## Facts

- A nonprofit developer contracted to buy 15 acres in a predominantly white suburb to build a federally subsidized § 236 low- and moderate-income townhouse project, contingent on rezoning from single-family to multi-family.
- The proposed development (about 190 townhouse units) required federal approval and an affirmative marketing plan intended to facilitate racial integration.
- After public hearings, the village plan commission recommended denial, and the board of trustees denied the rezoning request.
- The village stated the site had long been reserved for single-family use and that multi-family zoning was generally confined to buffer areas not including the site.
- Plaintiffs (the developer, individual Black plaintiffs, and intervenors) sued alleging violations of the Equal Protection Clause and the Fair Housing Act (FHA).
- The district court rejected both claims; the Supreme Court later held the evidence did not prove discriminatory intent for an Equal Protection violation and remanded for consideration of the FHA claim.
- On remand, the Seventh Circuit addressed only the FHA issues and sent the case back for further fact-finding.

## Issues

1. Whether a municipality’s refusal to rezone for subsidized housing can violate the FHA based on discriminatory effect even if discriminatory intent was not proved for an Equal Protection claim.
2. Whether the FHA requires proof of discriminatory intent, or permits liability based on significant discriminatory impact.
3. Whether the FHA imposes a duty on a municipality to avoid zoning policies that effectively exclude low-cost housing from the municipality.

## Decision

- The court held that the FHA can be violated by governmental zoning action that has a discriminatory effect, without proof of discriminatory intent.
- The court concluded plaintiffs made a sufficient prima facie showing of discriminatory impact to require application of an FHA effects-based analysis.
- The court adopted a burden-shifting framework requiring the municipality to justify the challenged action with legitimate interests and to address whether less discriminatory alternatives exist.
- The court stated the municipality has a statutory obligation to refrain from zoning policies that effectively foreclose construction of any low-cost housing within its boundaries.
- The court remanded to the district court to apply the FHA standard and make detailed findings; it did not make a final liability determination.

## Legal Principles

- The FHA applies to municipal zoning and land-use decisions when those decisions affect housing opportunities for protected classes.
- FHA liability may be established by proof of significant discriminatory impact; intent is not a required element in all FHA challenges to governmental action.
- Once plaintiffs show a prima facie discriminatory effect, the burden shifts to the defendant to show bona fide and legitimate governmental interests supporting the action.
- Even where legitimate interests exist, liability may follow if those interests could be served by less discriminatory alternatives.
- A municipality must not maintain zoning policies that, in practical operation, effectively bar low-cost housing within its corporate limits, evaluated in context of local policies and metropolitan housing patterns.

## Conclusion

The Seventh Circuit held that the Fair Housing Act permits challenges to exclusionary zoning based on discriminatory effect and recognized a municipal duty not to effectively exclude low-cost housing, remanding for the district court to determine whether the village’s zoning practices violated the statute under an effects-based, burden-shifting analysis.


Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 558 F.2d 1283 (7th Cir. 1977)