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Parker v. St. Stephen''s Urban Development Corp.

Decided: August 24, 1990.


On appeal from the Superior Court, Law Division, Monmouth County.

Pressler, Long and Gruccio. The opinion of the court was delivered by Long, J.A.D.


In 1988, plaintiff Hazel Parker filed a complaint against defendant St. Stephen's Urban Development Corp., Inc., alleging that she had sustained injuries in a fall on a sidewalk at Stephen Manor, an Asbury Park apartment complex owned and operated by defendant. The trial judge granted defendant's motion for summary judgment and dismissed plaintiff's complaint on the ground that it was barred by the Charitable Immunity Act. N.J.S.A. 2A:53A-7. Plaintiff appeals. We reverse.

The facts in the case are relatively straightforward. In June 1968, the governing body of St. Stephen's A.M.E. Zion Church of Asbury Park determined "to serve as a sponsoring organization to work in conjunction with other agencies and particularly with the Federal Housing Authority," and "to help fill an immediate need for respectable housing" in Asbury Park. Accordingly, it created defendant, a nonprofit corporation, pursuant to the provisions of Title 15 of the New Jersey statutes. As set forth in its certificate of incorporation, defendant's goals include working for the "health, welfare and morals of the community" and assisting low and moderate income persons to obtain housing. Among defendant's by-laws, the following corporate purposes were set forth:

a. To undertake any activity or do anything specifically or inferentially permitted under any Act of the United States or the State of New Jersey, specifically

including, but not limited to anything permitted or authorized directly or indirectly under Sections 221(d) and/or 236 of the National Housing Act.

b. To immediately undertake the building of a low to moderate income housing development in Asbury Park Urban Renewal Area to provide decent and standard housing for the local community.

e. To solicit, receive, and hold money and other property, real or personal, whether the same be acquired by gift, devise, bequest, or otherwise, and to make such disbursements thereof from time to time as may be determined to be in the best interests of the realization of the objectives of the National Housing Act as it applies to Stephen Manor and other objectives of this Corporation.

Because defendant's incorporation conformed in every respect with the requirements of Section 236 of the National Housing Act (12 U.S.C.A. § 1701 et seq.), it qualified for an arrangement with the United States Department of Housing and Urban Development (HUD) pursuant to which HUD agreed to make mortgage interest reduction payments and provide mortgage insurance on a housing complex which defendant proposed to construct.

With the federal funding in place, in 1971 defendant constructed Stephen Manor, an eight-building apartment complex containing one, two and three-bedroom apartments. As the owner of a multi-family housing project receiving mortgage insurance and interest reduction payments from HUD, defendant also qualified for federal rent supplement payments. 24 C.F.R. § 215.15 (1971). This program requires that individuals who fall into HUD's federal preference categories be given the first opportunity to rent an apartment at Stephen Manor. (All tenants at Stephen Manor fall into one of the federal preference categories.) The program contemplates that the income from all apartments will cover the total expenses of a project including all operational costs, salaries,*fn1 taxes and the portion of the mortgage not paid under Section 236. That total figure is

prorated among the apartments to establish the "basic rent" for each unit. The actual rent paid by tenants is determined by an income formual including certain authorized deductions not here relevant. Under the formula, the rent paid is equal to 30 percent of a tenant's net monthly income. The difference between the rent actually paid by each tenant and the basic rent assigned to the unit is covered by a HUD rental subsidy. Approximately 60 percent of the tenants at Stephen Manor receive HUD subsidies. The remaining tenants, whose net monthly income is sufficient, pay the basic rent or more, up to a predetermined market rent. Any amount paid in excess of the base rent by tenants who do not receive HUD subsidies is used to reimburse HUD. 24 C.F.R. § 236.60 (1971); 12 U.S.C.A. § 1715z-1(g). Defendant's operation of ...

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