NYC thwarted in bid to avoid trial in discrimination case challenging its outsider-restriction policy in affordable-housing lotteries

In a recent Opinion and Order, the Hon. Laura Taylor Swain, Chief Judge of the federal district court for the Southern District of New York, cleared the way for a trial to be held as to whether New York City's outsider-restriction policy in its affordable housing lotteries violates the federal Fair Housing Act and the New York City Human Rights Law. There is no question that the policy racially discriminates in multiple ways:

(1) Perpetuation of segregation. A lottery starts out with a racially diverse citywide pool of applicants. The moves that the overwhelming number of apparently eligible applicants (those living outside the community district where the housing is located, referred to as "outsiders") want to make are, on balance, substantially more desegregating than the moves that those living within the community district ("insiders") want to make. But the City's policy powerfully squeezes down the percentage of apartments available to outsiders, thus slowing down the racially integrating moves that would otherwise be made. Scroll down on this page to see more details of how this works.

ADC: “We have always said that there is a simple solution: the City should take its thumb off the scale and honor the choices that New Yorkers are making via their applications — wherever they are coming from and wherever they wish to move.”

(2) Racially disparate impacts. This means that the policy causes a New Yorker’s chances in lotteries to vary significantly by race (the applicant’s versus the dominant racial group in the community district in which the housing is located). The Court has already found that "...Plaintiffs have shown that multiple racial demographic groups are affected in multiple [community district] typologies..." The reference to typologies is to the racial typographies of different community districts (e.g., majority White). The widespread nature of these racially disparate results of the policy are discussed here, along with the City's (thus far successful) defense that discrimination against a racial group in some areas of the city can be “offset” by discrimination in favor of that racial group in other parts of the city. Plaintiffs have moved the Court to reconsider the shocking idea that this new version of "separate but equal" could ever be consistent with our civil rights laws.

(3) Intentional racial discrimination. In this context, this means that the City has allowed itself to be influenced to exapnd and continue the policy by those who wish to maintain the segregated residential status quo. There is an unusually large amount of evidence supporting this claim. See more here.

The bottom line is that, in 2023, New York City should not be in the business of overriding the choices that New Yorkers of all races want to make on their own. All of our communities should belong to all of us -- regardless of where we are coming from. and regardless of where we want to move. And the policy -- denying, based on race, a level playing field -- operates squarely against that basic civil rights principle.

Perpetuation of segregation

Without the policy, each New Yorker who applies to a lottery would be treated the same. But the policy divides New Yorker into "insiders" (those who live in the community district where the housing is being built) and "outsiders" (those New Yorkers who don't). How does that splitting affect segregation?

When segregation is looked at, what is compared are two racial/ethnic groups at a time. The experts from both sides agreed on which moves had or would have an integrative effect, which moves had or would have a segregative effect.

When moves made or sought were tabulated, it was possible to see -- separately for outsiders and insiders -- what the net result of the integrating and segregating moves were.

This first chart below examines the moves that were sought by apparently eligible applicants. These show raw numbers. As you can see, the net-integrative effect for outsiders absolutely swamps the net-integrative effect for insiders in every case.

It is true that there are many more outsiders than insiders, so we also looked at the percentage of the moves sought by apparently eligible outsiders that were net-integrative and compared that to the percentage of the moves sought by apparently eligible insiders that were net-integrative. That way, we could see how much faster desegregation proceeds with outsiders than with insiders. So, for example, 30 percent net-integrative for outsider moves compared to 10 percent net-integrative for insider moves is, in relative terms, 300 percent higher. This next chart shows those relative percentages.

So what does the policy do with those moves that outsiders desire to make, moves that are much more desegregating by the choice of our fellow New Yorkers themselves? Well, it takes the enormous outsider pool -- almost 97 percent of applicants for housing in majority White community districts -- and dramatically squeezes down percentage of apartments available to those outsiders (outsiders, just as a reminder, mean New Yorkers outside of the community district who qualify for affordable housing and who have been found, overall, to be just as rent-burdened and extremely-rent-burdened as insiders). See chart below. This is a way that the City's policy causes there to be more segregation than there would be in the absence of the policy.

>> We have always said that there is a simple solution: the City should take its thumb off the scale and honor the choices that New Yorkers are making via their applications -- wherever they are coming from and wherever they wish to move.

Disparate impacts

Simply put, the policy denies the opportunity to compete on a level playing field on the basis of race. Without the policy, the competition would be among all applicants, regardless of race, whomever they were and from wherever in New York City they were coming. For housing in majority White community districts (CDs), for example, the entire pool of apparently eligible applicants is 33.36 percent Black and only 10.57 percent White. This is very similar how the demographics of "outsiders" (those living outside of the CD): 34.08 percent Black and only 10.06 percent White. Nobody shaped that pool except the New Yorkers who decided to apply.

So, without the policy, lotteries would work the way you expect lotteries to work: everybody who applies is treated equally.

With the policy, though, the City makes things very different. The point of the policy is to NOT treat everyone equally, but to favor insiders. What does this mean practically? Well, for that housing in majority White CDs, the demographics of the "insiders" are dramatically different: only 10.62 percent Black (versus 34.08 percent of outsiders), and fully 26.63 percent White (versus only 10.06 percent of the outsiders). It is the much Whiter insider group that goes first in line for 50 percent of apartments (even though that insider group is only about 3 percent of all the apparently eligible applicants). See the chart below.

Since the policy operates on a community different level, it imposes different racial tilts in different parts of the city (depending on the racial demographics of the CD). This chart below summarizes the racial disparities caused by the policy for both for all applicants ("entrants") and for the subset of entrants who, from analysis of their applications, are apparently-eligible.

This should have been the end of the story. But the Court then accepted (at least for now) the City's premise that discrimination against one racial group in specified areas of the city could be offset by discrimiantion in favor of that racial group in another area of the city. Plaintiffs have, of course, filed a motion to reconsider this part of the opinion. In plaintiffs' papers, they summarized the startling and unprecedented idea of "discrimination offset":

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.”

According to Craig Gurian, Anti-Discrimination Center's executive director, "This kind of modern-day version of separate-but-equal is anathema to basic principles of civil rights -- and basic principles of civil rights law. Leave aside the legal question for a moment: does this City really want to continue to be a place where there is never a level playing field to compete for desperately needed affordable housing? A place where your race will advantage you or disadvantage you depending on the demographics of the community district where the housing you apply to is located?"

Intentional discrimination

Intentional discrimination in the context of this case refers to the City being influenced in expanding and maintaining the policy by those who wish to retain the segregated status quo. There is voluminous evidence. In rejecting the City's bid to get the intentional discrimination claim knocked out, he Court's opinion, saying that the issue had to be tried before a jury, cited only a small fraction of it:

Plaintiffs, however, have proffered and pointed to evidence in the record indicating that the fear of displacement, voiced by opponents to affordable housing, may be multi-faceted, and may be grounded, at least partially, in residents’ resistance to racial change in their neighborhoods. (Pl. Opp. at 76-87; see docket entry no. 927 (“Maldonado Decl.”), Ex. 32 at 215:3-20 (deposition testimony from Matthew Murphy, who served as HPD’s deputy commissioner for strategic planning, in which, when asked whether “there are people both in white neighborhoods and in neighborhoods dominated by other racial groups that - - where racial change or the prospect of racial change makes them feel uncomfortable; is that right?” he responded, “I think it’s likely and I think people correlate that change to development, new housing development[,]” and “[s]o as a result, they oppose housing development, especially Affordable Housing development.”); Pl. Opp. at 76 (describing presentation by then-Commissioner of HPD, Ms. Been, about “fears of neighborhood change[,]” in which Plaintiffs assert she explained that residents of communities were seeing “people . . . coming in” who may “look different” and have “different demographics” and who may worry that even if they stay in their neighborhood, “the sense of the neighborhood may change”); Maldonado Decl., Ex. 7 at 138:9–141:7 (Ms. Been confirming that “race and ethnicity are part of demographics” and describing that her presentation referenced above concerned “people who are currently in the neighborhood,” as well as “people who have left the neighborhood but still have feelings about the neighborhood” because “[t]he people who were coming in may look different; may be wealthier; may have different demographics[.]”); Been Decl. ¶ 14 (testifying that the fear of displacement not only extends to the idea of “low-income people being forced to move to less expensive areas” but also encompasses fear surrounding how “changes may . . . make” “those who are able to stay in the neighborhood . . . feel like the neighborhood is no longer welcoming or familiar”).)
Plaintiffs also have pointed to evidence in the record that they argue indicates the City’s stated rationale for the Policy, to “ensure that local residents – who may have endured years of unfavorable conditions, worked hard to stabilize the neighborhood, and may have deep roots in the neighborhood – have a chance to participate in their neighborhoods’ revitalization[]” (Been Decl. ¶ 13), is pretextual, because, as the City concedes, “neither the length of time an applicant resides in the [neighborhood] in which the affordable units are being built nor an applicant’s housing conditions affect eligibility under the [P]olicy[.]” (Pl. Opp. at 84; see docket entry no. 901 ¶ 111.) Plaintiffs proffer an email from Mr. Murphy to a colleague at HPD referring to a “Community Preference working group” and stating: “We justify the [P]olicy because it prevents displacement. But we don’t have good metrics to show that displacement is occurring. What I’d like to do is start building a ‘case’ for anti-displacement policy.” (Maldonado Decl., Ex. 48.)

The Court was able to conclude that, as plaintiffs had argued, the City had to go to trial on the intentional discrimination issue, even without reciting additional, multiple elements of the City's knowledge of and responsiveness to resistance to fair housing:

Defendant’s own preliminary guide to the Assessment of Fair Housing process identifies the difficulty of overcoming “community opposition” as “high,” noting, “Securing community buy-in for fair housing is very difficult.” The document adds that, for publicly supported housing, opposition “can be high in higher opportunity areas (e.g. Queens, Staten Island) except for senior housing.” A slightly earlier version of the document specified that one of the “sides” not necessarily supporting integration is the “ethnic solidarity” side.
Defendant’s preliminary guide to the Assessment of Fair Housing also explicitly cautioned against simply taking relevant steps to identify and deal with “contributing factors” of segregation. The identification of “high priority” factors had to balance “relevance and practical feasibility.”The preceding sentence had just explained that contributing factors of segregation are “politically and legally sensitive.” A jury could certainly conclude that defendant was worried that some “high priority” factors were too politically or legally sensitive to be identified as such.
Deputy Mayor Been, when she was HPD Commissioner, reviewed a draft staff memo designed to get various outside actors to push back against a CM’s resistance to an affordable housing development in Queens. The staff described vague rationales for opposition – “vague”referring to expressed concerns about “parking, height, bulk, AMI’s aren’t perfect, doesn’t benefit my constituents” – as a “well-honed tactic that typically suburban communities have used to exclude affordable housing and maintain privilege and economic and racial segregation.” The staff had proposed to continue with the statement that the opposition “violates the objectives of the fair housing act,” a section that the then-Commissioner deleted with the comment, “No! No statements about FHA violations!”
The then-Commissioner was already concerned about the difficulty of having “thoughtful discussions” about determinants of fair housing issues “against the backdrop of local politics.”

And the Court was able to say that this was a matter for the jury even without considering a 33-page appendix of additional intentional discrimination evidence.

Motion to reconsider

The Court’s opinion regarding disparate impacts can, unfortunately, be summarized as follows:

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.”

We encourage you to read the briefs filed by both sides on the motion for reconsideration. You will note that the City has no substantive response to plaintiffs’ critiques of the Court’s opinion relating to disparate impacts.

Plaintiffs' opening brief (filed May 5, 2023)

Defendant's opposition brief (filed June 29, 2023)

Plaintiffs' reply brief (filed July 10, 2023)

Whether or not you know the details of legal doctrine, can you imagine a policy with these impacts still being the way New York City conducts its business in 2023?