Toward an Economic Fair Housing Act

Nat Jordan* February, 2025

This Note evaluates the prospect of an “Economic Fair Housing Act” through the framework of antidiscrimination law. The proposed bill—a brainchild of housing expert Richard Kahlenberg—would amend the Fair Housing Act to make economic status a protected class alongside race, national origin, religion, sex, and disability. Currently, fair housing lawsuits against local governments rarely succeed. Plaintiffs must present resounding statistical evidence of blatant racial disparities directly caused by exclusionary policies. Simultaneously, many local governments deter homebuilding through restrictive zoning ordinances that prevent lower-income people from moving in.

An Economic Fair Housing Act (EFHA) could help address these twin shortcomings of antidiscrimination law and local control of zoning. The proposed Act could replace or complement the growing number of housing enforcement regimes in high-cost blue states and eventually reduce residential segregation. This Note makes the legal case for an EFHA and raises important drafting considerations for interested legislators.

Introduction

In 1994, Congress ran an experiment. It instructed the U.S. Department of Housing and Urban Development (HUD) to do the following: invite several thousand urban poor families to move to low-poverty communities using housing vouchers, then track their life outcomes.¹ The experiment worked. Researchers found that a young child who moves from concentrated poverty to a wealthier area will earn, on average, $302,000 more (a 31% increase) over their lifetime than a child who remains in an urban housing project.² That child is also more likely to attend college and less likely to become a single parent.³ These results makes sense: Research shows that concentrated poverty inflicts myriad harms on children⁴ while economic integration pays off.⁵ Yet between 1970 and 2009, the United States became progressively more economically segregated,⁶ and between 1980 and 2010, the number of neighborhoods in which over 30 percent of residents are poor nearly doubled.⁷ So, if integration works, why does segregation persist?

Land use laws largely explain this persistence.⁸ Single-family zoning keeps out those with low or moderate incomes by preventing the construction of multi-family housing, which both reduces the housing supply and raises the price of entry to a neighborhood.⁹ So do other land use ordinances, like minimum lot sizes,¹⁰ height limits,¹¹ and setback requirements. These restrictions are often referred to by the umbrella term, “exclusionary zoning.”

Exclusionary zoning creates negative externalities besides segregation. Because of exclusionary zoning, low income people must often live far from jobs,¹² which triggers an array of social consequences, including worker shortages and long commutes.¹³ Exclusionary zoning exacerbates housing shortages, leading to higher rents.¹⁴ And exclusionary zoning reduces the property tax dollars available to fund services for low-income families, including public education.¹⁵ There’s also the great economic cost of spatial misallocation: Exclusionary zoning blocks workers from moving to where they’d be more productive.¹⁶ One 2019 study found that if zoning restrictions were relaxed to the level of the median U.S. city in just the New York, San Francisco, and San Jose metropolitan areas, GDP would increase 8.9 percent ($1.2 trillion), and the average wage nationwide would increase $8,775 per year.¹⁷ Exclusionary zoning has vast social and economic consequences.

States—especially those with “superstar cities”¹⁸ like California and Massachusetts—are trying to solve the problem, but it’s a thorny one. States often give municipal governments the power to set their own zoning, although the state can qualify that power and, in some circumstances, revoke it.¹⁹ States have also used their power over localities to require that those towns and cities loosen their exclusionary zoning ordinances. Most notably—and perhaps most successfully—the New Jersey Supreme Court in 1975 created the Mount Laurel doctrine, which established an affirmative obligation for every local government to “revise[] its land use regulations . . . to provide a realistic opportunity for the construction . . . of lower income housing.”²⁰ Since 1969, California’s Housing Element law has made cities plan for affordable housing.²¹ More recently, Massachusetts passed a landmark bill in 2021 that requires cities with rapid transit to allow for more density.²² Other states have pursued and are actively pursuing similar reforms.²³

But state housing mandates have faced pushback. Told to allow for more density, exclusive suburbs scratch and claw to keep single-family zoning. Likely motivated by constituents opposed to density, New Jersey Governor Chris Christie proposed abolishing the council that administered the Mount Laurel obligation and refused to properly administer the obligation.²⁴ In response to Governor Christie, the New Jersey Supreme Court took control of affordable housing regulation.²⁵ As of 2024, several Boston suburbs have refused to comply with Massachusetts’s 2021 zoning law, which has prompted the state attorney general to file a lawsuit against at least one of them.²⁶ After California strengthened its housing requirement laws in 2017,²⁷ the state encountered strong pushback from certain municipalities²⁸—in response, Attorney General Rob Bonta created the “Housing Strike Force,” a team of state-employed attorneys dedicated to enforcing those laws.²⁹ In short, asking nicely doesn’t always work.

Apart from state statutory and judicial reform efforts, another underutilized legal framework could further the fight against exclusionary zoning: anti-discrimination law. In particular, the federal Fair Housing Act³⁰—which nearly every state maintains their own analog of³¹—has long held promise as a way to create more housing opportunities. In 2015, the U.S. Supreme Court declared that exclusionary zoning forms the “heartland of disparate-impact liability” under the federal Fair Housing Act (FHA).³²

That “heartland” is anything but fertile. In fact, fair housing land use lawsuits—most based on racial discrimination—tend to lose in trial courts;³³ they tend to lose in appellate courts;³⁴ they’re expensive;³⁵ they require fancy experts;³⁶ and, they take forever.³⁷ Thus, litigation has failed to fulfill the FHA’s integrationist goals.³⁸ The past thirty years of case law support an unfortunate conclusion: fair housing challenges rarely overcome exclusionary zoning regimes. But a growing body of research³⁹ and shifting public opinion⁴⁰ reveal a gap between the doctrine and reality. Americans, especially the poor, desperately want and need more housing. Well-off suburbs deny them that opportunity. This Note argues that banning economic housing discrimination could help solve this problem.

An “Economic Fair Housing Act” (EFHA) would add economic status to the list of characteristics already protected by fair housing law. Housing expert Richard Kahlenberg first developed the idea in 2017.⁴¹ Today, the EFHA exists as model legislation,⁴² but the legal mechanics and implications of such a law have yet to be explored. This Note furthers housing policy discussions by elaborating on the EFHA’s legal consequences.

Part I discusses current shortcomings of fair housing liability theories—disparate treatment, disparate impact, and segregative effect—and considers how the EFHA might improve the status quo. Part II offers lawmakers suggestions for defining the protected class and determining the scope of that class’s protection. Part III identifies how an EFHA could improve fair housing outcomes and addresses concerns about a firehose of litigation. I focus on banning economic discrimination at the state level because that is where civil rights innovation happens today.⁴³

I. Applying an EFHA to Antidiscrimination Law

A. The Promise—and Problems—of Fair Housing

The Fair Housing Act was enacted on April 11, 1968, just seven days after Martin Luther King, Jr. was assassinated. Lawmakers had sparred for the previous two years over fair housing legislation, but King’s killing spurred action.⁴⁴ During debates that preceded the bill’s passage, its chief sponsor, Senator Walter Mondale, famously proclaimed that the Act would further the creation of “truly integrated and balanced living patterns” across racial groups.⁴⁵

The Fair Housing Act is unique in its approach to attacking discrimination. While other laws, most notably Title VII, target individual acts of discrimination,⁴⁶ the FHA—despite protests from some “fair housing revisionists” who claim otherwise—goes further.⁴⁷ As opposed to the individually focused Title VII, the FHA is structural in its ambitions because it attempts to make fair “housing markets writ large.”⁴⁸ It aims not just to right private wrongs but to integrate at a systemic level. The FHA’s promotion of segregative-effect theory—which considers an action’s impact on the larger community and lacks an analog in Title VII—exemplifies these market-level goals.⁴⁹ So does the FHA’s provision instructing the government to “affirmatively further” fair housing.⁵⁰ Even the Supreme Court characterized the FHA’s language as “broad and inclusive.”⁵¹

Despite having such ambitious directives, the FHA has yet to realize its potential. The FHA has proven particularly ineffective in preventing exclusionary zoning, among other failures. Structural limitations partially explain this ineffectiveness. First, Professor Stewart Sterk identified that “local governments have no incentive to comply with FHA mandates until required to do so by court order.”⁵² Second, the FHA’s burden-shifting test⁵³ requires plaintiffs to invest significant time and resources to litigate a claim.⁵⁴ Third, the Act is ill-suited to challenging discriminatory zoning regimes; in fact, the Act never even mentions zoning.⁵⁵ Since the landmark 2015 Inclusive Communities decision, two notable FHA cases have successfully challenged exclusionary zoning laws—but Professor Michael Lewyn notes that those opinions were “drafted so narrowly that they may aid very few FHA plaintiffs.”⁵⁶

B. Adding Income

This Note explores whether adding income protections to the FHA could clear the way for plaintiffs to more reliably challenge exclusionary zoning. That prospect—adding socioeconomic class as a protected status—has been shot down before. Senator Walter Mondale told Congress that the FHA “would not overcome the economic problem of those who could not afford to purchase the house of their choice.”⁵⁷ Analysis published shortly after the FHA’s passage suggests explicit economic-status protections would not gain popular support. In 1969, one year after the FHA’s passage, Professor Lawrence Sager described a “very basic difference” between denying the poor housing and denying the poor the right to vote or an attorney:

“No man should be unable to live in the neighborhood of his choosing because of his poverty” is simply not a proposition for which one could expect to find firm nationwide support in 1969. Exclusive neighborhoods, indeed, an entire range of neighborhoods of graduated exclusivity, are commonplace and, unlike racial ghettos, are not even the objects of widespread verbal lamentation.⁵⁸

But a lot has changed since 1969.⁵⁹ Rent is much higher.⁶⁰ Income segregation has increased and continues to rise.⁶¹ The United States is ensnarled in a housing crisis felt most acutely in metropolitan areas.⁶² But the growth of the “Yes in My Backyard” (YIMBY) movement, spawned in San Francisco in the 2010s in opposition to the “Not in My Backyard” (NIMBY) phenomenon,⁶³ has prompted land use reform from coast to coast.⁶⁴ Large majorities support pro-housing reforms.⁶⁵ Americans are becoming cognizant of the causal connection between opportunity and exclusive neighborhoods, and lack of opportunity for those excluded.⁶⁶ An EFHA could answer these concerns. Importantly, an EFHA would not eliminate exclusive enclaves. It would simply end arbitrary NIMBYism—exclusion without legitimate justification.

In the three sections below, I outline how FHA plaintiffs today struggle to assert housing discrimination under the theories of disparate treatment, disparate impact, and segregative effect; I also explain how a hypothetical EFHA would apply under each theory. A person or group suffers disparate treatment when they are treated differently than others, and their protected status “actually motivated” that different treatment.⁶⁷ Disparate impact plaintiffs, on the other hand, do not need to show evidence of motivation.⁶⁸ Plaintiffs can allege disparate impact by identifying policies that cause a disproportionately negative effect on members of a protected class and “are otherwise unjustified by a legitimate rationale.”⁶⁹ The Supreme Court has focused most of its attention on disparate impact fair housing claims.⁷⁰ Finally, segregative-effect claims allege that a policy or decision caused “harm to the community generally by the perpetuation of segregation.”⁷¹ Although segregative effect and disparate impact are quite similar,⁷² they differ in that (1) disparate impact considers how a policy affects a protected class, while segregative effect considers how a policy affects the community as a whole; and (2) segregative-effect plaintiffs can challenge both policies and decisions, while disparate impact plaintiffs may only be able to target policies.⁷³ Segregative effect is the least developed but most intriguing theory for purposes of an EFHA.

Disparate Treatment

Despite disparate impact attracting much of the Supreme Court’s fair housing attention, disparate-treatment claims remain alive and well in fair housing litigation.⁷⁴ The two theories often go hand-in-hand—many, though not all, FHA disparate impact plaintiffs who have prevailed at the appellate level also brought disparate-treatment claims.⁷⁵ While disparate impact theory addresses insidious discrimination, disparate-treatment theory targets intentional discrimination. Yet, the line separating the two is blurrier than it initially seems.

“Disparate treatment” suffers from an unsettled definition. Initially, courts interpreted disparate treatment to mean conscious discrimination based on a protected characteristic—in other words, discriminatory purpose.⁷⁶ But in 1977, the Supreme Court adopted a statistical test, which did not incorporate a conscious discrimination factor into its methodology, to prove disparate treatment.⁷⁷ Some commentators argue that a modern interpretation should account for unconscious bias: For instance, police shootings of Black men could be a form of disparate treatment, even if the individual officers were not conscious of their racial bias.⁷⁸ Under this formulation, plaintiffs would not need to prove intent with a smoking gun, like a racist statement—but courts have yet to endorse such a view.

To prove a prima facie case of disparate treatment under an antidiscrimination statute, plaintiffs must “allege they were treated differently from similarly situated persons or groups” because of their protected characteristic.⁷⁹ Note that this requirement is unique to disparate-treatment theory. The Seventh Circuit has held that in the fair housing context, “ ‘similarly situated’ means that individuals engaged in similar conduct without such differentiating or mitigating circumstances as would distinguish their conduct.”⁸⁰ Income complicates the task of finding a similarly situated comparison group. A recent disparate-treatment case involved Black low-income tenants living in affordable housing units at the infamous (and expensive) Hudson Yards development in New York City.⁸¹ The plaintiffs alleged that they had to use separate “poor doors” to enter the building and were prevented from using amenities, like the swimming pool, that were available to the wealthier residents.⁸² On its face this may seem like point-blank discrimination based on economic status. However, the district court dismissed the complaint; because the complaint used the luxury condo owners as the comparison group against the protected class of Black, low-income tenants, the court found that the two groups were not similarly situated.⁸³ Under that logic, even those who live in the same building or development are not “similarly situated.”⁸⁴

Because the EFHA would protect some class of individuals with lower incomes, bill drafters should explicitly define “similarly situated.”⁸⁵ For instance, if the protected class is those earning under 80 percent of the Area Median Income⁸⁶ (AMI), the law could state that a proper comparison group is those making between 80 percent and 120 percent of AMI. That comparison group should also be drawn from the same housing market in which the municipality lies.⁸⁷

Case law has established burden-shifting frameworks to evaluate FHA claims. Each of those frameworks are similar but slightly different for each liability theory. The McDonnell Douglas burden-shifting framework, borne from Title VII, controls FHA disparate-treatment claims.⁸⁸ After the plaintiff proves a prima facie case of disparate treatment, a defendant may raise a legitimate justification for its action.⁸⁹ Unlike the theories of liability discussed below, McDonnell Douglas then affords the plaintiff a chance to prove by a preponderance of the evidence that the defendant’s justification is merely pretextual, and therefore impermissible.⁹⁰

We begin at step one. To prove a prima facie case, the plaintiff must establish causation—that is, that their protected status actually caused the disparate treatment. Two main causation standards govern disparate-treatment claims generally: but-for causation and motivating-factor causation. Although both play important roles in antidiscrimination litigation, motivating-factor analysis would more readily support economic discrimination claims.

But-For Causation

In recent years, the Supreme Court has indicated its preference to take a but-for approach with disparate-treatment claims under Title VII.⁹¹

In Bostock v. Clayton County, Justice Gorsuch—writing for the majority—clarified that but-for causation as applied to Title VII⁹² “is established whenever a particular outcome would not have happened ‘but for’ the purported cause. In other words, a but-for test directs us to change one thing at a time and see if the outcome changes. If it does, we have found a but-for cause.”⁹³ In mixed-motive cases, where the defendant claims they made a decision for multiple reasons, “[s]o long as the [protected characteristic] was one but-for cause of that decision, that is enough to trigger the law.”⁹⁴

The problem with a but-for theory under an EFHA is that local governments often resist multi-family housing—or housing in general—of any kind, income-restricted or not.⁹⁵ Imagine a town in a state with an EFHA. In this town, the city council has just rejected three luxury condo building applications in a row. Now, it takes up a similarly sized, income-restricted affordable housing proposal. The councilors complain about increased traffic and shadows; the council chair comments, “I don’t want poor neighbors.” The council rejects the application, 7-0.

In this scenario, a plaintiff cannot establish but-for causation because the council would have blocked the housing proposal regardless of the prospective residents’ economic status. The Chair’s comments would not be a but-for cause under the legal standard if the council denied all or most housing projects—the proposal would have been denied, regardless of classist bias. Justice Gorsuch has previously called for this sort of counterfactual analysis⁹⁶: Were the prospective residents rich, a five-story building still would not have gained approval, as evidenced by the council’s past denials, and thus but-for causation could not lead to liability.

Motivating-Factor Causation

Conversely, under the more lenient motivating-factor theory of causation, the defendant city council might lose this hypothetical lawsuit. Under this test, the plaintiff need not prove that the malintent was a but-for cause of the rejected proposal. Rather, they only need to show that the discriminatory motive contributed to the decision.⁹⁷ In Arlington Heights, the Court added that this contributing motive need not be the “dominant” or “primary” purpose.⁹⁸ If the plaintiff makes such a showing, the burden shifts to the defendant to raise a “same decision” defense, discussed below.⁹⁹

A 2016 case out of the Second Circuit, Mhany Management, illustrates the motivating-factor theory’s utility. In response to citizen concerns raised at a series of public meetings, Nassau County, New York, rezoned a county-owned site initially slated for multi-family affordable housing.¹⁰⁰ The opinion relied on a Second Circuit decision that stated plaintiffs must show “that [the] animus against the protected group was a significant factor in the position taken by the municipal decision-makers themselves or by those to whom the decision-makers were knowingly responsive.”¹⁰¹ Importantly, this holding requires the lower court to scrutinize both statements by officials and public comments that state officials are “knowingly responsive” to.¹⁰² The Mhany court then evaluated the record of public meetings using a number of factors spelled out in Arlington Heights.¹⁰³ It ruled that the “tenor” of public comments,¹⁰⁴ which had clearly swayed decisionmakers away from affordable housing, constituted proof of disparate treatment under a motivating-factor analysis.¹⁰⁵ Specifically, the court cited comments decrying the potential impact on the area’s “character” and “flavor” as “code words for racial animus.”¹⁰⁶

Under an EFHA, a legal finding of animus from public comments could be even easier: Thinly veiled discriminatory justifications, such as “character” or “flavor” are more obvious indicators of class animus than of racial animus.¹⁰⁷ An EFHA, then, could turn what’s currently a logical jump into a mere hop.

***

So, which causation theory governs the FHA? That question remains unanswered, but the motivating-factor test has the strongest case. In 1988, Congress passed a set of changes that strengthened the FHA, intuitively called the Fair Housing Amendments Act (FHAA).¹⁰⁸ The choice not to address causation in the FHAA suggested Congress implicitly adopted 20 years of FHA case law that unanimously employed the motivating-factor test.¹⁰⁹ The Supreme Court used this theory of adoption to justify the existence of disparate impact in Inclusive Communities.¹¹⁰ One could apply the same logic to FHA causation analysis.¹¹¹ Lower courts¹¹² share this intuition—they have consistently applied the motivating-factor test to FHA disparate-treatment cases since 1988, most notably in Mhany Management.¹¹³ Furthermore, since the passage of the FHAA, HUD’s guidance implicitly favors the more lenient standard.¹¹⁴

However, despite an apparent consensus among appellate courts across the past five decades, recent Supreme Court decisions signal that the motivating-factor standard could be in jeopardy.¹¹⁵ A leading commentator on this issue, Professor Robert Schwemm, believes that a circuit split is likely, and that the Court or Congress will eventually resolve the question of which theory determines causation under the FHA.¹¹⁶ I recommend that states explicitly establish more lenient causation standards, such as the motivating-factor standard, for disparate treatment in their EFHA legislation. This recommendation follows many state and local governments: California, for instance, names “motivating[-]factor” as the governing test in its state fair housing law.¹¹⁷ Various cities have codified similar tests in their ordinances.¹¹⁸ If federal case law gets worse for plaintiffs, state courts can interpret their EFHA’s language more leniently.¹¹⁹

c. The “Same Decision” Defense

Even if a plaintiff establishes causation and proves a prima facie case of disparate treatment, defendants still have a way out. Justice Brennan’s majority opinion in Price Waterhouse v. Hopkins created an affirmative defense to a successful prima facie showing of disparate treatment.¹²⁰ Under this so-called “same decision” defense, a defendant must prove by a preponderance of the evidence that it would have made the same decision without its discriminatory purpose.¹²¹ So, in step one, the plaintiff proves a prima facie case; in step two, the defendant can raise the affirmative defense. Although this sounds like but-for causation, the Price Waterhouse approach combined with a “motivating-factor” standard is more lenient to plaintiffs, because it shifts the burden of proof to defendants.

The disparate-treatment standard requires plaintiffs to meet a high burden to show a prima facie case, one often “impossible to satisfy.”¹²² If they can meet that burden, defendants may raise a legitimate justification. Plaintiffs must then prove that justification is pretextual by a preponderance of the evidence.¹²³ In sum, including the motivating-factor standard in an EFHA could reduce localities’ ability to reject affordable housing developments. At minimum, an EFHA will cause public officials to carefully watch their tongues.¹²⁴ At best, outlawing disparate treatment based on economic status will lead to a proliferation of low- and mixed-income housing development—decisionmakers and their wealthier constituents could no longer rely on flimsy, classist justifications to block new homes.¹²⁵

Disparate Impact

The Supreme Court first recognized the validity of disparate-impact theory in 1971, in the employment context. In Griggs v. Duke Power Co., an industrial company required employees to either have a high school diploma or pass an intelligence test to obtain a promotion.¹²⁶ Black employees filed suit, claiming that the policy, while facially neutral, inflicted a disproportionately harmful impact on Black workers.¹²⁷ The Court agreed with the workers’ theory, invalidating the policy for having no significant relation to job performance.¹²⁸ For the first time, plaintiffs asserted a valid disparate-impact claim—independent from disparate treatment—although the Court didn’t call it that until later.¹²⁹

Lower courts have long extended this Title VII disparate impact interpretation to Title VIII (fair housing).¹³⁰ Disparate impact fair housing suits peaked in the 1970s. The plaintiffs prevailed in all three disparate impact fair housing cases considered on appeal that decade.¹³¹ But the plaintiff success rate at the appellate level has dropped every decade since.¹³² In the 2000s, plaintiffs prevailed in just three of thirty-six appellate decisions, an 8.3 percent success rate.¹³³ And things aren’t better at the trial level: Many plaintiffs fall victim to summary judgment.¹³⁴

Courts adjudicate disparate impact fair housing cases using the burden-shifting rule that HUD promulgated in 2013. The rule, affirmed by the Supreme Court in Inclusive Communities, provides a three-step framework for evaluating disparate impact claims. ¹³⁵ First, the plaintiff—a member of a protected class—must establish a prima facie case of disparate impact.¹³⁶ Then, the defendant must show that its “challenged practice is necessary to achieve one or more substantial, legitimate, non-discriminatory interests.”¹³⁷ Finally, if the defendant shows a legitimate justification, the burden shifts back to the plaintiff, who must prove that the defendant’s interest could be achieved by a less discriminatory policy.¹³⁸

In the following sections, this Note examines the existing roadblocks that cause so many fair housing disparate impact claims to fail and discusses how an EFHA could create a more plaintiff-friendly future.

Step One: The Prima Facie Case

To make a prima facie disparate impact case under the FHA, a plaintiff needs to show three things. First, they must identify the challenged policy.¹³⁹ Second, they must show a “sufficiently large disparity in how this policy affects a class of persons protected by the FHA compared with others.”¹⁴⁰ Third, they must demonstrate that the policy “actually caused” the statistical disparity.¹⁴¹

Historically, litigants have successfully identified and challenged facially neutral exclusionary zoning policies—the first showing necessary for a prima facie case—using disparate impact theory under an FHA cause of action.¹⁴² Translated to the EFHA context, a plaintiff could—for example—assert a disparate impact challenge to a county policy that barred multi-family housing in 95 percent of the county’s land area.

Next, the plaintiff must provide statistical proof of a sufficiently large disparity between the protected class and others. Courts have declined to endorse any one statistical test to demonstrate proof. But Professor Robert Schwemm has found four general requirements courts commonly apply in disparate impact case law.¹⁴³

First, the plaintiff’s data must refer specifically to the “subset of the population affected by the challenged policy.”¹⁴⁴ That subset under both the FHA or an EFHA can be large:¹⁴⁵ Under my proposal, this would constitute all persons below a certain percentage of the Area Median Income (AMI).

Second, the plaintiff must identify “appropriate comparison groups” to show a statistical disparity between the protected group.¹⁴⁶ Unlike disparate treatment, comparison groups under the disparate impact theory do not need to be nearly as “similarly situated.” For example, the Second Circuit in Tsombanidis v. West Haven Fire Department determined that the appropriate comparison group for recovering drug abusers was simply composed of those who were not recovering drug abusers.¹⁴⁷ It clarified that the correct comparison for purposes of disparate impact is protected class members against non-class members, not protected class members against “similarly situated” non-class members.¹⁴⁸

Third, the plaintiff should highlight the percentage of people from the protected class affected by a policy, rather than the raw number of class members.¹⁴⁹

Finally, the disparity between the groups must be sufficiently large. Courts agree that in the Title VII context, the magic number is 0.80; that is, if the ratio between (1) the percentage of protected class members who have access to a benefit (employment) and (2) the percentage of comparison group members who have access to the benefit is less than 0.80, then the plaintiff has met their burden.¹⁵⁰ In fair housing cases, however, courts have endorsed an inversion of this comparison: instead of gauging access to a benefit, they consider lack of access—rejection rates—in the landlord arena.¹⁵¹ While no agreed-upon number exists for FHA claims, the plaintiff must usually show an injury ratio well above 1.25.¹⁵² An EFHA claim might identify two groups: the protected class, making under 80 percent of the Area Median Income, and the comparator, people from the same area earning over 80 percent of the AMI. If only 10 percent of the protected class can afford housing in City X, while 30 percent of the comparator can, the ratio of 1:3, or 0.3, likely demonstrates disparate impact. A policy that adversely impacts most people—in the case of exclusionary zoning, almost everyone who isn’t already a resident—doesn’t mean plaintiffs can’t show a disproportionate impact on a protected class.¹⁵³ Using the simple ability to move somewhere as the controlling metric, low-income people suffer disproportionately from exclusionary zoning (as opposed to a middle-income household which might pay more in housing costs but can still afford to move).

An EFHA could increase the proportion of claims that make a successful prima facie case, clearing step one. Most fair housing disparate impact litigants first prove income discrimination and then show the resulting disparate impact on racial minorities. In many cases, however, plaintiffs face difficulty connecting the economic and racial impacts. An EFHA would remove that second, statistically arduous, step. Plaintiffs would save time and money—and prevail more. The Tenth Circuit’s Reinhart v. Lincoln County decision shows how an EFHA could lower the bar for fair housing claims.¹⁵⁴

The Reinhart family brought a lawsuit against Lincoln County, Wyoming, over the county’s new, comprehensive land-use plan.¹⁵⁵ They claimed that various restrictions in the plan made it financially infeasible to develop low-cost¹⁵⁶ housing on their land. The Reinharts submitted evidence that, because of the new policy, the sales price for a lot would rise from $30,000 to $60,000.¹⁵⁷ They alleged that the increased housing costs disproportionately excluded groups protected by the FHA, including racial minorities and single-parent households.¹⁵⁸ However, the court concluded that it was “not enough for the Reinharts to show that (1) a regulation would increase housing costs and (2) members of a protected group tend to be less wealthy than others.”¹⁵⁹ Rather, the plaintiffs needed to compare the percentage of people—in both protected and non-protected classes—who could afford the housing before the rule to the percentage who could afford it after the rule.¹⁶⁰

The court then contrasted the Reinharts’ claim with the prima facie cases in Arlington Heights and Huntington, two cases wherein “[t]he racial implications were clear.”¹⁶¹ Both involved almost entirely white, housing-resistant towns in diverse metropolitan areas.

This distinction between Reinhart and the Arlington Heights /Huntington line of cases highlights important problems with racial disparate impact claims. Especially in recent decades, plaintiffs must present airtight evidence that makes the racial disparity abundantly clear.¹⁶² Showing racial disparities requires a racially diverse housing market, which many metropolitan areas lack;¹⁶³ pricey statisticians;¹⁶⁴ before-and-after analysis of policy impact;¹⁶⁵ and solid datasets for drawing comparison groups.¹⁶⁶

An EFHA couldn’t eliminate this proof problem, but it could alleviate it. If the EFHA’s protected class were low-income individuals, the Reinharts would need only show that a much smaller percentage of the protected class could afford to buy a lot than those above 80% AMI. This empowers the Reinharts to avoid some tricky statistical gymnastics and advance to step two. An EFHA disparate impact claim could show, as the Reinhart court demanded, “that the new regulations increase the cost of a dwelling by some amount and then show that this increase disparately impacts the ability of protected group members to buy a dwelling.”¹⁶⁷

But the problem of causation—the third prong of a prima facie case—remains. To prove a prima facie case, a plaintiff must show that the exclusionary zoning ordinance actually caused the disparate impact on the protected class.¹⁶⁸ The Inclusive Communities decision emphasized causation and encouraged lower courts to toss cases lacking a causal connection between the challenged policy and the disparate impact.¹⁶⁹ But housing markets are notoriously inconstant.¹⁷⁰ And it’s difficult to draw lines between one housing market and another, or one town and its neighbor.¹⁷¹ As the COVID-19 pandemic demonstrated, a variety of factors—like remote work or a changing climate—can induce a large number of people to move to a previously undesired location, raising prices in that location.¹⁷² Even under an EFHA, a plaintiff alleging higher rents because of a discriminatory land-use policy would still likely need to prove that the policy actually caused (or would cause, in the case of a proposed ordinance) the higher rents and resulting exclusion. To show causation, the plaintiff could compare a city’s median rent with its less-exclusive neighbors.

The causation prong may, in many instances, require plaintiffs to hire expensive experts to show how a policy actually caused exclusion.¹⁷³ But research¹⁷⁴ on the per se exclusionary effects of single-family zoning will add merit to such a claim. In sum, EFHA plaintiffs would still have to meet their burden of showing to demonstrate disparate impact and actual causation, but making that prima facie case would be easier.

Step Two: Legitimate Justifications

Practically speaking, the greatest benefit an EFHA can offer is expedition: It will move things along. Under an EFHA, far more claims will advance to step two, or the burden-shifting stage, where defendants must provide legitimate justifications.

Perhaps because so few land-use cases—especially in the last several decades—have advanced past go,¹⁷⁵ the case law is sparse on what constitutes a legitimate justification. But the burden-shifting stage gets to the heart of the matter: it weighs policy interests against fair housing. Courts ought to welcome this change.¹⁷⁶

Title VII doctrine contains a clear standard for evaluating justifications. Specifically, the court asks: (1) was the practice or decision job-related¹⁷⁷ and (2) was it a business necessity?¹⁷⁸ But as Justice Alito points out in his Inclusive Communities dissent, those inquiries are not applicable to land-use cases, or almost any Title VIII scenarios.¹⁷⁹ For FHA claims, no clear standard exists.¹⁸⁰

Famous cases have taken different approaches, but they all do some sort of balancing. United States v. City of Black Jack used something that looked like strict scrutiny;¹⁸¹ Langlois v. Abington Housing Authority used rational basis review.¹⁸² Arlington Heights II created its own four-part balancing test, weighing the strength of the evidence against the defendant’s interest.¹⁸³ Huntington Branch, NAACP v. Huntington held that “there must be a weighing of the adverse impact against the defendant’s justification.”¹⁸⁴ Modern courts have accepted the balancing test,¹⁸⁵ although they have applied it in divergent ways. Professor Jonathan Zasloff proposes that judges apply intermediate scrutiny in these balancing tests. He walks through common defenses for restrictive land use and offers ways to evaluate the (il)legitimacy of those justifications.¹⁸⁶

If more cases advance to step two, courts must determine how to perform this balancing test and whether to use intermediate scrutiny. The Inclusive Communities opinion’s vague formulation of the burden-shifting test raises more questions than it answers.¹⁸⁷ One unresolved quandary, among others, is whether the Supreme Court understands “valid interest”¹⁸⁸ to means the same thing as “substantial, legitimate, [and] nondiscriminatory interests” in HUD’s regulation.¹⁸⁹ Perhaps because economic discrimination plaintiffs rarely get there, step two is messy and murky. Further, should courts perform this balancing task? Should they be charged with shining light on excuses for exclusionary zoning and determining their legitimacy? An EFHA would force the courts to address these unanswered queries.

Skeptics may worry that such a pliable formulation—the balancing test—overloads judges with too many factors, which gives them policymaking power. Yet every circuit that has found a defendant liable for a disparate impact has used a balancing test at step two.¹⁹⁰ For example, in Huntington, the Second Circuit’s balancing analysis resulted in a favorable outcome for the plaintiffs.¹⁹¹ The court applied a balancing test to evaluate a disparate-impact claim based on a zoning regime that restricted multi-family housing to a low-income, “urban renewal” area.¹⁹² It separated potential legitimate justifications into two categories: “plan-specific,” relating to building design, and “site-specific,” relating to location.¹⁹³ It then methodically rejected the defendant’s nondiscriminatory reasons as “weak and inadequate,” compared to their discriminatory impact.¹⁹⁴ Future courts could model their balancing tests after Huntington. If more courts scrutinize legitimate justifications, the judicial system might eventually discourage or outlaw certain explanations, like traffic concerns and home prices, which data tends not to support.¹⁹⁵

Of course, the type of wholesale change that an EFHA would invite—the ability to challenge entire zoning ordinances—is more complex than the above cases. It weighs socioeconomic exclusion against what are often economic justifications, like school costs and home prices. This kind of balancing hasn’t been done before and would warrant careful attention from a state’s supreme court. Still, complexity does not relieve courts of their job¹⁹⁶: Fair housing’s promise demands difficult decisions.

Segregative Effect

Finally, the addition of low-income people as a protected class could revive a third, less frequently used, theory of housing discrimination: segregative effect.

Segregative effect’s relative dormancy stems from its uniqueness. Unlike disparate impact, which courts adapted from Title VII analysis and applied to Title VIII cases, segregative effect has no sibling in employment law.¹⁹⁷ It belongs to fair housing and fair housing alone.¹⁹⁸ Although the theory has a lower level of prominence compared to disparate impact, a 2013 rule promulgated by HUD affirmed its legitimacy as a theory of housing discrimination.¹⁹⁹

Segregative-effect theory operates similarly to the disparate impact theory. HUD’s 2013 regulation applies a three-step burden-shifting framework to both.²⁰⁰ In the first step, a plaintiff must prove that “a challenged practice caused or predictably will cause a discriminatory effect.”²⁰¹ In the second step, the burden shifts to the defendant who must prove that the practice “is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests.”²⁰² Finally, in the third step, the plaintiff “may still prevail” if they prove that the policy goal “could be served by another practice that has a less discriminatory effect.”²⁰³ If the plaintiff fails to prove there is a segregative effect in their prima facie case, they will likely suffer the same fate that the Supreme Court prescribed in Inclusive Communities: “[P]rompt resolution” in favor of the defendant.²⁰⁴

Despite their similarities, three main differences separate disparate impact theory from segregative-effect theory. First, according to HUD, the former reflects “harm to a particular group of persons,” while the latter is “harm to the community generally by creating, increasing, reinforcing, or perpetuating segregated housing patterns [because of any protected characteristic].”²⁰⁵ Second, while disparate impact claims might only be able to challenge policies of a municipal defendant,²⁰⁶ a plaintiff can lob segregative-effect claims at both one-off decisions and general ordinances.²⁰⁷ Third, and most importantly, segregative-effect claims do not require a comparison group.²⁰⁸ Plaintiffs need not compare one community to another; they must only prove that a law or decision inflicts a segregative effect on the community generally. The “community generally” identified by HUD seems to include only the bounds of whatever local government is being sued—not the local area or metropolitan region as a whole.²⁰⁹ Further, a government action need not affirmatively further segregation—in fact, segregative-effect theory has led to liability where a municipality rejected housing projects that would have reduced segregation.²¹⁰

Segregative-effect claims are uniquely suited to the world of zoning decisions. These claims arise primarily when white neighborhoods block housing development.²¹¹ Courts have also affirmed seminal disparate impact cases on segregative-effect grounds. In Arlington Heights for example, the Seventh Circuit called the disparate impact proof “relatively weak” because 60 percent of eligible new residents in an apartment complex were white; nevertheless, the court found a potential discriminatory effect because “the construction . . . would be a significant step toward integrating the community.”²¹² The Second Circuit similarly chided the lower court in Huntington for ignoring the plaintiff’s segregative-effect claim and ruled that the predominantly white town’s rejection of an affordable housing project violated the FHA under both theories.²¹³

To successfully claim segregative effect, the “community” or area must not already be integrated.²¹⁴ But what’s the line between integrated and segregated? In Avenue 6E Investments, LLC v. City of Yuma, the plaintiffs claimed that Yuma’s unwillingness to rezone land in a mainly white neighborhood created a segregative effect between white and Hispanic residents.²¹⁵ The District Court—whose analysis the Ninth Circuit affirmed²¹⁶—found that there was no significant segregative effect because Hispanic individuals, who comprised 55 percent of Yuma’s population, were beginning to integrate the relevant neighborhood.²¹⁷ In many successful segregative-effect cases, on the other hand, the area to be integrated is “almost totally white.”²¹⁸

For economic claims, this line-drawing won’t pose much of a problem. Because the EFHA intends to curb exclusionary zoning, most offenders—especially the worst offenders—are nowhere near socioeconomic integration.²¹⁹

Segregative effect also makes life easier for plaintiffs because it requires a less expensive statistical showing compared to disparate-impact-based claims.²²⁰ The requirement that disparate-impact claimants must use comparators increases plaintiff costs because it’s often difficult to establish and gather sufficient data on a proper comparison group.²²¹ In segregative-effect cases, however, claimants don’t need to identify comparators. Instead, plaintiffs must first show an imbalance.²²² Past cases have achieved this using relatively simple and inexpensive methods like relying on census data.²²³ The plaintiffs don’t need to show a significant impact on segregation in the area relative to population.²²⁴ But it is not enough to simply identify racial imbalances, because the Supreme Court has held that would impermissibly lead to quotas.²²⁵ To avoid such a situation, the plaintiffs must also show that the policy or decision causes the segregative effect.²²⁶ However, causation may not pose nearly as much of a problem as it does under disparate impact, because HUD’s causation standard is more expansive²²⁷ for segregative effect than for disparate impact. The unresolved question, then, is how significant the segregative effect must be to prove a prima facie case.²²⁸ Compared to disparate treatment and disparate impact, segregative effect asks far less of plaintiffs. The theory is therefore ripe to further attack NIMBYism under its current racial framework.²²⁹

Under the EFHA, a segregative-effect claim might play out like this: Imagine a suburb where the median home price is $800,000 and 10% of its population are renters. In the first stage, the claimant would allege that the suburb’s single-family zoning perpetuates its segregated housing patterns because of poverty status. Census evidence of median income and the proportion of renters in relation to the entire metropolitan area, combined with evidence showing how single-family zoning excludes lower-income people, would be sufficient to prove a prima facie case. The plaintiff could clear this first hurdle in a cheaper and quicker manner compared to disparate impact. Then, as with disparate impact, the defendant would need to show a legitimate justification. In the third phase, the plaintiff could suggest a less discriminatory alternative that would satisfy the defendant’s interests.²³⁰

The main drawback to segregative effect—and disparate impact to a lesser extent—is Supreme Court animus. The near omission of segregative effect from the Inclusive Communities opinion²³¹ and its lack of an analog in Title VII doctrine puts the theory at risk.²³² The 1988 FHA amendments seem to have enshrined segregative effect as a legitimate cause of action, but the Court has never confirmed this interpretation.²³³ There has also never been a case where a segregative-effect claim succeeded while a disparate-impact claim failed.²³⁴ Because of segregative effect’s uncertain standing, states that enact an EFHA should specifically affirm the theory in their legislation—for example, by including language that state perpetuation of economic segregation is invalid under the EFHA.

II. Drawing the Contours of Economic Discrimination

This Part considers how to draw lines around the protected group and around the liable parties. First, it asks how states might define low-income status. Then it weighs whether to include various state and private actors as those potentially liable. Finally, it discusses which actions, such as policies or one-off decisions, would be challengeable under an EFHA.

The Protected Class

The below sections answer whether an EFHA should choose the neutral descriptor, “economic status,” or its non-neutral counterpart, “low-income status” when setting its protected class. If states limit the class to low-income status, they encounter a line-drawing problem. Should an EFHA protect the middle class and its ability to live in certain exclusive zip codes? The working class? Or only those below the federal poverty line?

EFHA drafters could just plug in “economic status” to the current list of FHA protected classes—that’s what the Equitable Housing Institute did in its initial EFHA draft.²³⁵ But without proper safeguards, simply adding “economic status” as a protection may be too broad and cause unintended consequences. “Economic status” could invalidate policies, like inclusionary zoning and government housing assistance, meant to reduce inequality by discriminating against those of higher socioeconomic status. It would protect the rich from exclusion, too, because of its neutrality.

To avoid this problem, drafters could use the term “economic status,” but include exemptions. For instance, housing strictly for older people has a clear discriminatory effect based on family status, a protected class under the FHA,²³⁶ as age-restricted housing discriminates against those with young children.²³⁷ Accordingly, the Fair Housing Amendments Act clarifies that no “provision in this subchapter regarding familial status appl[ies] with respect to housing for older persons.”²³⁸

A bill could provide, as the Equitable Housing Institute’s latest draft EFHA does, that “only regulatory barriers that would adversely affect housing opportunities for low- and moderate-income persons may be challenged through the provisions of this Act.”²³⁹ But under such an exception, states must define a moderate income. Thus, by specifically delineating the income level at which people receive “economic status” protection, legislatures would avoid the unintended consequence of outlawing programs designed to assist those in need.

Lawmakers could define the group in two ways. They could protect “economic status,” with the caveat that the rich do not receive protection. Or they could simply protect “low-income people” and draw a line, below which people are part of a protected class.²⁴⁰ Both scenarios necessitate the same, crucial decision: who is low- (or moderate-) income?

States must first set the criterion by which to measure poverty. The best available measure is a person’s income as a percentage of Area Median Income (AMI). Local governments and housing authorities already rely on a person’s AMI percentage to determine eligibility for income-restricted units, such as low-income housing.²⁴¹ Because most federal and state housing programs already use AMI,²⁴² it would be the simplest and most intuitive marker for states to implement. The specific definition of low-income would likely be somewhere under 80 percent of AMI—a class similarly eligible for income-restricted housing.²⁴³ For example, in Los Angeles County the 2023 AMI for a four-person household was about $98,000.²⁴⁴ A family earning under 80 percent of that number ($78,400) would be considered “lower income” under the county’s definition and would qualify for certain subsidized housing opportunities.²⁴⁵

Exactly where to set this number in an EFHA should be a key focus for lawmakers. But one might counterargue that a legislature’s choice of where to draw the line between poor and not poor—between protected and not protected—doesn’t matter. If EFHA plaintiffs can successfully challenge ordinances based solely on the argument that exclusionary zoning increases the cost of housing, then people across economic classes will benefit from looser land-use restrictions. With more supply unlocked, housing will be cheaper than it otherwise would have been with exclusionary zoning.

However, the practical impacts of an EFHA hinge upon where lawmakers draw the line; where that line is drawn may determine who can (and can’t) be accountable for discrimination under the EFHA. In high-cost-of-living areas, poor people may not be able to afford to move in, whether the municipal government rids itself of exclusionary zoning or not. The high cost of land makes low rents infeasible.²⁴⁶ So, a high-cost locality would not be discriminating,²⁴⁷ regardless of its discriminatory zoning policy, because those with low incomes couldn’t move in whether or not that zoning policy exists. In such a scenario, the worst offenders—places like Marin County, California²⁴⁸—could entirely escape liability, because plaintiffs could not possibly prove that the zoning policy caused the protected class to suffer harm. By drawing the line as close to AMI as possible, thus expanding the population—the middle class—that is being discriminated against by the most expensive communities, legislators could protect against high-cost areas exploiting the EFHA to escape liability. Expanding the EFHA class to moderate-income people protects communities actually capable of gaining access to those communities. All that is to say: It matters how the protected class is drawn. If the line is drawn too narrowly, it may preclude the EFHA from regulating some of the nation’s worst offenders.

Still, in many places with high land costs, poor plaintiffs would still have a cause of action. For example, if a municipality (like Marin County) has an inclusionary zoning ordinance,²⁴⁹ a plaintiff could point to an ordinance that restricts the supply of any new housing to allege discrimination, because some percentage of that housing—even if it’s a luxury condo development—must be affordable. Towns that want to preserve exclusionary zoning would then have an incentive to do away with any inclusionary zoning ordinances they may have. Similarly, plaintiffs could cite restrictions that effectively ban apartment complexes²⁵⁰—which tend to be the most economically feasible for affordable housing developers using tax credits—to show disparate impact on the poor even in high-cost-of-living areas.²⁵¹

There are also downsides to drawing the class too generously. A protected class that includes moderate income people may jeopardize segregative-effect claims. As discussed in Part I, areas must not already be integrated to allege segregative effect.²⁵² Thus, when a protected class is larger and more economically diverse, segregation becomes harder to prove. But if the protected class is restricted to low-income people and those people are almost entirely excluded from a certain area, a plaintiff can more easily show segregative effect.²⁵³

Taking these scenarios into consideration, legislatures have a choice: Protect only the poorest through the segregative-effect theory, or protect moderate income people through the disparate-impact and disparate-treatment theories. Because segregative effect is such an underdeveloped concept,²⁵⁴ and because protected classes have never been drawn based on income, I stress that these scenarios are mere hypotheticals, and these implications warrant further exploration.

Scope of Protection

I now consider who should be liable under an EFHA. Unlike Title VII—which applies only to employers—the FHA does not limit liability to certain actors. It instead focuses on the acts of discrimination.²⁵⁵ An EFHA, on the other hand, should name names to determine who and what should be held liable for discrimination. If not, it could encounter serious administrability problems.

Actors

An economic discrimination ban will inevitably rankle landlords and housing providers who depend on monthly rent. The purpose, though, is to target the “heartland” of disparate impact—municipal land-use policies—not landlords, developers, or public housing agencies. It would function as the land-use complement to bans on source-of-income discrimination, which almost exclusively prohibit landlords from discriminating against would-be tenants based on their income, including government assistance.²⁵⁶ Thus, an EFHA should shield landlords, developers, and public housing agencies from liability, but leave governments and their land-use policies open to legal challenges. In the below sections, I discuss whether and how to exempt those actors from EFHA litigation.

Landlords

Fair housing lawsuits already overwhelmingly target landlords; an EFHA should not. For obvious practical reasons, landlords need to be able to exclude tenants whose incomes cannot support regular rent payments. Therefore, landlords are always engaging in economic discrimination. An EFHA could exempt landlords in one of two ways. The first option is to codify such an exemption, which would be clear, politically practical, and easy enough to construct.²⁵⁷

However, exempting landlords could weaken the EFHA’s possible impact by permitting landlords to discriminate against lower-income people unfairly. For instance, in an area with high demand, a landlord might try to select the richest tenant possible by requiring a very high income-to-rent ratio, even when most people with a lower ratio would reliably pay rent. Such a flat exemption may create a loophole for landlords and weaken the EFHA’s possible impact.

Alternatively, to accomplish both goals—protecting landlords from the brunt of an EFHA but also cracking down on astronomical income-to-rent ratios—policymakers could enshrine “ability to pay” as a legitimate justification for landlords. Under this affirmative-defense scheme, plaintiffs would first make a prima facie case of both disparate treatment and disparate impact, prompting courts to then consider whether the landlord’s required minimum income-to-rent ratio is a legitimate justification²⁵⁸ at the second, burden-shifting step.²⁵⁹ In step three, plaintiffs may be able to suggest less discriminatory means to achieve the legitimate justification (getting reliable rent payments)—here, that could mean simply lowering the required income-to-rent ratio. In choosing between these options, legislatures must decide whether they want to go after exorbitant income-to-rent ratios and whether it is politically feasible to include landlords as potentially liable.

Developers

Developers have little reason to worry about an EFHA. In Inclusive Communities, the Supreme Court took pains to protect developers from much, if any, disparate impact litigation: “If the specter of disparate impact litigation causes private developers to no longer construct or renovate housing units for low-income individuals, then the FHA would have undermined its own purpose as well as the free-market system.”²⁶⁰ Writing for the majority, Justice Kennedy mused that a developer’s choice of where to locate a project would be either exempt from disparate-impact liability or a per se valid interest that could overcome a plaintiff’s prima facie case of discrimination.²⁶¹ Although the Inclusive Communities opinion did not focus on segregative effect, the Court’s strong language that protects developers from disparate impact attacks makes it unlikely that a segregative-effect claim against a developer would survive summary judgment.

As Justice Kennedy worried, “abusive disparate-impact claims” might discourage developers from building in low-income areas.²⁶² To assuage his concern, he gave developers “latitude to consider market factors”²⁶³ that would likely hold up as a legitimate justification for segregative effect. An EFHA, then, will help developers’ business, not hurt it.

Public Housing Agencies

Unlike developers, public housing agencies (PHAs) could be liable for decisions about where to locate public housing under the EFHA’s theory of segregative effect, as PHAs are now vis-à-vis race-based claims.²⁶⁴ That said, the tenor of the Inclusive Communities opinion implies that PHAs might have a good chance of winning similar protection. Also, because segregative effect is underdeveloped and may be on shaky ground,²⁶⁵ PHAs shouldn’t be alarmed by this prospect. Wary states may want to include language specifically exempting PHAs from these claims, though.

Generally, however, just as PHAs are not liable under source-of-income discrimination statutes, they likely wouldn’t face EFHA liability. A PHA would likely be safe even if it implemented an income minimum in addition to its existing income limit. For instance, say the PHA adopts a policy stating that prospective residents must make between 20 percent and 80 percent of AMI to receive assistance. Arguably, that policy would discriminate against a group of people with low incomes—the 0–20 percent group—based on poverty status. Under the AMI definition of “low-income status”—say, people earning below 80 percent of AMI—those who live in public housing would form part of the protected class. Consequently, a plaintiff couldn’t show disparate treatment or impact, because the comparator must come entirely from outside the protected class.²⁶⁶ Even if plaintiffs were successful in creating a prima facie case here, PHAs, just like landlords, might raise something akin to a legitimate justification defense in this situation, to the extent that they depend on rent to continue operating.

Actions

Finally, in addition to deciding who an EFHA claim would implicate, legislatures must also choose what actions an EFHA implicates. States enacting an EFHA should make clear that their law applies to both one-time decisions and policies. This distinction matters most for the future of disparate impact claims, as disparate-treatment theory and segregative-effect theory clearly apply to both one-time decisions and policies.²⁶⁷

The strict causation requirement for disparate impact theory means claims based on one-time project siting decisions will generally fail. The Court specifically pointed to this issue in its Inclusive Communities decision, expressing its skepticism—in dicta—that plaintiffs challenging one-off decisions could demonstrate there was a “policy at all” or properly show causation.²⁶⁸

However, some scholars have argued that this dicta does not preclude all or even most one-time decisions from disparate-impact liability, because plaintiffs have won notable disparate impact cases challenging individual zoning decisions.²⁶⁹ Circuit courts have split on how to interpret Inclusive Communities’s dicta. The Seventh Circuit used the distinction between one-time decisions and policies to reject a disparate impact claim about a decision to condemn a housing complex.²⁷⁰ The Eighth Circuit followed suit, rejecting a disparate impact claim related to increased enforcement of local housing code in low-income apartment buildings.²⁷¹ On the other hand, the Second Circuit declined to apply this distinction in Mhany Management, Inc. v. County of Nassau, which concerned the one-off decision to rezone a particular plot of land to prevent multi-family housing.²⁷² However, the implications of Mhany are complicated because the court nonetheless considered whether the zoning change itself was part of a larger “policy”—i.e., a subset of the zoning ordinance as a whole.²⁷³ The court ultimately thought not, but the facts of Mhany differ significantly from those considered at the Seventh and Eighth Circuits.

While the principal goal of an EFHA is to combat exclusionary zoning policies, one-off decisions, even those wholly separate from larger zoning schemes, matter—both for the individuals who would have lived in a new development but for its rejection, and for the deterrent effect on unjustified exclusion elsewhere (that is, if exclusionary decisions are routinely and swiftly rejected, local governments will theoretically be less likely to try to exclude). If one-off decisions cannot create liability under an EFHA, what’s to prevent a city from allowing multi-family housing but effectively preventing it through endless public hearings, administrative reviews, and a string of rejections? Such tactics are not unusual.²⁷⁴

Even if disparate impact claims can only challenge policies, a series of single decisions—here, the repeated refusal to approve housing—may still constitute a “policy.”²⁷⁵ The answer seems to be “yes” because systems that promote discretionary decision-making can form disparate impact claims.²⁷⁶ An EFHA might properly address this problem in states like California, where a number of local governments engage in such behavior.²⁷⁷ There, an EFHA may enable plaintiffs to sue based on a pattern of decisions that block housing.

Whether one-time decisions can be challenged under disparate impact theory is unclear. It’s an important question for the future of FHA plaintiffs, especially in the land-use arena. Even if only policies face scrutiny, an EFHA could still make an impact on one-time decisions using the segregative-effect or disparate-treatment theories.

III. The Legal Case for an EFHA

It is the goal of this Note to offer a fair evaluation of the legal implications that come with an EFHA. In the final Part, I sketch out three drawbacks and three benefits to such a scheme. I do not purport to have considered every possible problem or advantage that may come with this change. Only in practice will we become clear-eyed about the EFHA and its potential. In making the legal case for an EFHA, I argue not that it will surely work as intended, but merely that it is worth a try.

Benefits

An EFHA would improve upon the current landscape of fair housing zoning lawsuits in three principal ways.

First, such legislation would make the prima facie case of disparate impact and segregative effect easier to prove. In its Inclusive Communities decision, the Court emphasized the strict causality requirement that plaintiffs must fulfill to plead a prima facie case.²⁷⁸ This requirement forces plaintiffs to show both a statistical disparity and a policy-caused discriminatory effect.²⁷⁹ The rigorous showing necessary to survive summary judgment keeps many plaintiffs out of court. An EFHA can lessen that burden of statistical proof by removing the requirement to show large racial disparities caused by the challenged government action.²⁸⁰ Lessening that burden would lower plaintiff’s barrier to entry and move suits along. It would also make fair housing more efficient and less expensive while encouraging litigation to more effectively deter exclusionary governance.

Second, an EFHA would shift courts’ focus to legitimate justifications and balancing—part two of HUD’s three-part burden-shifting test. Instead of hinging on the plaintiff’s ability to show a sufficient relationship between race, income, and new residents, a claim’s success would more likely be determined at the second stage: balancing a municipality’s legitimate public policy interest against the disparate impact or segregative effect that policy inflicts on the poor.²⁸¹

Finally, an EFHA would be a natural continuation of the growing movement to protect renters against source-of-income discrimination. As of 2024, nineteen states ban source-of-income discrimination.²⁸² These statutes target discrimination based on the source of a would-be renter’s income—usually meaning government housing vouchers.²⁸³ Most source-of-income lawsuits target private landlords who refuse to take federal Housing Choice Vouchers (HCVs).²⁸⁴ Few, if any, have targeted state actors or exclusionary zoning.²⁸⁵ But families must wait years and years on HCV waiting lists. Three out of four low-income families eligible to receive a voucher didn’t have one as of 2023.²⁸⁶ In a way, an EFHA would protect the same class—the poor—from the same injury—a lack of housing options. By increasing the sheer number of housing opportunities, especially income-restricted units, the EFHA would protect far more members of that class than the existing source-of-income regime while combatting exclusionary zoning.

Drawbacks

With such ambitious legislation, practical concerns naturally abound. First, there’s the concern that politically, the EFHA will never happen.²⁸⁷ Federally, this concern is legitimate. But states seem to be adopting more aggressive pro-housing reforms.²⁸⁸ For instance, between 2018 and 2024, nine states enacted source-of-income protections.²⁸⁹ An EFHA faces the clearest path to enactment in high-cost blue states, where YIMBY activists and fair housing advocates could push this legislation across the finish line.

Then there’s the concern that a firehose of litigation will implicate every suburb.²⁹⁰ To address this problem, states could build “cautionary safeguards” into their EFHAs to prevent “abusive litigation.”²⁹¹ I recommend that states tie their EFHA to a safe-harbor mechanism which protects municipalities from exposure to lawsuits if they allow for their fair share of housing.²⁹² For instance, California could declare that municipal governments that fulfill their responsibilities to plan for more homes under the Housing Element law would be immune from EFHA litigation. Or states could outline certain benchmarks in the EFHA itself that usher municipalities into the safe harbor. In other words, if local governments make good-faith efforts to allow housing, they’ll be fine.²⁹³

The problem is, too many local governments act in bad faith, and they’ve been acting in bad faith since zoning was born.²⁹⁴ The Fair Housing Act of 1968 was supposed to stop arbitrary exclusion, but its current conception cannot achieve that goal. An Economic Fair Housing Act could help.

Conclusion

This Note prompts lawmakers to consider an EFHA’s potential to integrate America. It aims to further the legal nuts and bolts of an EFHA. There will undoubtedly be kinks to work out and compromises to be made—but that’s what laboratories of democracy are made for. An ambitious state legislature should shoulder this important task.

* J.D. Candidate, May 2025, University of Michigan Law School. Thank you to Professor Noah Kazis for serving as my advisor on this Note, and for teaching me Local Government law; the excellent Michigan Law Review Notes editors: Kavitha Babu, Salvatore Guido, Alex Izbiky, Jeesae Kim, Lulu Qian and Sara Shapiro; Alex Armlovich and Andrew Justus of the Niskanen Center, who helped me develop my thoughts; and my mother, Nancy Jordan, for her layperson feedback. All mistakes are mine.