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Mt. Holly Gardens Citizens in Action Inc. v. Township of Mount Holly

658 F.3d 375 (3rd Cir. 2011)

REDEVELOPMENT; DISCRIMINATION — A court has the power to review a redevelopment plan where, after a review of the statistical data in a light most favorable to the residents, it determines that persons in protected classes might be disproportionately, adversely affected by the redevelopment plan.

A municipality proposed a redevelopment plan that would demolish a blighted neighborhood and replace existing dilapidated housing with up to 520 new houses and apartments. The plan provided that only 56 of the units would be deed-restricted affordable housing units, of which 11 would be offered to existing neighborhood residents at market rents. However, most of the neighborhood’s residents were African-American or Hispanic with incomes equal to less than 80% of the area’s median income. This made it extremely difficult for them to remain in the neighborhood once redeveloped.

A group of current and former residents sued in federal court alleging that the municipality was violating the Fair Housing Act (FHA), Title VIII of the Civil Rights Act of 1968, and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. The municipality filed a motion for summary judgment, arguing that the residents failed to show a prima facie case of discrimination under the FHA. The lower court agreed and ruled in the municipality’s favor. When the residents appealed, the United States Court of Appeals reversed.

In doing so, the Court noted that the FHA makes it unlawful to “otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, family status or national origin.” The FHA can be violated either by intentional discrimination or if a practice has a disparate impact on a protected class. If the residents could show that the proposed redevelopment would disproportionately burden African-Americans and Hispanics, so as to cause a disparate impact, that would demonstrate a prima facie case of housing discrimination under the FHA. Once a prima facie case for discrimination is shown, the municipality would need to show that no alternative plan could be adopted that would have a less discriminatory impact. If the municipality did show that, then the burden would shift back to the residents to demonstrate a less discriminatory way to advance the municipality’s goals to redevelop the blighted area.

In this case, the Court found that the residents had made a prima facie showing of discrimination through their use of a statistical analysis showing that while 22.54% of African-American households and 32.31% of Hispanic households within the municipality would be adversely affected by demolition of the neighborhood, only 2.73% of White households would be similarly affected. They also demonstrated that only 21% of the African-American and Hispanic households in the county would be able to afford new housing in the redeveloped neighborhood, as opposed to the 79% of White households. The Court held that the lower court improperly rejected the statistical analysis, which could have served to show that the redevelopment plan had a disparate impact on minorities. In the summary judgment motion, the lower court should have viewed the statistical data in a light most favorable to the residents, but it did not. Furthermore, the lower court had rejected a reasonable inference in the residents’ favor by looking at the absolute number of African-American and Hispanic households within the county that could afford homes. Instead, it should have looked to see if African-American and Hispanic households were disproportionately, adversely affected by the municipality’s redevelopment plan.

Lastly, and most importantly, the lower court confused the concept of disparate treatment with that of disparate impact. The lower court had held that since 100% of the minority residents within the neighborhood were treated the same as were 100% of the non-minorities, the residents failed to prove that there was a greater impact on minorities. According to the Court, given the opportunity, the minority residents might reasonably be able to establish a prima facie case of disparate impact by showing that minority residents were burdened disproportionately.

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