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Mount Holly: Gentrification, Disparate Impact and the FHA

By Gabriella Khorasanee, JD | Last updated on

Have you ever been to the Hell's Kitchen neighborhood in New York? While I was a struggling law student, I lived there and I would often see drug baggies on the street, and an occasional prostitute at work in her John's car. Now, it's like Disneyland on crack.

In the latest case of gentrification, a group of citizens sued their township claiming disparate impact under the Fair Housing Act. How will the Supreme Court decide?

Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc. -- Background

The Gardens neighborhood in the Township of Mount Holly, New Jersey, is predominantly made up of African-American and Hispanic residents, and poor, with nearly all Gardens residents earning less than 80% of the town's residents' median income. Guess what neighborhood Mount Holly chose for redevelopment?

A group of citizens called the Mt. Holly Gardens Citizens in Action ("Citizens") challenged the redevelopment plan citing violations of the Fair Housing Act ("FHA"), Title VIII and 42 U.S.C. § 1982. The district court found that the Citizens did not show a prima facie case of discrimination, and granted the Townships motion for summary judgment.

On appeal, the Third Circuit held that the district court erred by rejecting statistical evidence, that when viewed in the light most favorable to the Citizens, would have shown a disparate impact. The court vacated the district court's opinion and remanded the case.

Now, the Supreme Court must determine whether "disparate impact claims cognizable under the Fair Housing Act?" In doing so, it may revisit its holding in City of Memphis v. Greene, denying a disparate impact claim in an ethnic neighborhood.

The Obama Administration weighed in, stating the issue does not warrant review in light of new HUD regulations that have not yet made the rounds in the courts, reports the AP. In an amicus brief, the United States emphasizes: "HUD also recently issued a regulation reinforcing its longstanding recognition of disparate-impact liability under the FHA and prescribing standards for adjudicating such claims."

You never know, the Court may decide the case is now moot. Perhaps the Court will give us a hint at oral arguments on December 4th.

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