. DAVIES, HOUSING REFORM DURING THE TRUMAN ADMINISTRATION 108
(1966); Elizabeth K. Julian & Michael M. Daniel, Separate and Unequal—The Root and
Branch of Public Housing Segregation, 23 CLEARINGHOUSE REV. 668–69 (1989).
23. Heathcott, Design of Early Public Housing, supra note 18, at 89–90; Davis, Civ.
No. 8637, at 355.
24. Heathcott, Design of Early Public Housing, supra note 18, at 99.
The Making of Ferguson
179
Terrace Project and the John J. Cochran Project to white occupancy was
approved by the [federal government’s] Public Housing Administration,
conditioned upon the provision of [separate] facilities for non-white occupancy.” The judge ordered the St. Louis Housing Authority to cease segregating its projects by race and to admit qualified black families to the
two white projects.25 But the ruling came too late. By the 1950s, federal
policy to move working-class whites to homeownership in the suburbs
was in full swing. Clinton-Peabody and Cochran Gardens gradually increased their share of African Americans as white residents departed,
many with mortgages guaranteed by the FHA or Veterans Administration
(VA), for suburbs from which blacks were excluded.
In the early 1950s, St. Louis began construction of the Pruitt–Igoe towers and other high-rises to house the African American poor. Pruitt had
been intended for blacks and Igoe for whites, but by the time the projects
opened in 1955–56, few whites were still interested in urban public housing; there were so many inexpensive options for them in south St. Louis
and in the suburbs. Igoe then filled with black families as well.26
By the 1960s, Pruitt–Igoe became a national symbol of dysfunctional
public housing, high-rise towers packed with welfare-dependent families,
frequently headed by single mothers. Youth gang activity was pervasive.
The Housing Authority’s neglect of maintenance and facilities exacerbated matters. The Pruitt–Igoe vertical ghettos discredited the entire national public housing program, giving the lie to Senator Douglas’s promise that it would be in the “best interests of the Negro race that we carry
through” with a segregated housing program. The combination of deteriorating social conditions and public disinvestment made life in the projects so untenable that the federal government evicted all residents and dynamited the thirty-three towers, beginning in 1972.27
Restrictive Covenants
When St. Louis leaders developed zoning rules to control black population movement in the second decade of the twentieth century, private
real estate agents and individual white homeowners began to attach
clauses to property deeds and adopt neighborhood contracts to prevent
African Americans from moving into their environs. Called “restrictive
covenants,” the first in St. Louis was recorded in 1910.28 Later, covenants
were promoted nationwide by the National Association of Real Estate
Boards, which provided model language. In St. Louis, the Real Estate Exchange provided a “uniform restriction agreement” for neighborhood
25. Davis, Civ. No. 8637, at 355.
26. Orfield, supra note 9, at 37–38; GORDON, MAPPING DECLINE, supra note 2, at 99.
27. GORDON, MAPPING DECLINE, supra note 2, at 12, 176.
28. Gary Tobin, Deposition, Liddell v. Bd. of Educ. of the City of St. Louis, Civil
Action 72-100C (4) 20 (E.D. Mo. Dec. 13, 1982).
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associations to use. By 1945, about 300 neighborhood covenants were in
force.29
The legal instruments took two forms. In one, homebuilders attached
clauses to property deeds committing the first and subsequent buyers of
a house never to sell that property to an African American or permit
the property to be occupied by one. Exceptions were typically made for
live-in domestic servants. In the other, associations of homeowners in
particular neighborhoods signed mutual agreements that no member of
the association would sell to, or permit occupancy by, an African
American—again, with a similar exception. The second form was easier
to enforce because any signatory had standing to compel compliance.
The Real Estate Exchange itself was typically a signatory, and it frequently
initiated litigation to prevent a breach.
Courts in Missouri and elsewhere supported this segregation by consistently ordering the cancellation of sales made in violation of such agreements. But if initial sales in an all-white neighborhood proceeded without
challenge, courts frequently refused to prohibit subsequent sales because
the all-white character of the neighborhood had already been lost, and the
intent of an association to preserve segregation could no longer be fulfilled by enforcing the covenant. This legal theory required the Real Estate
Exchange and other white activists to be perfectly vigilant, something
rarely achieved. Once sales to African Americans proceeded without challenge, neighborhoods bordering overcrowded ghetto areas quickly
flipped from white to black.
Public policy was deeply entangled in restrictive covenants, and not
only because Harland Bartholomew’s City Plan Commission considered
their existence to be a factor supporting a neighborhood’s first-residential
classification.30 The federal government also became entangled in racial
covenants because so many of them were promoted by institutions subsidized by the government with tax exemptions and tax deductibility.
As the U.S. Supreme Court found in an unrelated case in 1983, the Internal Revenue Service has the power to revoke the tax favoritism of institutions practicing racial discrimination. Although that case involved a
seemingly tangential aspect of the institution’s mission and practice
(Bob Jones University banned interracial dating by its students), the
court found this sufficient to justify the IRS revocation. The court did
not reach the question of whether the IRS is compelled by the Constitution
and law to withhold tax exemption from institutions that are heavily involved in promoting racial discrimination, but such an interpretation
29. GORDON, MAPPING DECLINE, supra note 2, at 71, 75, 79; Colin Gordon, Mapping
Decline, St. Louis and the American City (online project), Documents, doc. 1, available
at http://mappingdecline.lib.uiowa.edu/.
30. Flint, supra note 12, at 352–53.
The Making of Ferguson
181
seems to follow. The court observed that the Internal Revenue Code intends that “an institution seeking tax-exempt status must serve a public
purpose and not be contrary to established public policy.”31 IRS regulations specifically authorize charitable deductions for organizations that
“eliminate prejudice and discrimination” and “defend human and civil
rights secured by law.”32
Inasmuch as the right of African Americans to purchase residential
property without discrimination had been secured by law since 1866,33
it follows that granting tax-exempt status to churches or other institutions promoting restrictive covenants constituted improper federal support, as it violated established public policy. The government, however,
never questioned the prominent involvement of tax-exempt churches,
hospitals, and universities in enforcing segregation. If church leaders
had to choose between their tax-exemptions and racial exclusion, there
might have been many fewer covenants blanketing white St. Louis and
other cities.
Although the Supreme Court had upheld the legality of covenants
themselves in 1926, it found in 1948 that state courts could not enforce
them without violating the Fourteenth Amendment. The decision came
in Detroit and St. Louis cases (although many similar cases had been pursued elsewhere, with the greatest frequency in Los Angeles) and the decision has come to be known by the St. Louis case, Shelley v. Kraemer.34 And
this case was particularly interesting because of the role played by taxexempt institutions.
The case arose from the objections of a white St. Louis homeowner,
Fern Kraemer, to the purchase of a home near hers by the African American Shelley family. The area had been covered by a restrictive covenant
organized by a neighborhood group, the Marcus Avenue Improvement
Association. The association, including 2,000 property owners, was sponsored by the Cote Brilliante Presbyterian Church, whose trustees provided
funds from the church treasury to finance Ms. Kraemer’s lawsuit to
enforce the covenant. Another church, the Waggoner Place Methodist
31. Bob Jones Univ. v. United States, 461 U.S. 574, 586 (1983).
32. William T. Coleman, Jr., Brief of Amicus Curiae 67, Bob Jones Univ., 461 U.S.
574 (citing Treas. Reg. § 1.501(c)(3)-1(d)(2)).
33. In 1968, the U.S. Supreme Court in Jones v. Mayer affirmed that the 1866
Civil Rights Acts had properly enforced the Thirteenth Amendment by prohibiting
discrimination in private housing sales. However, the Civil Rights Acts did not
provide an enforcement mechanism for this prohibition, so the only recourse for
African Americans claiming private discrimination was an individual civil lawsuit.
The Fair Housing Act, passed by Congress also in 1968, provided for limited enforcement of a ban on racial discrimination in the private housing market. Jones
v. Alfred H. Mayer Co., 392 U.S. 409 (1968).
34. 334 U.S. 1 (1948).
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Episcopal Church South, was also a signatory to the covenant; its pastor
had defended the covenant in court in an earlier (1942) case.35
Restrictive covenants also became an expression of public policy
when, in the early New Deal, the Federal Housing Administration subsidized suburbanization and made the existence of racial covenants an
important condition of mortgage insurance. Beginning in 1934 and continuing thereafter, FHA underwriting manuals stated that “protection
against some adverse influences is obtained by the proper zoning and
deed restrictions that prevail in a neighborhood” and elaborated that
“the more important among the adverse influential factors are the ingress of undesirable racial or nationality groups.”36 As public housing
helped define the north side of St. Louis as black and the south side as
white, this FHA policy began a half-century of federal government effort
to move St. Louis’s white families to newly growing exclusively white
suburbs.
Subsidization of Suburban Development for Whites Only
The FHA not only insured individual mortgages of white homeowners. Perhaps even more important, it effectively financed the construction of entire segregated subdivisions by making advance commitments to builders that met FHA construction standards for materials
used, lot size, setback from street, and location in a properly zoned
neighborhood that prohibited industry or commercial development
threatening home values. Aware that the Supreme Court had prohibited
explicit racial zoning, the FHA took the position that the presence of African Americans in nearby neighborhoods was nonetheless a consideration that could threaten FHA insurability and that racial exclusion in
the insured subdivision itself could be accomplished if deeds in the subdivision included mutually obligatory clauses prohibiting African Americans from residence.37
35. Cote Brilliante Presbyterian Church, Our History; GORDON, MAPPING DECLINE,
supra note 2, at 79; WRIGHT, MISSOURI’S FIRST BLACK CITY, supra note 2, at 77; HERMAN
A. LONG & CHARLES S. JOHNSON, PEOPLE VS. PROPERTY: RACE RESTRICTIVE COVENANTS IN
HOUSING 82 (1947). The earlier case (1942) arose from the attempt of African American attorney Scovel Richardson to purchase a home in the neighborhood. Fifteen
years later, Richardson was one of the first African Americans appointed to the
federal judiciary.
36. FEDERAL HOUSING ADMINISTRATION, UNDERWRITING MANUAL: UNDERWRITING AND
VALUATION PROCEDURE UNDER TITLE II OF THE NATIONAL HOUSING ACT 1934 (excerpts
in Richard C. Stearns, Memorandum, Racial Content of FHA Underwriting Practices 1934–1962).
37. Charles D. Clark, Federal Housing Administration Standards for Land Subdivision, 4(5) J. AM. INST. PLANNERS 111–12 (1938); KENNETH T. JACKSON, CRABGRASS FRONTIER 238 (1985).
The Making of Ferguson
183
Subdivision developers that obtained such commitments could use
them to persuade bankers to issue low-interest construction loans. Developers could then also assure potential (white) buyers that their homes
were FHA-approved and that FHA (and later VA) mortgages would be
available at low interest rates and with no or limited down payments.
The FHA’s policy was to prefer homebuilding priced for lower-middleto middle-class buyers.38
At its peak in 1943 when civilian construction was limited, the FHA financed 80 percent of all private home construction nationwide. During
the postwar period, it dropped to one-third.39 But even when subdivisions
were not built with advance FHA commitments, individual homebuyers
needed access to FHA or VA insured mortgages, so similar standards
for new construction pertained. Subdivisions throughout St. Louis County
were developed in this way, with FHA advance commitments for the
builders and a resulting whites-only sale policy.
The FHA’s suburban whites-only policy continued through the postwar housing boom that lasted through the mid-1960s. In 1947, the FHA
sanitized its manual, removing literal race references but still demanding
“compatibility among neighborhood occupants” for mortgage guarantees.
“Neighborhoods constituted of families that are congenial,” the FHA
manual explained, “. . . generally exhibit strong appeal and stability.”40
This very slightly sanitized language suggested no change in policy,
and the FHA continued to finance builders with open policies of racial exclusion for another fifteen years.
These practices of the FHA were once well known, but have now
mostly been forgotten, although their effects persist. In 1959, the U.S. on
Civil Rights’ annual report summarized how the suburban landscape,
by then firmly established, was created:
Nonwhite home buyers and renters have not, however enjoyed the benefits
of FHA mortgage insurance to the same extent as whites. According to testimony given before this Commission, less than 2 percent of the total number
of new homes insured by FHA since 1946 have been available to minorities.
Most of this housing has been all-Negro developments in the South. . . .
Although the relatively low participation [of] nonwhites has in part been
due to their lower incomes, FHA bears some responsibility. Of great significance in this respect are FHA’s policies with regard to the discriminatory
38. JACKSON, supra note 37, at 207–08, 238; RADFORD, supra note 17, at 193–94;
MARC A. WEISS, THE RISE OF THE COMMUNITY BUILDERS: THE AMERICAN REAL ESTATE INDUSTRY AND URBAN LAND PLANNING 145–47, 152–54, 156 (1987).
39. WEISS, supra note 38, at 154.
40. FEDERAL HOUSING ADMINISTRATION, UNDERWRITING MANUAL: UNDERWRITING AND
VALUATION PROCEDURE UNDER TITLE II SECTION 203 OF THE NATIONAL HOUSING ACT (excerpts in Richard C. Stearns, Memorandum, Racial Content of FHA Underwriting
Practices 1934–1962).
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practices toward Negroes of real estate boards, home builders and lending
institutions.
For the first 16 years of its life, FHA itself actually encouraged the use of
racially restrictive covenants. It not only acquiesced in their use but in
fact contributed to perfecting them. The 1938 FHA Underwriting Manual,
which contained the criteria used in determining eligibility for receipt of
FHA benefits, warned against insuring property that would be used by “inharmonious racial groups,” and declared that for stability of a neighborhood, “properties shall continue to be occupied by the same social and racial classes.” The Manual contained a model restrictive covenant which
FHA strongly recommended for inclusion in all sales contracts. Furthermore, FHA instructed land valuators that among their considerations
should be a determination as to whether “effective restrictive covenants
are recorded against the entire tract, since these provide the surest protection against undesirable encroachment and inharmonious use. To be most
effective, deed restrictions should be imposed upon all land in the immediate environment of the subject location.” [Many housing experts believe
that while FHA did not invent the restrictive covenant, its official sanction
played a large role in the spread of racial restrictions, particularly in newly
developed areas.].
FHA continued this practice of encouraging racially restricted housing developments until 1950, despite mounting pressure from civic organizations,
State and local antidiscrimination commissions and other groups to abandon the practice. The only change made by FHA during this period was
a softening of the wording in the Underwriting Manual in 1947. This change
in language amounted to no real change in policy, however. . . .
While the unenforceability of racial restrictive covenants [following the Supreme Court’s 1948 Shelley ruling] has undoubtedly increased Negro participation in FHA’s insurance programs by making available to them additional existing housing, it has done little in the way of new housing or of
apartment units in suburban and outlying areas. There the discriminatory
practices of the real estate business, home building industry, and financial
institutions continue for the most part unabated. FHA insurance remains
available to builders with known policies of discrimination. With the
help of FHA financing, all-white suburbs have been constructed in recent
years around almost every large city. Huge FHA-insured projects that become whole new residential towns have been built with an acknowledged
policy of excluding Negroes.41
In the St. Louis metropolitan area as well as elsewhere, the FHA and
VA continued to promote racial restrictions in their loan insurance programs until the 1960s.42
The FHA seal of approval guaranteed that a subdivision was for whites
only. Advertisements for white suburban subdivisions were commonplace
41. U.S. COMM’N ON CIVIL RIGHTS, REPORT OF THE UNITED STATES COMMISSION ON CIVIL
RIGHTS 463–65 (1959).
42. Tobin, supra note 28, 55–56, 103.
The Making of Ferguson
185
in St. Louis (and nationwide). By marketing an “FHA financed” subdivision
in Ferguson and an “FHA approved” Peaseway subdivision in Kirkwood,
ads in a booklet published by the Home Builders’ Association of Greater St.
Louis signalled the development’s whites-only character. Other advertisements in the booklet touted a “Veterans’ Preference” subdivision called
Woodson, located in Overland (a few towns south of Ferguson); and
“FHA terms” for houses in Webster Groves.43
In that era, the St. Louis-area builder with the most liberal attitudes on
racial matters was Charles Vatterott, a devout Catholic, who obtained
FHA guarantees for St. Ann, a subdivision (later an incorporated town)
he started building in 1943. Vatterott intended for St. Ann to be a community for lower-middle-class Catholics, particularly returning war veterans,
although he did not prohibit sales to non-Catholic whites, but only to
blacks, as the FHA expected. As was conventional for FHA-financed subdivisions in St. Louis County, deeds on St. Ann homes stated that “no lot
or portion of a lot or building erected thereon shall be sold, leased, rented
or occupied by any other than those of the Caucasian race.”
Vatterott’s limited liberalism was expressed in an insistence, over residents’ opposition, that the golf course he built as part of the St. Ann development be open to nonresident African Americans. He built a separate,
lower-quality subdivision for African Americans, De Porres in the town of
Breckenridge Hills, a few miles away (but not adjacent to) St. Ann. The
buyers had incomes and occupations—from truck drivers to chemists—
similar to those of St. Ann buyers. Had they been permitted to do so by
the FHA and its merchant builders, they could have purchased homes
in St. Ann or in any of the many other subdivisions that were built for
whites in St. Louis County in the postwar period.
Vatterott could not get FHA financing for De Porres because it was intended for African Americans. As a result, many of the homes were
rented, and Vatterott set up a special savings plan by which residents
could put aside money towards a purchase of their homes without an
FHA or VA mortgage. The De Porres development for African Americans
also lacked the full community facilities—parks and playgrounds—that
Vatterott had built into the St. Ann subdivision.44
As noted earlier, the federal and local governments in 1952 were still
operating public housing projects restricted to lower-middle-class white
families. The option of these families to remain in public housing was
an impediment to suburban home sales. The Home Builders Association
43. HOME BUILDERS ASS’N OF GREATER ST. LOUIS, THE BUILDERS BOOK OF HOMES, ‘ALL
NEW IN 52,’ 18, 19, 27, 28 (1952).
44. Cornelia F. Sexauer, Catholic Capitalism: Charles Vatterott, Civil Rights,
and Suburbanization in St. Louis and the Nation, 1919–1971 180, 199, 211, 215,
226–28, 232 (May 6, 2003) (unpublished Ph.D. dissertation, University of Cincinnati) (on file with author).
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booklet denounced public housing (because it “shackles private builders
who can’t compete with the government’s half-price product”) and
included a barely disguised racial appeal: “IN YOUR OWN HOME
you can pick your own neighbors, IN PUBLIC HOUSING . . . the government picks them for you.”45 On its face, the claim was clearly false—
homeowners could not pick their own neighbors because they had no control over the identities of those buying homes nearby. The only way in
which they could pick their neighbors was to purchase their homes in
subdivisions that, with government approval, excluded a class of buyers,
specifically, African Americans.
The Home Builders’ 1952 warning was accurate that the government
picks one’s neighbors in public housing, so there was always the threat
that the St. Louis Housing Authority would end its segregation policy
and assign African Americans to white projects. In fact, as noted earlier,
only three years later, a federal court ordered the authority to do so.
The only plausible explanation for the Home Builders’ warning about
the government picking neighbors is that if families remained in public
housing, they might experience racial integration.
The farther south and west in the county a suburb is, the more distant it
is from the north St. Louis black ghetto. Suburban developments were allwhite, with FHA approval, when constructed; by the 2010 census, Ferguson was only 29 percent white, and then, going south and west, Overland
was 73 percent white, Webster Groves was still 90 percent white, and
Kirkwood was 89 percent white.
This governmental policy of segregation, though now more than a halfcentury distant, has had enduring consequences. It contributed mightily
not only to our present-day residential segregation, but to all aspects of
black-white economic inequality. For example, in Kirkwood, homes
were marketed as selling to white FHA buyers for “$8,100 up” in 1952.
In that year, such home prices were about twice the national median family income of $3,890 and easily affordable to lower-middle or middle-class
African Americans, especially to veterans if they could have benefitted
from VA mortgage guarantees. A decade later, when assistant principal
Larman Williams and engineer Adel Allen were looking for homes in integrated middle-class suburban neighborhoods, those homes were still affordable. Today, however, houses in Kirkwood sell for about $400,000,
more than six times national median family income, and mostly unaffordable to working- and middle-class families.46 But for whites permitted to
buy in Kirkwood fifty years ago, the advantages they’ve been able to
45. HOME BUILDERS, supra note 43, at 39.
46. U.S. Census Bureau, Current Population Survey Annual Social and Economic Supplement, Tbl. F-5, Race and Hispanic Origin of Householder–Families
by Median and Mean Income: 1947 to 2009 (online data table).
The Making of Ferguson
187
bequeath to their children have been considerable, relative to those of
blacks who were denied similar opportunities.
Even accounting for home improvement investments that owners of
these homes have made since 1952, the capital gain for white homeowners
and their heirs endures. The federal government’s support for residential
segregation in the mid-twentieth century is largely responsible for the fact
that while the median family income of African Americans is now about
60 percent of whites’ income, the median household wealth of African
Americans is only about 5 percent of whites’ wealth.47 This enormous difference translates into differences between blacks and whites in the security and comfort of retirement (and in the obligations of adult children to
divert their incomes to support elderly parents), in the ability of young
people to attend college, and in the selectivity of the colleges they can
afford to attend.
In small ways, local government also worked closely with private agencies to encourage whites to leave the city and move to suburbs to escape
proximity to African Americans. A 1947 pamphlet of the Social Planning
Council of St. Louis and St. Louis County, a federation of public and private
social welfare agencies, rated every neighborhood by, among other characteristics, the “presence of negroes” and concluded, “People Who Can, Move
Away.”48 Of 70,000 housing units built in the City of St. Louis and in
St. Louis County between 1947 and 1952, fewer than thirty-five were available to African Americans, whether because of FHA policy, restrictive covenants, or the policy of the real estate industry.49
Denial of Adequate Municipal Services in Ghettos
As restrictive covenants and zoning rules barred the growing African
American population from most areas of the city and county in the
early and mid-twentieth century, black ghettos formed on the north and
northwest sides of the city and became increasingly hemmed in, overcrowded, and run down. City services like trash collection, street lighting,
and emergency response were less adequate than in white neighborhoods.
African Americans paid higher rents than whites for similar space—about
25 percent more, according to one postwar estimate—because their demand for apartments, relative to supply, was greater and because less adequate city fire protection led to higher insurance rates for landlords. With
FHA mortgages mostly unavailable, families bought homes with mortgages having very short repayment periods, or with contracts that permitted no accumulation of equity. Late installment payments could trigger repossession.50 To make the higher rent or contract payments, black families
47. LAWRENCE MISHEL, JOSH BIVENS, ELISE GOULD & HEIDI SHIERHOLZ, THE STATE
WORKING AMERICA tbls. 2.5, 6.5 (12th ed. 2012).
48. GORDON, MAPPING DECLINE, supra note 2, at 22.
49. Id. at 86.
50. Sexauer, supra note 44, at 220–21.
OF
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took in boarders or subdivided and sublet their homes or apartments, exacerbating the overcrowding. With higher housing costs, African Americans with good jobs were less able to save than were whites with similar
incomes—reduced savings made leaving the ghetto for better surroundings more difficult.
Whites observed the black ghetto and concluded that slum conditions
were characteristic of black families, not a result of housing discrimination. This conclusion reinforced whites’ resistance to racial integration,
lest black residents bring slum conditions to white communities.51 Thus,
to the extent we attribute segregation of the contemporary St. Louis
metropolitan area to white flight, government policy bears some responsibility for creating conditions that supported the racial stereotypes fueling such flight.
Annexation, Spot Zoning, Expulsive Zoning,
Incorporation, and Redevelopment
White jurisdictions deterred the possible integration of their neighborhoods in myriad ways. This can be seen in the fate of several isolated clusters of black residents in suburban St. Louis County in the early and midtwentieth century.
In some cases, white communities surrounding black neighborhoods
devised methods to expel their black populations, sometimes with barely
disguised racial motivation. In other cases, white towns adopted new zoning rules, brazenly designed to prevent African Americans from settling.
And in yet other cases, towns annexed unincorporated land or incorporated it independently to maintain segregated housing patterns.
One tool used nationwide by suburbs pursuing segregation was invoking eminent domain—the power to condemn and seize land for public
purposes. In 1959, Howard and Katie Venable, an African American couple, purchased a residential lot in the mostly white St. Louis suburb of
Creve Coeur. The Venables applied for, and the town approved, the necessary permits to build a home, and construction had begun when town
residents discovered that the purchasers were black. A hastily organized
citizens committee raised contributions to purchase the property, but
could not pressure the couple to sell. The city then condemned the property for use as a park and playground. The couple challenged the condemnation, but a Missouri appeals court ruled that courts could not inquire
into the motives for a condemnation, provided its purpose was for a public use, which a park and playground surely were.52
51. Heathcott, Black Archipelago, supra note 10, at 716.
52. U.S. COMM’N ON CIVIL RIGHTS, BOOK 4: HOUSING–1961 COMMISSION ON CIVIL
RIGHTS REPORT 135–36 (1961); State ex rel. City of Creve Coeur v. Weinstein, 329
S.W.2d 399 (Mo. Ct. App. 1959); Sexauer, supra note 44, at 215–16.
The Making of Ferguson
189
Fifteen years later, Creve Coeur again forestalled the possibility of integration when it ousted its one small black neighborhood, characterized
by small homes on small lots that had been deeded before the city’s zoning law required much larger ones. The city harassed the homeowners
with code violations and denied building permits for remodeling. The
city itself even bought up lots in the neighborhood through a straw
party, as the Creve Coeur mayor allowed that he “personally did not
want any colored in there.” The neighborhood was razed and is today
the Malcolm Terrace public park and neighborhood, one of the more affluent in Creve Coeur.53
In 1969, a Methodist church-sponsored nonprofit organization proposed to construct a racially integrated and federally subsidized development for moderate- and low-income families in Black Jack, an all-white
suburb in unincorporated St. Louis County. In response, Black Jack rapidly incorporated and adopted a zoning ordinance prohibiting more
than three homes per acre, making development of new moderate-income
housing impossible (although some already existed within the new city
boundaries). Several African American residents of the City of St. Louis
sued. They claimed they had been unable to find decent housing outside
the ghetto and therefore had little access to employment that was increasingly suburban. The incident attracted national attention, and the Nixon
administration deliberated for many months about whether to file its
own suit to enjoin the zoning ordinance.54
Eventually it did, and a federal appeals court ordered Black Jack to permit the development to proceed. The court observed that opposition to the
integrated development was “repeatedly expressed in racial terms by persons whom the District Court found to be leaders of the incorporation
movement, by individuals circulating petitions, and by zoning commissioners themselves.” The court continued: “Racial criticism of [the proposed development] was made and cheered at public meetings. The uncontradicted
evidence indicates that, at all levels of opposition, race played a significant
role, both in the drive to incorporate and the decision to rezone.”
Citing similar cases from elsewhere in the country, the court concluded
that Black Jack’s actions were “but one more factor confining blacks to
low-income housing in the center city, confirming the inexorable process
whereby the St. Louis metropolitan area becomes one that ‘has the racial
shape of a donut, with the Negroes in the hole and with mostly Whites
occupying the ring.’ ”55
53. GORDON, MAPPING DECLINE, supra note 2, at 213.
54. Jack Rosenthal, President Reaffirms Opposition to Forced Suburban Integration,
N.Y. TIMES, Feb. 18, 1971; Jack Rosenthal, U.S. Sues Suburb on Housing Bias, N.Y.
TIMES, June 15, 1971.
55. United States v. City of Black Jack, 508 F.2d 1179, 1185 n.3, 1186 (8th Cir.
1974).
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However, by the time the court order was obtained, the Methodist
group had lost its financing, interest rates had climbed, and, according
to urban historian Colin Gordon, the federal government was “lukewarm” about proceeding with the integrated development. The lawyers
for the integrated project said that, despite the court ruling, “no developer
in his or her right mind” would proceed with the project in the face of
such hostility. It was never constructed.56
In 1981, an almost identical series of events transpired in Affton, a white
suburb south of the City of St. Louis. A religious order offered to sell a parcel of land to a developer that planned to build low-density subsidized
housing. Groups that had originally formed to protest court-ordered school
busing for racial integration flooded a meeting of the St. Louis County Planning Commission. The groups demanded that the parcel be rezoned to prohibit multifamily housing. A councilman who was one of the leaders of the
rezoning proponents, probably with Black Jack in mind, admitted that “I
think we’ll get sued” for this rezoning, but the county council nonetheless
voted six to one to ban multifamily construction.57 There were no lawsuits,
however, perhaps because the lesson of Black Jack was that winning a lawsuit is not the same as winning the fight for integration.
As years have passed, public officials and citizens generally have
learned to be less explicit about racial animus. Other predominantly
white areas in southern and western St. Louis County have incorporated
to adopt exclusionary zoning ordinances, but support was expressed in
terms of desires to keep out low-income families and preserve uniform
single-family lots throughout the communities, not in terms as racially explicit as the court found in Black Jack.
Nationwide, beginning in the 1970s, public housing authorities have
demolished their physical projects and substituted subsidies to eligible
families for rental of privately owned and operated housing. The subsidies, now known as Section 8 vouchers, permit low-income families to
rent market-rate apartments that would otherwise be unaffordable. The
vouchers could, in theory, be used to promote integration, although this
would not be possible in communities with exclusionary zoning ordinances. But in the St. Louis County suburbs and unincorporated areas
where working class whites were living in multifamily units, the likelihood of housing Section 8 voucher recipients increased as the City of
St. Louis demolished more of its projects.
To forestall this growing threat, in 1995 alone two white suburban areas
in St. Louis County incorporated to be able to adopt zoning ordinances
56. John Herbers, Housing: Challenge to ‘White Power’ in the Suburbs, N.Y. TIMES,
Nov. 15, 1970; R. Drummond Ayres, Jr., Bulldozers Turn Up Soil and Ill Will in a Suburb of St. Louis, N.Y. TIMES, Jan. 18, 1971; GORDON, MAPPING DECLINE, supra note 2, at
147–50; Park View Heights Corp. v. City of Black Jack, 407 F.2d 1208 (8th Cir. 1972).
57. Orfield, supra note 9, at 85.
The Making of Ferguson
191
preventing multifamily buildings accessible to Section 8 voucher holders.
One, Wildwood, encompassed all of the unincorporated area in western
St. Louis County, an area equal in size to the City of St. Louis itself.58
As of the 2010 census, this new city remained 92 percent white and less
than 2 percent African American. It has managed to prevent development
of housing affordable to most African Americans. Wildwood’s median
family income is over twice the national median and its poverty rate is
less than 2 percent. The other, Green Park in southern St. Louis County,
also incorporated to prevent the construction of apartments that could
house Section 8 voucher holders.59 It remains 93 percent white and 1 percent African American, despite its solidly middle-class character. Green
Park’s median family income is close to the national median, while the
town’s family poverty rate is also less than 2 percent.
Urban Renewal and Redevelopment Programs
In 1950, Olivette in St. Louis County annexed a portion of the adjacent
unincorporated community of Elmwood Park. Twenty years later, the
chairman of the Olivette Land Clearance and Redevelopment Authority asserted that the annexation was needed simply to “straighten” the city’s
boundaries. Olivette was an all-white, solidly middle-class community
where nearly two-thirds of residences were single-family; apartment dwellers in the balance were socioeconomically similar. Adjacent Elmwood Park,
in contrast, was very poor, African American, with thirty-seven dilapidated
homes, subject to frequent flooding from the River Des Peres, and without
paved roads or sewers. Elmwood Park had been settled after the Civil War
by laborers, formerly slaves on nearby farms.
The area was bisected by railroad tracks; Olivette annexed the portion
north of the city and south of the tracks, creating a physical boundary between the expanded city and unincorporated Elmwood Park. Olivette was
under no legal obligation to notify affected Elmwood Park residents of the
annexation and did not do so. After the annexation, Olivette provided no
services to its new Elmwood Park neighborhood and erected a barbedwire fence between the neighborhood and the nearest white subdivision.
(Even after 1954 when schools were integrated, school buses did not come
into the annexed neighborhood, so black children had to walk around the
perimeter of the white subdivision, rather than taking a direct route across
it, to board their school bus.) Olivette did mail tax bills to the newly annexed residents, but few Elmwood Park homeowners apparently understood the implication of these bills. Most were not aware of the annexation
58. Dennis R. Judd, The Role of Governmental Policies in Promoting Residential Segregation in the St. Louis Metropolitan Area, 66 (3) J. NEGRO EDUC. 235–36 (1997); GORDON, MAPPING DECLINE, supra note 2, at 43.
59. Judd, supra note 58, at 236.
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until 1955, when Olivette began to auction off their homes for nonpayment of taxes and other fees.
The actual aim of Olivette officials was almost certainly not to
“straighten boundaries” but to force Elmwood Park residents to abandon
their homes (or have them seized) so the area could be redeveloped with
industry, both to increase Olivette’s tax revenue and to reinforce the barrier between Olivette and the remaining African American community in
unincorporated Elmwood Park.
By 1960, however, a decade after the annexation, Olivette had not succeeded in driving most Elmwood Park residents away. Most had scraped
up enough money to pay their back taxes. Olivette applied for and obtained
federal urban renewal funds, enabling it to condemn the land and attract
industrial development. Olivette then informed Elmwood Park residents
that their homes were too dilapidated to rehabilitate and would be demolished. It rezoned Elmwood Park as industrial, condemned the African
American residents’ properties, and began charging them rent to live in
homes they had previously possessed clear of mortgages.
Although federal urban renewal policy required Olivette to relocate the
displaced residents within Olivette, the federal government initially
refused to enforce that requirement, and Olivette instead offered housing
either in a public housing project being constructed in unincorporated
Elmwood Park or in the City of St. Louis. Responding to protests, the government eventually required Olivette to build ten residential units in the
industrial zone, which the city separated from its middle-class areas by a
park.60 Most of the original residents of the annexed neighborhood relocated to St. Louis; to the all-black suburb of Wellston; or to a black neighborhood in another suburb, University City. Once constructed, Olivette’s
new public housing development in the industrial zone was also all-black,
separated from the rest of the city.61
Meanwhile, St. Louis County also declared the unincorporated area of
Elmwood Park a redevelopment zone. The homes of 170 black families
there were razed in the early 1960s and the county developed industry
and more expensive housing, unaffordable to the former residents. The
displaced families were given small relocation allowances, inadequate
to purchase comparable housing. Many scattered to other black pockets
in the county or to the City of St. Louis’s ghetto. A grand jury later
60. The U.S. Department of Housing and Urban Development increased its requirement to 24 units if the greater number were needed for relocation of former
Elmwood Park residents. However, because most residents had moved away to
other black communities when their homes were demolished, the additional requirement of fourteen units was not implemented. U.S. Comm’n on Civil Rights,
Hearing, supra note 2, at 392–93, 564–65.
61. Illene Dubrow, Municipal Antagonism or Benign Neglect: Racial Motivations in
Municipal Annexations in St. Louis County, Missouri, 53 J. URB. L. 254–64 (1975); U.S.
Comm’n on Civil Rights, Hearing, supra note 2, at 384–410.
The Making of Ferguson
193
concluded, too late to reverse the hardship, that because of its racial impact, the urban renewal program was “an evasion of responsibility” and
nothing more than a “race clearance program.”62
While suburbs with clusters of black residents were designing redevelopment projects that forced African Americans to seek public housing
back in the city, St. Louis itself was pursuing urban renewal and redevelopment that forced black residents into nearby suburbs and attracted
white middle-class suburbanites back to the city. Beginning in the
1950s, the city’s urban renewal projects condemned and razed slum housing occupied mostly by African Americans and constructed monuments
and other institutions in place of those homes. Neighborhoods were
razed for the Jefferson National Expansion Memorial (which includes
the Gateway Arch), a museum, a sports stadium, interstate highways (including ramps and interchanges) to bring suburban commuters into
white-collar city jobs, new industry and hotels for the city, university expansion, and middle-class housing that was unaffordable to former African American residents of the redeveloped areas.63
Mill Creek Valley, the community at the heart of St. Louis’s African
American life, was demolished beginning in 1959, displacing 20,000 residents, 95 percent of whom were black. Some forty churches were razed as
their parishioners scattered to developing ghettos in inner-ring suburbs.
The Mill Creek acreage was then used for an expansion of Saint Louis
University, an expressway, a private market-rate housing project, and a
subsidized public-private project.64
In some cases, as was true elsewhere in the country, after African
American neighborhoods were demolished, planners’ designs for redevelopment never materialized, and the cleared land remained vacant. One
early St. Louis venture, the Kosciusko Urban Renewal Project, demolished
an African American neighborhood of seventy blocks and 221 acres in the
early 1960s, with plans for attracting new industry. Fifty years later, much
of it still remained vacant or with paved-over lots.65
Some federal urban renewal laws required that displaced residents be
provided with new housing, but others did not. But even for those laws
with such requirements, only about half of the African Americans displaced by urban renewal in St. Louis were offered any relocation assistance. Displaced families, whether on their own or with assistance, mostly
relocated to public housing or to apartments adjoining their former ghetto
62. GORDON, MAPPING DECLINE, supra note 2, at 212; U.S. Comm’n on Civil Rights,
Hearing, supra note 2, at 569–70.
63. Orfield, supra note 9, at 50; GORDON, MAPPING DECLINE, supra note 2, at chs. 4–5.
64. Jeffrey E. Smith, A Preservation Plan for St. Louis, Part I: Historic Contexts: The
African-American Experience (St. Louis Cultural Resources Office 1995); Ellen
Sweets, Laclede: An Experiment in Ethnic Harmony, SEATTLE TIMES, Nov. 9, 1997.
65. Michael R. Allen, A Brief History of the Kosciusko Urban Renewal Area, Preservation Research Office, June 19, 2011.
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that were as substandard as those from which they had been displaced.66
Soon public housing itself became unavailable, and the St. Louis Housing
Authority issued Section 8 rent supplement vouchers to eligible families.
From 1950 to 1980, St. Louis assigned 7,900 family residential units either
to public housing or to subsidized apartments. Of these, 94 percent were
in census tracts where more than 75 percent of the residents were African
American.67 As black families moved repeatedly to stay ahead of the
urban renewal bulldozers, space in the city itself disappeared, and a
wholesale movement to the northern and northwestern suburbs began.
A 1970 staff report of the U.S. Commission on Civil Rights faulted the
conduct of the U.S. Department of Housing and Urban Development
(HUD), concluding that:
Federal programs of housing and urban development not only have failed
to eliminate the dual housing market, but have had the effect of perpetuating and promoting it. . . . HUD has failed to carry out [its] affirmative obligations [to prevent discrimination] and has permitted its programs to be
operated in a discriminatory manner in the St. Louis metropolitan area. . . .
As long as HUD continues to condone the discriminatory activities of the
local housing and home finance industry—public and private—there is little hope of relief for black families from the existing system of separate and
unequal housing conditions.68
Regulatory Support of Policies in the Real Estate and Financial Sectors
That Promoted Segregation
Government regulators at the local, state, and federal levels failed to
halt, indeed they endorsed, discriminatory practices of the real estate
and financial sectors that played significant roles in the segregation of
housing in St. Louis and nationwide.
Blockbusting
Real estate speculators assisted the conversion of inner-ring suburbs
from white to black by creating panic among white homeowners with
the message that unless they sold quickly, their property values would deteriorate. In a systematic fashion, these real estate agents “blockbusted”
neighborhood by neighborhood as African American refugees from
urban renewal moved north and northwest. The blockbusting contributed
to the transformation of inner-ring suburbs like Ferguson from all-white
communities that excluded African Americans to today’s deteriorating
nearly all-black (or becoming all-black) suburbs.
In St. Louis, blockbusting began as the ghetto expanded and then proceeded to inner-ring suburbs when St. Louis itself could no longer absorb
its growing (and later, displaced) African American population. The
66. Orfield, supra note 9, at 50; GORDON, MAPPING DECLINE, supra note 2, at 25, 168.
67. Orfield, supra note 9, at 63; GORDON, MAPPING DECLINE, supra note 2, at 100.
68. U.S. Comm’n on Civil Rights, Hearing, supra note 2, at 576–79.
The Making of Ferguson
195
practice was not unique to St. Louis. It was commonplace nationwide.
Typically, an African American family like the Williamses or Allens
found housing in a lower-middle-class neighborhood just outside the
ghetto. Frequently a blockbusting real estate agent arranged this initial
sale, perhaps subsidizing it himself. Once the family moved in and was
visible, real estate agents solicited nearby homeowners to sell quickly before an imminent influx of black buyers caused their homes to lose value.
Sometimes the agents supported their predictions by hiring black youth to
drive around the neighborhood blasting music, by placing fictitious forsale advertisements in African American newspapers (and showing copies to white homeowners), or by hiring black women to push baby
carriages around, or engaging in other similar tactics.69 While it was not
usually necessary for real estate agents to be as flamboyant as this, such
tactics were employed more than occasionally.
A 1995 St. Louis newspaper report alleged that in some cases, speculators did not have initial African American buyers but instead bought
homes in neighborhoods they anticipated turning into African American
communities and let the empty houses deteriorate to depress the value of
others nearby.70 After neighbors were sufficiently panicked, speculators
bought properties at reduced prices and then resold them at inflated
prices to African Americans in desperate need of housing. Agents made
large profits in this way. Once a block or neighborhood had been “busted”
in this fashion, agents would proceed to the next block or neighborhood,
using similar tactics. Some agents did not resell homes, but subdivided
and rented them to black families.
Adel Allen described how, soon after he moved into his new home,
“for sale” signs went up on his block in Kirkwood (the town that zoning
officials tried so hard in 1940 to keep white and where the FHA had approved whites-only development in 1952). Allen did not mention a conspicuous role of real estate agents, but they likely were involved in his
neighbors’ panic selling.
69. Susan Spiegel Glassberg, Legal Control of Blockbusting, J. URB. & CONTEM. L.
145–70 (1972); Thomas B. Hayes, The Constitutionality of a Municipal Ordinance Prohibiting ‘For Sale,’ ‘Sold,’ or ‘Open’ Signs to Prevent Blockbusting, 14(1) ST. LOUIS UNIV.
L.J. 691 (1969). Literature on blockbusting in Chicago contains the most graphic descriptions of these tactics. See, e.g., James Alan McPherson, ‘In My Father’s House
There are Many Mansions—And I’m Going to Get Me Some of Them Too;’ The Story
of the Contract Buyers League 52–82, ATL. MONTHLY (Apr. 1972); Amanda Irene Seligman, “Apologies to Dracula, Werewolf, Frankenstein”: White Homeowners and Blockbusters in Postwar Chicago, 94 (1) J. ILL. STATE HIST. SOC’Y 70–95 (2001); and especially
BERYL SATTER, FAMILY PROPERTIES: HOW THE STRUGGLE OVER RACE AND REAL ESTATE TRANSFORMED CHICAGO AND URBAN AMERICA 111–16 (2009).
70. Thomas Gross, Suspicions—No Proof—of ‘Blockbusting’ in Home Sales, ST.
LOUIS POST-DISPATCH, June 4, 1995.
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The problem was serious enough that some St. Louis suburbs, and
St. Louis itself, attempted to legislate against blockbusting. But violations were and still are hard to prove, and creating a sufficiently precise
definition of blockbusting for statutory purposes was and remains challenging. In 1969, St. Louis adopted ordinances prohibiting solicitation of
listings by real estate agents and the placement of “open,” “for sale,” or
“sold” signs in specific designated zones considered subject to sudden
racial change. A subsequent amendment permitted such a sign if a private individual, not a real estate agent, obtained a permit from the
city’s Human Relations Council that could be granted only after the
council made a determination that the neighborhood was not subject
to rapid racial change.71
In the late 1960s, the western suburb of Vinita Park adopted an ordinance prohibiting all solicitation of listings by real estate agents.72
Blockbusting in another suburb, University City, began as early as
1962; the suburb also banned “for sale” signs and adopted an antiblockbusting ordinance.73 University City remains uniquely integrated, although within the city, black and white neighborhoods are mostly distinct. Other suburbs also took action against blockbusting, but without
much impact. The only effective control over blockbusting would have
been disciplinary action by the Missouri Real Estate Commission, the
state agency charged with regulating the industry, but this was not
forthcoming.
Racial Steering
Real estate agents’ practices and state action to create and support racial segregation were inseparable in St. Louis and elsewhere. Overlapping
with zoning rules adopted by Harland Bartholomew’s City Plan Commission in 1919, the St. Louis Real Estate Exchange surveyed its members in
1923 to define zones in which property could be sold to African Americans. City government worked hand-in-glove with the exchange, providing it with data on changing racial residential patterns so the exchange
could adapt its restrictive practices accordingly. By 1930, the City Plan
Commission estimated that 80 percent of the city’s African American population was contained within the zones established by the Real Estate
Exchange. These boundaries were revised substantially in 1941 and continued to guide real estate practice afterwards.74
71. Hayes, supra note 69, at 686–718; Howe v. City of St. Louis, 512 S.W.2d 127
(Mo. 1974).
72. Hayes, supra note 69, at 1969, 687–88, 709, 714.
73. Orfield, supra note 9, at 87; Michael D. Sorkin, Larry Lieberman Dies; Fought
Block Busting, Helped Delmar Loop, ST. LOUIS POST-DISPATCH, Sept. 9, 2010.
74. DAVIS MCENTIRE, RESIDENCE AND RACE: FINAL AND COMPREHENSIVE REPORT TO THE
COMMISSION ON RACE AND HOUSING 244 (1960); GORDON, MAPPING DECLINE, supra note 2,
at 84; Heathcott, Black Archipelago, supra note 10, at 717.
The Making of Ferguson
197
The Real Estate Exchange adopted a code of ethics in the mid-1920s,
with language taken verbatim from the 1924 code of National Association
of Realtors that stated: “A realtor should never be instrumental in introducing into a neighborhood . . . members of any race or nationality . . .
whose presence will clearly be detrimental to property values in that
neighborhood.”75
Both the St. Louis Real Estate Exchange and the Missouri Real Estate
Commission deemed sales to African Americans in white neighborhoods
to constitute professional misconduct that could result in loss of license. It
could also lead to expulsion from the national as well as the local association, making it difficult for real estate agents to stay in business because
they would no longer have access to multiple listing services.76
In 1950, the national association amended its code so that integrating a
neighborhood was no longer explicitly unethical, instead prohibiting sales
that would be “detrimental to property values.” Real estate agents nationwide continued to interpret this rule (as it was doubtlessly intended) as
prohibiting sales to African Americans in white neighborhoods and continued practices of promoting and enforcing segregation. The revised code
suggested no positive obligation of nondiscrimination.77
Making explicit that the revised code, despite its sanitized wording,
implied no change in race policy, the St. Louis Real Estate Exchange
sent this notice to all members in 1955:
No Member of our Board may, directly or indirectly, sell to Negroes . . . unless there are three separate and distinct buildings in such block already occupied by Negroes. . . . This rule is of long standing [and is our interpretation of] the Code of Ethics of the National Association of Real Estate
Boards.78
In 1969, a year after enactment of the Fair Housing Act, a St. Louis real
estate agent boasted to an investigator, “We never sell to colored. When
they ask for a specific house, we tell them there is already a contract on
that house.”79 At that time, St. Louis real estate agents still asserted they
would lose their licenses if they sold homes to African Americans in
white neighborhoods.80
75. GORDON, MAPPING DECLINE, supra note 2, at 83.
76. ROBERT C. WEAVER, THE NEGRO GHETTO 216–17 (1948); Thomas J. Sugrue, The
Structures of Urban Poverty: The Reorganization of Space and Work in Three Periods of
American History, in THE UNDERCLASS DEBATE: VIEWS FROM HISTORY 112 (Michael B.
Katz ed., 1993); GORDON, MAPPING DECLINE, supra note 2, at 84.
77. MCENTIRE, supra note 74, at 242–43, 246; Raymond A. Mohl, The Second
Ghetto and the ‘Infiltration Theory’ in Urban Real Estate, 1940–1960, in URBAN PLANNING
AND THE AFRICAN AMERICAN COMMUNITY: IN THE SHADOWS 65 (June Manning Thomas &
Marsha Ritzdorf eds., 1997); Glassberg, supra note 69, at 146 n.3.
78. GORDON, MAPPING DECLINE, supra note 2, at 86.
79. Id. 87.
80. U.S. Comm’n on Civil Rights, Hearing, supra note 2, at 202.
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A 1953 survey by the FHA found that St. Louis had 80,000 African
Americans with stable working-class and middle-class jobs who could
have afforded to buy their own homes and participate in the postwar suburban boom.81 But few were permitted to do so (in considerable part because of the FHA’s own policy) and instead were forced either to rent
ghetto apartments in the city or settle in the few lower-class black enclaves
(like Kinloch) in the suburbs. As Larman Williams and Adel Allen later
found, until passage of the Fair Housing Act and to some extent afterwards, real estate agents openly steered black home buyers away from
white neighborhoods, helping to prevent the emergence of a solid black
lower middle class that could have integrated into socioeconomically similar white suburbs.
To address racial steering, the federal government had levers that it declined to use. For example, one St. Louis County employer was the Mallinckrodt Chemical Works, a government contractor that sold medical
supplies to the Veterans Administration. At the same 1970 hearing of
the Civil Rights Commission at which the Williamses and Adel Allen testified, Charles Swartout, vice president for personnel of Mallinckrodt, said
he had difficulty attracting black professional, technical, and administrative employees to the company’s suburban facility because the recruits
were unable to find housing in the area. The company maintained a list
of real estate agents to which it referred employees it recruited. The commission’s general counsel asked Mr. Swartout whether the company
might ask real estate agents on the list to agree not to discriminate.
“No,” he replied, “I don’t think we would [ask that] any more than we
do [for] suppliers of chemicals or equipment.”82 This testimony occurred
two years after adoption of the Fair Housing Act making discrimination
unlawful. The federal government was apparently unwilling to require
its contractors to refer prospective employees only to real estate agents
who agreed to obey the law.
Federal acquiescence also played a role in the case of McDonnell Douglas, a major suburban St. Louis defense contractor. The company maintained separate housing lists for white and black recruits so that employees of each race could be referred to their respective segregated
communities. It merged its lists in the late 1960s, but this had little effect.83
By 1970 the company employed nearly 3,000 nonwhite workers. The previous year alone, some 650 new hires at the plant were nonwhite. Yet
when these employees, with good and stable jobs, sought housing, real estate agents still routinely referred them to the black Kinloch suburb,
avoiding the many available homes in working-class white suburban
communities nearer the plant. Unlike Adel Allen, many were not in
81. Sexauer, supra note 44, at 219–20.
82. U.S. Comm’n on Civil Rights, Hearing, supra note 2, at 51–53.
83. Id. at 203–04.
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199
jobs paying well enough to enable them to break into a middle-class suburb like Kirkwood. In these cases, real estate agents steered African American workers away from lower-middle-class suburbs. Often these workers
could find housing only far away in the St. Louis ghetto, resulting in long
commutes and excessive absenteeism when carpooling arrangements
failed. With public transportation, the commute took as much as two
hours each way.84 Black workers at other industrial plants, increasingly
located in the suburbs, faced similar challenges.
Heavily Regulated Industries as Agents of the State
Should the actions of real estate agents contributing to the racial
segregation of the St. Louis metropolitan area be considered private or
state action? As noted above, the conventional understanding of conditions that led to the recent conflicts in Ferguson emphasizes the white
flight of homeowners from inner-ring suburbs once African Americans
arrived. But white flight spurred directly by real estate industry practices
that were sanctioned, even encouraged, by state regulators calls for remedial public actions that account for government’s role in Ferguson’s
transformation.
Almost every industry in the United States is regulated by government
to some extent, so it would be foolish to consider the mere fact of regulation to justify a public remedy. Yet few industries are as regulated as real
estate. Obtaining a real estate license in Missouri and in other states requires extensive study, testing, and recertification. Regulations cover detailed aspects of real estate practice, including not only who can show a
home or how escrow funds should be handled, but the personal behavior
of real estate agents in their private lives. Until late in the twentieth century, however, it almost seemed that the sole area of real estate practice
not subject to regulation was racial discrimination, except to the extent
that real estate agents were subject to discipline if they did not discriminate. Racial steering by real estate agents had been unlawful since 1866,
but Missouri’s and the nation’s real estate ethics rules required it.85
Blockbusting on its face was a flagrant violation of the Real Estate Exchange’s and the Missouri Real Estate Commission’s prohibition of introducing black families into white neighborhoods, but the commission did
not deem blockbusting inappropriate until 1970, two years after federal
law reiterated its illegality, and even after that, enforcement was weak
or nonexistent.86
84. Id. at 51, 63, 112, 656; GORDON, MAPPING DECLINE, supra note 2, at 87.
85. Jones v. Alfred H. Mayer Co., 392 U.S. 409 (1968).
86. GORDON, MAPPING DECLINE, supra note 2, at 103. In view of the overcrowded
conditions in which African Americans were forced to live as a result of their exclusion from most neighborhoods, blockbusting played the positive function of
rapidly expanding the space available for black occupancy. If African Americans
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Insurance and banking are two industries that are even more regulated
than real estate, and these also played important roles in segregating
St. Louis and the nation. Until the 1960s, insurance companies openly
practiced “redlining”—refusing casualty or title insurance in black neighborhoods, or making it available only at premium rates.87 The nation’s
leading insurance companies became developers themselves of segregated apartment complexes.
For most of the twentieth century, banks also routinely and openly
practiced redlining and refused mortgages or home improvement loans
to African Americans in predominantly white neighborhoods. Federal
and state regulators rarely took notice. In one recent case, however, the
Department of Housing and Urban Development pursued a complaint
that the First National Bank of St. Louis had avoiding making loans in predominantly minority neighborhoods. As part of its settlement of the case,
the bank promised the federal government that it would open a branch in
Ferguson to remedy its past failures. The branch opened in March 2012.88
Public Labor Market Policy Contributing to Segregation
This report has described the public—federal, state, and local—housing
policies that contributed to the residential segregation of Ferguson and the
entire St. Louis metropolitan area. Without these policies, we would not
be confronted with the racial inequality and conflict we continue to experience today. While it is beyond the scope of this report to fully explore the
nonhousing public policies contributing to residential segregation, labor
market and employment policy has had such a direct impact on housing
that it warrants brief mention here.
If state-sponsored labor and employment discrimination reduced the
incomes of African Americans relative to whites in St. Louis, the ability
of African Americans to afford housing in middle-class suburbs would
have suffered, even in the absence of specific housing discrimination.
And, indeed, public labor and employment policy did play such a role.
Defense plants like McDonnell Douglas were, by the 1970s, mostly welcoming to black workers, but this was a relatively late development. During World War II, St. Louis was the site of a large arms and ammunition
were to be segregated into ghettos, they would be better off in larger than in
smaller ghettos.
87. Tobin, supra note 28, at 58–59; GORDON, MAPPING DECLINE, supra note 2, at 111.
88. The Bank of St. Louis’s settlement agreement with the federal government
contains a clause stating that the bank does not admit that it has violated the law.
Press Release, U.S. Dep’t of Hous. & Urb. Dev., HUD, First National Bank of St.
Louis, Reach Agreement to Increase Investment in Low-Income and Minority
Communities, Dec. 21, 2010; U.S. Dep’t of Hous. & Urb. Dev., Conciliation Agreement Between Metropolitan St. Louis Equal Housing Opportunity Council (complainant) and First National Bank of St. Louis and Central Bancompany (respondents), Dec. 17, 2010; Elisabeth Risch, Fair Housing Equity Assessment ( July 2013).
The Making of Ferguson
201
industry. The St. Louis Small Arms Ammunition Plant alone employed
40,000 workers.89 At first, this federally controlled plant would not hire
African Americans except as janitors, landscape gardeners, or other service workers, but after civil rights demonstrations at the plant in 1942,
the plant agreed to hire blacks for production work—but only on a separate, segregated production line. In 1944, the plant finally agreed to integrate its production lines, but by then, the war was nearly over.90
The federal government also had a role in other industries’ treatment of
black workers. For example, while the United Auto Workers union at the
Chrysler plant in the St. Louis suburb of Fenton was unusually hospitable
to black workers, unions in other industries denied membership and thus
jobs to African Americans. In St. Louis (and elsewhere), these whites-only
unions nonetheless were recognized as exclusive bargaining agents by the
federal government. This had an especially big impact in the construction
trades, which offered numerous jobs during the suburban housing boom
but excluded African American workers. Eventually the National Labor
Relations Board concluded that it was violating the Constitution by certifying unions that denied membership to black workers, but it did not
make such a ruling until the suburban housing boom was mostly
complete.
The lower incomes of African Americans today cannot be understood
in isolation from the history of pervasive housing segregation. By keeping
black families out of the better-off suburbs, segregation not only deprived
them of the opportunity to build wealth through rising home equity, but
contributed to (and was reinforced by) what urban scholars term the “spatial mismatch” between the neighborhoods where African Americans
mostly lived, and the better suburban jobs they had difficulty accessing.
After World War II and accelerating in the 1950s and 1960s, industrial corporations nationwide relocated facilities from city to suburb or established
new suburban plants. This phenomenon can be seen in the trajectory of
employment opportunities in the City of St. Louis. From 1951 to 1967,
the number of jobs in the city declined by 20 percent, while those in suburban St. Louis County increased by 400 percent.91
For black workers who were able to commute to work in the suburbs,
higher commuting costs reduced incomes relative to incomes of whites.
From 1959 to 2009, Chrysler operated its assembly plant in suburban Fenton. Black workers living in the St. Louis ghetto and unable to live near the
89. DEBORAH C. WHELAN, LEO HIRREL, WILLIAM T. DODD, J. HAMPTON TUCKER &
KATHERINE GRANDINE, HISTORIC CONTEXT FOR DEPARTMENT OF DEFENSE WORLD WAR II
PERMANENT CONSTRUCTION 198 (1997).
90. Two years later in December 1944, shortly before the war ended, production
lines at the plant were integrated. Tim O’Neil, A Look Back—St. Louis Factory Loaded
America’s Weapons During World War II, ST. LOUIS POST-DISPATCH, June 27, 2010.
91. U.S. Comm’n on Civil Rights, Hearing, supra note 2, at 471.
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plant spent up to an hour commuting each way. But many more black
workers were simply unable to take jobs at the Chrysler plant because
they could not get there. In the 1960s, Chrysler made a special effort to recruit black workers for a training program for production jobs. The program’s retention rate was only 40 percent, mostly because of absenteeism
due to transportation difficulties.92 Today, the town of Fenton remains 96
percent white, less than 0.5 percent black.
We now understand that, for both races, intergenerational income
mobility—the ability of adult children to do better than their parents—is
quite limited, which means we are still paying a price for these labor market
practices. Contemporary conditions in Ferguson are but one illustration.
In Conclusion: Understanding Segregation’s Causes
Suggests Remedies
Once rules of residential segregation were firmly in place, other, raceneutral, public policies had and still have a disparate impact on African
Americans, reinforcing the segregation. For example, the federal income
tax system, permitting the deduction of home mortgage interest, subsidizes those who move to single-family homes in white suburbs and
thus imposes a relative penalty on those who remain renting in urban
African American neighborhoods.
The federal highway system routed highways through urban areas
often to eliminate black neighborhoods that were close to downtowns.
The generous financing of interstate highways relative to efficient public
transportation facilitated the commutes of white suburbanites to office
jobs in the city while making it harder for African Americans restricted
to urban neighborhoods to obtain good industrial jobs in the suburbs.
But the disparate impacts of the mortgage interest deduction and transportation priorities should not distract us from the underlying reality.
These policies would have had no racial impact if African Americans
had been permitted to suburbanize along with whites.
A century of evidence demonstrates that St. Louis was segregated by
interlocking and racially explicit public policies of zoning, public housing,
and suburban finance, and by publicly endorsed segregation policies of
the real estate, banking, and insurance industries. These governmental
policies interacted with public labor market and employment policies
that denied African Americans access to jobs available to comparably
skilled whites. When these mutually reinforcing public policies conspired
with private prejudice to turn St. Louis’s African American communities
into slums, public officials razed those slums to devote acreage to more
profitable (and less unsightly) uses. African Americans who were displaced then relocated to the few other places available, converting
towns like Ferguson into new segregated enclaves.
92. Id. at 33, 78–81.
The Making of Ferguson
203
The pattern—in St. Louis and other U.S. metropolitan areas—of white
middle-class suburbs surrounding black ghettos cannot easily be explained without taking account of the myriad public policies that, with
race-conscious intent, encouraged and supported this particular distribution of population by race. After all, as historian Colin Gordon has noted,
in Europe, the opposite pattern prevails—middle-class whites reside in
the center cities and low-income immigrants settle in the suburbs,
where public housing is located.93 Today, as whites in St. Louis and elsewhere find gentrifying urban neighborhoods more attractive and
displaced African Americans relocate in heavy concentrations to specific
suburbs, we may be replicating segregation on the European model.
As the federal court observed more than thirty years ago, school desegregation requires housing desegregation.94 Several elementary schools in
Ferguson today are 90 percent African American and no elementary
school is less than 75 percent African American; educational performance
in such racially isolated settings is inadequate. As the tragic death of Michael Brown shows, the interaction of black men and youths with police
has much in common with Adel Allen’s experiences fifty years ago, and
the reaction in Ferguson (though comparatively mild) is reminiscent of
the 1967 race riots that the Kerner Commission investigated.
Litigation has revealed that in the 2000s, federally supervised banks
marketed exploitative subprime loans to African American communities
like Ferguson, expecting that African Americans (particularly the elderly)
were too gullible to resist false promises. When the loans’ exploding interest rates combined with the collapse of the housing bubble, it compounded
the devastation of black neighborhoods.95 Half of Ferguson homes today
are underwater with owners owing more than their homes are worth.96
Many practical programs and regulatory strategies can address
problems of Ferguson and similar communities nationwide. One example
is to prohibit landlords from refusing to accept tenants whose rent is
subsidized—a few states and municipalities currently do prohibit such
refusal, but most do not. Another example is to require even outer-ring
suburbs to repeal zoning ordinances that prohibit construction of housing
that lower- or moderate-income residents—white or black—can afford.
Going further, we could require every community to permit development
of housing to accommodate a “fair share” of its region’s low-income and
93. GORDON, MAPPING DECLINE, supra note 2, at 35.
94. See note 9 above, referring to the discussion of the federal judge’s order in
the St. Louis school desegregation case.
95. Richard Rothstein, A Comment on Bank of America/Countrywide’s Discriminatory Mortgage Lending and Its Implications for Racial Segregation, Briefing Paper #335
(Econ. Pol’y Inst. 2012).
96. Matthew Goldstein, Another Shadow in Ferguson as Outside Firms Buy and
Rent Out Distressed Homes, N.Y. TIMES, Sept. 3, 2014.
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minority populations. New Jersey, for example, has taken a very modest
step towards this requirement.97
But we won’t consider such remedies if we remain blind to how Ferguson became Ferguson. It is impractical to think that the public and policymakers will support remedies to problems whose causes they don’t understand. We flatter ourselves that the responsibility is only borne by
rogue police officers, white flight, and suburbanites’ desire for economic
homogeneity. Prosecuting the officer who shot Michael Brown, or investigating and integrating Ferguson’s police department, can’t address the
deeper obstacles to racial progress.
Acknowledgments
When the Troubles in Ferguson began in August 2014, I put other work
aside to delve into the background of how an inner-city suburb of
St. Louis had become segregated. Without much previous familiarity
with St. Louis, I relied extensively on scholars with expertise in this history. Without their generous help, I could not have produced this report.
First among them is Colin Gordon, a professor at the University of
Iowa and author of Mapping Decline, who did not tire of answering my frequent questions. Others who provided extensive help include Peter
Acsay, professor, University of Missouri–St. Louis; Margaret Garb professor, Washington University, St. Louis; Dan Mandelker and Kimberly Norwood, professors, Washington University School of Law; Cornelia Sexauer, professor, University of Wisconsin–Marathon County; and John A.
Wright, former superintendent of schools in Kinloch and author of several
illustrated books on the history of African Americans in St. Louis.
I am also grateful to Lawrence Mishel, president of the Economic Policy
Institute, who reviewed the draft of this report; Jason Stratman, assistant
librarian (reference) at the Missouri History Museum Library and Research Center, who promptly responded to my frequent requests for documents in the museum’s collection; Alyssa Davis, a researcher at the Economic Policy Institute, who gathered census data for this report; editorial
staff of the American Prospect, including Robert Kuttner and Paul Starr, coeditors, and Katherine Downs, Justin Miller, Mary Parsons, Adele Stan,
and Amanda Teuscher, who helped prepare an article version of this report for the magazine’s Fall 2014 issue; and to the communications staff
members of the Economic Policy Institute, including Elizabeth Rose, communications director, and Donte Donald, Lora Engdahl, Dan Essrow,
Chris Roof, and Eric Shansby, who edited this report and prepared it
for publication and dissemination.
97. DOUGLAS S. MASSEY, LEN ALBRIGHT, REBECCA CASCIANO, ELIZABETH DERICKSON &
DAVID N. KINSEY, CLIMBING MOUNT LAUREL: THE STRUGGLE FOR AFFORDABLE HOUSING AND
SOCIAL MOBILITY IN AN AMERICAN SUBURB (2013).
From Ferguson to Baltimore: The Fruits
of Government-Sponsored Segregation
Richard Rothstein
In Baltimore in 1910, a black Yale law school graduate purchased a
home in a previously all-white neighborhood. The Baltimore city government reacted by adopting a residential segregation ordinance, restricting
African Americans to designated blocks. Explaining the policy, Baltimore’s mayor proclaimed, “Blacks should be quarantined in isolated
slums in order to reduce the incidence of civil disturbance, to prevent
the spread of communicable disease into the nearby White neighborhoods, and to protect property values among the White majority.”
Thus began a century of federal, state, and local policies to quarantine
Baltimore’s black population in isolated slums—policies that continue to
the present day, as federal housing subsidy policies still disproportionately direct low-income black families to segregated neighborhoods and
away from middle class suburbs.
Whenever young black men riot in response to police brutality or murder, as they have done in Baltimore this week [April 18–May 3, 2015],
we’re tempted to think we can address the problem by improving police
quality—training officers not to use excessive force, implementing community policing, encouraging police to be more sensitive, prohibiting racial profiling, and so on. These are all good, necessary, and important
things to do. But such proposals ignore the obvious reality that the protests are not really (or primarily) about policing.
In 1968, following hundreds of similar riots nationwide, a commission
appointed by President Lyndon Johnson concluded that “[o]ur nation is
moving toward two societies, one black, one white—separate and unequal” and that “[s]egregation and poverty have created in the racial
ghetto a destructive environment totally unknown to most white Americans.” The Kerner Commission (headed by Illinois Governor Otto Kerner)
added that “[w]hat white Americans have never fully understood—but
what the Negro can never forget—is that white society is deeply implicated in the ghetto. White institutions created it, white institutions maintain it, and white society condones it.”
In the last fifty years, the two societies have become even more unequal. Although a relatively small black middle class has been permitted
Richard Rothstein ([email protected]) is a research associate of the Economic Policy Institute. Reprinted with permission from Richard Rothstein, “From Ferguson to
Baltimore: The Fruits of Government-Sponsored Segregation,” Working Economics
(Economic Policy Institute blog), April 29, 2015; www.epi.org/blog.
205
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to integrate itself into mainstream America, those left behind are more
segregated now than they were in 1968.
When the Kerner Commission blamed “white society” and “white institutions,” it employed euphemisms to avoid naming the culprits everyone knew at the time. It was not a vague white society that created ghettos
but government—federal, state, and local—that employed explicitly racial
laws, policies, and regulations to ensure that black Americans would live
impoverished and separately from whites. Baltimore’s ghetto was not created by private discrimination, income differences, personal preferences,
or demographic trends, but by purposeful action of government in violation of the Fifth, Thirteenth, and Fourteenth Amendments. These constitutional violations have never been remedied, and we are paying the price
in the violence we saw this week.
Following the police killing of Michael Brown in Ferguson, Missouri, last
August, I wrote The Making of Ferguson, a history of the state-sponsored segregation in St. Louis County that set the stage for police–community hostility there. Virtually every one of the racially explicit federal, state, and local
policies of segregation pursued in St. Louis has a parallel in policies pursued by government in Baltimore.
In 1917, the U.S. Supreme Court found ordinances like Baltimore’s 1910
segregation rule unconstitutional, not because they abridged African
Americans’ rights to live where they could afford, but because they restricted the property rights of (white) homeowners to sell to whomever
they wished. Baltimore’s mayor responded by instructing city building inspectors and health department investigators to cite for code violations
anyone who rented or sold to blacks in predominantly white neighborhoods. Five years later, the next Baltimore mayor formalized this approach by forming an official Committee on Segregation and appointing
the city solicitor to lead it. The committee coordinated the efforts of the
building and health departments with those of the real estate industry
and white community organizations to apply pressure to any whites
tempted to sell or rent to blacks. Members of the city’s real estate board,
for example, accompanied building and health inspectors to warn property owners not to violate the city’s color line.
In 1925, eighteen Baltimore neighborhood associations came together
to form the “Allied Civic and Protective Association” for the purpose of
urging both new and existing property owners to sign restrictive covenants that committed owners never to sell to an African American.
Where neighbors jointly signed a covenant, any one of them could enforce
it by asking a court to evict an African American family who purchased
property in violation. Restrictive covenants were not merely private
agreements between homeowners; they frequently had government sanction. In Baltimore, the city-sponsored Committee on Segregation organized neighborhood associations throughout the city that could circulate
and enforce such covenants.
From Ferguson to Baltimore
207
Supplementing the covenants, African Americans were prevented from
moving to white neighborhoods by explicit policy of the Federal Housing
Administration (FHA), which barred suburban subdivision developers
from qualifying for federally subsidized construction loans unless the developers committed to exclude African Americans from the community.
The FHA also barred African Americans themselves from obtaining
bank mortgages for house purchases, even in suburban subdivisions that
were privately financed without federal construction loan guarantees.
The FHA not only refused to insure mortgages for black families in
white neighborhoods, it also refused to insure mortgages in black neighborhoods—a policy that came to be known as “redlining,” because neighborhoods were colored red on government maps to indicate that these
neighborhoods should be considered poor credit risks as a consequence
of African Americans living in (or even near) them.
Unable to get mortgages, and restricted to overcrowded neighborhoods
where housing was in short supply, African Americans either rented apartments at rents considerably higher than those for similar dwellings in white
neighborhoods or bought homes on installment plans. These arrangements,
known as contract sales, differed from mortgages because monthly payments were not amortized, so a single missed payment meant loss of a
home with no accumulated equity. In the Atlantic last year, Ta-Nehisi
Coates described how this system worked in Chicago. In summarizing
her book, Family Properties, Rutgers University historian Beryl Satter described it this way:
Because black contract buyers knew how easily they could lose their
homes, they struggled to make their inflated monthly payments. Husbands
and wives both worked double shifts. They neglected basic maintenance.
They subdivided their apartments, crammed in extra tenants and, when
possible, charged their tenants hefty rents . . .
White people observed that their new black neighbors overcrowded and
neglected their properties. Overcrowded neighborhoods meant overcrowded schools; in Chicago, officials responded by “double-shifting” the
students (half attending in the morning, half in the afternoon). Children
were deprived of a full day of schooling and left to fend for themselves
in the after-school hours. These conditions helped fuel the rise of gangs,
which in turn terrorized shop owners and residents alike.
In the end, whites fled these neighborhoods, not only because of the influx of
black families, but also because they were upset about overcrowding, decaying schools, and crime. They also understood that the longer they stayed, the
less their property would be worth. But black contract buyers did not have the
option of leaving a declining neighborhood before their properties were paid
for in full—if they did, they would lose everything they’d invested in that
property to date. Whites could leave—blacks had to stay.
The contract buying system was commonplace in Baltimore. Its existence was solely due to the federal government’s policy of denying mortgages to African Americans, in either black or white neighborhoods.
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Nationwide, black family incomes are now about 60 percent of white
family incomes, but black household wealth is only about 5 percent of
white household wealth. In Baltimore and elsewhere, the distressed condition of working African Americans and lower-middle-class families is
almost entirely attributable to federal policy that prohibited black families
from accumulating housing equity during the suburban boom that moved
white families into single-family homes from the mid-1930s to the mid1960s—and thus from bequeathing that wealth to their children and
grandchildren, as white suburbanites have done.
As I described in the Making of Ferguson, the federal government maintained a policy of segregation in public housing nationwide for decades.
This was as true in northeastern cities like New York as it was in border
cities like Baltimore and St. Louis. In 1994, civil rights groups sued the Department of Housing and Urban Development (HUD), alleging that HUD
had segregated its public housing in Baltimore and then, after it had concentrated the poorest African American families in projects in the poorest
neighborhoods, HUD and the City of Baltimore demolished the projects,
and purposely relocated the former residents into other segregated
black neighborhoods. An eventual settlement required the government
to provide vouchers to former public housing residents for apartments
in integrated neighborhoods and to support this provision with counseling and social services to ensure that families’ moves to integrated neighborhoods would have a high likelihood of success. Although the program
is generally considered a model, it affects only a small number of families
and has not substantially dismantled Baltimore’s black ghetto.
In 1970, declaring that the federal government had established a “white
noose” around ghettos in Baltimore and other cities, HUD Secretary George
Romney proposed denying federal funds for sewers, water projects, parkland, or redevelopment to all-white suburbs that resisted integration by
maintaining exclusionary zoning ordinances (that prohibited multi-unit
construction) or by refusing to accept subsidized moderate-income or public low-income housing. In the case of Baltimore County, he withheld a
sewer grant that had previously been committed because of the county’s
policies of residential segregation. It was a very controversial move, but
Romney got support from Vice President Spiro Agnew, who had been frustrated by unreasonable suburban resistance to integration and mixed income developments when he had been the Baltimore County Executive
and governor of Maryland. In a 1970 speech to the National Alliance of
Businessmen, Agnew attacked attempts to solve the country’s racial
problems by pouring money into the inner city as had been done in the
Johnson administration. Agnew said that he flatly rejected the assumption
that “because the primary problems of race and poverty are found in the
ghettos of urban America, the solutions to these problems must also be
found there. . . . Resources needed to solve the urban poverty problem—
land, money, and jobs—exist in substantial supply in suburban areas, but
are not being sufficiently utilized in solving inner-city problems.”
From Ferguson to Baltimore
209
President Richard Nixon eventually restrained Romney, HUD’s integration programs were abandoned, Romney himself was forced out as
HUD Secretary, and little has been done since to solve the urban poverty
problem with the substantial resources that exist in the suburbs.
Ten years ago, during the subprime lending boom, banks and other financial institutions targeted African Americans for the marketing of subprime loans. The loans had exploding interest rates and prohibitive prepayment penalties, leading to a wave of foreclosures that forced black
homeowners back into ghetto apartments and devastated the middle
class neighborhoods to which these families had moved. The City of Baltimore sued Wells Fargo Bank, presenting evidence that the bank had established a special unit staffed exclusively by African American bank employees who were instructed to visit black churches to market subprime
loans. The bank had no similar practice of marketing such loans through
white institutions. These policies were commonplace nationwide, but federal bank examiners responsible for supervising lending practices made
no attempt to intervene. When a similar suit was filed in Cleveland, a federal judge observed that because mortgage lending is so heavily regulated
by the federal and state governments, “there is no question that the subprime lending that occurred in Cleveland was conduct which ‘the law
sanctions’.”
Baltimore, not at all uniquely, has experienced a century of public policy designed, consciously so, to segregate and impoverish its black population. A legacy of these policies is the rioting we have seen in Baltimore.
Whether after the 1967 wave of riots that led to the Kerner Commission
report, after the 1992 Los Angeles riot that followed the acquittal of police
officers who beat Rodney King, or after the recent wave of confrontations
and vandalism following police killings of black men, community leaders
typically say, properly, that violence isn’t the answer and that after peace
is restored, we can deal with the underlying problems. We never do so.
Certainly, African American citizens of Baltimore were provoked by aggressive, hostile, even murderous policing, but Spiro Agnew had it right.
Without suburban integration, something barely on today’s public policy
agenda, ghetto conditions will persist, giving rise to aggressive policing
and the riots that inevitably ensue. Like Ferguson before it, Baltimore
will not be the last such conflagration the nation needlessly experiences.
Welcome to the Village: An Analysis of
How St. Louis County Occupancy
Permit Schemes Perpetuate
Segregation and Violate the
Constitution
Zachary Schmook and Lauren Verseman
I. Introduction .............................................................................................. 213
A. St. Louis County, Missouri ............................................................. 213
B. St. Louis County Occupancy Permits ........................................... 217
C. Origin and Development of the St. Louis County System ....... 221
D. Relationship to Anti-Harboring Ordinances ............................... 222
II. Constitutional Issues with St. Louis County Occupancy Permits .. 225
A. Occupancy Permits and the Right to Travel ............................... 225
B. Other Federal Constitutional Issues with Occupancy Permits... 230
C. Hancock Amendment to the Missouri Constitution.................. 235
III. Fair Housing Act and the Duty to Affirmatively Further Fair
Housing ..................................................................................................... 238
A. Disparate Treatment......................................................................... 238
B. Disparate Impact............................................................................... 241
C. Affirmatively Furthering Fair Housing ........................................ 245
IV. Conclusion ................................................................................................ 247
In the wake of the shooting of Michael Brown in August 2014 and the
events that followed in Ferguson, national attention turned to the several
ways St. Louis County’s balkanized municipal governments create policies
and conditions that target poor residents and perpetuate racial segregation
in the region.1 One such set of municipal policies involves occupancy
1. See, e.g., Frances Robles, Mistrust Lingers as Ferguson Takes New Tack on Fines,
N.Y. TIMES (Sept. 12, 2014), available at http://www.nytimes.com/2014/09/13/us/
Zachary Schmook ([email protected]) is the Deputy Director and Managing
Attorney for the Metropolitan St. Louis Equal Housing & Opportunity Council
(EHOC) and Lauren Verseman is a law student at the Washington University School
of Law, Class of 2017. The authors would like to thank the following students and interns for their assistance in researching local ordinances and reviewing this article:
Maysa Daoud, Runmin Gao, Saher Valiani, and David Weber. Many thanks are
also owed to Elisabeth Risch, EHOC’s Director of Education and Research, for drafting the maps used throughout the article.
211
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permits: many municipalities in St. Louis County require both tenants and
owners of residential properties to obtain new occupancy permits upon
each change in the individuals occupying the residence.2 Even as the
State of Missouri takes action to address some of the abuses highlighted
in the wake of the Ferguson tragedy by limiting the revenue that cities
can earn from traffic offenses,3 these housing offenses remain ripe for
abuse, and in fact, some cities may even increase enforcement of non-traffic
offenses to cover lost revenue.4
While these occupancy ordinances were purportedly enacted to address race-neutral policy goals based on health and safety, their implementation has a racially exclusionary effect, even if applied uniformly
to all housing in a municipality. Because of the proliferation of small
municipalities in St. Louis County and the absence of a regional policy,
occupancy permits create barriers to entry into communities and have
the potential to exclude people not just from individual properties, but
from entire cities or villages.
In addition, many municipalities in St. Louis County require official
photo identification (e.g., a driver’s license, state-issued photo identification, or valid U.S. passport) for a head of household applying for an occupancy permit; some require approved forms of photo identification for all
residents.5 These requirements effectively exclude those without approved photo identification from being able to live in the municipality.
Like voter identification requirements, photo identification requirements
for occupancy permits have a disparate impact on African Americans,
people with disabilities, and immigrant populations, all of whom are
less likely to possess the requisite identification or documents.
Part I of this article will provide a brief introduction to the St. Louis
County landscape and compare the occupancy permit system as it currently
exists in St. Louis County to how occupancy permits are used elsewhere in
the country. Part II will address constitutional issues inherent in St. Louis
County occupancy permit schemes, including potential infringement of
the right to travel and the so-called Hancock Amendment to the Missouri
mistrust-lingers-as-ferguson-takes-new-tack-on-fines.html?_r=0; Ben Mathis-Lilley,
St. Louis County Sounds Like One Big Shakedown Racket Targeted at Black People,
SLATE (Sept. 4, 2014), at http://www.slate.com/blogs/the_slatest/2014/09/04/
st_louis_fines_system_washington_post_reports_on_tickets_arrests_in_ferguson.
html; Radley Balko, How Municipalities in St. Louis County, Mo., Profit from Poverty,
WASH. POST (Sept. 3, 2014), available at https://washingtonpost.com/news/thewatch/wp/2014/09/03/how-st-louis-county-missouri-profits-from-poverty/.
2. See Appendix.
3. S.B. 50 (Mo. 2015).
4. Jennifer S. Mann, Municipalities Ticket for Trees and Toys, As Traffic Revenue Decline, ST. LOUIS POST-DISPATCH (May 24, 2015), available at http://www.stltoday.com/
news/local/crime-and-courts/article_42739be7-afd1-5f66-b325-e1f654ba9625.html.
5. See Appendix.
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
213
Constitution. Part III examines potential Fair Housing Act violations, as
well as exploring how these ordinances affect a municipality’s duty, as a recipient of federal funding, to affirmatively further fair housing. Finally,
Part IV will briefly examine less discriminatory practices that achieve the
legitimate goals that municipalities are trying to advance and propose policy alternatives to advance racial justice and affirmatively further fair housing in the St. Louis region.
I. Introduction
A. St. Louis County
St. Louis County is a predominately suburban county located in the
St. Louis, Missouri–Illinois Metropolitan Statistical Area (MSA), the nation’s eighteenth largest MSA as of the 2010 Census.6 St. Louis County
is adjacent to, but does not include, the independent City of St. Louis.7
While the county is significantly more diverse than the State of Missouri
as a whole, it is primarily white, with 70.3% of the population identifying
as white alone.8 African Americans comprise 23.7% of the population.9
Just 6% of the population identifies as something other than white or African American (including 1.9% of the population that identifies as multiple races), and only 2.7% of the population identifies as Hispanic or Latino
(any race).10
In the local vernacular, the county is typically divided into three areas:
North County, West County, and South County (with independent
St. Louis City occupying what might otherwise be called East County).11
The vast majority of African Americans living in St. Louis County live in
or near the North County area, which includes Ferguson.
6. U.S. Census Bureau, Annual Estimates of the Resident Population: April 1,
2010 to July 1, 2014–United States–Metropolitan and Micropolitan Statistical Area
(2014), available at http://factfinder.census.gov/faces/tableservices/jsf/pages/
productview.xhtml?src=bkmk.
7. See JAMES NEAL PRIMM, LION OF THE VALLEY: ST. LOUIS, MISSOURI, 1764–1980,
297–309 (3d ed. 1981) (detailing the “Great Divorce” between St. Louis City and
County in 1876).
8. U.S. Census Bureau, State and County QuickFacts: St. Louis County, Missouri, available at http://quickfacts.census.gov/qfd/states/29/29189.html (last
revised Aug. 5, 2015).
9. Id.
10. Id.
11. DAWNE MASSEY, INSIDERS’ GUIDE TO ST. LOUIS 4–5 (2007). The precise borders of
North, West, and South County are nebulous, but Interstates I-70 and I-44 provide
rough approximations, with North County extending north from I-70; South
County extending south from I-44; and West County occupying the space in the
middle (although more commonly referring to the area west of Lindbergh Boulevard/U.S.-67). Id.
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50 - 79.9%
20 - 49.9%
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Figure 1
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St. Louis County Occupancy Permit Schemes Perpetuate Segregation
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The racially segregated nature of St. Louis is also reflected in measurements of concentrated poverty. In 2015, using data from the 2009–2013
American Community Survey, the Century Foundation compared the
concentration of poverty by race in the 25 largest MSAs in the country.12
The resulting report states that 29.5% of African American families in the
St. Louis MSA lived in an area of concentrated poverty, ranking St. Louis
as the MSA with fourth highest percentage of African Americans living in
concentrated poverty.13 In contrast, just 1.6% of white families in the
St. Louis MSA lived in an area of concentrated poverty, the second lowest
concentration nationally.14 The only MSA in the report with a lower rate
of whites living in concentrated poverty was Nassau-Suffolk, New York,
which has no areas that are considered concentrated poverty (in any racial
demographic).15
St. Louis County government is also divided, with ninety incorporated
municipalities existing within its borders.16 By comparison, the Kansas
City area counties of Clay and Jackson, which in aggregate have roughly
the same population as St. Louis County, contain only thirty-nine municipalities combined.17 Cook County, Illinois, a county with roughly five
times as many people as St. Louis County, contains just over 130 municipalities.18 Of the ninety municipalities in St. Louis County, eighty of them
run their own municipal court system.19 Throughout the county, twentythree fire departments,20 sixty police departments,21 and twenty-three
12. Paul A. Jargowsky, Architecture of Segregation: Civil Unrest, the Concentration
of Poverty, and Public Policy (Cent. Found. 2015), at http://apps.tcf.org/
architecture-of-segregation.
13. Id. at Table 6, http://www.tcf.org/assets/downloads/Jargowsky_Arch_
Appendix.pdf.
14. Id.
15. Id.
16. Municipalities, Saint Louis County, Mo., at http://www.stlouisco.com/
YourGovernment/Municipalities (last visited Sept. 5, 2015).
17. Municipalities, Clay County, Mo., at http://www.stlouisco.com/
YourGovernment/Municipalities/ (last visited Sept. 9, 2015); Jackson County
Communities, Jackson County, Mo., at www.jacksongov.org/content/3273/3297/
default.aspx (last visited Sept. 9, 2015).
18. Municipalities and Maps, Cook County Government, at http://blog.
cookcountyil.gov/economicdevelopment/wp-content/uploads/2013/06/
Municipalities-and-Maps.pdf ( June 2013).
19. Public Safety–Municipal Courts, Better Together at 5 (Mar. 2015), at http://
www.bettertogetherstl.com/wp-content/uploads/2014/10/BT-Municipal-CourtsReport-Full-Report1.pdf.
20. Transparency Report, Better Together at 3 (Mar. 2015), http://www.
bettertogetherstl.com/wp-content/uploads/2015/03/BT-Transparency-ReportFINAL.pdf.
21. Id.
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BY
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$81,000 - $100,000
$61,000 - $80,000
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Journal of Affordable Housing
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Median Household Income
Household Income by Census Tract, St. Louis County
Figure 2
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St. Louis County Occupancy Permit Schemes Perpetuate Segregation
217
school districts22 are currently in operation. In total, 115 different governments are charged with providing municipal services in St. Louis City and
County.23
B. St. Louis County Occupancy Permits
One of the many ways that municipalities in St. Louis County choose to
regulate their residents is by requiring occupancy permits for residential
property upon each change of tenancy. Occupancy permits are a tool
used throughout the country for regulating commercial and residential
property use in conformance with municipal zoning regulations.24 In residential contexts, occupancy permits can be used as an enforcement mechanism for occupancy standards that are part of municipal building and
property maintenance codes.25 To ensure that buildings’ uses comply
with the zoning code, municipalities typically require an inspection
upon the completion of construction before they will permit occupancy.26
Inspections are also generally required after a significant renovation, after
a period of extended vacancy, or when the proposed use of the building
changes.27
After the initial occupancy inspection, the enforcement of residential
occupancy standards throughout the rest of the country is typically
complaint-based.28 When the responsible government entity receives a
complaint, an inspection is made to verify the allegations.29 While some
municipalities have incorporated regulations that involve registration
and/or inspection of rental property upon change of tenancy, requiring
an occupancy permit upon each change of residency (whether tenant or
owner-occupied) is very rare outside the St. Louis area.30 In fact, outside
22. County School Districts, St. Louis County, Mo. at http://www.stlouisco.
com/yourgovernment/othergovernmentagencies/countyschooldistricts (last
visited Nov. 22, 2015).
23. Transparency Report, supra note 20, at 3.
24. 83 AM. JUR. 2D Zoning and Planning § 612 (2015).
25. Id.
26. Id.
27. PATRICIA E. SALKIN, 4 AMERICAN LAW OF ZONING § 39:3 (5th ed. 2015).
28. ROBERT C. ELLICKSON & VICKI L. BEEN, LAND USE CONTROLS: CASES AND MATERIALS 715 n.6 (3d ed. 2005).
29. Id.
30. Chicago, for instance, requires a residential certificate of occupancy only for
“new or substantially rehabbed multiple dwellings.” Certificate of Occupancy Inspection, City of Chicago, at http://www.cityofchicago.org/city/en/depts/bldgs/
provdrs/inspect/svcs/request_a_certificateofoccupancyinspection.html (last
visited Sept. 7, 2015). New York City requires certificates of occupancy, but only
for new buildings or where construction changes the use. Certificates of
Occupancy, N.Y.C. Bldgs. Dep’t, at http://www.nyc.gov/html/dob/html/
development/certificates.shtml (last visited Sept. 7, 2015). Milwaukee does not
require occupancy permits for residential properties unless they are new, have
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St. Louis, the prevailing view is that “[a] new occupancy permit may not
be required prior to each new tenancy or occupancy of a dwelling.”31
In St. Louis County, however, requiring permits upon every change of
residency is the standard practice.32 Occupancy permits function on the
front end: municipalities require information about who will be residing
in a unit before the residents are able to move in to the property. Throughout St. Louis County, at least sixty-two of the ninety municipalities require
occupancy permits upon each change of residency.33 In addition, St. Louis
County itself imposed a system of “Occupancy, Re-occupancy, and PreOccupancy Permits” in unincorporated areas in 2010.34
The precise information required in each occupancy permit varies from
one municipality to another, but the most common requirements are that
the new resident appear in person at city hall; pay a fee (ranging from $10
to well over $100); and complete an application identifying who will be
living in the property, including identification of relationships.35 In addition, the majority of municipalities require new occupants to provide
proof of identification, with at least fifteen specially identifying certain acceptable forms of photo identification.36 While occupancy permits are premised on the idea that the municipality is ensuring the maintenance and
upkeep of residential property, a number of municipalities have divorced
the occupancy permitting system from housing code inspections.37
been vacant for over six months, or if an inspector has posted a notice. Occupancy
Permits, City of Milwaukee, at http://city.milwaukee.gov/Occupancy#.
Ve4Bxp3BzGc (last visited Sept. 7, 2015).
31. SALKIN, supra note 27, § 39:3; see also People v. Spitz, 356 N.Y.S.2d 480 (N.Y.
App. Div. 1973) (“The ordinance in question, which required the issuance of a new
certificate of occupancy prior to each new tenancy or occupancy of a dwelling unit,
is an unreasonable exercise of police power.”).
32. See Appendix.
33. Id.; e.g., F ERGUSON C ITY C ODE § 7-145.1(1)(a), available at https://www.
municode.com/library/mo/ferguson/codes/code_of_ordinances (requiring a
permit “upon each change of occupancy or upon increase in the number of
persons occupying any residential building”).
34. ST. LOUIS COUNTY, REVISED CODE § 1110.1050. See also St. Louis County Public
Works, Re-Occupancy Permits, available at https://www.stlouisco.com/Portals/8/
docs/Document%20Library/Public%20Works/code%20enforcement/guides/
residential/ReOccupancy.pdf (last visited Sept. 9, 2015).
35. See Appendix.
36. Belridge, Bellefontaine Neighbors, Bridgeton, Clayton, Dellwood, Ferguson,
Hazelwood, Jennings, Lakeshire, Maplewood, Northwoods, Overland, Riverview,
Saint Ann, and University City. See Appendix for local code citations.
37. A number of municipalities have a two-part system, whereby properties are
first inspected (for a fee) before the occupant subsequently submits (and pays for)
an entirely separate application for an occupancy permit listing the proposed residents of the property. See, e.g., OVERLAND MUNICIPAL CODE § 515.070; WINCHESTER
MUNICIPAL CODE § 515.070(C); VINITA PARK MUNICIPAL CODE § 500.095(A)(4).
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Municipalities Requiring Occupancy Permits upon Change of Residence
Figure 3
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
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Instead, obtaining an occupancy permit in these municipalities is a purely
administrative ritual completed entirely at city hall, independent of any
inquiry into the property itself.38
Residing in a property without an occupancy permit is a violation of
local ordinance, punishable by fines and incarceration. For example, Ferguson, Hazelwood, Jennings, and University City all punish occupancy
permit violations by fines of up to $1,000 or imprisonment for up to
three months.39 The St. Louis Post-Dispatch has reported that the Village
of Hanley Hills recently recommended a fine of $474 for an individual
lacking an occupancy permit—on top of fines for other ordinance violations.40 Some municipalities are even more punitive in their use of occupancy permits. The City of Maplewood, for instance, has passed an ordinance authorizing “denial of occupancy permits within the city to those
persons [convicted of nuisance violations] for a period not to exceed six
months,” essentially exiling the person from the community.41
Although prevalent throughout St. Louis County, occupancy permits
are not common elsewhere in the MSA. In the City of St. Louis (which
is not part of St. Louis County), for instance, there is no requirement for
residents to identify all occupants in their property to municipal officials.
While a certificate of inspection must be obtained before most changes in
residency, the city inspection focuses on the conditions of the property
and can even occur before the residents are identified.42 A certificate of inspection states the number of occupants that can legally occupy the
38. Bridgeton, in particular, requires a new occupancy permit at each change of
tenancy, but requires a property inspection only every two years. BRIDGETON CODE
OF ORDINANCES § 510.040(B).
39. FERGUSON CITY CODE § 7-145.6(1) (citing § 1-15); HAZELWOOD CITY CODE
§ 100.130; JENNINGS CITY CODE § 1-9; UNIVERSITY CITY MUNICIPAL CODE § 100.190.
40. Mann, supra note 3. Other fines included $488 for having a home unfit for
habitation, $100 for improper trash storage, $250 for having no dog license, $478
for violating minimum housing standards, and $228 for not participating in the
city trash program, totaling $1,794 in fines for ordinance violations. The PostDispatch has also reported that Hanley Hills has sent out notices attempting to
hold residents’ driver’s licenses for non-traffic offenses, including occupancy permit violations. Jeremy Kohler & Jennifer S. Mann, Muni Court Improperly Holds Woman’s Drivers License Hostage–and She’s Not Alone, ST. LOUIS POST DISPATCH (May 12,
2015), available at http://www.stltoday.com/news/local/crime-and-courts/municourt-improperly-holds-woman-s-drivers-license-hostage-and/article_9e1a43975eb3-50d6-8185-bd4f156621ab.html.
41. MAPLEWOOD CODE § 34-242(2)(e).
42. CITY OF ST. LOUIS REVISED CODE § 256.56.040. The Code places all areas within
the legal boundaries of the City of St. Louis in housing conservation districts. Id.
§ 25.56.010. In practice, 98 percent of the property in St. Louis is in a housing conservation district. Housing Conservation Inspection, City of St. Louis, Mo., at
https://www.stlouis-mo.gov/government/departments/public-safety/building/
housing-conservation.cfm (last visited Sept. 7, 2015).
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
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property, but it does not identify those occupants by name, and in fact, the
same certificate of inspection can be used for multiple, distinct occupancies, as long as there is a certificate on file within the twelve months preceding each change of occupancy.43 In neighboring St. Charles County, occupancy permit ordinances typically follow the national norm, requiring
permits only upon construction, alteration, extended vacancy, or change
in use.44 Even within St. Louis County, occupancy permit requirements
are not uniform. For instance, Ladue, a wealthy city in West County,45 requires an occupancy permit only for new construction, properties that
have been vacant for over six months, and properties that have undergone
substantial construction.46
C. Origin and Development of the St. Louis County System
St. Louis County’s unique approach to occupancy permit requirements
appears to have originated nearly fifty years ago in University City, an
inner suburb bordering the City of St. Louis. In 1967, University City
was a “pioneer” in municipal occupancy law when it instituted a system
requiring that potential residents acquire a permit before moving into any
property.47 At the time, the mayor of University City framed the new occupancy law as a safeguard against the overcrowding and degradation of
housing stock occurring in western St. Louis City.48
Today, occupancy permits in University City require a separate application from the application for a property inspection. Prospective residents must first pay a fee for inspection of the property and then pay
an additional $25 to obtain an occupancy permit.49 A majority of area municipalities have followed University City’s lead: for individuals seeking
to live in much of St. Louis County, applying for permission to live in
their chosen municipality is a fixture of the move-in process.50 Many of
these municipalities have added restrictions, including requiring occupants to provide approved forms of identification. Ferguson, for instance,
requires photo identification from the primary applicant; the names and
43. Id.
44. See, e.g., ST. CHARLES CODE OF ORDINANCES § 400.1350(B) (“Premises and buildings hereafter erected or structurally altered shall not be used, occupied or changed
in use until a certificate of occupancy shall have been issued.”).
45. In 2013, median household income for Ladue was $176,369, compared with
Missouri’s median household income of $47,380. U.S. Census Bureau, State and
County QuickFacts: Ladue, Missouri, at http://quickfacts.census.gov/qfd/
states/29/2939656.html (last revised Aug. 2015).
46. LADUE CODE § 62-289.
47. ELLICKSON & BEEN, supra note 28.
48. Nathan B. Kaufman, University City’s Residential Occupancy Law, 15 ST. LOUIS
B. J. 29, 29–30 (1968–1969).
49. UNIVERSITY CITY MUNICIPAL CODE § 240.020 (A)(3).
50. See Appendix; Figure 3.
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relationships of all persons occupying the property; and a copy of the
lease agreement, if renting.51
Like Ferguson, many other municipalities require prospective residents
to provide photo identification. Some even go as far as to specify certain
approved forms of identification.52 For instance, in Overland, a majority
white, lower-income city located just south of what generally is considered to be North County), the occupancy permit ordinance specifically
identifies approved forms of identification.53
The information sought by municipalities, however, is not limited to information about the condition of the property or identity and relationship
of the occupants. The City of Jennings, a North County suburb of
St. Louis, includes a provision in its ordinance authorizing the application
for an occupancy permit to include “any other necessary information to
enable the code official to issue a permit.”54 The application available online as of August 2015 requests that applicants and residents also indicate
their place of employment, the purchase price of the property, and the applicant’s previous address.55
Overall, occupancy permit requirements in St. Louis County appear to
be roughly correlated to race and economic status. Occupancy permits are
least prevalent in West County, which is the wealthiest, whitest portion of
the County.56 While occupancy permit requirements are extensive in both
North County (predominately black) and South County (predominately
white), North County is significantly more likely to include photo identification requirements.57 The correlation between occupancy permits and
household income is even more pronounced, as occupancy permits are
very common in areas with household incomes less than $100,000 and almost non-existent in areas with household incomes above that mark.58
D. Relationship to Anti-Harboring Ordinances
In their focus on the identity of individual occupants, the occupancy
permit systems in St. Louis County are similar in many ways to “antiharboring” ordinances designed to prevent undocumented immigrants
from moving into a municipality. Anti-harboring ordinances have been
the subject of litigation in Hazelton, Pennsylvania; Farmers Branch,
51. FERGUSON CITY CODE § 7-145.2 Sec. 7-145.2.
52. See Appendix.
53. OVERLAND MUNICIPAL CODE § 515.070 (“The I.D. shall be in the form of a:
(1) U.S. government issued State driver’s license; (2) U.S. government issued
State I.D.; (3) Approved current school I.D.; (4) U.S. government issued passport.”)
54. JENNINGS CITY CODE, Ch. 17 § 302.3(2)(B)(i).
55. Application for Certificate of Occupancy, City of Jennings, at http://www.
cityofjennings.org/BldgDept/OccupancyApp.pdf (last visited Aug. 24, 2015).
56. See Figs. 1–3; Appendix.
57. See Figs. 1, 3–4; Appendix.
58. See Figs. 1–3; Appendix.
7
10.5
14
Miles
Unknown
N/A
No
METROPOLITAN ST. LOUIS EQUAL HOUSING & OPPORTUNITY COUNCIL, ST. LOUIS COUNTY MUNICIPALITIES REQUIRING PHOTO ID TO OBTAIN OCCUPANCY PERMITS, USING ARCVIEW GIS,
VERSION 10.1, ENVTL. SYS. RESEARCH INST., INC. 2012; see APPENDIX.
2015 / Metropolitan St. Louis Equal Housing and Opportunity Council
0 1.75 3.5
N
Yes
ID Requirements
Municipalities Requiring Photo ID to Obtain Occupancy Permits
Figure 4
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
223
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Journal of Affordable Housing
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2015
Texas; Freemont, Nebraska; and elsewhere.59 In 2006, Hazleton became
the first municipality to adopt such an ordinance.60 While St. Louis
County occupancy permit ordinances do not explicitly focus on illegal immigration, they share the pre-authorization requirements that allow a municipality to scrutinize who is living in a property before permitting occupancy.61 These ordinances have been challenged on many grounds,
including preemption, Equal Protection, state landlord tenant law, and
the Fair Housing Act.62 The majority have been struck down based on
findings that they were preempted by federal immigration laws.63
St. Louis County has its own experience with ordinances explicitly created to deny housing to undocumented immigrants. In 2006, the City of
Valley Park passed an ordinance to “abate the nuisance of illegal immigration” and secure the right “to be free of the debilitating effects . . . imposed
by the influx of illegal aliens.”64 The city eventually repealed the portions
of the ordinance and related ordinances dealing with housing after litigation ensued.65 In researching municipal ordinances regarding occupancy
permits throughout St. Louis County for this article, the authors did not
identify any ordinance that specifically stated as its purpose to address occupancy by undocumented immigrants.66
Even without explicitly referencing immigration or harboring, however,
the ordinances prevalent in St. Louis County still create many of the same
issues litigated in anti-harboring cases. Parts II and III of this article discuss
59. See generally Rigel Oliveri, Between a Rock and a Hard Place: Landlords, Latinos,
Anti-Illegal Immigrant Ordinances, and Housing Discrimination, 62 VAND. L. REV. 55
(2009).
60. Id. at 60.
61. Id. at 63–64.
62. E.g., Lozano v. City of Hazelton, 496 F. Supp. 2d 477, 483 (M.D. Pa. 2007).
63. E.g., Lozano v. City of Hazleton, 724 F.3d 297, 317–22 (3d Cir. 2013); Villas at
Parkside v. City of Farmers Branch, Tex., 675 F.3d 802, 816 (5th Cir. 2012); contra
Keller v. City of Fremont, 719 F.3d 931, 944–46 (8th Cir. 2013) (upholding an ordinance prohibiting rental of property to undocumented immigrants, based in part
on the finding that “the rental provisions do not require local officials to determine
whether an alien is removable from the United States” but rather “expressly require City officials to defer to the federal government’s determination of whether
an alien renter is unlawfully present”).
64. VALLEY PARK ORDINANCE 1715, Findings §§ (D)–(F) (Sept. 26, 2006), available at
http:/clearinghouse.wustl.edu/chDocs/public/IM-MO-0001-0009.pdf, amended by
VALLEY PARK ORDINANCE 1721 (Feb. 14, 2007), available at http://clearinghouse.
wustl.edu/chDocs/public/IM-MO-0001-0015.pdf.
65. Oliveri, supra note 59, at 61 n.16.
66. Other St. Louis County municipalities, however, have faced other challenges to their landlord permitting/licensing schemes. E.g. Clifford Hindman
Real Estate, Inc. v. City of Jennings, 283 S.W.3d 804, 808–09 (Mo. Ct. App. 2009)
(overturning a city’s landlord licensing scheme on the grounds that it exceeded
the power delegated to cities under state statute).
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
225
many of these, but this article does not address the preemption arguments
in depth. Nevertheless, to the extent that these ordinances require local
officials to independently determine the immigration status of prospective
residents, they likely are preempted by federal immigration policy.67
II. Constitutional Issues with St. Louis County
Occupancy Permits
The approach to occupancy permits in St. Louis County creates a number of potential legal issues for local governments. By creating barriers to
travel and residence within a community, these permit systems potentially create an unjustifiable burden on the freedom of travel, a fundamental right under the U.S. Constitution.68 By limiting an owner’s use of his
property, they also raise due process and Fourth Amendment issues because courts have found that there is a property interest in occupancy permits.69 Additionally, these ordinances may violate the so-called Hancock
Amendment to the Missouri Constitution, which limits the power of local
governments to levy taxes, licenses, and fees.70
A. Occupancy Permits and the Right to Travel
The occupancy permit schemes prevalent in St. Louis County, which
require individuals to register their presence with the city before moving
in, violate the constitutionally guaranteed right to travel by creating barriers that may deter people from moving into a municipality. The effect is
especially pronounced in areas that require photo identification, particularly for prospective residents from groups with less access to state-issued
photo identification.
The right to travel is constitutionally protected71 and has been recognized by the U.S. Supreme Court as a fundamental right.72 The right to
travel is protected against encroachment by both states and their political
67. See Keller, F.3d at 944 (upholding ordinance restricting occupancy by undocumented immigrants based on ordinance’s deferral to federal government’s determination as to whether an immigrant was “unlawfully present”); see also Villas at
Parkside, 675 F.3d at 816 (striking down similar ordinance despite city’s purported
deference to “federal categories of immigration”).
68. See generally infra Part II.A.
69. E.g., Polenz v. Parrott, 883 F.2d 551, 556 (7th Cir. 1989) (citing Reed. v. Vill.
of Shorewood, 704 F.2d 943 (7th Cir. 1983)); see also Part II.B, infra.
70. MO. CONST. art. X, §§ 16–24.
71. United States v. Guest, 383 U.S. 745, 759 (1966) (“Although there have been
recurring differences in emphasis within the Court as to the source of the constitutional right of interstate travel, there is no need here to canvass those differences
further. All have agreed that the right exists.”).
72. Shapiro v. Thompson, 394 U.S. 618, 638 (1969). Missouri courts have not
recognized a corresponding right to travel under the Missouri Constitution but
have, however, recognized that it is protected by the U.S. Constitution. E.g., United
C.O.D. v. State of Missouri, 150 S.W.3d 311, 313 (Mo. 2004) (noting that fundamental
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subdivisions.73 It consists of three elements: the right to enter/leave a
state; the right to be treated as welcome visitor; and to “those travelers
who elect to become permanent residents, the right to be treated like
other citizens of that State.”74 As the third element suggests, the right to
travel extends to those intending to move to a location permanently.75
While the Supreme Court has reserved judgment as to whether the
right to freedom of intrastate movements is also fundamental,76 it has characterized the right to travel as the right to pass through every part of the
country “as freely as in our own states,” suggesting that the freedom of
intrastate travel is equally expansive as the freedom of interstate travel.77
In any case, occupancy permit restrictions apply to all prospective residents, whether hailing from within or outside the State of Missouri. In
the event that intrastate travel is found not to be a fundamental right,
the occupancy permits would still be unconstitutional as applied to prospective out-of-state residents.
The standard of review for an ordinance that restricts the right to travel
is strict scrutiny, i.e., whether the ordinance promotes a compelling state
interest.78 In reviewing state statutes that mandated minimum residency
requirements before a person became eligible for state benefits, the Supreme Court in Shapiro v. Thompson found that “the purpose of inhibiting
migration by needy persons into the State is constitutionally impermissible.”79 It found that these policies limiting welfare access burdened the
rights requiring strict scrutiny include “the rights to interstate travel, to vote, free
speech, and other rights explicitly or implicitly guaranteed by the Constitution”).
73. See Ketchum v. City of West Memphis, Ark., 974 F.2d 81, 83 (8th Cir. 1992).
74. Saenz v. Roe, 526 U.S. 489, 500 (1999).
75. Id.; Edwards v. California, 314 U.S. 160, 183 (1941) ( Jackson, J., concurring)
(“[I]t is a privilege of citizenship of the United States, protected from state abridgment, to enter any State of the Union, either for temporary sojourn or for the establishment of permanent residence therein and for gaining resultant citizenship
thereof. If national citizenship means less than this, it means nothing.”).
76. Mem’l Hosp. v. Maricopa Cnty., 415 U.S. 250, 255 (1974).
77. Shapiro, 394 U.S. at 630; see also Johnson v. City of Cincinnati, 310 F.3d 484,
498 (6th Cir. 2002) (“In view of the historical endorsement of a right to intrastate
travel and the practical necessity of such a right, we hold that the Constitution protects a right to travel locally through public spaces and roadways.”); King v. New
Rochelle Mun. Hous. Auth., 442 F.2d 646, 648 (2d Cir. 1971) (finding that it would
be “meaningless to describe the right travel between states as a fundamental precept of personal liberty and not to acknowledge a correlative constitutional right to
travel within a state”); but see Doe v. Miller, 405 F.3d 700, 713 (8th Cir. 2005) (declining to decide whether there is a fundamental right to intrastate travel under
the Constitution); Wardwell v. Bd. of Ed. of City Sch. Dist. of City of Cincinnati,
529 F.2d 625, 627 (6th Cir. 1976) (“We find no support for plaintiff’s theory that
the right to intrastate travel has been afforded federal constitutional protection.”).
78. Memorial Hosp., 415 U.S. at 254.
79. Shapiro, 394 U.S. at 629.
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
227
right to travel since “[a]n indigent who desires to migrate, resettle, find a
new job, and start a new life will doubtless hesitate if he knows that he
must risk making the move without the possibility of falling back on
state welfare assistance.”80 Widespread evidence of actual deterrence is
not required to challenge the constitutionality of an ordinance that restricts travel, but rather it is the possibility of deterrence that is determinative.81 The Court found that financial solvency was not a compelling interest to justify burdens on the right to travel. Although the state has some
interest in saving money, that interest is not compelling: “the saving of
welfare costs cannot justify an otherwise invidious classification.”82
In addition, at least one federal court has found that “[b]anishment . . .
has never been permitted in this country.”83 In that case, the court enjoined a police officer’s practice of telling people to get out of town or
face arrest.84 The law was enjoined both as a violation of the fundamental
right to travel and because banishment is not a punishment permitted in
the United States.85 As the right to freedom of travel covers the freedom to
establish residence as well as the freedom to visit,86 occupancy permit policies that ban prospective residents from moving to an area are just as unconstitutional as policies that ban a person from visiting.
By requiring each new resident to register with the city upon moving
into the community, municipalities create barriers for new residents. In
enforcing their occupancy permit regulations, many municipalities in
St. Louis County specify certain acceptable forms of identification.87 In
striking down a state voter identification law, the Supreme Court of Missouri recognized that “between 3 and 4 percent of Missouri citizens lack
the requisite photo ID [i.e., a Missouri driver’s or non-driver’s license or
a United States passport].”88 The court referenced state reports estimating
that between 169,215 and 240,000 registered voters may not have the
80. Id.
81. Dunn v. Blumstein, 405 U.S. 330, 339–40 (1972) (“Shapiro did not rest upon a
finding that denial of welfare actually deterred travel. Nor have other ‘right to
travel’ cases in this Court always relied on the presence of actual deterrence.”).
82. Shapiro, 394 U.S. at 633.
83. Commonwealth of Pennsylvania v. Porter, 480 F. Supp. 686, 698 (W.D. Pa.
1979).
84. Id.
85. Id.
86. See Saenz v. Roe, 526 U.S. 489, 500 (1999); Edwards v. California, 314 U.S.
160, 183 (1941).
87. E.g, OVERLAND MUNICIPAL CODE § 515.07056; JENNINGS CITY CODE, Ch. 17
§ 302.3(2)(B)(i); Application for Certificate of Occupancy, City of Jennings,
http://www.cityofjennings.org/BldgDept/OccupancyApp.pdf (last visited
Aug. 24, 2015).
88. Weinschenk v. State, 203 S.W.3d 201, 206 (Mo. 2006).
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required photo identification.89 While these voters were able to apply and
obtain the appropriate forms of identification, the court found that
“[e]ach of these forms of ID, however, normally costs money to obtain.
This presents a practical problem for Missourians who will be discouraged
from attempting to vote because of their concern that they must pay a
fee to do so.”90
Just as the voter identification laws that were struck down by the Missouri Supreme Court created a burden on the fundamental right to vote,
occupancy permits in St. Louis County create burdens on the right to
travel and reside in a municipality. While the voter identification laws
provided only indirect costs to voters by requiring them to obtain an approved form identification, occupancy permits require new residents pay
a fee directly to the municipality in addition to imposing similar indirect
fees related to acquisition of photo identification. The burden of obtaining
the approved identification is even greater in housing than it is in voting,
as the population of residents in St. Louis County includes many people
who are ineligible to vote, particularly immigrant populations that are unable to obtain approved forms of state identification.91
St. Louis County municipalities have no compelling interest that would
justify this burden on potential residents’ right to travel and reside in their
borders. Municipalities with occupancy permit ordinances typically cite a
desire to “protect the public health, safety and the general welfare.”92
While municipalities can impose reasonable occupancy standards that address health, safety, and overcrowding concerns, the focus on identifying
who lives in the property, as opposed to the condition of the property itself,
89. Id.
90. Id.
91. In Missouri, for example, all applicants must have a Social Security number
or a letter from the Social Security Administration to apply for a driver’s license or
non-driver identification. MO. REV. STAT. ANN. § 302.171; Documents for Driver/
Nondriver License & Instruction Permit, Mo. Dep’t of Revenue, http://dor.mo.
gov/drivers/idrequirements.php.
92. See, e.g., FLORISSANT CITY CODE § 500.010:
The general purpose of this Chapter is to protect the public health, safety and
the general welfare of the people of the City. The specific purposes,
within these general objectives, are to: 1. Protect the character and stability of
residential property within the City; 2. Provide minimum standards for cooking, heating and sanitary equipment necessary to the health and safety of occupants of buildings; 3. Provide facilities for light and ventilation necessary to
health and safety; 4. Provide minimum standards for the maintenance of existing residential buildings and to thus prevent the creation of slums and blight;
5. Preserve the property value of land and buildings throughout the City;
and 6. Administration of the Code to ensure that the above purposes are
accomplished.
Id.
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
229
belies that purported legitimate purpose. The legitimate interest in ensuring
safe and well-maintained property is equally, if not better, served by allowing landlords to bear the responsibility for getting a permit, or directly linking permits to the property inspection.
This is precisely the tactic used by the independent City of St. Louis
with its certificate of inspection93 and is similar to rental licensing schemes
that have been upheld by some courts. The New Jersey Supreme Court,
for instance, has upheld a municipal ordinance conditioning a new tenant’s occupancy on the property passing a housing code inspection, reasoning that the ordinance encouraged landlords to make apartments
available for inspection, which would lead to more effective and efficient
housing code enforcement.94 New Jersey courts have also held that exempting types of property that are traditionally owner-occupied does
not violate equal protection, finding that their exemption was rational because owner-occupants need less “official coercion to insure property
maintenance.”95
Unlike these ordinances that focus on property maintenance, the ordinances prevalent in St. Louis County create additional burdens for all prospective residents, including questioning that extends far beyond what is
required to establish compliance with health and safety codes. St. Louis
County occupancy permits create larger burdens than most rental licensing systems because the permits are required for all occupants, both owners and renters.96 In addition, St. Louis County municipalities focus the
occupancy permit application process on the occupants themselves instead of inquiring into the condition of the property. Rather than examining whether the property is suitable for its occupants, their inquiry goes
more towards suitability of the occupants for the community by demanding proof of identification (including, in many cases, an approved photo
identification) and/or the relationships of the proposed occupants.
In many municipalities, occupants must apply for a permit separately
from and in addition to the inspection.97 In these municipalities, the health
and safety concerns have already been satisfied by the inspection process,
but the municipalities still insist on a superfluous occupancy permit application process and associated identification requirements. This additional information has no relevance to ensuring the property’s compliance with the
housing code, but instead serves to create a wholly unjustifiable burden on
the right of freedom of travel without serving any compelling state interest.
93. See CITY OF ST. LOUIS REVISED CODE § 256.56.040.
94. Dome Realty, Inc. v. City of Paterson, 416 A.2d 334, 347 (N.J. 1980).
95. State of New Jersey v. C. I. B. Int’l, 416 A.2d 362, 368 (N.J. 1980).
96. See Appendix.
97. For example, the City of Bridgeton requires occupancy permits for all new
occupants but no inspection is required if the property was inspected in last two
years. BRIDGETON CODE OF ORDINANCES § 510.040(B).
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B. Other Federal Constitutional Issues with Occupancy Permits
In addition to violating the fundamental right to freedom of travel by
creating barriers to settlement by prospective residents without a compelling state interest to justify those burdens, St. Louis County occupancy
permits raise other constitutional issues. The power to issue occupancy
permits stems from a state’s police power, but a state’s police power is
not without limit, and unreasonable exercises of the police power cannot
be imposed.98 In addition, there is a constitutionally protected property
interest in an occupancy permit, and municipalities cannot deny occupancy permits without appropriate due process safeguards.99 Finally,
the inspection of property that is required to obtain an occupancy permit
raises potential Fourth Amendment issues related to the state’s ability to
search private residences.100
The Supreme Court has held that
[t]he governmental power to interfere by zoning regulations with the general rights of the land owner by restricting the character of his use, is not
unlimited, and other questions aside, such restriction cannot be imposed
if it does not bear a substantial relation to the public health, safety, morals,
or general welfare.101
In evaluating a similar occupancy permit scheme, a New York appellate
court found that an ordinance “which required the issuance of a new certificate of occupancy prior to each new tenancy or occupancy of a dwelling unit, is an unreasonable exercise of police power.”102 Elaborating on
that reasoning to strike down a similar “rental permit” scheme, another
New York court found that the burdens created by requiring an owner
to perpetually reapply for rental permits on each change of occupancy
to be “onerous and unreasonable.”103 The court rejected the ordinance
as “an attempt to shift the entire burden of enforcement of the housing
code . . . from the village to the owner” because the owner, despite having
already obtained a certificate of occupancy, would “be required, in effect,
to demonstrate his continued right to that certificate.”104
The St. Louis County occupancy permit schemes described herein have
the same constitutional deficiencies as the ordinance rejected in New
York. By requiring all owners, whether they are personally occupying
the property or leasing it out, to obtain an occupancy permit upon each
change of individual occupants, St. Louis County municipalities attempt
98.
99.
100.
(1967).
101.
102.
103.
104.
Nectow v. City of Cambridge, 277 U.S. 183, 188 (1928).
Polenz v. Parrott, 883 F.2d 551, 556 (7th Cir. 1989).
Camara v. Mun. Ct. of the City & Cnty. of San Francisco, 387 U.S. 523, 534
Nectow, 277 U.S. at 188.
People v. Spitz, 356 N.Y.S.2d 480 (N.Y. App. Div. 1973).
Sokolov v. Vill. of Freeport, 372 N.Y.S.2d 304, 305 (N.Y. App. Div. 1975).
Id.
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
231
to improperly shift the burden of enforcement of the housing code from
the municipality to the owner. In addition, the intrusive focus on personal
information about the occupants only serves to further highlight how far
these ordinances have strayed from the regulation of health, safety, and
general welfare.
An owner’s ability to exclusively use his or her own property is “one of
the bundle of rights attendant to ownership under the laws of property in
all states.”105 In Polenz v. Parrott, the Seventh Circuit found that there was
a constitutionally protected property right in an occupancy permit.106 In
reaching its conclusion, the court placed particular emphasis on the fact
that, without an occupancy permit, the property was devoid of economic
value.107 “If the state prevents you from entering your house, it deprives
you of your property right even if the fee simple remains securely
yours.”108 There is also a property interest in a leasehold under Missouri
law.109 Accordingly, in addition to depriving owners of their property
rights, an occupancy permit scheme preventing leaseholders from occupying their (rented) houses would also deprive tenants of their property
rights.
St. Louis County occupancy permit schemes also raise procedural due
process issues in their deprivation of property and liberty interests without a pre-deprivation hearing.110 By denying an occupancy permit, a city
deprives the owner or tenant of a property interest.111 In addition to taking property, many of the municipalities in St. Louis County impose criminal penalties upon violators, which can lead to arrest and at least temporary loss of liberty.112 Because of citizens’ interests in using their property
and remaining free of incarceration, municipalities must ensure adequate
due process safeguards before depriving residents of those rights.113
105. Polenz, 883 F.2d at 558.
106. Id.
107. Id.
108. Id. (citing Reed v. Vill. of Shorewood, 704 F.2d 943 (7th Cir. 1983).
109. Santa Fe Trail Neighborhood Redev. Corp. v. W.F. Coehn & Co., 154 S.W.3d
432, 439 (Mo. Ct. App. 2005) (quoting State ex rel. State Highway Comm’n v. Johnson,
592 S.W.2d 854, 857 (Mo. Ct. App. 1979) (“[A] leaseholder possesses an interest in
property for which he must be compensated in condemnation.”)).
110. Given the availability of “an explicit textual source of constitutional protection against a particular sort of government behavior,” i.e., the Fourth Amendment’s protection against warrantless search and seizure, it is unlikely that the occupancy permits raise substantive due process issues. See Mangino v. Inc. Vill. of
Patchogue, 739 F. Supp. 2d 205, 251 (E.D.N.Y. 2010) (quoting Albright v. Oliver,
114 S. Ct. 807 (1994)).
111. See Polenz v. Parrott, 883 F.2d 551, 556 (7th Cir. 1989); Santa Fe Trail Neighborhood Redev. Corp., 154 S.W.3d at 439.
112. E.g., FERGUSON CITY CODE § 7-145.6(1) (citing § 1-15); HAZELWOOD CITY CODE
§ 100.130; JENNINGS CITY CODE § 1-9; UNIVERSITY CITY MUNICIPAL CODE § 100.190.
113. U.S. CONST. amend. XIV, § 1.
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Procedural due process requires that the government give parties
whose rights are to be affected notice and the opportunity to be
heard.114 “Due process analysis requires the balancing of three competing
interests: (1) the private interest that will be affected by official action;
(2) the risk of erroneous deprivation of such interest through the procedures used and the probable value, if any, of additional safeguards; and
(3) the government’s interest.”115 “[T]he Court has traditionally insisted
that, whatever its form, opportunity for that hearing must be provided before the deprivation at issue takes effect.”116 The requirement that a hearing take place before the deprivation of property does not apply in “extraordinary situations where some valid governmental interest is at
stake that justifies postponing the hearing until after the event.”117
To satisfy procedural due process requirements, residential occupants
must generally be given notice and an opportunity for hearing before
being deprived of an occupancy license.118
In an action to revoke a license, procedural due process requires the city to
provide timely notice of the revocation hearing; to afford adequate time
for the licensee to investigate the charges and prepare a defense; and to
give the licensee an opportunity to respond to the charges, to present evidence through witnesses under oath, and to confront and cross-examine
opposing witnesses under oath.119
An ordinance creating meaningful opportunity for pre-deprivation appeal
provides adequate procedural due process safeguards.120 Where there are
significant and imminent health and safety risks, however, a postdeprivation hearing may be sufficient to protect an occupants procedural
due process rights.121
114. Fuentes v. Shevin, 407 U.S. 67, 80 (1972).
115. Clark v. Bd. of Dirs. of Sch. Dist. of Kansas City, 915 S.W.2d 766, 771 (Mo.
Ct. App. 1996) (quoting Mathews v. Eldridge, 424 U.S. 319, 335 (1976)).
116. Id. at 82.
117. Id.
118. See Tollett v. Laman, 497 F.2d 1231 (8th Cir. 1974) (finding that procedural
due process required notice and opportunity for hearing before revocation of a
trailer park license); Jones v. Wildgen, 428 F. Supp. 2d 1178, 1183 (D. Kan. 2006)
(finding that plaintiff stated a claim where complaint stated that city gave him
notice of a violation, denied his request for a hearing, and subsequently filed a
criminal complaint against him).
119. Zeman v. City of Minneapolis, 540 N.W.2d 532, 537 (Minn. Ct. App. 1995),
rev’d on other grounds, 552 N.W.2d 548 (Minn. 1996).
120. Greater New Haven Prop. Owners Ass’n v. City of New Haven, 951 A.2d
551 (2008).
121. CarePartners LLC v. Lashway, 428 F. App’x 734, 736 (9th Cir. 2011) (“Predeprivation suspension of boarding home’s license did not violate operator’s procedural due process rights; post-deprivation hearing was sufficient . . . [because]
facility had no sprinkler system and . . . a very high percentage of its residents
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
233
Occupancy permit ordinances in St. Louis County violate the procedural
due process requirements of the Fourth Amendment if they do not provide
for a pre-deprivation hearing. While some county municipalities include an
appeals process,122 many do not.123 A prospective owner-occupant who is
denied an occupancy permit in a city without an appeals process loses his
right to property without a hearing. Similarly, a prospective tenant who enters into a lease with a landlord and is subsequently denied an occupancy
permit loses his right to property (the leasehold) without hearing. However, a prospective tenant who applies for an occupancy permit before signing a lease with the landlord probably does not have a property interest
because such a tenant would not yet be a leaseholder. Some municipalities,
however, require a prospective occupant in a rental property to provide a
copy of the lease agreement to obtain an occupancy permit,124 all but assuring that prospective tenants will have property rights to lose if their application is denied.125 Furthermore, municipalities are unlikely to demonstrate
an imminent risk justifying dispensing with a pre-deprivation hearing.126
Finally, St. Louis County occupancy permits also potentially raise
issues related to warrantless searches. Warrantless searches are prohibited by the Fourth Amendment, which protects individuals from unreasonable searches and seizures.127 The Fourteenth Amendment extends
the protection against warrantless searches to the states via the Due Process Clause,128 and Missouri’s Constitution also provides its own protection against unreasonable searches.129 “Entries onto private property
were semi- or non-ambulatory, and government’s interest of protecting the lives of
elderly residents who were physically or mentally incapable of evacuating in case
of a fire was high.”).
122. E.g., ST. ANN CITY CODE § 400.700(H) (providing administrative appeal for
“[a]ny person or corporation who feels that an error has been made in an inspection performed by the City”).
123. E.g., MAPLEWOOD CODE §§ 12-21–12-38 (providing appeals only for public
nuisance declarations); JENNINGS CITY CODE, Ch. 17 §§ 302.1-302.5 (no appeals provisions); FERGUSON CITY CODE §§ 7-145.1–145.7 (no appeals provisions); FLORISSANT CITY
CODE § 510.1030 (no appeals provisions).
124. E.g., JENNINGS CITY CODE, Ch. 17 § 302.3(2)(B)(i); Application for Certificate
of Occupancy, City of Jennings, http://www.cityofjennings.org/BldgDept/
OccupancyApp.pdf (last visited Aug. 24, 2015).
125. An exception being those tenants who are denied a permit because of their
inability to demonstrate a lease agreement.
126. For instance, inadequate proof of identity or disclosure of family relationships may violate ordinance requirements, but it is inconceivable that a municipality’s failure to know exactly who is residing in a property at any given moment
would create anything near the degree of a safety risk that was presented in
CarePartners. See CarePartners LLC, 428 F. App’x at 734.
127. State of Mo. v. Tackett, 12 S.W.3d 332, 337 (Mo. Ct. App. 2000).
128. Ker v. California, 374 U.S. 23 (1963); Mapp v. Ohio, 367 U.S. 643 (1961).
129. MO. CONST. art. I, § 15.
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by government officials, like searches pursuant to a criminal investigation, are governed by the warrant requirement of the Fourth Amendment.”130 Absent consent, warrantless searches by municipal building
inspectors of residential rental property for code enforcement have
been held to violate the Fourth Amendment.131 The “basic purpose of
this Amendment . . . is to safeguard the privacy and security of individuals against arbitrary invasions by governmental officials.”132
Courts are split as to whether making occupancy contingent on consenting to an inspection amounts to a Fourth Amendment violation. The
New York Court of Appeals found that “[a] property owner cannot be regarded as having voluntarily given his consent to a search where the price
he must pay to enjoy his rights under the Constitution is the effective deprivation of any economic benefit from his rental property.”133 In contrast,
in evaluating a Moberly, Missouri, rental permit ordinance, the Court of
Appeals for the Western District of Missouri found that, regardless of
whether the permitting system created a “forced choice” for owners to
consent to searches, the determinative issue was “whether the subsequent
prosecution of the individual is for his or her refusal to consent
thereto.”134 A California court, however, rejected a similar argument as
“specious,” finding that “[t]o compel a property owner to let his property
lie vacant and to prohibit him from selling it, unless he ‘consents’ to a
warrantless search is to require an involuntary consent.”135
The key to distinguishing the California case from the Missouri case
appears to be the comprehensiveness of the restrictions at issue. While
the Missouri case applied only to owners seeking to lease out their
units, the California case required inspections in order to “occupy, change
130. Bezayiff v. City of St. Louis, 963 S.W.2d 225, 232 (Mo. Ct. App. 1997).
131. See Camara v. Mun. Ct. of the City & Cnty. of San Francisco, 387 U.S. 523
(1967).
132. Id.
133. Sokolov v. Vill. of Freeport, 52 N.Y.2d 341, 346 (N.Y. 1981) (invalidating an
ordinance requiring landlords to obtain a rental permit before letting or reletting
their property); see also Baker v. City of Portsmouth, No. 1: 14CV5L2, 2015 WL
5822659, at *1 (S.D. Ohio Oct. 1, 2015) (slip op.) (invalidating an ordinance requiring licenses and annual inspections for all rental properties).
134. Ashworth v. City of Moberly, 53 S.W.3d 564, 580 (Mo. Ct. App. 2001); see
also Marcavage v. Borough of Lansdowne, 493 F. App’x 301, 306 (3d Cir. 2012) (upholding an ordinance requiring periodic inspections of rental properties by either a
city inspector or a “licensed architect or engineer of [owner’s] choice”); Platteville
Area Apartment Ass’n v. City of Platteville, 179 F.3d 574, 578 (7th Cir. 1999) (upholding an ordinance requiring periodic inspections for rental properties and excluding owner-occupied housing).
135. Currier v. City of Pasadena, 48 Cal. App. 3d 810, 814 (Ct. App. 1975); see
also Wilson v. City of Cincinnati, 346 N.E.2d 666 (Ohio 1976) (finding unconstitutional an ordinance requiring property owners to obtain a certificate of housing inspection before selling their property).
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
235
the use of or sell, exchange, rent, lease or otherwise permit any unit which
is hereafter vacated by the occupant thereof to be re-occupied.”136 The coerciveness of the forced choice is magnified when the owner faces the
prospect of losing all use of the property rather than a single use, i.e., renting. That said, the New York case also involved an ordinance that regulated only rentals, yet the court still found that conditioning the permit
on consent to the inspection “compels consent to a warrantless search.”137
In St. Louis County, the majority of municipalities either make inspections a part of the occupancy permit or require inspections to be completed before issuing a permit. These requirements potentially raise issues
related to unreasonable searches. The vast majority of St. Louis County occupancy permit ordinances apply not only to renters, but also to owners.
By making any occupancy of the property contingent on consenting to a
search, the ordinances potentially exact consent to an administrative
search from the owner, as the owner has no ability to put the property
to economic use if he can neither occupy the property himself nor rent
the property to another occupant.
C. Hancock Amendment to the Missouri Constitution
Ordinances that charge a fee to obtain occupancy permits also potentially raise issues under the Missouri Constitution, specifically the socalled Hancock Amendment limiting local governmental authority to
levy new taxes.138 Under the Hancock Amendment, a local government
may not levy any “tax, license, or fee” that was not already in existence
at the time the Amendment was adopted or increase the levy of a tax beyond the level that was in effect at the time the Amendment was adopted
without voter approval.139 In interpreting what constitutes a “tax, license
or fee,” the Missouri Supreme Court has distinguished between “taxes,”
which require voter approval, and “user fees,” which do not.140
To aid in the determination of whether a sum is best categorized as a
“tax” or a “user fee” the Missouri Supreme Court has established a five
factor test:
(1) When is the fee paid?—Periodic fees are likely subject to the Hancock Amendment while one-time fees are not.
(2) Who pays the fee?—User fees are less likely to be subject to the
Hancock Amendment, while fees that are “blanket-billed to all or
almost all of the residents of the political subdivision” are.
136.
137.
138.
139.
140.
City of Pasadena, 48 Cal. App. 3d at 813.
Sokolov, 52 N.Y.2d at 347; see also Baker, 2015 WL 5822659.
MO. CONST. art. X, §§ 16–24.
Id.
Keller v. Marion Cnty. Ambulance Dist., 820 S.W.2d 301 (Mo. 1991).
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(3) Is the amount of the fee to be paid affected by the level of goods or
services provided to the fee payer?—If so, then the Hancock
Amendment is less likely to apply.
(4) Is the government providing a service or good?—If so, the fee is
less likely to be subject to the Hancock Amendment.
(5) Has the activity historically and exclusively been provided by the
government?—If so, the fee is likely subject to the Hancock
Amendment.141
More recently, the court has deemphasized the five factor test—stating
that the factors are to “be used only as reliable indicators, not constitutional divining rods”—in favor of the Leggett test for distinguishing fees
from taxes.142 Under that test:
[f]ees or charges prescribed by law to be paid by certain individuals to public officers for services rendered in connection with a specific purpose ordinarily are not taxes . . . unless the object of the requirement is to raise revenue to be paid into the general fund of the government to defray
customary governmental expenditures . . . rather than compensation of
public officers for particular services rendered.143
The Missouri Court of Appeals has examined the applicability of the
five factors to a rental licensing permit in Moberly, Missouri.144 While
the answers to the questions raised by the five factor test will, by necessity, depend on the specifics of each ordinance, the court’s analysis is illustrative of how courts would be likely to evaluate St. Louis County occupancy permits under the Hancock Amendment.
In the Moberly case, the court found that an annual payment was more
like a periodic tax than a user fee and resolved the first factor (when the
fee is paid) in favor of the property owners against the city.145 The court
ruled for the city on the second factor (who pays the fee) after finding that
the “fee limited only the owners of non-owner occupied rental properties”
and was not “blanket-billed.”146 As to factors three (whether the fee is “affected by the level of goods or services provided”) and four (government
provision of a service or good), the court ruled in favor of the city after
finding that the city was providing a service (the inspection) and was scaling the fee based on the level of services provided by charging more for
larger units.147 Finally, the court ruled in favor of the landlords on the
fifth factor (historic and exclusive provision by the government), after
finding that purpose of the ordinance was to “protect the public health,
141.
142.
143.
144.
145.
146.
147.
Id. at 304 n.10 (Mo. 1991).
Zweig v. Metro. St. Louis Sewer Dist., 412 S.W.3d 223 (Mo. 2013).
Leggett v. Mo. State Life Ins. Co., 342 S.W.2d 833, 875 (Mo. 1960).
Ashworth v. City of Moberly, 53 S.W.3d 564, 568 (Mo. Ct. App. 2001).
Id. at 575.
Id. at 576.
Id. at 576–77.
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
237
safety and general welfare of the people in the City in non-owner occupied dwellings” and that that “regulation for the public health is typically
a government function.”148 Overall, the court upheld the ordinance after
ruling for the city on three of the five factors.149
While the earliest occupancy permits likely predate the Hancock
Amendment, many of the occupancy permit ordinances in St. Louis
County are subject to the Amendment.150 The typical St. Louis County occupancy permit differs from the rental licensing scheme discussed in the
Moberly case, however. Factors one (when the fees are paid) and two (who
pays them) would probably be decided differently than they were in Moberly. Municipalities in St. Louis County do not typically have periodic inspections, choosing instead to inspect only upon change of occupancy,151
so the first factor would likely disfavor application of the Hancock
Amendment. The municipalities do, however, blanket-bill the permit
charges by applying them to all residential properties, not just rentals,152
which may favor application of the Hancock Amendment under the
second factor. The fees in St. Louis County are not generally scaled by
size, which would tend to resolve factor three (whether fees are affected
by level of goods or service provided) against the municipalities.153 Jumping to factor five (historic provision by the government), this too would
tend to be resolved against the municipalities—just as it was in the Moberly case—because the stated purpose of the ordinances is the same regulation for public health and safety that court found to weigh against the
City of Moberly. Leaving aside factor four, at least three of the four other
factors would seem to favor application of the Hancock Amendment and
require a public vote to justify the fees.
Factor four’s analysis of whether the government is providing a service
or good, arguably the most important factor in light of the court’s reendorsement of the Leggett test, would likely be more difficult to establish
and would potentially vary from municipality to municipality. In many of
the municipalities, there is an inspection of the property, which the court
found to be a “service” in the Moberly case.154 On the other hand, a number
of municipalities bifurcate the inspection from the occupancy permit.155
In municipalities where occupancy permits are separate from inspections, four of the five factors would tend to show the charges are
“taxes” that require a public vote to enact. Even where municipalities
148. Id. at 578.
149. Id.
150. Including the St. Louis County ordinance applying to unincorporated
areas, which was passed in 2010. ST. LOUIS COUNTY, REVISED CODE § 1110.1050.
151. See Appendix.
152. See supra text accompanying notes 30–32.
153. See Appendix.
154. Ashworth, 53 S.W.3d at 576–77.
155. See supra text accompanying notes 40–42.
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link the occupancy permit to an inspection, it is still likely that three out of
five of the factors would advocate for making the permit fees subject to the
Hancock Amendment. Unlike the licensing fees at issue in Moberly,
St. Louis County occupancy permits fees are blanket billed to prospective
occupants and typically do not scale fees by size,156 likely invalidating the
ordinances under the Hancock Amendment.
III. Fair Housing Act and the Duty to Affirmatively
Further Fair Housing
Occupancy permit ordinances can also create issues under the Fair
Housing Act (FHA)157 by discriminating against protected classes. The
FHA protects persons from discrimination in housing on the basis of
race, color, national origin, religion, gender, disability, and familial status.158 Under the FHA, it is illegal to use membership in a protected
class to “make unavailable or deny a dwelling to a person”159 or to “discriminate in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith.”160
The FHA also makes it unlawful to “make, print, or publish, or cause to be
made, printed, or published any notice, statement, or advertisement, with
respect to the sale or rental of a dwelling that indicates any preference,
limitation, or discrimination” based on a protected class161 or to retaliate
against a person who exercises a right protected by the FHA.162
A. Disparate Treatment
Although St. Louis County occupancy permits are facially neutral, by
giving municipal officials the authority to determine who is and is not
permitted to live in the municipality, these ordinances may encourage
landlords to discriminate in order to avoid penalties and open the door
to abuse by persons who wish to discriminate against a protected
class.163 Private landlords have an incentive to rent to persons who are
156. E.g., F ERGUSON C ITY C ODE § 7-145.1(1)(a), available at https://www.
municode.com/library/mo/ferguson/codes/code_of_ordinances (requiring a
permit “upon each change of occupancy or upon increase in the number of
persons occupying any residential building”).
157. 42 U.S.C. §§ 3601–3619. For this article, both the Title VIII of the Civil
Rights Act of the 1968 and its subsequent amendments are referred to, in aggregate, as the Fair Housing Act or FHA.
158. 42 U.S.C. § 3604.
159. 42 U.S.C. § 3604(a).
160. 42 U.S.C. § 3604(b).
161. 42 U.S.C. § 3604(c).
162. 42 U.S.C. § 3617.
163. See Oliveri, supra note 59, at 87–97 (discussing how “anti-illegal immigrant” ordinances create incentives for discrimination prohibited by the Fair Housing Act, 42 U.S.C. § 601, by private landlords and provide cover for discrimination
by municipalities).
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
239
able to legally reside in the property and do not want the disruption and
expense of accepting a tenant only to find out that the municipality will
not grant an occupancy permit. When municipalities narrowly define
what forms of identification are authorized or do not provide clear guidance, landlords may be less inclined to deal with bureaucratic hurdles involved with approving unfamiliar or foreign forms of identification.164
Worse yet, landlords may attempt to determine for themselves whether
a prospective applicant’s photo identification is valid or approved.165
This exposes them to considerable risk, because in some cases, merely inquiring into someone’s place of birth, national origin, or citizenship may
violate the Fair Housing Act.166
In addition to creating an incentive for landlords to discriminate
against immigrants, even without malicious intent, these ordinances create cover for landlords who do wish to deny housing based on a protected
class. “A landlord can easily make the pretextual claim that he refused to
rent to a Latina apartment-seeker not because of her national origin, but
because he thought she was here illegally, or because her documents
looked funny.”167
Not only do these ordinances pose a serious risk of encouraging private
landlords to discriminate against immigrants, they also increase the likelihood that municipal employees will, either intentionally or unintentionally, discriminate against immigrants. If approved forms of identification
are not specified by ordinance, municipal clerks or other officials have
vast discretion as to which forms of identification they consider
“valid.”168 In an article evaluating “anti-illegal immigrant” ordinances,
164. Id. at 87–88 (describing how landlords have used objections to bureaucratic
requirements to avoid renting to persons with housing vouchers).
165. Id. at 88–89.
The landlord may also try to undertake his own evaluation of a prospective tenant’s legal status. . . . [T]his scenario presents other dangers. A landlord untrained
in deciphering the intricacies of immigration documents is very likely to evaluate
the documents incorrectly. A landlord who is presented with documents he does
not recognize and who faces punishment for renting to an undocumented alien is
likely to err on the side of caution and refuse to rent to the person presenting the
unfamiliar documentation. This outcome is even more likely if the landlord fears
counterfeit documents and is unschooled in how to detect them.
Id. (internal citations omitted).
166. Id. at 89–90; Housing Rights Ctr. v. Donald Sterling Corp. 274 F. Supp. 2d
1129, 1141–43 (C.D. Cal. 2003), aff ’d, 84 F. App’x 801 (9th Cir. 2003).
167. Oliveri, supra note 59, at 92.
168. In the context of voter identification, studies have found that, controlling
for other factors, blacks and Hispanics were asked for identification a statistically
significant 5 percent more often than their white counterparts. Stephan Ansolabehere, Access Versus Integrity in Voter Identification Requirements, 63 N.Y.U. ANN. SURV.
AM. L. 613 (2007–08).
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Professor Oliveri catalogs the risks taken by municipalities with these ordinances as follows:
If municipal employees single out national origin minorities and either deliberately or mistakenly deny them the ability to qualify for rental housing,
this constitutes a denial of housing in violation of [42 U.S.C.] § 3604(a). If
they impose different requirements on such individuals such as extra document checks or delays—this could violate § 3604(b), depending on whether
the court considers these actions to be connected to the rental of housing.
And if they make discriminatory national origin-based statements, they
risk violating § 3604(c) if a court deems these statements to be connected
to the rental of housing.
A municipality might also be liable to landlords under the provision of § 3617
that protects people from retaliation for aiding others in their ability to enjoy
housing free of discrimination. If a municipality penalizes a landlord for failing or refusing to comply with an AII [anti-illegal immigrant] ordinance—for
example, if the landlord refuses to request extra documentation from his Latino tenants after receiving a complaint—the landlord could have a cause of
action against the municipality for retaliation.169
In fact, recent cases have demonstrated how the pre-authorization requirements of St. Louis County occupancy permits can abet unlawful discrimination. Currently, a fair housing complaint is pending against the
City of Berkeley alleging that the city denied occupancy permits to a family based on a failure to provide a “valid” identification.170 The prospective residents provided foreign-issued forms of photo identification, including a passport, a driver’s license, and a voter identification card,
but were denied.171 Despite lacking any ordinance defining approved
forms of identification, the city officials provided a list of “valid ID” and
“identification not accepted” and told the family “[u]ntil you get, show
us, citizenship, don’t come back here applying for an application for occupancy permit.”172 Similarly, in 2006, the City of Black Jack was sued for
169. Id. at 93–94 (internal citations omitted).
170. Emanuele Berry, Dispute over IDs Creates Problem for People Seeking Occupancy Permit in Berkeley, St. Louis Public Radio, Jan. 2, 2015, available at http://
news.stlpublicradio.org/post/dispute-over-ids-creates-problem-people-seekingoccupancy-permit-berkeley.
171. Id.
172. Id.
A Valid ID Means:
• State Issued ID or Driver’s License
• A United States Passport
• A Greencard Issued by the U.S. Citizenship and Immigration Services
• Birth Certificates for all Occupants Under 18 Years
Identification Not Allowed:
• Foreign Passports
• International Driver’s License
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
241
discriminating against families with children in denying an occupancy permit to an unmarried couple and their children.173 The denial of the occupancy permit stemmed not from any complaint against the family, but instead was based on the municipality’s failure to pre-authorize the family.174
So long as St. Louis County municipalities mandate that prospective residents report to municipal officials and obtain approval before moving into
their homes, they increase the likelihood of discriminatory behavior—by
both landlords and municipal officials—by creating incentives to avoid
renting to people who, stereotypically, seem less likely to be able to be approved and by providing cover for bad actors who actively seek to discriminate against housing seekers.
B. Disparate Impact
In addition to creating incentives for disparate treatment, St. Louis
County occupancy permits also create disparate impacts on protected
classes. The Supreme Court has recognized that disparate-impact claims
are cognizable under the Fair Housing Act.175 In evaluating disparate impact claims, federal circuits apply different legal standards.176 The Eighth
Circuit, which covers Missouri, has endorsed a shifting burden test
whereby plaintiffs must first establish a prima facie case, i.e., showing
“that the objected-to actions resulted in a disparate impact upon protected
classes compared to a relevant population,” and then the burden shifts to
defendants to demonstrate a legitimate business interest.177 If a defendant
meets its burden, the burden of proof returns to the plaintiff, who must
show that there is a “ ‘viable alternative means’ . . . available to achieve
the legitimate policy objective without discriminatory effects.”178 The
• Foreign Birth Certificates
• Foreign ID Badges
Id.
173. Petition, Loving v. City of Black Jack, No. 06CC-003157 (Mo. Cir. Ct.
Sept. 26, 2006), dismissed by consent of parties, available at http://www.aclu-mo.
org/files/1413/7462/7005/LovingBlackJackPetition.pdf. The unmarried couple
lived with three children, two of whom were related to both parents and a third
who was the biological offspring of the mother from a previous relationship. Id.
The ordinance at the time prohibited more than three persons not related by
blood or marriage from living in a single family property. Id.; BLACK JACK CODE
OF ORDINANCES § 6-18, 118.1.6(a) (2007).
174. Id.
175. Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135
S. Ct. 2507, 2525 (2015)
176. See ROBERT G. SCHWEMM, HOUSING DISCRIMINATION LAW AND LITIGATION § 10:6
(2013) (discussing the various standards applied across the circuits).
177. Gallagher v. Magner, 619 F.3d 823, 833 (8th Cir. 2010) (citing Darst–Webbe
Tenant Ass’n Bd. v. St. Louis Hous. Auth., 417 F.3d 898, 902 (8th Cir. 2005)).
178. Id. at 834.
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U.S. Department of Housing and Urban Development (HUD) has also recently issued regulations regarding disparate impact claims under the
FHA, endorsing a similar standard.179
As discussed in Parts II.A and II.B, these occupancy permit ordinances
create burdens, including monetary ones, on residents. The cost of an occupancy permit itself can create a burden, especially as it rises above
$100,180 but there is also the cost burden of obtaining an approved form
of identification. These burdens fall especially hard on members of protected classes, creating a claim for discrimination based on disparate
impact.181
The photo identification requirements in particular create a disparate
impact on persons based on national origin. For some residents, an approved form of photo identification is impossible, because Missouri requires a Social Security number to obtain a driver’s license or nondriver’s identification card.182 The Missouri Supreme Court in Weinschenk
v. State also notes that obtaining photo identification requires advance
planning, as well as time and ability to navigate bureaucracies.183
179. 24 C.F.R. § 100.500(c) (2013).
(1) The charging party . . . has the burden of proving that a challenged practice
caused or predictably will cause a discriminatory effect. (2) Once the charging
party or plaintiff satisfies [its] burden of proof, . . . the respondent or defendant
has the burden of proving that the challenged practice is necessary to achieve
one or more substantial, legitimate, nondiscriminatory interests of the respondent or defendant. (3) If the respondent or defendant satisfies [its] burden of
proof, . . . the charging party or plaintiff may still prevail upon proving that
the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect.
24 C.F.R. § 100.500(c).
180. E.g., GREEN PARK ZONING CODE § 400.120(A)(1)(8) (setting fee for residential
occupancy permit at $110).
181. In evaluating the anti-harboring ordinance in Hazelton, Pennsylvania, the
district court in Lozano v. City of Hazelton, 496 F. Supp. 2d 477, 496 (M.D. Pa. 2007),
found that there was no FHA violation “because the statutes have not yet gone into
effect, we cannot know whether they would have the discriminatory effect that
plaintiffs claim.” In St. Louis County, however, the ordinances are already in effect
and creating disparate impacts. See supra discussion accompanying notes 170–174.
182. See MO. REV. STAT. ANN. § 302.171; Documents for Driver/Nondriver License & Instruction Permit, Mo. Dep’t of Revenue, at http://dor.mo.gov/
drivers/idrequirements.php.
183. Weinschenk v. State, 203 S.W.3d 201, 208–09 (Mo. 2006) (“[I]n addition to
the monetary costs imposed on persons seeking to obtain the proper photo ID, the
process to do so imposes additional practical costs, including navigating state and/
or federal bureaucracies, and travel to and from the Department of Revenue and
other government agencies. One of these practical costs is the time it takes to
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
243
In addition to discrimination against persons on the basis of national
origin, these occupancy permit ordinances also have disparate impacts
on other protected classes, including persons with disabilities, victims of
domestic violence, and minority populations. With regard to persons
with disabilities, the Missouri Supreme Court recognized how voter identification requirements presented special burdens for persons with disabilities, including one voter who, due to a mobility impairment, had difficulty “gather[ing] the necessary documents to obtain a non-driver’s
license and . . . stand[ing] in line at the Department of Revenue” and another voter who had “a physical condition that requires him to arrange
transportation to and from the Department of Revenue and to employ
an attendant to assist him in order to obtain a non-driver’s license.”184
These same obstacles would impact the ability of residents with disabilities to obtain the required forms of identification for occupancy permits.
Occupancy permits may also create a burden on victims of domestic violence. In its report on the Ferguson Police Department, the U.S. Department of Justice highlighted two instances where women called the police
to report a domestic disturbance, and as a result, were issued occupancy
permit violations.185 To the extent that these occupancy ordinance are
used to disproportionately deny occupancy to victims of domestic violence, they create a disparate impact on women, who make up the vast
majority of domestic violence victims.186
receive the appropriate documentation. In Missouri, the waiting period for a birth
certificate alone is six to eight weeks.”).
184. Id. at 209.
185. U.S. DEP’T OF JUSTICE, CIVIL RIGHTS DIVISION, INVESTIGATION OF THE FERGUSON POLICE DEPARTMENT (Mar. 4, 2015) available at http://www.justice.gov/sites/default/
files/opa/press-releases/attachments/2015/03/04/ferguson_police_department_
report.pdf.
In one instance, for example, a woman called FPD to report a domestic disturbance. By the time the police arrived, the woman’s boyfriend had left. The police looked through the house and saw indications that the boyfriend lived
there. When the woman told police that only she and her brother were listed
on the home’s occupancy permit, the officer placed the woman under arrest
for the permit violation and she was jailed. In another instance, after a
woman called police to report a domestic disturbance and was given a summons for an occupancy permit violation, she said, according to the officer’s report, that she “hated the Ferguson Police Department and will never call again,
even if she is being killed.”
Id.
186. See U.S. Dep’t of Health & Human Services, National Intimate Partner and
Sexual Violence Survey: 2010 Summary Report, at 38–39, 54–55 (2011) (reporting
that women are five times more likely than men to need medical care from domestic violence); Sara K. Pratt, U.S. Dep’t of Hous. & Urban Dev., Office of Fair Hous.
& Equal Opportunity, Assessing Claims of Housing Discrimination Against Victims of
244
Journal of Affordable Housing
Volume 24, Number 2
2015
Finally, occupancy permits may create a disparate impact based on
race or color. In Magner v. Gallagher, the Eighth Circuit overturned a district court’s dismissal on summary judgment of a disparate impact
claim.187 In that case, the plaintiffs alleged that the City of St. Paul’s aggressive code enforcement strategy decreased the availability of affordable housing and increased costs for owners who rented to low-income
tenants.188 Because African Americans made up a disproportionate percentage of lower-income households that rely on low-income housing,
the plaintiffs alleged that the impact was discriminatory.189 The court
found that the plaintiffs had met their initial burden in showing a disparate effect, but also found that that the city met its burden by showing that
“enforcement of the Housing Code promotes the objectives of providing
minimum property maintenance standards, keeping the City clean and
housing habitable, and making the City’s neighborhoods safe and livable.”190 In deciding whether there were less discriminatory alternatives,
the court evaluated an alternative housing code enforcement strategy that
provided more collaborative approach toward dealing with landlords.191
Ultimately, the court found that there was “a genuine dispute of fact regarding whether [the plaintiffs’ favored strategy] was a viable alternative
to the City’s aggressive Housing Code enforcement practices.”192
In St. Louis County, the occupancy permit schemes are nearly ubiquitous in the predominately African American North County and relatively
rare in predominately white West County.193 To the extent that occupancy
permit schemes create an adverse effect, e.g., by forcing tenants to pay additional fees, that effect would have disparate impact because African
Domestic Violence under the Fair Housing Act and the Violence Against Women Act, at 2
(2011) (“[S]tatistics show that discrimination against victims of domestic violence is
almost always discrimination against women. Thus, domestic violence survivors
who are denied housing, evicted, or deprived of assistance based on the violence
in their homes may have a cause of action for sex discrimination under the Fair
Housing Act.”).
187. Gallagher v. Magner, 619 F.3d 823, 838 (8th Cir. 2010).
188. Id. at 834–35.
189. Id.
190. Id. at 836–37.
191. Id. at 837–38.
192. Id. at 838.
193. See supra Figures 1 and 3. Although occupancy permits are also common in
predominately white South County, that does not address the aggregate disparity.
To prove a disparate effect (and thereby establish a prima facie case), plaintiffs
can show that “(1) x% of [the protected class population is affected] by facially neutral . . . regulations, (2) that y% of [the non-protected class population is affected] by
the . . . regulations, and, crucially, (3) that x is significantly greater than y.” Tsombanidis v. West Haven Fire Dept., 352 F.3d 565 (2d Cir. 2003). In St. Louis County, the
vast majority of African Americans live in areas with occupancy permits while a significant proportion of the white population does not.
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
245
Americans are disproportionately more likely to be residents of municipalities where they are subject to occupancy permits. While the municipalities will be able to articulate a legitimate non-discriminatory purpose,
i.e., the stated goal of preserving the health, safety, and general welfare of
the community, they would be unlikely to show that there is no available
alternative with a less discriminatory impact, especially given the rarity of
St. Louis County-style occupancy permit schemes outside of the area.
This analysis of disparate racial impact, however, is complicated by the
multiple local jurisdictions that are decision makers. While the occupancy
permit schemes, in aggregate, create a picture of disparity throughout the
county, the disparate effect based on race is less apparent within each municipality. In each municipality, all of the applicants are subject to the occupancy permit scheme, so there would be no ability to show that, within
a given municipality, the proportion of African Americans affected is
higher than the proportion of white residents. In order to make an effective disparate impact claim, a plaintiff would have to either sue the county
itself (which has limited authority over the municipalities it encompasses)
or convince the court to evaluate an individual municipality in relation to
the regional disparate effects. Both options are potentially difficult. A better strategy to address regional disparities based on race and/or color
may be to use municipal obligations to affirmatively further fair housing
to encourage changes to the ordinances.194
C. Affirmatively Furthering Fair Housing
Along with their obligation to not actively discriminate against protected classes, many of the municipalities in St. Louis County also have
an additional obligation to affirmatively further fair housing based on
their receipt of funds from the Department of Housing and Urban Development (HUD). HUD is required to “administer the programs and activities relating to housing and urban development in a manner affirmatively
to further the policies of [the Fair Housing Act].”195 HUD has pushed
those responsibilities down to municipalities it funds, including those receiving funds under the Community Development Block Grant program.196 Many municipalities in St. Louis County receive this funding
as sub-recipients of the county197 and are thereby obligated to do more
194. See infra Part III.C.
195. 42 U.S.C. § 3608(e)(5).
196. Affirmatively Furthering Fair Housing, 80 Fed. Reg. 42271, 42274–75
( July 16, 2015).
197. Including BelRidge, Bella Villa, Berkeley, Beverly Hills, Breckenridge Hills,
Bridgeton, Calverton Park, Charlack, Chesterfield, Clayton, Country Club Hills,
Creve Coeur, Ferguson, Flordell Hills, Hanley Hills, Hillsdale, Jennings, Moline
Acres, Normandy, Oakland, Olivette, Pagedale, Pine Lawn, Riverview, Shrewsbury, St. John, Sycamore Hills, University City, Velda City, Velda Village Hills,
246
Journal of Affordable Housing
Volume 24, Number 2
2015
than simply address fair housing complaints that are brought to their attention. Instead, these municipalities must
tak[e] meaningful actions that, taken together, address significant disparities in housing needs and in access to opportunity, replacing segregated
living patterns with truly integrated and balanced living patterns, transforming racially and ethnically concentrated areas of poverty into areas
of opportunity, and fostering and maintaining compliance with civil rights
and fair housing laws.198
Instead of affirmatively furthering fair housing, occupancy permits requiring pre-authorization do the opposite by creating financial and administrative barriers to entering a new municipality, which in turn preserves
the segregated status quo. Obtaining an occupancy permit from a municipal government can range from an administrative chore to a significant
extra cost to a potential resident. When residents have to physically go to
city hall to ask permission to move in, there are a variety of subtle and unsubtle ways a municipality can communicate who is and is not welcome in
that community. The process of going to a government office to request a
permit to reside in an area could have a deterrent effect on members of protected classes, especially when coupled with demands for identification.
Many of the municipalities have overwhelmingly white staff and officials.199 Even without a direct or intentional message of discrimination,
this mono-racial environment can convey a message of exclusion.200 Racist
emails from a Ferguson court clerk (now working in another nearby municipality), demonstrate at least some possibility of a hostile environment for
African Americans dealing with local governments.201
Vinita Park, Webster Groves, Wellston, and Wildwood. Fiscal Year 2013 Consolidated Annual Performance and Evaluation Report, St. Louis County ( Jan. 1, 2013–
Dec. 31, 2013) available at http://www.stlouisco.com/Portals/8/docs/Document
%20Library/planning/community%20development/Draft_CAPER_2013.pdf.
198. 80 Fed. Reg. at 42353.
199. For instance, only four out of fifty-four total commissioned police officers
in the Ferguson Police Department were black as of March 2015. See INVESTIGATION
OF THE FERGUSON POLICE DEPARTMENT, supra note 185, at 88.
200. See Saunders v. Gen. Serv. Corp., 659 F. Supp. 1042, 1058 (E.D. Va. 1985).
[I]t is natural that readers of the . . . brochure would look at the human models
depicted as representing the kinds of individuals that live in and enjoy [the provider’s] apartment complexes. If a prospective tenant positively identified with
these models, the message conveyed would be that “I belong in these apartments. My kind of people live there.” Conversely, if the prospective tenant
reading the brochure saw no models with whom he or she could identify, the
reader would obtain a message that “these apartments are not for me” or
“my kind.”
Id.
201. Jennifer S. Mann, Ferguson Court Clerk Fired Over Racist Email Is Now
Working in Another Nearby Court, ST. LOUIS POST-DISPATCH (Aug. 8, 2015), available
St. Louis County Occupancy Permit Schemes Perpetuate Segregation
247
Additionally, the way that municipalities broadcast their occupancy
permit requirements can be perceived as inhospitable or even threatening.
The Jennings application for a certificate of occupancy states at the top
that “violation of the municipal code can result in fines not exceeding
$500.00 per day or imprisonment. The City of Jennings reserves the
right to conduct post occupancy inspections.”202 Before a person even
goes to city hall to request an occupancy permit, Jennings has conveyed
that the person will be viewed suspiciously. Such a message flies in the
face of the obligation to affirmatively further fair housing.
IV. Conclusion
Municipalities have a legitimate interest in ensuring that their housing
stock is safe, healthy, and well-maintained, but the current preauthorization schemes prevalent throughout St. Louis County go well beyond that legitimate purpose. Many occupancy permit requirements
appear to focus less on the suitability of the property and more on the suitability of the resident. In addition, the fees, administrative burdens, and
limitations on approved forms of identification create barriers to entry
into the community, especially for immigrants and persons with disabilities. By assuming the authority to determine who is and is not able to
move into a municipality, municipalities violate constitutional guarantees,
including the right to travel, and risk violating the Fair Housing Act.
Municipalities can avoid the majority of these issues—and still address
their stated purpose of maintaining the quality of their housing stock—by
focusing their enforcement on the legitimate habitability concerns.
Throughout the country, municipalities are able to address inadequate
housing with a complaint-based code enforcement, rather than a draconian pre-authorization scheme. To the extent that municipalities wish to
enforce a front-end enforcement, ordinances should focus on the condition of the property and permit landlords to demonstrate that their property meets code requirements even before identifying tenants—like the
City of St. Louis’s certificate of inspection program. Unless there are allegations of overcrowding or other complaints, municipalities should avoid
intrusive inquiries into family dynamics within a household. Requiring
identification for every occupant of a household likely exceeds a municipality’s authority, but to the extent that photo identification requirements
are permissible, municipalities should be very broad in defining what
forms of identification are acceptable to avoid creating disparate impacts
or undue burdens on vulnerable populations.
at http://www.stltoday.com/news/local/govt-and-politics/ferguson-court-clerkfired-over-racist-email-is-now-working/article_fd10bf70-ba5d-5fa1-bf75fa6c1dc62a3e.html.
202. City of Jennings, Application for Certificate of Occupancy, http://www.
cityofjennings.org/BldgDept/OccupancyApp.pdf (last visited Oct. 11, 2015).
§ 29-118(c)(1)
§ 515.150
§ 400.440.1
Website
ECode360 Yes
Multi-family
Only
Yes
Othere
Otherf
ECode360 Yes
Otherg
Municode Yes
Bellefontaine
Neighbors
Bellerive
Bel-Ridge
Berkeley
Beverly Hills
Black Jack
Yes
§ 6-18-118.6(a)
Website
§ 425.010
Otherc
Bella Villa
Multi-family
Only
§ 13-22(a)
Municode Yes
Ballwin
Cite
Code
Require
Locationb Occupancy
Permit on
each
occupancy
change
Municipalitya
N/A
§ 33-2-1(B)(2)
No
§ 515.15(C)
§ 5-7
§ 505.02
§ 13-22(b)
Cite
Rental: $50;
§ 6-18-118.1.6 (a)(2)
owner-occupied:
$20
Not listed
$75
Not listed
Unknown
$30
$40
$0
Cost of
Occupancy
Permit
No
No
No
N/A
No
Yes
No
No
N/A
N/A
N/A
N/A
N/A
Yes
N/A
N/A
Require
Specify
ID for
Approved
Occupancy IDs
Permit
Appendix: Occupancy Permits in St. Louis County
N/A
N/A
N/A
N/A
N/A
websited
N/A
§ 13-22
Cite
Website
§ 31-02-14
§ 405.150
§ 405.500
§ 400.130B
§ 26-187(b)
§ 500.930(113.1)
ECode360 Yes
ECode360 Yes
ECode360 Yes
ECode360 No
Yes
Otherj
ECode360 Yes
Yes
Otheri
Otherl
Otherm
Municode Yes
Othern
ECode360 Yes
Brentwood
Bridgeton
Calverton Park
Charlack
Chesterfield
Clarkson Valley
Clayton
Cool Valley
Country Club
Hills
Crestwood
Creve Coeur
Crystal Lake
Park
No
No
Yes
§ 510.040(A)
ECode360 Yes
Breckenridge
Hills
§ 515.020
§ 15.10.12
§ 505.070(D)(1)
§ 400.1240A
§ 405.430E
Cite
Code
Require
Locationb Occupancy
Permit on
each
occupancy
change
Municipalitya
$100
N/A
Unknown
Unknown
$20
Single: $80;
Multi: $60
N/A
NA
$20
$35
Single: $40;
Multi families:
$25/unit
$45
$20
Cost of
Occupancy
Permit
N/A
No
Websiteo
No
Unknown
N/A
N/A
N/A
No
Yes
Websitek
§ 400.210
N/A
N/A
Unknown
Unknown
Yes
No
No
N/A
N/A
N/A
N/A
N/A
Yes
N/A
N/A
N/A
N/A
Yes
N/A
N/A
Require
Specify
ID for
Approved
Occupancy IDs
Permit
N/A
N/A
§ 505.070(C)(3)
Websitei
§ 510.040(C)
§ 25-147
§ 405.430F
Cite
(Continued)
N/A
N/A
N/A
N/A
Sec 400.130
Websitek
N/A
N/A
N/A
N/A
Websiteh
N/A
N/A
Cite
§ 500.020(A)(4)
§§ 5-17, 5-3.1.1
§ 400.820
Websiteu
Municode No
ECode360 Yes
ECode360 Yes
Others
ECode360 No
Municode Yes
ECode360 Yes
ECode360 No
ECode360 Yes
Otheru
Des Peres
Edmundson
Ellisville
Eureka
Fenton
Ferguson
Florissant
Frontenac
Glendale
Grantwood
Village
Yes
Multifamily
Only
N/A
§ 510.130(D)
§ 7-145.1(a)
§ 430.020(E)(2)
§§ 405.830(C);
500.030(11)
§ 6-36
Websitep
Otherp
Dellwood
Yes
Cite
Code
Require
Locationb Occupancy
Permit on
each
occupancy
change
Municipalitya
§ 400.860
N/A
§ 510.130(C)
No
N/A
No
Yes
No
Websitet
§ 7-145.2(7)
Unknown
No
websiter
N/A
No
N/A
Yes
N/A
N/A
N/A
Yes
N/A
N/A
N/A
N/A
N/A
No
Require
Specify
ID for
Approved
Occupancy IDs
Permit
§ 500.030(11)(a)(2)
N/A
Websiteq
Cite
N/A
N/A
N/A
§ 7-145.2(1)(a)
N/A
N/A
Websiter
N/A
N/A
Websiteq
Cite
Grantwood city uses unincorporated St. Louis County permit system. See St. Louis
County, infra.
$25
N/A
$30 (apt)
$40 (house)
$40
$5
Unknown
$15
$25
N/A
$25
Cost of
Occupancy
Permit
§ 111.1.1
ECode360 Yes
Other
Municode Yes
Otheraa
Municode No
Hazelwood
Huntleigh
Jennings
Kirkwood
Ladue
§ 05.695(A)
Municode Yes
Otheree
Maryland
Heights
Moline Acres
Yes
§ 6-242
Municode Yes
Maplewood
§ 12-25
§ 405.810(a)
ECode360 Yes
cc
Manchester
§ 500.040
§ 62-289
Other
Yes
Yes
§ 405.060
§ 500.140(B)(2)
Lakeshire
bb
Ch. 17, § 302.3
Yes
Websitex
Hanley Hills
No
§ 515.270(B)
Yes
Otherv
Greendale
Websitex
§ 405.480(A)
ECode360 Yes
Green Park
Cite
Code
Require
Locationb Occupancy
Permit on
each
occupancy
change
Municipalitya
dd
Website
N/A
N/A
Ch. 17, § 301.8
N/A
§ 500.140(B)(8)(a)
N/A
Websitew
§ 400.120(A)(1)(8)
Cite
§ 6-247(B)(1)(2)
§ 12-25(d)(2)
$25 original/$10 Chpt 500 App. A
update
$75 single, $60
for multifamily
$50
$150 single, $125 § 505.05
multifamily
$0 for permit;
$75-$96
inspection fee
N/A
Unknown
$50
N/A
$30
Unknown
$25 permit/
$100 inspection
$110
Cost of
Occupancy
Permit
Unknown
No
Yes
No
Yes
N/A
No
Yes
N/A
Yes
Unknown
Unknown
No
Unknown
N/A
No
N/A
Yes
N/A
N/A
Yes
N/A
Yes
Unknown
Unknown
N/A
Require
Specify
ID for
Approved
Occupancy IDs
Permit
(Continued)
N/A
N/A
§ 12-25(c)
N/A
Websitedd
N/A
N/A
Websitez
N/A
Websitey
N/A
N/A
N/A
Cite
§ 405.54
ECode360 Yes
ECode360 Yes
ECode360 Yes
ECode360 Yes
ECode360 Yes
Otherhh
ECode360 Yes
ECode360 Yes
ECode360 Yes
Oakland
Olivette
Overland
Pacific
Pagedale
Pine Lawn
Richmond
Heights
Rock Hill
Saint Ann
Yes
§ 201.790(B)(2)
ECode360 Yes
Northwoods
§ 400.700(B)(1)
§ 405.130
§ 500.040(12)(2)
§ 500.160(A)
§ 515.070(A)
§ 500.040-112.1
§ 405.570(C)(1)
§ 415.020(A)
§ 500.015(A)
ECode360 Yes
Normandy
Cite
Code
Require
Locationb Occupancy
Permit on
each
occupancy
change
Municipalitya
N/A
§ 415.020(L)(3)
$30
$45
$80
$56
$15
$25
$25
§ 400.700(G)(2)(a)
§ 405.130
§ 500.040(12)(2)
§ 405.550, Appx. A
§ 405.140
§ 500.360(A)
§ 515.070(B)
Yes
No
No
No
No
No
Yes
No
No
Yes
No
Websiteff
Yes
N/A
N/A
N/A
N/A
N/A
Yes
N/A
N/A
No
N/A
Require
Specify
ID for
Approved
Occupancy IDs
Permit
Cite
Varies with unit § 500.040-112.2(a)
($95, $65, $75)
plus inspection
fee of $28
Unknown
$10
$25
Cost of
Occupancy
Permit
§ 400.700(D)(1)
N/A
N/A
N/A
N/A
N/A
§ 515.070(A)
N/A
N/A
Websitegg
N/A
Cite
§ 500.011(B)(4)
ECode360 Yes
ECode360 Yes
Yes
Yes
Yes
Otherll
Othermm
Othernn
ECode360 Yes
Municode Yes
Other
Other
Twin Oaks
University City
Valley Park
Velda City
Vinita Park
Warson Woods
Webster Groves
Westwood
Wilbur Park
Yes
Yes
§ 240.020(A)(3)
ECode360 Yes
Town and
Country
§ 515.450
§8
§§ 113.1-113.4
§ 425.010
§ 510.120(F)(1)
§ 515.020(A)
§ 400.450(C)
§ 405.240(A)
§ 7-132(c)
Municode Yes
§ 540.010
Sunset Hills
ECode360 Yes
Shrewsbury
§ 520.050(D)
§ 1110.1050
ECode360 Yes
Saint John
Cite
St. Louis County Municode Yes
(uninc.)
Code
Require
Locationb Occupancy
Permit on
each
occupancy
change
Municipalitya
§ 515.090(B)
§ 500.011(B)(4)
§ 240.020(A)(3)
§ 400.460(A)(1)
§ 405.240(C)
§ 7-132(c)
Unknown
$50
$25
$0
No
No
Websiteoo
N/A
No
No
§ 103.5
§ 45.020
No
No
No
Yes
No
No
No
No
No
Websitejj
§1110.1065
No
Websiteii
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Yes
N/A
N/A
N/A
N/A
N/A
N/A
Require
Specify
ID for
Approved
Occupancy IDs
Permit
Cite
$20 change of
§§ 510.120(F)(2);
occupancy only; 510.120(D)
inspections $35
apt/$65 other
$10
$75.00
$25
$150
$50
$25
$40-$80
(inspection fee)
$40
$50
Cost of
Occupancy
Permit
(Continued)
§ 515.444
N/A
N/A
N/A
N/A
N/A
N/A
Websitekk
N/A
N/A
N/A
N/A
N/A
N/A
Cite
ECode360 No
ECode360 Yes
ECode360 Yes
Wildwood
Winchester
Woodson
Terrace
$10.00 (plus
inspection fees)
Unknown
Cost of
Occupancy
Permit
§§ 400.050(B)(4); $10.00
500.070
§ 515.070(B), (E)
§ 415.540(C)(4)
Cite
§ 400.450(C)(3)
§ 515.070(C)
N/A
Cite
No
No
No
N/A
N/A
N/A
Require
Specify
ID for
Approved
Occupancy IDs
Permit
N/A
N/A
N/A
Cite
a
The authors were unable to find information on the following municipalities in St. Louis County: Bel-Nor, Champ, Flordell Hills, Glen Echo Park,
Hillsdale, Kinloch, Mackenzie, Marlborough, Pasadena Hills, Pasadena Park, Sycamore Hills, Upland Park, Velda Village Hills, Vinita Terrace, and
Wellston.
b
The majority of municipalities host their codes using one of two services: Municode or ECode360. Municipalities using Municode are accessible at:
https://www.municode.com/library/mo. Municipalities using ECode360 are accessible at: http://www.generalcode.com/ecode360/MO.
c
http://www.cityofbellavilla-mo.org/BELLA_VILLA_MUNI_CODE_BOOK_-_TITLE_IV-V.pdf
d
http://www.cityofbn.com/departments/building/frequently-asked-questions/
e
http://www.belleriveacres.com/images/stories/files/belleriveord.pdf
f
http://bel-ridge.us/wp-content/uploads/2014/02/Occupancy_Permit_NoMark.pdf
g
http://cityofbeverlyhillsmo.org/?page_id=199
h
http://www.bridgetonmo.com/departments/public-works/occupancy-inspections-permits/rental-occupancy-permits
i
https://docs.google.com/file/d/0BxJ9T0zBLH69Um9ZWmxrN1dGd3M/edit?pli=1
j
http://www.clarksonvalley.org/Michele/2012%20Codified%20-%20Clarkson%20Valley%20Code.pdf
k
http://www.claytonmo.gov/Assets/Planning+and+Development/Permits+and+Applications/Residential+Occupancy+Permit+Application+P
+03-1.pdf
Code
Require
Locationb Occupancy
Permit on
each
occupancy
change
Municipalitya
m
(Continued)
http://z2codes.sullivanpublications.com/sullivan/Z2Browser2.html?showset=coolvalleyset
http://countryclubhills.org/departments-services/city-clerk/municipal-code/
n
http://www.creve-coeur.org/index.aspx?NID=684
o
https://3fff8e6e-a-e8fbb000-s-sites.googlegroups.com/a/crystallakepark.org/crystallakepark/municipal-codes/permits/Occupancy-AProcedures-List.pdf?attachauth=ANoY7cp-7UjBUjTFuBy-QC0avgYq53lcCj-g5_hp7ttyvfT25Wx4eMW8sY-XbCM7YpUY3m4XYS3XVX2QDgXQtN
MutJNXi2v4sv9EMO09ipEqNYHXZV-U4NeHOZwTQP_Gdx-tyl2virHsE2lLsf1DhTx_6I6LbdHweH7eioqJcnycybAgGNPv5des55EIX9buUII2r
VANa3ccGeWs6XMV6n7B544lw748bts00gupnrrwDCpPz6JGvNgVzmyMcFuNGRXjV_x_MS3am185HuDnopnrAhZOSfKNIw%3D%
3D&attredirects=0
p http://cityofdellwoodmo.com/917/Permits-Inspections
q
http://mo-dellwood2.civicplus.com/1071/Occupancy-Permit
r
http://www.ellisville.mo.us/161/Occupancy-Inspections
s
http://www.eureka.mo.us/government/municipal-code-amendments-2/
t
http://www.ecode360.com/attachment/FE3298/FE3298-Title%20IV%20Addendum%20A.pdf
u
http://www.grantwoodvillage.org/2012/06/05/resident-information/
v
http://www.greendale-mo.us/ordinances/code-of-ordinances
w
http://www.greendale-mo.us/government/greendale-rules?showall=&start=4
x
http://villageofhanleyhillsmo.com/village-information/
y
http://www.hazelwoodmo.org/wp-content/uploads/2014/03/ResidentialOccupancyPermitApp-2.pdf
z
http://www.cityofjennings.org/BldgDept/OccupancyApp.pdf; http://www.cityofjennings.org/BldgDept/TenantAuthorization.pdf
aa
http://www.kirkwoodmo.org/content/2034/code-of-ordinances.aspx
bb
http://www.lakeshiremo.com/occupancy-permits/
cc
Referenced on website, but code is not online. See infra note dd.
dd
http://www.lakeshiremo.com/occupancy-permits
ee
http://www.molineacres.org/MuniCode.aspx
ff
http://www.cityofnormandy.gov/DocumentCenter/Home/View/392
gg
http://www.cityofnorthwoods.com/law_occupancy-permit.html
hh
http://z2codes.sullivanpublications.com/sullivan/Z2Browser2.html?showset=pinelawnset
ii
http://www.cityofstjohn.org/index.php/public-works/occupancy-inspections.html
jj
http://www.cityofshrewsbury.com/FAQ.htm#Occupancy Permits
l
ll
https://apps.ucitymo.org/planning/forms/f-residentialoccupancypermit.pdf
http://z2codes.sullivanpublications.com/sullivan/Z2Browser2.html?showset=valleyparkset
mm
http://www.veldacity.org/govtmenu/city-code
nn
http://z2codes.sullivanpublications.com/sullivan/Z2Browser2.html?showset=vinitaparkset
oo
http://www.townhall.westwood.ma.us/index.cfm/page/Building,-Mechanical,-and-Sprinkler-fees-Permit-Fees/cdid/15935/pid/25772
kk
Southeast Ferguson:
The Transformation Opportunity or
Is Decent and Affordable
Good Enough?
Sandra M. Moore
This report is a preliminary overview of a proposal of what needs to
happen in Southeast Ferguson to use Low Income Housing Tax Credits
(LIHTC) to create healthy thriving communities. This report urges the intentional linking of the physical development of affordable housing to the
improvement of the overall quality of life and standard of living; the increase in the level of educational attainment and the employment rate;
and the improvement of health and safety of the community, such that
strengthening of housing, families, and the community occur simultaneously. While the report is focused on Ferguson, the data tells a familiar
story shared by many communities around the country and the recommended approach can be universally applicable.
There are four housing communities that form the one-way-in, oneway-out cul de sac of affordable housing at the epicenter of the Michael
Brown crisis. The total number of units, more than half of which are
heavily subsidized, is 1,136. Canfield Green, the strongest of the four in
terms of both household demographics and housing quality, is nestled adjacent to three separate apartment communities. Canfield Green is all
market-rate, with rents ranging from $425 to $600 for a spacious multibedroom unit. Most noteworthy of the remaining three communities is
the 438-unit Northwinds Apartment, which has set aside a significant
number of Section 8 apartments in its unit mix. Northwinds, located directly northeast of Canfield, can be accessed only through Canfield
Drive, which is the sole entryway into Canfield Green Apartments. The
alternate access to Northwinds Apartments has been blocked off in an effort to fight crime. The remaining two housing communities, which also
are accessible only by Canfield Drive, are the 184-unit Oakmont Townhomes and Versailles Apartments with 100 units. Oakmont has a significant number of Section 8 apartments and Versailles, like Canfield, is billed
as a 100 percent market-rate community.
Sandra M. Moore ([email protected]) is president of Urban
Strategies, Inc. in St. Louis, Missouri.
257
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Journal of Affordable Housing
Volume 24, Number 2
2015
Community Demographics
The typical household in this Southeast Ferguson cul de sac has an income well below the area median income of $25,882, despite the fact that
most adults are working. Many adults have more than one job. These families fit the classic definition of the “working poor.” Nearly 100 percent of
the households are African American.
Chart 1
Population Household Income
Household Income
Census Tract 2120.2
City of Ferguson
Average Income
$36,501
$49,986
Median Income
$26,758
$37,517
Chart 2
Population Below Poverty Level
Population Below
Poverty Level
Census Tract
2120.2
City of
Ferguson
State of
Missouri
Under Age 18
47.3%
40.1%
21.6%
Age 18 to 64
34.8%
20.1%
14.6%
Over Age 65
29.3%
10.3%
8.9%
Of the households with children, most are headed by a single parent.
The children are likely to attend Koch Elementary School in the unaccredited Riverview Gardens school district. Few, if any, of the children have
had early childhood education preparation and their generally low school
performance is the result, with 33 percent of all third grade students performing below the basic proficiency level in communication arts. See adjoining chart.
Southeast Ferguson: Is Decent and Affordable Good Enough?
259
Chart 3
North County School District Comparisons
North County School District Comparisons—2014 DATA
Neighborhood
Riverview Ferguson
Gardens
Florissant Jennings Hazelwood
Missouri
Pre-School Enrollment
140
422
45
444
30,127
K-12 Total Enrollment
4,870
11,599
2,537
14,957
887,521
90.8%
(4,549)
68.7%
(8,259)
86.5%
(2,234)
68.7%
(10,581)
47.4%
(435,207)
78.5%
84.4%
86.5%
87.3%
89.3%
Riverview Ferguson
Gardens
Florissant Jennings Hazelwood
Missouri
% Free and Reduced Lunch
Proportional Attendance
Elementary School
Enrollment
2,747
2,170
1,413
5,003
English Language Arts
% Proficient and Advanced
(3rd to 5th Grade)
13.4%
27.9%
26.7%
35.7%
46.4%
Mathematics
% Proficient and Advanced
(3rd to 5th Grade)
14.1%
26.2%
35.7%
38.5%
48.8%
Riverview Ferguson
Gardens
Florissant Jennings Hazelwood
Missouri
Middle Schools
Enrollment
1,145
6,139
436
4,303
English Language Arts
% Proficient And Advanced
(3rd to 5th Grade)
18.2%
32.7%
28.7%
38.2%
51.7%
Mathematics
% Proficient and Advanced
(3rd to 5th Grade)
14.1%
34.1%
34.2%
45.8%
52.6%
Riverview Ferguson
Gardens Florissant Jennings Hazelwood
Missouri
High School
Enrollment
4-Year Graduation Rate
Drop-Out Rate
Composite ACT Score
978
3,646
688
5,527
79.8%
78.3%
91.6%
84.8%
88.1%
2.6%
7.5%
2.5%
3.2%
2.5%
15.6
18.0
15.4
18.2
21.8
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Journal of Affordable Housing
Volume 24, Number 2
2015
According to data from the 2008–2012 U.S. Census, census tract 2120.2,
within which these four properties are located, consists of 86.6 percent
African American versus 65 percent in the City of Ferguson and 7.4 percent non-Hispanic white versus 31 percent in the City of Ferguson.
Additionally, population data within the census tract 2120.2 shows a dramatically higher percentage of younger residents compared to the population of the City of Ferguson, with approximately 13.4 percent of the residents between ages 0–5 and 14.9 percent between ages 18–24.
Chart 4
Population Racial Breakdown
Racial Breakdown
Census Tract 2120.2
City of Ferguson
African American
86.60%
65.00%
Non-Hispanic White
7.40%
31.00%
Biracial
6.10%
2.10%
Hispanic
0.50%
0.70%
Asian
0.00%
1.20%
Other
0.00%
0.80%
As late as January 2015, there were over 1,136 units distributed in these
housing communities where a large number of children, youth, and young
adults live. The high school completion rate for youth has drastically declined from 86.1 percent in 2004 to 64 percent in 2013. The unemployment
rate for working age adults is 21.2 percent in the census tract, nearly nine
points higher than the rest of Ferguson at 12.2 percent. Nearly 40 percent
of the transition age youth, defined as young people between the ages of
sixteen and twenty-four who are classified as at-risk, do not work.
Chart 5
Population Age Distribution
Age Group
Census Tract 2120.2
City of Ferguson
0 to 5
13.4%
9.8%
6 to 12
12.1%
10.9%
13 to 17
8.0%
8.1%
18 to 24
14.9%
10.3%
25 to 44
25.8%
25.3%
45 to 64
20.1%
25.3%
65+
5.9%
10.3P%
Southeast Ferguson: Is Decent and Affordable Good Enough?
261
Is Decent and Affordable Enough?
All of the housing in the Canfield cul de sac was either developed or
redeveloped using LIHTCs awarded by the State of Missouri. The housing
is unquestionably affordable and many have asserted and will continue to
do so that the housing is decent and therefore adequate for the market.
Assuming for the sake of argument that the housing is indeed adequate,
the question for community development specialists is whether decent, affordable, and adequate housing is enough or whether LIHTC investments
should require more.
A look at the physical terrain surrounding the housing is illustrative.
There are no uniform formal sidewalks running through the property, despite the fact that children and families frequently must walk because
most do not have access to cars. There are no parks or other defined recreation spaces within the cul de sac, even though a large number of children and youth live in the housing. Taking from the “new urbanist” design recommendations on state of the art community development,
there is little defensible space for families to mark as their own and no
“eyes on the street” to create a sense of community.
Moving inside the units of the largest apartment complex (Northwinds), most of the multi-bedroom units have galley kitchens, which
are too small for a dining table; dining space is not otherwise available
in the units. The notion of decent and adequate might come into question
here: where are families to sit down for dinner? Is family housing without
space for family dining decent? Is such housing adequate?
Against this backdrop of a deep need for affordable housing and an
equally deep need for the opportunity to improve overall living conditions, decent, affordable, and adequate housing is simply not enough
for the public investment of tax credits. Affordability, decency, and adequacy of housing stock alone are insufficient returns from the use of available housing and community development tools. The Southeast Ferguson
housing landscape and the story of its people illuminate the need for some
uniformity in standards for affordable housing development—plus appropriate community enhancing services and supports.
At the federal level, the Department of Housing and Urban Development (HUD) has set the practice model in place with the launch of the
Choice Neighborhoods grant program, which requires more than affordable, decent housing from federal housing investments. HUD has likewise
deepened the notion of requiring more than affordable, decent, and adequate housing in its Affirmatively Furthering Fair Housing (AFFH) Final
Rule (29 C.F.R. Parts 5, 91, 92, 570, 574, 576, and 903). The final rule describes the requirements for HUD participants, i.e., those that receive
HUD funding, this way: “. . . program participants [are directed] to take
significant actions to overcome historic patterns of segregation, achieve
truly balanced and integrated living patterns, promote fair housing
choice, foster inclusive communities that are free from discrimination.”
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Volume 24, Number 2
2015
Achieving truly balanced and integrated living patterns as mandated by
the rule will require focus and intentionality from the housing and community development community on more than affordable, decent, and
adequate housing.
The Transformation Opportunity: What Might We Do?
For every dollar of subsidy for housing development, there must be
some corresponding allocation of monetary resources to systems, services,
and human capital development support. That is what we must do.
The heart of any program to address the challenges of implanting
large numbers of heavily subsidized affordable housing units into moderate- to low-income communities like Southeast Ferguson must focus
on human capital development as a part of the housing development
strategy. Human capital development must include the design plan
and implementation approach for a comprehensive set of strategies coordinated from a central unit in the community that are targeted to
improve specific health, economic, and social outcomes that are or will
negatively affect the poor and near-poor children and families living
in the housing and surrounding community. That is the starting point
of a “Ferguson” transformation and the starting point for similar transformations in Ferguson-like communities around the country. It should
be noted that many such communities are now, since the Ferguson occurrence, seen as pockets of suburbanized poverty; however, the conditions similarly exist in urban core communities that have large concentrations of public or otherwise subsidized housing. The key here is the
attachment of people and systems strategies to place strategies from
the moment the place strategy of affordable housing begins to germinate.
People and systems strategies cannot be an addendum to housing strategies; they must be conjunctive with housing strategies so that public
financing support tax credits and similar vehicles can be used to leverage
the necessary people and systems strategies.
As discussed above, the federal government has adopted this approach
in the HUD Choice Neighborhood grant program. The people component
of the Choice Neighborhood program is literally the starting point of the
affordable housing development process and remains central to the “success” of this affordable housing grant program.
Human capital development planning and implementation as part of an
affordable housing transformation strategy has four main components:
• Information gathering
• Plan drafting
• Fund strategy development
• Correlation of human capital planning and physical design planning
Adding these components to the affordable housing planning process,
whether there is a Choice Neighborhoods grant or not, does not add
Southeast Ferguson: Is Decent and Affordable Good Enough?
263
significantly to the planning timeline, especially with the kind of LIHTC
regulatory requirements already in place. It will, however, add to the
cost. Without the additional federal funding that a Choice Neighborhood
grant might bring, the assertion that for every dollar of housing subsidy
there must be a source for funding the human capital, systems, and services components is paramount to implementation of this comprehensive
approach. Private and philanthropic funding is routinely raised to fill
gaps in housing development financing. The fundraising for the human
capital planning effort and early implementation efforts must be addressed with as much rigor as funding efforts to support raising the capital for the housing. However, because the human capital “outcomes” are
often seen as riskier than the physical development outcomes, the question is and always will be what will the investors get for the additional
funding required and raised?
A Look at Ferguson—What is Possible?
In light of recent events, population conditions, and demographics, a
data-driven human capital plan (HCP) and implementation strategy (IS)
as the lead component of a transformation plan for Southeast Ferguson generally, and the targeted affordable housing specifically, would start at the
epicenter—Canfield, Northwinds, Oakmont, and Versailles—and move
outward into the surrounding neighborhoods. The human capital planning
and implementation would be focused on robust multi-generational
programming and supports, targeted specifically to the assets and challenges of these four communities. Given the large number of working
age adults and the strong concentration of young adults coupled with the
large number of young children, the HCP should focus on employment
and early childhood education. Both areas have a long and strong history
of positively impacting short-term (adults working) and longer-term (children entering school prepared) community transformation.
Early human capital implementation strategies that could launch just
before or in conjunction with a housing strategy, whether revitalization
or redevelopment, could include proven approaches such as:
• Setting up a local presence within the targeted housing area.
• Identifying and engaging residents, community leaders, and nonresident stakeholders in a leadership group to guide the transformation work; meeting regularly to build ongoing working relationships;
and providing leadership training to this group.
• Conducting a comprehensive, but quick turn, needs assessment for
each occupied household in the target area through interviews and
building a complete database of the baseline condition of the
households.
• Identifying the working age population and triaging into appropriate
category of work readiness or otherwise work availability status.
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Journal of Affordable Housing
Volume 24, Number 2
2015
• Assessing and connecting residents to the myriad of community
workforce readiness and employment resources that would make a
significant difference in the employment rate and income levels if
they were better coordinated and focused on addressing the most
challenged households—a rifle, rather than the current shotgun,
approach.
• Identifying needs for which no program services currently exist and
new partnerships and potential resources to fill those needs.
• Gathering, maintaining, processing, and disseminating data on the
results to verify success and inform the field.
With such a set of strategies in place, early improvement in human capital outcomes could be realized in the time it takes to plan, fund, and start
a good housing strategy, whether revitalization or redevelopment. Some
of these include:
• Implementation of a barrier removal program for the transition age
youth group that would increase employment for residents between
the ages of 18 and 24.
• Connection of households with young children to high-quality early
childhood education programs in the community, even if short-term
transportation is needed until the capacity of local programs can
grow, to immediately increase participation rates by the nearly 13 percent of the residents living in the targeted developments who are fiveyears old or younger.
• Use of established resident engagement and leadership identification
activities to increase community engagement in some area of common interest, such as public safety, resulting in greater community
efficacy around the common interest.
The Epilogue
Decent, affordable, and adequate housing is not enough. Taxpayersupported affordable housing must be geared to comprehensive community development and complete community transformation. Since the
original Ferguson incident and the subsequent anniversary unrest, rental
property owners report increased occurrences of “abandoned” units and
rental payment delays on more units than usual. In addition to the business challenges presented by high abandoned vacancy rates, there are a
number of other indicators of need for action, including, but not limited,
to (1) high turnover rates in the market-rate communities, arguably the
most stabilizing residents of the rental housing community; (2) high real
or perceived crime rates; (3) lack of a clear set of community-owned priorities for housing stability, crime reduction, and social and recreational
service delivery; and (4) need to increase employment for the working
age population, especially young adults.
Southeast Ferguson: Is Decent and Affordable Good Enough?
265
Unless we employ a dramatically different approach to just decent, affordable, and adequate housing, we are destined to continue to create the
Southeast Ferguson housing dilemma and risk the repeat of the destructive cycle of events we are now witnessing in the Southeast Ferguson affordable housing market. Further, we increase the likelihood of repeating
the adverse cycle in similar markets around the country. Ultimately, we
run the risk of the losing the comprehensive benefit intended from public
policies designed to increase the development of affordable housing—the
overall improvement of living conditions for low- and moderate-income
households.
Disparate Impact and Integration:
With TDHCA v. Inclusive Communities
the Supreme Court Retains an
Uneasy Status Quo
Rigel C. Oliveri
I.
II.
III.
IV.
Background on Disparate Impact and Fair Housing........................ 269
The First Two Supreme Court Cases ................................................... 272
TDHCA v. Inclusive Communities........................................................... 274
The Supreme Court’s Opinion .............................................................. 276
A. Broad Integrationist Purpose.......................................................... 277
B. Limitations in Practice: Housing and Neighborhood
Improvement ..................................................................................... 278
V. Analysis and Ramifications ................................................................... 280
A. Enrichment–Integration Tension.................................................... 280
B. Ongoing Difficulty of Disparate Impact Claims ......................... 284
VI. Conclusion ................................................................................................ 286
On June 25, 2015, the Supreme Court handed down its decision in Texas
Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.,1 and fair housing advocates breathed a collective sigh of relief.
The decision, written by Justice Kennedy for a five-to-four majority, upheld the use of disparate impact theory in cases brought under the Fair
Housing Act.
The fair housing community had been understandably nervous about
the case. In recent years, the Supreme Court had expressed skepticism
about disparate impact theory in other contexts2 and a willingness to
1. 135 S. Ct. 2507 (2015).
2. For example, in Smith v. City of Jackson, a badly divided Court upheld the use
of disparate impact theory in claims brought under the Age Discrimination in Employment Act, but narrowed the scope of such claims significantly. 544 U.S. 228
(2005). Only four justices endorsed the holding that disparate impact theory was
cognizable under the statute. The fifth, Justice Scalia, concurred separately to
Rigel Oliveri ([email protected]) is Associate Professor of Law at the University of Missouri School of Law in Columbia. She received her J.D. from Stanford Law
School and her B.A. from the University of Virginia. The author was formerly a trial
attorney for the U.S. Department of Justice, Civil Rights Division, in the Housing and
Civil Enforcement Section. Thanks, as always, to Michael Byrne for comments.
267
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Journal of Affordable Housing
Volume 24, Number 2
2015
curtail the application of other civil rights statutes.3 The Court had tried to
take up the issue of disparate impact in housing, granting certiorari in two
previous cases, Magner v. Gallagher4 and Township of Mt. Holly v. Mt. Holly
Gardens Citizens in Action.5 Both of these cases settled before oral argument, in part because fair housing advocates were worried about the possible outcome. In the absence of a circuit split on disparate impact and
with new regulations issued by HUD endorsing the theory, it was difficult
to see why the Court was suddenly interested in hearing the issue. Commentators predicted the worst.6
In light of the fears about what the Court might have done, the recent
ruling has certainly been cause for celebration. Besides upholding the availability of disparate impact theory, it contains a powerful affirmation of the
law’s commitment to advance residential integration. Yet supporters of fair
housing, particularly as it relates to affordable housing and community development, might not want to crack open the champagne just yet. That is
because in a relatively obscure paragraph buried deep within the opinion,
the majority telegraphs a strong hint at how many of these cases will be
reviewed—not favorably—on the merits. The extent to which this will represent a change from the status quo, in which many disparate impact claims
already founder, remains to be seen. Nevertheless, the opinion contains a
make clear that his agreement was solely out of Chevron deference to an existing
EEOC regulation that would allow it. Id. at 243. In Ricci v. DeStefano, the Court refused to allow a municipality to use fear of a disparate impact lawsuit as a reason
for disregarding a qualifying exam for firefighter positions, where the exam had
clearly had a disparate racial effect. 557 U.S. 557 (2009). Justice Scalia concurred separately in that case to warn of a coming collision between equal protection and
disparate impact theory. Id. at 594. In Alexander v. Sandoval, the Court held that
there is no private right of action to enforce disparate impact regulations promulgated under Title VI of Civil Rights Act of 1964. 532 U.S. 275 (2001). Many years
earlier, in Washington v. Davis, 426 U.S. 229 (1976), and Village of Arlington Heights
v. Metropolitan Housing Development Corp., 429 U.S. 252 (1977), the Court held that
disparate impact theory could not be used for constitutional claims.
3. The Court had recently struck down the pre-clearance portion of the Voting
Rights Act in Shelby County v. Holder, 133 S. Ct. 2612 (2013), and held that mixed
motive theory was not available to plaintiffs in suits brought under the ADEA in
Gross v. FBL Financial Services, Inc., 129 S. Ct. 2343 (2009).
4. 132 S. Ct. 548 (2011).
5. 133 S. Ct. 2824 (2013).
6. See, e.g., Jamelle Bouie, The Next Assault on Civil Rights, SLATE, http://www.
slate.com/articles/news_and_politics/politics/2014/10/the_supreme_court_s_
next_attack_on_civil_rights_the_justices_will_likely.html (predicting that “[t]he
court will hear disparate impact, and most likely . . . end it”); Heather Digby
Parton, Supreme Court’s Civil Rights Backlash: How A New Case Could Set Us Back
Decades, S ALON , http://www.salon.com/2014/10/20/supreme_courts_civil_
rights_backlash_how_a_new_case_could_set_us_back_decades (noting that “[a]
new challenge to anti-discrimination tools looks likely to prevail”).
Supreme Court Retains an Uneasy Status Quo with Inclusive Communities 269
good deal of guidance for advocates, housing providers, and municipalities
for how to navigate the legal landscape in which disparate impact remains
a fixture.
This article begins with a brief history of disparate impact theory as it
relates to fair housing cases. It then proceeds to an overview of two previous cases on this issue to reach the Supreme Court in recent years. Next,
it analyzes the Inclusive Communities opinion, discussing both the Court’s
affirmation of integration as a fair housing goal and its skepticism of
whether plaintiffs can succeed using disparate impact theory in cases
like the one at bar. The article concludes by locating the opinion’s focus
on competing priorities within the historical tension between affordable
housing/community development and integration and discussing the
ramifications that this tension has for the use of disparate impact theory
going forward.
I. Background on Disparate Impact and Fair Housing
Disparate impact theory allows a discrimination claim to be cognizable
even in the absence of evidence of intentional discrimination. Instead, the
fact that a facially neutral act, policy, or practice has a disproportionate adverse impact on a group of people with an identified, protected characteristic can be enough to allow a plaintiff to state a claim for discrimination.
Disparate impact theory was first recognized by the Supreme Court in
a Title VII case, Griggs v. Duke Power Co.7 In that case, the Court was considering a challenge to a power company’s policies for the hire and transfer of employees. Specifically, the company instituted a policy requiring a
high-school diploma and/or a passing score on an IQ test and the Wonderlic Personnel Test for hire and promotion. Although this had the effect
of excluding a disproportionately high number of blacks, the company argued that the requirements were neutral, that they would be applied
equally to whites and blacks alike, and that there was no showing of discriminatory purpose or invidious intent in their adoption.8 The lower
courts held that without evidence of disparate treatment or discriminatory
intent, the plaintiffs could not state a claim for discrimination.
The Supreme Court reversed, reasoning that Title VII “proscribes not
only overt discrimination but also practices that are fair in form, but discriminatory in operation.”9 The Court went on to note that the key to
7. 401 U.S. 424 (1971). The theory had been advanced by the Equal Employment
Opportunity Commission some years before. Inclusive Cmtys., 135 S. Ct. at 2528–29
(Thomas, J., dissenting). See also Olatunde Johnson, The Agency Roots of Disparate
Impact, 49 HARV. C.R.-C.L. L. REV. 125 (2014).
8. While the first two contentions may have been true, the third was almost certainly not. The company had deliberately created a segregated work force by engaging in overtly discriminatory practices right up until the day Title VII took effect, at which point it adopted the challenged policies.
9. Duke Power, 401 U.S. at 431.
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Volume 24, Number 2
2015
evaluating such practices is whether they can be justified by business necessity: “If an employment practice which operates to exclude Negroes
cannot be shown to be related to job performance, the practice is prohibited.”10 In Griggs, the jobs at issue involved manual labor. The company
was unable to persuasively argue the need for the testing and degree requirements. Moreover, the company had previously allowed white employees to work in higher-ranking positions without these credentials
and these employees had apparently performed their jobs satisfactorily,
further demonstrating that the requirements lacked any connection to
job performance.
A series of cases followed in which lower federal courts allowed disparate impact theory to apply to Equal Protection claims in the housing context.11 Although these cases dealt with housing, the claims were brought
under the Equal Protection Clause because the defendants were municipalities. Some of these courts also recognized a housing-specific form of
disparate impact claim, one that looked to the impact on the affected community as a whole rather than on any one particular group. Specifically,
they found that a practice or policy could also violate the law if it “perpetuates segregation and thereby prevents interracial association.”12
The first case to recognize disparate impact theory in a claim brought
under the Fair Housing Act (FHA) was United States v. City of Black
Jack.13 When the events giving rise to the lawsuit began, Black Jack was
an unincorporated area in suburban St. Louis. Black Jack’s population
was virtually all white, while nearby St. Louis had a significant black population that was trapped in overcrowded, dilapidated, and segregated
housing conditions. A nonprofit organization began planning a multifamily development called Park View Heights in the area to create alternative
housing opportunities for low- and moderate-income people living in the
ghetto areas of St. Louis, with specific plans to affirmatively market the
development to minorities.14
Opposition by white residents was both fierce and swift. They immediately began a drive to incorporate the area. One month after incorporation,
the city’s first official act was to pass a zoning ordinance prohibiting the
10. Id. at 430.
11. See generally Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 517 F.2d
409 (7th Cir. 1975), rev’d sub nom., Vill. of Arlington Heights v. Metro. Hous. Dev.
Corp., 429 U.S. 252, 271 (1977); Hawkins v. Town of Shaw, Miss., 461 F.2d 1171 (5th
Cir. 1972); Kennedy Park Homes Ass’n v. City of Lackawanna, 436 F.2d 108 (2d Cir.
1970); Norwalk CORE v. Norwalk Redev. Agency, 395 F.2d 920 (2d Cir. 1968).
Adopting the language of strict scrutiny, these cases defined the defense burden
as one of demonstrating a compelling government interest.
12. See, e.g. Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 558 F.2d 1283,
1290 (7th Cir. 1977).
13. 508 F.2d 1179 (8th Cir. 1974).
14. Id. at 1182.
Supreme Court Retains an Uneasy Status Quo with Inclusive Communities 271
construction of any new multifamily dwellings, effectively killing the project.
The ordinance was challenged by both the developer and the Department of
Justice (DOJ). DOJ argued that the ordinance violated the FHA because it
was both motivated by racial animus and was discriminatory in effect.
Despite significant evidence that the ordinance was in fact racially motivated,15 the Eighth Circuit treated the case solely as one involving facially neutral actions. The court found that the ordinance would indeed
have a disparate impact, both because it would disproportionately affect
blacks living in the region (85 percent of whom would otherwise be priced
out of Black Jack)16 and because this would further entrench the area’s
segregated patterns.17 In light of this impact, the court held that:
The plaintiff need make no showing whatsoever that the action resulting in
racial discrimination in housing was racially motivated. . . . Effect, and not
motivation, is the touchstone, in part because clever men may easily conceal their motivations, but more importantly because whatever our law
was once, we now firmly recognize that the arbitrary quality of thoughtlessness can be as disastrous and unfair to private rights and the public interest as the perversity of a willful scheme.18
In doing so, the court cited almost exclusively to the Equal Protection
Clause cases and conducted its analysis accordingly, with just a bare reference to Griggs. In particular, the court required the city to prove a compelling government interest (an equal protection standard) in order to
avoid liability.19
The Supreme Court later overruled the equal protection cases in Washington v. Davis20 and Village of Arlington Heights v. Metropolitan Housing Development Corp.,21 holding that disparate impact theory could not be used
for constitutional claims. Subsequent housing cases thus had to rely more
explicitly on the statutory basis for the theory, specifically the similarities
in purpose and text between Title VII and the FHA. Significantly, however, Washington and Arlington Heights did not disturb the consensus
that disparate impact theory could be used to challenge practices that perpetuate housing segregation.22 They merely found that such claims could
not be brought pursuant to the Equal Protection Clause.
15. Id. at 1185 n.3 (“The uncontradicted evidence indicates that, at all levels of
opposition, race played a significant role, both in the drive to incorporate and the
decision to rezone.”).
16. Id. at 1186.
17. Id. (“[blocking the development] would contribute to the perpetuation of
segregation in a community which was 99 percent white”).
18. Id. at 1185 (internal quotations omitted).
19. Id. at 1186–87.
20. 426 U.S. 229 (1976).
21. 429 U.S. 252 (1977).
22. Washington was an employment discrimination case, so the segregation
issue was not presented. In Arlington Heights, the Court refused to weigh in on
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Over the ensuing decades, a consensus developed among all nine of the
federal courts of appeal to consider the issue that disparate impact theory
was viable in FHA cases and that an unlawful disparate impact could include perpetuation of segregation.23 Disparate impact theory has been
used to challenge a variety of practices under the FHA, including exclusionary zoning ordinances, administration of Section 8 vouchers, mortgage lending practices, occupancy restrictions, and demolition and siting
of subsidized housing. To the extent there was any disagreement among
the courts, it was about how the respective burdens of the parties should
be allocated when the claim was presented.
In 2013, HUD issued a disparate impact regulation that explicitly endorsed the use of the disparate impact theory to challenge practices that
have a discriminatory effect or that “create, increase, reinforce, or perpetuate segregated housing patterns.”24 The regulation also sets forth the
proper framework for the burden-shifting analysis.25 First, the plaintiff
must prove that a challenged practice causes a disparate impact or segregated housing patterns based on protected characteristics. The burden of
proof then shifts to the defendant to demonstrate that the challenged practice “is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests.”26 If the defendant meets this burden the
plaintiff may still prevail by demonstrating that these interests “could
be served by a practice that has a less discriminatory effect.”27
II. The First Two Supreme Court Cases
In recent years, the Supreme Court has tried multiple times to hear the
issue of whether disparate impact claims are cognizable under the FHA. It
granted certiorari in two cases, both of which settled prior to oral argument, in as many years. The first case, Magner v. Gallagher,28 was brought
whether any of the defendant’s conduct might violate the FHA. 429 U.S. at 271. On
remand, the Seventh Circuit found both that disparate impact theory was available
under the FHA and that the defendant’s actions, which perpetuated racial segregation, violated the statute. See 558 F.2d 1283 (7th Cir. 1977).
23. In addition to Black Jack and Arlington Heights, see, e.g., Langlois v. Abington
Housing Authority, 207 F.3d 43 (1st Cir. 2000); Huntington Branch, NAACP v. Town of
Huntington, 844 F.2d 926 (2d Cir. 1988); Resident Advisory Board v. Rizzo, 564 F.2d
126 (3d Cir. 1977); Smith v. Town of Clarkton, 682 F.2d 1055, 1065–66 (4th Cir.
1982); United States v. City of Parma, 661 F.2d 562 (6th Cir. 1981); Keith v. Volpe,
858 F.2d 467 (9th Cir. 1988); City of Hawthorne v. Wright, 493 U.S. 913 (1989); and
Jackson v. Okaloosa County, 21 F.3d 1531 (11th Cir. 1994).
24. See 24 C.F.R. § 100.500; Implementation of the Fair Housing Act’s Discriminatory Effects Standard, 78 Fed. Reg. 11,460 (Feb. 15, 2013).
25. 24 C.F.R. § 100.500(c)(1)–(3).
26. 24 C.F.R. § 100.500(c)(2).
27. 24 C.F.R. § 100.500(c)(3).
28. The case was originally brought as Steinhauser v. City of St. Paul, 595
F. Supp. 2d 987 (D. Minn. 2008), aff ’d in part rev’d in part, 619 F.3d 823 (8th Cir.
Supreme Court Retains an Uneasy Status Quo with Inclusive Communities 273
by owners of low-income properties in St. Paul, Minnesota. The city’s
code enforcement authorities had recently begun aggressively enforcing
its property maintenance code in an attempt to crack down on slum conditions, including health and safety violations and rodent infestations, in
the city’s low-income housing stock. As a result of the city’s enforcement
efforts, the property owners were potentially subject to increased maintenance costs, fees, condemnations, and forced sales of their properties.
The owners challenged the city’s code enforcement practices using a
number of statutes and theories, one of which was a disparate impact
claim under the FHA. Specifically, they claimed that the city had an affordable housing shortage, that blacks made up a disproportionate percentage of households in the city that relied on affordable housing, that
the city’s code enforcement practices increased costs for property owners
that rent to low-income tenants, and that this increased burden resulted in
less affordable housing in the city because the owners would have to raise
rents or potentially go out of business. All of this, they argued, would result in a disproportionate adverse effect on blacks. The district court
found that the owners had failed to establish any of their claims. On appeal, the Eight Circuit upheld the dismissal of all claims except the one
based on disparate impact theory. The Supreme Court granted certiorari
to determine two issues: (1) whether disparate impact theory is cognizable
under the FHA; and (2) if so, what burden-shifting analysis should be
used.29
Magner settled before the Court could hear oral argument on the case,
in large part because fair housing advocates feared a negative outcome.30
The case did not present particularly good facts for the plaintiffs, who
were raising the disparate impact claim not for themselves but on behalf
of their tenants (who by all accounts were living in deplorable conditions).
Moreover, HUD’s disparate impact regulation had been proposed but was
not yet final, so advocates needed to buy some time.
The following year the Court agreed to hear another disparate impact
case, Township of Mt. Holly v. Mt. Holly Gardens Citizens in Action.31 The
case arose out of a plan by the Township of Mt. Holly, New Jersey, to redevelop one of its neighborhoods, an area called Mt. Holly Gardens.
Seventy-five percent of the Gardens residents were minorities and most
2010). This summary is based on the facts as set forth in the appellate court opinion, as well as the briefs filed by the parties to the Supreme Court.
29. 132 S. Ct. 548 (2011) (granting cert.).
30. 132 S. Ct. 1306 (2012) (dismissing cert.). See Review and Outlook, The Talented
Mr. Perez, WALL ST. J. (Mar. 21, 2013) (describing a deal that then-HUD Secretary
Perez struck with the City of St. Paul to dismiss the case in favor for HUD’s withdrawal of an unrelated claim against the city).
31. No. 08-2584, 2011 WL 9405 (D.N.J. 2011), rev’d, 658 F.3d 375 (3d Cir. 2011).
This summary is based on the facts as set forth in the appellate court opinion, as
well as the briefs filed by the parties to the Supreme Court.
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were classified as “very low” or extremely low” income. More than half of
the properties were rentals, many of which were owned by absentee landlords that did not maintain them well. There was no homeowners association to provide for the upkeep of common areas or alleys. Overcrowding,
vacancies, drainage, lack of parking, and crime were all problems.
Nevertheless, the population of the Gardens was relatively stable: 81 percent of the homeowners had lived in their homes for at least nine years,
and 72 percent of renters had lived there for at least five years.
The township adopted a redevelopment plan that called for the acquisition and demolition of all of the existing homes in the Gardens. A new
community called the Villages at Parker’s Mill would be built in its place.
The vast majority of Garden residents would be permanently displaced by
the plan. While existing homes in the Gardens sold for between $64,000
and $81,000, the estimated cost of a new home in the Villages was between
$200,000 and $275,000. It was also alleged that the plan would perpetuate
segregation in the township because only 29 percent of minority households in the area would be able to afford housing in the redeveloped Villages, whereas 79 percent of the township’s white households could afford to live there.
The district court denied the residents’ request for injunctive relief,
concluding that they failed to establish a prima facie case of discrimination under the FHA and that, even if they had, they failed to show an
available alternative that would have had a lesser impact. The residents
appealed to the Third Circuit, which reversed the district court’s decision.
The Supreme Court granted certiorari on the question of whether disparate impact was cognizable under the FHA.32 This case also settled before
the Court could hear oral argument, apparently due to a change in political leadership in the township.33
III. TDHCA v. Inclusive Communities
Inclusive Communities arose out of a challenge to the Low Income Housing Tax Credit (LIHTC) allocations made by the Texas Department of
Housing and Community Affairs (TDHCA) in the Dallas metropolitan
area. The Inclusive Communities Project, Inc. is a non-profit organization
whose mission is to further racial and socioeconomic integration in the Dallas metropolitan area. In 2004, it was appointed to be the fund administrator and housing mobility provider in order to implement the remedy in a
Dallas public housing desegregation case.34 In particular, Inclusive Communities assists low-income families, a significant number of whom are
black, who are eligible for the Dallas Housing Authority’s Housing Choice
Voucher Program in finding affordable housing in predominantly white
32. 133 S. Ct. 2824 (2013) (granting cert.).
33. 134 S. Ct. 636 (2013) (dismissing cert.).
34. Walker v. HUD, 734 F. Supp. 1289 (N.D. Tex. 1989).
Supreme Court Retains an Uneasy Status Quo with Inclusive Communities 275
suburban neighborhoods. A development that receives an LIHTC cannot
refuse to accept tenants because of their use of vouchers. As a result, Inclusive Communities has an interest in where LIHTC developments are located in the Dallas metropolitan area because this will determine where
it can help place its clients.
Competition for LIHTCs is fierce and the program has historically been
oversubscribed by a ratio of two-to-one in Texas. The department awards
LIHTCs according to a complex formula governed by both state and federal
statutes. For the most desirable LIHTC, the 9 percent credit, federal law requires that designated agencies adopt a Qualified Allocation Plan (QAP)
that includes particular selection criteria and preferences. One such criterion is the length of the waiting list for public housing in the area.35 Preferences include that the housing contribute to a “concerted community revitalization plan” and be built in predominantly low-income census tracts.36
Texas state law requires the department to first determine whether an
application satisfies the QAP threshold criteria. Then it must use a point
system in order to score and rank qualifying applications, specifically by
prioritizing the eleven statutory criteria (referred to as “above-the-line” criteria) in descending order. The department may use additional “below-theline” criteria to supplement its decision-making, but none of these criteria
may outweigh any “above-the-line” factors.
Inclusive Communities brought a disparate impact claim in 2008, alleging that the department disproportionately approved LIHTCs in minority
concentrated neighborhoods and disproportionately disapproved them in
predominantly white neighborhoods.37 Inclusive Communities alleged
that from 1995 to 2009, the department did not allocate any LIHTCs for
units in predominantly white census tracts within the City of Dallas. As
a result, by 2008 more than 92 percent of LIHTC units in Dallas were located in minority census tracts. When looking at the metro area as a
whole, between 1999 and 2008, the department approved tax credits for
49.7 percent of proposed units in areas that were at least 90 percent minority, but approved only 37.4 percent of proposed units in areas that were at
least 90 percent white. Thus, according to Inclusive Communities, the department’s allocation practices have caused low-income housing to be
concentrated in minority areas and less available in white areas, which
in turn maintains and perpetuates segregated housing patterns.
The department countered that any statistical disparity in LIHTC allocation arose directly from federal and state laws that required it to use fixed
criteria and preferences, some of which are correlated with race, in its
35. 26 U.S.C. § 42(m)(1)(C).
36. 26 U.S.C. § 42(m)(1)(B).
37. 860 F. Supp. 2d 312 (N.D. Tex. 2012), rev’d, 747 F.3d 275 (5th Cir. 2014). This
summary is based on the facts as set forth in the appellate court opinion, as well as
the briefs filed by the parties to the Supreme Court.
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decision making. Although the district court assumed that the department’s
interest in complying with the law was legitimate and bona fide, it concluded that the department had failed to prove the absence of any alternative that would reduce the statistical disparity in allocation rates.38
After the trial, while the district court was considering the injunctive
remedy, it granted permission to Frazier Revitalization, Inc. (FRI) to intervene on the side of the department to represent the interests of developers
and other organizations that seek to revitalize low-income neighborhoods.39 FRI is a nonprofit organization that was formed to implement
a revitalization plan for the Frazier Courts neighborhood, a predominantly black area that has experienced significant decline. The Frazier
Neighborhood Plan called for more than $270 million in new development to create a mixed-income neighborhood with affordable housing
and a full range of basic services. FRI depends upon LIHTC to fund
these efforts. It argued that requiring the department to increase its allocation of tax credits to projects in more affluent white areas would reduce
the amount of credits available to Frazier and other low-income minority
neighborhoods, which are the areas that the credits were intended to help
in the first place.
The case was appealed to the Fifth Circuit. While the appeal was pending, HUD issued its regulation setting forth the burden-shifting framework
for adjudicating disparate impact claims. The regulation clarified that the
plaintiff has the burden at “step three” of showing that the defendant’s interests can be served by another practice that has a less discriminatory effect.40 The Fifth Circuit determined that the lower court had erred by placing the burden on the defendant to prove that no less discriminatory
alternative existed. Thus, it upheld the use of disparate impact theory but
reversed and remanded the case for a proper “step three” analysis. The department petitioned for certiorari; the petition was granted on the question
of whether disparate impact claims are cognizable under the FHA.41
IV. The Supreme Court’s Opinion
The opinion, written for a five-to-four majority by Justice Kennedy,
held squarely that disparate impact claims are cognizable under the
FHA. Other than the fact that many prognosticators feared the Court
would come out the other way, this result is not particularly remarkable
in the sense that it merely leaves existing law and precedent undisturbed.
As noted previously, the circuits had long unanimously recognized
38. The Court suggested that the Department could add “below-the-line” criteria or otherwise adjust its scoring formula to achieve greater parity in LIHTC allocation. No. 3:08–CV–0546–D, 2012 WL 3201401 (Aug. 7, 2012).
39. No. 3:08–CV–0546–D, 2012 WL 2133667 (N.D. Tex. June 12, 2012).
40. 24 C.F.R. § 100.500(c)(3).
41. 135 S. Ct. 46 (2014).
Supreme Court Retains an Uneasy Status Quo with Inclusive Communities 277
disparate impact theory and HUD has issued a regulation endorsing it.42
The opinion is noteworthy, however, for what it says both about the reach
and purpose of fair housing law and for the limitations that it sets on that
reach.
A. Broad Integrationist Purpose
Although the word “integration” is nowhere mentioned in the Fair
Housing Act, the majority opinion offered unequivocal recognition of
the fact that segregation is a serious social harm that the statute was intended to combat. Early in the opinion, Justice Kennedy cited the President’s Advisory Commission Report on Civil Disorders (commonly
known as the Kerner Commission) and its urgent, clarion call to end
the deepening racial division in American society.43 Justice Kennedy admitted that “[m]uch progress remains to be made in our Nation’s continuing struggle against racial isolation”44 and acknowledged “the Fair
Housing Act’s continuing role in moving the nation toward a more integrated society.”45
Additionally, the majority opinion acknowledged that today’s segregated residential patterns can be traced back to government policies46
and recognized how entrenched and intractable these patterns can
be.47 All of this led to the sweeping conclusion that “[r]ecognition of
disparate-impact claims is consistent with the FHA’s central purpose . . .
to eradicate discriminatory practices within a sector of our Nation’s
economy.”48
Finally, and significantly, the Court addressed a potential conflict between disparate impact theory and equal protection. In previous cases,
the Court and individual justices had questioned whether race-conscious
measures to achieve integration and avoid disparate impact liability were
constitutional.49 In their briefs in Inclusive Communities, the department
42. It is significant that the Court based its conclusion on its interpretation of
the statute rather than on deference to the HUD regulation.
43. Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, 135 S. Ct.
2507, 2516 (2015).
44. Id. at 2525.
45. Id. at 2525–26.
46. Id. at 2515 (“[V]arious practices were followed, sometimes with governmental support, to encourage and maintain the separation of the races.”).
47. Id. (“De jure residential segregation by race was declared unconstitutional
almost a century ago, but its vestiges remain today, intertwined with the country’s
economic and social life.”).
48. Id. at 2521.
49. For example, in Parents Involved in Community Schools v. Seattle School District No. 1, the Court struck down a school assignment plan that would assign students in a pro-integrative manner, with Chief Justice Roberts admonishing that
“[t]he way to stop discriminating on the basis of race is to stop discriminating
on the basis of race.” 551 U.S. 701, 748 (2007). In Ricci v. DeStefano, a municipality
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and its amici argued that interpreting the FHA to incorporate disparate
impact theory would violate the Constitution because it would force municipalities into race-based or, at least, race-conscious decision-making.
This argument, taken to its logical conclusion, would forbid municipalities from ever considering the racial impacts of their zoning, community
development, and housing policies. The majority rejected this claim, holding that laws imposing liability for unjustified disparate impact are not
themselves unconstitutionally discriminatory even though they aim to
achieve a result—integration—that is racially defined. “When setting
their larger goals,” Justice Kennedy advised, “local housing authorities
may choose to foster diversity and combat racial isolation with raceneutral tools, and mere awareness of race in attempting to solve the problems facing inner cities does not doom that endeavor from the outset.”50
B. Limitations in Practice: Housing and Neighborhood Improvement
The only issue before the Court in Inclusive Communities was whether
disparate impact theory could be used in a FHA case. Nevertheless, the
majority included a brief, but crucial, paragraph about the merits of the
plaintiff ’s case that hints at a significant limitation on the use of disparate
impact theory in the future. Specifically, the opinion referred critically to
the plaintiff ’s use of disparate impact theory in the case at bar as a “novel
theory of liability.”51 Justice Kennedy distinguished this case from what
he called “the heartland” of disparate impact suits that target artificial barriers to housing, particularly “zoning laws and other housing restrictions
that function unfairly to exclude minorities from certain neighborhoods
without any sufficient justification.”52
This somewhat opaque reference is to a distinction first noted by Stacy
Seicshnaydre in her article, Is Disparate Impact Having Any Impact? An Appellate Analysis of Forty Years of Disparate Impact Claims Under the Fair Housing Act.53 In the article, which the Court cites, Professor Seicshnaydre
administered a qualifying exam for firefighting jobs that clearly had a disparate impact on minorities. The municipality chose to disregard the exams and justified this
decision by arguing that if it used the test results in hiring, it would almost certainly be sued by disappointed minority applicants under a disparate impact theory. The Court refused to allow this fear to justify the disregarding of the test results. It reasoned that such an action was itself race-based, and therefore using
disparate impact theory to require this result would itself violate Title VII. 557
U.S. 557 (2009). Justice Scalia wrote separately to warn about the coming “war” between disparate impact and equal protection. Id. at 594–96.
50. Inclusive Cmtys., 135 S. Ct. at 2525.
51. Id. at 2522.
52. Id. at 2521–22.
53. Stacy E. Seicshnaydre, Is Disparate Impact Having Any Impact, An Appellate
Analysis of Forty Years of Disparate Impact Claims Under the Fair Housing Act, 63
AM. U. L. REV. 357 (2013).
Supreme Court Retains an Uneasy Status Quo with Inclusive Communities 279
posits that housing disparate impact cases can be sorted into two basic
types: (1) “housing barrier” cases, which challenge policies that prevent
the construction of housing for minority group members or otherwise
deny minority households freedom of movement in the wider housing
marketplace;54 and (2) “housing improvement” cases, which challenge
policies that are intended to improve the condition of housing and/or
the surrounding neighborhood.55 In the first type of case, the remedy
sought is simply the removal of the housing barrier so that new housing
opportunities can be created in the private market. In the latter, the remedy sought is typically to prevent a plaintiff ’s displacement from existing
housing, usually by altering or enjoining the policy meant to improve the
housing or neighborhood.
City of Black Jack is an example of a housing barrier case. There, a municipal action prevented the construction of affordable housing that might
attract minority families. In other words, the city stood in the way of minority housing opportunities that otherwise would have been created by a
private organization. All the plaintiffs sought was the modification of the
exclusionary zoning ordinance so that the housing could proceed.
In contrast, the two recent disparate impact cases to reach the Supreme
Court, Magner and Mt. Holly Gardens, can be classified as housing improvement cases. Both involved challenges to municipal attempts to improve
housing conditions, either through code enforcement or neighborhood redevelopment. In both cases, these attempts were likely to displace the existing residents who were disproportionately minority. In both cases, the
plaintiffs were asking that the municipality significantly alter or abandon
its efforts.
As Professor Seicshnaydre notes, housing improvement cases do not
fare well in the courts. At the appellate level, housing improvement cases
are half as likely to result in positive decisions for plaintiffs as housing barrier cases.56 Put another way, 44 percent of all positive disparate impact
outcomes at the appellate level were housing barrier challenges, while
just 16.7 percent involved housing improvement challenges.57 All of this
leads Professor Seicshnaydre to conclude that in the forty years that courts
have been applying disparate impact theory to housing cases, “they have
been far more receptive to Housing Barrier claims than to Housing
Improvement Claims.”58
54. Id. at 360–61.
55. Id. at 361.
56. Housing barrier challenges were successful 42 percent of the time, whereas
housing improvement challenges were successful only 21 percent of the time. Id. at
400–01.
57. Id. at 402.
58. Id.
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Justice Kennedy clearly viewed Inclusive Communities as a housing improvement case, describing the use of disparate impact theory as “novel”
and casting serious doubt on whether Inclusive Communities could prevail on the merits. He cautioned that disparate impact claims should
not be used to micromanage the complex, multifactor decisions of housing
developers and municipal officials:
It would be paradoxical to construe the FHA to impose onerous costs on
actors who encourage revitalizing dilapidated housing in our Nation’s cities merely because some other priority might seem preferable. . . .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.59
Ultimately, Kennedy opined, “[t]his case on remand may be seen simply
as an attempt to second-guess which of two reasonable approaches a
housing authority should follow in the sound exercise of its discretion
in allocating tax credits for low-income housing.”60
And therein lies the rub: in disparate impact cases, the analysis almost
always turns on the defendant’s ability to demonstrate that the challenged
practice, in the language of the rule, “is necessary to achieve one or more
substantial, legitimate, non-discriminatory interests,” versus the plaintiff ’s
ability to prove that another, less discriminatory alternative is available.
The Inclusive Communities opinion, in essence, reminds us that fostering
integration is just on one of many legitimate interests, such as revitalizing
dilapidated neighborhoods, ensuring compliance with health and safety
codes, and providing affordable housing, that a local government might
pursue.61 This may well mean that housing improvement cases, which
by definition involve legitimate goals, will always be an uphill battle on
the merits for fair housing advocates using disparate impact theory.
V. Analysis and Ramifications
A. Enrichment–Integration Tension
The Court’s approach in Inclusive Communities reflects a tension that
has existed since the dawn of the modern fair housing movement. In
its thorough discussion of the riots that took place throughout the United
States in 1967, the Kerner Commission identified housing discrimination
and segregation, as well as the slum conditions in urban ghettos with a
59. Inclusive Cmtys., 135 S. Ct. at 2523.
60. Id. at 2522.
61. Id. at 2522 (“An important and appropriate means of ensuring that disparate impact liability is properly limited is to give housing authorities and private
developers leeway to state and explain the valid interests served by their
policies.”).
Supreme Court Retains an Uneasy Status Quo with Inclusive Communities 281
high concentration of black residents, as contributing factors to the
unrest.62
The Commission also recognized that responding to these conditions
was one of the great policy challenges of our time. As for how to do so,
the Commission identified two plausible approaches.63 The first was “a
policy of ‘enrichment’ ” aimed at improving the quality of life in segregated areas while abandoning integration as a goal.64 The second was to
pursue integration by combining enrichment measures with policies
that will break up segregated patterns and encourage freedom of mobility.65 The Commission was clear that the enrichment choice without a
commitment to integration would ultimately fail to advance the cause
of equality. “[E]quality cannot be achieved,” wrote the Commission,
“under conditions of nearly complete separation. In a country where
the economy, and particularly the resources of employment, are predominantly white, a policy of separation can only relegate Negroes to a permanently inferior economic status.”66
Thus, the Commission advocated the use of both approaches, but with
enrichment being the adjunct or interim strategy and integration being the
ultimate goal.67 The Commission recommended an “all of the above” approach, including a massive increase in affordable housing; significant
urban renewal, but with a focus on preserving housing for low-income
people; and programs to expand low and moderate income housing
into higher income areas.68
If we fast forward to the present day, it would seem that the Commission’s suggestions have gone unheeded. Segregation has declined slightly
over the past few decades, but still persists at unacceptably high levels in
most major metropolitan areas.69 The consequences of this are numerous
62. REPORT OF THE NATIONAL ADVISORY COMMISSION ON CIVIL DISORDERS 1 (1968).
63. Technically, the Commission offered three approaches, but the first was to
do nothing at all (“the Present Policies” choice). Inaction, the Commission determined, was not a valid option. Id. at 218–21.
64. Id. at 222–24.
65. Id. at 224–25.
66. Id. at 10.
67. Id. (“Enrichment must be an important adjunct to integration, for no matter
how ambitious or energetic the program, few Negroes now living in central cities
can be quickly integrated. In the meantime, large-scale improvement in the quality
of ghetto life is essential. But this can be no more than an interim strategy. Programs must be developed which will permit substantial Negro movement out of
the ghettos.”).
68. Id. at 260–63.
69. John R. Logan & Brian J. Stults, The Persistence of Segregation in the Metropolis:
New Findings from the 2010 Census, US 2010, at 4–10 (Mar. 24, 2011), available at
http://www.s4.brown.edu/us2010/Data/Report/report2.pdf (finding that blackwhite segregation and isolation remain “very high”).
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and severe.70 Higher concentrations of minorities in a neighborhood are
associated with lower home values, even with all other variables held
constant.71 As a result, segregation limits people’s accumulation of wealth
through asset appreciation.72 Racially segregated neighborhoods tend to
experience reduced educational and employment opportunities, more
crime, and higher mortality rates.73 Finally, and perhaps most importantly, segregation undermines our national unity, leads to racial misunderstanding, and causes us to continue living, in the words of the Kerner
Commission, as “two societies, one black, one white—separate and
unequal.”74
At least some of America’s stubbornly persistent segregated patterns
can be traced to state and federal housing policies that have focused
more on the provision of affordable housing in and redevelopment of distressed minority areas than on the politically challenging work of encouraging integration.75 The LIHTC is a prime example of such a policy. Commentators have long pointed out that the program reinforces segregated
patterns because it encourages the siting of low-income housing in
areas that already have a high concentration of poverty.76 Between 1995
70. See James Robert Breymaier, The Need to Prioritize the Affirmative Furthering of
Fair Housing, 57 CLEV. ST. L. REV. 245, 252 (2009) (“[Segregated housing patterns] are
harmful to everyone. Promoting integrated communities would stimulate positive
changes to improved affordable housing dispersion, balanced economic development, equitable school improvement, and sustainable growth patterns.”). See generally Douglas S. Massey & Nancy A. Denton, AMERICAN APARTHEID: SEGREGATION
AND THE MAKING OF THE UNDERCLASS (1993).
71. David R. Harris, “Property Values Drop When Blacks Move In, Because . . .”:
Racial and Socioeconomic Determinants of Neighborhood Desirability, 64 AM. SOC. REV.
461 (1999) (finding a pronounced skew in neighborhood desirability and housing
prices in segregated neighborhoods).
72. Nancy A. Denton, The Role of Residential Segregation in Promoting and Maintaining Inequality in Wealth and Property, 34 IND. L. REV. 1199, 1206 (2001).
73. Robert G. Schwemm, Overcoming Barriers to Integrated Housing: A Back-to theFuture Reflection on the Fair Housing Act’s “Affirmatively Further” Mandate, 100
KY. L.J. 125, 135 (2011–12).
74. NATIONAL ADVISORY COMMISSION, supra note 62, at 1.
75. For a thorough discussion of the tension between fair housing and affordable housing policy, see Henry Korman, Underwriting for Fair Housing? Achieving
Civil Rights Goals in Affordable Housing Programs, 14-4 J. AFFORDABLE HOUS. &
CMTY. DEV. L. 292 (2005). See also Michelle Adams, Separate and [Un]equal: Housing
Choice, Mobility, and Equalization in the Federally Subsidized Housing Program, 71
TUL. L. REV. 413 (1996); Florence Wagman Roisman, Keeping the Promise: Ending Racial Discrimination and Segregation in Federally Financed Housing, 48 HOW. L.J. (2005);
Stacy E. Seicshnaydre, How Government Housing Perpetuates Racial Segregation: Lessons From Post-Katrina New Orleans, 60 CATH. U. L. REV. 661 (2011).
76. Florence Wagman Roisman, Mandates Unsatisfied: The Low Income Housing
Tax Credit Program and the Civil Rights Laws, 52 U. MIAMI L. REV. 1011 (1998);
Supreme Court Retains an Uneasy Status Quo with Inclusive Communities 283
and 2006, 36.8 percent of LIHTC units were located in census tracts with
populations that were more than 60 percent minority, as compared to only
17.6 percent of households located in such census tracts generally.77 In the
St. Louis metropolitan area, for example, 62 percent of LIHTC properties
are in majority black census tracts.
The Community Development Block Grant (CDBG) program is another
example of a well-intentioned government program that has tended to intensify segregation. Many communities use their community development funds in a manner that perpetuates segregation, either by continuing
to site low-income housing in predominantly minority neighborhoods or
redeveloping minority neighborhoods and displacing the existing residents. Recent litigation against one such grant recipient, Westchester
County, New York, illustrates the problem. From 2000 to 2006, Westchester County received CDBG funds totaling $52 million. The county was
(and still is) extremely racially segregated. Although it certified to HUD
that it would use these funds in a manner that affirmatively furthered
fair housing, the county focused only on affordable housing, not fair,
i.e., pro-integrative, housing. As a result, the country’s development
and siting of affordable housing actually exacerbated the segregated
patterns.78
Even the Housing Choice Voucher program may exacerbate segregation and concentrate poverty.79 Disparities in housing prices often mean
that most of the housing units that a voucher can cover are located in
lower-income, minority communities. When housing is located in more
affluent white neighborhoods, voucher holders may experience hostility
from existing residents and landlords may refuse to accept vouchers without laws in place prohibiting source-of-income discrimination. Bureaucratic obstacles may hinder voucher holders who wish to make a prointegrative move from one jurisdiction to another.
These three programs represent some of the most significant federal
programs that encourage access to and development of affordable
Myron Orfield, Racial Integration and Community Revitalization: Applying the Fair
Housing Act to the Low Income Housing Tax Credit, 58 VAND. L. REV. 1747 (2005).
77. U.S. Department of Housing and Urban Development, Office of Economic
Affairs, Updating the Low-Income Housing Tax Credit (LIHTC) Database: Projects
Placed in Service Through 2006, at 57 ex. 4–15.
78. United States ex rel. Anti-Discrimination Center of Metro New York, Inc. v.
Westchester Cnty., N.Y., 668 F. Supp. 2d 548, 559 (S.D.N.Y. 2009).
79. Stefanie DeLuca, Philip M. E. Garboden & Peter Rosenblatt, Segregating Shelter: How Housing Policies Shape the Residential Locations of Low-Income Minority Families, 647 ANNALS AM. ACAD. POL. & SOC. SCI. 268 (2013) (finding that minority
voucher holders in Mobile, Alabama, rarely escape poor, segregated communities);
John Eligon, An Indelible Black-and-White Line, N.Y. TIMES, at A1 (Aug. 9, 2015) (noting that there are nearly twenty times as many Section 8 renters in predominantly
black north St. Louis County than in predominantly white south St. Louis County).
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housing. But to the extent that they increase segregation, decisions that
municipal governments and housing authorities make in implementing
these programs also represent some of the most likely targets for “housing
improvement” challenges based upon disparate impact theory.
The Inclusive Communities opinion reveals an understandable reluctance to impose liability on government attempts to revitalize neighborhoods, cure blighted conditions, and develop affordable housing. Such
an outcome would not only be unsound as a matter of policy, it would
also harm the very minority group members whom the FHA was intended to help. As Justice Kennedy makes clear, “If the specter of
disparate-impact litigation causes private developers to no longer construct or renovate housing units for low-income individuals, then the
FHA would have undermined its own purpose as well as the free-market
system.”80 Yet truly sustainable long-term solutions will be elusive if local
governments fail to make the hard choices necessary to foster integration.
B. Ongoing Difficulty of Disparate Impact Claims
Any discussion of disparate impact theory would be remiss without a
realistic look at the existing state of affairs with respect to disparate impact
claims in the courts: they are infrequently made and unlikely to result in a
positive outcome for plaintiffs. As Professor Seicshnaydre’s survey
revealed, plaintiffs fare poorly in all types of disparate impact cases, not
just housing improvement challenges. Her survey found that plaintiffs received positive decisions in less than 20 percent of all housing disparate
impact claims considered on appeal.81 This statistic fails to capture the
state of play today: the numbers have been steadily dropping over time.
Most of the successes occurred in the 1970s and 1980s. By the 1990s, the
success rate had dropped to 13 percent, and it was down to just over
8 percent by the 2000s.82
Another way to look at how plaintiffs fare is by comparing the affirmance and reversal rate of plaintiff-favorable district court rulings to
those of rulings that favor defendants. Professor Seicshnaydre found
that, while the overall affirmance rate for federal civil appeals is roughly
80 percent, plaintiffs have gotten affirmances of favorable lower court decisions in housing disparate impact cases only 33.3 percent of the time.83
Defendants, in contrast, have an affirmance rate of 83.8 percent.84
There are a number of possible explanations for this poor showing. One
is that disparate impact cases are often highly technical and therefore difficult to bring. Failure to properly identify the affected groups will prove
80. Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, 135 S. Ct.
2507, 2524 (2015).
81. Seicshnaydre, supra note 53, at 393.
82. Id. at 393–94.
83. Id. at 399.
84. Id. at 398.
Supreme Court Retains an Uneasy Status Quo with Inclusive Communities 285
fatal to the plaintiff ’s prima facie case. Fair housing plaintiffs may be tacking weak disparate impact claims onto intentional discrimination claims
as insurance in case their intent evidence fails. Courts may be increasingly
unwilling to impose liability against defendants that are attempting to address legitimate concerns.
Of course, the litigation statistics do not tell the whole story. Many
cases settle before ever reaching the summary judgment or trial phase,
so FHA plaintiffs proceeding under disparate impact theory may be
achieving favorable results through settlement. It is clear that local governments and housing authorities have made fundamental changes to
the ways they operate as a result of the threat of disparate impact liability.
Thus, disparate impact theory has surely had more of an impact than the
stark litigation numbers would indicate. Still, disparate impact theory’s
infrequency of use and success in court does suggest that, despite its conceptual significance, it has failed to live up to its promise.85
Interestingly, just a few weeks after the Inclusive Communities opinion
was handed down, new developments on the regulatory front may
make disparate impact theory less important as a tool for combatting government policies that entrench segregation. The FHA has long stated that
the federal government, federal agencies, and recipients of federal housing funds have the duty to “affirmatively further” fair housing, which includes a mandate to foster integrated living patterns.86 For decades this
provision lacked force because HUD failed to ensure compliance by program participants or to take action against recipients that failed to comply.87 In July 2015, HUD promulgated a rule on the affirmatively furthering mandate.88 The rule overhauls the AFFH assessment and planning
framework for program participants and requires HUD to provide each
jurisdiction with national data on racial segregation, poverty concentration, and access to community assets such as education, transportation,
and jobs in order to facilitate regional planning efforts. It remains to be
85. Rigel C. Oliveri, Beyond Disparate Impact: How the Fair Housing Movement Can
Move On, 54 WASHBURN L.J. 625 (2015).
86. Section 3608 of the FHA directs HUD to administer its programs and activities relating to housing and urban development “in a manner affirmatively to further the [FHA’s] policies.” The statute that created the CDBG also requires grant
recipients to certify to HUD that their grant will be administered in conformity
with the FHA and that the recipient will use the funds in such a manner to “affirmatively further fair housing.” 42 U.S.C. § 5304(b)(2). Although the term “affirmatively further” is not defined, the legislative history of the FHA makes clear that
Congress intended for the statute both to eradicate housing discrimination and
to foster integrated living patterns.
87. Robert G. Schwemm, Overcoming Barriers to Integrated Housing: A Back-to theFuture Reflection on the Fair Housing Act’s “Affirmatively Further” Mandate, 100 KY.
L.J. 125, 153–54 (2011–12).
88. 24 C.F.R. pts. 5, 91, 92, 570, 574, 576, 903 ( July 16, 2015).
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seen whether, and to what extent, this new rule helps to promote diverse,
inclusive communities of opportunity.89 Nevertheless, its passage suggests a renewed focus on the part of HUD toward working for this goal.90
VI. Conclusion
Ultimately, Inclusive Communities left existing precedent intact, preserving a legal theory that was in many ways more important in theory than in
practice. Justice Kennedy’s nuanced opinion plumbed longstanding tensions between the Fair Housing Act’s pro-integrationist focus and affordable housing policy. By affirming the significance of integration as a goal
but then questioning whether disparate impact theory can succeed in a
number of the cases that might be brought to vindicate this goal, the
Court handed fair housing advocates an unquestionable, but qualified,
victory.
Still, a victory is a victory, and with social ills as pervasive and intractable as housing discrimination and residential segregation, fair housing
advocates want every tool at their disposal. Recent events, including the
racial unrest in Ferguson and other segregated cities, the litigation against
Westchester County, and HUD’s recent promulgation of rules both for affirmatively furthering fair housing and for disparate impact theory have
reinvigorated the discussion about how government housing policy,
agency practice, and the civil rights laws can be used to combat inequality
and segregation. The Inclusive Communities opinion is a welcome addition
to this debate.
89. See Jonathan J. Sheffield, At Forty-Five Years Old the Obligation to Affirmatively
Further Fair Housing Gets a Face-Lift, But Will It Integrate America’s Cities?, 25 U. FLA.
J.L. & PUB. POL’Y 51 (2014) (arguing that without a private right of action to enforce
these requirements, and until they are adopted by other agencies, particularly the
IRS, progress will remain mixed).
90. Housing Fairness Act of 2009: Hearing on H.R. 476 Before the Subcomm. on Hous.
and Cmty. Opportunity of the H. Comm. on Fin. Servs., 111th Cong. 110 (2010) (statement by HUD Assistant Sec’y for Fair Hous. and Equal Opportunity John D. Trasvina) (“HUD has not always fulfilled its obligation to ensure that our money is
spent in ways that affirmatively further fair housing. In this new day, however,
there is a Department-wide commitment to incorporate our mandate to affirmatively furthering fair housing into all of our work so that we can fulfill our shared
goal of truly integrated and balanced living patterns.”).
Winfield v. City of New York:
Testing the Limits of Disparate-Impact
Liability after Texas Department of
Housing and Community Affairs v. The
Inclusive Communities Project, Inc.
Andrea McArdle
I. Introduction .............................................................................................. 287
II. The Tension in ICP: Reducing the Salience of Race versus
Concern for Perpetuating Racial Isolation .......................................... 289
A. ICP’s Case Theory: Highlighting the Harms of Perpetuating
Racially Segregated Housing.......................................................... 289
B. The Court’s Response: Acceptance of the Pro-Integration
Argument—with Reservations ....................................................... 292
III. Winfield v. City of New York: Using the Fair Housing Act to
Challenge Residential Segregation at the Community District
Level........................................................................................................... 295
I. Introduction
At the close of its 2014 Term, a five-to-four majority of the Supreme
Court held in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. (ICP)1 that disparate-impact claims are
cognizable under the Fair Housing Act (FHA).2 The specific legal challenge involved the claim that the State of Texas awarded tax credits
under the Low Income Housing Tax Credit (LIHTC) program3 disproportionately to affordable housing projects to be built in racially segregated,
economically distressed areas, and allocated far fewer tax credits to housing being developed in higher-resourced areas that afford access to improved education and employment opportunities.4 This article addresses
1. 135 S. Ct. 2507 (2015).
2. 42 U.S.C. § 3601 et seq.
3. 26 U.S.C. § 42 et seq.
4. Brief for Plaintiff-Appellee Inclusive Communities Project, Inc., at 15–18, Tex.
Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507
(2015).
Andrea McArdle ([email protected]) is Professor of Law at the City University of New York School of Law.
287
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tensions and questions that remain in the wake of the Court’s highly consequential opinion. Recognizing that the opinion focused on the broader
question whether Congress intended disparate-impact liability to be actionable under the Fair Housing Act, the article will consider the implications of the opinion for achieving racial justice as lower courts, housing
advocates, local governments, and private developers seek to apply the
Court’s precepts to specific contexts.
A key consideration in Part II will be the Court’s treatment of the legal
theory developed by the plaintiff, The Inclusive Communities Project, Inc.,
in ICP that promoting residential mobility to areas of greater opportunity
is integral to achieving the aims of the Fair Housing Act.5 This discussion
addresses the Court’s seeming struggle throughout the opinion between,
on the one hand, concerns to reduce the “salience of race” in social and
economic functioning,6 and, on the other, the importance of reducing
the degree of racial isolation7 that, in segregated neighborhoods, impairs
access to resources present in more racially and economically integrated
areas. It will show that although the Court ruled that disparate-impact liability was actionable under the Fair Housing Act, it articulated a number
of limits on its ruling but offered limited guidance to those seeking to implement the decision.
In Part III, the article will address related claims advanced in a recent
lawsuit, Winfield v. City of New York,8 a post-ICP challenge to a lottery, referred to in the complaint as an “outsider-restriction“ policy, that New
York City uses to screen applications for access to affordable housing.9
As developed in the complaint, the policy accords a preference for 50 percent of units in an affordable housing project to the residents of the community district in which the project is to be built. The complaint turns on the
theory that the outsider-restriction policy limits the ability of New York
City residents otherwise equally eligible for affordable housing to have
equal opportunity to be considered when applying for units located outside
their community district.10 It alleges that this restriction, in turn, impairs the
5. Brief for Plaintiff-Appellee at 44–46.
6. Inclusive Cmtys., 135 S. Ct. at 2524.
7. Id. at 2525.
8. Winfield v. City of New York, Case 1:15-cv-05236 (S.D.N.Y. filed July 7,
2015).
9. Id.
10. Id. New York City is divided into fifty-nine community districts across five
boroughs. These districts vary in area from less than 900 acres to almost 15,000
acres and in population from fewer than 35,000 residents to more than 200,000.
Each community district is represented by a local community board, constituted
by local law in 1975, which serves as a site of local governance and community
input. N.Y.C. Dep’t of City Planning, Community Portal, http://www.nyc.gov/
html/dcp/html/neigh_info/nhmap.shtml. Each board comprises up to fifty
members, who serve without salary. Half of the board members are nominated
Winfield v. City of New York: The Limits of Disparate-Impact Liability
289
mobility that affords access to housing sited in higher opportunity districts
and constitutes disparate-impact as well as intentional discrimination
under both the Fair Housing Act and the city’s Human Rights Law.11
The article will examine the legal theory and background of the
Winfield complaint in relation to the Court’s signals in ICP concerning
the scope of disparate-impact liability under the FHA. It argues that the
facts pleaded in the Winfield case implicate core concerns animating the
drafters of the Fair Housing Act, which the Court in ICP recognized. Related to these mobility-to-opportunity concerns in the complaint, this part
will note recent research that centers on the significance of place, and in
particular opportunities for residential mobility, in improving the life circumstances of persons living in racially and economically segregated
neighborhoods.
The article concludes with some preliminary observations whether the
Court’s analysis in ICP affords support for this litigation-based effort to
pursue a vision of racial justice and inclusion in the provision of affordable
housing. In ICP, the analysis of disparate-impact liability was complicated
by the relevance of the community-revitalization provisions of the Low Income Housing Tax Credit program, which are not at issue in Winfield. Further, unlike ICP, the Winfield case does not challenge the locations where affordable housing is being built but rather the lack of equal access to
affordable housing opportunities on the basis of where applicants reside
in New York City. To the extent that the Court suggested that the particular
facts in the ICP case might not warrant a finding of disparate-impact liability, these facts seem distinguishable from the policy challenged in Winfield.
II. The Tension in ICP: Reducing the Salience of Race versus
Concern for Perpetuating Racial Isolation
A. ICP’s Case Theory: Highlighting the Harms of Perpetuating Racially
Segregated Housing
This part offers a close reading of the Court’s interpretation of the Fair
Housing Act in ICP, arguing that the Court’s rationale reveals a tension at
the heart of the opinion between agreement with the pro-integration goal
of the Act and concern that implementing that goal would reinforce racebased decision making. This tension complicates efforts at predicting how
the opinion will be applied in future cases. Understanding the source of
the tension, in turn, benefits from a consideration of the parties and the
underlying theory of the complaint.
by their district’s city council members and all board members are selected and appointed by the borough president. New York City community boards have a significant advisory role in land use and zoning matters. NYC Mayor’s Community
Affairs Unit, About Community Boards, http://www.nyc.gov/html/cau/html/cb/
about.shtml.
11. New York City Human Rights Law, N.Y.C. ADMIN. CODE § 8-107.
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2015
A non-profit organization serving low-income African American families
in the Dallas metropolitan area, ICP’s mission is to assist these families who
qualify for the Section 8 Housing Choice Voucher program to obtain rental
housing in predominantly Caucasian suburban neighborhoods.12 In this action, ICP challenged the practices of the Texas Department of Housing and
Community Affairs (TDHCA), the state agency charged with allocating federal Low Income Housing Tax Credits (LIHTC) to finance the building of
affordable housing projects.13 The LIHTC statutory scheme sets eligibility requirements for assigning credits and also confers on the states authority to
develop additional criteria for awarding credits. The statute contemplates
that developers that receive credits will be able to finance the building of
housing projects by selling the credits to investors.14
In its complaint, ICP alleged that the TDHCA allocated credits disproportionately to projects located in predominately minority districts in the
Dallas metropolitan area rather than majority-Caucasian districts that offered superior education and employment opportunities. The complaint
further alleged that this practice perpetuates residential segregation that
historically has deprived African Americans in this area from attaining
equal access to higher-opportunity areas and has relegated them to housing located in high-crime, environmentally degraded neighborhoods, in
violation of the disparate-impact provisions of the Fair Housing Act.15
After trial, the District Court for the Western District of Texas found
that ICP had demonstrated disparate impact under a burden-shifting arrangement that placed the burden on defendant (TDHCA) to show both
that it had a substantial interest justifying its practice and that there
were no less intrusive alternatives to it. On appeal, the Fifth Circuit reversed and remanded, determining that the recently promulgated Department of Housing and Urban Development (HUD) standard shifting the
burden of demonstrating less intrusive alternatives to the plaintiff should
be applied.16 The TDHCA petitioned for certiorari, challenging an issue
that it preserved but had not argued below: whether the Fair Housing
Act made actionable a disparate-impact claim of discrimination.17
In the Supreme Court, the briefs of ICP18 and the Solicitor General19 supported a construction of the Fair Housing Act that reflected its broad
12. Brief for Plaintiff-Respondent at 18, Tex. Dep’t of Hous. & Cmty. Affairs v.
Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507 (2015).
13. Id. at 20, 23.
14. Id. at 20.
15. Id.
16. Inclusive Cmtys. Project v. Tex. Dep’t of Hous. & Cmty. Affairs, 747 F.3d
275, 281–82 (5th Cir. 2014).
17. Brief for Plaintiff-Respondent at 29–30, Tex. Dep’t of Hous. & Cmty. Affairs
v. Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507 (2015).
18. Id. at 32–33, 42–47, 59–61.
19. Brief for U.S. Solicitor General as Amicus Curiae at 17–30.
Winfield v. City of New York: The Limits of Disparate-Impact Liability
291
purpose and forty years of federal appellate court interpretation. The plaintiff ’s brief also developed a theme that Texas’s allocation of low income
housing tax credits impeded residents of racially segregated, economically
distressed areas from realizing the benefits of housing located in higheropportunity areas and thus of achieving the purpose of the FHA.
Citing legislative history accompanying the FHA, the ICP brief highlighted the detrimental impact and opportunity losses caused by residential segregation:
Segregated housing is deeply corrosive both for the individual and for his
community. It isolates racial minorities from the public life of the community. It means inferior public education, recreation, health, sanitation, and
transportation services and facilities. It means denial of access to training
and employment and business opportunities. It prevents the inhabitants
of the ghettos from liberating themselves, and it prevents the Federal,
State, and local governments and private groups and institutions from fulfilling their responsibilities and desire to help in this liberation. App. 48a
(U.S. Attorney General Katzenbach).20
After detailing the extent to which housing in Dallas had long been racially segregated, the brief challenged the allocation of LIHTC units by the
TDHCA as effectively reproducing the level of de jure racial segregation
that had existed in Dallas public housing. The brief pointed out that between 1994 and 2008 the number of affordable housing units in predominantly minority census tracts had increased substantially while, at the
same time, majority-Caucasian Dallas suburbs developed with limited affordable housing.21
The brief went on to explain that between 1995 to 2009, TDHCA did not
assign tax credits for any family units in predominantly white tracts in Dallas but allocated LIHTCs to units to be developed in locations reflecting
“ghetto conditions.”22 Further, it noted that the housing in Dallas offered
under Section 8 vouchers is principally sited in minority areas because
many property owners in largely Caucasian areas have declined to participate in the voucher program. The net result has been to restrict housing
opportunities available in non-minority, higher-opportunity areas.23
The brief also contrasted ICP’s pro-integration argument with the consequences of assigning tax credits to the project championed by Intervenor Frazier Revitalization, Inc. (FRI). The location of the FRI project was
described as high-crime and high-poverty (over 40 percent) with rising
unemployment and the absence of retail and other services.24 Apparently
20. Brief for Plaintiff-Respondent at 10.
21. Id. at 15.
22. Id. at 16.
23. Id. at 20.
24. Id. at 17. In its brief to the Court, Intervenor Frazier Revitalization, Inc. described itself as a § 501(c)(3) nonprofit corporation constituted to help carry out a
neighborhood plan on a former public housing site, Frazier Courts, in South Dallas.
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drawing on these arguments, the Court’s opinion acknowledged the societal effects of racial segregation while offering a somewhat moderated
scope of effects-based liability.
B. The Court’s Response: Acceptance of the Pro-Integration
Argument—with Reservations
This section analyzes the Court’s complicated response to the arguments developed by ICP and the federal government as amicus curiae, arguing that the Court both accepted their reading of the purpose and context of the Fair Housing Act while adopting a cautionary approach to its
application. Initially, Justice Kennedy’s majority opinion in ICP closely
followed the theory of the case developed on appeal in the briefs of ICP
and the Solicitor General. The Court addressed the impact of segregation
in its reference to the historical context in relation to which the Fair Housing Act was enacted.
In Part IB of the opinion, for example, the Court reviewed historic
markers of residential segregation in the United States and the discriminatory practices that were at segregation’s core. The Court particularly
linked societal unrest in the 1960s to racially segregated housing patterns
and lack of equal access to housing,25 citing the 1968 Report on the National
Advisory Commission on Civil Disorders (the Kerner Commission Report) for
its observations on the extent to which nonwhite families lived in racially
segregated, blighted urban areas and on a resulting “deepening racial division.”26 The Court further noted that, in the immediate aftermath of the
assassination of Dr. Marin Luther King, Jr., in April 1968, and in response
to the Kerner Commission proposals to adopt legislation banning discrimination and promoting racial integration in the sale and rental of housing, Congress enacted the Fair Housing Act.27
The Court returned to the issue of racial segregation in Part II of the
opinion, in identifying as part of the “heartland” cases, i.e., cases that directly implicate the concerns that the Fair Housing Act was enacted to
remedy, those practices, such as exclusionary zoning laws and bans on
the construction of multifamily housing, that restrict racial minorities’ access to housing in particular neighborhoods.28 In addition to this discussion, the Court’s pointed mention of the problem of “racial isolation” in
With substantial representation on its board by Frazier Courts residents as well as
members of the Dallas business community, FRI is tasked with acquiring blighted
properties and transferring them to developers to rehabilitate. These revitalization
projects are funded by low income housing tax credits. Brief of Respondent Frazier
Revitalization, Inc., in Support of Petitioners, at 1–2, Tex. Dep’t of Hous. & Cmty.
Affairs v. Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507 (2015).
25. Inclusive Cmtys., 135 S. Ct. at 2516.
26. Id.
27. Id.
28. Id. at 2522.
Winfield v. City of New York: The Limits of Disparate-Impact Liability
293
Part III of the opinion, echoing a reference at the conclusion of Part II,29
indicates a concern that a theory of disparate-impact liability be capacious
enough to protect against policies and practices that, in effect, continue to
codify the reality of segregated housing.
Specifically, the Court quoted Justice Kennedy’s concurrence in Parents
Involved in Community Schools v. Seattle School District No. 1,30 which differed in nuanced ways from the plurality’s concern in that case to limit
substantially the use of race-based remedies.31 In ICP, the Court quoted
Justice Kennedy’s reference in Parents Involved to the “historic commitment to creating an integrated society” as justification for using appropriate tools to combat actions that perpetuate racial segregation in housing.32
Nonetheless, the Court in ICP tempered statements that would otherwise seem to embrace residential mobility as the key means to achieving
the goals of the Fair Housing Act. The Court went on to address the need
to recognize some limits on disparate-impact liability after canvassing
multiple factors supporting the interpretation that disparate-impact
claims are cognizable under the FHA: the statute’s results-oriented language;33 the similar structure and language of two similarly aimed antidiscrimination statutes, Title VII of the Civil Rights Act34 and the Age Discrimination in Employment Act;35 the 1988 amendments to the FHA;36
and the purpose of the FHA.37
First, the Court noted “serious constitutional questions” if liability were
found only on the basis of a “statistical disparity” in the racial composition
of affordable housing developments.38 The Court also noted that, unlike the
‘heartland” disparate-impact cases combatting artificial and arbitrary impediments to racially inclusive housing, the case at issue entailed a
“novel theory of liability,”39 that is, that assigning housing tax credits to develop housing in a blighted area was inconsistent with the aims of the FHA
to achieve more widespread integration in housing.40 Instead, it is important, the Court opined, to give ”leeway” to housing authorities and private
29. Id. at 2525.
30. 551 U.S. 701,789 (2007) (Kennedy, J., concurring in part and concurring in
judgment).
31. Id. at 733, 748.
32. Inclusive Cmtys., 135 S. Ct. at 2525 (quoting Parents Involved, 551 U.S. at 797).
33. Id. at 2518–20.
34. Id. at 2516–18, discussing the Civil Rights Act of 1964, Title VII, 42 U.S.C.
§ 2000e-2(a)(2).
35. Id. at 2516–18, discussing Age Discrimination in Employment Act, 29 U.S.C.
§ 623(a)(2).
36. Id. at 2519–21.
37. Id. at 2521–22.
38. Id. at 2523.
39. Id. at 2522.
40. Id. at 2523.
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developers to demonstrate valid interests behind challenged policies, similar to the business necessity defense allowed under Title VII.41 It would
be “paradoxical to construe the FHA to impose onerous costs on actors
who encourage revitalizing dilapidated housing in our Nation’s cities
merely because some other priority might seem preferable.”42
Referring to the risk that race-based considerations would be introduced into every determination about housing, the Court stated that it
was necessary to insist on a “robust causality requirement” beyond a
showing of statistical disparity.43 The Court tied its argument for limiting
the scope of disparate-impact liability to the “artificial, arbitrary, and unnecessary barriers” standard stated in Griggs v. Duke Power Co.44 The
Court observed that limiting the reach of disparate-impact liability
would also mitigate against the commencement of “abusive“ claims that
would have a chilling effect on the construction of affordable housing
and impair government efforts to enforce building and housing codes designed to protect residents’ health and welfare.45 The Court further expressed concern that remedial orders adopt race-neutral means, avoiding
racial targets or quotas that could implicate “difficult constitutional
questions.”46
Yet even after invoking the need for limits, the Court acknowledged
that a reference to race in crafting remedies was not entirely foreclosed:
“local housing authorities may choose to foster diversity and combat racial isolation with race-neutral tools, and mere awareness of race in attempting to solve the problems facing inner cities does not doom that endeavor at the outset.”47 And in concluding, the Court again cited the
Kerner Commission’s caution against societal segregation.
In sum, the opinion in ICP draws on the historic context of the Fair
Housing Act in interpreting it to encompass disparate-impact discrimination. Yet the Court’s policy-based concerns coupled with mention of constitutional questions, presumably involving reference to race in designing
remedies, place limits on the ruling. Moreover, despite the Court’s reference to these limits as “cautionary standards” and ”safeguards” for interpreting the FHA, it seems fair to question how much guidance the Court
has in fact given for those seeking to invoke or implement its ruling. The
following section addresses this question in the context of a newly filed
lawsuit that asserts that the City of New York has engaged in both
41. Id. at 2522.
42. Id. at 2523.
43. Id.
44. 401 U.S. 424 (1971).
45. Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135
S. Ct. 2507, 2524 (2015).
46. Id.
47. Id. at 2525.
Winfield v. City of New York: The Limits of Disparate-Impact Liability
295
intentional and disparate-impact discrimination in the lottery system in
effect for canvassing city residents’ applications for affordable housing.
III. Winfield v. City of New York: Using the Fair Housing
Act to Challenge Residential Segregation at
the Community District Level
Whether the ICP opinion affords adequate criteria for determining
when local governments and private developers merit leeway under the
FHA in deciding where to site affordable housing opportunities, or
whether the value of residential mobility is primary, must await the contours of future claims. A lawsuit recently filed by the Anti-Discrimination
Center against the City of New York may afford such an opportunity. In
Winfield v. City of New York, the plaintiffs challenge an “outsiderrestriction” policy, a lottery system under which city residents eligible
to apply for affordable housing in the city are given preference with respect to 50 percent of the units if they reside in the community district
in which the proposed housing will be located.48 As a consequence, residents living outside the community district who are otherwise eligible to
apply for affordable housing are prevented from competing for these
units on an equal basis.49 This section analyzes the theory of the lawsuit,
arguing that the claim falls squarely within the core concerns of the Fair
Housing Act and is also sufficiently distinguishable from the ICP facts
to suggest that the complaint will likely succeed in sidestepping the
Court’s limits and cautionary statements.
The three plaintiffs are African Americans residing in Manhattan,
Brooklyn, and Queens, who unsuccessfully applied via lottery for
affordable units in various developments located in majority-white community districts in Manhattan.50 The complaint alleges that the outsiderrestriction policy perpetuates residential racial segregation that exists
across the city, among the city’s fifty-nine community districts and
among households eligible to apply for affordable housing. The policy,
it is alleged, impairs mobility of city residents, particularly African
Americans and Latinos, who seek housing in higher-opportunity neighborhoods, many of which are majority white, that afford superior
schools, health care, employment opportunities, parks, and lower
crime rates.51 The complaint also charges the city with intentional discrimination, alleging, among other grounds, that the outsider-restriction
policy was adopted with awareness of a history of residential segregation in the city, that the city rejected more integration-enhancing
48. Winfield v. City of New York, Case 1:15-cv-05236, Complaint ¶¶ 83–99
(S.D.N.Y. July 7, 2015).
49. Id. ¶¶ 100–26.
50. Id. ¶¶ 13–16.
51. Id. ¶ 7.
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approaches, and that it responded to “racially—and ethnically influenced” political opposition.52
The complaint relies on a variety of statistical measures of racial disparity that merit discussion here. They include a “dissimilarity index,” which
quantifies the intensity of housing segregation.53 This index captures the
unevenness in distribution of two groups across “areal” units in a larger
area and is one of five recognized dimensions of segregation.54 Discussed
in various analyses of measuring residential segregation, this index was
noted in a widely cited 1955 sociological study of segregation indices by
Otis Dudley Duncan and Beverly Duncan and essentially validated in an
influential 1988 study by sociologists Douglas Benton and Nancy Massey.55
The complaint alleges that in 1980, among the largest U.S. cities, New
York was the second most segregated using the dissimilarity index measured between African Americans and whites, and that in 2010, New York
remained the second most segregated city with respect to this same dissimilarity index.56 The complaint also alleges that in 1980, among the largest cities, New York City was the fourth most segregated in a dissimilarity
index measured between Latinos and whites, and that in 2010, among the
largest cities, New York was the second most segregated according to the
Latino-white dissimilarity index.57
The lawsuit further charges that New York City is residentially segregated at the community district level. Stating that the city’s African American population is approximately 22.8 percent according to the 2010 Census,58 the complaint alleges that there is substantial disparity in the
distribution of African Americans among community districts; in seventeen
of the districts, African Americans comprise less than 5 percent of the population whereas in eleven other districts, African Americans comprise more
52. Id. ¶ 8.
53. Id. ¶ 34.
54. The others are exposure, clustering, concentration, and centralization. John
Iceland, Daniel H. Weinberg, and Erika Steinmetz, U.S. Census Bureau, Series
CENSR-3, Racial and Ethnic Residential Segregation in the United States: 1980-2000,
https://www.census.gov/prod/2002pubs/censr-3.pdf.
55. Id. The index computes the population of one of the two measured groups
in an areal unit, for example, a census tract, divides this figure by the size of the
group’s population in the larger area, obtains a similar calculation for the
second group in the study, calculates the difference between the measures for
the two groups, and then sums up the differences among all the areal units within
the larger area. University of Michigan Population Studies Center, Racial Residential
Segregation Measurement Project, Calculation Formula for Segregation Measures,
http://enceladus.isr.umich.edu/race/calculate.html.
56. Winfield v. City of New York, Case 1:15-cv-05236, Complaint ¶¶ 35–40
(S.D.N.Y. July 7, 2015).
57. Id. ¶¶ 41–46.
58. Id. ¶ 49.
Winfield v. City of New York: The Limits of Disparate-Impact Liability
297
than 50 percent, and in six districts exceed 65 percent of the population.59
To gauge the significance of the disparity between community district
and citywide percentage of the group, the complaint also refers to “relative
difference,” consisting of the difference between the citywide percentage
and the community district percentage, divided by the citywide percentage.60 The complaint explains that relative difference puts the scope of
the difference in a context.61 Applying this measure, the complaint alleges
that in forty-two community districts, the relative difference between citywide and community district African American populations was 50 percent
or more.62 The complaint alleges a citywide Latino population based on the
2010 Census of approximately 28.6 percent,63 with ten districts having Latino populations of less than 10 percent, twelve districts with more than 50
percent, of which nine had greater than 60 percent.64 In thirty-three districts, the relative difference between citywide and community district percentages of the Latino population is 50 percent or more.65
In another comparative measure of residential segregation at the community district level, the complaint focuses on differences among households earning various percentages of Area Median Income, an important
Department of Housing and Urban Development-developed gauge of eligibility for various categories of affordable housing.66 According to the
59. Id. ¶¶ 50–51.
60. Id. ¶ 52.
61. Id. at n.3. This calculation, as the complaint explains, gauges the percentage
relationship between the citywide-district difference and the smaller of the two
numbers in the calculation of difference. Id. The complaint offers the following explanation and example, stating that if one
[o]nly looked at a percentage-point difference, one would not be able to determine
the significance of a particular percentage-point different. Take, for example, variances between two pairs of numbers. In each pair, the percentage-point difference
is nine points. In the first pair, the difference is between 1 percent and 10 percent.
In the second pair, the difference is between 50 percent and 59 percent. In the first
example, the nine percentage- point difference is nine times (or 900 percent) greater
than the smaller of the two numbers; in the second example, the same nine
percentage-point difference is only 18 percent greater than the smaller of the
two numbers. It is relative difference that puts the scope of a variation in context.
Id. (emphasis in original).
62. Id. ¶ 53.
63. Id. ¶ 54.
64. Id. ¶¶ 55–56.
65. Id. ¶ 57.
66. At the federal level, the Department of Housing and Urban Development
(HUD) refers to the median income for families in metropolitan and non-metropolitan areas to determine eligibility for a number of housing programs. HUD first sets
an area median family income in a given year and takes family size into account,
presenting family incomes as a percentage of the area median income. Florida
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complaint, significant differences exist in most community districts between the percentage of households within a given income eligibility
range who are African American or Latino and the citywide percentages
of households in that income range who are African American or Latino.67
In a fourth effort to gauge the extent of residential segregation, the
complaint examines where 50 percent of the citywide population of
major racial groups reside. Drawing on 2010 Census data, the complaint
notes that approximately 50 percent of Latinos in New York City live in
about 25 percent of the city’s community districts, approximately 50 percent of whites live in fewer than 25 percent of the city’s community districts, approximately 50 percent of Asians live in 17 percent of the city’s
community districts, and approximately 50 percent of African Americans
live in 15 percent of the city’s community districts.68 In effect, the smaller
the percentages of community districts, the greater the degree of residential concentration. The complaint further alleges that all community districts “at least in part” have been affected by past intentional and
disparate-impact segregation-perpetuating policies.69
Turning to the specific basis for its challenge, the complaint describes the
origins and development of the outsider-restriction policy. First adopted in
1988 as a preference accorded for 30 percent of the affordable housing units
for residents of the community district in which the units were being
built,70 the percentage was increased to 50 percent in 2002 and remains at
that level.71 The complaint also points out that the preference accorded residents of community districts does not depend on their length of residence
within the district and thus cannot be justified on the basis of long-time involvement in a particular neighborhood.72 The complaint connects these
data to its overarching legal theory: that given the existing residential segregation among community districts, the outsider-restriction policy perpetuates segregation in New York City neighborhoods, including those located
in majority-white community districts of opportunity such as those in
which the plaintiffs had applied for housing.73
Housing Data Clearinghouse, Improving Housing Decisions, http://flhousingdata.
shimberg.ufl.edu/apps/azindex.pl?t=18.
67. Winfield v. City of New York, Case 1:15-cv-05236, Complaint ¶¶ 61–76
(S.D.N.Y. July 7, 2015).
68. Id. ¶ 76.
69. Id. ¶ 77.
70. Id. ¶ 81.
71. ¶¶ 83–87. The policy provides that applicants for 38 percent of affordable
units have equal access to units via the lottery, id. ¶ 88, that city employees be
given preference to 5 percent of the units, mobility-impaired applicants receive
a preference for 5 percent of the units, and applicants with hearing or visual deficits, preference for 2 percent of the units, id. ¶ 89.
72. Id. ¶¶ 92–95.
73. Id. ¶¶ 100–01.
Winfield v. City of New York: The Limits of Disparate-Impact Liability
299
In alleging the city’s awareness of the impact of residential segregation
on access to opportunity,74 the complaint refers to the city’s actual or constructive knowledge of studies demonstrating the effects on children who
mature in high-poverty, low-opportunity neighborhoods,75 areas marked
by inferior schools and health care, higher concentrations of environmental risk, and higher crime rates.76 Similarly, the complaint refers to the
city’s actual or constructive knowledge of studies that demonstrate the advantages to children born to low-income families who are able to move to
higher-opportunity neighborhoods.77 Although the studies are unnamed
in the complaint, recent social science research provides compelling support for the complaint’s linking of children’s opportunities with the degree to which they live in high- or low-poverty areas. In particular, a noteworthy 2104 study by Raj Chetty and his research associates explores the
spatial dimensions of intergenerational mobility, identifying variations in
mobility based on geographic areas.78
Analyzing the probability that a child born to a family in the bottom
fifth of the national income distribution will ascend to the top fifth of
that same distribution, the study found notable differences, ranging
from a probability of 12.9 percent in San Jose, California, to 4.4 percent
in Charlotte, North Carolina.79 The study analyzes five “factors” that
are “strongly” correlated with geographic variations in upward mobility:
residential segregation, income inequality, strength of local schools, social
capital such as participation in community networks, and family structure
(one versus two parents).80 Building on research that analyzed ways in
which segregation impairs life opportunities, including lack of access to
successful role models, well-funded schools, or employment, the Chetty
study found an inverse correlation between racially segregated areas
and upward mobility.81
74. Id. ¶¶ 112–17.
75. Id. ¶ 118.
76. Id. ¶ 117.
77. Id. ¶120.
78. Raj Chetty, Nathaniel Hendren, Patrick Kline & Emmanuel Saez, Where Is
the Land of Opportunity? The Geography of Intergenerational Mobility in the United
States, 129(4) Q.J. ECON. 1553–1623 (2014), available at http://www.equality-ofopportunity.org/images/mobility_geo.pdf.
79. Id. at 26–27 (http://www.equality-of-opportunity.org/images/mobility_
geo.pdf).
80. Id. at 3, 34–42.
81. Id. at 34–35. This study is also usefully discussed in Malcolm Gladwell,
Starting Over, NEW YORKER, Aug. 24, 2015, at 32–37 (examining how decisions
whether to relocate away from New Orleans after Hurricane Katrina affected the
life circumstances of persons dispossessed by the storm). Another recent Chetty
study relevant to the theory of both ICP and Winfield analyzed experimental data
involving randomly chosen families who were given housing vouchers that
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Other research based on analyses of U.S. Census data indicates that the
concentration of people in the United States living in high-poverty areas—
located in census tracts in which 40 percent or more of the residents have
incomes lower than the federal poverty level—increased from 7.2 million
in 2000 to 13.8 million in 2013.82 In cities with the highest incidence of
poverty, large percentages of minority populations lived in these
poverty-concentrated areas.83 This development reversed the improvements noted in the decade between 1990 and 200084 and is evidence
both of the persistence and spatial concentration of poverty, the problem
that the FHA was enacted in part to combat.
The Winfield case, unlike ICP, does not involve a challenge to the
locations where affordable housing is being built or financed, that is, it
does not implicate a city’s locational choice between siting housing in a
high-opportunity neighborhood or a project of “revitalization” in a
higher-poverty area. Nor does it challenge the use of low-income housing
tax credits to favor projects in locations having a high concentration of
low-income, minority residents.85 In this respect, the theory of the Winfield
complaint is distinguishable from the plaintiffs’ disparate-impact
theory in ICP, which alleged that Texas’s allocation of tax credits was
segregation-reinforcing, perpetuating racially concentrated housing patterns and impairing opportunities that could lead to increased racial
and economic integration.
allowed them to move from a high-poverty area to a better-resourced neighborhood. The data demonstrated that moving to a higher opportunity neighborhood
improved educational and employment outcomes for children of these families
who were under thirteen when the families moved. Raj Chetty, Nathaniel Hendren
& Lawrence F. Katz, The Effects of Exposure to Better Neighborhoods on Children: New
Evidence for the Moving to Opportunity Experiment, available at http://www.equalityof-opportunity.org/images/mto_paper.pdf (May 2015). (Thanks are due to
Stephen Miller’s discussion, The neighborhood matters, it turns out, but for tomorrow
more than today, L AND U SE P ROF B LOG (Aug. 21, 2015), http://lawprofessors.
typepad.com/land_use/2015/08/the-neighborhood-matters-one-generation-later.
html, for bringing Gladwell’s article and Chetty’s research to my attention.)
82. Alana Semuels, The Resurrection of America’s Slums, ATLANTIC (Aug. 9, 2015),
available at http://www.theatlantic.com/business/archive/2015/08/moreamericans-are-living-in-slums/400832/?utm_source=Furman+Center+Mailing
+List&utm_campaign=9418a09b88-Housing_Starts_Aug_29&utm_medium=
email&utm_term=0_ea37468da6-9418a09b88-173366509 (discussing Century
Foundation Fellow Paul Jargowsky’s review of federal census data in The
Architecture of Segregation: Civil Unrest, the Concentration of Poverty, and Public
Policy, Aug. 9, 2015, http://community-wealth.org/sites/clone.communitywealth.org/files/downloads/report-jargowsky.pdf ).
83. Id.
84. Id.
85. Winfield v. City of New York, Case 1:15-cv-05236, Complaint ¶¶ 107–09
(S.D.N.Y. July 7, 2015).
Winfield v. City of New York: The Limits of Disparate-Impact Liability
301
Rather, the Winfield complaint focuses attention on a policy restricting
the ability of some city residents to be considered for available affordable
housing developments based on the community district in which they
live, arguing that this restricted access reinforces the impact of residential
segregation on low-income persons of color. It links the elimination of the
outsider-restriction policy with enhancing the values of residential choice
and mobility-to-opportunity. To the extent that it emphasizes these values, the complaint invokes the broad remedial purpose of the Fair Housing Act and the ICP Court’s connection of that purpose with its acknowledgment that the Act reaches disparate–impact discrimination.86
In its motion to dismiss, the city as expected reaffirmed its long-held
outsider restriction policy (although it argued that a state real property
tax law actually required community preference for the projects at
issue). In a previously released press statement, New York City Mayor
de Blasio had described the lottery as a “very balanced plan” allowing
“people who are part of a neighborhood [to] have an opportunity to access
affordable housing in that neighborhood.”87 Thus, the caveats and caution
expressed in the ICP opinion that potentially limit its usefulness as a precedent will likely be tested in the Winfield litigation. For example, in commenting on the ICP complaint’s “novel theory of liability,” the Court observed that on remand the case “may be seen simply as an attempt to
second-guess which of two reasonable approaches a housing authority
should follow in the sound exercise of its discretion in allocating tax credits for low-income housing.”88 If the Court is suggesting that developing
blighted, racially segregated neighborhoods is an approach equally reasonable to one promoting residential mobility and integration, it is not
86. Gesturing toward the broader, thematic connections between the ICP and
Winfield suits, The Anti-Discrimination Center’s website highlights a supportive
quotation from Elizabeth Julian, president of The Inclusive Communities Project:
The fundamental theme of ADC’s lawsuit is that there is no acceptable type or
scope of housing segregation. That stance upsets lots of people who, for various
reasons, support the segregated status quo. But it’s the only stance compatible
with a vision of a just society, and it is why ADC’s lawsuit against New York
City’s outsider-restriction policy needs to be supported by civil rights advocates
and their allies all across the country.
Anti-Discrimination Center, Support for the Challenge to NYC’s Outsider-Restriction
Policy, http://www.antibiaslaw.com/article/support-challenge-nycs-outsiderrestriction-policy (last visited Oct. 3, 2015).
87. Telephone communication with plaintiffs’ attorney Craig Gurian, AntiDiscrimination Center (Sept. 1, 2015). See also Sally Goldenberg, DeBlasio Defends
Housing-Lottery Policy Amid Legal Challenge, POLITICO ( July 13, 2015, 3:31 PM),
http://www.capitalnewyork.com/article/city-hall/2015/07/8571958/de-blasiodefends-housing-lottery-policy-amid-legal-challenge.
88. Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135
S. Ct. 2507, 2522 (2015).
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evident that the ICP opinion is a strong or clear precedent favoring use of
the FHA to encourage racial and economic integration.
To be sure, both cases are animated by a concern for mobility, affording
access, in the words of Chetty and his associates, to the “land of opportunity.” However, it is not even clear from the Court’s opinion that the complaint’s allegations in ICP relating to limits on residential mobility would
qualify as disparate-impact discrimination. The Court hinted that, on remand, the complaint might not meet a “robust causality requirement,”
which, to avoid “serious Constitutional questions,” the Court averred,
must be based on more than statistical disparity in the racial composition
of housing developments.89
In Winfield, the ICP Court’s concern that causality be demonstrated independently of a statistical disparity would have to be addressed. As noted,
the Winfield complaint offers various statistical showings of over- and
under-representation of minority racial and ethnic groups in particular
community districts. However, the challenge made to the lottery system
is rooted not in population statistics per se but rather in the concern to eliminate an explicitly preferential policy among applicants, which may prove
to be a helpful point of differentiation. Moreover, the relief plaintiffs seek
does not entail the imposition of racial targets or quotas, another concern
of the ICP Court, but as noted requests the elimination of preferences
(based on residency in a community district). Further, the absence of a rationale for according preferences merely by virtue of residing in a community district and the availability of an in-district preference without any consideration of longevity of residence90 weigh in the plaintiffs’ favor. The
plaintiffs can argue that removing the lottery preferences would count as
dismantling “artificial, arbitrary, and unnecessary barriers” to desirable
housing, a touchstone in Griggs that the ICP Court also embraced.91
As the disparate-impact case theory of Winfield is developed,92 a key
consideration will be the ability to sidestep ICP’s rationales for limiting
89. Id. at 2522–23.
90. Winfield v. City of New York, Complaint ¶¶ 92–95.
91. Inclusive Cmtys., 135 S. Ct. at 2524.
92. In addition to the complaint’s disparate-impact cause of action under the
FHA, it alleges the city’s violation of the disparate-impact provisions of the city’s
Human Rights Law, which may be shown where
(1) . . . a policy or practice of a covered entity or a group of policies or practices
of a covered entity results in a disparate impact to the detriment of any group
protected by the provisions of this chapter; and (2) the covered entity fails to
plead and prove as an affirmative defense that each such policy or practice
bears a significant relationship to a significant business objective of the covered
entity or does not contribute to the disparate impact.
N.Y.C. ADMIN. CODE § 8-107(17)(a)(1)(2).
The statute also provides that
Winfield v. City of New York: The Limits of Disparate-Impact Liability
303
disparate-impact liability. As noted above, the context of the Winfield suit
is sufficiently distinguishable from ICP that it seems fair to assume that it
can avoid conflict with ICP’s cautionary reservations. If the lawsuit can instead be situated in the ”heartland” of FHA’s historical context and purpose, considerations that the ICP majority recognized as crucial, the case is
more likely to survive the motion stage and afford an opportunity to test
whether FHA disparate-impact liability post-ICP will realize the racial justice concerns at the statute’s core.
[t]he mere existence of a statistical imbalance between a covered entity’s challenged demographic composition and the general population is not alone
sufficient to establish a prima facie case of disparate impact violation unless
the general population is shown to be the relevant pool for comparison, the imbalance is shown to be statistically significant and there is an identifiable policy
or practice or group of policies or practices that allegedly causes the imbalance.
N.Y.C. ADMIN. CODE § 8-107(17)(b).
A recent amendment to the city’s Human Rights Law, the Local Civil Rights
Restoration Act, adopted by the New York City Council in 2005, was intended
to ensure that the Human Rights Law would be interpreted broadly and “independently from similar or identical provisions of New York state or federal statutes.”
Craig Gurian, A Return to the Eyes on the Prize: Litigating Under the Restored New York
City Human Rights Law, 33 FORDHAM URB. L. J. 255, 256 (2006), quoting N.Y.C. Local
Law No. 85 of 2005, § 1 (Oct. 3, 2005). Although analysis of the plaintiffs’ cause of
action under the City’s Human Rights Law is beyond the scope of this article, the
statute is potentially a promising vehicle for relief, in light of the stated intent not to
replicate federal law but to provide a potentially greater source of rights.
State Land Use Regulation in the Era of
Affirmatively Furthering Fair Housing
Thomas Silverstein
I. Nature and Power of States as HUD Program Participants ........... 308
A. Who Is the Grantee?..........................................................................308
B. States in the Federal System............................................................309
C. States and Localism...........................................................................309
II. Exclusionary Zoning, States, and Residential Racial Segregation .. 311
A. Early Origins ......................................................................................311
B. Exclusionary Zoning and the Fair Housing Act..........................313
C. Exclusionary Zoning Today.............................................................315
III. Successfully Promoting Residential Racial Integration Through
State Land Use Reform........................................................................... 317
A. New Jersey ..........................................................................................317
B. California.............................................................................................320
C. Massachusetts and Connecticut ......................................................321
D. Extracting a Model ............................................................................322
1. A Planning Mandate Emphasizing Site Selection and
Municipal Buy-In......................................................................... 323
2. Focus on Very Low-Income and Extremely Low-Income
Households ................................................................................... 324
3. Require Affirmative Fair Housing Marketing........................ 326
4. Prioritizing Enforcement by Advocates over Enforcement
by Developers............................................................................... 326
IV. Grounding Reform in Current Political Reality................................. 327
V. Building a Bridge Toward a New Land Use Regulation
Paradigm ................................................................................................... 328
Since 2009, the U.S. Department of Housing & Urban Development
(HUD) and various housing and community development stakeholders
have grappled with the question of what it means to affirmatively further
fair housing (AFFH). In some respects, HUD’s publication of a final AFFH
rule on July 16, 2015, was the culmination of that process,1 but the rule did
1. Affirmatively Furthering Fair Housing, 80 Fed. Reg. 42271 ( July 16, 2015).
Thomas Silverstein ([email protected]) is Associate Counsel of
the Fair Housing & Community Development Project of the Lawyers’ Committee
for Civil Rights Under Law.
305
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2015
not resolve all outstanding questions. In particular, the one point that has
been reiterated by a range of groups with often competing interests is that
no one is entirely clear how the framework that HUD has developed will
work for states. To a certain extent, this gap in understanding is illustrated
by the fact that the department still has not published a template for the
required Assessment of Fair Housing (AFH) for states.
This purported conundrum should not be hard to solve. The solution is
to simply refocus the conversation on two closely related questions. First,
what is the identity of the entity that is subject to the duty to AFFH? Second, what is the scope of that entity’s capacity, both in terms of planning
and implementation? Agonizing over how states fit into HUD’s regulatory
framework is grounded in a misappraisal of the answers to these two
questions.
The answer to the first question is clear-cut: the entity is the state government as a whole and not the individual lead agency that develops the
state’s Consolidated Plan and AFH. Each state government includes not
only its state housing and community development department and its
state housing finance agency but also its more far-flung executive agencies, the legislative branch, and even the judiciary. If the most effective
way to overcome a fair housing issue involves state legislative action,
the state legislature actually has an obligation to pass a bill, and the governor has an obligation to sign it into law.2
Once it is clear that the state as a whole, not an individual lead agency, is
responsible,3 the scope of the state’s capacity starts to look quite vast. In
light of the United States’ federal system of government, states are arguably
the most powerful political entities in this country, and their power has
only grown in recent years in light of Supreme Court decisions limiting
the federal government’s powers.4 Subject to a relatively limited set of
2. There is, of course, a difference between an obligation to adopt specific legislation as a condition of grant funding and the availability of injunctive relief
against individual officials who act in a manner inconsistent with those obligations.
The availability of such relief is a subject of conjecture at this point. However, the
Second Circuit’s affirmance of the district court’s decision that the Westchester
County Executive’s veto of legislation banning discrimination in housing on the
basis of lawful source of income violated a provision of a consent decree between
HUD and the county, which required the latter to promote such legislation, suggests that the duty to AFFH—as embodied in that consent decree—reaches the affairs of legislators and chief executives in a meaningful way. U.S. ex rel. AntiDiscrimination Ctr. of Metro New York, Inc. v. Westchester Cnty., 712 F.3d 761
(2d Cir. 2013).
3. See infra text accompanying notes 6–9.
4. See Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2603–04 (2012)
(holding that the provision of the Affordable Care Act making the expansion of
Medicaid mandatory for the states was unconstitutional coercion in excess of Congress’s powers under the Spending Clause); United States v. Morrison, 529 U.S.
State Land Use Regulation and Affirmatively Furthering Fair Housing
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constitutional constraints, states can impose taxes, create new spending
programs, exercise the power of eminent domain, regulate participants in
the housing market like real estate agents and insurance companies, and
regulate land use. The fact that states have diffused these powers across
their component parts and delegated these powers to local governments
is immaterial to the substance of their legal obligations as HUD grantees.
The twin phenomena of diffusion and delegation, however, are relevant to the question of how to implement policies that would bring a
state into meaningful compliance with the duty to AFFH. For example, although amending a provision of a state’s constitution may accomplish
AFFH goals, the perceived difficulty of doing so might undermine meaningful voluntary compliance from the start. State officials are most likely
to take positive steps that are attainable. Creating unrealistic expectations
could incentivize evasive tactics.
Out of this context, there emerges a need for policy solutions that embody three essential characteristics. First, reforms must provide effective
tools for fostering residential racial integration by reducing the prevalence
of exclusionary zoning. This article focuses narrowly on exclusionary zoning because it is a widespread practice that has a deep historical connection
to residential racial and ethnic segregation. Clearly, states will need to develop strategies for addressing other fair housing challenges, as well. Second, despite requiring statutory changes, they must be based on proven
policies from other states. Third, their adoption must move the discourse
surrounding land use regulation in a direction where a more dramatic rethinking of the state’s role is possible. A handful of states have pursued policies that satisfy these criteria to varying extents. California, Connecticut,
Massachusetts, and New Jersey all have longstanding statutes that seek
to mitigate exclusionary zoning through some sort of a state role, whether
administrative or judicial. Each offers important lessons.
This article elaborates a vision of the specific policy features that state
land use reforms should have in order to embody the three broad characteristics noted above and play an important role in AFFH efforts. To do that,
Part I explores the legal basis for this article’s definition of states and the
scope of their authority. Part II catalogues the history of exclusionary zoning
and its connection to residential racial segregation. Part III looks at the policy
598, 613 (2000) (holding that a provision of the Violence Against Women Act exceeded Congress’s authority under the Commerce Clause because Congress can
consider only the aggregated effects of economic, rather than noneconomic, activity on interstate commerce); City of Boerne v. Flores, 521 U.S. 507, 520 (1997) (holding the Religious Freedom Restoration Act exceeded Congress’s authority under
Section 5 of the Fourteenth Amendment because it lacked “congruence and proportionality” to the constitutional infirmity being remedied); United States v. Lopez,
514 U.S. 549, 561 (1995) (holding that a provision of the Gun-Free School Zones
Act exceeded Congress’s authority under the Commerce Clause because it regulated noncommercial activity).
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features, both those found in existing laws and more innovative solutions,
that should be part of a state legislative reform package that addresses the
AFFH duty. Part IV situates that package in the context of policy rationales
that have contemporary political salience. Lastly, the article expresses the aspiration that such reforms could contribute to a paradigm shift in the discourse of land use regulation.
I. The Nature and Power of States as HUD Program Participants
A. Who Is the Grantee?
The conclusion that states as whole entities, rather than individual
agencies, are states for purposes of the duty to AFFH is compelled by
the McKinney-Vento Homeless Assistance Act of 1987, as well as
HUD’s regulations implementing Consolidated Planning requirements
that govern the Community Development Block Grant (CDBG) program,
the HOME Investment Partnerships Program (HOME), and the Housing
Opportunities for Persons with AIDS (HOPWA) program.5 Under
McKinney-Vento, which authorized the creation of the Emergency Solutions Grant program (ESG, formerly known as the Emergency Shelter
Grant), a state is “each of the several States, the District of Columbia,
the Commonwealth of Puerto Rico, the United States Virgin Islands,
Guam, American Samoa, The Commonwealth of the Northern Mariana Islands, the Trust Territory of the Pacific Islands, and any other territory or
possession of the United States.”6
By contrast, the authorizing statute for the CDBG program, which is representative of the other two block grant programs, defines a state more
broadly as “any State of the United States, or any instrumentality thereof
approved by the Governor; and the Commonwealth of Puerto Rico.”7
This definition could arguably support the interpretation that individual
state agencies, rather than state governments as whole entities, are program
participants. However, HUD’s regulation implementing the Consolidated
Planning requirement attached to those programs defines states in a manner consistent with McKinney-Vento.8 Those regulations have been in place
for over six years, which is the statute of limitations for challenging the validity of regulations under the Administrative Procedure Act.9 As the regulation is minimally vulnerable to challenge and all states receive ESG
5. See 42 U.S.C. § 11371(8); 24 C.F.R. § 91.5.
6. 42 U.S.C. § 11371(8).
7. 42 U.S.C. § 5302(a)(2). See also 42 U.S.C. § 12092(9) (defining the term “state”
for purposes of the AIDS Housing Opportunity Act); 42 U.S.C. § 12704(2) (including a similar definition of the term “state” for purposes of the HOME Investment
Partnerships Program).
8. See 24 C.F.R. § 91.5.
9. See 28 U.S.C. § 2401(a); Impro Prods., Inc. v. Block, 722 F.2d 845, 850 n.8 (D.C.
Cir. 1983) (stating that the statute of limitations for challenges to agency action
under the Administrative Procedure Act is six years).
State Land Use Regulation and Affirmatively Furthering Fair Housing
309
allocations that unambiguously carry responsibilities for states as whole entities, the scope of agencies or branches of a state’s government to which the
duty to AFFH applies is clear: it applies to all of them.
B. States in the Federal System
States have expansive powers that enable them to pursue a broad array
of policy objectives. Unless a specific constitutional provision that constrains state action applies or such action is preempted by federal law
in an area of federal power, state governments can essentially legislate
on any issue and use any enforcement tool to effectuate that policy.10 In
recent years, state power has grown appreciably as the U.S. Supreme
Court has limited the scope of Congress’s authority to legislate under
the Commerce Clause, Section 5 of the Fourteenth Amendment, and the
Spending Clause.11 Additionally, the Court has constrained the ability
of private parties to challenge state action as violative of federal law.12
Federal authority to adopt laws that might limit state policymaking and
the ability of private parties to enforce what federal laws remain valid
has diminished. This state of affairs has increased the power of state governments in proportion to that reduction in federal power.
C. States and Localism
One of the more common rhetorical tactics of states that are trying to
justify the failure to constrain local authority is that certain areas of policymaking are the province of exclusive municipal control. The degree of
legal foundation for this assertion varies from state to state, but ultimately
the source of all local authority is in state law. In theory, this means that
states, defined broadly to include all of their branches of government, are
responsible for all local decision-making.
Nonetheless, practicalities may intervene and are, at minimum, important for understanding what steps might be necessary in order to actually
implement state land use reforms that mitigate exclusionary zoning. The
primary relevant division among states in initiating that discussion is
whether a state follows the Dillon’s Rule, is a home rule state, or is
10. See Jacobson v. Massachusetts, 197 U.S. 11, 25 (1905) (outlining the scope of
the police power in the federal system while upholding a state law requiring vaccination for smallpox).
11. See cases cited supra note 4.
12. See Armstrong v. Exceptional Child Ctr., 135 S. Ct. 1378 (2015) (holding
there was no private right of action to seek injunctive relief with respect to violations of the Medicaid provisions of the Social Security Act); Gonzaga Univ. v.
Doe, 536 U.S. 273, 387 (2002) (holding that there was no private right of action
under 42 U.S.C. § 1983 to enforce the Family Educational Rights and Privacy
Act); Alexander v. Sandoval, 532 U.S. 275, 288, 293 (2001) (holding that there
was no private right of action to enforce the Department of Transportation’s regulation prohibiting policies or practices with discriminatory effects under Title VI of
the Civil Rights Act of 1964).
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somewhere in between those two poles.13 Secondarily, among home rule
states, it is important to determine whether the source of legal authority
for that designation is found in the state constitution, a statute, or the common law. Notwithstanding that the content of a state constitution is within
the control of a state, amending a state constitution in order to allow the
state to supersede local land use regulations would be a more laborious,
long-term endeavor than modifying a statute.
It is helpful to briefly define what these different regimes entail. Under
Dillon’s Rule, the powers of municipalities are limited to that which the
state has explicitly granted or that are necessarily implied by an explicit
grant of authority.14 With respect to local land use regulation, the most
common explicit grant of power is a state zoning enabling act.15 Under
home rule, local governments are generally presumed to have broad powers.16 However, even in states in which there is a constitutional basis for
home rule, state legislatures may abrogate the authority of home rule municipalities by adopting specific legislation.17
Although the law of home rule is an important consideration, so is the
culture. This is the case even in states where there is no longstanding legal
authority for home rule. For example, Westchester County Executive Rob
Astorino referred to home rule as a “power long cherished in New York”
in arguing against HUD’s attempts to bring the county into compliance
with the duty to AFFH by rooting out exclusionary zoning in affluent, predominantly white municipalities.18 Although the New York State Constitution and the state’s General Laws have home rule provisions,19 they are
relatively limited in scope, stopping short of endowing municipalities
with the police power, and of recent vintage in comparison with other
13. As of the time of publication, twenty-nine states followed Dillon’s Rule and
nine were strong home rule states. The remaining twelve states had either statutory
or constitutional grants of home rule authority, but either the substantive scope of
that authority was limited or that authority was not granted to all municipalities.
14. See Arlington Cnty. v. White, 528 S.E.2d 706, 708 (Va. 2000).
15. See VA. CODE ANN. §§ 15.2-2280–2316.
16. See FLA. CONST. art. VIII, § 2(b) (“[m]unicipalities shall have governmental,
corporate and proprietary powers to enable them to conduct municipal government, perform municipal functions and render municipal services, and may exercise any power for municipal purposes except as otherwise provided by law.”).
17. See OHIO CONST. art. XVIII, § 3 (limiting municipalities’ home rule powers to
regulations that “are not in conflict with general laws”). However, a small number
of state constitutions impose limits on the types of laws that state legislatures can
pass that limit home rule. See KAN. CONST. art. XII, § 12 (limiting the power of the
state legislature to preempt local home rule to “statutes of statewide concern applicable uniformly to all cities”).
18. Alfred Branch, Astorino Defends County on Affordable Housing Efforts,
BEDFORD-KATONAH PATCH (July 24, 2015), http://patch.com/new-york/bedford/
astorino-defends-county-affordable-housing-efforts.
19. See N.Y. CONST. art. IX, § 2; N.Y. Mun. Home Rule Law § 10.
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states. Notwithstanding the state’s home rule laws, its courts continue to
articulate Dillon’s Rule in weighing the scope of local governmental
power.20 There is nothing in New York law that would prevent the
state from statutorily imposing a regime with the power to override
local land use decisions. Some, however, would likely see such a law as
a significant cultural shift.
II. Exclusionary Zoning, States, and Residential
Racial Segregation
A. Early Origins
The problem of residential racial segregation is inextricable from the
history of land use regulation in the United States. Zoning, which
emerged as a widespread practice in the 1910s and 1920s, is very much
a product of its time in two meaningful respects. First, zoning proponents’
attempts to methodologically determine the highest and best use of land
reflected the ideology of the Progressive Era reformers.21 Although zoning
ordinances have grown vastly more complicated over time, early ordinances straightforwardly classified parcels of land with regard to two
characteristics, the types of uses allowed and the intensity of uses permitted.22 These early ordinances also imposed detailed restrictions on building heights, minimum lot sizes, set-backs, and other features.23 For example, a zoning ordinance might classify land into three types of use: R for
residential, C for commercial, and I for industrial. There may be three intensities of use: 1 for low density, 2 for medium density, and 3 for high
density. Thus a parcel zoned R-1 would be restricted to low-density residential use. Second, from the start, the practice was used to exclude perceived outsiders in terms of race, national origin, religion, and socioeconomic status.24 Indeed, even before the advent of traditional zoning,
municipalities attempted to use their regulatory power to allocate space
between groups of people on the basis of race.25
A review of two seminal cases that reached the Supreme Court, Buchanan v. Warley and Village of Euclid v. Ambler Realty Co., is instructive.
In Buchanan, a white property owner sought specific performance of a
contract to sell his property to an African American buyer.26 The buyer’s
obligation to purchase under the contract was contingent on the ultimate
determination of whether he had the right to occupy the parcel. Under
20. See Sureway Towing, Inc. v. Martinez, 779 N.Y.S.2d 109, 111 (N.Y. App. Div.
2004).
21. DAVID M.P. FREUND, COLORED PROPERTY 50–51 (2007) (discussing the “scientific” origins of land use planning).
22. Id. at 82 (describing zoning ordinance of Euclid, Ohio, adopted in 1922).
23. Id.
24. KENNETH T. JACKSON, CRABGRASS FRONTIER 241–43 (1985).
25. Id.
26. 245 U.S. 60 (1917).
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Louisville’s local ordinances, it was unlawful for an African American to
reside in a home on a majority-white block. The Supreme Court invalidated the ordinance on the grounds that it violated the Due Process
Clause of the Fourteenth Amendment by irrationally and unjustifiably restricting the seller’s right to alienate property.27 Although Louisville’s ordinance was at issue in Buchanan, it was reflective of a nationwide trend
toward explicit racial zoning reflected in local laws.28 Those ordinances
quickly fell away after the Court’s decision, and racist local governments
looked to other strategies for maintaining residential segregation.
Traditional zoning, as it developed at that time, proved to be a remarkably effective tool for doing so. New York City adopted the nation’s first
zoning ordinance in 1916, just two years before the Court’s decision in Buchanan, and the practice spread rapidly over the course of the next two decades.29 In particular, zoning held a strong allure for newly forming suburban municipalities outside of industrial cities in the northeast and
Midwest.30 The populations of these cities were booming at the time
due to a combination of European immigration (prior to the adoption of
restrictive laws in 1921 and 1924) and the first Great Migration of African
Americans from the rural South, beginning just before World War I.31 In
the wake of World War I, nativist and white supremacist sentiment were
at their height, Prohibition became the law of the land, and the Ku Klux
Klan expanded from a regional to a national political force.32 In this context, economically mobile white Protestants effectively used zoning to create buffers between the neighborhoods in which they resided and those in
which perceived outsiders were permitted to live.33
The Village of Euclid, Ohio, was one such enclave that rapidly developed during the post-World War I era. Euclid, now a city, is located immediately to the east of Cleveland along the shores of Lake Erie. Although
a majority of its population is African American today, just 1.3 percent of
its population was African American in the 1920 Census.34 Meanwhile,
between 1910 and 1920, the size of Cleveland’s African American population had more than quadrupled from 8,448 to 34,451.35 Its adoption of a
27. Id. at 82.
28. FREUND, supra note 21, at 59.
29. JACKSON, supra note 25, at 241–42.
30. FREUND, supra note 21, at 70–72 (describing proliferation of zoning ordinances in Michigan).
31. ISABEL WILKERSON, THE WARMTH OF OTHER SUNS 8–15 (2010).
32. FREUND, supra note 21, at 14–15.
33. Id. at 54–61.
34. U.S. Census Bureau; Census 1920, Ohio, Composition and Characteristics of
the Population for Places of 2,500 to 10,000 (1922).
35. U.S. Census Bureau; Census 1920, Ohio, Age, for Cities of 10,000 or More
(1922); U.S. Census Bureau; Census 1910, Ohio, Age, for Cities of 25,000 or
More (1913).
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zoning ordinance in 1922 initiated a sequence of events that led to the Supreme Court giving its imprimatur to zoning. In Village of Euclid v. Ambler
Realty Co., the Supreme Court applied a permissive rational basis standard in upholding Euclid’s zoning ordinance in the face of a challenge
to its validity under the Due Process Clause.36
Sometimes forgotten in light of the Court’s decisive opinion in Euclid is
the decision of the U.S. District Court for the Northern District of Ohio,
which the Court overturned. In a decision holding that Euclid’s zoning ordinance violated the Due Process Clause, Judge Westenhaven saw past
the facts of the instant case, which involved a property owner that wished
to use its land for industrial purposes, to write that “the result to be accomplished is to classify the population and segregate them according
to their income or situation in life.”37 The only reason why one household
might live in a mansion, another in a duplex, and a third in an apartment,
Judge Westenhaven concluded, was socioeconomic status. Thus, economic exclusion and by extension racial exclusion were at the heart of
zoning from its inception.
B. Exclusionary Zoning and the Fair Housing Act
A new status quo emerged out of Buchanan and Euclid, which, despite
some contrary currents, remains in place today. Explicit racial zoning, like
that of Louisville in Buchanan, was not permissible, but race-neutral zoning that separated people on the basis of housing density and often restricted density altogether was acceptable. The predictable effect, and
often the intent, of the latter form of zoning, has been intense residential
racial segregation. Among the many reasons for this causal relationship
have been explicitly racially discriminatory federal mortgage lending policies that pushed middle-class and affluent African Americans into the
rental housing market and the broader longstanding correlation between
race and socioeconomic status in the United States.38 With the revival of
the Equal Protection Clause in the decades following Euclid and the passage of the Fair Housing Act (FHA) in 1968, new lines of attack in the
struggle for inclusive land use policies emerged.
In the 1970s, three major cases illuminated the contours of fair housing
and civil rights advocates’ ability to challenge exclusionary zoning ordinances and reinforced the nexus between traditional, often called Euclidean, zoning and segregation. In United States v. City of Black Jack, the
Eighth Circuit held that the zoning ordinance of a developing suburb of
St. Louis violated the FHA because of its unjustified discriminatory effect.39 Although the Civil Rights Division of the U.S. Department of Justice
36. 277 U.S. 365 (1926).
37. Ambler Realty Co. v. Vill. of Euclid, 297 F. 307, 312–13, 316 (N.D. Ohio 1924).
38. See, e.g., FREUND, supra note 21, 99–175 (discussing the history of discriminatory mortgage lending policies and practices).
39. 508 F.2d 1179, 1188 (8th Cir. 1974).
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litigated the case in the Eighth Circuit, the case arose out of failed attempts
by an affordable housing developer with the mission of promoting residential integration to build in Black Jack.40 The city both incorporated
and adopted its zoning ordinance, in substantial part, with the purpose
of derailing that development proposal.41 The case was the first in
which a court applied the disparate impact or discriminatory effects standard in deciding a case under the FHA. Black Jack armed advocates with a
powerful tool for combatting exclusionary zoning.
The Supreme Court followed Black Jack by mitigating its utility in
Warth v. Seldin, a case that hinged on the issue of standing in exclusionary
zoning cases. In Warth, a variety of plaintiffs challenged the validity of the
zoning ordinance of Penfield, New York, an affluent suburb of Rochester.
They alleged that the ordinance unconstitutionally excluded low-income
people but did not include a claim of race discrimination in violation of
the FHA. Unlike in Black Jack, there was no developer prepared to build
affordable housing in the event of an increase in the allowable density.
Thus, in assessing whether the individual plaintiffs who wished to
move to Penfield could demonstrate injury-in-fact, the Court concluded
that the plaintiffs had not demonstrated that “absent the respondents’ restrictive zoning practices, there [was] a substantial probability that they
would have been able to purchase or lease in Penfield.”42 That holding
was significant and has informed many lower court decisions on standing
in FHA cases because, unlike the Warth Court’s decision with respect to
the standing of white residents of Penfield who desired to live in a
more diverse community, the plaintiffs who wished to move to Penfield
failed to demonstrate Article III standing and not just prudential standing.
Lastly, in Village of Arlington Heights v. Metropolitan Housing Development Corp. (Arlington Heights I),43 the Supreme Court clarified that disparate impact claims are not cognizable under the Equal Protection Clause
and articulated a test for inferring discriminatory intent from circumstantial evidence. The underlying case involved a municipality’s refusal to rezone land to allow a nonprofit affordable housing developer to build townhomes for low- and moderate-income households in a predominantly
white suburb to the northwest of Chicago. In light of the demographics
of the region, building the housing would have had the effect of fostering
residential racial integration. The Court decided the case shortly after having issued its decision in Washington v. Davis, which had already held that
discriminatory intent was necessary to prove a violation of the Equal Protection Clause but which was decided after the Seventh Circuit decision
that the Court reversed in Arlington Heights I. The Court’s test for inferring
40.
41.
42.
43.
Id. at 1182.
Id. at 1182–83.
Warth v. Seldin, 422 U.S. 490, 504 (1975).
429 U.S. 252 (1977).
State Land Use Regulation and Affirmatively Furthering Fair Housing
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discriminatory intent has become the touchstone of disparate treatment
analysis in exclusionary zoning cases under the FHA.44
It is important to note that the Court remanded the case to the Seventh
Circuit for further proceedings on the question of whether Arlington
Heights’ refusal to rezone the property in question violated the FHA in
lights of its disparate impact. In Arlington Heights II, the Seventh Circuit,
building upon the foundation laid by the Eighth Circuit in City of Black
Jack, held that it did.45 Thus, by the late 1970s, it was clear the FHA had
the potential to serve as a tool for remedying exclusionary zoning, but
the constraints of standing doctrine and the difficulty of proving discriminatory intent through circumstantial evidence somewhat curtailed the effectiveness of that tool.
C. Exclusionary Zoning Today
Although FHA litigation has proven successful in reducing some barriers to the development of affordable housing in targeted communities,
the strategy generally has not had a systemic effect. Observers can find
proof of that contention in the fact that exclusionary zoning is still relatively widespread and in the persistence of litigation to this day. If the
major exclusionary zoning lawsuits of the 1970s had their intended effect,
local governments that were not defendants in those actions would be deterred from engaging in similar practices. Two important trends in contemporary efforts to eradicate exclusionary zoning through FHA litigation
are worthy of note.
The first is that advocates continue to litigate lawsuits very similar to
City of Black Jack and Arlington Heights II.46 There has not been a huge volume of these cases, and, for every successful challenge, there has been at
least one that faltered in light of the standing requirements of Warth, an
inability to marshal adequate statistical evidence, or the strength of the
municipality’s justification for its zoning policies.47 Even when plaintiffs
44. Id. at 266–68.
45. Metro. Dev. Hous. Corp. v. Vill. of Arlington Heights (Arlington Heights II),
558 F.2d 1283 (7th Cir. 1977).
46. See, e.g., Mhany Mgmt. Inc. v. Vill. of Garden City, 985 F. Supp. 2d 390
(E.D.N.Y. 2013) (holding that a decision to rezone a property to allow townhomes
but not apartments violated the FHA); Greater New Orleans Fair Hous. Action Ctr.
v. St. Bernard Parish, 641 F. Supp. 2d 563 (E.D. La. 2009) (holding that a moratorium on multifamily development violated the FHA); Dews v. Town of Sunnyvale,
109 F. Supp. 2d 526 (N.D. Tex. 2000) (holding that a municipality’s one-acre minimum lot size requirement for residential development violated the FHA).
47. Stacy E. Seicshnaydre, Is Disparate Impact Having Any Impact? An Appellate
Analysis of Forty Years of Disparate Impact Claims Under the Fair Housing Act, 63
AM. U. L. REV. 357 (2013). In particular, identifying plaintiffs with standing to challenge exclusionary zoning has been difficult. Affordable housing developers are
often best positioned to prove that they have suffered injury as a result of land
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have succeeded, the relief that courts have been willing to grant has sometimes been meager, and the amount of time that it has taken to achieve
some of those victories has been immense. Despite those difficulties, the
Supreme Court’s recent decision upholding the disparate impact standard
in Texas Department of Housing and Community Affairs v. Inclusive Communities Project has the potential to breathe new life into exclusionary zoning
litigation as Justice Kennedy’s majority opinion identified exclusionary
zoning cases as comprising the heartland of the FHA.48 Overall, traditional exclusionary zoning lawsuits under the FHA are still a viable tool
for combatting exclusionary zoning; however, they have proven more successful at securing individualized relief on a case-by-case basis than they
have at providing a general deterrent effect.
The second is United States ex rel. Anti-Discrimination Center of Metro
New York, Inc. v. Westchester County, the landmark case construing the
duty to AFFH that played a major a role in motivating HUD to develop
its new regulation.49 Although the plaintiff in Westchester brought its action under the False Claims Act based on the failure to properly engage
in required planning activities rather the FHA, the issue of exclusionary
zoning has dominated discussions about the implementation of the settlement. Pursuant to a consent decree, the county was required to produce,
among other requirements, a new Analysis of Impediments to Fair Housing Choice, the planning document that preceded the AFH.50 The county
still has not prepared an AI that HUD has found acceptable because the
county has failed to identify exclusionary zoning in any of its villages
and towns. As a result, HUD has reallocated tens of millions of dollars
in federal grant funds from the county to other jurisdictions.51 Although
HUD has not taken a similarly hard line against other jurisdictions by requiring them to identify and take action against exclusionary zoning in
order to receive federal funds, the systemic dimensions of that type of approach are clear. Where case-by-case FHA litigation has proven inadequate to the task of eradicating exclusionary zoning, tying the receipt of
use barriers, but they may be unwilling to file lawsuits because they tend to be repeat players dependent upon municipal goodwill in order to function.
48. 135 S. Ct. 2507, 2511 (2015).
49. 668 F. Supp. 2d 548 (S.D.N.Y. 2009).
50. Stipulation and Order of Settlement and Dismissal, U.S. ex rel. AntiDiscrimination Ctr. of Metro New York, Inc. v. Westchester Cnty., No. 06-CV2860 (S.D.N.Y. Aug. 10, 2009).
51. Westchester Cnty. v. U.S. Dep’t of Hous. & Urb. Dev., 778 F.3d 412 (2d Cir.
2015). But see Press Release, Gov. Andrew M. Cuomo, Governor Cuomo, Congresswoman Lowey Announce Plan to Make $5 Million Federal Community Development Investments Available to Westchester County Communities (Feb. 9, 2015)
(on file with author) (announcing the State of New York’s plan to provide
CDBG, HOME, and ESG funds available to communities in Westchester County).
State Land Use Regulation and Affirmatively Furthering Fair Housing
317
federal funds to action to dismantle such segregative policies, including
on the part of lesser units of local government, could lead to progress.
III. Successfully Promoting Residential Racial Integration
Through State Land Use Reform
As the litigation discussed in Part II of this article makes clear, most attempts to remediate exclusionary zoning have taken place at the local
level; however, as the discussion of the role and powers of states in Part II
makes clear, state governments as well have the ability and the obligation
to take action to eradicate exclusionary zoning that perpetuates residential
racial segregation. The Westchester case, although involving a local government, illustrates how a larger unit of government may be responsible for
the policies and practices of its sub-parts. A handful of states have taken
the initiative to develop and implement reforms to their land use regulation regimes that have the effect of reducing exclusionary zoning. This
section addresses how three of those models operate when viewed
through a race-conscious prism.
A. New Jersey
The New Jersey Fair Housing Act52 is in some ways the gold standard
for state law innovations that mitigate exclusionary zoning in a manner
that is well calibrated to achieve AFFH goals. At the same time, that system was the result of and continues to be fraught with litigation.53 That
conflict is both a reflection of its effectiveness, which has riled exclusionary suburbs, and its complexity, which has even baffled supporters at
times.54 Regardless, it is well worth the effort to try to understand how
the law has worked in the past and is intended to work.
Under the New Jersey Fair Housing Act, an administrative agency, the
Council on Affordable Housing (COAH), is responsible for determining
each municipality’s fair share of the regional need for housing that is affordable to moderate-income, low-income, and very low-income households.55 Under the statute, moderate-income households are defined as
those earning between 50 percent and 80 percent of the area median
52. N.J. STAT. ANN. §§ 52:27D-301-329.9.
53. See, e.g., In re the Adoption of N.J.A.C. 5:96 and 5:97 by the N.J. Council
on Affordable Hous., 110 A.3d 31 (N.J. 2015); S. Burlington Cnty. N.A.A.C.P. v.
Twp. of Mount Laurel, 456 A.2d 390 (N.J. 1983); S. Burlington Cnty. N.A.A.C.P.
v. Twp. of Mount Laurel, 336 A.2d 713 (N.J. 1975).
54. For instance, in 2011, the New Jersey Legislature adopted a bill substantially
simplifying the provisions of the New Jersey Fair Housing Act and had the support
of fair housing advocates in doing so. Governor Chris Christie vetoed the bill. See
Matt Friedman, Gov. Christie Rejects N.J. Bill’s Affordable Housing Minimum Requirement, NJ.COM (Jan. 25, 2011, 6:00 AM), http://www.nj.com/news/index.ssf/2011/
01/gov_christie_rejects_nj_afford.html.
55. N.J. STAT. ANN. § 52:27D-307.
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income (AMI), low-income households are those making between 30 percent and 50 percent of AMI, and very low-income households are those
making less than 30 percent of AMI.56 Once COAH establishes the size
of those allocations of units, individual municipalities that seek to avoid
builder’s remedy lawsuits are responsible for developing plans that provide a reasonable opportunity for the development of housing to meet
those needs.57 When the process has worked effectively, compliant jurisdictions have generally met their obligations through the use of mandatory inclusionary zoning and rezoning developable land in order to accommodate higher density.58 When municipalities do not adopt
effective plans, advocates are able to bring judicial challenges to those inadequate plans,59 and developers may bring so-called “builder’s remedy”
suits in order to allow them to construct housing that includes an affordable component.60
A few things stand out about the New Jersey Fair Housing Act from a
fair housing perspective and make the law a model for other states to follow. First, the law focuses on units that are affordable to households
earning below 30 percent of AMI and between 30 percent and 50 percent
of AMI in addition to those making between 50 percent and 80 percent of
AMI. Some other states focus exclusively on the production of units at between 50 percent and 80 percent of AMI, as do many jurisdictions with
mandatory inclusionary zoning ordinances nationwide.
In most metropolitan areas, the correlation between race and ethnicity,
on the one hand, and socioeconomic status, on the other, is likely to be
much more pronounced below 50 percent of AMI than it is above that
threshold.61 Second, assessing housing need regionally better accords
56. N.J. STAT. ANN. § 52:27D-304.
57. N.J. STAT. ANN. § 52:27D-309.
58. N.J. STAT. ANN. § 52:27D-311.
59. See In Re Petition for Substantive Certification Filed by the Twp. of Warren,
622 A.2d 1257 (N.J. 1993) (with the public advocate representing three public interest entities).
60. See Mount Olive Complex v. Twp. of Mount Olive, 774 A.2d 704 (N.J. Super.
Ct. App. Div. 2001).
61. See MARGARET C. SIMMS ET AL., RACIAL AND ETHNIC DISPARITIES AMONG LOWINCOME FAMILIES 11 (2009). Data that demonstrates the correlation between race
and ethnicity and extremely low-income or very low-income status is limited because of limitations in Census data; however, according to a 2009 Urban Institute
study, 53 percent of African American families and 45 percent of Latino families
with incomes below 200 percent of the federal poverty level had incomes that
were below 100 percent of the federal poverty level. By contrast, just 39 percent
of white families with incomes below 200 percent of the federal poverty line had
incomes below 100 percent of the federal poverty line. It is important to note
that, aside from Alaska and Hawaii, there is geographic variation in the federal
poverty line so it is not a proxy for the adjusted median income (AMI). Nonetheless, the data is illustrative of the broader point that there are demographic
State Land Use Regulation and Affirmatively Furthering Fair Housing
319
with the obligation to overcome, rather than simply mitigate, residential
segregation. By contrast, Massachusetts and Connecticut effectively set
each municipality’s obligation at 10 percent of the municipality’s own
housing stock, which is far below what any municipality’s fair share is
likely to be. Third, a planning process informed by robust community engagement can empower historically marginalized communities, avoid the
selection of low quality sites for rezoning, and build long-term political
support for the statute.
The main drawbacks to the New Jersey approach are its complexity
and the extent to which it has provoked political opposition. Although political challenges can be surmountable, they stymied the effectiveness of
that state’s law for several years. COAH has failed to adopt valid rules
for determining fair share allocations because of Governor Chris Christie’s
opposition to the underlying statute.62 In the face of that intransigence, the
New Jersey Supreme Court retook judicial control of the process in 2015,
basing obligations on the methodology used for prior rounds of the fair
share allocation process.63 The court’s action was an important victory
for fair housing advocates but also casts some doubt on the durability
of administrative agencies as vehicles for implementing reforms to land
use regulation with respect to affordable housing. As an additional
note, the complexity of determining fair share allocations has, at times,
led to some conflict with environmental conservation advocates in addition to the more predictable run-ins with suburban local governments.64
This occasional source of tension demonstrates the need to adopt a nuanced approach to greenfield development that neither encourages sprawl
nor exempts exurban communities from providing opportunities for affordable housing development.
variations among income segments of the low-income population that tend to reflect greater disadvantage on the part of African American and Latino individuals
and families.
62. See Brent Johnson, N.J. Supreme Court Rebukes Christie Administration, Puts
Courts in Charge of Affordable Housing, NJ.COM (Mar. 11, 2015, 12:03 AM), http://
www.nj.com/politics/index.ssf/2015/03/nj_supreme_court_rebukes_christie_
administration_puts_courts_in_charge_of_affordable_housing.html; Salvador
Rizzo, N.J. Supreme Court Blocks Christie’s Plan to Abolish Affordable Housing
Agency, NJ.COM (July 10, 2013, 6:31 PM), http://www.nj.com/politics/index.ssf/
2013/07/nj_supreme_court_blocks_christies_plan_to_abolish_affordable-housing_
agency.html; Megan DeMarco, Gov. Christie Abolishes N.J. Council on Affordable
Housing, NJ.COM ( June 29, 2011, 9:31 PM), http://www.nj.com/news/index.ssf/
2011/06/gov_christie_abolishes_nj_coun.html.
63. In re the Adoption of N.J.A.C. 5:96 and 5:97 by the N.J. Council on Affordable Housing, 110 A.3d 31, 48-49 (N.J. 2015).
64. See MaryAnn Spoto, N.J. Appellate Court Upholds Highlands Council Plan to
Prevent Housing Development in Environmentally Sensitive Area, NJ.COM (Aug. 16,
2011, 5:50 AM), http://www.nj.com/news/index.ssf/2011/08/court_upholds_
highlands_counci.html.
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B. California
California’s Housing Element is a required component of each municipality’s General Plan.65 Thus, as in New Jersey, there are opportunities for
community engagement in the process of developing the document. Municipalities are required to sufficiently zone properties to absorb each
community’s allocation of the future need for housing for very lowincome (between 30 percent and 50 percent of AMI), low-income (between
50 percent and 80 percent of AMI), moderate-income (between 80 percent
and 120 percent of AMI), and above moderate-income (greater than
120 percent of AMI) households.66 Unlike New Jersey, California does
not include allocations of regional housing need for households earning
less than 30 percent of AMI although planning efforts must address
those needs in a vaguer manner.67 The comparative failure of California’s
Housing Element requirement to address the needs of households below
30 percent of AMI makes the model less valuable than that of New Jersey
from a fair housing perspective.
Like New Jersey, the authority to determine regional housing need is
vested in an administrative agency, the California Department of Housing
and Community Development.68 California’s system is made more
complicated by the fact that various councils of governments conduct
sub-allocation of that need to individual municipalities within regions.69
Thus, for a municipality in Los Angeles County, the state agency determines the regional housing need for Southern California, and the Southern
California Association of Governments determines that city or town’s share
of the regional need. This added layer of administrative governance has
positive and negative features. It increases the risk of methodological inconsistency in determining municipalities’ allocations of regional housing
need, but it also has the potential to increase local buy-in to the system by
fostering both the perception and the reality of responsiveness to contextspecific concerns.
With respect to enforcement, advocacy organizations can challenge the
validity of municipalities’ housing elements in state court, and attorney
fees are available to prevailing plaintiffs in those suits. Like in New Jersey,
affordable housing developers have a builder’s remedy; however, that
remedy is only available if at least 49 percent of its units are affordable
to very low-, low-, and moderate-income households.70 California, accordingly, has a somewhat weaker mandate than New Jersey although the
65. CAL. GOV’T CODE § 65580.
66. CAL. GOV’T CODE § 65583(c)(1)(A).
67. See CAL. GOV’T CODE § 65583(a)(1) (requiring jurisdictions to analyze extremely low-income housing needs).
68. CAL. GOV’T CODE § 65584.01.
69. CAL. GOV’T CODE § 65584.03.
70. CAL. GOV’T CODE §§ 65583(g), § 65589.5(d).
State Land Use Regulation and Affirmatively Furthering Fair Housing
321
availability of attorney fees has proven to be a sufficient incentive to ensure at least some enforcement activity by advocates.71 In highly populated metropolitan areas with a solid base of advocacy organizations
and community stakeholders that are able to participate in the development of jurisdictional Housing Elements, this enforcement structure is
largely adequate. In exurban and rural areas, its weaknesses are more
glaring. A court order to redo a Housing Element is only worth so
much if no stakeholder groups have the capacity to influence the revision
process. Meanwhile, it may be profitable for a developer to construct
mixed-income multifamily housing in outlying communities if allowed
to do so at a higher density than permitted by existing zoning.
C. Massachusetts and Connecticut
In comparison to New Jersey and California, the Massachusetts72 and
Connecticut73 models deemphasize the planning process and empower
multifamily housing developers. In each state, municipalities in which
less than 10 percent of the housing stock is affordable to households at
80 percent of AMI are subject to a builder’s remedy.74 Developers in Massachusetts proposing mixed-income housing under such circumstances
face a simplified, streamlined application process in trying to secure zoning approval and permits.75 In both states, if the developer’s application is
denied, it has the ability to appeal the denial and have its appeal adjudicated under a more favorable standard than would be applicable under
land use laws in nearly all states.76 In Massachusetts, an administrative
agency hears that appeal whereas the state courts hear appeals in Connecticut. In Massachusetts, the administrative agency’s determination is
ultimately appealable to superior court. With respect to enforcement, advocates and community members who are not developers do not have the
ability to challenge the conduct of municipalities under these laws.
Although Massachusetts and Connecticut deemphasize the planning
process, Massachusetts holds out the possibility of avoiding a stringent
builder’s remedy if municipalities engage in effective planning.77 Those
options, however, are not nearly as widespread as equivalent housing
plans in New Jersey and California, and the portions of the respective
states that remain subject to a builder’s remedy are significant. Since
Housing Production Plans in Massachusetts must address the needs of
very low-income households, any strengthening of the planning components of these statutes is likely to have positive fair housing ramifications.
71.
72.
73.
74.
75.
76.
77.
CAL. GOV’T CODE § 65589.5(k).
MASS. GEN. LAWS ch. 40B, §§ 20–23.
CONN. GEN. STAT. § 8-30g.
MASS. GEN. LAWS ch. 40B, § 20; CONN. GEN. STAT. § 8-30g(k).
MASS. GEN. LAWS ch. 40B, § 21.
MASS. GEN. LAWS ch. 40B, § 22; CONN. GEN. STAT. § 8-30g(f ).
760 MASS. CODE REGS. § 56.03(4).
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By confining the scope of municipalities’ legal obligation to housing
that is affordable at 80 percent of AMI and creating structures that downplay the role of community-based stakeholders and advocates, these laws
have clear shortcomings. Additionally, as noted above, it is highly unlikely that a jurisdiction’s fair share of affordable housing need would
ever comprise just 10 percent of its own housing stock. Thus, there are
real limitations on the potential of these tools to foster significant levels
of residential racial and ethnic integration.
The Massachusetts and Connecticut models do have their strengths,
however. Namely, they are comparatively much easier to administer
and do not require nearly as much expertise as do New Jersey and California. Developers find the streamlined permitting and appeals process to
be helpful to their activities, which translates into hard units on the
ground. Connecticut also requires developers seeking to use the builder’s
remedy to engage in affirmative fair housing marketing, which should be
mandatory under any type of regulatory regime.78 Nonetheless, those
positive features, while serving a legitimate public purpose by increasing
the supply of housing for households earning 80 percent of AMI, are not
well calibrated to serving the goals of the FHA. Additionally, the Massachusetts and Connecticut laws, despite their less ambitious scope, have
been subject to the constant threat of repeal or dilution.79
D. Extracting a Model
In attempting to extract a model for other states from New Jersey, California, Massachusetts, and Connecticut, a handful of features are salient.
An effective state land use regulatory regime should: (1) empower local
governments, advocacy organizations, and community-based stakeholders to engage in a collaborative planning process that increases acceptance
of municipalities’ obligations and avoids the risk of adverse site selection
for rezoning and/or subsidized development; (2) ensure that both planning activities and enforcement activities address the needs of households
earning less than 50 percent of AMI; (3) require affirmative fair housing
marketing in connection with the units produced under the relevant obligation; and (4) provide for private enforcement by both multifamily developers and advocacy organizations. These features are grounded in lessons learned both from the states that have had these laws and from
decades of fair housing advocacy more generally. To some extent, they
are also based on common sense.
78. CONN. AGENCIES REGS. § 8-30g-7(a)(1)(E).
79. See, e.g., Kathleen Burge, Critics Push for Repeal of 40B, BOSTON GLOBE (Oct. 17,
2010), http://www.boston.com/news/local/massachusetts/articles/2010/10/17/
critics__push_for_repeal__of_40b; Mary E. O’Leary, Connecticut Lawmakers Fight
Affordable Housing Regulations, N EW H AVEN R EGISTER (Feb. 5, 2015, 11:19 PM),
http://www.nhregister.com/general-news/20150205/connecticut-lawmakersfight-affordable-housing-regulations.
State Land Use Regulation and Affirmatively Furthering Fair Housing
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1. A Planning Mandate Emphasizing Site Selection and
Municipal Buy-In
The implementation of the consent decree in Westchester has been replete with controversy, but, unlike in many efforts to remediate exclusionary suburban policies, that controversy has tended not to involve site selection. Chappaqua Station, a proposed twenty-eight unit development in
the Town of New Castle that would be located on a sliver of land between
train tracks and a highway onramp, is the exception to that rule. Chappaqua Station has faced significant community opposition from individuals
based on the poor choice of site, regardless of whether they oppose any
affordable housing development in their neighborhood.80 It has also
drawn criticism from the Anti-Discrimination Center, the civil rights organization that originally brought the Westchester suit.81 Some of the other
development sites that Westchester County is using to fulfill its obligation
under the consent decree suffer from similar defects, whether they are geographically isolated, subject to adverse environmental features, and/or on
the border of communities with much more diverse populations.
These types of sites may be appealing to developers because they are
comparatively inexpensive or are properly zoned for multifamily housing.
Their potential to promote meaningful racial or ethnic integration, however, is less than that of developments that are better incorporated into
the fabric of communities. They may also raise health or safety risks for
their residents. When both exclusionary community opponents and civil
rights advocates are in agreement about a site, there may be a real problem, even if there are grounds to doubt the good faith of one side.
Concentrating affordable housing development efforts in high opportunity areas on sites that do not have obvious flaws also has the potential
to play an important role in exposing the motivations of area residents
who continue to oppose development. When the legitimate reasons for
opposing a particular development disappear, only pretext or irrationality
remains. In the context of legal challenges to exclusionary zoning, the inability of a municipality to show a convincing reason for its decision to
block a proposal is hugely valuable for advocates.
Taking a planning-based approach to reducing exclusionary barriers is
important from a fair housing perspective because doing so reduces the
risk of site selection that does not contribute to integration and harms
80. David McKay Wilson, Chappaqua Station Affordable Units Back on Track, J.
NEWS (July 3, 2015, 2:37 PM), http://www.lohud.com/story/money/personalfinance/taxes/david-mckay-wilson/2015/07/03/chappaqua-affordable-housingtrack/29667647/ (describing how town board member has not done anything to
make alternative site viable for housing).
81. Monitor Identifies Westchester Violation of Consent Decree, Anti-Discrimination
Ctr. (May 11, 2015), http://www.antibiaslaw.com/article/monitor-identifieswestchester-violation-consent-decree.
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the health and safety of low-income people of color. In local plans, states
should require covered municipalities to identify sites for new affordable
housing development that are not isolated from residential neighborhoods, that are not proximate to adverse land uses, and that have
reasonable access to amenities.82 These criteria should be expressly incorporated into the applicable statute. The former requirement may seem
harder to make objective than the latter two, but the means by which
jurisdictions isolate multifamily housing from single-family neighborhoods are well known. Specifically, the law should require the identification of sites that are not separated from single-family neighborhoods by
major roads, train tracks, industrial or commercial zones, or large parks.
Small parks or two-lane roads may not raise the same issues. The necessary second step that follows site selection based on inclusive principles
is rezoning. Without a requirement to ensure that selected sites are appropriately zoned for housing with an affordable component, a site selection
requirement is meaningless.
The type of planning process described above would give municipalities a substantial amount of ownership over the process of reducing exclusionary zoning. The implementation of such a policy may still entail
political controversy, but the magnitude of that furor may be lessened
over that which a process that solely empowers developers might generate. Additionally, aside from the prospect of municipal buy-in to the process, structuring state regulation of exclusionary zoning as a planning
mandate allows state officials to sell the structure to the electorate as
being one that empowers localities. From a messaging standpoint, it is
helpful to return to the fundamental observations that states have an obligation to eliminate exclusionary zoning at the municipal level and that
exclusionary local zoning is often unlawful. Compared to the potential
consequences of liability for violations of the FHA, the loss of federal
funds, or a stringent builder’s remedy, a planning mandate with strong
site selection and rezoning requirements is a clear “second-best” solution,
even for resistant municipalities.
2. Focus on Very Low-Income and Extremely
Low-Income Households
From a fair housing perspective, this criterion of an effective state regulatory regime is straightforward. In many regions across the country,
non-Latino whites may comprise a relatively similar proportion of the
population making between 50 percent and 80 percent of AMI to that of
African Americans and Latinos.83 At the same time, it is very unlikely
82. See Monitor’s Report Regarding Implementation of the Stipulation and
Order of Settlement and Dismissal for the Period of Oct. 25, 2010 through
Apr. 25, 2011, U.S. ex rel. Anti-Discrimination Ctr. of Metro New York, Inc. v.
Westchester Cnty., No. 06-CV-2860 (S.D.N.Y. Apr. 25, 2011).
83. See source cited supra note 56.
State Land Use Regulation and Affirmatively Furthering Fair Housing
325
that, outside of areas with very small populations of people of color, nonLatino whites will make up a similar proportion of the population earning
less than 50 percent of AMI as African Americans and Latinos. For example, in the Washington, D.C., metropolitan area, the AMI for FY 2015 is
$109,200.84 The Census Bureau’s breakdown of household income by
race and ethnicity does not precisely match the relevant percentiles of
AMI for affordable housing eligibility, but the data nonetheless paints a
vivid picture. More than 21 percent of non-Latino white households85
earn between $60,000 and $100,000 as opposed to 23.7 percent of African
American households86 and 26.4 percent of Latino households.87 By contrast, 24.2 percent of non-Latino white households earn less than $60,00088
as opposed to 46.3 percent of African American households89 and
44.5 percent of Latino households.90
With this knowledge of the importance of housing that is affordable
below 50 percent of AMI, it is critical that states suffuse their statutory regime with an attention to the needs of very low- and extremely lowincome housing. The specific points at which that attention should be incorporated are (1) the allocation of regional housing need, (2) the planning
obligation of municipalities, and (3) the criteria for developers being able
to assert a builder’s remedy. States should give municipalities a menu of
actions that they could take to address very low- and extremely lowincome housing needs in the portions of their statutes elaborating upon
the planning mandate. Lastly, while a typical builder’s remedy may
allow a developer to qualify if it is proposing housing that would be
20 percent affordable at 80 percent of AMI, a builder’s remedy that is sensitive to fair housing concerns could require developers to build housing
wherein 15 percent of units are affordable at 80 percent of AMI and 5 percent are affordable at 50 percent of AMI.
84. FY 2015 Income Limits, U.S. Dep’t of Hous. & Urb. Dev. (Mar. 6, 2015),
http://www.huduser.gov/portal/datasets/il/il15/index.html.
85. U.S. Census Bureau, American Community Survey, 2009–2013 American
Community Survey 5-Year Estimates, Table B19001H (generated by Thomas Silverstein, using American FactFinder; http://factfinder2.census.gov) (Sept. 25, 2015).
86. U.S. Census Bureau, American Community Survey, 2009–2013 American
Community Survey 5-Year Estimates, Table B19001B (generated by Thomas Silverstein, using American FactFinder; http://factfinder2.census.gov) (Sept. 22, 2015).
87. U.S. Census Bureau, American Community Survey, 2009–2013 American
Community Survey 5-Year Estimates, Table B19001I (generated by Thomas Silverstein, using American FactFinder; http://factfinder2.census.gov) (Sept. 25, 2015).
88. See source cited supra note 85.
89. See source cited supra note 86.
90. See source cited supra note 87.
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3. Require Affirmative Fair Housing Marketing
When done well, affirmative fair housing marketing can play an important role in ensuring that development results in integration in practice,
rather than merely in theory. Additionally, since many developers and
municipalities are familiar with the HOME program’s affirmative marketing requirements, instilling those principles into projects undertaken in
connection with planning obligations should be uncomplicated. On a related note, neither municipalities nor developers should impose residency
preferences with respect to affordable units in housing constructed in conjunction with a state regulatory regime. Residency preferences may violate the FHA and are likely to undercut the effectiveness of affirmative
fair housing marketing efforts because applicants reached by marketing
efforts would not be eligible for the housing under the terms of the
preferences.
4. Prioritizing Enforcement by Advocates over Enforcement
by Developers
When the planning process breaks down and municipalities continue
exclusionary policies, there will be a need for private enforcement. The
state administrative agency has a stake in ensuring compliance with the
planning mandate but may face significant political hurdles to taking action against municipalities. Thus, without enforcement, any regulatory regime will crumble. That is the lesson of Minnesota, which has a law that
shares some operational characteristics with California, but lacks meaningful enforcement provisions, such as a builder’s remedy or a private
right of action and prevailing party attorney fees for community-based organizations and other housing advocates.
States should design their laws with the goal of empowering advocacy
organizations to serve as the primary private enforcers of the law. They
should do this by ensuring that the statute is written to recognize the
standing of advocacy organizations to challenge inadequate or unimplemented municipal plans and by providing that prevailing plaintiffs in
challenges to local plans are entitled to reasonable attorney fees and
costs. The statutory backdrop for California’s Housing Element requirement puts advocates in a position to do this valuable enforcement work.
Developers still have a role to play in enforcing the law through builder’s remedy suits, particularly in rural or exurban areas with limited advocacy capacity to engage in public participation processes around
plans, but that role should be comparatively deemphasized. The most effective way of doing so is simply to follow the recommendations above for
empowering advocates to challenge plans in court. If prevailing party attorney fees are available, such lawsuits may be more practical for
community-based organizations than intensive engagement in the planning process would be. Another, more novel way of ensuring the continuing role of advocates in the enforcement process would be to statutorily
recognize the right of advocates to intervene in builder’s remedy suits. In
State Land Use Regulation and Affirmatively Furthering Fair Housing
327
that event, if a developer is using the enforcement mechanisms of a state
law to pave the way for development at a site that, while located in a high
opportunity community, does not advance fair housing goals because of
its adverse characteristics, the advocacy organization would be able to
get those concerns before a judge.
IV. Grounding Reform in Current Political Reality
States can clearly learn important lessons from the experiences of New
Jersey, California, Massachusetts, and Connecticut. Having those models
to point to as evidence of success should be a selling point for other states
that are considering reform. The current political and social context offers
other strong arguments for the urgency of reform, as well. Beyond the
legal obligations of states as grantees of federal housing and community
development funds, moving to eliminate exclusionary zoning could mitigate the harmful effects of concentrated poverty, serve valuable environmental goals, and facilitate the efforts of employers outside of central cities to attract and retain diverse, high-quality workforces. These are the
types of arguments that should be salient across a broad range of states.
Clearly, it will be easier to achieve reform in more politically progressive
states, but the business community may be interested in policies that enable more of their workers to live closer to their jobs. The influence of the
business community in moderate and conservative states could be leveraged to support policies that further fair housing choice.91
Likewise, avoiding the concentration of affordable, multifamily housing and distributing that housing more equitably across regions has fiscal
benefits. When the tax base of individual communities is eroded over
time, states and counties have to absorb the cost one way or the other. Policies that encourage the concentration of poverty by sealing off certain
communities from affordable housing lead to reduced income tax revenue
at the state level. As Patrick Sharkey’s landmark book Stuck in Place demonstrates, childhood exposure to concentrated poverty significantly reduces the future earnings of individuals.92
91. Although policies like those outlined in this article have not been adopted
outside more traditionally progressive states, the support of the business community for some of these policies has been encouraging and may suggest the existence
of receptive audiences in other states. See Michelle Chapman, Chamber Working to
Preserve & Enhance State-Level Housing Production Policies, Greater Boston Chamber
of Commerce (Oct. 17, 2011), http://bostonchamber.com/chamber-working-topreserve-enhance-state-level-housing-production-policies; In-Depth Case Studies,
HousingPolicy.org (July 18, 2011), http://www.housingpolicy.org/toolbox/
strategy/policies/employer_assisted_housing.html?tierid=202 (detailing
employer programs to support affordable housing, including in Georgia and
Mississippi).
92. PATRICK SHARKEY, STUCK IN PLACE 162 (2013).
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With respect to environmental concerns, remediating exclusionary zoning serves two important functions. First, allowing increased housing supply within the footprint of existing suburban communities and creating a
framework whereby any further removed municipality would be subject
to the same obligations should result in a reduction in the demand for
housing in outlying areas.93 Doing so would preserve open space. Second,
enabling low-income people of color to live closer to suburban and exurban job centers could further reduce lengthy commutes.94 By grounding
appeals for state oversight of local zoning with respect to affordable housing in these types of concerns as well as in states’ legal obligations, advocates should be able to make a compelling case for change.
V. Building a Bridge Toward a New Land Use
Regulation Paradigm
As Part II of this article illustrates, the road to the current land use regulatory context in the United States is a full century long. The first six decades of that process took on the appearance of a headlong race toward
exclusionary policies while the last four decades have been marked by occasional but ultimately not transformative attempts to press the brakes
and restore balance. None of those attempts have fundamentally reshaped
how people in communities on the ground think about land use regulation. As evidenced by the rhetoric of local policy-makers like Westchester
County Executive Rob Astorino, many continue to see exclusionary zoning as something that is natural, inevitably local, and supportive of individual property rights. Of course, both historically and theoretically, it is
none of those things.
By initiating conversations about statutory reform, states can reorient
the popular understanding of zoning to what it can and, under federal
law, must be. Zoning can be a tool for reducing households’ exposure
to environmental harms. It can be a tool for ensuring that workers have
access to jobs and employers have access to workers. It can be a tool for
minimizing the cost of providing public services and infrastructure. It
can be a tool for protecting environmentally sensitive areas. Zoning is,
and always has been, a manifestation of the robust powers of state governments, and not municipalities. If this conception of zoning informs public
policy, through statutory reforms based on existing models, zoning can be
a tool for affirmatively furthering fair housing.
93. See Rolf Pendall, Do Land-Use Controls Cause Sprawl?, 26 ENV’T & PLAN. B:
PLAN & DESIGN 555 (1999) (finding that land use controls “that mandate low densities are found cumulatively to increase sprawl).
94. See Emily Badger, The Commuting Penalty of Being Poor and Black in Chicago,
CITYLAB (Feb. 21, 2014), http://www.citylab.com/commute/2014/02/commutingpenality-being-poor-and-black-chicago/8457 (noting the higher commuting costs
and longer commutes faced by African American Chicago residents as a result
of the spatial mismatch of jobs and housing).
Affirmatively Further Fair Housing—
and Potentially Further
Fair Schooling
LeighAnn M. Smith
Of the nearly 3,800 census tracts in this country where more than 40 percent
of the population is below the poverty line, about 3,000 (78 percent) are also
predominantly minority. Racially or ethnically concentrated areas of poverty merit special attention because the costs they impose extend far beyond their residents, who suffer due to their limited access to high-quality
educational opportunities, stable employment, and other prospects for economic success.”1
—U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT
[A]t this point there is no question that school poverty concentration has a
detrimental impact on student achievement.2
—POVERTY & RACE RESEARCH ACTION COUNCIL
Interrelated Systems and Integrated Solutions: Neighborhoods,
School Attendance Zones, and Their Policies .................................... 330
I. School and Housing Segregation Along Lines of Race and
Socioeconomic Status Is Strongly Correlated with Negative
Outcomes for Minority and Low-Income Students .......................... 332
II. Solutions Solely Based on Education Policy Struggle to Yield
Ideal Outcomes ........................................................................................ 335
A. Supplying Resources to High Poverty Schools Can Yield
Mixed Results, Problems of Implementation ...............................336
B. Socioeconomic Integration Delivers Promising Outcomes, Yet
Is Difficult to Achieve Through Education Policy Alone ..........337
1. Affirmatively Furthering Fair Housing (AFFH) Proposed Rule, 78 Fed. Reg.
43710, 43714, available at https://www.federalregister.gov/articles/2013/07/19/
2013-16751/affirmatively-furthering-fair-housing.
2. Poverty & Race Research Action Council (PRRAC), Annotated Bibliography:
The Impact of School-Based Poverty Concentration on Academic Achievement & Student
Outcomes 1 (n.d.), available at http://www.prrac.org/pdf/annotated_bibliography_
on_school_poverty_concentration.pdf.
LeighAnn M. Smith expects to receive her J.D./M.A. in Education Policy from The
George Washington University in May 2016.
329
330
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III. Affirmatively Furthering Fair Housing: The New HUD
Regulation and Its Possibilities for Education ................................... 340
A. Summary: The AFFH Rule Provides the Means and
Opportunity for Housing Authorities to Consider Equitable
Educational Access ............................................................................341
1. Assessment of Fair Housing (AFH) ......................................... 343
2. Emphasis on Collaboration........................................................ 345
B. Implications of the AFFH Rule Hold Hope for School
Integration...........................................................................................347
IV. Exploring the Benefits of This Reciprocal Relationship ................... 348
A. Integrated Planning and Policy Would Enable Integration of
Elementary and Secondary Schools ...............................................348
B. Integration of Neighborhoods Would Improve Educational
Outcomes for All Students...............................................................350
V. Conclusions and Recommendations .................................................... 352
Interrelated Systems and Integrated Solutions: Neighborhoods,
School Attendance Zones, and Their Policies
The inherent connection between housing policy and education policy
can be understood by an uncontroversial proposition: the makeup of our
elementary and secondary schools is primarily drawn from the neighborhoods that surround the school building itself. In other words, most of our
local educational systems assign students to schools based on their home
addresses.3 Yet this uncontroversial proposition causes controversial
problems. As many neighborhoods become increasingly comprised of
members of the same race and social class, so too do our schools grow
to be representative of the divisions along these lines4 with disparities
in classroom composition found as early as pre-kindergarten programs.5
As economic segregation has continued to rise,6 the high percentage of
3. Roslyn Arlin Mickelson, The Reciprocal Relationship Between Housing and School
Integration, National Coalition on School Diversity, Research Brief No. 7 (Sept. 2011),
available at http://www.school-diversity.org/pdf/DiversityResearchBriefNo7.pdf.
4. Id.; see also Philip Tegeler, Introduction, in FINDING COMMON GROUND: COORDINATING HOUSING AND EDUCATION POLICY TO PROMOTE INTEGRATION 1, 1–2 (Philip Tegler
ed., 2011); Inst. on Race & Poverty, Examining the Relationship Between Housing, Education, and Persistent Segregation: A Final Report (Barry Leonard ed., Feb. 1998);
Gary Orfield & Nancy McArdle, The Vicious Cycle: Segregated Housing, Schools and
Intergenerational Inequality (Harvard College Aug. 2006), available at http://www.
prrac.org/projects/fair_housing_commission/los_angeles/orfield-mcardle.pdf.
5. See Jeanne L. Reid & Sharon Lynn Kagan, A Better Start: Why Classroom Diversity Matters in Early Education (Cent. Found. and Poverty & Race Research Action
Council eds., Apr. 2015).
6. Patrick Sharkey, Rich Neighborhood, Poor Neighborhood: How Segregation Threatens Social Mobility (Brookings Inst. Dec. 5, 2013), http://www.brookings.edu/blogs/
social-mobility-memos/posts/2013/12/04-how-segregation-threatens-mobility.
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 331
census tracts (78 percent)7 identified as experiencing concentrated poverty
that are also predominantly minority is particularly troubling. Notably,
this is also no longer an exclusively urban problem: poverty is now
more prevalent in suburban areas than in years past.8 In other, controversial, words: our schools are currently more segregated along lines of race
and socioeconomic status than they were before the landmark Brown v.
Board of Education9 decision desegregated them through denouncement
of de jure racial discrimination.10 Taken together with the evidence that
economic mobility has proven itself increasingly more difficult for families of low- and moderate-income to achieve,11 it becomes frustratingly
simple to understand how the composition of a school is merely reflective
of its fixed, segregated surroundings.
This interdependent relationship between schools and their local
neighborhoods has many implications for how housing and education
can and should play a role in the other’s development—implications
even noted recently by the U.S. Supreme Court.12 This article will examine
the extent to which housing policy can and should be positively used to
further education policy—from the role of the local community to that
of the U.S. Departments of Housing and Urban Development (HUD)
and Education.
Part I shows how elementary and secondary (PK-12) educational outcomes are shaped by the current state of housing, specifically by examining
student access to services and achievement data. Part II details several popular education reform strategies and discusses how they fare in isolation.
Part III examines the Affirmatively Furthering Fair Housing regulation recently finalized by HUD,13 which requires analysis of educational outcomes
in new planning processes for HUD-funded housing programs. This
7. AFFH Proposed Rule, supra note 1, 78 Fed. Reg. at 43714.
8. Richard D. Kahlenberg, From All Walks of Life: New Hope for School Integration, AM. EDUCATOR, Winter 2012–13, at 2, 7 [hereinafter Kahlenberg, From All
Walks of Life].
9. 347 U.S. 483 (1954).
10. Gary Orfield, John Kucsera & Genevieve Siegel-Hawley, E Pluribus . . . Separation: Deepening Double Segregation for More Students (Civil Rights Project,
UCLA Sept. 19, 2012), available at http://civilrightsproject.ucla.edu/research/k12-education/integration-and-diversity/mlk-national/e-pluribus...separationdeepening-double-segregation-for-more-students.
11. See Greg J. Duncan & Richard J. Murnane, Introduction: The American Dream,
Then and Now, in WHITHER OPPORTUNITY? 3 (G.J. Duncan & R.J. Murnane eds., 2011);
Sharkey, supra note 6.
12. Texas Dep’t of Hous. & Ctmy. Affairs v. Inclusive Cmtys. Project, Inc., 135
S. Ct. 2507 (2015) (suggesting that the consideration of a neighborhood’s schools in
real estate appraising is a permissible, race-neutral factor affecting the housing
assessment).
13. Affirmatively Furthering Fair Housing, 24 C.F.R. §§ 5.150–5.168 ( July 16, 2015),
available at http://www.gpo.gov/fdsys/pkg/FR-2015-07-16/pdf/2015-17032.pdf.
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section then discusses the possible implications of such rule. Part IV explores the potential benefits that could be yielded by leveraging this new
regulation, along with other housing policies, to impact PK-12 school diversity. Part V draws conclusions and recommendations for the possibilities in
this space—in short, the interrelated nature of these systems should and
can be dealt with through integrated planning and programming.
I. School and Housing Segregation Along Lines of
Race and Socioeconomic Status Is Strongly
Correlated with Negative Outcomes for
Minority and Low-Income Students
Race- and class-based segregation of PK-12 schools has negative implications beyond the composition of the classroom: such isolation is statistically linked with poor academic outcomes for low-income and minority
student populations.14
The widely cited (and critiqued) Coleman Report first detailed the
strong correlation between the socioeconomic composition of a school
and its students’ outcomes in 1966.15 Since that time, research continues
to document this relationship with many troubling findings. For example,
student achievement is negatively affected by both family poverty status
as well as school poverty status, meaning those who experience poverty in
both have a “double handicap”; high-poverty schools often receive underqualified teachers and diluted curricula; concentrated poverty reaches a
“tipping point,” at which it is less susceptible to correction from the school
itself; and increased poverty rates have been found to have not only a negative effect on the achievement of poor students, but an even greater relative impact on non-poor students at the school.16 Likewise, low-poverty
schools demonstrate academic achievement at greater rates than highpoverty schools, for what many perceive to be a number of reasons.
With many local educational agencies relying upon tax-based funding
schemes, low-poverty schools may have access to greater material resources. They are also believed to “reap the stability-conferring benefits
14. J. Burdick-Will, J. Ludwig, S.W. Raudenbush, R.J. Sampson, L. Sanbonmatsu & P. Sharkey, Converging Evidence for Neighborhood Effects on Children’s Test
Scores: An Experimental, Quasi-Experimental, and Observational Comparison, in
WHITHER OPPORTUNITY? 255 (G.J. Duncan & R.J. Murnane eds., 2011); see also
PRRAC (n.d.), supra note 2, at 1.
15. PRRAC (n.d.), supra note 2, at 2.
16. Id. at 2–5; see also Russell W. Rumberger & Gregory J. Palardy, Does Resegregation Matter? The Impact of Social Composition on Academic Achievement in Southern
High Schools, in SCHOOL RESEGREGATION: MUST THE SOUTH TURN BACK? 128 ( John
Charles Boger & Gary Orfield eds., 2005); David L. Silvernail, James E. Sloan, Chelsea R. Paul, Amy F. Johnson & Erika K. Stump, The Relationships Between School Poverty and Student Achievement in Maine 30 (Maine Ed. Pol’y Research Inst. Jan. 2014).
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 333
from having greater parental stewardship and attract and retain a betterprepared corps of teachers, administrators, and students.”17
Racial segregation has similar deleterious effects, which can often be
observed in the context of districts where post-Brown, court-enforced desegregation orders have ended. After the end of its court-ordered desegregation busing plan, the Charlotte-Mecklenberg school district in North
Carolina drastically redrew its school attendance zones, resulting in
higher rates of segregation and decreased educational outcomes for all
students in high-minority schools.18 Nearby Wake County experienced
similar results after the termination of its desegregation order.19 Indeed,
more than 80 percent of the lowest performing school districts in that
state are also predominantly minority.20 Such problems are also seen in
Missouri: the Normandy school district outside St. Louis also felt the deleterious effects of the end of mandated school desegregation.21 Research
indicates that such trends are less indicative of race alone, but rather are a
byproduct of the close ties between race and socioeconomic status.22
Moreover, these negative achievement outcomes also bear a relation to
students’ housing situations. A study of data from 2008–09 found that students living in federally assisted households generally were more likely
than their peers to live near and thus attend low-performing schools.23
17. Heather Schwartz, Integrating Schools Is a Matter of Housing Policy, in FINDING
COMMON GROUND: COORDINATING HOUSING AND EDUCATION POLICY TO PROMOTE INTEGRATION 17 (Philip Tegler ed., 2011); see also Cynthia Hudley, Education and Urban
Schools, SES INDICATOR (Am. Psychological Ass’n May 2013), available at http://
www.apa.org/pi/ses/resources/indicator/2013/05/urban-schools.aspx.
18. Stephen B. Billings, David J. Deming & Jonah Rackoff, School Segregation, Educational Attainment and Crime: Evidence from the End of Busing in CharlotteMecklenberg, Q. J. ECON. 435 (2014).
19. Nikole Hannah-Jones, The Problem We All Live With, THIS AM. LIFE No. 562
(NPR July 31/Aug. 7, 2015) http://www.thisamericanlife.org/radio-archives/
episode/562/the-problem-we-all-live-with.
20. Derek W. Black, Middle-Income Peers As Educational Resources and the Constitutional Right to Equal Access, 53 B.C. L. REV. 373, 407 (2012).
21. Id.
22. Id. at 404; see also Duncan & Murnane, supra note 11 at 6.
23. PRRAC, Civil Rights Research: Do Federally Assisted Households Have Access to
High Performing Public Schools? 1 (2011), available at http://www.prrac.org/pdf/
PRRACHousingLocation&Schools.pdf; see also James E. Rosenbaum, Changing the
Geography of Opportunity by Expanding Residential Choice: Lessons from the Gautreaux
Program, 6 HOUS. POL’Y DEBATE 231 (1995) (finding significant correlations between
positive academic outcomes and random assignment to middle-income white
suburbs, as compared to low-income, majority-black urban areas, in a program
serving low-income black families in Chicago); Jonathan Rothwell, Housing Costs,
Zoning, and Access to High-Scoring Schools 1, 9, 16–21 (Brookings Inst. Apr. 2012)
available at http://www.brookings.edu/~/media/research/files/papers/2012/4/
19%20school%20inequality%20rothwell/0419_school_inequality_rothwell.pdf
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The study focused on the four programs that constituted the majority of
housing-based federal assistance for those years: Public Housing,
Project-Based Section 8, Low Income Housing Tax Credits (LIHTC), and
Housing Choice Vouchers.24 On average, students in public housing
were more likely to have the lowest performing schools in their near vicinity: schools near these households had a median math and reading proficiency ranking in the 19th percentile.25 Students living in Housing Choice
Voucher households were surprisingly the next lowest, with their local
schools ranking in the 26th percentile of proficiency.26 Students in
project-based Section 8 households were nearest to schools in the 28th percentile of math and reading proficiency, and LIHTC households were
closest to those in the 31st percentile.27 In comparison, the median ranking
of schools nearest to all households living below the poverty line (not just
those receiving assistance) was in the 30th percentile; the ranking for all
renters was the 37th percentile.28 Researchers also found differences for
Housing Choice Voucher participants along the lines of race: white
voucher holders were nearer to higher performing schools (median at
the 40th percentile); Hispanic voucher holders were near schools with a
median ranking in the 25th percentile; and black participants were nearest
to schools with a median percentile ranking of 20.29
This research draws a line through the trajectory of how these systems
affect low-income and minority students: housing locations are often segregated along lines of race and class; school attendance zones are crafted
around housing patterns; schools become segregated along lines of race
and class; and students who attend high-poverty or predominantly minority schools are likely to receive a poorer quality education than their
peers. Yet education policy has struggled, and continues to struggle,
with how to effectively address these important issues.
(discussing the negative effects of concentrated poverty on school outcomes; finding a relationship between metropolitan areas with exclusionary zoning and exacerbated inequalities in educational attainment).
24. PRRAC, supra note 23.
25. Id. at 4.
26. Id; but compare with Susan J. Popkin, Michael Eiseman & Elizabeth Cove,
How Are HOPE VI Families Faring? Children (Urb. Inst. 2004) (finding that parents
participating in the HOPE VI program who relocated from public housing generally benefitted from the program and were less likely to believe school quality was
a problem).
27. Id.
28. Id. at 4–5.
29. Id. at 6.
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 335
II. Solutions Solely Based on Education Policy
Struggle to Yield Ideal Outcomes
Naturally, these deeply troubling statistical correlations are a critical
source of scholarship for many education policy experts. Desegregated
schooling has been found to yield a positive, statistically significant benefit for minority students later in life, with linkages to higher earnings
and occupational attainment.30 Yet directly addressing issues of racial segregation in school composition is now difficult to achieve through education policy alone, with the courts playing a leading role in curtailing such
efforts. Although initially mandated by Brown, court-sanctioned desegregation saw a shift in the early 1990s; in Oklahoma City v. Dowell,31 the Supreme Court decided that as long as districts had made a “good faith” effort to remedy past segregation, they had no further duty to overcome
demographic shifts in their efforts to integrate their schools. Many systems once under desegregation orders saw the end of such oversight.
By 2007, the Court decided that districts not under or no longer under desegregation orders could not solely use race on an individual basis in K-12
attendance policies,32 casting even further doubt upon the legal viability
of voluntary integration plans using racial distinctions.
Economic distinctions, however, are subject to lesser scrutiny by the
courts. Yet this, too, must occur on a strictly voluntary basis: state educational agencies are not required by the Fourteenth Amendment to compensate for funding inequities arising from the disproportionate tax
bases that fund local districts,33 nor have those local districts been
found to be in violation of state constitutional requirements for failing
to disperse concentrations of poverty in school enrollment.34 Thus,
much of the current, relevant scholarship focuses on supporting highpoverty schools with resources to meet the specific needs of their students
or on exploring voluntary policies to integrate schools along the basis of
socioeconomic status. While policies and programs such as these can provide students with necessary support, they have yet to show significant,
scalable results in isolation.
30. William T. Trent, Outcomes of School Desegregation: Findings from Longitudinal
Research, 66 J. NEGRO ED. 255 (1997).
31. 498 U.S. 237 (1991).
32. Parents Involved in Cmty. Schs. v. Seattle Sch. Dist. No. 1, 551 U.S. 701
(2007).
33. San Antonio Indep. Sch. Dist. v. Rodriguez, 411 U.S. 1 (1973). Some states,
however, have found that inequitable funding schemes are in violation of state constitutions; see, e.g., Tenn. Small Sch. Sys. v. McWherter, 91 S.W.3d 232 (Tenn. 2002);
see also 110 A.L.R.5th 293 (originally published in 2003).
34. See, e.g., Paynter v. State, 797 N.E.2d 1225 (N.Y. Ct. App. 2003); see also Black,
supra note 19, at 382–84.
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A. Supplying Resources to High Poverty Schools Can Yield
Mixed Results, Problems of Implementation
Faced with such enrollment disparities, an increasing number of districts have put complex polices in place to address income-based differences in student outcomes.35 These strategies often involve coordinating
the provision of resources to students living in poverty in order to combat
the deficits they typically face. For example, in-school interventions that
condition self-regulation in children can be utilized to combat the negative
neurological and cognitive effects of stressors that children from lowincome households are more likely to experience than their peers.36 Schools
can and do attempt to provide any number of additional services to students in a variety of coordinated efforts.37 One such structure is the community school model, which focuses on bringing a collection of such quality
resources to students in high-poverty schools.38 These schools pursue a
consistent relationship with community partners to bring the relevant, necessary services to their students; the model flexibly allows school leaders to
seek out specific resources to meet student needs, such as early child care,
quality instruction, mental health services, and parenting support.39 Access
to additional academic and non-academic services can positively impact
student outcomes academically as well as socio-emotionally.40
However, such programs are highly dependent upon three key factors:
(1) policies that support collaboration between the nonprofit and for-profit
sectors and schools, (2) capacity of the school staff to coordinate and share
responsibilities with these partners, and (3) supplemental funding to support the administration and execution of the model.41 As this is true of
any resource-provision model, the funding and administration of such programming can be a barrier for many schools and districts. Additionally, although these programs can address some of the negative effects of living in
poverty, they only do so on an ad hoc basis, often building their support
systems by adding resources as funding permits.42 Such approach runs
35. Kahlenberg, From All Walks of Life, supra note 8, at 3.
36. C.A. Nelson & M.A. Sheridan, Lessons from Neuroscience Research for Understanding Causal Links Between Family and Neighborhood Characteristics and Educational
Outcomes, in WHITHER OPPORTUNITY? 27, 38 (G.J. Duncan & R.J. Murnane eds., 2011).
37. Kahlenberg, From All Walks of Life, supra note 8, at 4–5.
38. M.J. Blank, A. Melaville & B.P. Shah, Making the Difference: Research and Practice in Community Schools 2 (Coal. for Cmty. Schs. 2003).
39. Id. at 10–13.
40. Id. at 16–31, 40–41.
41. Joy G. Dryfoos, Evaluation of Community Schools: Findings to Date (Coal. for
Cmty. Schs. 2000), available at http://www.communityschools.org/assets/1/
AssetManager/Evaluation%20of%20Community%20Schools_joy_dryfoos.pdf.
42. See Coalition for Community Schools, A Policy Approach to Create and Sustain
Community Schools 15–18 (Apr. 2000), available at http://www.communityschools.
org/assets/1/AssetManager/POLICYdraft_CCS.pdf (discussing the various funding
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 337
the risk that services may not always support the specific needs of all students or may not be capable of providing services to scale. Additionally,
many factors important to student success cannot be addressed through
supplemental programs alone, including teacher quality, access to diverse
peers, and greater financial resources found in lower-poverty schools and
neighborhoods. Thus, while some student needs are met through
resource-provision programs, the barriers to implementation and sufficient
results may likely be too great to effect the changes necessary for all students in high-poverty schools where funding is often inequitably low.43
Programs providing additional resources to students in high-poverty
schools are certainly preferable to schools that provide little more than
a traditional instructional model. Given the national poverty rate, such efforts are also necessary. Yet there are other effective ways of positively
impacting the academic and socio-emotional outcomes of low-income students, such as models that seek to integrate children on the basis of family
income.
B. Socioeconomic Integration Delivers Promising Outcomes,
Yet Is Difficult to Achieve Through Education Policy Alone
Instead of bringing resources to students, some researchers have examined the efficacy of bringing the students to the resources. Several studies
have analyzed programs that provide high-poverty students with access
to established, quality educational services through assignment to a lowpoverty school or assignment to a low-poverty neighborhood.44 Districtand area-wide socioeconomic integration models such as these assign
strategies utilized by community schools and advocating for policy reforms to provide “stable funding sources,” “coordination of funding streams,” and funding for
infrastructure and facilities); see also Iris Hemmerich, Urban Strategies Council, A Resource Guide for Understanding Community Schools: Community School Funding 6,
available at http://www.urbanstrategies.org/documents/fscs/FSCS%20Funding_
Oct%202012.pdf (“Unfortunately, securing funding for community school
initiatives also proves to be one of the most difficult components of the
planning, implementation and scaling up process.”); see, e.g., Dryfoos, supra note
41, at 7–39 (highlighting national and local community school models, which
vary from site to site, and discussing the specific initiatives targeted by each).
43. Press Release, U.S. Dep’t of Educ., More Than 40% of Low-Income Schools
Don’t Get a Fair Share of State and Local Funds, Department of Education Research
Finds (Nov. 30, 2011), http://www.ed.gov/news/press-releases/more-40-lowincome-schools-dont-get-fair-share-state-and-local-funds-department-educationresearch-finds; Matthew Lynch, Poverty and School Funding: Why Low-Income
Students Often Suffer, EDUC. WK. (Oct. 2, 2014), available at http://blogs.edweek.
org/edweek/education_futures/2014/10/poverty_and_school_funding_why_
low-income_students_often_suffer.html.
44. See Schwartz, supra note 17; but see Greg J. Duncan & Anita Zuberi, Mobility
Lessons from Gautreaux and Moving to Opportunity, 1 NW. J. L. & SOC. POL’Y 110
(2006), available at http://scholarlycommons.law.northwestern.edu/cgi/
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2015
low-income students to schools that already provide these quality services.
Instead of attending schools that are linked to negative academic outcomes,
assignment to a low-poverty school means access to a more successful educational program: middle-class schools are twenty-two times more likely
to be high performing than high-poverty schools.45 Low-poverty schools
also provide access to other factors believed to be influential in students’
success: parents who hold schools accountable; peers who are already performing at higher levels; and teachers and administrators who are better
prepared.46 Targeting high-poverty students and assigning them to lowpoverty schools gives them access to the quality services—academic and
socio-emotional—that such educational institutions provide. While such
plans were rare twenty years ago, now over eighty school districts employ
socioeconomic integration policies.47 In order for such plan to be viable, researchers recommend policies that specifically allow local school districts
to: (1) develop an intra- or inter-district choice system; and (2) incentivize
high-poverty student attendance at low-poverty schools, as well as lowpoverty student attendance at formerly high-poverty schools.48
Choice Systems: Choice systems allow students to move outside their
geographic attendance zones. They can be intra- or inter-district, although
the latter obviously poses the problem of coordination among multiple
districts. In a choice system where the specific outcome of socioeconomic
integration is desired, the model must incorporate an assignment method
that carefully controls for socioeconomic status.49 For example, after its
race-based integration policies were declared unconstitutional,50 Jefferson
County, Kentucky, created a choice system designed to integrate its
schools on the basis of socioeconomic status.51 In Jefferson County
(which encompasses the Louisville metro area), geographic areas are
viewcontent.cgi?article=1007&context=njlsp (finding positive outcomes for students in the Gatreaux program, with mixed results in the MTO program).
45. Richard D. Kahlenberg, Integrating Rich and Poor Matters Most, N.Y. TIMES,
May 21, 2012, available at http://www.nytimes.com/roomfordebate/2012/05/
20/is-segregation-back-in-us-public-schools/integrating-rich-and-poor-mattersmost [hereinafter Kahlenberg, Integrating Rich and Poor].
46. Id.; Schwartz, supra note 17, at 17.
47. Kahlenberg, From All Walks of Life, supra note 8, at 3; RICHARD D. KAHLENBERG,
THE FUTURE OF SCHOOL INTEGRATION: SOCIOECONOMIC DIVERSITY AS AN EDUCATION REFORM
STRATEGY 309–11 (2012).
48. Kahlenberg, From All Walks of Life, supra note 8, at 6–8, 11; see also Elizabeth
DeBray & Erica Frankenberg, Federal Legislation to Promote Metropolitan Approaches, in
INTEGRATING SCHOOLS IN A CHANGING SOCIETY: NEW POLICIES AND LEGAL OPTIONS FOR A
MULTIRACIAL GENERATION 281, 285 (Erica Frankenberg & Elizabeth DeBray eds., 2011).
49. See Kahlenberg, Integrating Rich and Poor, supra note 45; Kahlenberg, From
All Walks of Life, supra note 8.
50. Parents Involved in Cmty. Schs. v. Seattle Sch. Dist. No. 1, 551 U.S. 701
(2007).
51. Kahlenberg, From All Walks of Life, supra note 8.
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 339
identified as below- or above-average in terms of income and educational
attainment, as well as presence of racial minorities.52 Students then select
the schools they wish to attend, and choices are honored while also controlled to ensure below-average income students are between 15 percent
and 50 percent of each school’s population.53 However, it is important
to note that such a model continues to rely upon the inherent concentrations of poverty in the local community in order to utilize geographic
boundaries as a proxy for other factors, such as socioeconomic status.
Incentivized Attendance: Financial incentives can encourage low-poverty
schools to take more high-poverty students and also enable high-poverty
schools to develop magnet programs that attract low-poverty students.
Systems such as this can be created through “a subset of magnet and selective enrollment schools where a critical mass of middle-class students
are interested in attending.”54 This is a more feasible option for districts
such as Jefferson County and Wake County, North Carolina, which operate diverse districts created from urban-suburban mergers in the 1970s.55
Districts that lack such diversity may have to rely upon inter-district
transfers, which would require coordination between school systems for
enrollment, transportation, and student funding.
While these programs do more to address the gaps in educational programming than the provision of resources to high-poverty schools can,
they can again only go so far in addressing the conditions of poverty students face outside the classroom. Moreover, such programs tend not to be
realistic options for district- or county-wide concentrations of poverty
seen in some urban and rural areas because there are fewer middle
class peers with which to integrate low-income students. It is possible
that intra-district integration could be attempted with attractive magnet
offerings in high-poverty areas, but political realities suggest that such
model could not be brought to the scale necessary to achieve full
integration.
It therefore becomes apparent that educational efforts at integration, in
isolation, struggle to fully address the magnitude of the problem that is
segregation in our schools. Yet this conclusion seems natural: the segregation of student populations is not in the complete control of school systems. As such, developments in the field of housing policy that could
have a positive impact on education are of critical importance when considering how best to move forward to achieve equitable outcomes for all
students.
52.
53.
54.
55.
Id. at 11.
Id.
Id. at 7.
Id. at 11.
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III. Affirmatively Furthering Fair Housing: The New HUD
Regulation and Its Possibilities for Education
As an overview of the education-based solutions suggests, there are
many possible mechanisms for positively influencing student outcomes
that stretch beyond traditional education reform into the realm of housing
policy. Indeed, the idea of utilizing housing strategies to move families to
better outcomes—including educational ones—is not new.56 While there
has been some effort to foster interagency collaboration between the Departments of Housing and Urban Development (HUD) and Education
in the context of grant allocations—through Choice Neighborhoods,57
Promise Zones,58 and Promise Neighborhoods59—a stronger obligation
for collaboration does not yet exist.
However, that could change with the formal adoption of a HUD regulation, proposed in 2013 and adopted in July 2015,60 that requires consideration of educational outcomes in fair housing action planning.61 HUD
currently requires any entities receiving its departmental funds (local governments, states, and public housing authorities) to certify that they will
affirmatively further fair housing, generally through their long-term
56. See, e.g., Myron Orfield, Inst. on Metro. Opportunity, Why Are the Twin Cities
So Segregated? (Univ. of Minn. Feb. 2015), available at http://www.minnpost.com/
sites/default/files/attachments/WhyAretheTwinCitiesSoSegregated22615.pdf;
PRRAC, Linking Housing and School Integration Policy: What Federal, State and Local
Governments Can Do (2015), available at http://www.prrac.org/pdf/linking_
housing_and_school_integration-policy_brief%201-20-15.pdf; David Zisser,
Community Development and Fair Housing Approaches to Education Equity, E D
E QUITY : A B LOG BY THE E DUCATION P ROJECT (Lawyers’ Comm. for Civil Rights
Under Law Jan. 18, 2013), available at http://www.lawyerscommittee.org/
projects/education/page?id=0035; Myron Orfield, Linking Housing and School
Integration to Growth Management, in INTEGRATING SCHOOLS IN A CHANGING SOCIETY:
NEW POLICIES AND LEGAL OPTIONS FOR A MULTIRACIAL GENERATION (Erica Frankenberg
& Elizabeth Debray eds., 2011).
57. See HUD, Choice Neighborhoods, http://portal.hud.gov/hudportal/HUD?
src=/program_offices/public_indian_housing/programs/ph/cn (last visited
Apr. 20, 2015).
58. See HUD, Promise Zones, http://portal.hud.gov/hudportal/HUD?src=/
program_offices/comm_planning/economicdevelopment/programs/pz (last
visited Apr. 20, 2015); see also Associated Press, HUD Secretary Announces 8 New
Promise Zone Designations, ABC NEWS (Apr. 28, 2015), http://abcnews.go.com/
US/wireStory/hud-secretary-announces-promise-zone-designations-30647870
59. See U.S. Dep’t of Educ., Promise Neighborhoods, http://www2.ed.gov/
programs/promiseneighborhoods/index.html (last visited Apr. 20, 2015).
60. Affirmatively Furthering Fair Housing, 24 C.F.R. §§ 5.150–5.168 ( July 16,
2015), available at http://www.gpo.gov/fdsys/pkg/FR-2015-07-16/pdf/201517032.pdf.
61. 24 C.F.R. § 5.154(d).
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 341
planning processes.62 By including consideration of educational outcomes
in this required process, HUD has created a mechanism for local governments and housing authorities to potentially engage in action planning
that could have the effect of contributing to school integration. With the
finalization of this new rule, HUD has created an opportunity for greater
collaboration on more meaningful planning and programming that can—
and should—be seized by both the housing and education communities.
A. Summary: The AFFH Rule Provides the Means and Opportunity for
Housing Authorities to Consider Equitable Educational Access
HUD’s recently finalized “Affirmatively Furthering Fair Housing” rule
provides technical assistance for HUD program participants63 to fulfill
their statutory obligations under the 1968 Fair Housing Act to improve
and achieve more meaningful outcomes from fair housing policies.64
The rule provides new procedures to empower HUD-affiliated housing
programs to more capably execute their responsibilities, mostly by shifting the burden of data collection from those programs to HUD, thus allowing the programs to focus on analysis and planning rather than data
gathering.65 Specific outcomes are not mandated by this rule; instead, it
establishes a framework through which local entities can seek to identify
and target their own fair housing outcomes.66 Under this rule, HUD will
62. See Affirmatively Furthering Fair Housing (AFFH) Proposed Rule, 78 Fed.
Reg. 43710, 43710–11, available at https://www.federalregister.gov/articles/2013/
07/19/2013-16751/affirmatively-furthering-fair-housing.
63. “Program Participants” are defined as those groups receiving federal monies
from HUD, including (1) public housing agencies; and (2) local and state governments participating in any of the following programs: Community Development
Block Grants (CDBG); HOME Investment Partnerships (HOME); Emergency Solutions Grants (ESG); and Housing Opportunities for Persons with AIDS (HOPWA).
See AFFH Proposed Rule, 78 Fed. Reg. 43710, 43717.
64. Commenters raised concerns about their ability to implement new regulations, although HUD responded by assuring them of the Department’s commitment to providing technical assistance. AFFH Final Rule, Public Comments and
HUD’s Response to Public Comments, at 80 Fed. Reg. 42342 ( July 16, 2015). Funding for implementation of the AFFH Rule is contemplated through modest increases in several sections of the HUD budget (see HUD Congressional Justifications: FY 2016, available at http://portal.hud.gov/hudportal/documents/
huddoc?id=FY16-CJE-EntireFile.pdf). Implementation of the AFFH Rule seems
relatively certain; see also Press Release (No. 13-110), HUD Publishes New
Proposed Rule on Affirmatively Furthering Fair Housing ( July 19, 2013), available
at http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_
advisories/2013/HUDNo.13-110.
65. See Affirmatively Furthering Fair Housing, 24 C.F.R. §§ 5.152, 5.154 ( July 16,
2015), available at http://www.gpo.gov/fdsys/pkg/FR-2015-07-16/pdf/201517032.pdf (definition of “Data”).
66. 24 C.F.R. §§ 5.154, 5.162.
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assist housing program participants in the fair housing planning process
by providing them with:
• A more clearly articulated definition of what it means to affirmatively further fair housing;67
• An assessment template that replaces the current, loosely defined
Analysis of Impediments;
• Nationally uniform data and a geospatial tool; and
• Clear guidance and technical assistance.68
This rule “proposes to refine existing requirements with a fair housing
assessment and planning process that will better aid HUD program participants with fulfilling statutory obligations.”69 Indeed, under the new
rule, HUD program participants will now be supplied with regional
and national data sets, including patterns of integration, racially and ethnically concentrated areas of poverty (R/ECAP), and access to key community assets.70 In this structure, local programs will be able to engage
less in national and regional data collection and more in community conversations.71 This enables them to prioritize and devote resources to fair
housing planning and to incorporate fair housing ideals into existing
planning and decision-making processes, such as those affecting housing,
community development, and land use.72
This provision of data is significant. As many fair housing issues transcend jurisdictional boundaries, the solutions to address them “require
creative collaboration across traditionally disconnected policy domains.”73 Under the rule, participants across programs and locales will
utilize and have access to the same HUD-supplied information. HUD expects that the use of uniform national and regional data will enable more
informed and transparent conversations about fair housing potential
among officials, community members, and other stakeholders.74 There67. 24 C.F.R. § 5.150 (“Specifically, affirmatively furthering fair housing means
taking meaningful actions that, taken together, address significant disparities in
housing needs and in access to opportunity, replacing segregated living patterns
with truly integrated and balanced living patterns, transforming racially and ethnically concentrated areas of poverty into areas of opportunity, and fostering
and maintaining compliance with civil rights and fair housing laws.”).
68. HUD Press Release, supra note 64.
69. Affirmatively Furthering Fair Housing (AFFH) Proposed Rule, 78 Fed. Reg.
43710, available at https://www.federalregister.gov/articles/2013/07/19/201316751/affirmatively-furthering-fair-housing.
70. AFFH Final Rule Executive Summary, 80 Fed. Reg. 42272, at 42273, available
at http://www.gpo.gov/fdsys/pkg/FR-2015-07-16/pdf/2015-17032.pdf.
71. Id.
72. Id.
73. AFFH Proposed Rule, 78 Fed. Reg. 43710, 43716.
74. Id. at 43715.
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 343
fore, the provision of a uniform data set by HUD will not only streamline
and lessen the burden of the planning process for individual program participants, but will enable greater consistency and collaboration among
programs, stakeholders, and locations.
Change to the regulatory structure necessarily requires program participants to make some adjustments; however, the inter-agency (and intersector) possibilities created by the use of a common data set should not
be underestimated. Used intelligently, the AFFH rule may provide a platform upon which better, shared conversations can take place. HUD seeks
to achieve such results by maximizing the utility of this common data set
through two key measures: (1) the Assessment of Fair Housing, a required
tool for its program participants; and (2) an emphasis on collaboration, a
mostly voluntary yet compelling structure for participation.
1. Assessment of Fair Housing (AFH)
To maximize efficiency for program participants in the fair housing
planning process, the rule centers on the use and analysis of HUDprovided data within a uniform, directed structure: the Assessment of
Fair Housing (AFH). Importantly, this process is mandatory for program
participants, which must undertake the analyses it prescribes. Consequently, given the specifications for the AFH, these HUD funding recipients are now required to consider the implications of housing decisions on
other community issues and vice versa.
Program participants must complete their AFHs with the national and
regional data that HUD will supply, although they may also supplement
their analyses with available local or regional information.75 The completed AFH must be submitted to HUD, approved, and utilized in other
housing planning processes, such as the Consolidated Plan76 and the Public Housing Agency plan.77 The AFH should also inform fair housing
strategies in community plans for related sectors, such as transportation
and education.78 This mandatory process aims to more fully integrate
fair housing concerns into the overall planning process and to inform
both policy and program goals.79
75. Affirmatively Furthering Fair Housing, 24 C.F.R. §§ 5.152, 5.154 ( July 16, 2015),
available at http://www.gpo.gov/fdsys/pkg/FR-2015-07-16/pdf/2015-17032.pdf.
76. A part of the annual planning process, HUD grantee jurisdictions utilize the
Consolidated Plan to engage the community in the implementation of programs by
creating a three-to-five year measure of goals and priorities. The consolidated plan
is then carried out through annual action plans. See HUD, Consolidated Plan Process,
Grant Programs, and Related HUD Programs, HUD EXCHANGE, available at https://
www.hudexchange.info/consolidated-plan/consolidated-plan-process-grantprograms-and-related-hud-programs/ (last visited Jan. 28, 2015).
77. 24 C.F.R. § 5.154.
78. 24 C.F.R. § 5.154.
79. 24 C.F.R. § 5.154.
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The AFH focuses participants on four primary goals:
(1) improving integrated living patterns and overcoming historic patterns of segregation;
(2) reducing racial and ethnic concentrations of poverty;
(3) reducing disparities by race, color, religion, sex, familial status, national origin, or disability in access to community assets such as education, transit access, and employment, as well as exposure to environmental health hazards and other stressors that harm a person’s
quality of life; and
(4) responding to disproportionate housing needs by protected class.80
The AFH process requires a summary and analysis of the regional and
national benchmarks and data provided by HUD, supplemented by local
data, to identify trends and changes in fair housing needs for various populations over time.81 In a sample AFH made available for public comment,82 HUD asks programs to complete a demographic summary of
their jurisdiction, which then informs analyses in the following areas:
(1) Segregation/Integration and Racial/Ethnic Concentrated Areas of
Poverty
(2) Disproportionate Housing Needs
(3) Disparities in Access to Community Assets and Exposure to Adverse Community Factors
(4) Disability and Access
(5) Fair Housing Compliance and Infrastructure
Within each of the above categories, participants must identify their
key fair housing challenges.83 After such identification, programs evaluate the factors that contribute to these major concerns, such as zoning
and land use practices.84 These possible “determinants of disparities”
are selected by participants via a pre-determined drop-down menu in
the AFH.85 Programs must also specify the extent to which each of
80. HUD, Affirmatively Furthering Fair Housing Proposed Rule: Background Materials, and Prospective Geospacial Tool, HUD USER, available at http://www.huduser.
org/portal/affht_pt.html (emphasis added) (last visited Jan. 28, 2015).
81. AFFH Proposed Rule, 78 Fed. Reg. 43710, 43718.
82. HUD, Fair Housing Assessment Tool, available at http://www.huduser.
org/portal/publications/pdf/AFFH-Assessment-Tool-2014.pdf.
83. AFFH Proposed Rule, 78 Fed. Reg. at 43711.
84. Id at 43716.
85. See Affirmatively Furthering Fair Housing Assessment Tool: Solicitation of
Comment-60-Day Notice Under Paperwork Reduction Act of 1995, 79 Fed. Reg.
57949, 57954 (proposed Sept. 26, 2014), available at https://www.federalregister.
gov/articles/2014/09/26/2014-22956/affirmatively-furthering-fair-housingassessment-tool-solicitation-of-comment-60-day-notice-under.
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 345
those factors is determinative of the disparities experienced in their
jurisdiction.86
This process culminates with strategy development and action planning in which programs are asked to target those factors they have selected that are most significant in influencing disparity.87 Thus, the AFH
is centered on enabling programs to identify, analyze, and appropriately
address disparities in both housing and resource access issues. Where
those resource disparities involve education, an AFH will be useful resource to the community at large by first identifying such inequities, at
the least, and by creating an opportunity to address such issues through
broader efforts.
2. Emphasis on Collaboration
The Affirmatively Further Fair Housing rule goes one step further than
mandating the use of a common data set and the program-level consideration of community access. Throughout, it enables, recommends, and
even requires some collaborative efforts. As such, the rule goes beyond
creating a common knowledge foundation on these issues. By explicitly
embedding collaboration in these various planning processes, the AFFH
rule creates opportunities for building and acting upon the findings of
the AFH.
The AFFH rule encourages joint and regional assessments to more effectively address housing and community needs.88 Community participation
and consultation is also required for the completion of each AFH.89 The
rule encourages and facilitates collaboration and coordination across jurisdictions to address fair housing issues and access to key community assets.90 Two or more program participants may join together to submit a single AFH; they need not be contiguous and may cross state boundaries.91
Programs are also encouraged to develop regional AFHs to encourage the
86. In the current sample version of the AFH, participants identify the extent to
which determinants affect their jurisdiction through a pre-filled drop-down menu.
HUD has supplied the potential determinants, and participants will rate each as
highly, moderately, or not significant. See, e.g., Fair Housing Assessment Tool,
supra note 82, at 10, available at http://www.huduser.org/portal/publications/
pdf/AFFH-Assessment-Tool-2014.pdf.
87. Fair Housing Assessment Tool: Solicitation of Comment, 79 Fed. Reg. 57954,
supra note 85.
88. 24 C.F.R. § 5.156.
89. 24 C.F.R. §§ 5.154, 5.158.
90. 24 C.F.R. § 5.156.
91. 24 C.F.R. § 5.156 (stating that “joint participants or regionally collaborating
participants, need not be located in contiguous jurisdictions and may cross State
boundaries, provided that the collaborating program participants are “located
within the same Core Based Statistical Area (CBSA), as defined by the United
States Office of Management and Budget (OMB) at the time of submission of the
joint or regional AFH”).
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sharing of resources and goals in order to improve outcomes.92 Additionally, HUD encourages exploration of avenues for collaboration by providing distinct guidelines for both local and state government consultation;93
and requiring citizen participation plans at each of these governmental levels, with each including low- and moderate-income citizens as well as developers and community organizations.94 Local and state governments
must make all AFH data they have received, or supplemented their analysis
with, available to the public, public agencies, and other interested parties.95
In effect, the rule seeks to involve a number of relevant stakeholders in a
shared conversation about fair housing and resource access.
Use of Educational Data: Within the metrics regarding access to
community assets are clear requirements for housing programs to consider educational data. The AFH requires analysis of the relationship
among patterns of segregation, concentrations of poverty, and multiple
community-asset factors, such as access to education, employment, transportation, and environmental health.96 Collectively, these measures will
assess the extent to which an area possesses or is linked to stressors or
to assets that correlate with an impact on life quality.97 Independent of
this aggregated measure, HUD explicitly recognized the link between
asset-rich neighborhoods and educational success and expressed its desire
to address disparities in ability to access such resources in the proposal of
the rule.98
To this end, HUD requires the analysis of educational opportunities in
the AFH. Programs will be provided with a “neighborhood school proficiency index” with school-level data that describes which neighborhoods
have more or less proficient elementary schools, as measured by a calculation of student performance on state exams.99 While HUD acknowledges that this is not a detailed measure of instructional quality, its use
of widely available and frequently cited data may also support its aspiration to enable the AFH to contribute to other planning conversations, such
as those in the educational sphere.100 Ultimately, the use of school-level
92. 24 C.F.R. § 5.156.
93. 24 C.F.R. §§ 91.100, 91.110.
94. 24 C.F.R. §§ 91.105, 91.115.
95. 24 C.F.R. §§ 91.105, 91.115.
96. 24 C.F.R. § 5.154; Fair Housing Assessment Tool: Solicitation of Comment,
79 Fed. Reg. 57949, 57952, supra note 85.
97. Affirmatively Furthering Fair Housing (AFFH) Proposed Rule, 78 Fed.
Reg. 43710, 43715, available at https://www.federalregister.gov/articles/2013/
07/19/2013-16751/affirmatively-furthering-fair-housing.
98. Id. at 43714.
99. AFFH Data Documentation, 78 Fed. Reg. 43710, at 5, available at http://
www.regulations.gov/#!documentDetail;D=HUD-2013-0066-0003; see also AFFH
Proposed Rule, 78 Fed. Reg. 43710, 43717.
100. AFFH Proposed Rule, 78 Fed. Reg. 43710, 43718.
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 347
data will enable program participants to consider the relevance of education as they evaluate their present fair housing issues, identify the primary
determinants for those issues, and develop priorities and goals.
B. Implications of the AFFH Rule Hold Hope for School Integration
The Affirmatively Furthering Fair Housing rule is a potential beginning
for collaboration within educational and housing planning processes. Requiring HUD program participants to consider access to quality educational services as an indicator of fair housing issues creates an opportunity
to impact schools through housing planning. All recipients of HUD funds
are obligated to “affirmatively further fair housing,”101 which means that
they must:
• Analyze and eliminate housing discrimination in the jurisdiction;
• Promote fair housing choice for all persons;
• Provide opportunities for inclusive patterns of housing occupancy regardless of race, color, religion, sex, familial status, disability and national origin;
• Promote housing that is structurally accessible to, and usable by, all
persons, particularly persons with disabilities; and
• Foster compliance with the nondiscrimination provisions of the Fair
Housing Act.102
Because the definition includes consideration of educational factors, the
planning process by which state and local governments are able to utilize
HUD block grants or programs requires analysis of school performance
relative to such fair, inclusive, and non-discriminatory housing program
decisions. This holds enormous potential, especially for residents who
could benefit from such considerations in the planning and expansion
of federally assisted housing. And, given the unfortunate association between HUD-funded housing and its proximity to lower-performing
schools,103 it seems prudent for the planning and development of such
programs to consider the educational resources to which students
would have access. With the finalization of this rule, it seems that program participants are now required, rather than just incentivized, to
push back on other pressures to geographically concentrate housing programming in a given jurisdiction or school zone.
Furthermore, the strong preference for collaboration within the rule increases the ability for education-related service providers to participate in
the housing and community development process. Ideally, this will result
101. HUD, Promoting Fair Housing, available at http://portal.hud.gov/
hudportal/HUD?src=/program_offices/fair_housing_equal_opp/promotingfh
(last visited Apr. 18, 2015).
102. HUD, Fair Housing Planning Guide 1–2 to 1–3 (Mar. 1996), available at
http://www.hud.gov/offices/fheo/images/fhpg.pdf.
103. Supra Part I.
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in more open collaboration between housing and educational authorities;
indeed, the provision of data from HUD may make it more feasible for
program participants to seek out and acquire additional data from educational sources. At the very least, the requirement to publicize the AFH
data, the consolidated plan, and notice of a mandatory pubic hearing creates an opportunity for educational stakeholders to understand and involve themselves in the housing issues faced by their school communities.
In these ways, this regulation has the potential to impact or otherwise
influence issues of equity and access in education. One question that remains is the extent to which educational inequity would trigger the program participants’ duty to affirmatively further fair housing and whether
it would have the resources or political capacity to fully do so. In any
event, there are a number of ways in which program participants could
consider the effect of its actions on neighboring schools.
IV. Exploring the Benefits of This Reciprocal Relationship
A. Integrated Planning and Policy Would Enable Integration of
Elementary and Secondary Schools
With this regulation now in effect, there are myriad ways in which federal, state, and local housing authorities could develop or influence planning processes and policies to intentionally impact schools. Such a goal
may not require too much creativity; there are a number of existing programs that already support the mission of combined school and housing
development. Program participants should carefully consider the existing
landscape as they seek to follow this new process. Although many of
HUD’s programs could be utilized to this end, two means by which school
integration might be most heavily impacted are (1) a direct, HUDsanctioned incentive through coordination of its various voucher and
grant programs; and (2) a direct but limited impact through collaboration
between existing, selective community development grant programs.
HUD and its program participants currently further fair housing goals
thorough the operation of public housing, public subsidized housing, and
grants that incentivize private investment in housing development.104
However, the Affirmatively Furthering Fair Housing process is only one
factor that determines how each program participant chooses to utilize
HUD resources.105 Program participants are also influenced by the laws
and policies of their local jurisdictions.106 While the AFFH rule does not
mandate specific local policies to be adopted, it would be prudent for
104. Philip Tegeler, Megan Haberle & Ebony Gayles, Affirmatively Furthering
Fair Housing in HUD Housing Programs: A First Term Report Card, 22 J. AFFORDABLE
HOUS. & CMTY. DEV. L. 27 (2013).
105. Raphael Bostic & Alastair McFarlane, The Proposed Affirmatively Furthering
Fair Housing Regulatory Impact Analysis, 15 CITYSCAPE 257 (2013).
106. Id.
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 349
later iterations of guidance to favorably comment upon those jurisdictions
and programs that address systemic issues, such as integration.107 Participants would still be granted the flexibility to base their planning on the
needs, conditions, and available resources of the local context, but could
be persuaded by the access to public, common data to prioritize the inequities highlighted by the new review process.108 Importantly, the rule
does not prescribe a particular path for program participants to pursue coordinated housing and education solutions; instead it has the potential to
urge participants to consider, and to inform their stakeholders about, prioritizing equitable access to resources such as education. In this way,
HUD grantees and their stakeholders would likely be more informed
and incentivized to advocate for more progressive policies and practices
within their jurisdictions.
Additionally, grant programs for community-development-focused
housing programs and projects provide useful starting points. For example,
the Promise Zones initiative has already designated specific cities and regions that are working with local community partners to create jobs, leverage private investment, increase economic activity, expand educational opportunities, and reduce violent crime.109 Placing new emphasis on
affirmatively furthering integrated housing that would benefit school enrollment is an option such grantees could consider that would further several of the program’s goals. Another possibility opportunity is collaboration
between the Department of Education’s Promise Neighborhoods initiative
and HUD’s Choice Neighborhoods initiative. The Promise Neighborhoods
initiative seeks to empower community organizations whose focus is to
positively impact the lives of children and youth in their schools and communities.110 The Choice Neighborhoods initiative focuses on housing issues, in addition to people and community groups, to improve neighborhoods, housing, services, and schools.111 Because these two programs
have similar missions, HUD and the Department of Education could
work collaboratively to define how their respective program grantees
could further coordinate housing services to better support schools.
All HUD program participants are, by definition, actively engaged in
the federal planning process, while the aforementioned grant programs
are targeted to reach jurisdictions that have already considered the
107. See id.
108. See id.
109. HUD, Promise Zones Overview, available at http://portal.hud.gov/
hudportal/HUD?src=/program_offices/comm_planning/economicdevelopment/
programs/pz/overview (last visited Apr. 20, 2015).
110. U.S. Dep’t of Educ., Promise Neighborhoods, available at http://www2.ed.
gov/programs/promiseneighborhoods/index.html (last visited Apr. 20, 2015).
111. HUD, Choice Neighborhoods, http://portal.hud.gov/hudportal/HUD?
src=/program_offices/public_indian_housing/programs/ph/cn (last visited
Apr. 20, 2015).
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broader, community-level impacts of their housing plans. Now, with the
AFFH rule in place, more program participants can be equipped with the
information and access to resources necessary to concentrate their efforts
on housing and educational agency collaboration. As the new rule is implemented, there is greater potential to emphasize the importance of such
coordinated efforts because more actors will likely have familiarity with
the interactions of housing and education issues in their local context.
B. Integration of Neighborhoods Would Improve Educational Outcomes
for All Students
Addressing the issue of school-based outcomes through the framework
of housing law and policy is an increasingly real possibility. Given the potential benefits at stake, it is also increasingly imperative. Importantly,
both low-income and minority students realize the positive educational
effects of integrated neighborhoods. Such results have been documented
in studies of certain voucher programs and inclusionary zoning models.
As these solutions are the most beneficial way for HUD program participants to directly and indirectly affect school integration, the results of
such studies could have important implications when predicting the potential effects of the Affirmatively Furthering Fair Housing rule.
Voucher Programs: A study of children living in households that receive
Housing Choice Vouchers (HCV) found that they generally live in better
neighborhoods and are less likely to miss school than other children from
families of low income.112 The study also indicated other quality of life
measures that were improved by participation in the program, including
a reduction in poverty and material hardship.113 A similar study of HUD’s
Moving to Opportunity (MTO) program enabled low-income families in
five large urban districts to relocate to higher-income neighborhoods.114
While the program had mixed success in the aggregate, residents in Baltimore and Chicago who moved out of neighborhoods with concentrated
poverty into lower-poverty situations saw positive academic gains from
their children.115 Those in other locations did not move to a higher-income
neighborhoods for a variety of personal factors, including proximity to
family and caretakers for children.116 The MTO program focused upon
changing housing location and, by proxy, children’s ability to attend a
school drawing from a lower-poverty neighborhood. While attendance
112. HUD, Effects of Housing Vouchers on Welfare Families vi, x, available at http://
www.huduser.gov/publications/pdf/hsgvouchers_1_2011.pdf. While the study
initially focuses on the Welfare to Work Vouchers (WtWV), the fundamental
aspects of the programs were similar enough that, once WtWV was discontinued,
those participants were merged into the regular HCV program.
113. Id. at ix.
114. Burdick-Will et al., supra note 14.
115. Id.
116. Id.
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 351
at a higher performing school was made possible via the MTO model, the
goal is for policy to create a probable chance that low-income students can
escape concentrations of poverty to attend socio-economically integrated
schools. Thus, if a program could specifically offer opportunities in
more integrated, low-poverty jurisdictions, it may be able to replicate
the academic success seen by children in the Baltimore and Chicago
MTO sites and the general outcomes of the HCV program. If the AFFH
rule is utilized to make available more choice units in low-poverty
areas, the results could affirmatively assist school integration.
Inclusionary Zoning: If HUD program participants consider advocating
for inclusionary zoning as a method of affirmatively furthering fair housing, the results for school outcomes would likely be great. Heralded as a
leader in the field with its forty year-old inclusionary zoning program,
Montgomery County, Maryland, has seen great results from such policies
in its PK-12 school system, which is also notably one of the best in the
country.117 Initially acting in order to preserve affordable housing for
working and middle-class families, Montgomery County has an inclusionary zoning policy that “require[s] all developers of market-rate residential
developments of 20 units or more to set aside 12.5 to 15 percent of the
units to be rented or sold at below-market prices.”118 Additionally, and
importantly, Montgomery County’s program contains a feature that allows very low-income households to live in its affluent areas: the county’s
public housing authority is granted the right of first refusal to purchase up
to one-third of the inclusionary zoning units that are produced in a given
development.119 As of 2011, the housing authority had purchased 1,500
units; about 700 of these are moderately-priced dwelling units, operated
as public housing within in market-rate apartment complexes.120 Altogether, the housing authority operates 992 public housing apartments.121
While there are still some clustered public housing developments in
Montgomery County, many very low-income residents are able to live
in mixed-income developments throughout the jurisdiction.122
The public housing authority in Montgomery County randomly assigns tenants to its public housing apartments, which are spread throughout the county’s neighborhood-based elementary school attendance
zones. Therefore, in effect, the housing authority randomly assigns children to schools.123 This random assignment allowed Heather Schwartz
of the RAND Corp. to conduct a longitudinal study of the effects of school
117.
118.
119.
120.
121.
122.
123.
Schwartz, supra note 17.
Id. at 15–16.
Id. at 16.
Id. at 16–17.
Id. at 17.
Id. at 16–17.
Id. at 17.
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2015
placement on public housing students.124 After five to seven years,
Schwartz found that children living in public housing who were assigned
to low-poverty schools significantly outperformed their peers assigned to
moderate-poverty schools in both reading and math and significantly
closed the achievement gap between themselves and their classmates
from non-poor households.125 Moreover, Montgomery County also had
a resource-allocation policy for its neediest elementary schools (of the
type discussed above, in Part II.A) in place at the time—yet even with
the number of programs put in place by the schools, the students assigned
to low-poverty schools significantly outperformed the students assigned
to high-poverty schools that received additional resources. With such
drastic implications for educational outcomes, advocating for inclusionary
zoning as a manner in which state and local governments demonstrate affirmative efforts toward furthering fair housing may be an ideal way to
promote fair housing while also keeping educational outcomes in mind.
In this way, the AFFH rule could assist efforts to integrate PK-12
schools. Importantly, students of color and students of low-income families would not be the only beneficiaries of such system: integrated schools,
when created as a product of integrated neighborhoods, have been shown
to foster positive educational outcomes for all students.126 Furthermore,
exposure to peers from a variety of backgrounds is also believed to
have positive effects on preparing students for the diverse demands of
the global marketplace.127 These outcomes for skill-based and academic
attainment mean better employment prospects for all subgroups, which
also enable economic mobility.128 This, in turn, is better for the housing
market, thus demonstrating the potential for reciprocally beneficial relationships between education and housing.
V. Conclusions and Recommendations
It is true that many of the ways in which the Affordably Furthering Fair
Housing rule could positively impact education could begin without
adoption of the rule; a variety of programs throughout the country already seek to integrate housing and education services and find that
each sector is better able to serve its constituents with a coordinated,
124. Id.; see also Heather L. Schwartz, Housing Policy Is School Policy: Economically
Integrative Housing Promotes Academic Success in Montgomery County, Maryland
(Cent. Found. 2010), available at https://www.tcf.org/assets/downloads/tcfSchwartz.pdf.
125. Schwartz, supra note 17, at 17–18.
126. See Mickelson, supra note 3.
127. Elizabeth Debray & Erica Frankenberg, Federal Legislation to Promote Metropolitan Approaches to Educational and Housing Opportunity, in FINDING COMMON
GROUND: COORDINATING HOUSING AND EDUCATION POLICY TO PROMOTE INTEGRATION 43,
44 (Philip Tegler ed., 2011).
128. Mickelson, supra note 3.
Affirmatively Further Fair Housing—and Potentially Further Fair Schooling 353
more informed approach.129 Yet the actions required by the finalized
AFFH rule shift the relevance of these programs—from potential levers
of change to critical considerations in a necessary conversation. And,
with the Supreme Court’s recognition of the role that school quality
could play as a race-neutral remedy for disparate impact claims,130
forward-looking consideration of school data is in most program participants’ best interests. If housing programs and governmental entities
lacked the impetus for pursuing such approach before, the adoption of
the AFFH rule may provide the motivation to overcome such inertia.
Moreover, the rule even provides the requisite information and process
by which local actors in housing, education, planning, or other sectors
can begin to understand the overlap between their housing policies and
educational outcomes. Thus, adoption of the rule may provide both the
means and the motive to pursue meaningful outcomes for our most disadvantaged students through a mechanism with proven effect: neighborhood and school integration.
In the merger of operationally distinct disciplines, challenges will naturally present themselves. For one, many of the suggestions made here do
not even begin to address the complications that private, charter, and
other “school choice” models would present in a coordinated effort to address residences and school attendance zones.131 To be certain, there are
no perfect, one-size-fits-all solutions for systems as nuanced and complex
as our housing and education systems. Yet beginning to address these
challenges together, through the lens of both housing and education, is
a step toward a solution that has the greatest potential for our students
who need it most. As such, affirmatively furthering fair housing could
also further fair schooling—which would be of great benefit to us all.
129. Deborah McKoy & Jeffrey M. Vincent, Framing the Connections: Integrating
Housing, Transportation and Education in City and Regional Planning, in FINDING COMMON GROUND: COORDINATING HOUSING AND EDUCATION POLICY TO PROMOTE INTEGRATION
53 (Philip Tegler ed., 2011).
130. Texas Dep’t of Housing & Cmty. Affairs v. Inclusive Cmtys. Project, Inc.,
135 S. Ct. 2507 (2015).
131. To briefly peel back the lid of the can of worms, these models often either
have no means by which to guarantee diversity or have attendance policies that
have the effect of screening against diversity, thus allowing for the segregation
of schools within communities that may be less segregated. See Salvatore Saporito
& Deenesh Sohoni, Coloring Outside the Lines: Racial Segregation in Public Schools and
Their Attendance Boundary Zones, 79 SOC. OF EDUC. 81 (2006).
Introduction to Worker Cooperatives
and Their Role in the Changing
Economy
Priya Baskaran
I. Who Are Our Vulnerable Workers? .................................................... 358
II. What Is a Worker Cooperative, and How Can It Help
Vulnerable Workers?............................................................................... 359
A. The Detroit Snack Cooperative—The Nuts and Bolts of a
Worker Cooperative ..........................................................................361
B. Cooperatives and Wealth Building ................................................362
C. Entity Options and Tax Treatment.................................................364
III. Role of Worker Cooperatives ................................................................ 365
A. Benefits to the Individual Worker ..................................................365
B. Benefits to the Community ..............................................................366
1. People ............................................................................................ 367
2. Place ............................................................................................... 367
3. Things ............................................................................................ 367
IV. Current Models in the United States ................................................... 368
A. Nonprofit Incubator Model..............................................................368
B. Union Coop Model............................................................................370
C. Anchor Institution Model.................................................................373
V. Common Challenges and Obstacles Faced by Worker
Cooperatives ............................................................................................. 377
A. Education and Training on the Worker-Ownership ...................378
B. Selecting a Profitable Business Model and Building to Scale ...378
C. Funding Concerns .............................................................................379
VI. Conclusion ................................................................................................ 380
In May 2015, the New York Times made waves with a two-part expose on
the dangerous working conditions and general mistreatment of nail salon
workers.1 The report details the low wages, routine incidents of ethnic
1. Sarah Maslin Nir, The Price of Nice Nails, N.Y. TIMES, May 7, 2015, http://
www.nytimes.com/2015/05/10/nyregion/at-nail-salons-in-nyc-manicurists-areunderpaid-and-unprotected.html?_r=0 (last visited Aug. 31, 2015).
Priya Baskaran ([email protected]) is a Visiting Associate Professor at
Georgetown University Law Center and teaches in the Social Enterprise & Nonprofit
Law Clinic.
355
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Volume 24, Number 2
2015
discrimination, abusive treatment by management and business owners,
exposure to unhealthy levels of chemicals, repeated wage theft, and other
employment law violations, as well as a slew of other denigrations that created nightmarish working conditions.2 The expose resulted in public outcry, prompting New York Governor Andrew Cuomo to sign emergency
legislation providing basic health safety and wage protections for nail
salon workers.3 Just a month before the New York Times coverage, a new enterprise focused on providing manicures raised $5 million dollars in venture capital.4 Manicube operates much like Uber, connecting clients seeking
nail services with technicians who will come to your location.5 In this scenario, the service you get is a pedicure—not a ride to the airport.
There is a steadily increasing emphasis on innovative, mission driven
enterprises both by consumers and entrepreneurs. Popular businesses
like Tom’s Shoes6 focus on more than the traditional Dodge v. Ford dicta
of shareholder wealth maximization,7 incorporating core values such as
environmental sustainability and philanthropy as central to their enterprises. Manicube is no exception to this new social enterprise model.8
For every manicure, the company donates a dollar to Kiva to help support
female entrepreneurs in “third world countries.”9
Although the social mission certainly sets them apart from a traditional
nail business, I immediately wondered whether Manicube’s workers were
better off than their peers in New York nail salons. Did Manicube truly
offer a better employment alternative or were these workers simply trading in one set of problems for another? Did Manicube provide health insurance and other benefits? Did workers have better schedules overall or
simply better in comparison to traditional salons? If Manicube’s business
model mimics the Uber model, the workers are classified as independent
2. Id.
3. Laila Kearney, New York Governor Signs Emergency Nail Salon Worker Law,
REUTERS, July 6, 2015, http://www.reuters.com/article/2015/07/16/us-usa-newyork-nail-salons-idUSKCN0PQ26T20150716.
4. Scott Kirsner, In-Office Manicure Start-Up Manicube Collects $5 Million from
Bain, BOSTON GLOBE, Apr. 4, 2014, http://www.betaboston.com/news/2014/04/
14/in-office-manicure-startup-manicube-collects-5-million-from-bain/.
5. Manicube, http://manicube.com/about/ (last visited Sept. 16, 2015).
6. Tom’s Shoes, http://www.toms.com/ (last visited Sept. 16, 2015).
7. See Dodge v. Ford Motor Co., 170 N.W. 668 (Mich. 1919) (“A business corporation is organized primarily for the profit of the stockholders.”); see also J. William Callison, Benefit Corporations, Innovation, and Statutory Design, 26 REGENT U. L.
REV. 143 (2013).
8. Nidhi Thapar, Is Entrepreneurship Better with a Social Mission?, BUS. INSIDER,
Nov. 26, 2012, http://www.businessinsider.com/is-entrepreneurship-better-witha-social-mission-2012-12.
9. Manicube, Twitter (Aug. 23, 2012, 11:51 AM) https://twitter.com/
manicube/status/238710025751756800.
Worker Cooperatives and Their Role in the Changing Economy
357
contractors,10 relieving the company of certain obligations under federal
labor laws.11 As independent contractors, the workers would have to personally carry costs traditionally associated with corporate business expenses, like liability insurance, nail polish, and other supplies. I also wondered whether Manicube would be held accountable under Governor
Cuomo’s protections, which are directed at owners of nail salons.12
What if a third option protected workers, provided excellent service to
customers, and preserved the social mission of supporting entrepreneurs
with a local emphasis? The worker cooperative is an entity form poised to
play this role in our growing, mission driven commercial sector. Worker cooperatives are businesses owned by and operated for the benefit of their
workers, as opposed to the financial gains of shareholders. Workers in a
worker cooperative have voting rights in a one member, one vote ratio, empowering them to weigh in on management and other decisions. Workers
can design an enterprise that pays a living wage, hires from their community, and sets standards for workplace safety and worker dignity. This structure provides an exciting opportunity for job security, wealth retention, and
enfranchisement of vulnerable workers otherwise facing low wage employment opportunities with little control over their working conditions.
Worker cooperatives are as diverse as the marketplace, spanning a number of industries, including manufacturing and service fields.13 The largest
worker cooperative in the United States, Cooperative Home Care Associates (CHCA), employs over 2,300 workers.14 The company earned over
$60 million in revenue in 2013, is 90 percent owned by minority women,
and is based in one of the poorest congressional districts in the country.15
This article serves as an introduction to worker cooperatives and their
potential role supporting vulnerable workers and disenfranchised communities in the changing U.S. economy. Part I defines the vulnerable
worker; Part II defines worker cooperatives and provides a brief historical
overview; Part III examines the benefits of worker cooperatives to individual workers and the community; Part IV discusses the various existing
models of worker cooperatives. Part V focuses on common challenges
and obstacles faced by today’s worker cooperatives.
10. Uber, https://get.uber.com/drive/ (last visited Sept. 16, 2015).
11. 29 U.S.C.A. §§ 206–207.
12. Kearney, supra note 3.
13. Melissa Hoover, Another Workplace Is Possible: Co-ops and Workplace Democracy, in SOLIDARITY ECONOMY: BUILDING ALTERNATIVES FOR PEOPLE AND PLANET 237, 250
( Jenna Allard, Carl Davidson & Julie Matthaei eds., 2008).
14. Laura Flanders, How America’s Largest Worker Owned Co-Op Lifts People Out
of Poverty, YES! MAG., Aug. 14, 2014, http://www.yesmagazine.org/issues/theend-of-poverty/how-america-s-largest-worker-owned-co-op-lifts-people-out-ofpoverty; Community Health Care Associates, http://www.chcany.org/ (last
visited Sept. 16, 2015).
15. Id.
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I. Who Are Our Vulnerable Workers?
In discussing the benefits of worker cooperatives to vulnerable workers, it is important to define who vulnerable workers are. Vulnerable
workers are overrepresented in low-income communities of color
throughout the United States.16 These individuals are exposed to a variety
of risks in their workplace, including low wages, long hours, lack of benefits, unsafe or hazardous work environments, and long commutes.17
Many are employed in service sector jobs that lack stability or the ability
to provide full-time employment, requiring them to work multiple jobs
simply to pay their bills.18 Any attempts for upward mobility are often
stymied by little or no training or educational opportunities at their
jobs.19 Additionally, wage theft and other employer infractions are often
not reported because vulnerable workers fear reprisals and loss of employment. Those with a complicated immigration status also fear deportation or similar retaliatory efforts from employers.20
The cleaning services industry clearly illustrates the obstacles faced by
these workers. One study of workers in Silicon Valley uncovered the following details: the average house cleaner is an immigrant Latina who independently cleans homes and offices or works as a temporary cleaner for
an agency. The work is poorly compensated, with starting wages as small
as $7 an hour with no benefits. Workers are often required to travel long
distances, leading to long work hours and negatively impacting personal
and family life. Workers also have little control over what cleaning products are used and are routinely exposed to harmful chemicals. Finally the
work is isolating and potentially dangerous because it often requires
working alone in a stranger’s home.21
House cleaners and other domestic workers have few avenues for relief
when a client underpays them or engages in other unscrupulous behavior.
Workers are reticent to unionize or pursue legal action against employers
for fear of reprisals. Despite being a growing part of the workforce, they
remain at risk.22
16. Brandon Roberts, Deborah Povich & Mark Mather, Low-Income Working
Families: The Growing Economic Gap, Working Poor Families Project, at 5 (2013),
available at http://www.workingpoorfamilies.org/wp-content/uploads/2013/
01/Winter-2012_2013-WPFP-Data-Brief.pdf.
17. Id. at 4.
18. Id.
19. Gowri J. Krishna, Worker Cooperative Creation As Progressive Lawyering? Moving Beyond the One-Person, One-Vote Floor, 34 BERKELEY J. EMP. & LAB. L. 65, 81 (2013).
20. Id.
21. WAGES has been reorganized as the nonprofit Prospera. See http://
prosperacoops.org/ (last visited Sept. 17, 2015).
22. Linda Burnham & Nik Theodore, Home Economics, The Invisible and Unregulated World of Domestic Work, National Domestic Workers Alliance, at xi (2012), available at http://www.domesticworkers.org/pdfs/HomeEconomicsEnglish.pdf.
Worker Cooperatives and Their Role in the Changing Economy
359
II. What Is a Worker Cooperative and How Can It Help
Vulnerable Workers?
Worker cooperatives can provide a more stable and safe employment opportunity for vulnerable workers. For instance, the nonprofit WAGES,23 an
organization dedicated to helping women gain economic security, collaborated with a group of the Silicon Valley house cleaners to create a sustainable and financially stable alternative to the working reality described
above.24 Emma’s Eco-Clean, a full-service house cleaning cooperative in
Redwood City was launched in 1999. The worker-owners pooled their collective resources and began cleaning houses and offices in teams. They were
able to increase wages and provide a safer workplace for workers by using
only non-toxic and eco-friendly cleaning products.25 One year after founding Emma’s Eco-Clean, each worker-owner earned $13 an hour compared
to the industry standard of $7 an hour. In addition, worker-owners received
patronage dividends26 from the company’s profits. Emma’s Eco-Clean further provides medical benefits, mileage reimbursement, and better working
hours for its worker-owners.27
At its core, a worker cooperative is a type of business that adheres to
certain key principles shared by all cooperatives.28
1. Voluntary and Open Membership
Co-operatives are voluntary organizations, open to all persons able to
use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.
2. Democratic Member Control
Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives, members
have equal voting rights (one member, one vote) and co-operatives
at other levels are also organized in a democratic manner.
3. Member Economic Participation
Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the
23. Supra note 21.
24. Id.
25. Emma’s Eco-Clean, http://www.emmasecoclean.com/ (last visited
Sept. 14, 2015).
26. Dmitriy Kustov, Worker Cooperatives and Patronage Dividends, § 1.02, A Look Inside Worker Cooperatives, LEXIS FED. TAX J.Q. (Sept. 2012), available at http://www.
cooperativefund.org/system/files/WorkerCooperativesAndPatronageDividends.pdf.
27. Supra note 21.
28. The International Cooperative Alliance defines a cooperative as “an autonomous association of persons united voluntarily to meet their common economic,
social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.” See ICA, http://ica.coop/en/what-co-operative.
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common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of
membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up
reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and
supporting other activities approved by the membership.
4. Autonomy and Independence
Co-operatives are autonomous, self-help organizations controlled by
their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources,
they do so on terms that ensure democratic control by their members
and maintain their co-operative autonomy.
5. Education, Training, and Information
Co-operatives provide education and training for their members,
elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public—particularly young people and opinion
leaders—about the nature and benefits of co-operation.
6. Co-operation among Co-operatives
Co-operatives serve their members most effectively and strengthen
the co-operative movement by working together through local, national, regional, and international structures.
7. Concern for Community
Co-operatives work for the sustainable development of their communities through policies approved by their members.29
Worker cooperatives have a long and rich history, both internationally
and in the United States. The early American economy was one of ownership and small enterprise, not mass employment by large corporations. It
is no surprise that worker cooperatives have existed in the United States
since the 1800s.30
Worker cooperatives have served two primary purposes in history,
providing a vehicle for economic stability and, later, for political expression. Worker cooperatives often emerge and gain in popularity during
times of economic distress. During the Great Depression, thousands of
new cooperatives emerged with the express purpose of creating new
jobs.31 These cooperatives were not primarily focused on social justice
or political expression. In contrast, the 1960s and 1970s saw a surge in
the creation of worker cooperatives connected to larger social justice
and political movements. These worker cooperatives were used as a
29. 7 Cooperative Principles, 2012 International Year of the Cooperatives, NCBA,
http://usa2012.coop/about-coops/7-cooperative-principles (last visited July 1, 2015).
30. Joyce Rothschild, Workers’ Cooperative and Social Enterprise: A Forgotten Route
to Social Equity and Democracy, 52 AM. BEHAVIORAL SCI. 1023, 1032 (2009).
31. Id.
Worker Cooperatives and Their Role in the Changing Economy
361
means to empower workers and push back against capitalist values that
negatively impacted communities and individuals.32
Modern worker cooperatives incorporate both elements to varying degrees, with some cooperatives focused more on ensuring job stability and
others connected to broader social justice movements.33 In both cases,
worker cooperatives are dedicated to protecting workers and providing
them with a safe, stable, and dignified working environment.
Today’s worker cooperatives aim to (1) empower workers to create and
control their own workplace through democratic participation, (2) provide
workers with a safe and stable work environment, and (3) build wealth for
workers as owners of the business.34
How do worker cooperatives achieve this? Like all businesses, worker
cooperatives operate within the realities of the market system. However,
unlike traditional businesses, worker cooperatives are not subject to pressure from shareholders or investors to maximize profits. Instead, worker
cooperatives focus on the priorities of workers by creating a democratic
workplace that is owned and controlled by the workers.35 In a worker cooperative, voting rights are tied to status as worker and not capital investment.36 All workers receive voting rights in a one worker, one vote ratio.37
As the value of labor is prioritized over capital investment, workers are
free to design a workplace in accordance with their needs and principles.
Workers can agree to pay a living wage or provide child care or pursue
certain eco-friendly business practices. Workers can manage the cooperative themselves or elect a management team to oversee daily operations.38
A. The Detroit Snack Cooperative—The Nuts and Bolts of a
Worker Cooperative
Imagine, if you will, the Detroit Snack Cooperative owned and operated by Ms. A, Ms. B, and Ms. C.39 All three women were previously
cooks in various Detroit public schools. Unfortunately, a shrinking population led to school closures and their recent unemployment. The three
women decided to start a business to provide healthy snacks and catering
to new downtown businesses. As former cooks, they know first hand the
difficulties of such a physical profession. Long hours in the kitchen for
minimum wages meant they worked multiple jobs to make ends meet.
32. Krishna, supra note 19, at 79. See also JOHN CURL, FOR ALL THE PEOPLE: UNCOVHIDDEN HISTORY OF COOPERATION, COOPERATIVE MOVEMENTS, AND COMMUNALISM IN AMERICA 6 (2009).
33. Hoover, supra note 13, at 240.
34. CURL, supra note 32, at 8.
35. Id.
36. Kustov, supra note 26.
37. CURL, supra note 32, at 9
38. Krishna, supra note 19, at 77.
39. This hypothetical is loosely based on a real client scenario.
ERING THE
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The physical demands of commercial kitchen work led to health issues,
including arthritis. The cooperative’s priorities include providing job security and a living wage for all workers. They also want to provide medical benefits and reasonable working hours.
As a worker cooperative, all three women have an equal stake and
equal vote in the business simply by being worker-owners. This would
be true even if Ms. A contributed the majority of the start-up capital.40
Ms. A does not become a majority shareholder or owner because of her
larger initial investment. The purpose of the cooperative is to run a successful business that ensures the common goals of providing a living
wage, medical benefits, and reasonable working hours; not for Ms. A or
another investor to make a large return on her capital investment. Likewise, the capital investment does not “buy” Ms. A the right to manage
the enterprise. If all three decide to elect a manager to oversee the daily
activities, Ms. A can make a case for her candidacy. The three women
could just as easily decide to collectively manage the enterprise.
Worker cooperatives can offer great flexibility and reflect the nuances of
the business, the different roles of different workers, or other goals. For instance, what if workers have different hours because certain jobs are more
difficult or dangerous? The commitment to pay all workers a living wage
and ensure reasonable hours can be honored in a worker cooperative,
even if there are variations between roles and hours of individual workers.
In the Snack Cooperative, operating the ovens is a far more taxing job
than managing the sales and orders, a mostly administrative position.
Ms. A is able to spend forty hours a week managing the administrative
tasks. Ms. B is in charge of the ovens and works only twenty hours a
week. The Snack Cooperative can institute a policy that all workers are
paid wages for thirty-five hours a week, regardless of whether they
work more or less. This ensures Ms. B receives equal wages to Ms. A despite the difference in total hours worked.
B. Cooperatives and Wealth Building
It is important to recognize that worker cooperatives are profit generating and wealth building ventures.41 A successful worker cooperative
is a successful business; one that enables its members to build wealth
though two important means: wages and dividends.
First, worker cooperatives are businesses with employees and therefore
pay wages. As the workers are also the owners, they often strive to pay
40. Some, but not all, worker cooperatives may require an initial capital investment, also called a “buy-in.” This initial investment is not returned until the worker
leaves the cooperative. When a worker member leaves, it is treated as a loan to the
cooperative and paid back accordingly. The rate of return and other details are determined in advance and codified in the cooperatives governance documents. For
more information, see http://www.co-oplaw.org/topics-2/patronage/.
41. See Hoover, supra note 13.
Worker Cooperatives and Their Role in the Changing Economy
363
higher wages than the traditional corporation because they do not have the
same incentive to keep wages low.42 Second, the profits are distributed to
worker-owners through patronage dividends.43 These patronage dividends
are similar to shareholder dividends. They are surplus profits that are distributed to the owners of the enterprise. However, patronage dividends are
not distributed based on how much capital the worker invests in the business. Instead, patronage is usually calculated by the amount of labor contributed to the cooperative.44 This ensures all worker-owners receive living
wages for the time they spend working. It also enables those who work
more to receive more compensation through their patronage dividends.
Let us revisit the Snack Cooperative. The cooperative is doing brisk
business. The three worker-owners receive an hourly wage of $13/hour
and full health care benefits. At the end of their first year, they have a
net gain of $12,000. Like a traditional business, they have a number of options. The Snack Cooperative can reinvest or “bank” some of this profit in
its operations. Alternatively, all or some of the profits can be distributed as
patronage dividends. The cooperative can even pursue a combination of
these options. The cooperative may have written certain rules into the bylaws requiring a certain amount be reserved for the business. Alternatively, they may leave this decision to managers or members.
So if the cooperative would like to pay patronage dividends, how will
they work? Remember, patronage dividends are distributed based on
number of hours worked. Generally, they are calculated based on the following formula:
Patronage dividend = (hours worked by individual worker-owner/
hours worked by all worker-owners)
total net profit
For the sake of simplicity, let us imagine all three women worked an
aggregate of 5,250 hours for the year. Each individual worker’s patronage
share is calculated this way:
(1,750/5,250) $12,000 = $4,000
The cooperative can vote to distribute a patronage dividend of $4,000 to
each worker at the end of the year. Ms. A, Ms. B, and Ms. C now take
home an extra $4,000 in addition to their regular wages.45
42. Jessica Gordon Nembhard, Benefits and Impacts of Cooperatives–White Paper, available at http://www.coas.howard.edu/centeronraceandwealth/reports&publications/
0213-benefits-and-impacts-of-cooperatives.pdf.
43. Kustov, supra note 26.
44. Id.
45. This is a very basic explanation of patronage dividends. For a fuller understanding, see Co-OpLaw.org, http://www.co-oplaw.org/topics-2/patronage/
(last visited Sept. 17, 2015).
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In the above scenario the Snack Cooperative has not reinvested any
money into the business. Ms. A, Ms. B, and Ms. C may have a business
plan that recommends some reinvestment of profits to ensure sustainable
growth. The Snack Cooperative may include in its bylaws that 50 percent
of any net profit must be reinvested in the business before patronage dividends may be paid. This creates a new patronage dividend amount:
(1,750/5,250) $12,000 = $4,000
(1,750/5,250) $6,000 = $2,000
The initial net profit is $12,000, but only 50 percent of this amount
($6,000) is available for calculating patronage dividends. The remaining
$6,000 of net profit is reinvested into the Snack Cooperative. Thus, the patronage dividends paid to Ms. A, Ms. B, and Ms. C are now only $2,000.
C. Entity Options and Tax Treatment
Practically speaking, the worker cooperative can be created through a
variety of legal forms. A number of jurisdictions have worker cooperative
association statutes.46 These statutes enable the creation of cooperative enterprises as their own corporate form.47 Generally, worker cooperatives are
taxed under Subchapter T of the IRC.48 Worker cooperatives are often
formed also formed as LLCs, with carefully crafted operating agreements
that reflect cooperative principles, including democratic leadership.49
As with any entity, there are benefits and limitations for worker cooperatives under the relevant jurisdiction’s cooperative statute or as a LLC. As
mentioned in the previous paragraph, cooperative statutes are available in
some, but not all, jurisdictions. In some states, the statute may have particular requirements that may pose barriers. For example, a state statute may
impose certain onerous requirements, such as restrictions on who can be
members of the cooperative.50 In contrast, LLCs can be formed in most jurisdictions and offer maximum flexibility in terms of taxation, governance,
and membership.51 However, this flexibility can compromise the security
46. Some of the states with cooperative association/organization statutes include California, Delaware, District of Columbia, Ohio, Iowa, Maryland, Colorado,
Wisconsin, Maine, and New York. See MODEL UNIFORM LIMITED COOPERATIVE ASSOCIATION ACT, http://www.uniformlaws.org/shared/docs/limited%20cooperative
%20association/ulcaa_amdraft_jun07.pdf.
47. Thinking Outside the Boss: How to Create a Worker-Owned Business, Sustainable
Economies Law Center, at 8, (2013), available at http://www.academia.edu/
1829531/Think_Outside_the_Boss_How_to_Create_a_Worker-Owned_Business.
48. Id. at 10.
49. Id. at 9–10.
50. Edward W. De Barbieri & Brian Glick, Legal Entity Options for Worker Cooperatives, 2:8 GRASSROOTS ECON. ORGANIZING (GEO) NEWSLETTER (2011), available at
http://geo.coop/node/628.
51. Id.
Worker Cooperatives and Their Role in the Changing Economy
365
and values of worker cooperatives. In an LLC, future member-owners can
change the principles, structure, and commitment to the worker cooperative model easily by modifying the operating agreement and other documents. This can effectively undermine the democratic management principle central to worker cooperatives.
III. Role of Worker Cooperatives
A. Benefits to the Individual Worker
All people deserve a safe and dignified working environment. The labor
movement arose as a response to low wages, dangerous working conditions, and undignified treatment of workers. Individual workers realized
collective action was necessary to bargain successfully with company management. The worker cooperative builds on this principle, using collective
action as a management technique rather than a bargaining method.
Earlier, I discussed some of the challenges vulnerable workers
routinely face. Worker cooperatives offer these marginalized groups an
opportunity for stable employment, wealth retention, and better working
conditions.52 Worker-owners can make affirmative commitments to allow
workers to participate regardless of language proficiency, work status obligation, or former incarceration status. In addition to providing these
workers with a stable and safe working environment, worker cooperatives
often help their members receive training and educational opportunities.53 These enterprises are committed not only to protecting the basic
labor rights of their workers, but also investing in the continued growth
and capacity-building of their worker-owners.
Many established worker cooperatives provide their workers with a
variety of employment benefits. Cooperative Home Care Associates
(CHCA), the largest worker cooperative in the United States, provides
its workers with a high base salary and guaranteed hours. Workers earn
$16 an hour compared to the industry standard of $10. CHCA also guarantees workers payment for thirty-six hours a week, compared to the industry average of twenty-five to thirty hours a week.54 CHCA offers
workers health care and dental benefits. It also provides retirement benefits for worker-owners.55 Workers who face other life challenges such as
child care, housing, immigration, or domestic issues have access to case
managers. Case managers help connect workers to social services or programs that help workers secure affordable child care, housing subsidies,
or legal assistance.56
52. CURL, supra note 32, at 3.
53. Krishna, supra note 19, at 81.
54. Flanders, supra note 14.
55. Nembhard, supra note 42.
56. PHI Best Practices: Cooperative Home Care Associates, http://phinational.
org/consulting/resources/best-practices/chca (last visited Sept. 15, 2015).
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B. Benefits to the Community
The impact of worker cooperatives extends beyond the benefits to individual workers, impacting the broader community as well. On the most
basic level, a worker cooperative is a local business. These businesses
tend to spend their dollars locally, creating a rippling effect in the local
economy. For every dollar a person spends at a local business, there is a
two-to-four multiplier effect on the local economy through hiring and
purchasing.57 Worker cooperatives further stimulate the local economy
because they are vehicles for “community wealth building.” Coined by
the Democracy Collaborative Community, wealth building is defined as
a fast-growing economic development movement that strengthens our
communities through broader democratic ownership and control of business and jobs. It builds on local talents, capacities and institutions, rebuilding capital to strengthen and create locally owned family and community
owned businesses that are anchored in place, that aren’t moving.58
Worker cooperatives take a comprehensive approach to increasing the capacity of the community. Worker cooperatives focus on the people, places,
and things in a community.
57. American Independent Business Alliance, http://www.amiba.net/
resources/multiplier-effect (last visited Sept. 16, 2015).
58. Ted Howard, What is Community Wealth Building & Why Is It So Important?,
Veris Wealth Partners, Dec. 6, 2014, http://www.veriswp.com/2014/12/06/whatis-community-wealth-building-why-is-it-so-important/?utm_source=Veris
%20Master%20Contact%20List&utm_campaign=0c23fc439b-The%20Veris%20Blog
%2015&utm_medium=email&utm_term=0_a961e90223-0c23fc439b-122842249.
Worker Cooperatives and Their Role in the Changing Economy
367
1. People
The “people” impacted by worker cooperatives are workers, who are
often also community residents. As local businesses, worker cooperatives
already contribute to the local economy through local hiring. Many cooperatives go the extra mile by (1) creating an ongoing job training and employment pipeline for local residents, (2) creating a larger pool of employable residents, and (3) investing in the continued education and training
of workers within the cooperative.
CHCA is an excellent example of the employment pipeline. CHCA provides free training and certification for home health care workers. Graduates of the training are also guaranteed employment through CHCA.59
These graduates then contribute to a growing pool of employable people
in the community, regardless of whether they choose to stay as part of the
cooperative.
In addition to initial job training, worker cooperatives provide longterm, career-focused opportunities for workers. Often cooperatives offer
members continuing educational opportunities, including training for additional certifications and management positions. The Island Employee
Cooperative, the largest worker cooperative in Maine, has partnered
with Eastern Maine Community College to provide free management
training to interested workers.60
2. Place
Worker cooperatives are strongly connected to the physical place and
community where they are located. Unlike faceless shareholders, the owners
are drawn from the community and thus more committed to the neighborhood. Worker cooperatives are less likely to outsource labor or production,
keeping jobs and dollars local. Worker cooperatives also enable individual
worker-owners to build wealth through stable salaries and patronage dividends. As worker-owners are drawn from the community, this wealth is retained locally, strengthening economic and neighborhood stability.
3. Things
As for the “things” category, one of the cooperative principles is “concern for the community.” Worker cooperatives encourage sustainable
development efforts. This includes promoting the creation of local
infrastructure, including financial institutions that provide opportunities
for growth. Worker cooperatives advocate for new funding sources for
59. Community Health Care Associates, http://www.chcany.org/ (last visited
Sept 16, 2015).
60. Press Release, E. Maine Cmty. Coll., EMCC to Provide Customized Business
Management Training to Largest Worker Cooperative in Maine, Dec. 15, 2014,
http://www.emcc.edu/news-events/news/emcc-provide-customized-businessmanagement-training-largest-worker-cooperative-maine/ (last visited Sept. 10,
2015).
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small, local businesses that are less appealing to traditional lenders.61
Through partnerships with anchor institutions and nonprofits, cooperatives lend their voices to political campaigns and local initiatives designed
to lure interest and capital into the community. Representatives from
worker cooperatives have also testified before Congress and worked
with other coalition members to advocate for living wage ordinances.62
IV. Current Models in the United States
Although worker cooperatives are innovative and flexible enterprises,
three common models have emerged for incubating the modern worker
cooperative: nonprofit incubator model, union coop model, and anchor institution model.
A. Nonprofit Incubator Model
Nonprofits committed to economic development often help organize
and incubate worker cooperatives. These nonprofits engage in outreach,
organizing, and education. They can help connect workers to experts
and tools in key areas like business planning, accounting, and legal support.63 Some of these nonprofits are dedicated primarily to incubating cooperatives, some are worker centers, and some are larger social service
providers.
WAGES, discussed earlier in this article, is representative of nonprofits
dedicated to incubating worker cooperatives. It defines its mission as helping
“low-income women gain economic security through business cooperative
ownership.” WAGES’s primary activity is incubating worker cooperatives
predominantly owned and operated by Latina immigrant workers in the
San Francisco Bay Area. WAGES helps workers develop cooperatives by providing them with continued support through the lifetime of the business.
Prior to the official creation of the worker cooperative, WAGES conducts outreach and helps organize interested workers. It helps workers identify and
focus on a specific “business niche” for their cooperative. Next, WAGES provides education and training to help build the capacity of worker-owners.
The initial training and education offers information on the cooperative
model and operation. On-going training includes focusing on key business,
61. Hilary Abell, Pathways to Scale, Democracy Collaborative 14 (2014), available at
http://democracycollaborative.org/sites/clone.community-wealth.org/files/
downloads/WorkerCoops-PathwaysToScale.pdf (“The ability of co-ops to help
bridge the well-documented racial wealth gap shows that cooperative businesses,
co-op housing, and credit unions can diversify assets and enhance family stability
for low-income people and people of color.”).
62. Flanders, supra 14 (“Among the co-op members who testified was Yadira
Fragoso, whose wages rose to $25 an hour—up from $6.25—after becoming a
worker-owner at Si Se Puede, a cleaning co-op incubated by the Brooklyn-based
Center for Family Life.”).
63. Krishna, supra note 19, at 86.
Worker Cooperatives and Their Role in the Changing Economy
369
management, leadership, and other areas designed to build the capacity of
worker-owners. WAGES also provides professional management support
for the cooperatives. This involves connecting the worker cooperatives to expert managers, accountants, or other specialized service providers.
Other cooperative incubators are programs of larger nonprofits. Worker
centers have played an important role in developing worker cooperatives.64
Most worker centers are nonprofits that engage in a variety of economic
justice efforts on behalf of workers.65 These organizations assist workers,
including day laborers and restaurant workers, who fall outside the protection of labor laws because they are categorized as independent contractors
or another exempt class or are difficult to organize under the traditional
union framework.66 On a macro level, these worker centers support these
workers by conducting policy research surrounding unfair labor and
wage conditions, creating advocacy campaigns to raise consumer and public awareness of workplace injustices, and lobbying on workplace issues.
Worker centers also provide a number of direct services ranging from
worker education and training, leadership development, and legal assistance in cases of wage theft or other unfair legal practices.67 Worker centers
view worker cooperatives as part and parcel of their larger economic development and workplace justice advocacy. They often incubate cooperatives
as a means to “create non-exploitive jobs in an industry where workers are
often taken advantage of and treated poorly.”68
Large nonprofits that provide general social services have also successfully supported worker cooperatives. The Center for Family Life (CFL) in
Brooklyn is a social services organization that provides a variety of safety
net services, including family counseling, foster care, youth employment,
summer camps for youth, school age child care, and adult employment
programs, for families in Sunset Park. CFL has an extensive adult employment program that prepares community members for job readiness
through resume and job search assistance, computer literacy classes,
and ESL classes. Although the adult employment program was a helpful
resource, CFL staff felt the problem was a shortage of well paying jobs in
the community. They started a worker cooperative incubator as a means
to create these jobs.69 The incubator has successfully launched a number
64. Prominent worker centers include the Restaurant Opportunity Center, New
Orleans Worker Center for Racial Justice, National Domestic Workers Alliance, and
Centro de Trabajadores Unidos en Lucha.
65. JANICE FINE, WORKER CENTERS: ORGANIZING COMMUNITIES AT THE EDGE OF THE
DREAM 11 (2006).
66. Id.
67. Krishna, supra note 19, at 72.
68. Id.
69. Vanessa Bransburg, The Center for Family Life: Tackling Poverty and Social Isolation in Brooklyn with Worker Cooperatives, 2:8 GRASSROOTS ECON. ORGANIZING (GEO)
NEWSLETTER (2011), available at http://geo.coop/node/636.
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of worker cooperatives, including the Si Se Puede Cleaning Cooperative.
Si Se Puede began in 2006 with fifteen founding members. As of March
2015, it has sixty-five members who earn an average of $20 an hour.70
Much like WAGES, CFL helps interested workers organize worker cooperatives. It conducts initial training to educate workers about the cooperative model. It assists interested workers in designing and creating their
business, securing funding, and building business literacy and skills. Additionally, it helps connect these workers to experts who can provide the
enterprise with business and legal assistance. As a social services organization, CFL also provides workers with referrals and services they may
need as individuals, including family counseling, ESL classes, etc.71
B. Union Coop Model
Labor unions are joining forces with worker cooperatives to generate
sustainable employment opportunities and advocate for workers rights.
The American labor landscape is shifting as the decline in manufacturing
jobs, movement of production offshore, and passage of right to work laws
and similar anti-union legislation have contributed to the rise of corporate
clout and steady decline of union power.72 In this climate, it is increasingly difficult for unions to battle reductions in benefits and stagnating
wages.73 Exacerbating the problem, unions represent only a fraction of
the current workforce: in 2014, only 11.1 percent of American workers
were union employees.74 Unions have turned to worker cooperatives as
another vehicle for helping workers. Recognizing the lack of viable employment opportunities, unions are supporting the development of sustainable worker-owned enterprises as a means to provide strong wages,
benefits, and a safe and dignified working environment. In 2012, the
United Steelworkers, Mondragon,75 and the Ohio Employee Ownership
70. Si Se Puede, http://www.wecandoit.coop/about.html (last visited Aug. 31,
2015).
71. Center for Family Life Adult Employment Program, http://sco.org/
programs/center-for-family-life/programs-services/#adult (last visited Aug. 31,
2015).
72. Rob Witherell, An Emerging Solidarity: Worker Cooperatives, Unions, and the
New Union Cooperative Model in the United States, United Steelworkers of Am., at
2 (2013), available at http://www.ilo.org/wcmsp5/groups/public/---ed_
dialogue/---actrav/documents/meetingdocument/wcms_234173.pdf.
73. Id. at 1.
74. Press Release, Bureau of Labor Statistics, Union Members Summary, Jan. 23,
2015, http://www.bls.gov/news.release/union2.nr0.htm (last visited Sept. 10,
2015).
75. The Mondragon Corporation is a network of worker cooperatives that
began in the Basque Region of Spain. The first Mondragon Cooperative was created in 1956. The network has grown to include over 100 businesses, employing
over 70,000 workers. A key part of Mondragon’s success is creating institutions
that support the development and growth of cooperatives businesses by providing
Worker Cooperatives and Their Role in the Changing Economy
371
Center unveiled its template for developing union cooperatives.76 Adapted
from the Mondragon Corporation, workers in a union cooperative are
unionized in addition to being worker-owners.
How does the union coop model work? As worker cooperatives grow
in size and complexity, the union coop model serves as an important vehicle for protecting the rights of workers. In a small worker cooperative,
workers can play the roles of worker, owner, and manager. Daily management and operations decisions can be democratic with equal participation
from all worker-owners. This often becomes unwieldy in larger enterprises. For these larger cooperatives, it is more prudent from a business
and operations standpoint to delegate management to a board of directors
elected by the worker-owners. The board then hires outside experts to
oversee the daily operations and management of the business. The illustration below may help better understand these layers:
business expertise, financial support, and even research and development services.
Caja Laboral, started in 1959 by existing Mondragon cooperatives, was structured
as a credit union and designed to help create and expand worker cooperatives by
providing financial assistance. Caja Laboral now serves as the primary coordinating organization between the various cooperatives in the Mondragon network. Cooperatives receive “financial, analytical, and business development services” from
Caja Laboral. In return, the worker cooperatives give Caja Laboral “oversight over
the cooperative’s internal organization” and allow Caja Laboral to set certain standards, including “dictating capital-to-debt ratio requirements and norms and policies regarding hiring.” This ensures all the cooperatives in the Mondragon network are bound by certain financial and governance standards designed to
promote solvency and preserve the values of the worker cooperative model. See
Mondragon, http://www.mondragon-corporation.com/eng/.
76. Flanders, supra note 14.
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The connection between worker and management in this scenario
more closely mirrors a traditional corporation. Managers may make
changes to wages, hours, and other terms and conditions of employment,
all of which may directly impact individual workers. If workers have
concerns or grievances with management in this larger cooperative,
how can these be addressed? By unionizing, the workers in larger cooperative now have a vehicle to negotiate with management. The collective
bargaining agreement codifies core values, principles, and promises such
as wages and benefits. Without the collective bargaining agreement,
workers would need to pressure the board of directors to replace management. During the interim, management could enforce any number
of policies and decisions that negatively impact workers.
The union coop model protects the rights and interests of cooperative
members in their role as workers. In their capacity as owners, cooperative
members still receive the same benefits as their peers in smaller worker
cooperatives. These include patronage dividends and voting rights in a
one member, one vote ratio; additionally, they are able to vote on major
decisions such as electing the board of directors and dissolving the
organization.
The union coop model provides numerous benefits to both worker cooperatives and unions. For unions, worker cooperatives provide another
avenue to support workers, create better employment opportunities,
and build their membership base. Equally important, worker cooperatives
can help reverse the dilution of labor rights by building new partnerships
and coalitions, reaching beyond the workforce currently represented by
unions.77 Likewise, unions provide worker cooperatives with the necessary resources to educate workers about the cooperative model as well
as skills training. Unions can also provide technical assistance and funding to help worker cooperatives launch or grow to scale. A successful
worker cooperative will need to conduct market and feasibility studies
and engage in business planning when launching a new enterprise or converting to an existing manufacturing or other large business. Unions can
help connect worker cooperatives to experts in the field and help provide
initial capital or other financial support.78
One example of the Union Coop model is Our Harvest, a worker-owned
farm and food hub in Cincinnati launched in April 2012.79 Our Harvest
operates two farms, supplying local grocery stores, retailers, and
selling directly to the public through community supported agriculture
77. BLS Press Release, supra note 74.
78. Witherell, supra note 72, at 3.
79. Cincinnati Union Coops, http://www.cincinnatiunioncoop.org/ourinitiatives/ (last visited Sept. 10, 2015).
Worker Cooperatives and Their Role in the Changing Economy
373
subscriptions.80 The cooperative is the first of many planned businesses
launched by the Cincinnati Union Cooperative Initiative (CUCI), a nonprofit incubator dedicated to creating union worker cooperatives.81 CUCI
sees union cooperatives as a means to create higher-paying, stable jobs in
Cincinnati, replacing the once plentiful union manufacturing jobs that
served as the backbone of the local economy.82 CUCI launched Our Harvest
with support from the United Steel Workers and the United Food and
Commercial Workers. Both unions provided capital for market and feasibility studies as well as staffing during the incubation stages.83 Some larger
cooperatives have incorporated this union structure as they have continued
to grow. Although Community Health Care Associates did not start as a
union coop model, its workers are currently represented by the Service Employees International Union.84
The architects of the union coop believe this model can be replicated for
future development, creating viable replacement jobs and industries after
the loss of high earning manufacturing jobs. The union coop model envisions creating a network of cooperatives and related institutions, similar
to Mondragon, to support the growth and development of cooperatives.85
This network will create a new economic eco-system, one that is anchored
locally and dedicated to the continued reinvestment and growth of local
communities.
C. Anchor Institution Model
Large anchor institutions like hospitals, universities, and municipal
governments have always played a key role in local economy. Worker cooperatives have recently started collaborating with the anchor institutions
to develop and launch worker-owned businesses that create jobs and retain wealth in the community.
The most well-known examples of this model are the Evergreen Cooperatives. Located in Cleveland, the Evergreen Cooperatives were founded
in 2008 as a joint effort among the Cleveland Foundation, Cleveland
Clinic, Case Western Reserve University, the City of Cleveland, and University Hospitals with assistance from the Democracy Collaborative and
the Ohio Employee Ownership Center.86 The cooperatives targeted the
80. Our Harvest, https://ourharvest.coop/default.aspx (last visited Sept. 10,
2015).
81. Cincinnati Union Coops, supra note 79.
82. Id.
83. Id.
84. Flanders, supra note 14.
85. See note 75 for a full discussion of the Mondragon Corporation’s network of
cooperatives and support institutions.
86. Evergreen Cooperatives, http://evergreencooperatives.com/about/
mission-goals-and-principles/ (last visited Sept. 10, 2015).
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Greater University Circle neighborhood, an economically depressed
neighborhood with a high unemployment rate surrounded by a number
of key anchor institutions like the Cleveland Clinic.87 These anchor institutions contracted with vendors outside the City of Cleveland for a variety
of goods and services, collectively spending over $3.5 billion a year.88 The
Evergreen Cooperatives designed businesses that could compete with and
replace outside vendors, creating sustainable employment opportunities
that captured and retained anchor institution spending within the University Circle neighborhood.
The Evergreen Cooperatives launched the first worker cooperative, the
Evergreen Cooperative Laundry, in 2009. The business is an environmentally friendly, commercial laundry service provider that currently employs
fifty workers who will eventually own 100% of the business.89 The network
has since launched two other smaller cooperatives, Evergreen Energy Solutions, a solar panel installation business, and Green City Growers, a hydroponic greenhouse growing leafy greens for commercial consumption.90 All
the Evergreen Cooperatives are “green” businesses, committed to environmentally friendly and sustainable business practices.91
Like the Mondragon Cooperatives, the Evergreen Cooperatives strive
to create a network of support organizations.92 This network has three primary goals: (1) facilitating the continued growth of existing cooperatives,
(2) incubating new cooperative ventures to sustainable local employment
opportunities, and (3) ensuring that all enterprises remain committed to a
larger vision and values of the Evergreen Cooperatives. The figure on the
next page illustrates the structure of the Evergreen Cooperatives.93
In order to meet the three goals listed above, the Evergreen Cooperatives created a 501(c)(3) umbrella organization called the Evergreen Cooperative Corporation (ECC). The ECC serves as the coordinating body for
the various cooperative businesses, providing access to training, education, funding, technical assistance, and other resources. Worker cooperatives receive continued business development support and human
resources services from Evergreen Business Services, a wholly owned
87. Bill Bradley, Cleveland’s Evergreen Cooperatives Finding Better Ways to Employ Locals, Keep Cash Flow in Town, NEXT CITY, June 12, 2013, http://nextcity.org/daily/
entry/clevelands-evergreen-cooperatives-finding-better-ways-to-employ-locals-keep
88. Erik Reece, The End of Illth, HARPER’S MAG. BLOG (Oct. 4, 2013 2:30 PM),
http://harpers.org/blog/2013/10/the-end-of-illth/2/.
89. Id.
90. Capital Inst., Evergreen Cooperatives Field Study 7 (2015), http://www.
capitalinstitute.org/sites/capitalinstitute.org/files/docs/FS2-Evergreen%20full
%20article.pdf.
91. Id.
92. See supra note 75.
93. Evergreen Cooperatives Field Study, supra note 90, at 14.
Worker Cooperatives and Their Role in the Changing Economy
375
Board of
Directors
GUC Initiative
Transit-Oriented Development
Education
Housing
Evergreen Cooperative
Development Fund
LLC
(CDFI)
CDE
Evergreen Cooperative
Corp
501(c)(3)
Executive Director & Senior Staff, Credit
Analysis, Asset Management, General
Counsel, Fund Manager, Accounting, IT,
Human Resources, Replication, etc.
Cooperative Businesses &
other business ventures
Executive Committee
Audit & Finance
Credit Committee
Evergreen
Land Trust LLC
Evergreen
Business
Services
LLC
Structured
Fund
subsidiary of ECC. The cooperative businesses also receive financial support from the Evergreen Cooperative Development Fund.94
The ECC also protects the mission, vision, and sustainable development goals of the Evergreen Cooperatives by requiring stakeholder participation in its corporate structure. The board of the ECC includes a
member from each anchor institution, the Cleveland Foundation, as
well as representatives from the worker cooperative businesses, promoting engagement and preserving the vision over time. Equally important,
the ECC serves as an accountability tool for individual worker cooperatives. The ECC holds a seat on the board of directors for each cooperative
business and owns 20 percent of each cooperative business. Additionally,
the ECC has the right to veto “any cooperative’s attempt to exit the Evergreen system.”95 At first these measures may seem restrictive, but they
serve an important purpose. The success of the Evergreen Model relies
on creating sustainable businesses that continue to hire and reinvest locally. Toward that end, the Evergreen Cooperatives create a system of services, resources, and dedicated funding to support these ventures. If these
businesses were permitted to divest from the community once they became profitable, they would undermine efforts to build jobs and retain
wealth in these communities.
94. Id. at 15.
95. Id. at 14.
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Critics of the Evergreen Model say the cooperatives have failed to make
enough impact for the amount of money, time, and effort invested. The
Evergreen Cooperatives have faced challenges since their inception, falling short of their original lofty goals of establishing ten businesses and
providing 500 jobs by 2014.96 At present, some of the businesses have
fallen short of estimated financial solvency and worker-ownership
goals. Originally, worker owners in the Evergreen Cooperative Laundry
(ECL) were expected to build $65,000 in equity after seven years.97 The
laundry business was expected to be generating a profit and repaying
its start-up loans by year seven as well, but it has proved not to be as profitable as predicted.98 The promised pipeline of business between the anchor institutions and the cooperative was difficult to establish. The anchor
institutions had existing contracts with outside vendors for a much lower
cost. ECL suddenly needed to drum up new business or operate at well
below capacity.99 As a result, it has been difficult transitioning employees
to worker-owners. In 2013, ECL employed thirty-eight people but only fifteen were also owners. Likewise, Green City Growers (GCG) has faced
similar problems with securing business. Their target consumers were
the cafeterias of local hospital and universities supplied by firms in California. GCG provided an eco-friendly, local alternative but could not compete with the low prices offered by existing out-of state-vendors.100 In
2013, GCG employed twenty-one workers, only three of whom were
also owners.101
Another challenge has been reinvesting in the Greater University Circle
neighborhood. The Evergreen Cooperatives were designed to hire from
the neighborhood and encourage worker-owners to remain and reinvest
in the neighborhood as means for local economic development. A study
conducted in 2013 found only 21 percent of cooperative employees
lived in the Greater University Circle neighborhoods, although almost
all the employees lived in the City of Cleveland.102
96. Jacquelyn Yates, Evergreen Coops Are Taking Root and Growing, OWNERS AT
WORK 19 (2011), http://www2.kent.edu/CAS/oeoc/upload/Evergreen-CoopsGrowing.pdf.
97. Steve Friess, Can the Co-op Save Us?, TAKE PART, May 30, 2014, http://www.
takepart.com/feature/2014/05/30/co-op-businesses-in-the-us-evergreencooperatives.
98. Id.
99. Id.
100. Id.
101. Candi Clouse, Ziona Austrian & Kathryn W. Hexter, Living Cities: The Integration Initiative in Cleveland, Ohio–Greater University Circle Community Wealth
Building Initiative: Programs and Projects Report, Year 3, at 21 (2014), available at
http://engagedscholarship.csuohio.edu/urban_facpub/1262.
102. Id. at 16.
Worker Cooperatives and Their Role in the Changing Economy
377
Advocates argue that these obstacles are growing pains and that the
model has seen some success. Evergreen Energy Solutions (E2S), the second cooperative launched in 2008, has received a number of contracts
from anchor institutions as well as other local businesses.103 It also diversified its business model to ensure continued profits, providing general
handyman services in addition to energy-related services. In 2013, E2S
employed eight individuals, all of whom were also owners, earning an
hourly wage of $15.65. The business was expected to return profits to
worker-owners in 2014.104
Despite the hurdles, all of the Evergreen Cooperatives do provide benefits to their employees, many of whom “were formerly in the ranks of the
long-term unemployed.”105 All businesses provide wages of over $10 and
hour and have access to a number of support services, including free
health care, credit counselors, and courses in personal finance. Employees
can also use the Evergreen Housing Program and Evergreen Car Programs, which help them purchase homes and cars.106 Both ECL and E2S
were committed to hiring individuals regardless of past incarceration or
criminal records. As of 2013, more than half of ECL workers and a third
of ES2 employees were formerly incarcerated or had criminal records.107
This was particularly meaningful, as Ohio did not pass “ban the box” legislation until 2015.108 As a vehicle for offering opportunities for vulnerable
workers, personal stories among employees do testify to the positive impact of the Evergreen Cooperatives during a time when they felt
unemployable.109
V. Common Challenges and Obstacles Faced by
Worker Cooperatives
While worker cooperatives can be an important and effective tool for
empowering vulnerable workers, they face a number of challenges.
Some of these obstacles are the same as any entrepreneur or small
103. Id. at 19.
104. Id. at 20.
105. Evergreen Cooperatives Field Study, supra note 90, at 18.
106. Id. at 17.
107. Clouse et al., supra note 101, at 20–21.
108. Fatima Hussein, Ohio Adopts Ban the Box Policy, CINCINNATI ENQUIRER, June 2,
2015, available at http://www.cincinnati.com/story/money/2015/06/02/ohioadopts-ban-box-policy/28383485/. “Ban the Box” refers to a campaign promoting
fair treatment of ex-offenders in hiring practices. The campaign advocates for the
removal of the check-box on employment applications requiring individuals to
disclose whether they have a criminal record.
109. Friess, supra note 97 (“I explained to him that I just need a chance. He
reached out to me and he said, ‘You deserve a chance. You’re not a bad guy;
you just made some choices.’ So he gave me that opportunity, and I’ve been
there ever since.”).
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business confronts and some are unique to the cooperative model. The
section below briefly touches on some of the key challenges faced by
worker cooperatives.
A. Education and Training on the Worker-Ownership
Training workers to become worker-owners can be challenging. Take
the example of house cleaners. As noted earlier, these workers often
work alone or intermittently as part of a temporary agency. In a worker
cooperative, they are expected to suddenly operate and manage a business collaboratively with others. They are no longer individuals collecting
a paycheck, but need to be invested in the continued growth and development of the enterprise. Understandably there is a learning curve during
this transition from employee to worker-owner.
Successful worker-owners need to understand and embrace the worker
cooperative model. They need to engage in collaborative decision-making
and teamwork. Additionally, they need to build the skills necessary for
any successful entrepreneur, including business and financial literacy
skills.110
Worker cooperative organizers have stressed the importance of educating
potential worker-owners as key to the launching of a successful cooperative.
In its early training and education efforts, the CFL noted “some women left
the cooperative because they realized being a business owner was not for
them, or because they felt that the process of creating the cooperative was
taking too long, and they need to generate income more rapidly.”111
B. Selecting a Profitable Business Model and Building to Scale
As businesses, worker cooperatives must be able to compete in the free
market. Even worker cooperatives that are praised for their innovation
and commitment face many practical business hurdles. The Evergreen Cooperative Laundry launched with the expectation that worker-owners
would have earned $65,000 of equity after seven years of operation.
These projections turned out to be far too optimistic as actual profits
were lower than initial projections as discussed in Part IV.112
Selecting the correct business is key to providing stable employment
for the workers and continued growth for the cooperative. One criticism
of the Evergreen Laundry and Green City Growers is that both enterprises
required huge initial capital investments for infrastructure and similar expenses without an adequate revenue stream.113 Both ventures required
new, green facilities and anticipated a steady stream of business from anchor institutions, providing them with a stable customer base. As discussed in Part IV, the anchor institutions were not a reliable source of
110.
111.
112.
113.
Abell, supra note 61, at 25.
Bransburg, supra note 69.
Friess, supra note 97.
Id.
Worker Cooperatives and Their Role in the Changing Economy
379
income for a number of reasons, including the inability of the cooperatives
to compete with low prices of existing vendors.
The early struggles of the Evergreen Cooperative model reinforce the
fact that cooperatives are ultimately businesses. It is important for worker
cooperatives to take the same business planning steps as any for-profit
venture, including crafting business plans and even conducting feasibility
studies. Likewise, it is important for worker cooperatives to have reasonable profit margins and growth expectations.
C. Funding Concerns
No business can succeed without adequate capitalization. Worker cooperatives are less likely to court venture capital as one of the founding
principles in prioritizing the value of labor over invested capital. While
some investors may find the socially responsible core of worker cooperatives compelling, it is unlikely we will ever see them on an episode of
Shark Tank or receive funding from a traditional venture capital firm.
Some worker cooperatives have experimented with issuing non-voting
shares as a means for raising capital.114 Others have turned to traditional
forms of small business funding, including loans and crowdfunding. The
Evergreen Cooperatives have designed a complex fund for member cooperatives, pooling grants, low-interest loans, and other funding sources. They
are even exploring creating a socially responsible mutual fund, although
the ventures currently are still heavily subsidized by foundation money.115
One exciting new development in New York City is the creation of a
dedicated funding source for worker cooperatives. Inspired in part by the
success of CHCA, and led by a coalition of cooperative advocates, the
City Council allocated $1.2 million to worker cooperative development
for the 2015 budget.116 This marks the largest investment in co-ops by
any municipal government to date and represents an endorsement of
worker cooperatives as a means of creating quality jobs and businesses in
local communities.117
114. BreadHive Bakery in Buffalo and the Worker’s Diner in New York City
have both pursued this option. See Nina Misuraca Ignaczak, It Takes an Ecosystem:
The Rise of Worker Cooperatives in the US, SHAREABLE, July 16, 2014, http://www.
shareable.net/blog/it-takes-an-ecosystem-the-rise-of-worker-cooperatives-in-theus; Joe Marraffino, Workers Diner in NYC to Offer Non-voting Preferred Shares to
Investors, CO-OPERATIVE NEWS, Mar. 12, 2012, http://www.thenews.coop/32960/
news/business/workers-diner-nyc-offer-non-voting-preferred-shares-investors/.
115. Evergreen Cooperatives Field Study, supra note 90, at 15.
116. New York City Invests in Worker Cooperatives, U.S. Federation of Worker Cooperatives, June 25, 2014, http://www.usworker.coop/news/new-york-cityinvests-worker-cooperatives-0.
117. Press Release, NCBA CLUSA, New York City Invests $12 Million in
Worker Cooperatives, June 27, 2014, http://www.ncba.coop/ncba-media/pressreleases/610-new-york-city-invests-1-2-million-in-worker-cooperatives.
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Garnering support from other local governments will be key in the
continued success of worker cooperatives. Local governments often
offer tax credits and other incentives to lure traditional businesses into
downtown areas. Similar funding could be provided to the development
of worker cooperatives, which in turn would reinvest in the local community through jobs, purchasing, and building the individual capacity and
wealth of residents.
VI. Conclusion
This article advocates for cooperatives as a vehicle for protecting and
empowering vulnerable workers, like those in New York’s nail salons.
Some may argue that worker cooperatives are unnecessary and that advocacy groups and legislation would be just as effective. California has a
nonprofit, the California Healthy Nail Salon Collaborative (CHNSC),
which is dedicated to advocating for healthy working conditions for
nail workers.118 The organization is composed of key stakeholders in
the nail salon industry, including individual manicurists, environmental
organizations, researchers, reproductive justice groups, and government
agencies.119 CHNSC created a “healthy nail salon”120 certification as an incentive for owners to create and maintain safe and healthy workspaces.121
The certification is a marketing tool, indicating to customers that the business operates ethically.122 While currently effective and certainly commendable, there are shortcomings to this approach. The certification primarily addresses primarily health and safety, not wage or employment,
issues. Additionally, the certification is dependent on the continued interest and commitment of the salon owner in order to be successful.
Worker-owned nail salons would be a more permanent solution and
provide greater protection for workers. A worker cooperative nail salon
118. The collaborative is fiscally sponsored by Asian Health Services. See California Healthy Nail Salon Collaborative Three Year Strategic Plan, available at http://
www.cahealthynailsalons.org/wp-content/uploads/2010/07/Collab-2012-14Strat-Plan-FINAL.pdf.
119. The organization’s mission is “to improve the health, safety, and rights of
the nail and beauty care workforce to achieve a healthier, more sustainable, and
just industry.” CHNSC engages in research, policy advocacy, and direct outreach
and education for workers and salon owners to create better working conditions.
California Healthy Nail Salon Collaborative, http://www.cahealthynailsalons.
org/about/mission-history/ (last visited Sept. 17, 2015).
120. To qualify for the certification, owners must meet certain standards. See
http://www.cahealthynailsalons.org/what-is-hns/about-healthy-nail-salons/
(last visited Sept. 17, 2015).
121. Eleanor Goldberg, How California’s Ethical Nail Salons Can Teach New York to
Clean Up Its Act, HUFFINGTON POST, May 22, 2015, http://www.huffingtonpost.com/
2015/05/22/help-new-york-city-nail-salons_n_7355360.html.
122. San Mateo Healthy Nail Salon Information for Customers, http://
smchealth.org/healthynails (last visited Sept. 16, 2015).
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381
not only has a vested interest in providing the highest standards in health
and safety, but also in wages and wealth retention. The worker cooperative nail salon goes beyond certification and becomes a true social enterprise, positively impacting workers and reinvesting in the community.
A business like that could join the ranks of social ventures like Tom’s
shoes123 and Manicube.
Social enterprises are gaining in popularity among consumers and investors because they produce attractive products and services that also
appeal to the values of consumers. This type of socially conscious business
does not need to have an international focus; it can thrive and create
change in our own backyards. Stable, wealth building employment opportunities are vital to help vulnerable workers and their communities.
Worker cooperatives can play an important role in creating these jobs
and rebuilding economically distressed localities.
Despite their rich history both in the United States and internationally,
worker cooperatives are now starting to gain momentum with local power
players as a legitimate local economic development strategy. New York
City, Austin, and Madison have all passed municipal efforts to explore
and even fund the development of cooperatives as a means to reinvest
in the community and build broad-based wealth.124 These beginnings
may seem small and humble, but have the potential for creating a ripple
effect as cities often look to their peers when exploring new policies and
strategies for growth. As municipalities and states begin to look to worker
cooperatives as vehicles for growth, they can continue building networks
of cooperatives that foster local and even regional growth. The worker cooperative is in a prime place to prove there is nothing more contagious
than a good idea.
123. Tom’s Shoes is a social enterprise that operates on a one-for-one model.
Tom’s began as a shoe company that donated a pair of shoes to a child in need
for every pair sold. In 2014, Bain Capital acquired 50 percent ownership of
Tom’s Shoes. Tom’s Shoes has maintained its commitment to its philanthropic mission. It is interesting to note that social ventures like Tom’s operate within the traditional corporate framework of shareholder primacy, thus still allow for lucrative
returns for private equity groups and other investors. This is one of the key differences between worker cooperatives and other types of social ventures, and why
worker cooperatives are less appealing to these types of investors. See www.
toms.com (last visited Sept. 17, 2015).
124. Local Coalitions, The Democracy Collaborative, http://institute.usworker.
coop/local-coalitions (last visited Oct. 1, 2015).