New Jersey Slum Dispute Heads to Supreme Court

WASHINGTON (CN) - A New Jersey township will get another chance to shut down claims that its new development plan discriminates against poor residents, the Supreme Court said Monday.

The Gardens is the only neighborhood in Mt. Holly, N.J., with predominantly black and Hispanic residents, and almost all of its residents earn less than 80 percent of the area's median income. Most earn much less, according to census data.

Mt. Holly planned to eliminate the neighborhood's existing 329 homes and replace them with significantly more expensive housing units, prompting a lawsuit by Mt. Holly Gardens Citizens in Action and 23 current and former residents.

A federal judge nevertheless granted the township summary judgment before it had even filed an answer.

The 3rd Circuit reversed in September 2011, concluding that the trial court had "misapplied the standard for deciding whether the residents could establish a prima facie case under Title VIII and because it did not draw all reasonable inferences in the residents' favor."

It blasted the trial court for failing to properly consider the disparate impact question.

"The District Court's first error was in rejecting the residents' statistical submissions, which should have been taken in the light most favorable to them at this stage in the proceedings," the ruling states. "These statistics, like those presented in ... other prominent housing discrimination cases, show a disparate impact."

Though statistics showed that 21 percent of Burlington County minority residents could afford units in the redeveloped Gardens, the District Court improperly challenged that number "as both too broad, because it took account of the entire population of Burlington County, and too narrow because it failed to consider minorities outside the county who might move in," according to the ruling (emphasis in original).

The court also pointed to a claim that 56 of the units in the Revised West Rancocas Plan would be designated as affordable housing, but it failed to take into account that these "affordable" units would "be out of reach for almost all of the Gardens residents," the appellate panel added.

"The District Court also said that the statistics failed to take into account non-minority purchasers who might rent to minorities," the ruling states. "But, unless those purchasers offered below-market rents, this would not affect the inference that the project had a disproportionate effect on blacks and Hispanics who would be unable to afford market-rate units."

Most troubling for the appellate panel was the District Court's "conflation of the concept of disparate treatment with disparate impact," according to the ruling.

"The District Court essentially agreed with the township that because 100% of minorities in the Gardens will be treated the same as 100% of non-minorities in the Gardens, the residents failed to prove there is a greater adverse impact on minorities."

Sympathetic to the township, the appellate judges noted that a "valid and practical concern" drove the District Court's findings.

"It feared that finding a disparate impact here would render the township powerless to rehabilitate its blighted neighborhoods," the ruling states. "This underlying rationale distorts the focus and analysis of disparate impact cases under the FHA [Fair Housing Act]."

Alleviating blight is a legitimate interest that could nevertheless justify the township's actions, according to the ruling. Then it will be up to the plaintiffs to show that the township ignored a less discriminatory alternative.

That ruling also notes that the neighborhood's citizens had sued over the development in 2003 but lost that suit.

In granting the township's petition for certiorari Monday, the Supreme Court followed its custom of issuing no comment. It noted only that the question the justices will consider is whether disparate impact claims are cognizable under the Fair Housing Act.

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