This is a case of first impression, concerning the ability of a municipality to acquire property and simultaneously lease it to nonprofit community agencies.
In 1957, the City of Summit purchased a four and one-half-acre tract of land adjoining an 11-acre city park. The agreement of purchase recognized the city's need to build a new school on a portion of the site and "its future municipal needs for the remainder of the premises." The property was then conveyed to the board of education, which constructed a one-story 38,000-square foot building used continuously thereafter as the Robert Cade Wilson Elementary School. The property is located in an area zoned for low-density, single-family residences and is adjoined by a neighborhood of large, well-maintained homes. Summit itself is a six-square mile city with a population of 21,071, fully developed with the great majority of its area devoted to owner-occupied residences. In 1981, it enjoyed the highest per capita income of all municipalities in Union County.*fn1
In 1980, having determined to close the Wilson School, as it was not needed for school purposes, the board of education moved its administrative offices into the building. The following year the board obtained variance approvals for the Summit Child Care Center, the Y.W.C.A., the Historical Society and the United Way to occupy the vacant portions of the building as tenants on an interim basis. In 1984, the board leased those
areas to those agencies for an additional three-year period, and the temporary variances were eventually extended through 1988. In granting the variances, the board of adjustment, pursuant to N.J.S.A. 40:55D-2 and -70d, found that such uses would "promote the public health, safety, morals and general welfare."
In July 1986, the Summit Space Use Committee issued its interim report recommending to the board of education that the school property be transferred to the city for residential development. Over the next two years, the subject was regularly discussed by the common council, which conducted one or more feasibility studies concerning possible municipal uses and considered various other arrangements. During those two years, the future of the building was discussed at regular council meetings and at a special meeting called for that purpose, as well as at separate public meetings conducted in the summer of 1988. By then, the board of education had formally determined that the property was no longer needed for school purposes (see N.J.S.A. 18A:20-5).
Eventually, a majority of the council decided to accept the proffered deed from the board of education and to utilize the land and buildings as a "community resource center," immediately arranging to lease the building to the Summit Child Care Center, the Summit Y.W.C.A. and the Summit Area Association for Gerontological Endeavors (S.A.G.E.). The authorizing ordinance was adopted February 21, 1989, and the deed accepted March 22, 1989. Sixteen days later, this action challenging that ordinance was commenced.
After extensive negotiations which preceded as well as followed the acquisition decision, council introduced an ordinance on July 18, 1989 to enter into leases with these three agencies for ten-year terms at a beginning collective annual rental of $78,000. Those ordinances were finally adopted on September 8, 1989. It is understood that plaintiffs challenge the leasing ordinances as well.
In the ordinance accepting the property, the council found there to be
several municipal purposes for which the land and building can be used . . . the primary (one being) . . . to convert same into a community resource building and in turn to lease the premises to nonprofit corporations providing services which will promote the health, safety, morals and general welfare of the citizens of Summit . . . and if for any reason (it cannot be used) for the primary purpose of acceptance . . . that there are other municipal uses and purposes for which (it) can be adapted to serve.
In this regard, "nonprofit" means the corporation was found to be exempt from federal income taxes under § 501(c)(3) of the Internal Revenue Code as an entity organized and operated exclusively for charitable or educational purposes; and that it was incorporated under the predecessor statute (N.J.S.A. 15:1-1 et seq.) to the present New Jersey Nonprofit Corporation Act of 1983, meaning it was organized not for pecuniary profit but inter alia for charitable, benevolent, eleemosynary, educational, civil, social and/or athletic purposes. Each of the agencies involved here is so qualified.
The Summit Child Care Center, Inc., incorporated in 1955, is licensed by the New Jersey Department of Human Services pursuant to N.J.S.A. 30:5B-1 et seq. In section 2 of that act, the Legislature found that
it is in the public interest to license and regulate child care programs and facilities in order to insure the continuous growth and development of children. The Legislature further finds that comprehensive child care programs are of value to the health, safety, education, physical and intellectual growth and general well-being of the children served and that the programs strengthen and supplement the family unit. The Legislature further finds that child care programs provide places for preventive health measures, early detection of illnesses and handicaps and development of special talents and interests. The Legislature further finds the State and parents have a responsibility in the education of children and that the role of the teacher is essential to the continuous development of children. The Legislature further finds that experience indicates that the development of child care centers should be encouraged, whether publicly or privately supported, to provide a full range of services benefiting the child, parent and community and that there is a great need for expansion of existing centers and for the establishment of additional centers.
The lease approved by the city stipulates that no more than 165 children are to be enrolled in its programs on any single day. Partial- or full-day care is also provided at the center. In that
Private day care centers should be treated as community facilities rather than arbitrarily classified as proprietary uses, and should be considered as being comparable to elementary or public nursery schools for purposes of zoning. The very nature of the use, i.e., educational, gives rise to special reasons pursuant to Kohl v. Mayor, etc., Fair Lawn, supra, 50 N.J.  279 [234 A.2d 385 (1967)]. Additionally, day care center services meet community objectives in much the same manner as other more familiar community institutions such as schools and public nurseries, even though the State did not see fit to make nursery level compulsory. A private nursery school serves, in addition to the educational function, an important social community purpose for mothers. Public nursery schools can be established by a board of education in any school under its control, pursuant to N.J.S.A. 18A:44-1. If a public facility is not provided in the district, the availability of a local private nursery serves a legitimate education need, sanctioned, though not required, by the State. [at 459, 288 A.2d 312]
The Y.W.C.A. of Summit, New Jersey, incorporated prior to 1953, presently operates from a large building on Morris Avenue. Its use of the Wilson School gymnasium allows it to conduct a gymnastics program consisting of both recreational instruction and formal competitions. It is contemplated most participants will be driven to the school from the Morris Avenue ...