F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

A V E N U E 6E I N V E S T M E N T S , L L C, an Ariz ona limited liability

company ; S A G U A R O D E S E R

T L A N D , I N C ., an Ariz ona corporation,

Plaintiffs-Appellants

,

v

.

C I T Y O F Y U M

A , Ariz ona, a municipal corporation, Defendant-Appellee

. N o. 13-16159

D.C. No. 2:09-cv-00297- J W S

OPI NI ON

A ppeal from the United States District Court for the District of Ariz o na J ohn W . Sedwick, District J udg e, Presiding

Arg ued and Submitted Aug ust 13, 2015—San F rancisco, California

F iled March 25, 2016

B efore: Stephen Reinhardt, A. W allace Tashima, and Consuelo M. Callahan, Circuit J udg es.

Opinion by

J udg e ReinhardtA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 2

SUMMARY *

Civil Rights

The panel reverse d t h e d istrict court’s dismissal o f a complaint for failure t o state a claim, reversed the district court’s summary judg ment in f avor of def

e n dant, a nd remanded in a

n action broug ht by

two real estate developers who asserted that t h e C i t y of Y uma’s refusal to rez one land to permit hig h er-density

development violated, among other thing s, the Equal Protect i o n C l ause and the federal F air Housing Act.

Plaintiffs asserted that the City ’ s r e fusal stemmed from intentional discrimination ag ainst Hispanics and cr e ated a disparate impact because the d enial disp r oportionately deprived Hispanic residents o f housing opportunities a nd perpetuated seg

reg ation.

Taking the factual alleg ations in the complaint a s true, the panel first held that p laintiffs presented plaus i b l e claims for relief for disparate treatment under the F air Housing Act a nd under the Equal Protection Clause. The panel noted that the City Council denied plaintiffs’ r equest f or rez oning despite the advice of its own ex perts to the contrary and in the
contex t of what a reasonable jury could interpret as racially charg ed opposition b y Y uma r e s i dents. Given these circumstances, t h e panel determined that the complaint passed the p lausibility b a r

. The panel remanded to the district court on these claims.

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 3

The panel reversed the district court’s grant of summary judg ment in favor of the City on plaintiffs’ disparate-impact claim and vacated the d istrict court’s denial of the City ’s second summary judg ment motion as moot. The panel rejected the district court’s view that other similarly -priced

a n d s i m i l ar l y

- m o delled housing available e l s e wh e r e necessarily precluded a finding that there w as a di s p a r a t e impact. The panel r emanded f o r the district court to address the City ’ s second motion for summary judg ment in the first instance.

COUNSEL

Eliz abeth B r ancart (arg ue d) and Christopher B rancart, Br an cart & B rancart, Pescadero, California, for Plaintiffs

Appellants.

Andrew M. J acobs (arg

ued), Snell & W ilmer L .L .P., Tucson, Ariz ona; V aug hn A. Crawford, Martha E. Gibbs, a nd B enjamin M. Mitsuda, Snell & W ilmer L .L

. P

. , P h oenix

, Ariz ona, for Defendant-Appellee.

OP INION

REI NHARDT, Circuit J udg e:

The F a ir Housing Act (F H A) is one of the most important pieces o f leg islation to be enacted by the Cong ress in the past 60 y ears. I t strikes a t the heart of the persistent racism that so deeply troubles our Nation. Here, we d eal with one aspect o f
t hat law: zoning or rez oning of land as it a ffects t h eA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 4

construction of housing that may be affordable by sig nificant numbers of members of minority g roups.

Plaintiffs, two real estate developers (“Developer s ”), bring this c ase ag ainst the City of Yuma, contending that the City ’ s ref

u s a l to r ez one land to p ermit hig her-density development violated

, a m ong other thing s, the E q ual Protection Claus e o f t he United States Constitution a nd the federal F air Housing Act (F HA). I n particular, D evelopers maintain that the City ’s refu s al stemmed from intentional discrimination a ga i nst Hispanics and created a disparate impact because the denial disproportionately d e prives H i s p anic residents of h ousing opportunities and perpetuates seg reg ation. T h e district c ourt first dismissed Developers’ Equal Protection and F HA disparate-treatment claims under Rule 1 2(b)(6) for failure t o s t a t e a claim and denied Developers’ motion for leave to file a S e cond Amended Complaint. I t then g ranted summary judg ment in favor of the City on D evelopers’ disparate-impact cl aim, rejecting both theories on which Developers relied.

Taking the factual alleg ations in the complaint as true, we first hold that Developers presented plausible claims for relief for disparate treatment under the F H A and u n d er the E q ual Protection Clause

. The City Council denied Developers’
reque s t f or rez oning despite the advice of its own ex p erts to the contrary and in the contex t of what a reas o n a b le jury

co u l d interpret as racially charg ed opposition by Yuma residents. This was the only request f or rez oning that the City had denied in the last three y ears or of the last 76 applications. We reverse the district court because it failed to give sufficient weig h t to the City Council’s allege d capitulation to the animus of the d evelopment’s opponents, in the face of the City ’s own ex p e rt ’ s recommendation toA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 5

a p p r o ve the request and its practice of g enerally g rantin g these r equests. Give n these c ircumstances, the complaint
passes the p lausibility bar. W e remand to the district court on these claims.

W e a lso reverse and remand the district court’s g rant of
summary judg ment in favor of the Ci t y on Developers’ disparate-impact claim a

nd vacate its denial of th e s e cond
summary j u d gm e n t motion as moot. W e reject the district court’s v iew that other similarly -priced and similar ly

modelled housing available e lsewhere necessarily precluded

a fi nding that there was a disparate impact. W e remand for the district c ourt to address the City ’s seco n d m o t i o n for
summary judg ment in the first instance. 1

JURISDICTION

The district court had jurisdiction over Developers’ § 1983 claims under 28 U .S.C. §§ 1331 and 1 3 4 3 a n d over Developers’ F HA claims under 28 U.S. C

. § 1331. See Munger v. City of Glasgow P olice Dep’t
, 227 F .3d 1082, 1085 (9th Cir. 2000). W e h ave jurisdiction over Developers’ appeal under 28 U.S.C

. § 1291. S ee Budnick v

. Town of Carefree , 518 F .3d 1109, 1113 (9th Cir. 2008).

LEG AL STANDARDS

Dismissal of a complaint under Rule 12(b)(6) i s inappropriate unless the complaint fails to “ s t a t e a claim to relief that is plausible on i t s f ac e.” Bell Atl. Corp. v

.

1 In th at m o t io n , th e City co n ten d s th at Dev elo pers h av e f ailed to p ro f

f er statistical ev i d en ce d em o n stratin g a su b stan tial d isp arate im

pact resu ltin g f ro m th e zo n in g d en ial.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 6

Twombly

, 550 U.S. 544, 570 (2007). “W hen the district court d e nies leave to a mend [ a complaint] because of futility o f amendment, we will uphold such d enial if it is clear, upon de

novo review, that the complaint would not be saved by any amendment.” Carvalho v. Equifax Info. Servs.

, LLC
, 629 F .3d 876, 893 (9th Cir. 2010). A district court’s g rant o f
summary judg ment is also r eviewed de n ovo. Pac. Shores Props., LLC v

. City of Newport Beach

, 730 F .3d 1142, 1156 (9th Cir. 2013).

F ACTUAL BACK G ROUND

A c cording to the complaint, Plaintiffs, Avenue 6E I nvestments, L L C and Sag uaro Desert L and, I nc. are business entities owned by members of the Hall family

, who develop housing in Y uma, A riz ona. T h r oug h Developers and other affiliated companies, members of the Hall family have developed various affordable and moderately priced housing projects in Y uma. Thus, Developers are sometimes referred
to as “ Hall” or “Hall Construction.” Deve lopers alleg e that

even thoug h the Hall family ’s a ffilia t ed companies b uild a full rang e of housing products, they n evertheles s have a reputation as a developer of Hispanic neig hborhoods based
upon their d evelopm e n t o f s e v e ral affordable housing projects i n Y u ma in which the majority of homes were sold t o Hispanics.

Avenue 6E owned 42 acres of undeveloped land in southeastern Yuma (the “ Property ”), and g ranted Sag uaro an option to p urchase the Property for the purpose of developing

a “moderately

priced” housing project. As Developers state in t h e i r opening brief on appeal, their references to their proposed d e v elopment as “affordable” and “moderately priced” a r e descriptive only and do n ot imply that suchA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 7

projects are considered “affordable” as defined b y the United States D epartment of Housing and Urban Development. Developers alleg e that t h e C ity denied a requested z oning chang e in September 2008 in response to ani m u s b y neig hbors o f the proposed d evelopment who wis h ed to prevent the development of a heavily Hispanic neig h borhood adjacent to their subdivisions, in which 75% of the population was W hite.

B e tween 2002 and 2 010, the City performed two analy ses—specifically

, the Con s o l idated Plan and Analy sis of I mpediments to F air Housing Choice for 2002, as well a s

a 2007 version by the s a me name (respectively

, the “2002 Analy sis o f I m p ediments” a n d the “2007 A naly sis o f I mpediments”)—each showing that the Hispanic population in Yuma was c oncentrated in several areas i n t h e northern, western, and c entral portions of the City

. The analy ses show that substantially all of the available low- to moderate-income housing was located in those areas, a n d t h a t m o re than 75% of the households in that housing w ere Hispanic. The reports found that, by contrast, W hites were concentrated in separate

areas in the n orthwest and southeast o f Y u m a in which they comprised more than 75% of the population. The Property is

on the western boundary of what w as, at that time, one of the W h ite-majority

areas in the Southeast portion of Yuma.

The City ’s General Plan p r o h i bits actions promoting racial segr e g a t ion, and its 2 002 Analy sis o f I mpediments
recog niz es th e n eed to encourag e the development of more affordable h ousi n g choices to low- and moderate-income citiz ens outside the ar ea s with h ig h concentrations o f Hispanic households. T h e 2002 A naly sis warned, however, that resi d ents had used “NI MB Y” (not-in-my -backy ard)
arg uments to block o r delay several affordab l e housingA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 8

developments; the Ana l y s i s t h u s r e c o m m e n d e d an educational c ampaig n to promote acceptance o f a ffordable housing

, l o w e r

- i ncome neig hborhoods, and cultural diversity

. T h e General Plan a cknowledg e s that larg e-lot z oning ra i s e s housing costs and impairs the avai l a bility of housing affordable t o low- a

nd moderate-income purchasers, a nd identifies h ig her-density zoning as a means for the City to encourage deseg reg ation. The 2002 General Plan noted wealth disparities within Yuma, stating that “H i s p anic, African American and Native American households are more likely to h a ve lower income and live below the poverty line.”

The City ’s G eneral Plan desig nates the Property for use

as “ L ow D ensity Residential.” This desig nation encompasses two permissible zoning desig nations: “ R-1-6” z oning

, which allows d evelopment of a residential s u bdivision of houses placed on 6,000 square foot lots, and “R-1-8” z o ning

, which requires t h e use of at least 8,000 square foot lots. I n 2006, Developers purchased the Property from KDC o f Yuma, L L C (“KDC”), another housing developer, which h ad previously

rez oned the Property from ag ricultural u s e to R-1-8. The Property is b ordered on the south by the 3 8

- a c r e “B e llez a Subdivi s i o n,” which consists of homes on lots ex ceeding 9,000 square feet; on the n orth by the “Country Roads” recreational villag e, consisting o f 2 ,500 square foot lots limited to persons ag e 55 and over; on the west by the 8 0-acre “Terra B e lla Subdivision” owned by Perricone Development Group I I (“Perricone”), a developer of lux ury homes; a nd to the east by a p a r c e l the City intends to use to ex pand a wastewater facility and a municipal park.

I n 2008, Developers determined that development of the Property with R-1-8 z oning was no long er financially feasible due to the collapse of the housing market and a correspondingA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 9

difficulty in selling 8,000 square foot lots. They determined, howeve r , that there ex isted a need in Yuma for more

a f f o r d a ble h ousing

, a

nd d esig ned a hig her-densi t y , moderately priced housing project for the Property consistent with the City ’s General P l an and c o n sisting of 6,000 square foot lots. Developers subsequently applied to rez o ne the Property from R-1-8 to R-1-6. The City ’s staff and in-house planni n g ex perts both r ecommended approval of the z oning request.

Subsequently

, the City Planning a nd Z oning Commission held a p ublic hearing o n Developers’ z oning application. Several homeowners from the B ellez a Subdivision wrote letters or spoke at the hearing o b j e c ting that Developers “catered” to low- t o m o derate-income families. They

c o m p l a i n e d t h a t t h e p eo p l e l i v i n g i n “t h e H a l l neig hborhoods” tended to have larg e h ouseholds, use sing lefamily homes as multi-family dwelling s, allow unattended children to roam the streets, own nume r o us vehicles which they parked in the streets and in their y a rds, lack pride o f ownership, and fail to maintain their residen ces. These characteris t i c s , D e v e l o p e r s a l l e ge , c o i ncide w ith a stereoty pical d escription of Yuma’s Hispanic neig hborhoods. The Commission voted unanimously to approve the rez oning request, n oting t hat many subdivisions w ith small-siz ed lots had p reviou sly been b uilt adjacent to larg e-siz ed lot subdivisions w ithout incident. The rez oning r equest was then forwarded to the City Council with the r ecommen d a tions o f the Planning Staff and the Planning and Z oning Commission that the request be granted.

Prior to r endering its decision, the City Council received complaints from landowners near the Property commenting

on the fact that Developers b u i l d affordable housing a ndA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 10

criticiz ing the proposed development in t e rms Developers alleg e are well-known in Y uma a s descriptive o f Hispanic neig hborhoods. One landowner complained that Developers’
pr o posal would create “a low cost, hig h crime neig hborhood.” The City Council held a public hearing

. Several landowners

a ttending the hearing broug ht photog raphs of Developers’ Trail Estate Subdivision, in which 77% of homebuy ers were Hispanic, which they identi f i e d as an “affordable housing project.” One B ellez a homeowner sent the followi n g letter asking the City C o u n c il to deny Developers’ rez oning request:

W e as well as many other families ar e very

a wa r e o f t h e t y

p e o f ‘ h o m e s ’ a n d ‘neig hborhoods’ the ‘ H all Construction’
company has built in the past. I f any of the council members a

re u naware of what I am referring to, I urg e them to p l e ase drive throug h the many ‘Hall’ neig h borhoods in particular the ones with the comparable price and square footage that the Halls have proposed to build nex t to us. After doing so I ask council members to p lease ask themselves if they would want to l i v e around these areas after having paid su ch a sig nificant amount for their home.

. . . F rom my fi r s t h a nd

e x p e r i e n c e i n c o m p a r i n g t h e s e H a l l

s u b d i v i s i o n s w i t h o u r s u b d i v i s i o n s particularly Kerley subdivision, it is e viden t that the Hall subdivis i o n h a s a hig her rate o f unattended juveniles roaming the street s , a s well as domestic violence, theft, burg laries, and criminal damag e/vandalism to properties. I t was my ex perience that many o w ners o fA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 11

these h omes left juveniles unattended as well

a s many o f these homes were not singl e family dwelling s like they were desig nated to b e and instead turned into multifamily dwelling s which i n turn led to more unattended juveniles and crime.

. . . W e find it
very disappointing that we have worked very hard to keep out children o ut of areas like this,

as well as worked very hard t o c o m e up with the funds in o rder to buy the home that we live in. Now we a

re faced w ith the possibility that on ce ag ain the Hall Construction
company wants to add anothe r o n e of these ‘subdivisions’ in Yuma.

Another landowner sent a letter to the Council stating that:

According to the US De p artment of J ustice, households with incomes o f less than $75,000

acco u n t for 91% of all crimes n ationally a s well as 91% of all rape, murder, assault, armed robbery , etc. The ty pe of lots a

nd h ouses that Hall Construction is considerin g will be catering to this g r o up of p eople. W hat wi l l t h i s cost the city and county of Yuma to patrol this area a

nd how many innocent victims from B ellez a, Terra B ella and Tillman Estates will fall vict i m t o a predator in this 91% demog raphic?

A third landowner complaine d t h a t g raffiti is a p roblem in small-home subdivisions. One Councilmember describ e d the Hall Companies’ subdivisions as having cars parked o n t h e streets a nd in y ards, and a sked whether the g arag e sA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 12

envisioned for the Pr o p erty would be larg e enoug h to accommodate pickup trucks.

Developers proposed creating a “buffer” z o ne of 8,000
square foot lots separating the Property from the B ellez a a nd Terra B ella subdivisions, w ith 6,000 square foot lot s p laced between the buffe r z o n e and the Country Roads RV park. One landowner commented that Developers’ proposal would
create a smoo t h t r a n sition in terms o f lot siz e, but not o f “ownership demog raphics.” Reacting to the c riticism o f De v elopers’ proposal, a City Council member stated that subdivisions of different densities will i n e v i t a bly abut e ach other

, and v oiced his c o n cern that deny ing Developers’ application on the basis of the community ’s concerns would
create an “unsusta i n able p recedent” for future z oning decisions. 2 At the conclusion of the h earing

, the City Council denied Developers’ rez o ning request. 3 This rez oning request

was the o nly o ne of 76 applications cons i d e r e d by the City Council over the preceding three y ears that it had rejected.

P ROCEDURAL BACK G R OUND

Developers commenced this action in F ebruary 20 0 9, alleg ing a claim under 4 2 U.S.C. § 1 983 for violation of the Equal Protection C l a u s e of the F o urteenth Amendment a nd

2 A lth o u g h th e Seco n d A m en d ed Co m p lain t id en tif

i es th e sp eak er as th e Yu m a May o r, Dev elo pers state in th eir Op en in g Brief t h at t h e sp eak er w as in f act a m em

b er o f th e City Co u n cil.

3 A lth o u g h n o t relev an t to th e co m p lain t (o r m o tio n to d ism iss), th e City d isp u tes Dev elo p ers’ acco u n t an d m ain tain s th at it d en i ed th e zo n in g req u est becau se p ro p erty o w n ers h ad relied u

p o n th e p re- ex isti n g R

- 1- 8

zo n in g d esig n atio n an d b ecau s e Dev elo p ers, rath er th an th e C ity

, rej ected

a co m p ro m ise b u f

f er- zo n e p lan

.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 13

claims of disparate impact and d isparate treatment under the Fa i r Housing A ct (F HA), 42 U.S.C. § 3601 et seq

. I n ear l y 2010, the d istrict court g ranted the City ’s m otion to dismiss Developers’ disparate-treatment claims under the E q ual Protection Clause and the F HA, 4 b ut denied the City ’ s motion

as to Developers’ disparate-impact claim under the FH A

. 5 L ater that y ear, Developers filed a motion for l e a v e to file a Second Amended Complaint, which attempted, inter alia, to ad d additional facts, including the fact that the Developers’

rez oning request was the only one r ejected out of 76 in the preceding three y ears. The district c ourt denied this motion to amend on the g r ound that amendment would be futile.

After completing discovery on Developers’ remaining claim, the d isparate-impact claim, the City filed two motions for summary judg ment reg arding that c laim. The first motion contended that Developers could not prove disparate impact because there was an adequate supply o f similarly priced a nd modelled housing in the Southeast quadrant of Yuma and that “on this separate and d istinct b asis a lone” summary judg ment should be g r anted. I n that motion, the City proffered no other

reason for the g rant of summary j u d gment. F o ur day s later, the City filed the second m o t i o n , i n which it contended that (1) Developers’ had failed to show a disparate impact on H i s p anics resulting from the denial of the rez onin g

4 W e ref er to b o th th e claim f

o r in ten tio n al d iscrim in atio n u n d e r t h e Eq u al P ro t ectio n Clau se an d th e d isp arate- treatm en t claim u n d er th e FHA as “ d isp arate- t

reatm en t claim s” f

o r ease o f an aly sis.

5 T h e d istrict co u rt also d ism issed Dev elo p ers’ su bstan t iv e d u e p ro cess claim s u n d er th e Fed eral an d A rizo n a C o n s t i t u

tio n s as w ell as a claim

u n d er A rizo n a Rev ised Statu te § 9

- 4 52

- 0 1 (F), w h ich req u ires th at

rezo n in g o rd in an ces co n f orm t o th e ad o p ted g en eral p lan of th e

m u n icip ality . Dev elo p ers d o n o t ap p eal th e d ism issal o f th ese claim s.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 14

application, and (2) the City denied the rez oning application for leg al l y s ufficient reasons. The district court g ranted the City ’ s first summary judg ment motion, 6 ex pressly stating that it d i d not reach the issues raised by the second motion, a nd then denied the second motion as moot. 7 I t entered judg ment, holding that the adequate supply o f similarly -priced a nd modelled h ousing in Southeast Yuma foreclosed any finding of disparate impact. Ave. 6E
, 2013 W L 2455928, at *2, *7. The district court also rejected Developers’ perpetuation-ofseg reg ation theory f

or its disparate-impact claim. I t held that undisputed statistics showe d that “the integ rative e ffect o f that d evelopment

. . . would not have been sig nificant enoug h
t o s u p port a disparate impact claim” based on the
p e r p etuation-of-seg reg ation theory

. Id. at *7. Develope rs timely appealed.

ANALYSIS

Developers challeng e the district court’s dismi s s a l o f their disparate-treatment claims and g rant of the City ’s first motion for summary judg ment on the disparate-impact claim. W e first outline the avenues for re l i e f available under the F H A and then turn to the issues presented by this appeal.

I.

Enacted i n t h e late 1960s f ollowing the assassination o f Dr. Martin L uther K ing J r., th e F air Housing A ct came a t a

6 Ave. 6 E In vs., L

LC v. C ity o f Yu m a , 2 0 1 3 W L 2 4 5 5 9 2 8 (D. A riz. 2 0 1 3 ).

7 Ord er an d Op i n io n o n Mo tio n f o r Su m m ary J u d g m en t, Ave. 6E In vs., LLC v. City o

f Yu ma , No

. 09

- 0 0 2 97 (D. A riz. J u n e 5
, 2 0 1 3 ), ECF No

. 1 9 0

.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 15

time of “consider able social unrest.” Tex. Dep’t of H ous. & Cmty. A ffair s v

. Inclusive Cmties. Project, Inc.
, 135 S. Ct. 2507, 2516 ( 2015). B y the mid-1960s, Cong ress h ad addressed discrimination in public accommodations a nd
vot ing throug h major leg islation; y et, it had failed to tackle discrimination in housing

, the area that d etermined m i l l i ons of citiz ens’ daily life ex p eriences, a s well as who their neig hbors would be, w hic h s c hools their children would attend, and the g eneral social environment in which they would g r o w up or live. Combined with the advent o f L evittown-like s u b urban developments across the country ,

“ v a r ious practices

. . . , sometimes with g overnment al support,

. . . encourag e[ d] and maintain[ e d] the separation o f the r aces , ” i n c l u ding racially r estrictive covenants, blockbusting

, and redlining

. Id

. at 2515. Government policy

, which p romised n ot to chang e a neig hborhood’s composition when constructing affordable housing

, ex acerbated the stark
seg reg ation in America’s cities. B rief for Housing S c holars

as Amici Curiae Supporting Respondents, Texas D e p ’t of Hous. (No. 1 3 -1371), 9–16. Altog ether, as the Kerner Commission warned, t he nation was “moving towards two societies, one black, one white—separate a nd unequal.” Texas Dep’t of Hous.
, 1 35 S. Ct. at 2516 (quoting Report o f the National Advisory Commission on Civil Diso r d e rs 1 (Kerner Commission)). I t took this “ g rim prophecy

, ” and the social u nrest that g ripped the country f ollowing the murder o f Dr. King

, for Cong ress to a ct and pass the F HA. Id

. at 2516, 2525.

T he F H A declares that “it is the policy of the U n i t e d States to provide

, w i t hin constitutional limitations, for fair housing throug hout the United States.” 42 U.S.C. § 3 601. T o achieve this g oal, the F HA r e nders it unlawful to, a mong other thing s, “make unav a i l ab l e or deny

, a d welling to anyA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 16

person because of race, color, relig ion, sex , familial status, o r national ori gi n

. ” 4 2 U.S.C. § 3604(a). As relevant to this case, it provides several tools to do so.

F irst, and most obvious, it p rohibits intentional discrimination—that is, disparat e treatment. A private developer or g overnmental body cannot refuse to sell or rent housing to someone because o f that p erson’s race, relig ion,
g ende r, or other protected c h aracteristic, nor can a g overnment z one land or refuse to z one land out o f concern that minorities would enter a neig hborhood. See Pac. Shores Props.
, 7 3 0 F.3d at 1157 (noting that the F HA prohibits discriminatory z oning practices). I f a g over nmental actor eng ag es in this discrimination, such c onduct also violates the Equal Protection Clause. Arlington Heights v. Metro. Hous. Corp.
, 429 U.S. 252, 265–66 (1977) (noting

, in the c ontex t o f

a zoning challeng e, that “[ w] hen there is a proof that a discriminatory purpose has been a mot i v a ting factor” in a g overnment decision, judicial deference to that decision is not justified under the Equal Protection Clause).

Given the lon g h i story a nd dire consequences o f continuing housing discrimination and seg reg ation, Cong ress did not stop at prohibiting d isparate treatment alone. I ndeed, in enacting the F H A, Cong re s s soug h t “to e radicate disc r i m inatory practices within a sector of our Nation’s
economy .” Tex. Dep’t of Hous. , 135 S. Ct. at 2 522. To this end, as the Supreme Court recently r e a ffirmed, the F HA also
encompass es a second distinct claim of discrimination, disparate impact, that forbi d s actions by private o r g overnmental b odies that create a discriminatory e ffect upon

a p r o tected class or perpetuate housing seg reg ation without

a n y c o ncomitant leg itimate reason. I d. at 2522. D isparate impact provides a remedy in two situations that dispa r ateA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 17

treatment may not reach. F irst, “[ i] t permits plaintiffs to counteract unconscious prejudices and disg uised animus that
escape easy classification.” Id. ; see also Huntington Branch, N.A.A.C.P. v. H

untington
, 844 F .2d 926, 935 ( 2d Cir. 1 988) (noting tha t “clever men may easily conceal their motivations” and that dis p a r ate-impact analy sis is needed because “[ o] ften, such [facially neutral] rules bear no relation
to discrimination upon pass a ge , but develop into powerful discriminatory mechanisms when applied”). Second, disparate impact not only serves to uncover u n conscious o r consciously hid d e n biases, but also targ ets “ artificial, arbitrary , and unnecessary barriers” to minority housing a nd integ ration that can occur throug h unthinking, even if not malig nant, p olicies of developers a n d g overnmental entities. Tex. D ep’t of

Hous.
, 135 S. Ct. at 2522. I n this way , disparate i m p a c t “r e c o g niz e[ s] that the a rbitrary qu a l i t y o f thoug htlessness can be as d isastrous and unfair to private

r i gh t s a nd the public interest as the p erversity of a willful scheme.” United States v. City of Black Jack, Mo.
, 508 F .2d 1179, 1185 (8th Cir. 1974).

Today

, the policy to p rovide f air housing n a tionwide

a n n ounced in the F HA remains as important as ev e r. 42 U.S.C. § 3601. W hile “ma n y cities have become more d i v e r se” a fter “the passag e o f the [ F HA] and ag ainst the backdrop o f disparate-impact liability in n e a r ly every jurisdi ct i o n,” Texas Dep’t of Hous.
, 1 35 S. Ct. at 2525, ho u s i ng seg reg a tion both perpetuates and reflects this

c o u n t r y ’ s b a s i c p r o blems reg arding ra c e r e l a t i o n s : educational disparities, pol i ce-community relations, crime levels, wealth inequality

, and even access to basic needs such

as clean water and clean air. I n this c o u n t r y , the neig hborhood in which a person is born or lives will still far
too often determine his or h er opportunity for success. As theA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 18

Supreme Court recog niz e d, the F HA must play a “continuing role in moving the Nation toward a more integ rated society ” and a more just one. Id.

Given this contex t, we n ow turn to Developers’ claims in this case.

II. Disparate-Treatm ent Claim s

Developers first bring disparate-treatment claims un d er the F HA and the Equal Protection Clause, alleg i ng that the City refused their request to rez one the Property because o f discrimination or a

nimus ag ainst Hispanics. The district court dismissed these claims and f o und the request for leave
to amend f

utile, holdi n g that Developers did not a lleg e pl a u s i b l e claims for relief in the first or seconded amended complaints. Althoug h Developers appeal both the d ismissal of their first amended complaint and the district court’s denial of their motion for leave to file a second amended complaint,

we address only whethe r the second amended complaint stated a plausible claim for relief because the first and second amended complaints were both rejected based on p lausibility and because the second a mended complaint would have “supersede[ d] the orig inal” if allowed. See Ramirez v. Cnty. of S an Bernardino

, 806 F .3d 1002, 1 008 (9th Cir. 2 015); see also D o r f v. Bjorklund

, 531 F

. App’x 836, 837 (10th Cir. 2013) ( r u l i n g o nly on motion for leave to amend w h en the pl a intiffs appealed the dismissal of the first amended complaint an d the denial for leave to file a second amended complaint o n the b as is of futility ). B ecause the second amended complaint contains s u f ficient alleg ations that the City ’ s decision was driven by animus to state a pla u s ible claim for relief, we h old that the amendment was n ot futile and reverse the dismissal of the disparate-treatment claims.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 19

Arlington Heights g overns our inquiry whethe r i t is plausib l e t hat, in violation of the F H A and the E q ual Protection Clause, an “invidious discriminatory purpose was

a motivating factor” behind t h e C i t y ’s d ecision to deny the

z oning application. A rlington Heights

, 429 U.S. a t 2 6 6

. Under Arlington Heights

, a plaintiff must “‘simply p r o d u c e direct or circums t antial evidence d emonstrating that a discriminatory reason more l i kely that not motivated’ the defendant a

nd that the defendant’s actions adversely affected the plaintiff in some way .” P a c

. S h o res Props.
, 730 F

. 3d at 1158 ( quoting McGinest v. GTE Serv. Corp.
, 360 F .3d 1103, 1122 (9th Cir. 2004)). “A p laintiff does not h ave to prove t h a t the discriminatory purpose was the sole purpose of the challeng ed action, but only that it was a ‘ motivating factor.’” Arce v. Douglas

, 793 F .3d 968, 977 (9th Cir. 2 015) (quoting Arlington Heights

, 4 29 U.S. at 2 66). The court analy z e s whether a d iscriminatory purpose motivated the d efendant b y

ex a mining the events leading up to the c h a l leng e d decision and the leg islative history behind it, the defendant’s departure from normal procedures or substantive c onclusions, and the historical backg round o f the decision a n d w hether it creates

a disparate impact. Id. ( citing A rlington Heights

, 429 U .S. at 266–68, and P ac. Shores Props.
, 730 F .3d a t a t 1 158–59). These e lements are non-ex haustive, Arlington H eights

, 429 U.S. a t 268; Pac. Shores Props.
, 730 F .3d at 1 1 59, and a plaintiff n e ed not establish any particular element in order to prevail, see Pac. Shores Props.
, 7 3 0 F .3d at 1156 (stating that, for the purpose of summary judg ment, “any indication of discriminatory motive may suffice to raise a question that

can only b e resolved by a factfinder”). W e ex amine each in
turn.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 20

A. Sequence of

Events Leading Up to the Challenged Decision and the Legislative History

The g ravamen of Developers’ disparate-treatment c laims i s that the City discriminated a g ainst them by deny ing th ei r application in o rder to ap pease its constituents, despite knowing that o pposition to the application was based larg ely

on racial animus, a

n d despite the recommendations o f its

z onin g co m mission and planning staff and its reg ular practice. Here, the a lleg ations in the complaint are sufficient to raise these claims.

The presence of community animus can support a finding of d iscriminatory motives by g overnment officials, even if the officials do not personally hold such views. I nnovative Health Sys., Inc. v. City o

f W hite Plains

, 117 F .3d 37, 4 9 (2d Cir. 1997), superseded o n other grounds as recognized in Zervos v. Verizon N.Y

. , Inc.
, 252 F .3d 1 6 3 ( 2d Cir. 2 001); LeBlanc-Sternberg v. Fletcher

, 67 F

. 3d 4 1 2
, 425 (2d Cir. 1995) (plaintiff alleg ing a disparate-treatment claim under the F HA “can establish a p rima facie case by showing that animus ag a inst the protected g roup was a sig nificant factor in the position taken by th e m unicipal decision-makers themselves o r b y those to whom the decision-makers were knowing ly

responsive.” ( internal quotation marks omitted)). This s t andard “recog

niz e[ s] the r eality of such controversial proposals in the urban setting ,” United States v. City of New Orleans

, 2012 W L 6085081, at *9 (E.D. L a. Dec. 6, 2012), in which council members may vote based on constituents

concerns abou t “an influx of undesirables” into the neig hborhood. Smit h v. T o wn of Clarkton

, 682 F .2d 1055, 1066 (4th Cir. 1982).A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 21

N either Budnick nor Arlington Heights

, which the Ci t y cites to support its position, holds otherwise. I n Budnick

, the plaintiff soug ht a special use permit to build a continuing -care retirement community a nd, o nly a fter the Town Council denied his application, r aised for the first time the contention that the p lanned facility w o u l d serve disabled r esidents; plaintiff in his p r i o r declarations had asserted that residents would be limited to “healthy

, active, independent seniors.” Budnick

, 5 18 F .3d at 1112–13. This alone undercut any finding of d iscriminatory intent b y the Town Council, as the plaintiff failed to ex p l a in how the Town could have discriminated ag ai n s t r esidents it did not know would be housed at the facility

. Here, by c ontrast, Developers a lleg e that their r eputation as d evelopers o f subdivisions f avored b y Hispanics, and the g eneral d emog raphic trends sug g esting that the hig her-density d ev e lopment they p roposed would
attract a g reater number of Hispanic homebuy ers, were known p rior to the denial of their a p plication. According ly

, here, unlike in Budnick

, community members’ opposition to Developers’ a

pplication, using lang uag e indicating animus toward a protected class, provides circumstantial e vidence o f discriminatory

intent by the City

.

The f acts of Arlington Heigh t

s likewise do not support defendant’s arg ument. I n that case , the Supreme Court affir m ed the district court’s f inding following a trial that, althoug h some opponents of p l a intiffs’ requested z oning chang e mig ht h ave been motivated by opposition to minority
g roups, the evidence did not warrant the conclusion that this motivated defendants. 429 U.S. at 269–70. Unlike this c ase, the Supreme Court in A r l i n g ton Heights was required to review the d istrict court’s factual finding for clear error a fter

a trial, while here w e must accept Developers’ alleg a tions a s true and r eview the d istrict c o u r t’s order de novo. SeeA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 22

Anderson v

. City of

Bessemer City
, 470 U.S. 564, 566 ( 1 985); Newark B r a n ch, N.A.A.C.P. v. City of Bayonne, N.J.
, 134 F

. 3d 113, 119–20 ( 3d Cir. 1998). Moreover, other facts
not similar to any before th e d i s trict court on the present motion to dismiss supported the district c ourt’s fact u al finding in Arlington Heights

. F or ex ample, as the Supreme Court noted, the area surr o u n d i n g the site of the desired

z oning chang e to permit h ig h-density zoning had b een z oned for sing le-family homes for more than a decade, a nd the

z oning chang e would have been contrary to a “buffer policy ” consistently applied in p rior instances. 429 U

. S

. a t 269. Here, by contrast, t h e R-1-6 z oning soug ht by Developers was entirely consistent with the City ’s General Plan.

Althoug h the releva n t cases clearly hold that a c ity ’s denial of a z oning chang e f ollowing discri m i n atory statements by members of the pub l i c supports a c laim o f discriminatory intent, the q uestion r e m a i n s whether the
statements alleg ed in De v e lopers’ Second Amended Complaint actually constituted a nimus. None of the alleg ed
statements e x pressly refers to race or n ational orig in; r ather, they raise various concerns about issues includi n g larg e families, u nattended children, p arking

, and crime. W e have held, however, that the use of “code words” may demonstrate discriminatory intent. Galdamez v

. P o t ter , 415 F .3d 1015, 1024 n.6 (9th Cir. 2005) (citing McGinest
, 360 F .3d at 1117). I n McGinest
, we adopted the reasoning of the Third Circuit’s opinion in Aman v. Cort Furnitur e R ental Corp.
, 85 F .3d 1074, 1083 (3d Cir. 1996). Considerin g c o m ments that plaintiff, a

n African A merican, was a “drug dealer,” we quoted A man at leng th:

[ A] reasonable jury could conclude that the intent to discriminate i s implicit in theseA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 23

comments. There are n o talismanic

e x pressions w hich must be invoked as a condition-precedent to the a pplication of laws desig ned to p r otect ag a inst discrimination. The words themselves are o nly relevant for what they reveal–the intent of the speaker. A reasonable jury could find that statements like the ones alleg edly made in this case send a clear messag e and carry the distinct tone o f racial motivations a

nd implications. They could b e seen as convey

ing the messag e that members of a p articular race a r e disfavored and that members o f that race a re, therefore,
not full and equal members o f the workplace.

McGinest
, 360 F

. 3d at 1 117 (quoting Aman
, 85 F .3d at 1 083) ( a lteration in orig inal). T h e McGinest court then held t h at “[ t] he r eference to [plaintiff, an African-American] as a ‘drug d e aler’ mig ht certainly be deemed to be a c ode w o r d o r phrase” demonstrating animus. Id. ; see a l so Guimaraes v

. SuperValu, Inc.
, 6 7 4 F.3d 962, 974 (8th Cir. 2 012) (“ [ R] acially charg ed code words may provide evidence o f discriminatory intent by sending a c lear messag e and carry ing the distinct tone of racial m o t i vations and implications.”) (quotation marks omitted) (alteration in orig inal); Jenkins v. Methodist H

osps. of Da l l a s , 4 7 8 F .3d 255, 265 (5th Cir. 2007) ( citing Aman
, 85 F .3d at 1083). W hether a code word evidences r acial animus may depend upon factors i ncluding local custom and historical usag e. Ash v. Tyson Foods, Inc.
, 546 U.S. 454, 456 (2006). A lthoug h these c as es involve employ ment rather than housing discrimination, t h e s e lessons

are e qually a

pplicable to both ty

pes of cases. See Texas Dep’t of Hous.

, 135 S. Ct. at 2522–23.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 24

Here, construing the alleg ations in the complaint in favor of plaint i f

f s a s well as drawing a ll inferences in their favor, the alleg ed stat ements by the neig hborhood opposition submitted to city officia l s contained such c ode words consisting o f stereoty

pes of Hispanics that would be w ellunderstood in Yuma. Neigh b o r s ex pressed concern that the ty pe of people livi n g in “ the H all n eig hborhoods” h ad larg e households and used sing le-family homes as multi-family dwelling s. These people, neig hbors complained, o wn

numerous vehicles which they park in the streets and y ards, fail to maintain their residences, and lack pride of ownership. They also allow unattended children to roam the streets (what

some may call letting children p lay in the neig hborhood). Several land o w ners attending the public hearing even broug ht pictures of another H all subdivision, in which 77% of the homebuy ers are Hispanic, to ex emplify the complaints they had about the potential new development. S e e Greater New Orleans Fair Hous. Action Ctr. v. St. Bernard Parish

, 641 F

. Supp. 2d 5 63, 571–72 ( E.D. L a. 2 009) ( repeated references to Villag e Square, where Villag e Square was a l o ca l c omplex with a sig nificant black population, demonstr at e d racial animus). After Developers p resented their compromise p lan
to transition from the 8,000-foot lots down to 6,000-foot lots

near the RV park, another landowne r n oted that it would be

a smooth transition in t erms of lot siz e , but not ownership demog raphics, sug g esting

— at least to a reasonable juror—a chang e in racial composition. I n sum, landown ers worried that the t y

p e o f people who live in “ H all neig hborhoods”
create a “low cost, hig h crime neig hb o r h o o d” that these landowners had worked hard “to keep our children out of.” See id. (finding r eferences to c r i m e were “racially -loaded”); Atkins v. R obinson

, 545 F

. Supp. 852, 874 (E.D. Va. 1 982) (reference to “an abundance of crime” “may be interpreted a s [ a] veiled reference[ ] to race”).A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 25

Taken tog ether, these alleg ations, along w i t h the alleg ation that Developers are known to many as a developer of Hispanic neig h b o r h oods on the basis of their housing projects in Yuma, provide plausible circumstantial evidence that commun i t y opposition to Developers’ proposed development w as motivated i n p a r t by a nimus, and that the City Council was fully

aware of these concerns when it took the hig hly unusual step of acceding to the opposition a nd overruling the recommendations of its z oning co m m ission and planning staff.

B. City’s Departure f

rom its Norm al P rocedures or Substantive Conclusions

Developers also plausibly alleg e t h a t the denial of their

z oning application d eparted from the City ’ s normal procedures. I n deny ing the r ez on i ng , the City Council’s decision ran contrary to the unanimous recomm endation provided by the City ’s Planning and Z oning Commission, a s well as the r ecommendation of City planning staff. A city ’s decision to disreg ard the z oning advice of its own ex perts can provide evidence of discriminatory intent, particularly when,

as here, that recommendation is consonant with t h e municipality ’s g eneral z oning requirements and plaintiffs proffer additional evidence of animus. See Innovative Health Sys.
, 117 F .3d a t 4 9 (affirming g rant of preliminary injunction and stating that city ’s z oning body “ig nored the requirements of the ‘hospital or sanitaria’ c lassification and did not e x plain

w h y it d eclined to follow the Corporation Counsel’s straig htforward analy sis”); Sunrise Dev., Inc. v. Town of Huntington, N.Y

. , 6 2 F

. Supp. 2d 762, 775, 776 (E.D.N.Y. 1999) (concluding that T o wn’s disreg ard o f its Citiz en’s Advisory Committee’s recommendation sug g ested t hat “defendants likely w ere s w a y ed by the a nti-disabled animusA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 26

present in the community ”); D e w s v

. Town of Sunnyvale, Tex.
, 109 F

. Sup p

. 2 d 526, 572 (N.D. Tex

. 2 000) (“[ Defendant’s] history o f ig noring the recommendations o f i t s planners and proceeding in the face of sound leg al a n d planning a dvice” weig h ed towards finding of discriminatory intent); MHANY Mgmt. I

nc. v

. Cnty. of Nassau
, 843 F

. Supp. 2d 287, 321–22 (E.D.N.Y. 2012) (city ’s decision to d isreg ard its own c onsultant’s z o n ing recommendation and the County ’ s desires supported finding of discriminatory intent); but c f. Hallmark Developers

, 466 F .3d a t 1 2 85 (finding County B o ard’s decision to i gn o re r ecommendations o f
appr o v al f

rom its staff and planning bodies was not suspect becau s e n o larg er contex t demonstrated racial animus). Developers’ alleg ation that the City ’s prior z oning decisions permitted “many e x amples in Y uma where large lot

ex p ensive subdivisions had b e en b u i lt nex t to moderately priced small lot housing subdivi sions without problems” further underscores the inference that the de c i s i o n to deny Developers’ application was contrary to normal procedures. F inally

, this z oning request was the o n l y r e quest the City Council denied of the 7 6 considered over the t h r e e y ears preceding the Council’s decision. Drawin g a l l reasonable inferences in Developers’ favo r , t h e City ’s sing ling o ut o f their z oning r e q uest for denial supports Developers’ contention that the City

had a discriminatory

intent.

C. Disparate Im pact and the Historical Background of

the Decision

The complaint’s statistics on the disparate impact c aused by the decision and the historical backg round of the decision also tend to make the disparate-treatment claims plausible.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 27

Developers alleg e specific facts demonstrati n g city officials’ a w ar eness that the effect of their denial o f Developers’ application would “bear[ ] more heavily on o ne

race than another” in lig ht of historical patterns o f seg reg ation by r a c e and c lass. 8 Specifically

, they alleg e facts demonstrating that distinct areas of the c ity historically have been populated, respectively

, by lower class Hispan i cs a nd

more affluent W hites. T h e y p o int to the 2002 and 2007 Analy ses of I mpediments, each o f which shows that “substanti al l y all of the available low- to moderate-income housing ” in Yuma has historically b een concentrated in three

areas of the city in which more than 75% of th e h o u s e h o lds

are Hispanic, w hereas W hites have b een concentrated in two other a reas in which the W h ite population has been more than 75%. 9 They also alleg e facts contained in the City ’s General Plan a nd the U.S. Census identify ing a dir ec t r e lationship between housing density and costs , and demonstrating a

8 E ve n t h o u g h th e p ro po sed d ev elo p m en t w o u ld n o t h av e qu alif ied as

“ af f o rd ab le” u n d er HUD r e gu latio n s, alleg ed f acts reg ard in g th e d istrib u tio n of af

f o rd ab l e h o u sin g in Yu m a’ s H i s p a n i c n eig h b o rh o od s h elp d em on strate g en eral in co m e s tratif icatio n su pp o rt i n g th e in f

eren ce th at Hisp an ics in Yu m a are g en erally less af f lu en t th an W h ites an d w o u ld b e

m o re lik ely to p u rch ase h om es bu ilt o n th e s m a l l e r lo ts p ro p o sed b y Dev elo p ers.

9 A l th o u g h n o t relev an t t o o u r c o ns i d eratio n o f th e district co u rt’ s d ism issal o f th e d i sp arate- treatm en t claim p u rsu an t to Ru le 1 2 (b )(6 ), n ew d ata d ev elo p ed d u rin g th e su m m ary j u d g m en t p h ase sh o w ed th a t t h is
p ercen t ag e h as ch an g ed in So u th east Y u m a as a w

h o l e, th o u g h n o t

n ecessarily

in an y p articu lar p art o f th at q u ad ran t o f th e City

. W h ile th e City ’ s 2 0 0 2 an d 2 0 0 7 A n aly sis o f Im p ed im en ts n o ted th at So u

t h east Yu m a h ad a W h ite p o p u latio n o f 7 5 %, th e 2 0 1 2 v ersio n o f th e sam e rep ort sh o w s th at th e W h ite p o p u latio n in t h at area as a w

h o le d ecreased to b etw een 4 8 % an d 6 5 % (m ean in g th at th e Hisp an ic p o p u latio n w as l ik ely b etw een 3 0 % an d 4 7 %, w ith

5 % b ein g o th er).A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 28

sig nificant disparity ( 29%) between the m ed i a n income o f Yuma households headed by Hispanics and W hites.

B a sed upon these facts, Developers assert that the City ’s denial o f their application to b uild moderately priced housing will have a disproportionate effect on Hispanics. Developers’ alleg ations, accepted as true, support the inference that “the [ City ’s] decisio n does arg uably bear more heavily on racial minorities.” Arlington Heights

, 429 U.S. at 269. Drawing all i n f e r e n c es i n D e v e l o p er s ’ f av o r , t h e s e a l l e g a t i o n s demonstrate a historical backg round of stratification by race

a n d class, indicating the City ’s denial of Developer s ’ application to build moderately priced housin g will have a disparate impact on Hisp an i c s b y deny ing them affordable opportunities to move into communities long dominated b y more affluent W hites.

Developers also alleg e facts sug g esting a prior history o f animus in Yuma housing developments. S p ecifically

, they alleg e facts reported in the 2002 Analy s i s of I mpediments demonstrating a h i s t o ry of NI MB Y opposition to the development of affordable housin g developments a nd appearing to link such opp o s i t i o n at least in part to animus, because the reports’ a u t h o r s i n c lude among their recommendations that the City collaborate o n community
events celebrating c u ltural diversity

. This f urther supports Develop e rs’ claims that animus helped motivate the community opposition leading to the City Council’s decision to deny their z oning application.

Citing the Sevent h C ircuit’s decision on remand in Arlington Heights and the Seco n d C i rcuit’s decision in Huntington Branch

, N.A.A.C.P.
, the City arg ues that the facts before u s fail to demonstrate an intent to discriminate becauseA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 29

they f all short o f the facts in cases finding an intent t o discriminate in municipalities with a long history o f completely barring ce r t a in ty pes o f housing or restricting its development to only certain locations. See Metro. Hous. Dev. Corp. v. Vill. of

Arlington Heights

, 558 F .2d 1283, 1294 (7th C i r. 1977); H

untington Branch, N.A.A.C.P. v. H untington
, 844 F .2d 9 26, 928 (2d Cir. 1988). That the facts alleg ed here

are not as eg reg ious as the f a c ts in other cases in which plaintiffs pr e vailed is of no consequence. Developers need
not demonstrate a complete absence o f desired housing for Hispanics to prevail; discriminatory z oning practices violate the F HA even if they only “contr i b u t e to ‘mak[ ing ] unavailable or de n y [ ing ] housing ’” to protected individuals. Pac. Shor e s P r ops. , 7 30 F .3d at 1157 (quoting City of Edmonds v. W

ash. State B l d

g. Code Council

, 18 F

. 3d 802, 805 (9th Cir. 1994) (altera tions in orig inal) (emphasis added)). Moreover, a t this stag e o f the proceeding s all inferences must be drawn in the p laintiffs’ f a v o r a nd those inferences alone are sufficient to preclude dis m i s s al of the claims reg arding disparate treatment.

D. Conclusion

After public hearing s filled w ith what a reasonable ju r y could interpret to be r acially ti n ge d code words, the City Council d enied Developers’ rez oning request, overriding the unanimous vote of the plann i n g commission and deny ing a

re z o n i n g r e quest f

or the first time in three y ears. F or the

reasons ex plained above, we hold that D evelopers’ complaint sufficiently a lleg es claims of dispar a te treatment under the F HA and E qual Protection Clause. We hold that the c l a i ms of disparate treatment are, on the basis of the com p laint before us, p lausible a

nd therefore reverse the district court’s dismissal of these claims.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 30

III. Disparate-Im pact Claim

Developers nex t as s er t that the d istrict court erred in
g ranting the City ’s first summary judg ment motion as to the claim that the denial o f the z oning request caused a disparate impact on Hispanics. The motion was g ranted o n the sole
g round raised by the City : similarly -priced housing was available elsewhere in Southeast Y uma; therefo r e , no disparate impact c ould be established. 1 0 W e re j e c t that
g round and hold that when a developer seeks to r ez one land
to permit the construction o f housing that is more a ffordable,

a city c a n n o t d efeat a showing of d isparate impact on a minority g r oup by simply stating that other similarly -priced and similarly -modelled h ousing is a v ailable i n the g eneral

area. 1 1

A.

Developers presented a r e q uest to the City to chang e the

z oning of their land from lower-density t o hig her-density housing

. T hey did so mainly f or financi al reasons—lowerdensity h ousing was not selling a f t e r a recession, and they

10 A l tern a t i v e ho u s i n g elsew h ere i n th e area w as t

h e o n ly g ro u n d on

w h ich th e d i strict co u rt relied in g ran tin g s u m m ary j u d g m en t on th is claim

. T h e Dev elo p ers, h o w ev er, h ad an ad d itio n al c l a i m o f d isp arate i m p a c t b ased o n a p erp etu atio n

- o f

- seg reg atio n th eo ry

. A s d iscu s s e d b elo w , th e d istrict co u rt g ran ted su m m ary j u d g m en t o n th e p erp etu atio n

o f

- seg reg atio n claim f

o r th e reaso n th at u n d i sp u t ed statistics sh ow ed th at th e d en ial o f th e zo n i n g a p p licatio n w o u ld n o t h av e a sig n if ican t seg reg ativ e ef

f ect o n th e n eig h

b orh o o d

. W e af

f irm th at ru lin g , in

fra at 3 8

.

1 1 We d o n ot ad d ress arg u m en ts i n th e seco n d su m m ary j u d gm e n t

m o tio n , in clu d in g th e City ’ s co n ten tio n th at Dev elo pers h av e fa i l e d t o p ro f f er statistical ev i d e n ce d em o n stratin g a su b stan tial d i sp arate im

p act

resu ltin g f

ro m th e zo n in g d en ial.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 31

believed that h ig her-density units mig ht sell more easily

. The City arg u ed in its first summary judg ment motion only th at the availability of similarly -priced and modelled housing in other parts o f Southeast Yuma n ecessitated summary judg ment in its f

avor. Developers’ statistics demonstrat i ng that H ispanics would be more lik e l y t o buy homes in the

z o ned area if the p roposed hig her-density z oning wer e approved were not at issue. The City

, therefore, had a choice of two alternatives, each of which wa s permissible under its Ge n e r a l Plan; o ne would enable more minority g roup members to p urchase h o mes in an area with a white majority population than would the other. I t chose the other.

As noted above, in the 1960s and earlier, na t i onal, state, and loc al go vernments had ex plicit or implicit policies that prevented integ ration even when developers h ad an economic rationale for wanting to build more dense or more affordable housing

. I n Texas Department of Housing
, the S u p reme Court empha siz ed that disparate-impact liability was desig ned t o reverse this pattern by allowing “private developers to vindicate the F H A’s o b j e ctives and to protect their property rig hts by sto p p ing municipalities from enforcing arbitrary a

nd, in pr a c t i c e , d i scriminatory ordinances barring the construction of certain ty pes of housing units.” 135 S. Ct. at 2522. I nd eed, the wisdom of disparate-impact liability under the F HA is that it addresses local g overnment’s (as well a s other g overnment’s) historical rac i s m a nd the contin u i n g persistence of housing seg reg ation not b y interjecting racial quotas as the end g oal of municipal z oning decisions, but rather by ensuring that municipalitie s m a king such decisions will base them on leg itimate objectives rather
t han on discriminatory reasons, conscious or otherwi s e. Moreover, when such decisions may still cause a disp a rate impact, the municipality and the developer are instructed toA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 32

attempt to minimiz e that impact by determining whether there is an alternative that accommodates both the city ’s leg itimate objective and the developer’s leg itimate g oals. See 24 C.F .R. § 100.500 (describing this process u nder the F HA). Su c h a thoug htful consideration, under disparate-impact a naly sis, o f how a city ’ s leg itimate rationales may be reconciled with the desires of developers to build hig her-density affordable housing has helped to chang e the old patterns prevalent in the 1960s a nd will continue to help produce a fairer and more just society

.

B.

Adopting the district court’s holding

, which i t arrived at without the b enefit of the Supreme Court’s decision in Texas Department of Housing
, w ould prematurely c ut short the carefully constructed mode of a naly sis that the Court just recently established. Rely ing on Hallmark De v e l opers, Inc.

v. Fulton County
, 466 F .3d 1276 (11th C i r. 2006), a case decided almost ten y ears before Texa s D epartment of Housing
, the district court held tha t a n a d equate supply o f comparable housing in a quadrant of the C i t y i n w hich the

z one is located neg ated the possibility of any disparate impact from the City ’s denial of Developers’ application. 1 2

I n H allmark

, a Georg ia county denied the developer’s application to rez one land to build a mix ed-use development including affordable housing

, a n d the developer sued.

12 We assu

m e t h at th e Elev e nt h C ircu it, lik e th e d istrict co u rt, w ou ld reach a d if

f eren t d ecisio n th an it d id in Ha llma r k w ith th e b e ne fi t o f th e Su p rem e Co u rt’ s recen t Texa s Dep a r tmen t o f Ho u sin g d ecisio n

. In f

act,

w e a r e n ot aw are o f an y Elev en th Circu it case t h at h as reli e d o n Ha llma rk ’ s ru le o n

altern ativ e h ou sin g sin ce th at d ecisio n

.A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 33

466 F .3d a t 1279, 1282. T h e developer’s ex pert testified that the d e nial of z oning that w ould have a llowed the c onstruction

o f lower-cost housing had a disparate impact on minorit i e s based o n data of local home ownership and apartment rentals. Id. at 1282. Despite these statistics, the E leventh Circuit h eld that the developer had f

a i l e d to e stablish a disparate impact because there was an oversupply of homes in the developer’s projected price rang e in the southern p a r t o f the county

. Id.
at 1 287; see a l

s o Hallmark D evelopers, Inc. v

. Fulton Cty., Ga.
, 386 F

. Supp. 2d 1369, 1378 (N.D. Ga. 2005) ( describing the “South F ulton County ” area ). The court reasoned that “[ i] f there is a g lut in the market of homes i n H a l l mark’s projected price rang e , t h e lack of H allmark’s particular development is not likely to have an impact o n any one, let alone adversely

affect one g

r oup disproportionately .” Id

.

The district court adopted Hallmark ’s reasoning

, finding that “it is undisputed there was a supply of R

- 1-6 lots a nd affordable to moderately priced homes available i n the southeast portion of Yuma at the time o f t h e z oning denial and a couple y ear[ s] thereafter,” including some lots within
two miles of the proposed d evelopment in the same price
rang e and f

eaturing the s a m e ty

pe of homes. Citing Hallmark

, th e district c o u rt concluded that an adequate supply o f comparably -priced and similarly -modelled h omes in the area—that is, Southeast Yuma—forecl o s ed the possibility of any a d v e rse impact resulting from the City ’s denial of Developers’ z oning application, thereby precluding Developers from pursuing a disparate-impact claim.

W e disag ree. The a vailability of similar housing w ell outside of the z oned p rope r t y does not affect the analy sis wh e t h e r a city ’s rejection of a z oning request caused a disparate impact by p reventing a hig her percentag e o fA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 34

minority g roup members from purchasing homes. See Texas D e p ’ t of H ous. , 135 S. Ct. at 2522. I n fact, the Hallma r k reasoning would threaten the v ery p urpose of th e FH A. A lo cal g overnment could deny a developer’s request to construct hig her-density h ousing t h at more members o f minority g roups could purchase, as long as there was o t h er similarly -priced and modelled h ousing a n y where within a quadrant of a city or the southern or northern part of a c ounty

. I ndeed, there is no necessary limit to the Hallmark theory that similarly -priced and modelled housing located elsewh e re would preclude a f

inding that z onin g decisions had an adverse i m pact o n members of minority g roups. I t would permit cities to b l o ck leg itimate h ousing projects that have
t h e by -product of increasing integ ration simply by scouri n g larg e swaths of a city for housing in a nother part of town that is larg ely populated by minority re s idents, that d oes not compare in any number of respects to the neig h b orhood in which the developer has soug h t rez oning

, or that is, in fact, far less desirable in g eneral. T he Hallmark rule ig no re s t h e fact that n eig hborhoods chang e from mile to mile, if not from block to block, and thereby overlook s the potential for the purposeful creation of majority ar e as from which minorities
may be ex cluded or of minority a reas w ith few, if any , white homeowners. Such seg reg a ted areas, when based on consciously or unconsciousl y biased decisions that d i s p r o p o r t i o n a t e l y , a n d n e e d l es s l y , a d v e r s e l y a ff e ct minorities, are th e antithesis o f what the F air Housing A ct stands for. See Texas Dep’t of Hous. , 135 S. Ct. at 2522.

Similar to the Eleventh Circuit’s desig nation of the entire southern p art of a county as the r elevant unit for d etermining whe t h er comparable housing ex isted, the district court here also considered far too broad an area—an area coveri n g an entire quadrant of t h e city o f Yuma—when d eterminingA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 35

whether comparable housing ex ists. F or any f a m i l y , including th ose of potential purchasers of homes in the proposed housing development, housing that is a f air distance
away from where the family would otherwise c hoose to live
cannot in all likelihood be described as comparable. 1 3 I n other words, minority families that mig ht want to p u r c h a se homes in the z oned area would almost certainly be adversely affected by the denial of the z oning application if the

ex istence of available housing in a distant neig hborhood were deemed dispositive.

Our r ejection of the H

allmark rule does not mean that the

ex istence of available housing in close prox imity is irrelevant
to d etermining whether a plaintiff proves a disparate impact. I ndeed, if a city shows tha t t r u ly comparable housing is available in c lose prox imity to a proposed development, such

a showing would be a relevant factor in deciding whether its

z oning decision had a disparate impact in that circumstance. Truly comparable housing

, however, is not simply a question of price and model, but also o f the factors that determine the desirability of particular locations—factors such as similarly

or better performing schools, c omparable infrastructure, convenience of public transpor t a t i o n , a v a i l a bility of a menities

13 T h e City co n ten d ed at o ral arg u m en t t ha t s u c h a ru le is p erm issib le b ecau se Dev elo p e r s c o n ced ed th at an y h o u sin g at th e sam e p rice as th e p ro p osed d ev elo p m en t in th e w ho le So u th east qu ad ran t o f Yu m a w ou ld b e “ sim ilar h ou sin g .” No t s o

. A lth o u g h Dev elo p ers’ co m p l a i nt a n d

su m m ary j ud g m e n t b rief

in g n o t ed th at So u t

h east Yu m a h ad b een h isto r ically seg reg ated

, Dev elo p ers d o n o t assert th at all h o u sin g in th e

sam e p rice ran g e i n S o ut h e a s t Yu m a w o u ld b e eq u iv alen t. In f act, Dev elo p ers sp en t sev er a l pag es of th eir su m m ary j u dg m en t b rief

em p h asizin g th at o t

h er av ailab le h o u s in g in So u th east Y u m a th at th e d istrict co u rt cited w as, f

o r ex am p le, in a “ d if

f eren t, less d esirab le p art of Yu m a.”A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 36

such as p ublic parks and c o mmunity athletic facilities, access to g rocery or drug stores, as well as equal or lower cri me levels. See Clark v

. Universal Builders, In c

. , 5 0 1 F .2d 324, 335 (7th Cir. 1 974) (finding homes c omparable that “ we re located in c lose g eog raphical prox imity to plaintiffs’ ho mes and h ad similar communal amenities such as transport ation, schools, churches, a n d quality of neig hborhood”). T h us, in order to determine whether housing outside of the z oned area i s comparable, we must determine not only the cl o s e p rox imity o f such housing to that area but also the prin c i p al characteristics of the neig h bo r h o od that affect families’
every day lives.

Rejecting the Eleventh Circuit’s an d the district court’s approach d oes not, as t he district court contended, “effectively p lace an affirmative duty on g overning bodies to approve all re-z oning application s wherein a developer

s o ug ht to build housing within a particular price rang e.” I n

a d d i t i o n to mischaracteriz ing the Developers’ c ontention, this
statement misapprehends the applicable law. F irst, it may be that D evelopers have, in fact, failed to s h o w a disparate impact on minorities resulting from denial of the rez oning

a pplication—as noted, we remand to the district cou rt t o

assess the ar gu m e n t s advanced by the City in the second motion for summary judg ment. Second, a developer’s ability
to show disparate impact does not im p o s e a d uty o n a municipality to approve all z oning applications in a particular price rang e. I nstead, a s the Supreme Court made c lear in Texas D epartment o

f Housing
, such a s h o wing merely requires the city to demonstrate that the action that creates an adv e r s e e ffect on minorities is supported by adequate justificatio n

. 135 S. Ct. at 2522 (“An important a nd appropriate means of ensuring that d isparate-impact liability is properly limited is to g ive housing authorities a n d p rivateA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 37

developers leeway to s t a te and e x plain the valid interest served by th e i r p olicies.”); see a lso 24 C.F .R. § 100.500(c) (setting forth b urden-shifting framework for disparate-impact claims under the F HA).

I ndeed, municipalities that have g ood cause for deny ing

z oning chang es may do so, unless motivated by conscious o r unconsci o u s r acial b ias. W hen the developer shows b y statistical d a ta that a z oning denial will have a disparate i mpact on minorities, the city ’s o b lig ation is to establ i s h a leg itimate and credible basis for it s d ecision. This is not an unreasonable burden. I

n fact it is

a feat u r e o f the F H A’s prog ramming

, not a bug

. . . . W e need n ot be concerned that thi s approach is too ex pansi v e b ecause the establishment of a prima facie case, by itself, is not enoug h to estab l ish liability under the F HA. I t simply re s u l t s in a more searching inquiry into the defendant’s motivations— precisely the sort of inquiry required to ensure that the g overnment does not deprive people of housing “because of race.”

Mt. Holly Gardens Citizens in Action, Inc. v

. Twp. of Mount Holl y , 658 F .3d 375, 3 85 (3d Cir. 2011); see also Graoch Assocs. # 33, L.P. v. Louisville/Jefferson Cty. Metro Human Rel. Comm’n
, 508 F .3d 366, 3 74 (6th Cir. 2007) (“Of course, not every housing practice that has a disparate impact is illeg al.”); Metro. Hous. Dev

. C o r p

. , 558 F .2d at 1290. I n

some c ases, nonetheless, a n adjustment or accom m o d a tion

can still be made that will allow both interests to be satisfied. Cf. 24 C.F .R. § 100.500(c)(3).A V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 38

I n sum, we d e c line to fo llow Hallmark and r eject the district cou

r t ’ s determination that the availability of similarly

priced and modelled housing in the same quadrant of the City

as the z oned property p revents Developers from sho w i n g a disparate impact. We therefore reverse in part the distr ict court’s g rant o f the City ’s first motion for summary judg ment and vacate its deci s ion that the second motion is moot. On remand, the district court may consider the second motion. The p a rties may , of course, a mend their claims as to this motion so as to take into account this o p i n i on and the Supreme Court’s opinion in Texas Department of Housing a s well as any

statistical data or other law that may be r elevant, including a dditional data r eg a rd i n g comparable housing in close prox imity

to the proposed development.

F i n a l l y , Developers also r a ised a separate perpetua t i o n

- o f

seg reg ation claim of disparate impac t

. W e ag ree w ith the district court that they failed to set f orth suffici e n t fa c ts for
any such claim. The district court nee d not address it on remand.

CONCLUSION

F or the foreg oing reasons, we reverse the district court’s dismissal of t

h e D e v e l o p e r s’ disparate-treatment claims under the F HA and the Equal Protection Clause and its g rant of the City ’ s f irst summary judg ment motion on the dispa r ateimpact on Hispanics c laim. W e r e m a nd the case to the district cou r t for further p roceeding s consistent w ith this opinion, including its consideration in the first instance o f theA V E N U E 6E I N V E S T M E N T S V

. C I T Y O F Y U

M A 39

arg uments the City presents in its second summary judg ment motion, as that motion may be amended.

REVE RSED IN P ART, VACATED IN P A RT, AND REMANDED.