Artisan/American Corp. v. City of Alvin, Tex.

Citations: 588 F.3d 291; 2009 U.S. App. LEXIS 24968; 2009 WL 3789902Docket: 09-20174

Court: Court of Appeals for the Fifth Circuit; November 13, 2009; Federal Appellate Court

Original Court Document: View Document

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Artisan/American Corp. and its affiliates filed a lawsuit against the City of Alvin, Texas, under the Fair Housing Act, claiming the City's denial of a low-income housing project was driven by racial bias and disproportionately affected Hispanic residents. The district court granted summary judgment in favor of the City. The proposed development consisted of two projects, each with 36 rental units, aimed at serving a community where approximately 28% to 45% of the population is Hispanic.

In January 2004, Artisan/American applied for housing tax credits, which the City opposed by arguing that it already had a higher proportion of its citizens receiving housing assistance compared to other cities in the area and that the proposed development did not comply with unspecified municipal ordinances. Despite the City's opposition, the Texas Department of Housing and Community Affairs approved the application in June 2004. 

Following this, in April 2005, the City passed further resolutions opposing additional projects by Artisan/American, citing similar reasons. The City informed Artisan/American in a pre-development meeting that the project violated municipal ordinances prohibiting apartment complexes within 300 feet of single-family homes. Although Artisan/American inquired about obtaining a variance, the City indicated that there was a prior resolution against the project.

Throughout 2005 and 2006, the City reiterated the ordinance violation during multiple meetings, and Artisan/American never pursued a variance. In March 2006, after discussing modifications to the project, the City rejected Artisan/American's revised proposal, stating it still did not comply with regulations concerning access to public streets. The City refused Artisan/American's suggestion to designate the access road as a public street, citing economic concerns and the limited benefit to the housing project.

A map provided by the City in August 2006 indicated that the project violated an Ordinance by being within 300 feet of both a triplex and a mobile home park. This was the first time the mobile home park issue was raised. Although Artisan/American resolved most of the City’s objections to the project, the violation of the Ordinance remained unresolved. In February 2007, lacking municipal approval and facing the impending expiration of state tax credits on December 31, 2007, Artisan/American canceled the project and subsequently filed a lawsuit against the City. They alleged that the City's enforcement of the 300-foot separation requirement discriminated against racial minorities, particularly Hispanics, in violation of the Fair Housing Act. The district court granted summary judgment in favor of the City, which Artisan/American is now appealing. 

Under the Fair Housing Act, claims can be established through either discriminatory intent or significant discriminatory effect. To prove discriminatory intent, Artisan/American needed to show that the City’s stated reason for opposing the project—its violation of municipal ordinances—was a pretext and that race was a significant factor in the decision. The City’s resolutions opposing tax credits for the development and other projects cited that the proposals did not meet building ordinances and noted the existing housing assistance demographics in the area. Artisan/American argued that the City acted hastily without sufficient information, suggesting a discriminatory motive. However, the court found that the City did not need detailed plans or studies to determine compliance with the ordinance, given their knowledge of the project's location in relation to existing housing. Artisan/American did not successfully demonstrate that the City’s opposition was arbitrary or unreasonable.

No evidence indicates that the City’s resolutions deviated from standard policy or that Artisan/American's tax application was treated differently compared to other projects. There is no indication that a marketing study is typically required prior to resolving tax credit applications, nor that the City's opposition impacted its permit review process. Artisan/American's evidence was insufficient as it did not demonstrate that other non-protected applications were treated differently around the time of its rejection. 

Artisan/American argues that the City’s interpretation of the Municipal Code was unreasonable, asserting that the City improperly classified the project’s proposed access road and treated adjacent structures as single family dwellings. Although Artisan/American proposed design changes, the City determined that these did not resolve the ordinance violation due to the access road’s proximity to a residential triplex. 

Artisan/American contends that the City’s interpretation of the ordinance, which defines the measurement to the project’s property line, was overly strict and misaligned with the ordinance's purpose. The City rejected the application based on proximity to residential plots, including a mobile home park, which Artisan/American disputes as being classified as single family dwellings. However, the district court found the City's interpretation reasonable, noting that the municipal code provides ambiguous definitions for 'single family dwelling' and 'manufactured home.' The definitions support various interpretations, affirming the City's stance.

Artisan/American contends that a manufactured home cannot qualify as a "single family dwelling" under municipal code definitions, arguing that a structure cannot be both 'transportable' and 'site built.' However, the argument does not assert that manufactured homes are designed for multi-family use, distinguishing them from apartments or condominiums. The court finds that a manufactured home can still be classified as a dwelling for one family, deeming the City's interpretation reasonable. Concerns about property values or alternative interpretations do not alter the court's conclusion. Artisan/American's claims of racial bias are unsupported by substantial evidence; reliance on a statement from a co-owner about alleged remarks from city council members lacks corroboration. Consequently, there is insufficient evidence to suggest racial animus influenced the City's decision. 

Regarding discriminatory effect, Artisan/American fails to demonstrate a genuine material fact issue. The expert report presented indicates that minorities are more likely to rent but does not analyze the racial demographics of potential occupants for the proposed project. The City offered evidence of available alternative sites for apartment construction, undermining claims of a housing shortage. The court also noted that no evidence of a waiting list or individuals affected by the permit denial was presented. Although Artisan/American's successful tax credit application was mentioned, it lacked clarity on the criteria for approval. Ultimately, the court agrees with the district court's assessment that no evidence supports claims of low-income housing shortages or resultant discrimination from the permit denial.

Artisan/American's argument for the need for affordable housing within the City’s Hispanic community relies on generalized data and a reference to a successful state tax credits application, lacking specificity regarding the state's decision-making process. Consequently, Artisan/American does not establish a factual dispute regarding whether the City's actions resulted in a significant discriminatory effect. The district court affirmed its summary judgment in favor of the City of Alvin, noting that Artisan/American failed to demonstrate that the City's actions were motivated by discriminatory intent or contributed to racial segregation. The court pointed out that Artisan/American did not provide evidence of minority populations residing in specific areas or that the proposed project would worsen any existing segregation trends. Furthermore, the district court highlighted that Alvin already has a higher percentage of low-income housing compared to surrounding areas, suggesting that racial minorities are already concentrated in Alvin and that additional low-income housing would not exacerbate segregation. This contrasts with previous case law wherein zoning practices that effectively exclude minorities from certain areas were deemed discriminatory.