The council's action renders moot a hearing on the issue that was scheduled for next month before the U.S. Supreme Court, which took the township's appeal of a lower court decision in favor of the residents.
The high court was expected to revisit a controversial legal principle known as "disparate impact," which has been used for decades to enforce the antidiscrimination Fair Housing Act of 1968. Opponents of the principle had hoped the high court would rule it unconstitutional, while civil rights groups hoped that it would be upheld.
In 2003, U.S. District Court in Camden dismissed a civil rights suit brought by 50 Gardens residents and a community group against the town.
The U.S. Court of Appeals for the Third Circuit reversed the lower court and ordered a trial to determine whether the township's redevelopment plan had a "disparate impact" on minorities. The town appealed.
In the settlement Wednesday, the township agreed to provide homes to the 20 residents and compensate seven other homeowners who have chosen to leave the community. Both sides agreed to drop all legal proceedings.
Current residents of the Gardens will have the right to remain in their home community while the houses are built. The 44 homes will be developed by TRF Development Partners Inc. of Philadelphia.
"This is what the plaintiffs have always wanted: to be able to stay in their community once it's been revitalized," said Olga Pomar, a South Jersey Legal Services lawyer who has represented the plaintiffs throughout the case. "We've been seeking this for 10 years."
"I can't believe this is finally resolved," said Angela Gonzalez, executive director of Latino Services, a local support group. "This issue has been so devastating for the families involved. . . . It's going to be a different type of Christmas."
If Township of Mount Holly v. Mount Holly Gardens Citizens had gone before the Supreme Court, the justices would have been asked to decide whether Mount Holly had effectively discriminated against the predominantly Hispanic and African American residents who populate the Gardens when it condemned their homes in 2003 as part of a redevelopment plan.
First raised under the 1968 Fair Housing Act, the principle of disparate impact holds that developers and municipalities may not undertake redevelopment plans - especially condemnations - that adversely impact minority groups even if those actions are not intentionally prejudiced.
Many conservative groups, municipalities, and developers had expected the s court would reject the principle of disparate impact, which relies on statistical analyses to determine whether a minority group suffers disproportionately from a redevelopment plan.
For years, previous members of the Mount Holly council had defended the redevelopment plan, which called for razing the Gardens and replacing it with a 200-unit townhouse development and stores.
Residents of the homes, some of whose household incomes are below the poverty line, said they could not possibly afford to buy the new units and would be forced to leave Mount Holly.
The township argued that the community, which once included more than 300 rowhouses, was an eyesore with a high rate of crime that even stepped-up police patrols could not control, and that their motives were not racist.
A similar civil rights case in St. Paul, Minn., Magner v. Gallagher, was settled in 2011 weeks before the Supreme Court was to hear arguments. Mount Holly viewed Magner as so relevant, it filed amicus briefs.
Township Solicitor George R. Saponaro said after Wednesday's council vote that neither side had been focused on resolving the question of disparate impact. "Today's vote was about what was right for Mount Holly," he said.
Pomar and her colleague, Susan Ann Silverstein, agreed.
Disparate impact "was not an issue as we sought to get new homes for our clients," said Silverstein, a lawyer for the AARP Foundation Litigation, which worked with South Jersey Legal Services.
The residents "have lived with uncertainty for 10 years," Silverstein said, with the result that many had done no maintenance. "They look forward to raising their families . . . and moving into new homes."