Mt. Holly Gardens Citizens in Action, Inc. v. Township of Mount Holly
658 F.3d 375, 2011 U.S. App. LEXIS 18840, 2011 WL 4035780 (2011)
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Rule of Law:
A facially neutral government action, such as an urban redevelopment plan, violates the Fair Housing Act (FHA) under a disparate impact theory if it has a disproportionate adverse effect on a protected class and a less discriminatory alternative to achieve the government's legitimate objective exists.
Facts:
- The Gardens neighborhood in Mount Holly Township was predominantly occupied by low-income African-American and Hispanic residents.
- Due to issues like disrepair, crime, and blight, the Township designated the Gardens as an 'area in need of redevelopment' in 2000.
- The Township created a redevelopment plan that involved demolishing all 329 homes in the Gardens.
- The plan called for constructing up to 520 new, significantly more expensive housing units, with only 56 designated as affordable and only 11 offered with priority to existing residents.
- The estimated cost of the new homes, between $200,000 and $275,000, was unaffordable for the vast majority of the neighborhood's existing minority residents.
- The Township began acquiring and demolishing homes, which displaced many residents and created hazardous conditions for those who remained.
- Throughout the planning process, Gardens residents voiced objections, expressing fear that they would be displaced and unable to afford any other housing in the Township.
Procedural Posture:
- Mt. Holly Gardens Citizens in Action ('the Residents') initially filed suit against the Township in New Jersey Superior Court, a state trial court.
- The state trial court granted summary judgment to the Township, partly on the grounds that the discrimination claims were not yet ripe for review.
- The state's intermediate appellate court, the Appellate Division, affirmed the trial court's decision.
- The New Jersey Supreme Court, the state's highest court, declined to hear the case.
- The Residents then filed a new lawsuit in the U.S. District Court for the District of New Jersey, raising federal anti-discrimination claims.
- The District Court denied the Residents' motion for a preliminary injunction.
- The District Court granted summary judgment to the Township, finding the Residents had not established a prima facie case of discrimination under the FHA.
- The Residents, as appellants, appealed the District Court's grant of summary judgment to the U.S. Court of Appeals for the Third Circuit.
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Issue:
Does a township's redevelopment plan, which calls for the demolition of a predominantly minority neighborhood and its replacement with housing unaffordable to the current residents, state a prima facie case of discrimination under the Fair Housing Act's disparate impact theory?
Opinions:
Majority - Fuentes, J.
Yes, the residents stated a prima facie case of discrimination because a facially neutral policy that has a disproportionate adverse impact on a protected class can violate the Fair Housing Act. The court reasoned that disparate impact claims under the FHA do not require proof of discriminatory intent. A prima facie case can be established through statistical evidence showing that a policy falls more harshly on one group than another. Here, the Residents' statistics demonstrated that African-Americans were 8 times and Hispanics 11 times more likely to be affected by the plan than White residents. The district court erred by rejecting these statistics, by improperly focusing on absolute numbers rather than proportional impact, and by conflating disparate impact with disparate treatment. Once a plaintiff establishes a prima facie case, the burden shifts to the defendant to show a legitimate, non-discriminatory reason for its action and that no less discriminatory alternative exists. The Residents presented evidence of a viable, less discriminatory alternative—rehabilitation—creating a genuine issue of material fact that precluded summary judgment for the Township.
Analysis:
This decision reaffirms the viability of the disparate impact theory under the Fair Housing Act, particularly in the context of urban redevelopment. It clarifies that statistical evidence showing a disproportionate burden on minorities is sufficient to establish a prima facie case, forcing municipalities to justify their actions. The ruling puts local governments on notice that they must seriously consider less discriminatory alternatives, such as rehabilitation over demolition, when redevelopment plans threaten to displace protected communities. This precedent strengthens protections for minority and low-income neighborhoods against gentrification efforts that, while facially neutral, result in de facto segregation and displacement.
