"One of the most controversial issues concerns exclusionary zoning, or using zoning not to regulate the location of particular land uses but to exclude them altogether from a community. By limiting an area to single-family dwellings, imposing minimum lot size requirements, or placing other restrictions, a municipality effectively can exclude poor people from living in it. Several state courts have held that using zoning for this exclusionary purpose violates the state or federal constitution. The leading case is Southern Burlington County NAACP v. Township of Mt. Laurel (1975, 1983), which twice appeared in the New Jersey Supreme Court.
The zoning in Mt. Laurel, a growing community in southern New Jersey, allowed the construction of single-family homes on lots of substantial size. As a result, it was economically impossible to construct homes for low-income people in Mt. Laurel. The only apartment buildings permitted were cooperatives or condominiums for senior citizens, also beyond the reach of low and moderate income retirees. Applying state constitutional law, the court held that a developing community like Mt. Laurel must make it possible to build a variety of types of housing, including low-income housing. Among other provisions, the New Jersey Constitution guaranteed to everyone the right 'of acquiring,possessing, and protecting property.' When the state delegates its police power to a municipality, the municipality cannot consider purely local interests in exercising that power in framing a zoning ordinance. The township's desire to keep its real estate tax burden down by excluding the poor is an insufficient justification for limiting the people who could live in the community.
In the first Mt. Laurel case, the Supreme Court relied on the good faith of the township, and other municipalities in similar positions, to revise their zoning ordinances to comply with the requirements of the law. That reliance turned out to be unfounded, as Mt. Laurel and other evaded or ignored the Court's mandate. Several years later, in Mt. Laurel II, the Court imposed a series of remedies to ensure compliance. The remedies included empowering special judges with supervision of the cases, requiring that developers build low-income housing as a condition of having other projects approved, and ordering municipalities to allow builders to construct low-income housing unless the municipality met a high burden of proving the harm it would cause. Eventually the entire issue was dealt with by the legislature, which enacted a Fair Housing Act creating a statewide agency to deal with the problem." -From, "Law 101" By Jay M. Feinman