On October 19, 2017, Federal District Court Judge Ann Montgomery granted preliminary approval to the class action settlement in the Crossroads Apartments lawsuit. Defendant owners of Crossroads (now called Concierge) will pay the plaintiff tenants $650,000 and will make changes to their tenant screening practices so they are less exclusionary.
The settlement is the largest of its kind, involving a Fair Housing Act disparate impact claim against a private landlord.
Almost exactly two years earlier, defendants Soderberg Apartments Specialists and MSP Crossroads Apartments purchased the Crossroads Apartments in Richfield, an inner ring suburb of Minneapolis. At the time Crossroads was the third largest apartment complex in the Region (698 units) and a prime example of naturally occurring affordable housing. Crossroads was home to many lower income residents of color, persons with disabilities, and persons reliant on government housing programs, including Section 8. Defendants immediately enacted sweeping changes to the complex, increasing rents by 40%, requiring all tenants to reapply under tougher admission standards, ceasing involvement in any government housing programs, and adding high end amenities designed to appeal to a different tenant demographic.
In February 2017, HJC filed a class action lawsuit in federal court on behalf of the residents and HOME Line. The lawsuit alleged that defendants were violating the Fair Housing Act, both through intentional discrimination and based on a disparate impact claim. Plaintiffs contended that defendants were seeking to remake the tenant population from one largely composed of people of color and/or with disabilities to one consisting mainly of young white urban professionals. (95% of the original Crossroads residents have since been displaced.) The plaintiffs initially sought to block defendants’ efforts to force out Section 8 voucher holders by seeking a preliminary injunction. The court denied the request, based on the court’s conclusion that it lacked adequate information at that stage of the case to rule in plaintiffs’ favor. Shortly after that, however, the Court ruled in plaintiffs’ favor on another motion, when the Court denied defendants’ motion to dismiss the complaint.
With the exception of one minor state law claim, the Court ruled that all of plaintiffs’ Fair Housing claims could proceed to trial. The Judge’s order plows significant new ground in fair housing law and provides an important national precedent. Plaintiffs also received a big boost when class action specialists Lockridge Grindal and Nauen joined on as co-counsel with HJC. The case has now settled.
Former Crossroads residents will be able to file claim forms to obtain a share of a $300,000 fund to cover their displacement costs. Another $200,000 was designated by the plaintiffs to help other residents at risk of this same fate in the future, and is resulting in the creation of the “Crossroads Fund” which will supplement the NOAH Impact Fund designed to assist affordable housing providers seeking to buy and preserve properties like the Crossroads. The remaining portion of the $650,000 payment from defendants will cover damages for HOME Line, attorneys fees and costs, and fees for administering the class action settlement. The issuance of final payments to the plaintiff tenants will come in early 2018.
The Crossroads lawsuit has had multiple ripple effects. Crossroads became the symbol and leading example of the alarming trend in the Twin Cities of “upscaling” naturally affordable apartment buildings. (The loss of 700 affordable homes in one fell swoop effectively cancelled out the impact of the 770 new affordable units built throughout the region in 2014.) Crossroads became the subject of an acclaimed Twin Cities Public Television documentary “Sold Out,” available here. When defendant Soderberg attempted to purchase another large building in Richfield with the same business plan in mind, advocates, city officials, and affordable housing providers mobilized at the last minute to block the sale and persuade the owner to sell to affordable housing developer Aeon instead. Crossroads has also sparked efforts by more than half a dozen cities to enact local protections for naturally affordable housing that is at risk. For information on filing claims, see Crossroads settlement website . Copies of the complaint, order denying motion to dismiss, settlement agreement, and press release are available here .