Fighting hidden discrimination: disparate impact claims under the Fair Housing Act.

• Author: Milford, Sean
• Position: NOTE

Mt. Holly Gardens Citizens in Action, Inc. v. Township of Mount Holly, 658 F.3d 375 (3d Cir. 2011).

1. Introduction

   Discriminatory practices in housing are a serious issue facing minority groups around the nation. The Fair Housing Act ("FHA") makes discrimination on the basis of race unlawful, and violations of the FHA can be established by showing either intentional discrimination or that a policy has a disparate impact on a minority group. (1)

   In Mt. Holly Gardens Citizens in Action, Inc. v. Township of Mount Holly, a group of residents of a neighborhood in the New Jersey Township of Mount Holly brought suit against the Township, claiming that a proposed plan to redevelop their neighborhood violated the FHA because it had a disparate impact on minority groups. (2) The redevelopment plan proposed by the Township would force most of the minority residents out of the Gardens neighborhood and, in many cases, out of the Township of Mount Holly entirely. (3)

   The Third Circuit upheld the United States District Court for the District of New Jersey's ruling that the residents of the neighborhood could make a prima facie case for discrimination under the FHA by showing that the redevelopment plan disproportionately affected the minority residents of the neighborhood. (4) This Note will provide a brief overview of the history of disparate impact claims under the FHA and outline why they are an important tool in fighting housing discrimination in the United States. The ruling of the Third Circuit preserves this important tool and will help to protect minority homeowners from future discriminatory redevelopment of their neighborhoods. The parties settled this case on November 13, 2013, before the Supreme Court could rule on its merits. Should the Supreme Court hold in a future case that disparate impact claims are not cognizable under the FHA, the Court would strike a serious blow against homeowners fighting to preserve and redevelop their neighborhoods and towns.

2. Facts and Holding

   The appellants in this case were an association of residents, organized as the Mount Holly Gardens Citizens in Action, and twenty-three current and former residents of the Gardens neighborhood in the Township of Mount Holly, New Jersey. (5) In October of 2008, the residents filed suit in New Jersey District Court against the Township of Mount Holly alleging violations of the Fair Housing Act (also known as Title VIII of the Civil Rights Act of 1968), the Civil Rights Act of 1866, and the Equal Protection Clause of the Fourteenth Amendment. (6)

   The Gardens neighborhood, located in the Township of Mount Holly in Burlington County, New Jersey, consists of 329 homes and is predominantly inhabited by African-American and Hispanic residents. (7) The neighborhood is overwhelmingly poor; almost every resident there earned less than 80% of the median income for the area, and most were classified as having "very low" or "extremely low" incomes according to data from the 2000 census. (8) According to data from the 2000 census, about half the residents of the Gardens neighborhood rented their homes, while the remaining half were homeowners. (9) 10 Many were long-time residents of the Gardens: 81% of homeowners had lived in their homes for at least nine years, while 72% of renters had lived in their homes for at least five years. (10) The Gardens had a total population of 1,031 residents. (11) Of these residents, 19.7% were non-Hispanic Whites, 46.1% were African-Americans, and 28.8% were Hispanic. (12) This racial makeup gave the Gardens the highest concentration of minority residents in the Township of Mount Holly. (13)

   The Gardens neighborhood had several problems that, over time, negatively affected its livability. (14) There was little interest on the part of many homeowners in the upkeep of common areas in the structures, which were laid out in attached rows of eight to ten individual houses. (15) Many other owners were simply absentee landlords whose tenants had little interest in maintaining the condition of the homes they were renting. (16) The neighborhood was also overly crowded, which led some residents to pave their yards, leading to drainage problems. (17) Over time, many homes fell into disrepair and were abandoned, left to decay. (18) Because the homes were attached, the deterioration of one home often led to the decay of attached homes. (19) Combined with the dense population, the high number of abandoned properties led to a high crime rate in the Gardens. (20) In 1999, the Gardens, while containing only 1.5% of the land area in Mount Holly, produced 28% of the Township's crimes. (21)

   The deterioration of the Gardens neighborhood led to the proposal of a series of plans, beginning in 2000, aimed at redeveloping the neighborhood and remedying its high crime and vacancy rates. (22) The initiatives led to the renovation of some homes, but the problems in the Gardens continued. (23) A study to determine whether the Gardens should be designated for redevelopment was commissioned by the Township of Mount Holly in 2000. (24) The study determined that, due to "blight, excess land coverage, poor land use, and excess crime," the neighborhood presented a "significant opportunity for redevelopment." (25)

   The redevelopment plans proposed included replacing much of the housing stock in the Gardens with market-rate housing, unaffordable to the vast majority of the current residents. (26) The first plan, named the Township Area Redevelopment Plan and proposed in 2003, called for demolishing all of the homes in the Gardens and replacing them with 180 market-rate homes. (27) This plan was followed two years later by the West Rancocas Redevelopment Plan, which also called for the destruction of many of the existing homes in the Gardens. (28)

   This new plan called for the construction of 228 new units, but did allow for the optional rehabilitation of some of the existing homes so that a small number of residents would be able to remain in the neighborhood. (29) The West Rancocas plan also called for 10% of the new homes to be designated as affordable housing, possibly allowing for more current residents to stay in the Gardens. (30) Three years later, in 2008, the West Rancocas plan was revised. (31) The revised plan eliminated any rehabilitation of current homes that was previously contemplated and raised the number of proposed new units to 520, of which only fifty-six would be designated as affordable housing. (32) Of these fifty-six, only eleven would be offered to existing residents of the Gardens. (33)

   The residents of the Gardens raised objections to every redevelopment plan, fearing that they would not be able to afford to live in the neighborhood, nor anywhere else in the Township, once redevelopment took place. (34) At a meeting about the redevelopment in 2005, a planning expert testified that the West Rancocas plan was not a sufficient plan because it only allowed for possible rehabilitation of existing homes rather than encouraging or requiring rehabilitation. (35) The expert also testified that 90% of the existing residents of the Gardens would be unable to afford the new homes. (36)

   Despite the objections of residents, the Township began purchasing homes in the Gardens and proceeding with its plan to redevelop the neighborhood. (37) A relocation plan, called the Workable Relocation Assistance Plan ("WRAP"), was developed to provide financial assistance to the residents of the Gardens. (38) Homeowners in the Gardens would receive $15,000 and a $20,000 no-interest loan to help in the purchase of a new home. (39) The Township of Mount Holly offered to buy homes from residents in the Gardens for between $32,000 and $49,000. (40) The estimated cost of the new market-rate homes in the redevelopment plan was between $200,000 and $275,000, leaving them well outside the range of affordability for a majority of the African-American and Hispanic residents of the Township, even with the financial assistance and no-interest loans offered by the Township. (41)

   Residents of the Gardens who were renting their homes were offered up to $7,500 in relocation assistance, but this assistance could not be used to return to the Gardens once it had been redeveloped. (42) The proposed market0rate rent for the new units in the redevelopment plan was $1,230 per month, far higher than the majority of those currently renting in the Gardens could afford. (43) The Township paid for the relocation of sixty-two families, forty-two of which moved outside of the Township of Mount Holly. (44)

   The plan called for redeveloping the neighborhood in phases, but the Township began acquiring and demolishing any home it could purchase. (45) By August of 2008, the Township had demolished seventy-five homes and purchased 148 more, leaving them vacant. (46) By the following summer, 110 more houses had been demolished by the township. (47) The destruction of such a large number of houses in the neighborhood had a negative effect on the quality of life of the remaining residents, who were "forced to cope with noise, vibration, dust, and debris." (48) Because the homes were attached to each other, the destruction of one home often led to problems with adjacent homes. (49) Interior walls were exposed to the elements, and holes were created in the roofs of the homes left standing after the demolitions. (50) The signs of destruction were visible among the remaining homes: "hanging wires and telephone boxes, ragged brick comers, open masonry joints, rough surfaces, irregular plywood patches, and damaged porches, floors, and railing." (51) There was little incentive for the remaining residents to attempt to rehabilitate the neighborhood amidst all the destruction, and many of the remaining residents fled the Gardens. (52) Only seventy homes remained under private ownership by June 2011, and fifty-two properties owned by the Township were in the process of being demolished. (53)

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