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The Town of Oyster Bay created two zoning districts designed to provide housing to meet certain needs in the community.  The first, a “Golden Age District,” created in 1993, was established to provide below-market rate housing for senior citizens, with preference given to seniors who were residents of the school district in which the housing was located and to seniors who resided in Nassau County.  In 2004, the Town created a “Next Generation District,” to encourage the development of below-market rate price-controlled housing for first time homebuyers.  Preferences were to be given to residents of the Town and their children, with the purpose of encouraging these persons to remain in the Town and eventually make the transition to detached single-family homes. 

The New York State Division of Human Rights initiated an administrative complaint against the Town in 2009 under the State Human Rights Law, alleging unlawful discriminatory practices in housing on the basis of race, color and national origin. The complaint alleges that based on existing racial segregation in the Town, preserving housing for the children and parents of existing residents would likely result in discrimination against potential minority purchasers and would unlawfully perpetuate segregation and separation. The Division therefore challenged the preferences and restrictive covenants claiming that the Town is aiding and abetting discrimination in the provision of housing accommodations in violation of state Executive Law 296(6).   

Prior to the completion of the investigation by the Division of Human Rights, the Town commenced this action seeking a judgment at the Division was acting outside the scope of its authority in initiating the complaint and it sought to enjoin the Division from pursuing the complaint and from proceeding with the investigation.   

The appellate court ruled that the Town has failed to exhaust their administrative remedies.  For example, the Town’s claim that the Division’s investigation amounts to reverse discrimination against residents of the Town, does not facially challenge the constitutionality of the Human Right Law but rather challenges a specific application of the law to the situation in the Town.  Therefore, the Court explained that to get to the merits of this claim, the resolution of factual issues at the administrative level is required, and this has not yet occurred since the investigation had not yet been completed.  While other allegations in the Town’s motion where not subject to the exhaustion of administrative remedies, the Court found them meritless. The Court noted that the Division does have authority to file a complaint on its own, and that as an administrative agency, the Division has authority to both investigate and adjudicate a matter without such constituting a due process violation. 

Town of Oyster Bay v Kirkland, 2011 WL 560395 (N.Y.A.D. 2 Dept. 2/15/2011). 

The opinion can be accessed at:  http://www.courts.state.ny.us/courts/ad2/calendar/webcal/decisions/2011/D30054.pdf