Pac. Shores Properties v. City of Newport Beach

A facially neutral and overdiscriminate city ordinance violates state and federal housing discrimination laws when it has the purposeful and practical discriminatory effect that harms a targeted protected class by prohibiting the establishment of new and existing group homes for recovering substance abusers from obtaining living arrangements in most residential zones.

Before 2008, Pacific Shores Properties et al., ("Group Homes") were established businesses in the City of Newport Beach, ("City") which provided temporary homes and support for recovering alcoholics and drug users. In 2007, the City responded to their presence, by forming committees and enacting a series of moratoria, ("Moratorium") which identified causes of social problems and restraints on its resources, to be short-term lodgings, but exempted vacation rentals. The district court struck down the Moratorium for facial discrimination because it singled out Group Homes for adverse treatment. The City created task forces that surveilled and investigated Group Homes to verify their numbers and locations, and cited them for violating the revised Moratorium, while City officials worked to amend the residential zoning code, and hired new special council to draft the enacted Ordinance of 2008, ("Ordinance"). City officials reported in 2009 that the Ordinance caused a 40% decline in Group Homes' bed count. The City denied new residences and cost each Group Home to survive the Ordinance's new permit procedures, nearly 50% in business revenues, and other expenses for new permit procedural requirements, as well as emotional distress to residents, for anxiety of imminent closure. The district court granted summary judgment of the housing discrimination claim in favor of the City, and found Group Homes failed to present relevant evidence for the City's discriminatory intent; and to demonstrate the Ordinance caused harm suffered. The Ninth Circuit reversed and remanded because it was error to require Group Homes to show prima facie disparate treatment when direct or circumstantial evidence on the record presented genuine issues of material facts sufficient to determine whether the City's Ordinance and discriminatory purpose could be found to harm targeted recovering addicts, protected under the Fair Housing Act and Americans with Disabilities Act, when the City: (1) formed special private committees, (2) hired special council to circumscribe timely and costly extraordinary procedures for residential use permits; (3) amended the definition "single housekeeping units" to exclude Group Homes; (4) provided new hearings procedure for Group Homes before officers who adjudicated their applications under strict guidelines that considered Group Homes' density within the neighborhood and revoked permits for non-compliance; (5) was enacted with the same purpose and object of the previous facially discriminate Moratorium, informed, and amended by the same residents; (6) overdiscriminated but did not enforce against non-compliers that were not Group Homes; and (7) could be reasonably found to have caused the damages Group Homes alleged. REVERSED and REMANDED.