Housing Provider’s Income Requirements Made Affordable Housing Unit Unavailable to Many Low-Income People Who Qualify for Affordable Housing

TRENTON – Attorney General Matthew J. Platkin and the Division on Civil Rights (DCR) announced today that DCR has issued a Finding of Probable Cause against a housing provider and a leasing agent for allegedly violating the New Jersey Law Against Discrimination (LAD) by imposing unduly restrictive minimum-income requirements for an affordable rental unit. The Finding of Probable Cause alleges that the evidence supports a reasonable ground of suspicion that these minimum-income requirements, which result in the exclusion of many households that have an income low enough to qualify for affordable housing, had an unlawful disparate impact based on race and national origin.

The case centers on minimum-income policies maintained and implemented by Adoni Property Group, LLC, which owns and operates an apartment building in Avenel, New Jersey, and Legacy Realty Group, which served as Adoni’s leasing agent for the property. These policies required prospective tenants to show a monthly after-tax income of at least three times the monthly rent and to show that their bank account balance is at least five times the monthly rent. Adoni and Legacy applied these minimum-income requirements and denied the rental application of the complainant, a Black woman with two children who applied for an affordable unit in Adoni’s apartment building in Avenel.

As the Finding of Probable Cause explains, the unit the complainant applied for was designated as an affordable housing unit, meaning that it was available only to households whose income fell below certain thresholds. The complainant’s income was low enough to qualify for affordable housing, and the complainant was pre-screened for the unit and was deemed eligible to rent the unit by CGP&H, an Affordable Housing Administrative Agent approved by the State. Nonetheless, Adoni and Legacy determined that the complainant’s income and bank account balances were too low to meet their minimum-income policies.

In the Finding of Probable Cause announced today, DCR found a reasonable ground of suspicion to support the conclusion that the specific minimum-income requirements imposed by Adoni and Legacy had an unjustified and unlawful disparate impact based on race and national origin in violation of the LAD. DCR found sufficient evidence to support a reasonable ground of suspicion that these minimum-income requirements disproportionately exclude low-income Black and Hispanic prospective tenants, that these requirements are not necessary to achieve the housing provider’s legitimate interests, and that there are less discriminatory alternatives that could achieve those interests.

“Our civil rights laws prohibit housing providers from imposing screening barriers that result in discriminatory denials of housing to low-income New Jerseyans,” said Attorney General Platkin. “Protecting access to safe, stable, affordable housing has been a priority since I took office, and we will continue to hold accountable anyone who violates our laws.”

“New Jersey’s antidiscrimination laws are among the strongest in the nation. They prohibit housing providers from imposing tenant screening policies that have an unlawful disparate impact based on a protected characteristic,” said Sundeep Iyer, Director of the Division on Civil Rights. “Today’s announcement underscores that unduly restrictive minimum-income requirements may violate our antidiscrimination laws and can prevent renters, particularly low-income New Jerseyans, from accessing safe, affordable housing. We will continue to prioritize our enforcement work to dismantle unlawful barriers to housing across our state.”

The LAD prohibits not only conduct that expressly treats people differently based on a protected class, but also policies that have an unlawful disparate impact on members of a protected class. This latter form of discrimination is known as disparate impact discrimination. Under the LAD, policies or practices that are neutral on their face – for example, policies or practices that, like the minimum-income requirements at issue here, do not single out a protected class for differential treatment – may nonetheless violate the LAD if they have a disproportionate negative effect on members of a protected class.

Here, Adoni and Legacy stated that the complainant was deemed ineligible for the affordable housing unit she applied for because she failed to meet the requirements of their minimum-income policy, which requires prospective tenants to have an after-tax monthly income of three times the monthly rent and to have a bank account balance of five times the monthly rent. The rental unit the complainant sought to apply for had a monthly rent of $1,311. Adoni’s policy would have required her to show an after-tax monthly income of $3,933, which translates to an after-tax annual income of $47,196. The complainant would also have needed to show a bank account balance of $6,555.

DCR’s investigation found that, based on current federal and state tax rates, an applicant would likely need to show an annual before-tax income of $55,000 or more to qualify for the unit for which complainant applied. Under the applicable affordable housing guidelines, however, an applicant with a two-person household could qualify for a low-income affordable unit only if their income was below $49,280, and a three-person household could qualify only if their income was below $55,400. As a result, the minimum-income requirements at issue here likely exclude many potential applicants who were eligible for affordable housing, including the complainant, from being considered for the unit.

That was true of the complainant in this case. DCR’s investigation found that the complainant reported a monthly before-tax income of over $4,100 per month, which was more than three times the monthly rent. But her after-tax monthly income fell below the three-times-the-rent requirement, and her bank account balance also fell below the five-times-the-rent requirement set by Adoni and Legacy. As a result, her application was denied.

As the Finding of Probable Cause explains, data from the U.S. Census Bureau supports the conclusion that a policy of requiring a monthly after-tax income of three times the monthly rent and a bank account balance of five times the monthly rent disproportionately excludes Black and Hispanic applicants, who make up a disproportionately higher share of the low-income population in Middlesex County.

DCR’s investigation also found that Adoni and Legacy likely could not meet their burden to show that their minimum-income policies are necessary to achieve a substantial, legitimate, non-discriminatory interest. As the Finding of Probable Cause explains, Adoni and Legacy have a substantial, legitimate, non-discriminatory interest in ensuring that the tenants they select will be able to pay their monthly rent. But as the U.S. Department of Housing and Urban Development has explained in recent guidance, “[o]nly screening criteria and standards” that are “well-tailored to predict future behavior relevant to tenancy can be considered necessary to achieving a legitimate interest.” Here, DCR’s investigation found that the specific minimum-income requirements employed by Adoni and Legacy were not well-tailored to predict future payment by prospective tenants, especially in light of the fact that the unit in question was designated as an affordable housing unit.

The Finding of Probable Cause also explains that there is sufficient evidence to support a reasonable ground of suspicion that there were less discriminatory alternatives that would achieve Adoni and Legacy’s interest in ensuring that tenants will be able to pay their rent. DCR’s investigation found that Adoni and Legacy could have adopted less restrictive minimum-income policies, including, for example, by focusing on before-tax income instead of after-tax income, by focusing just on monthly income instead of on bank account balances, and by considering applicants’ prior rental history as evidence of ability to pay.

The issuance of a Finding of Probable Cause does not represent a final adjudication of this case. Rather, it indicates that DCR has concluded its preliminary investigation and determined sufficient evidence exists to support a reasonable suspicion that the LAD has been violated. The matter then goes to conciliation, giving the parties an opportunity to negotiate a voluntary resolution of the matter. If the parties are unable to reach a voluntary resolution, a Deputy Attorney General will be appointed to prosecute the matter either in Superior Court or in the New Jersey Office of Administrative Law.

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To view fact sheets on discrimination in employment, housing, and places of public accommodation, please visit https://www.njoag.gov/about/divisions-and-offices/division-on-civil-rights-home/division-on-civil-rights-resources/. People who believe their rights under the LAD have been violated can file a complaint with DCR by visiting https://bias.njcivilrights.gov/ or calling 1-833-NJDCR4U (833-653-2748).

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The New Jersey Division on Civil Rights enforces the New Jersey Law Against Discrimination, the New Jersey Family Leave Act, and the Fair Chance in Housing Act, and works to prevent, eliminate, and remedy discrimination and bias-based harassment in employment, housing, and places of public accommodation throughout New Jersey.

To find out more information or to file a complaint, go to www.njcivilrights.gov.

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