On appeal from Superior Court of New Jersey, Law Division, Passaic County.
Judges Pressler, Deighan and Baime. The opinion of the court was delivered by Baime, J.A.D.
This appeal requires us to construe sections of the Senior Citizens Nonprofit Rental Housing Tax Law (N.J.S.A. 55:14I-1 to - 9). This statutory scheme authorizes municipalities to exempt from real property taxes nonprofit housing projects for the elderly funded under the Federal Senior Citizens Housing Loan Program authorized by the Federal Housing Act of 1959, more commonly known as section 202 (12 U.S.C.A. § 1701q (1989)). The federal program is augmented by 42 U.S.C.A. § 1437f (1990) (section 8) under which eligible low-income tenants pay a percentage of adjusted incomes as rent and the remainder is subsidized by the United States Department of Housing and Urban Development (HUD). Under the New Jersey Act, nonprofit housing projects are to pay 15% of their "annual gross rents" in lieu of real property taxes. N.J.S.A. 55:14I-5. At issue is whether section 8 subsidies are to be considered in determining gross rents for the purpose of calculating the project's payment in lieu of taxes. The problem is compounded by HUD's long-standing policy in New Jersey which requires as a precondition to the release of section 202 funds that section 8 subsidies be excluded in determining a project's payment in lieu of taxes. We are convinced that the New Jersey Act was designed to implement and effectuate federal funding programs to assist the elderly in pursuit of decent housing. We thus construe the tax exemption provision as barring inclusion of federal rent subsidies in determining a nonprofit project's payment in lieu of taxes.
Additional questions are presented concerning plaintiff's application for a use variance. We hold that a nonprofit senior citizen housing project constitutes an inherently beneficial use. We also conclude that the grant of the variance sought here will not substantially impair the intent and purpose of the
master plan and zoning ordinance.*fn1
The facts are not in dispute. Plaintiff is a nonprofit corporation organized to provide elderly and handicapped persons with housing facilities. It is one of three corporations created by the Paterson Diocese of the Roman Catholic Church. These corporations have constructed 414 units of senior citizen housing since 1967.
Several years ago, plaintiff purchased approximately one acre of vacant land from St. Gerard's Parish. The property is located at 505 West Broadway in Paterson. Plaintiff seeks to construct 31 units of senior citizen housing, consisting of 22 one-bedroom apartments and eight studio apartments. The property is in a R-1, residential district which permits single family detached dwellings. The surrounding area consists of one- and two-family homes, numerous garden apartments, a Salvation Army building, several small commercial establishments and a fire house. According to plaintiff, the site is ideal for senior citizen housing because it is located on a major arterial road well-serviced by public transportation and in close proximity to a shopping area.
Based upon these considerations, plaintiff applied for a use variance to permit construction of an apartment building in a single family residential zone. Plaintiff also sought a variance for a minor deviation from the floor area requirement of the zoning ordinance. Following public hearings, the Board of Adjustment approved the application. In its resolution, the Board found that there was an "absolute need" for low-income subsidized housing for the elderly and that the site was "particularly
suitable" for the proposed development because of its proximity to public transportation and shopping areas. The Board also made particularized findings that the variances sought were consistent with the master plan and zoning ordinance. In that respect, the Board concluded that the development would "blend in with the immediately surrounding area" consisting of mixed uses, that the lot coverage of approximately 25% was consistent with the surrounding area, and that the master plan encouraged the development of housing for senior citizens.
In its de novo review, the governing body, without elucidation, disagreed with all of the Board's critical findings. The Council rejected the Board's determination that there was a need for senior citizen housing, noting that the evidence presented by plaintiff supporting that conclusion constituted unsubstantiated hearsay. The Council also found the "density of the development" was inconsistent with the surrounding neighborhood and conflicted with the intent and purpose of the zoning ordinance. Plaintiff's application was thus denied.
While these proceedings were ongoing, plaintiff was attempting to obtain federal funding for the project from HUD. Unfortunately, the record concerning these negotiations is not complete. However, both counsel have stipulated that HUD will not release section 202 funds unless the sponsor has entered into a tax exemption agreement with local authorities. As noted previously, it is HUD's long-standing policy to deny section 202 funds unless the municipality has agreed to accept payments in lieu of taxes determined by ...