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A state appeals court last Wednesday turned away a claim that New Jersey rules for a federal affordable-housing program perpetuate racial segregation.

Racial integration might be a “desirable by-product” but cannot be allowed to compromise the New Jersey Housing and Mortgage Finance Agency’s “central mission and statutory purposes,” the Appellate Division held.

That mission is to build and rehabilitate affordable housing under the statutory criteria — housing needs, economic status of tenants and sponsor qualifications — rather than the racial makeup of a project or area, wrote Judge James Havey in a 59-page ruling joined by Judges Richard Newman and Robert Fall.

At issue is the 2003 Qualified Allocation Plan, adopted by HMFA to allocate $15 million annually in federal low-income housing tax credits for low-and moderate-cost housing. The credits are the largest source of funding for affordable housing in New Jersey.

Four advocacy organizations said the state criteria perpetuate segregation by concentrating low-income housing in urban neighborhoods with substandard schools, violating the Fair Housing Act, federal law, state discrimination law and the Mount Laurel and Abbott doctrines.

The suit was brought by the Fair Share Housing Center of Cherry Hill, the Camden City Taxpayers Association and the Southern Burlington County and Camden County branches of the NAACP (the original Mount Laurel plaintiffs).

The court agreed that HMFA had an obligation to further federal fair housing goals but found it met by the 2003 QAP. The court also noted that shifting tax credits from minority urban areas to white suburbs could expose the agency to civil rights suits and interfere with its duty to help revitalize cities.

Senior Deputy Attorney General Carol Johnston, representing the HMFA, said the court found that the rules further fair housing goals through “incentives to invest in minority programs, to construct mixed income housing and to build in suburban areas.”

Kevin Walsh, an attorney with the Fair Share Housing Center, says his client will appeal. He calls the ruling “a surprising repudiation” of Brown v. Board of Education. The appeals court “basically said ‘separate but equal’ is OK,” he says.

Kenneth Zimmerman of the amicus New Jersey Institute for Social Justice, says conceding HMFA’s obligation to further integration is “a promising first step,” but the court neither gave content to that obligation nor addressed his argument that HMFA should collect data from which it can assess the racial-integration impact of its criteria.

The case is In re Adoption of the 2003 Low Income Housing Tax Credit Qualified Allocation Plan, A-109-03.

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