Public Advocate releases report: “Evicted from the American Dream: The Redevelopment of Mount Holly Gardens”

Calls for changes in state laws governing redevelopment and relocation assistance

TRENTON -- New Jersey redevelopment laws need to be changed to better protect and adequately compensate low- and moderate-income people who are displaced by municipal redevelopment programs, New Jersey Public Advocate Ronald K. Chen said today.

Read Report: Evicted from the American Dream: The Redevelopment of Mount Holly Gardens”

Watch companion video

Read Background on Mount Holly Gardens 

The findings are part of the conclusion of a lengthy investigation by the Public Advocate into the ongoing redevelopment of Mount Holly Gardens, a low- and moderate-income neighborhood that is targeted for demolition. 

The investigation reveals that the redevelopment has proceeded without adequate regard for the welfare of the families who lived in the area the Township had deemed blighted and who should by rights have been the first to benefit from its planned revitalization.  Instead, the residents tended to become collateral damage of the redevelopment process.

The investigation shows significant gaps in the state laws governing financial compensation for people whose homes are taken to make room for private redevelopment, leaving displaced families unable to replace the home they lose.  There are similar shortfalls in the laws meant to ensure that tenants get the assistance they need to relocate to comparable rental units.

The Public Advocate launched the investigation with a public hearing in December 2007, in which dozens of residents spoke about the impact that the redevelopment has had on their lives and their community.  A video excerpted from this hearing is located at: http://video.google.com/videoplay?docid=-5659206087356136484&ei=XMMdScHyHpKYrQKlmMHoBg&q=mount+holly+gardens

The report, “Evicted from the American Dream: The Redevelopment of Mount Holly Gardens,” examines a redevelopment process that began in 2002, and describes the gradual “dispersal and partial destruction of the existing community.”

“The municipality can offer homeowners far less money than it costs to actually replace the home they would lose to the redevelopment.  The local government can offer scant relocation assistance to low-income families who rent their homes in redevelopment areas, and can even deny relocation assistance altogether to residents it does not consider technically eligible. It isn’t right and it isn’t fair, but it is at least arguably permitted under our current laws as written,” said Chen. “That is why we need to change the law.”

“The first duty of any local government is to its existing residents,” said Chen.  “The law should not permit a municipality to proceed on the assumption that some of its residents will simply disappear for the convenience of those who remain or who may arrive to replace them.  It is our hope that statutory reform will reconcile the laws governing compensation and relocation with the overriding principle that the costs of redeveloping a community should not be borne by those who can least afford it.”

The redevelopment area studied by the Public Advocate includes Mount Holly Gardens, a diverse and affordable residential neighborhood built in the 1950s that once included more than 350 attached, garden-style units.

Since designating the area blighted in 2002, the township of Mount Holly has purchased more than 200 of the units without resorting to condemnation.  But the threat of eminent domain hung over the community for many years, and many landlords and some homeowners sold their houses with the understanding that the township intended to take them, by eminent domain if necessary.  

The township has demolished more than 70 of the units it purchased, and has boarded up and left vacant many of the others. About two-thirds of the housing units in the Gardens are now empty. 

The report makes these principal findings:

• When homeowners are displaced, they are not getting enough money to allow them to purchase comparable homes in the same municipality, or even the region.  A Mount Holly Gardens family who owned the largest three-bedroom unit received a maximum of $84,000: $49,000 for the sale of the property at the township’s appraised value, $15,000 in relocation assistance, and possibly a $20,000 interest-free loan to be repaid upon the sale of the replacement house. 
  
  Even this – the most generous compensation package offered – is not enough to buy a replacement property in Mount Holly, where the average sale price for a house last year was more than $206,000.  Senior citizens are hit particularly hard.  Many of them have lived in their homes for decades, and their mortgages are paid.  They live on fixed incomes and cannot assume new debt.

• Tenants also end up worse off.  Displaced tenants have relocated to housing that rents, on average, for almost 40% more than the homes they left.  To those it deemed eligible, the township paid $7500 in rental assistance, almost twice the $4000 required by a law that has not been updated since 1972.  Yet even this enhanced assistance was insufficient, covering less than 60% of the average rental increase, and only for a period of four years. 

• The law gives the municipality exclusive authority to trigger a household’s eligibility for relocation assistance, depriving the residents of control over when they leave an area that may have become a construction zone.  In Mount Holly, the township did not begin offering such assistance until late 2006, by which time dozens of rental families had already left the Gardens with no financial assistance at all. 
  
  Those who remain have watched the neighborhood empty and come down around them.  As the deteriorating conditions intensify the pressure to leave, they have no ready means to demand more adequate compensation and financial assistance when they are ready to go.

• Redevelopment threatens the affordable housing stock.  Based on the Township’s estimates, when this project is over, more than 300 homes that were affordable to low- and moderate-income households will have been demolished, and fifty-six such units will be built.  The result will be a loss of more than 200 affordable housing units.

To address those concerns, the Department makes the following recommendations:

• First, the law must demand that displaced homeowners receive “replacement value,” that is, compensation adequate to allow them to relocate to comparable replacement homes in their own communities. 
   
• Second, when tenants are displaced for redevelopment, the law should entitle them to the full difference between their old rent and their new rent in a decent, safe, sanitary, and comparable replacement dwelling for at least seven years – with no time limits for senior citizens or people with disabilities living on fixed incomes.

• Third, the law should require municipalities to notify residents at least six months before demolitions begin.  Once residents receive that notice, they must be allowed to demand fair compensation and to qualify for relocation assistance whenever they are ready to go.

• Fourth, when redevelopment results in the demolition of affordable housing, municipalities must be required to replace as much of this housing as possible so as to avoid aggravating an already dire shortage of affordable housing in the State.

The Department is working with state legislators to amend the state’s redevelopment laws to better protect vulnerable low-income citizens subject to displacement as a result of municipal redevelopment programs.

“Whatever their original intent may have been, the current compensation and relocation assistance laws allow a redevelopment to proceed, triggering the displacement of large numbers of residents, without ensuring that every resident is protected against the immediate and foreseeable adverse consequences of the redevelopment,” the report states.

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