The Closing the Segregated Housing Loophole Act aims to eliminate segregation in affordable housing inclusionary developments in New Jersey. It prohibits developers from creating separate entrances, amenities, or features that would segregate residents based on income-restricted status or other protected characteristics. Additionally, municipal authorities are barred from approving any development that violates these provisions. If a municipality does approve such a development, it will face penalties and enforcement actions established by the Commissioner of Community Affairs. Notably, any affordable unit found to be part of a segregated development will not count towards the municipality's fair share affordable housing obligation.

The bill mandates that the Commissioner of Community Affairs enact rules and regulations to implement its provisions within six months of its enactment. It emphasizes the state's commitment to fair housing opportunities and addresses the ongoing issue of segregation in housing, which contributes to racial and economic disparities. The act is set to take effect ten months after its passage.