In a case potentially overshadowed by the California Supreme Court’s same-day denial to hear a request to stay a cap on student admissions at UC Berkeley,[1] the Second Appellate District Court (Div. 2) issued its opinion in Crenshaw Subway Coalition v. City of Los Angeles.  This decision found, in effect, that the federal Fair Housing Act (FHA) and its State law counterpart, the California Fair Employment and Housing Act (FEHA), do not protect established minority-majority communities against displacement due to gentrification.

Crenshaw Subway Coalition involved a challenge to a project located in the “Crenshaw Corridor” in the City of Los Angeles.  The project, which had been in the works since 2008, would redevelop an existing mall to add significant commercial, office and residential uses over its 20-year construction timeline, including 961 new residential units with a 10% affordable set-aside.  The developer also agreed to hire 25% of the workforce to build and operate the project from the local community.

Petitioner Crenshaw Subway Coalition, an anti-gentrification nonprofit comprised of “residents, property owners and merchants in the South Los Angeles community,” contended that the Crenshaw Corridor functioned as the “political, cultural and commercial heart of Black Los Angeles” since the 1960s, with census data demonstrating that 43% and 47% of the residents in the Crenshaw Corridor are Black and Latinx, respectively, and that 65% and 25% of the residents in the nearby Leimert Park neighborhood are Black and Latinx, respectively.  Petitioner  argued the project would lead to an influx of new, more affluent residents that would result in increased rents and property values, and would ultimately push lower-income Black and Latinx residents out of the neighborhood.  Therefore, according to Petitioner, the project would have a “disparate impact” prohibited by FHA and FEHA by displacing Black and Latinx populations.  As part of its petition, Crenshaw Subway Coalition sought an injunction against the project until adequate measures were in place to ensure such displacement would not occur.

Relying on the 2015 U.S. Supreme Court decision in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519, the Second District found Crenshaw Subway Coalition’s claims under the FHA and FEHA were not legally cognizable because, in sum, those laws were established for the purpose of eradicating historically entrenched, segregated patterns and discriminatory practices within the housing sector that exclude minorities – not preserving existing minority-majority communities. The Court found the injunctive remedy Petitioner sought here would require the City to inject race into its decision-making process with respect to its housing decisions, a result previously determined to be prohibited under the FHA. Additionally, recognizing the Petitioner’s disparate impact claims would potentially cause developers to no longer construct or renovate housing for low-income communities, the Court found the claims were “beyond the purview” of FHA. Ultimately, FHA, and its State-law counterpart “will not sanction disparate-impact claims that have the effect of perpetuating racial isolation and segregation” – even to protect established minority communities against displacement.  Unless overturned by the Supreme Court, this case could remove a key thorn in the side of infill development projects in existing communities.

Of note, however, in the unpublished portion of the opinion, the Court found Crenshaw Subway Coalition –  unlike UC Berkeley’s neighbors – failed to timely file a California Environmental Quality Act (CEQA) challenge to the project’s discretionary approvals.  In making such a determination, the Court upheld the running on the statute of limitations on a CEQA decision from the date of the posting of the Notice of Determination for the original CEQA approval (not subsequent project approvals).  Together these two court rulings, issued on the same day, reinforce the primacy of CEQA in challenging development projects throughout the State.

[1]  Save Berkeley’s Neighborhood v. The Regents of the University of California (American Campus Communities) (S273160)