NYT: "Do New York’s Affordable Housing Lotteries Fuel Segregation?" (annotated)

This article originally appeared online on May 23, 2023 with the subhead, “An eight-year battle over whether community preferences for low-cost housing violate housing discrimination law has been cleared for trial.” It appeared in print on May, 24, 2023 on page A20 of the New York edition. Read the original article here. Annotations are bracketed set out in bold.

By Mihir Zaveri

For decades, affordable housing in New York City has followed a seemingly simple rule: To make new development more palatable, half of new affordable apartments must first be offered to people already living in the area.

The policy, put in place in 1988 by Mayor Ed Koch, was designed to benefit low-income communities. [The policy was expanded early in the Bloomberg Administration from covering 30 percent of units to covering 50 percent of units. The then- HPD Commissioner admitted that it never occurred to her that going from 30 to 50 percent could increase the risk of perpetuating segregation. She did not investigate the issue or cause the issue to be investigated: this issue was never raised and it never dawned on me that perpetuation of segregation would have anything to do with Community Preference.”]

It has since been used by politicians to push major neighborhood transformations, like the redevelopment of Greenpoint and East New York, while addressing fears of displacement. San Francisco, Minneapolis, Portland and Austin have adopted similar strategies as housing costs rose and gentrification accelerated, so local residents could remain in their neighborhoods even as new luxury buildings were built. [The premise peddled by New York and other cities is accurately conveyed but totally false: (1) the issue of what level of affordability each affordable unit is rented at is entirely separate from the question of preference; (2) insiders and outsiders who are eligible for affordable units are IDENTICAl financially…the only difference is the racial/ethnic composition of the policy-created groupings; (3) the City admits that is has no data that the policy does what it is supposed to do (address non-imminent displacement from neighborhood — not imminent displacement of any kind, nor non-imminent displacement from apartment or the city); (4) the City admits that it is a greater problem to be displaced from the City altogether — a risk the City is heightening for outsiders by disfavoring them; and (5) if the City wants to do something concrete about tenant security, it could use less discriminatory alternatives — like fully funding right to counsel, preserving more units, and creating a greater supply of low-income and extremely low-income housing CITYWIDE so as to reduce pressures on any one neighborhood.]

But New York City’s policy, known as “community preference,” has ignited a fight over whether it reinforces segregation[Plaintiffs have, since the outset of the case, referred to the policy as the City’s “outsider-restriction policy,” because that is exactly what it does.]

A federal judge in New York is allowing a civil rights lawsuit against the city to move forward, after the city spent eight years trying to quash it. The lawsuit says that by giving preference to the current residents of each neighborhood, the city’s affordable housing system violates the Fair Housing Act and New York City Human Rights Law.

The city uses a lottery system to distribute leases for new affordable homes. Competition is fierce: In 2022, there were roughly 430 applications for each home, according to the housing department. People living in the same community district as a new development typically get priority for half of the units, even if they make up a relatively small share of applicants. [The term “relatively small share” does not fully convey what actually happens. In majority White community districts for example, apparently eligible outsiders make up 96.90 percent of the pool. The policy squeezes their share down to 50 percent. See chart at the bottom of the linked page.]

The plaintiffs say the system maintains segregation because, for instance, a Black New Yorker who lives outside of the community district surrounding the West Village, which is more than 71 percent white, and applies to live there is at a disadvantage. That same New Yorker, might also have trouble in the community district that includes Flushing, Queens, which is more than 57 percent Asian. [The preference policy (outsider-restriction) certainly does operate to perpetuate segregation; the paragraph above describes what are called disparate impacts” (impacts that contribute to perpetuating segregation). Multiple racial and ethnic groups are harmed when applying as outsiders to lotteries in community districts where their racial or ethnic group is not dominant. Analysis of millions of applications demonstrates that this is true. If you go to the very last paragraph of the article, you’ll learn that the Court found that plaintiffs had demonstrated these disparities.] 

“Whenever you’re seeking a housing opportunity, you’re supposed to be able to compete on a level playing field without regard to race,” said Craig Gurian, the executive director of the Anti-Discrimination Center, the nonprofit organization that is representing the plaintiffs. “The city’s policy takes that away from them.” [The “Whenever” at the beginning of the statement is intended to convey that you’re supposed to be able to compete on a level playing field without regard to race every single time. See chart on who gets hurt where.]

The city declined to answer specific questions about the case, but in court filings, it has argued that the policy has helped the city become less segregated overall, because Black and Hispanic people are among the biggest recipients of new affordable homes. [The City’s position, accurately conveyed, constitutes shameless pandering and is wildly inaccurate factually. It is not the policy that helps Black and Hispanic New Yorkers, large numbers of Black and Hispanic New Yorkers get apartments because they New Yorkers apply in great numbers. What the policy does is fail to honor the choices these New Yorkers make when applying. It disproportionately reduces, for example, the odds for a Black New Yorker to get the housing she or he applies for in a majority White community district.] 

It has also said that the policy helps the city address fears of displacement, a “serious and legitimate concern of elected officials (and their constituents), who are ultimately responsible for approving many actions needed to facilitate affordable housing development,” court papers said. [The City’s “displacement” justification is a thing of wonder. The City admits that the policy does NOT seek to address imminent displacement of any type. The City admits that the policy does NOT seek to address non-imminent displacment from one’s apartment. The City admits that the policy does NOT seek to address non-imminent displacement from the City as a whole. The only remaining claim is that the policy seeks to address non-imminent displacement from neighborhood. But the City admits that it has no data to support the proposition that the policy helps in this regard.]

[And the City chooses not to explain why it would have a legitimate interest in subordinating the fears of outsiders (who are rent-burdened at an equivalent rate as insiders and who are far more numerous than insiders) about where they would go if they were displaced.]

[And the City has yet to take the CONCRETE steps that would help tenants throughout New York, like fully funding right-to-counsel.]

The outcome of the case could reshape the city’s high-stakes affordable housing lottery, which fields millions of applications every year for a scarce number of lower-cost homes subsidized by the city.

More broadly, it could force New York City to rethink its approach to development, which relies on fraught negotiations with City Council members who hold enormous sway over each project’s fate. The case is also likely to help set a standard for other high-cost cities that are crafting plans to build more housing while fighting displacement.

Thomas Silverstein, associate director for fair housing and community development projects at the Lawyers’ Committee for Civil Rights Under Law, said previous cases have found that citywide preferences violate fair housing law — when, say, an overwhelmingly white suburb gives priority to its own residents. But New York City appears to be the first to test a policy at the neighborhood level. [Since the passage of the Fair Housing Act, housing providers have been prohibited from intentionally making some neighborhoods less available to a racial group. Indeed, more than a hundred years ago, the Supreme Court issued a decision knocking down legislation that “equally” eliminated competition from Whites for housing in Black neighborhoods and eliminated competition from Blacks for housing in White neighborhoods. See annotation to last paragraph of this article on the return of separate but equal (“discrimination offset”).]

Despite its diversity, New York City remains highly segregated. The divisions drive inequality in wealth, schools, environmental health and more.

Rafael Espinal, a former city councilman, said a rezoning of East New York in his district in 2016 would not have been possible without a community preference for the roughly 1,200 below market-rate homes. “The community wanted to ensure the development that was being built included them,” he said. [In the discovery phase of the case, plaintiffs were kept from taking the depositions of Council Members — even as the City was pushing its Council-Member justification, with the Magistrate Judge asserting the “lack of relevance of city council members to this dispute.” Later in the case, of course, the City was forced to admit the obvious: that Council Members are the best source for explaining how he or she would act in the absence of the preference policy.]

[Looking forward to seeing how many Council Members testify at trial that, “In a world where my constituents have to compete fairly with other New Yorkers equally in need of affordable housing, I’m going to do my best to make sure that nobody — neither newcomers nor incumbents — gets affordable housing in my District.”]

David Yassky, a former city councilman who represented an area including Greenpoint, said that the policy helped him convince neighbors who were opposed to a 2006 rezoning. But he added that, these days, most people accept that big developments should include some lower-cost housing.

“The community preference is not as necessary to galvanize the interest,” he said.

Mayor Eric Adams has said in the past that he would end the policy in wealthier areas. During his campaign in 2021, he said that the preferences shut New Yorkers out of “desirable” neighborhoods. The city, however, has not dropped its opposition to the lawsuit. 

A spokesman for the mayor, Charles Lutvak, said Mr. Adams’s strategy to “make our city more affordable is building new housing in every corner of the city — especially in neighborhoods with access to jobs, transit and economic opportunity.”

In her April 28 ruling, Judge Laura T. Swain of U.S. District Court of the Southern District of New York rejected the plaintiffs’ move to resolve parts of the case in their favor, and instead cleared the way for a jury to decide whether the policy amounted to intentional discrimination that perpetuated segregation. [In the motions before the Court, the City had sought to end the case altogether, including the intentional discrimination claim (that the City was influenced in expanding and maintaining the policy by those who wish to maintain the segregated status quo). The Court rejected that attempt. In addition, the question of perpetuation of segregation does not require any finding of intent, although the finding of perpetuation is relevant to the question of whether the City did intend to discriminate. The Court left for trial the issue of the policy’s perpetuation of segregation, although it specifically rejected the City’s notion that even the smallest amount of desegregation could insulate a policy from challenge. The question to be answered as to perpetuation is whether the policy slows down the desegregative moves that New Yorkers wants to make. (The answer, as shown in these charts, is unmistakably “yes.”)]

She agreed that “multiple racial demographic groups are affected” in different types of community districts. [This last paragraph could very well be the lede. The Court acknowledged that plaintiffs have demonstrated the existence of they combinations of disadvantage and geography they claimed existed (depending on what demographic type of community district, you know in advance which racial and ethnic groups are, every time, going to be disproportionately hurt by the policy). The reason that this did not result in a finding of disparate impacts as a matter of law is that the Court erroneously accepted the City’s shocking notion of separate but equal:  “discrimination offset for the 21st century. That part of the opinion is now the subject of plaintiffs’ motion to reconsider. As stated in those papers:

The SJ Opinion effectively concluded that the law prohibiting disparate impact does not prevent a Black New Yorker living in Central Harlem who applies in a lottery for housing on the Upper East Side from being told, “Don’t complain that you are being disadvantaged on the basis of race in the lottery on the Upper East Side; at some point there will be a lottery in Central Harlem and you might decide to apply there and yield an advantage on the basis of race. Being discriminated in one place and potentially being favored in another place balance each other out, unldess you show that the Upper East Side lies within an ‘inherently more desirable’ community district.”

Plaintiffs respectfully submit that the SJ Opinion conflated the existence, established by analyses of a large universe of lotteries, of specific discriminatory patterns, on the one hand, with the very separate question of an individual’s application on the playing field of a single lottery, on the other. It is a conflation that undermines both case law and statutory language.]

Both sides are expected to meet in the coming weeks to see if they can settle.