By Lawrence Hurley
WASHINGTON (Reuters) - The Supreme Court on Monday agreed to consider whether a New Jersey township's plan to redevelop lower income housing violated the Fair Housing Act because it would reduce affordability for minorities.
In weighing the lawsuit filed by Mount Holly Gardens Citizens in Action against the township of Mount Holly, the court will decide whether the statute allows for claims based on seemingly neutral practices that have a discriminatory effect.
The Fair Housing Act, passed in 1968 to prohibit bias based on race in the sale or rental of housing and related services, does not explicitly allow so-called "disparate impact" claims. Courts are divided on whether such claims can be made. The Supreme Court has never ruled on the issue.
The dispute arose in 2002 when the township decided to redevelop an area known as Mount Holly Gardens due to a high crime rate, poor maintenance and other problems. The 30-acre neighborhood was 75 percent minority in 2000. The town in 2000 was 67 percent non-Hispanic white.
The residents complained that the new proposed market-rate housing would be financially out of reach for them. They said white people would be better able to afford the new units.
A federal judge dismissed the residents' lawsuit, but in a June 2012 ruling the 3rd U.S. Circuit Court of Appeals in Philadelphia said the disparate impact claims could proceed.
The Obama administration says disparate impact lawsuits should be allowed but has been keen to keep the case away from the conservative-leaning Supreme Court.
It asked the court not to take the Mount Holly case and also successfully intervened to encourage a settlement in a case the court agreed to hear last year over a dispute between landlords and the city of St. Paul, Minn.
The case could affect other laws that the government has interpreted to allow disparate impact claims. The Consumer Finance Protection Bureau has, for example, said that it could make such claims over lending practices under the Equal Credit Opportunity Act.
Oral arguments and a ruling are due in the court's next term, which starts in October and ends in June 2014.
The case is Township of Mount Holly v. Mount Holly Gardens Citizens in Action.
(Reporting by Lawrence Hurley; Editing by Howard Goller and Alden Bentley)