Metropolitan Housing Development Corp. v. Village of Arlington Heights

• Decision Date: 07 July 1977
• Docket Number: No. 74-1326,74-1326
• Citation: 558 F.2d 1283
• Parties: METROPOLITAN HOUSING DEVELOPMENT CORP. et al., Plaintiffs-Appellants, Northwest Opportunity Center and Eluteria D. Maldonado, Intervening Plaintiffs-Appellants. v. VILLAGE OF ARLINGTON HEIGHTS et al., Defendants-Appellees,
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1283

558 F.2d 1283

METROPOLITAN HOUSING DEVELOPMENT CORP. et al., Plaintiffs-Appellants, Northwest Opportunity Center and Eluteria D. Maldonado, Intervening Plaintiffs-Appellants. v. VILLAGE OF ARLINGTON HEIGHTS et al., Defendants-Appellees,

No. 74-1326.

United States Court of Appeals,

Seventh Circuit.

Decided July 7, 1977.

Rehearing Denied Aug. 25, 1977.

Gerald J. Muller, Chicago, Ill., William J. McNally, Boston, Mass., F. Willis Caruso, Robert G. Schwemm, Carol M. Petersen, Chicago, Ill., for plaintiffs-appellants.

Jack M. Siegel, Chicago, Ill., for defendants-appellees.

Before FAIRCHILD, Chief Judge, and SWYGERT and SPRECHER, Circuit Judges.

SWYGERT, Circuit Judge.

In this case plaintiffs seek to compel defendant, the Village of Arlington Heights, Illinois ("the Village"), to rezone plaintiffs' property to permit the construction of federally financed low-cost housing. Plaintiffs contend that defendant's refusal to rezone the property was racially discriminatory. The Supreme Court has determined that defendant's action did not violate the Equal Protection Clause. The remaining issue is whether the refusal to rezone was illegal under the Fair Housing Act, 42 U.S.C. §§ 3601 et seq. We hold that under the circumstances of this case defendant has a statutory obligation to refrain from zoning policies that effectively foreclose the construction of any low-cost housing within its corporate boundaries, and remand the case to the district court for a determination of whether defendant has done so.

I

We will briefly review the history of this case, which has been well documented in previously reported decisions.

The Clerics of St. Viator are a religious order who own eighty acres of property in Arlington Heights. Part of the site is occupied by the Clerics' high school and novitiate building, but much of it remains vacant land. In 1970 the Clerics decided to use some of the vacant land for low and moderate income housing. It contacted the Metropolitan Housing Development Corporation ("MHDC"), a nonprofit developer which had experience in using federal subsidies to build low-cost housing. On November 7, 1970, the Clerics agreed to sell MHDC fifteen acres in the southeast corner of the property in exchange for $300,000. Execution of the sale was contingent, however, upon the securing of proper zoning from the Village and an agreement from the federal government to provide financial assistance under section 236 of the National Housing Act, 12 U.S.C. § 1715z-1. ¹

The Clerics' property has been zoned R-3, requiring detached single family homes, since the Village first adopted a zoning ordinance in 1959. MHDC intended to construct 190 connected townhouse units, in twenty two-story buildings. Therefore, it could not proceed unless the property was rezoned R-5, the Village's multiple family dwelling classification. It accordingly filed a petition for rezoning with the Village. The material supporting the petition described the proposed development, which was to be called Lincoln Green, and stated that the development's purpose was to use section 236 subsidies to make it possible for people of low and moderate incomes to live in Arlington Heights. It also revealed that the federal government would not subsidize housing under section 236 unless a proposed development was to be racially integrated.

On September 28, 1971, the Village Board of Trustees voted to deny the petition for rezoning. MHDC, along with three black individuals, then filed suit against the Village in the district court for the Northern District of Illinois, seeking declaratory and injunctive relief on the ground that the Village's refusal to rezone was racially discriminatory and violated their rights under the Equal Protection Clause, 42 U.S.C. §§ 1981-83, and the Fair Housing Act. After a trial, the district court held that the Village's action did not violate the Equal Protection Clause ² because plaintiffs had failed to prove that the zoning decision would affect members of racial minorities, as opposed to poor people in general, adversely. The court also found that the decision was not motivated by racial discrimination or opposition to poor people, but "by a legitimate desire to protect property values and the integrity of the Village's zoning plan." 373 F.Supp. 208, 211 (N.D.Ill.1974).

This court reversed the district court's judgment. We first held that the district court's finding that the Village's refusal to rezone was motivated by factors unrelated to racial discrimination was not clearly erroneous. We rejected, however, the court's finding that the zoning decision did not have a discriminatory effect. Section 236 required that subsidized housing be limited to low or middle income tenants. Black people in the Chicago metropolitan area, who on the average earn less than white people in that area, constituted forty percent of the group eligible for section 236 subsidization but only eighteen percent of the area's total population. Since Arlington Heights is in the Chicago metropolitan area, the Village's decision, which effectively precluded the construction of low-cost housing on plaintiffs' property, constituted a greater deprivation of housing opportunities for black people than for white people.

We then noted that the fact that the Village's action created a racially disparate impact did not, by itself, subject that action to strict scrutiny under the Equal Protection Clause. But we also concluded that the discriminatory effect of the refusal to rezone could not be examined in a vacuum. Housing patterns in Arlington Heights reflected rigid racial segregation. In 1970 only twenty-seven out of the Village's 64,884 residents, compared to eighteen percent of the residents of the entire Chicago metropolitan area, were black. Moreover, the Village had not taken any affirmative steps to construct low-cost housing which would help remedy this lopsided disparity. In this historical context, the Village's refusal to permit MHDC to build Lincoln Green could not be upheld absent a compelling interest in support of the Village's decision. Since the Village could supply no such compelling justification, we held that it had violated the Equal Protection Clause. 517 F.2d 409, 412-15 (7th Cir. 1974).

The Supreme Court reversed. Although the Court did not question our conclusion that the Village's zoning decision had a racially discriminatory effect, it noted that under Washington v. Davis, 426 U.S. 229, 96 S.Ct. 2040, 48 L.Ed.2d 597 (1976), decided after we had issued our opinion in this case, a showing of discriminatory intent was a prerequisite to establishing a violation of the Equal Protection Clause. Since we had affirmed the district court's finding that there was no discriminatory purpose behind the Village's refusal to rezone, the Court held that plaintiffs had suffered no deprivation of their constitutional rights. 429 U.S. 252, 264-268, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977).

The Court then remanded the case for a determination of whether the Village's conduct violated the Fair Housing Act. Id. at 268-271, 97 S.Ct. 555. We had not decided the statutory question because, although plaintiffs' complaint mentioned the Fair Housing Act, they did not pursue the statutory claim either with the district court or with this court. ³

II

The Fair Housing Act, 42 U.S.C. §§ 3601 et seq., was enacted as Title VIII of the Civil Rights Act of 1968. Plaintiffs contend that the Village's refusal to rezone violated two of the Act's provisions. The first is42 U.S.C. § 3604(a), which provides in part that "it shall be unlawful . . . (t)o make unavailable or deny . . . a dwelling to any person because of race, color, religion, or national origin." The second is 42 U.S.C. § 3617, which states:

It shall be unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605, or 3606 of this title. This section may be enforced by appropriate civil action.

Defendant argues that these claims are barred by the Act's statute of limitations, which provides that civil actions to enforce rights granted by section 3604 must be commenced within 180 days after the alleged discriminatory housing practice occurred. 42 U.S.C. § 3612(a). It maintains that plaintiffs failed to file this suit within 180 days after the petition for rezoning was denied.

However, we need not decide whether the complaint was timely under section 3612(a) because defendant failed to raise this issue in the pleadings. A claim that the statute of limitations bars a lawsuit is an affirmative defense, and it must be pleaded or it will be considered waived. ⁴ See Fed.R.Civ.P. 8(c); Weinberger v. Salfi, 422 U.S. 749, 764, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975). Accordingly, we will proceed to the merits of this case.

III

In determining whether the Village's failure to rezone violated the Fair Housing Act, it is important to note that the Supreme Court's decision does not require us to change our previous conclusion that the Village's action had a racially discriminatory effect. What the Court held is that under the Equal Protection Clause that conclusion is irrelevant.

We reaffirm our earlier holding that the Village's refusal to rezone had a discriminatory effect. The construction of Lincoln Green would create a substantial number of federally subsidized low-cost housing units which are not presently available in Arlington Heights. Because a greater number of black people than white people in the Chicago metropolitan area satisfy the income requirements for federally subsidized housing, the Village's refusal to permit MHDC to construct the project had a greater impact on black people than on white people. Moreover, Arlington Heights remains almost...