Is a city’s project to revitalize a local neighborhood which may result in future gentrification prohibited under the Federal Fair Housing Act (FFHA)?

Crenshaw Subway Coalition v. City of Los Angeles (HAAS BHCP Property Owner, LLC)

Facts: A city approves an expansion project to encourage economic development in a predominately Black and Latinx neighborhood. The proposed renovation of the neighborhood entails significant construction of additional commercial and residential units facilitated by loosened zoning. The city issues a permit for construction in the neighborhood based on the developer setting aside housing for individuals earning less than the area median income.  A local fair housing NIMBY group challenges the city’s approval of the project under the Federal Fair Housing Act (FFHA) based on their belief the project to revitalize the neighborhood will lead to rent increases and economically depress low-income minority residents.

Claim: The local housing group seeks to stop the city’s housing expansion project claiming it violates the gentrification theory under FFHA and results in a disparate impact since it will result in greater future socioeconomic inequality through the displacement of future Black or Latinx residents in the neighborhood.

Counterclaim: The city claims the expansion project does not violate FFHA since the expansion of the neighborhood is meant for economic development, provides new housing ownership opportunities, and the city had no intent to perpetuate segregated housing in the project decision-making process.

Holding: A California appeals court holds the housing project permitted by the city to renovate the neighborhood does not violate the gentrification theory under FFHA and the construction permit is valid since the city’s project is designed to encourage economic development and future gentrification predictions cannot be based of the city’s housing expansion project. [Crenshaw Subway Coalition v. City of Los Angeles (HAAS BHCP Property Owner, LLC) (2022) 75 CA5th 917]

Read Crenshaw Subway Coalition v. City of Los Angeles (HAAS BHCP Property Owner, LLC) here.

Related Reading:

Real Estate Principles

Chapter 7: Civil rights and fair housing laws