Affordable Housing or Racial Segregation? Lessons from Noel v. City of New York

In 2015, a lawsuit was filed by Black women who sought to challenge New York City’s ‘community preference’ (CP) policy. However, CP policy began decades earlier in the year of 1988 under Mayor Ed Koch. [1] Mayor Koch branded the policy as a safety net for those most vulnerable to gentrification. Gentrification is a process in which an influx of middle and upper-class people flood poorer neighborhoods; they then renovate homes, build businesses, and ultimately, push property values up. [2] The resulting increase in rent, property taxes, and living costs often drive the neighborhood’s earlier, poorer residents from their homes. CP policy not only dissuaded these fears but also promoted support around large infrastructure projects, including the redevelopment of Greenpoint and East New York. Similar approaches were adopted in San Francisco, Minneapolis, Portland, and Austin. 

Plaintiffs in the Noel v. City of New York lawsuit argued that the policy not only disadvantaged those living outside of these neighborhoods but also disproportionately impacted communities of color. Consider the West Village, which is 72.6% percent white. [4] If 50% of the community district was prioritized in affordable housing lotteries, Black New Yorkers would face a systematic roadblock when applying. At New York’s Supreme Court, attorneys claimed that CP policy violated both the Fair Housing Act and the New York City Human Rights Law. [5] Introduced as Title VIII of the Civil Rights Act of 1968, the Fair Housing Act safeguards American citizens from discrimination in several housing-related activities. [6] Even more protections apply to federally-assisted housing programs. Under the Fair Housing Act, it is illegal to discriminate in housing based on: 

• Race
• Color
• National Origin
• Religion
• Sex (including gender identity and sexual orientation)
• Familial Status

On the other hand, the New York City Human Rights Law (Title 8 of the Administrative Code of the City of New York) prohibits discrimination across employment, housing, and public accommodations in New York City. [7] Individuals are protected from discrimination based on various characteristics, otherwise known as ‘protected classes.’ Like the Fair Housing Act, these protected classes included (among others):

• Race
• Religion
• Gender
• Disability
• Sexual Orientation

The city countered that the preferences were not discriminatory prima facie and remained essential for shielding residents from the impact of gentrification. By granting current residents priority for new affordable units, the policy, they argued, reduced local opposition. The city referenced an analysis of housing data from 2013 to 2018. In community districts that were over 60 percent white and 6 percent Black, the analysis showed that recipients of affordable units in new developments were 23 percent white and over 19 percent Black, suggesting that the policy contributed to neighborhood integration.

After almost a decade, Noel v. City of New York was nearing trial. In January of 2024, the litigants reached a settlement. [8] More specifically, New York City agreed to fundamentally alter CP policy. Under these terms, the city will reduce the percentage of affordable apartments set aside for current residents to 20 percent until April 2029. Starting in May of that same year, the share will drop to 15 percent.  Furthermore, local residents will only get priority for affordable housing units the first time those units are rented. This rule won’t apply to buildings where the only reason affordable units are included is because of a specific tax program (called the 421-a program) or in cases where the land was bought by the government and leased to developers. However, if New York State law requires it, the rule might still apply. Finally, New York City agreed to pay $6 million in lawyers’ and other fees — with $100,000 to each of the remaining plaintiffs. 

This was not the first challenge to community preference the courts have seen. In the 2015 case Texas Department of Housing and Community Affairs v. Inclusive Communities Project, the Supreme Court analyzed whether disparate impact claims are cognizable under the Fair Housing Act. [9] ‘Disparate impact’ refers to practices that, while neutral on the surface, can have an adverse effect on groups of people with protected characteristics, including race, religion, sex, and more. This concept is often applied in other areas of laws, including employment, and is used to address unintentional discrimination. In Justice Anthony Kennedy’s majority opinion, the Court upheld that Congress specifically intended to include disparate impact claims in the parameters of the Fair Housing Act. However, these claims require the plaintiff to prove the defendant’s policies directly caused a disparity. In the case of Noel v. City of New York, the settlement may have resolved the plaintiffs’ issue but left unresolved an important question: is CP policy allowed under the Fair Housing Act? 

The case involved a dilemma common to fair housing litigation — balancing the creation of more affordable housing and the reduction of segregation in existing housing. In Noel v. The City of New York, both plaintiffs and defendants acknowledged that, regardless of the lottery system, the city has simply not produced enough housing to meet market demands. It is important to remember that CP policy was born from the desire to protect lower income people, whether that be from gentrification or climbing housing costs. While the policy may have fallen short of its goals, it underscores the need for comprehensive and ongoing efforts to protect residents and promote equitable housing solutions. 

To begin with, there are more people coming to New York than homes being built, especially in low-income neighborhoods. From 2010 to 2020, New York City built around 200,000 new housing units. [10] From 2014 to 2021, nearly 35% of all of Brooklyn’s affordable housing production occurred in just two of the borough’s 18 community districts — Community District 5 in East New York and 16 in Brownsville. [11] Many community districts haven’t seen the development of any new affordable housing units at all. In that same decade, New York City gained 630,000 new residents. [12] This high-demand, low-supply dynamic has left half of New York City grappling with the burden of unaffordable rent. The solution may not lie in dismantling CP  policy but in addressing a much broader issue: New York City’s severe housing shortage. To overcome this, the city must prioritize building more housing across all types and income levels. However, outdated and restrictive zoning regulations impede this process. 

Zoning regulations are a comprehensive set of laws that dictate how land and buildings are developed and used. Those rules determine the size, construction, and purchases of each construction project. [13] Across the United States, most residential land only allows for one home per lot — otherwise known as ‘single-family-only’ or ‘exclusionary zoning.’  This rule gained prominence after the Supreme Court’s 1917 decision in Buchanan v. Warley [14], which struck down a Louisville ordinance mandating racial segregation in residential areas. In response, single-family-only emerged. This type of zoning limits the types of housing that can be built, preventing the development of denser, more affordable options like duplexes, townhomes, or apartment buildings. This creates an artificial scarcity, increasing the competition for available properties in high-demand areas and pushing up prices, particularly in predominantly white, suburban communities. Zoning regulations can also restrict the number of homes that can be built in certain neighborhoods, usually white and upper-class. [15] This is called ‘downzoning.’ Downzoning reduces the allowable density by lowering the number of buildings or units allowed, sometimes even preventing the construction of single-family homes. In cities like New York, where nearly every inch of land—apart from streets, parks, and waterways—is subject to zoning, these policies have had a particularly pronounced effect, stifling housing supply and exacerbating the housing crisis.

The resolution of Noel v. The City of New York underscores the tension between expanding affordable housing and addressing racial segregation. Dismantling CP policy may alleviate some inequities, but the city’s broader housing crisis will continue unless restrictive zoning regulations are addressed. These laws, particularly those that limit density or enforce single-family homes, manufacture competition and disproportionately affect Black and low-income neighborhoods. For example, two million housing units outside of Manhattan are within walking distance to the subway but are constrained to one to three-family homes due to zoning restrictions. [16] New York City’s Zoning for Housing Opportunity proposal, introduced by Mayor Eric Adams in September 2023, is a step in the right direction. The proposal aims to liberalize zoning regulations across all 59 community restrictions, allowing for more varied housing types… and more homes, in general. Its passage and subsequent success remains to be seen but ultimately, zoning reforms are crucial for ensuring that all New Yorkers have access to safe, affordable homes. 



 

[1] Mihir Zaveri, “New York Settles Suit That Said Its Housing Rules Worsened Segregation.” The New York Times, 2024. 

[2] Peter Sanders, “How to Understand Gentrification.” Forbes, 2016. 

[3] Mihir Zaveri, “Do New York’s Affordable Housing Lotteries Fuel Segregation?” The New York Times, 2023. 

[4] City-Data. “West Village Neighborhood in New York, NY, 10011, 10014 Detailed Profile.” 2022. 

[5] Noel v. City of New York, "Amicus Curiae Brief of Lawyers’ Committee for Civil Rights Under Law in Support of Plaintiffs' Motion for Summary Judgment," U.S. District Court for the Southern District of New York, 2020.

[6]  Fair Housing Act. “United States Code, Title 42, Sections 3601-3619”, 1968.

[7] New York City Human Rights Law. “Title 8 of the Administrative Code of the City of New York”, 1955.

[8]  Nixon Peabody LLP. “Settlement of New York City Fair Housing Case Leaves Legality of Local Resident Preferences Unresolved,” 2024.

[9] Oyez. "Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc", 2015. 

[10] Rand. “How New York City Can Make Housing More Affordable,” 2023. 

[11] New York City Council. “Fair Housing Framework: A Policy Briefing,” 2023.

[12] New York City Council. “Third State of the City Address,” 2022.

[13]  Furman Center for Real Estate & Urban Policy. “How Have Recent Rezonings Affected the City’s Ability to Grow?”, 2010. 

[14] Oyez. “Buchanan v. Warley,” 1917. 

[15] Politico. “The Quiet, Massive Rezoning of New York,” 2014. 

[16] Manhattan Institute. “NYC’s Mayor Adams Finally Faces Housing Crisis within Major Reforms,” 2023. 

 

Work Cited

Adams, Adrienne. Fair Housing Framework: A Policy Briefing. May 2023. New York City Council.

Adams, Adrienne. "Third State of the City Address." New York City Council, Day Month 2022, New York, NY. Address.

"Buchanan v. Warley." Oyez, www.oyez.org/cases/1900-1940/245us60. Accessed 20 Nov. 2024.

City-Data. "West Village Neighborhood in New York, NY, 10011, 10014 Detailed Profile." City-Data, 2022, https://www.city-data.com/neighborhood/West-Village-New-York-NY.html. Accessed 20 Nov. 2024.

Furman Center for Real Estate & Urban Policy. How Have Recent Rezonings Affected the City’s Ability to Grow? May 2010. New York University School of Law Wagner School of Public Service, https://furmancenter.org/files/publications/Rezonings_Furman_Center_Policy_Brief_March_2010.pdf.

Irving, Doug. “How New York City Can Make Housing More Affordable | Rand.” Rand, 2023, www.rand.org/pubs/articles/2023/how-new-york-city-can-make-housing-more-affordable.html. 

Fair Housing Act. United States Code, Title 42, Sec. 3601-3619, 1968.

Kabat, Michelle, and Harry Kelly. “Settlement of New York City Fair Housing Case Leaves Legality of Local Resident Preferences Unresolved.” Nixon Peabody LLP, 2024, www.nixonpeabody.com/insights/alerts/2024/01/30/settlement-of-nyc-fair-housing-case-leaves-legality-of-local-resident-preferences-unresolved. 

Kober, Eric. “NYC’s Mayor Adams Finally Faces Housing Crisis with Major Reforms.” Manhattan Institute, 21 Nov. 2023, manhattan.institute/article/nyc-mayor-adams-finally-faces-housing-crisis-with-major-reforms. 

Laskow, Sarah. “The Quiet, Massive Rezoning of New York - Politico.” Politico, 2014, www.politico.com/states/new-york/city-hall/story/2014/02/the-quiet-massive-rezoning-of-new-york-078398. 

New York City Human Rights Law. Title 8 of the Administrative Code of the City of New York, 1955.

Noel v. City of New York. 15-CV-5236 (LTS) (KHP), U.S. District Court for the Southern District of New York. Amicus Curiae Brief of Lawyers’ Committee for Civil Rights Under Law in Support of Plaintiffs' Motion for Summary Judgment, filed 7 Dec. 2020. https://lawyerscommittee.org/wp-content/uploads/2020/12/Noel-v.-City-of-New-York-LCCRUL-Filed-Amicus-Brief.pdf.  

Saunders, Pete. “How to Understand Gentrification.” Forbes, Forbes Magazine, 29 Aug. 2016, www.forbes.com/sites/petesaunders1/2016/08/29/understanding-gentrification/. 

"Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc." Oyez, www.oyez.org/cases/2014/13-1371. Accessed 20 Nov. 2024.

Zaveri, Mihir. “Do New York’s Affordable Housing Lotteries Fuel Segregation?” The New York Times, The New York Times, 23 May 2023, www.nytimes.com/2023/05/23/nyregion/nyc-affordable-housing-lotteries-segregation.html. 

Zaveri, Mihir. “New York Settles Suit That Said Its Housing Rules Worsened Segregation.” The New York Times, The New York Times, 22 Jan. 2024, www.nytimes.com/2024/01/22/nyregion/affordable-housing-segregation-settlement-community-preference.html.