The case, Mount Holly Township v. Mount Holly Gardens Citizens in Action Inc., has attracted national attention because a ruling could set a precedent on whether a housing policy or other government or business action may be subject to litigation if it results in unintended discrimination, segregation, or other "disparate impact" on minorities and other protected classes.
The U.S. Justice Department and the solicitor general have joined the side of the Gardens residents, saying disparate impact has long been recognized in Fair Housing Act cases where an action has the potential to deny "a dwelling to any person because of race, color, religion, sex, familial status, or national origin."
Cruz, vice president of Citizens in Action, and his neighbors had sued the township, saying the redevelopment would violate their civil rights and create a racial imbalance by forcing them out.
The 2000 census showed that 75 percent of Gardens residents were African American or Hispanic. The majority also were low-income or below poverty levels, unable to afford any of the planned condominiums in the stalled development that had been projected to cost between $200,000 and $275,000.
In 2011, the U.S. Court of Appeals for the Third Circuit in Philadelphia ordered a trial to determine whether the redevelopment project - initiated to eliminate blight and a high-crime area - might have a discriminatory effect. If so, the town could be ordered back to the drawing board to look at alternative solutions, such as rehabilitating the houses or offering affordable replacement homes to Gardens residents.
While preparations were made for trial, the township appealed to the U.S. Supreme Court.
M. James Maley Jr., the town's special counsel, said in a brief filed late last month the appeals court wrongly decided "race must be a factor in policy decisions." He said that means "New Jersey municipalities planning redevelopment activities must count the number of racial minorities in a blighted area before taking any action" or risk being sued.
From a practical standpoint, that means places with large minority populations cannot be redeveloped, Maley argued. That may actually hurt desegregation efforts because it stops towns from replacing "a minority predominated ghetto with an integrated mixed race, mixed income housing project," he wrote.
But U.S. Solicitor General Donald B. Verrilli Jr., who was invited by the Supreme Court to file a brief, said the federal Housing and Urban Development agency created regulations in February that address those issues. The new rules establish the validity of disparate impact to prevent housing discrimination, but also place the burden of proof on the person who feels he is wronged to show there was a discriminatory effect and that there were alternatives available. In the Mount Holly case, the township would have to prove only that the redevelopment was necessary to serve important interests.
Verrilli argued that the issue was not ripe for the Supreme Court to consider. All 11 courts of appeals that have considered the question have recognized disparate-impact claims, he said. "Review is unwarranted."
Verrilli also said the new rules should be exercised and vetted in the lower courts, as is standard.
Cruz and the other Gardens residents, meanwhile, say they would rather end the lengthy litigation and work out a settlement. Not only has the litigation cost the township more than $1 million in legal fees, but it has also caused a lot of anguish, Cruz said. If the Supreme Court takes on the matter, "how long will that take?" he asked.
Mount Holly Mayor Richard Dow and other officials said they could not comment because of the litigation. But in an interview last year, Dow said he believed the residents were entitled to "replacement homes" on another part of the tract if they wanted to stay.
In the years before Dow was elected, township officials had threatened to use eminent domain to get the residents out.
Olga Pomar, a lawyer with South Jersey Legal Services, which represents the Gardens residents, said that the town had offered between $32,000 and $60,000 per household to get the residents to move, but that many were elderly and had already paid off their mortgages. They couldn't afford to move with those compensation packages, she said.
"It's been very frustrating. We've wanted to meet with the township for years. . . . We asked for mediation and the township hasn't wanted to do that," Pomar said.
Maley declined to comment for this article but has said the Gardens residents' demands were unreasonable. He has said he doubted mediation would be fruitful.
Last month, acting alone, a delegation of Gardens homeowners presented the Township Council with an offer to get negotiations rolling. The offer, submitted in a letter released to the public, said 17 of the 25 homeowners would like "replacement housing" when the new development is built, and eight want buyouts totalling $1.2 million.
The letter urged the council to bring "the costly, lengthy legal battle over the redevelopment of our community to an end" and to stop paying for "lawyers to fight us."
The town lawyers plan to give an answer on Monday but declined to elaborate.
Contact Jan Hefler at 856-779-3224, email@example.com, or follow on Twitter @JanHefler. Read her blog, "Burlco Buzz," at www.philly.com/BurlcoBuzz.