City Not Liable for Discrimination Based on Decision to Condemn Buildings

Facts: For more than a decade, a city had been attempting to condemn two buildings on an assisted site. In 2005, the city filed a condemnation action, and the owner argued that its buildings aren’t dilapidated and that the city’s suit should be rejected on that ground, and on the further ground that razing the buildings would have a disparate impact on its predominantly black tenants, in violation of the Fair Housing Act. The district court judge rejected these arguments and found that the city is entitled to condemn the buildings for two reasons: First, they are dilapidated and crime-ridden; and second, the city plans to use the land to extend an existing park. The findings are supported by testimony, data (such as the number of crimes committed daily at the site), the fact that an extension of the park has been planned since 1990, and a report from HUD.

With regard to the question whether condemnation would violate the Fair Housing Act, either because the city set out to discriminate against blacks (disparate treatment) or because closure of the buildings would have an unjustified disparate impact on black residents, the district judge found that the city acted for reasons unrelated to race. The judge added that it would be implausible to attribute anti-black intent to the city, because as part of this litigation it agreed with HUD to create at least 115 new low-income housing units and provide housing vouchers for all remaining residents at the site, so that they could secure low-income housing at places of their choice within the city or anywhere else in the county.

The owner appealed the decision, arguing that the judge should not have considered the city’s settlement with HUD. The owner also argued that the practical effect of the vouchers issued will be useless because it believed owners won’t rent to people displaced from the site.

Ruling: The Seventh Circuit Court of Appeals upheld the lower court’s ruling.

Reasoning: The court ruled that the city properly condemned a housing complex that was dilapidated and crime-ridden to extend an existing park, since the city agreed to create low-income housing units and provide housing vouchers for residents of the complex.

The court stated that the facts don’t demonstrate disparate impact. Given the findings about the dilapidated and crime-ridden nature of the site, the court ruled that it’s inappropriate to treat the residents’ move to new housing as an adverse impact for them. The residents will be better off in the newly constructed units or the units available with housing vouchers. The city hasn’t required the residents to move any distance; the new units will be built nearby, and the vouchers can be used anywhere in the county.

The court also noted that the recent Supreme Court’s Inclusive Communities Project disparate impact decision stressed the importance of considering both whether a policy exists and whether it is justified. The Court observed that “a one-time decision may not be a policy at all.” Disparate-impact analysis looks at the effects of policies, not one-off decisions, which are analyzed for disparate treatment. The justices added that “governmental entities ... must not be prevented from achieving legitimate objectives, such as ensuring compliance with health and safety codes.”

Here, the court found that the condemnation of the buildings is a specific decision, not part of a policy to close minority housing in the city. The judge also found that the city set out to achieve goals that the Supreme Court approves, and the analysis of Inclusive Communities Project therefore favors the city rather than the owner.

• City of Joliet, Illinois v. New West, L.P., June 2016