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Philogene v. CPR Holdings


February 24, 2009


On appeal from the Superior Court of New Jersey, Law Division, Union County, L-4494-05.

Per curiam.


Argued December 16, 2008

Before Judges Winkelstein, Fuentes and Gilroy.

Defendant CPR Lapid Holdings is the owner of a thirty-five-bed nursing facility located in a historic district in Plainfield. CPR applied to the Plainfield Zoning Board of Adjustment for a use variance, bulk variances and waivers, and for site plan approval, to expand the facility to a sixty-bed skilled nursing home. The Board granted the application subject to conditions. Plaintiffs, neighbors and members of the Plainfield Historic Preservation Commission (the Historic Commission), challenged the Board's decision in Superior Court, where the Law Division judge set the approval aside. We reverse the Law Division's order and reinstate the Board's approval.

I. Background

In May 2000, CPR applied for site plan approval, a use variance and bulk variances to expand a thirty-five-bed nursing home, which had been in operation since the 1950's, to a sixty-bed assisted-living facility with a skilled nursing home component. The proposed plan included expansion of the facility onto an adjacent vacant lot and additional parking. In April 2002, the Board denied the application, adopting a memorializing resolution in July 2002. CPR did not appeal.

Instead, in December 2002, CPR and residents of the nursing home sued the Board and the City in federal district court for violating the Federal Fair Housing Act of 1968 (FHAA), as amended by the Fair Housing Amendments Act of 1988, 42 U.S.C.A. §§ 3601 to -3619. Macalalca v. Zoning Bd. of Adjustment of Plainfield, D.C.N.J. Docket No. 02-5897. The plaintiffs alleged in their complaint that the defendants denied them reasonable accommodations and the opportunity to reside "in the residence of their choice." They also alleged equal protection and due process violations under 42 U.S.C.A. § 1983, and sought declaratory and injunctive relief allowing expansion of the facility. The case was reported settled. Although a stipulation of settlement was prepared, it was never signed or filed. The judge entered a dismissal order on June 23, 2003, stating that the lawsuit could be reopened "if the settlement [was] not consummated" within ninety days. It does not appear that the parties took any further action in federal court. Nevertheless, as part of its settlement negotiations with CPR, the Board agreed to reopen CPR's application, and CPR agreed to amend its application by changing the use to a sixty-bed skilled nursing home without an assisted-living component.

II. Amended Application Hearings

The Board held nineteen hearings on the amended application from September 2003 through July 2005. Following are the facts that were presented during those hearings, as well as the Board's findings.

CPR's owners, Reynaldo Lapid and his wife, Maria, the Lapids, own Lots 4 and 6, in Block 760, as shown on the City's tax map (collectively, the property). Lot 6 has frontage on Central Avenue; Lot 4 fronts on West Eighth Street. The backs of the two lots abut and form an "L" around Lot 5, which is located at the corner of Central Avenue and West Eighth Street.

Lots 4 and 5 were subdivided in 1955. The Lapids purchased Lot 6 from Abbott Manor, Inc., in 1986, and Lot 4 from the estate of Mary Abbott in 2002. Neither Lot 5 nor the lot on the other side of Lot 6 had been available for purchase at either time. Plaintiff Philogene purchased Lot 5 from Abbott's estate in 2003. Philogene's property contains a 1950's two-family dwelling and a detached garage.

The nursing home, known as the Abbott Manor Convalescent Center, currently sits on Lot 6; it consists of an 8000-square foot historic Victorian brick mansion with an attached 1950's two-story framed addition at the rear, forming a "T." Lot 4 is vacant.

A nursing home has been operating continuously on Lot 6 since 1956. According to certificates of occupancy issued between 1955 and 1957, Abbott Manor's "structure" conformed to the zoning ordinances. The Board approved its use as a nursing home in 1958.

When the master plan was enacted in 1998, Plainfield contained eight historic districts, constituting ten to fifteen percent of its area. By 2005, nine historic districts existed, and a tenth was in the process of being created. According to the City planner, William Nierstedt, these districts brought economic investment to the City.

Of the nine districts, three were residential. The property is located in the Van Wyck Brooks Historic District (the VW District), which is the most architecturally diverse and largest historic residential district in the City. The VW District was certified as a local historic district in 1982, and was listed on the National and State Register of Historic Places in 1985.

Properties in the district are given one of three designations: (1) "contributing" - having "historic merit" and contributing to the historical character and official designation of the district; (2) "harmonizing" - "altered or a newer structure," but still having some historic merit; or (3) "non-contributing" - "a newer structure that results in disharmony in the district." Abbott Manor is designated as contributing. Four large non-contributing multi-family three- story apartment houses are located near the property; two of the larger ones are directly across Central Avenue from Abbott Manor. Diagonally across West Eighth Street from Lot 4 is a one-story harmonizing church with a three-story addition. Philogene's house on Lot 5 is also harmonizing. Diagonally across from Lot 5 is a multi-story, multi-family non-contributing brick apartment house. Nearby are older non-contributing single-family two-story brick and aluminum-clad homes on larger parcels, and some contributing single-family homes on larger parcels.

Before 2002, the property was in the R-4 VW zone, a low density multi-family residential zone that permitted nursing homes only as a conditional use. In December 2002, a new land use ordinance changed the R-4 zone, dividing the VW District into two zones: R-VWB1 and R-VWB2. The R-VWB1 zone permitted single-family homes. The R-VWB2 zone permitted one- and two-family homes, home-stay uses, guest houses and "bed and breakfast" inns. Neither zone contained conditional uses; three-story structures were prohibited, and lot size minimums were 40,000 square feet. The property is located in the R-VWB2 zone, which does not permit nursing homes, although they are permitted uses in other zones. The new ordinance also rendered the property undersized.

By 2000, Abbott Manor had fallen into technical obsolescence; residents using mobility aids such as wheelchairs or walkers could not pass each other in the narrow corridors, and some rooms were too small to allow proper patient care. The elevator in the addition had been taken out of use because it was not large enough for patients in wheelchairs or on stretchers. Of the fifteen residents who lived on the second floor, few were mobile without aids. Thus, employees carried residents up and down the stairs. One resident who lived on the second floor testified that, although he was generally mobile, he found it hard to traverse the old stairs.

In 2003, the facility was operating pursuant to a license with waivers issued by the New Jersey Department of Health and Senior Services (DHSS). The waivers were needed because the facility's "physical environment" was structurally unable to meet DHSS and National Fire Protection Association standards. Fire code deficiencies existed in the stairwells, exits, elevator shaft, light and ventilator shoots, and other vertical openings between floors. Robert Lapid testified that it would not be possible to bring the building into full compliance simply by making repairs to the existing building.

Mandatory construction standards for long-term care facilities require that renovations to a nursing home bring it into compliance with all codes. N.J.A.C. 8:39-31.1. Abbott Manor needed to be reconfigured and enlarged to meet the regulatory minimum floor requirements and all other requirements applicable to nursing homes. Consequently, CPR planned to spend $350,000 to restore and refurbish the mansion, using it for patient community and therapy rooms and administration. The plan also called for renovations to the exterior to make it look like a single-family residence, and demolition of the existing addition to build a new, larger addition for the patients' rooms. The addition would extend onto Lot 4, forming an "L" with the mansion. The expansion would increase the number of beds from thirty-five to sixty; a thirty-five-bed facility was no longer financially viable.

In its 2000 development application, which the Board had denied, CPR proposed expanding Abbott Manor to a combination sixty-bed assisted-living facility with a skilled nursing home component. In the 2003 application, CPR proposed a sixty-bed skilled nursing home, eliminating assisted-living beds. Because DHSS required smaller rooms for skilled nursing beds than rooms for assisted-living beds, CPR's revised plan was for a facility that would be smaller in size and would require fewer variances. Thus, although the planned "L" shape remained the same, the height slightly decreased; setbacks increased; building coverage was reduced from twenty-eight percent to twenty-four percent; an above-ground storm water detention basin was changed to an underground one with an added "storm ceptor device" for improving quality of any runoff; landscaping was added; and outside lights were modified to better shield their effects on the other lots.

The grading plan changed and many architectural changes were made, including the addition of a front porch and gazebo to bring the structure more in line with the residential neighborhood. Nonetheless, the number of parking spaces increased from eleven to twenty, which in turn increased impervious lot coverage.

The Board heard testimony about whether DHSS regulations required all nursing homes to have a minimum of sixty beds. CPR's authority to fill the additional beds was questioned because CPR did not have a certificate of need (CN) for sixty beds. David Kostinas, CPR's expert in health care regulatory matters, informed the Board that DHSS had historically encouraged nursing home providers to develop sixty-bed facilities.*fn1

As to certificates of need, which are valid for five years, the testimony was that Abbott Manor never had to apply for one because it had been operating with thirty-five beds before that state program was adopted in 1971. The state had not allowed construction of new nursing home beds since 1992, so the only way to either build or expand a nursing home was by having another licensed nursing home transfer some or all of its beds. CPR had contracted for the transfer of twenty-five beds from another nursing home to Abbott Manor; but that transfer would require a CN. DHSS had approved that transfer but CPR had not filed a CN application or its architectural plans with DHSS. Abbott Manor would require additional state approvals after construction but before operation.

The primary objections to the application centered on the size and scale of the proposed addition and the expanded use. The objectors claimed that the addition would change the character of the historic district and reduce property values. Neighbors and members of the Historic Commission objected to the addition's design, height, and footprint; the parking lot; and the additional deliveries and garbage removal that would result from Abbott Manor's having more patients and increased use.

CPR agreed to work with the Historic Commission to mitigate the problems and create features that were as compatible as possible with the existing mansion and district. CPR's expert in preservation and architecture, Mark Hewitt, a registered architect, testified that the addition had to contain three stories to fit sixty beds, and the two sections of the structure had to be connected to allow proper supervision by the nursing staff. He said that "the bulk and characteristics of the [proposed] building [were] essentially mandated by the type of facility." He testified that an "L" shaped structure was more efficient for elevators, fire stairs, and emergency exits. He noted that the new façade proposed for West Eighth Street was "very much" like the other houses on that street in terms of width, scale, and height.

Although Hewitt would have preferred to see the bulk of the proposed addition decreased, it would not be higher than the front of the mansion, which concealed it from Central Avenue. CPR would use a "roofscape" compatible with the existing mansion. The scale of the addition would be further reduced by adding more windows and using materials compatible with the mansion, the historical period, and the neighborhood. He opined that the addition had "little impact" from that side of the building. Although less efficient designs were available, Hewitt opined that CPR's proposal presented the most efficient use of space for a nursing facility and did not fundamentally alter the scheme of the historic preservation district.

The Board appointed experts to assist it in evaluating the application, and to work with CPR: (1) an attorney, Steven Eisdorfer; (2) an accountant and health care consultant, David L. Stafford; (3) a planner, Dennis W. Hudacsko; and (4) a historic preservationist, Gail Hunton. Stafford reviewed CPR's financial information, including operating figures, and concluded that Abbott Manor, in its present state, was not financially viable; renovating it at its current size would not make it financially viable; thirty-five-bed facilities were "generally unprofitable"; and renovating it and increasing it to sixty beds was "a financially viable alternative."

Hudacsko made a preliminary assessment that CPR's initial plans, if constructed, would result in a building that "fundamentally alter[ed] the purpose of the zoning and historic district overlay program." He testified that the addition was too big and too high for the neighborhood. He opined that the single loaded parking area, with parking spaces to one side, had a negative environmental impact "because it requires twice the amount of pavement to serve the same number of spaces," and altered the character of the area "because it pushes the parking further into the backyard." He nevertheless worked with CPR's architect to redesign the building to lessen any adverse impacts, and he opined that an acceptable facility for sixty beds could be constructed if CPR applied his modifications and created drawings or models to determine if other modifications were needed. He suggested that methods were available to create an optical illusion "to diminish the . . . apparent mass of this building to something that people would not find objectionable."

CPR's architect incorporated Hudacsko's design suggestions, which would move the proposal toward "an acceptable design" more in character with the neighborhood. The changes included raising the first floor consistent with the neighborhood; changing the roofline to make it seem lower; breaking up the walls with projections as an optical illusion to make them seem smaller; and changing the style of the windows. He also recommended combining the two lots and making use of the vacant lot to "fill[] in the void." CPR nevertheless refused to reduce its proposed addition to two stories or hide the third floor in a gambrel roof to make it appear like a second-story roof; separate the mansion from the addition by using a one-story glass conservatory-style connector; double load the parking area; or lower the interior ceiling heights below ten feet. Without those changes, Hudacsko did not believe that it was an appropriate structure to be put into the VW District.

Hunton, who like Hudacsko, only considered a sixty-bed facility, concurred with Hudacsko's opinion. Her main focus was "[t]he overall design" and exterior appearance of the building, and "mitigating the actual appearance of the structure and its size." Although the proposed addition met the required setbacks, it would be closer to the street than the neighboring parsonage; but, the setbacks in the historic district "weren't all perfectly aligned along the street." Nevertheless, she believed that the addition should be moved back ten feet to correspond to the other buildings on the street.

As a result of further meetings with Hudacsko and Hunton, CPR revised its plan. The new plan included a one-story glass connector between the mansion and the proposed addition; dormers and a gambrel roof that would hide the third floor, making it seem as if it was just a roof; more windows; and more mature landscaping.

The revised plans allowed Hudacsko to see additional problems, and based on his own three-dimensional computer images and video, he concluded that the footprint of the proposed addition was "out of context with the footprint of other buildings." He suggested a longer façade and that the rear of the building not penetrate as far into the open space. He explained that the difference between the roofline on the proposed building and the neighboring parsonage was six to eight feet, but "as long as you have [the] right kind of roof line, it's going to appear lower than it is." Hudacsko believed that additional design changes could be made to bring the project more into character with the neighborhood.

Hunton concurred that the then-current configuration was still "out of context with the neighborhood." She conceived of two "theoretical solutions to redesign it," but they were not possible given the constraints of the required number of beds and the fact that CPR did not own a neighboring lot. Thus, like Hudacsko, she concluded that, although the refinements to the first proposal improved the appearance and mass of the building, they would not mitigate the mass at the site, which was out of character with the neighborhood.

III. The Board Decision

Before voting on the application, the Board visited the property, and toured Abbott Manor and the neighborhood. After being instructed by its special counsel on the applicable law and standards to be applied under the FHAA and the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -99, the Board unanimously voted to approve CPR's revised application, subject to conditions. Because CPR's residents required and received full-time skilled nursing care, the Board determined as a matter of law that CPR's use was inherently beneficial. The Board applied the balancing test enunciated in Sica v. Board of Adjustment of Township of Wall, 127 N.J. 152 (1992), and concluded that CPR's proposed use would be inherently beneficial to the region, that it may cause substantial detriment to the public good or substantially impair the intent and purpose of the municipal zone plan and zoning ordinance, but that, with the revisions to the application made during the course of the proceedings and compliance with all conditions set forth [by the Board], the identified detriments can reasonably be mitigated, and that the regional benefit of the use outweighs detriments as mitigated.

Based on CPR's modifications and its agreement to impose deed restrictions preventing further expansion, the Board rejected the testimony that the project would "fundamentally alter or undermine the zoning scheme," finding the following benefits of the proposed facility:

1) . . . the historic portion of the building . . . will be restored according to the review and requirements of the Historic Preservation Commission; 2) the existing use is already institutional; 3) the unattractive, 1950's-era rear wing of the building will be demolished; 4) there is presently a "gap" in the pattern of structures along West 8th Street which would be filled by the new construction; 5) . . . the new construction, in all respects save size and site plan features will also be subject to the review and requirements of the Historic Preservation Commission, including its external appearance, design and construction features; 6) . . . the building will not be further enlarged nor the use further changed or expanded; 7) . . . Mark Hewitt will continue to execute and sign the building plans and to direct the building's design in terms of its appropriate appearance for the historic district; 8) the structure as rebuilt will conform to all current applicable health and safety codes, which at present it does not do; 9) the structure will continue as a viable economic use and as the home for its current and prospective handicapped residents.

The Board also accepted Stafford's testimony that the requested relief was "economically necessary" for the nursing home's continued viability, and "therapeutically necessary" for its residents. The Board found credible the testimony of Hudacsko, Hunton and Nierstedt, and identified in detail substantial detrimental effects that would flow from its granting the requested relief. Those detrimental effects related primarily to the size, height and bulk of the structure and their negative impact on the public good and on the character of the neighborhood as a historic district.

Specifically, the Board found that the size and shape of the two undersized lots, Lots 4 and 6, and their proximity to the corner lot, Lot 5, were "very" substantial detriments, even though CPR's revised application separated the facility into two parts with a lower glass connecting link and had "somewhat mitigated the severe detrimental impact as to Lot 5." The new addition would be "many times the size" of the mansion, higher than permitted in the zone, taller than the surrounding structures, and have less setback from the street and from neighboring buildings. The increased use of the facility to sixty beds would increase truck loading and unloading, ambulance access, garbage storage and collection schedules, and traffic.

The Board considered the bulk of the facility to be a substantial detriment to the neighboring properties, the district and the municipal and historic zoning schemes, as it would affect future investment and buyers' confidence in the district, property values, confidence in the protections of a historic district, and preservation of a historic tourist attraction.

The Board described the actions that CPR had taken to mitigate the potential negative effects from the "unitary, massive bulk of the building." Those actions included:

(1) separation of building masses, (2) redesign of the roof in order to incorporate a more gabled or Mansard-like appearance and to reduce the impression of size, (3) building the one-story link between the two components of the structure of glass, so as to be as unobtrusive as possible, (4) incorporating a basement so as to align the floors of the new construction and of the existing historic building to further reduce the above-ground footprint and bulk of the new construction, (5) screening of the adjacent properties with tall landscaping, (6) preserving existing trees to the extent possible, (7) stipulating that the original historic structure would be renovated in accordance with the review and requirements of the Historic Preservation Commission to the extent that those requirements do not conflict with this approval, (8) stipulating and agreeing to comply with all review and requirements of the Historic Preservation Commission, including review and requirements both on the new construction and on the stipulated renovation of the original historic structure to the extent that those requirements do not conflict with this approval, and (9) stipulating and agreeing to all of the conditions of this approval . . . .

Next, the Board imposed multiple conditions on the approval to address the expansion's negative effects. Those conditions included design changes further modifying the roofline to reduce the appearance of a single unbroken line at the corner of the "L" in the new addition; removing a cupola and modifying a staircase to increase the setback from West Eighth Street by at least six feet without concomitant expansion of the footprint; reducing the size of the multi-story rotunda at the rear of the building; and adding more glass expanses in the single-story connector instead of multiple windows in masonry. The improvements were required to comport with all design guidelines, ordinance and other historic requirements. The Board required CPR to place a deed restriction on the property preventing further expansion of the facility's use and bulk. It required landscaping, screening with tall evergreens and shade trees along the property lines and rights of way, and related maintenance, and placed restrictions on deliveries and waste removal.

The Board ultimately concluded that the detriments could "be reasonably mitigated" by CPR's various redesigns, compliance with all conditions attached to the Board's approval, and its agreement to incorporate all design criteria, except the bulk zoning relief it needed to expand its use, as imposed by the Historic Commission. The Board concluded that the historic district could absorb the expanded facility because non-contributing buildings were located across the street.

The Board found that the proposal improved "the immediate location, the neighborhood, and the district, by providing for historical renovation of the historic structure, the removal of the unsightly addition, the modernizing of the institution, and [CPR's] stipulated cooperation with the Historic Preservation Commission." Further, the Board found that

[t]he detriments, as mitigated, and balanced against the inherently beneficial use, do not substantially harm either the public good or the zoning plan. The board finds that the public good will be served by the proposed skilled nursing home use, and that the harm to the historic zone of the use and bulk variances, while not negotiable, is within the district's tolerance for non-contributing buildings, particularly at this location given the existing non-contributing apartment buildings directly across Central Avenue from the subject property and the other surrounding non-contributing buildings.

The Board addressed the "reasonable accommodations test" in the FHAA, finding that the requested accommodations are necessary in order to permit the handicapped [nursing home residents] to live in housing of their choice, both for economic and for therapeutic reasons. Further . . . the . . . requested relief might well have the potential to "undermine" or "fundamentally alter" the zoning scheme, but that, with the revisions to the application made during the course of the proceedings and compliance with all conditions . . . it does not do so. Accordingly, the Board granted CPR's application.

IV. The Trial Court Orders

After plaintiffs filed a complaint to invalidate the Board's approval, they moved for summary judgment, and asserted claims of res judicata, collateral estoppel, lack of jurisdiction, and fraud. Defendants filed a cross-motion to dismiss the complaint. The trial judge found that the claims of res judicata, collateral estoppel, lack of jurisdiction, and fraud did not bar the Board from considering CPR's amended application. Plaintiffs have not filed a cross-appeal from those determinations; consequently, we do not address them. See Pressler, Current N.J. Court Rules, comment 2 on R. 2:3-4 (2009) (respondent must cross-appeal to obtain relief from judgment).

In a subsequent decision addressing the merits, the court reversed the Board's decision, finding that the Board's approval was arbitrary and capricious.


CPR argues that the trial court substituted its judgment for the Board's, and the Board's decision was not arbitrary, capricious or unreasonable.*fn2 We agree.

In reviewing an application for an expansion of a nonconforming use, a board of adjustment may,

[i]n particular cases for special reasons, grant a variance to . . . permit . . . (2) an expansion of a nonconforming use . . . .

No variance or other relief may be granted under the terms of this section, including a variance or other relief involving an inherently beneficial use, without a showing that such variance or other relief can be granted without substantial detriment to the public good and will not substantially impair the intent and the purpose of the zone plan and zoning ordinance. [N.J.S.A. 40:55D-70(d).]

As a general rule, expansion "is not favored." Urban v. Planning Bd. of Manasquan, 124 N.J. 651, 656 (1991). An applicant must prove both the positive and negative criteria to obtain a use variance, which is necessary for an expansion of a nonconforming use. Smart SMR of N.Y., Inc. v. Borough of Fair Lawn Bd. of Adjustment, 152 N.J. 309, 323 (1998). Generally, "to satisfy the positive criteria, an applicant must prove that 'the use promotes the general welfare because the proposed site is particularly suitable for the proposed use.'" Ibid. (quoting Medici v. BPR Co., 107 N.J. 1, 4 (1987)). "To satisfy the negative criteria, in addition to proving that the variance can be granted 'without substantial detriment to the public good,' an applicant must demonstrate through an 'enhanced quality of proof . . . that the variance sought is not inconsistent with the intent and purpose of the master plan and zoning ordinance.'" Id. at 323 (quoting Medici, supra, 107 N.J. at 21).

The proponent of a use variance has the burden of proof.

Stop & Shop Supermarket Co. v. Bd. of Adjustment of Springfield, 162 N.J. 418, 430 (2000). "If, however, the proposed use is inherently beneficial, an applicant's burden of proof is significantly lessened" because an inherently beneficial use "presumptively satisfies the positive criteria" and also eliminates the need to satisfy the negative criteria "by an enhanced quality of proof." Smart, supra, 152 N.J. at 323. Instead, grant of a use variance for an inherently beneficial use "depends on balancing the positive and negative criteria." Id. at 324.

In Sica, supra, the Court established a four-part test to be used "as a general guide" for that balancing. 127 N.J. at 165-66. First, the board should identify the public interest at stake. Id. at 165. Uses such as nursing homes and elderly health-care facilities, are "sufficiently beneficial to satisfy the positive criteria," ibid., and "may outweigh the negative criteria." Id. at 166; see also Meridian Hosps. Corp. v. Borough of Point Pleasant, 325 N.J. Super. 490, 499-500 (App. Div. 1999) (nursing home in hospital), certif. denied, 163 N.J. 80 (2000); Mercurio v. DelVecchio, 285 N.J. Super. 328, 336-37 (App. Div. 1995) (expansion of existing nursing home), certif. denied, 144 N.J. 377 (1996); Urban Farms, Inc. v. Borough of Franklin Lakes, 179 N.J. Super. 203, 212 (App. Div.) (nursing home with one-third of its beds serving Medicaid patients), certif. denied, 87 N.J. 428 (1981).

Second, the board should identify the negative criteria, which are the detrimental effects that will flow from the grant of the variance. Sica, supra, 127 N.J. at 166. It is a two-part showing that (1) the variance can be granted without substantial detriment to the public good and (2) granting the variance will not substantially impair the intent and the purpose of the zone plan and zoning ordinance. N.J.S.A. 40:55D-70(d).

Third, the board may ameliorate the detrimental effects by imposing reasonable conditions on the use. Sica, supra, 127 N.J. at 166.

Fourth, the board should weigh the negative and positive criteria and determine whether, on balance, the grant of the variance would cause a substantial detriment to the public good. Ibid. If the proofs demonstrate that because of the property's location and characteristics the detrimental effects of the inherently beneficial use are substantial and would outweigh the public benefit, the board may deny the requested variance. Stop & Shop Supermarket Co., supra, 162 N.J. at 430-31; Med. Ctr. at Princeton, supra, 343 N.J. Super. at 201.

Here, as to the positive criteria, the judge agreed that Abbott Manor was an inherently beneficial use. Unlike the Board, however, he found no other special reasons to justify a use variance. He disagreed with the Board's finding that CPR's need for more beds was a special reason, as the record did not show a need for more beds in the region. He also concluded that CPR's need for continued financial viability was not a special reason; and it was irrelevant that "the residents preferred to remain in this facility," as the right to an accommodation under the FHAA did not "attach to a specific location."

As to the negative criteria, the judge found the detrimental effects more substantial than did the Board. He found that the size of the proposed addition was "totally disproportionate" to the surrounding structures in the neighborhood. The addition would overshadow the neighboring structures; reduce property values; decrease confidence and interest by potential purchasers; and undermine confidence in maintaining a historic district. Moreover, the expanded use would increase traffic, deliveries, ambulance visits and garbage.

He also found that the addition would be out of character with the district. Even though the property was on the border of the historic district and surrounded by numerous other non-contributing structures, the court found that those structures "were erected or refurbished prior to the passage of the ordinance that established the area in question as an historic district."

The judge concluded that the Board was arbitrary and capricious in finding that the negative criteria could be mitigated. He stated that none of the detrimental effects of CPR's plan to the neighborhood and the VW District could be overcome, or even reduced, by the Board's imposed conditions or, indeed, by any conditions. The court stated: "Not one expert said that the redesign mitigated the bulk which bulk is the principal detriment to the district." The judge disagreed with the Board's finding that the new roofline and the foliage would reduce the appearance of bulk. Instead, he found that the facility's bulk was "totally incompatible" with the scaled three-dimensional model offered at the hearings by plaintiff Arne Aakre, an architect, to demonstrate the bulk of the proposed facility.

The judge further concluded that the Board's fear of a lawsuit had caused it to give too much weight to the settlement of CPR's federal lawsuit. The judge found that the Board changed its mind from the 2002 denial "because of the settlement issues that they were concerned about as opposed to the supporting testimony." He also found that the Board had misapplied the FHAA, giving it too much weight because it feared a lawsuit by CPR and the nursing home residents. He stated: "I find that the board became so concerned with the threat of an F.H.A.A. lawsuit that [it] took a tortured path to find that the negative factors which are a part of the record would be mitigated by conditions imposed."

On appeal, this court is "[b]ound by the same scope of review as the Law Division[;] our role is to defer to the local land-use agency's broad discretion and to reverse only if we find its decision to be arbitrary, capricious, or unreasonable." Bressman v. Gash, 131 N.J. 517, 529 (1993); see also Smart, supra, 152 N.J. at 327 (same). "The proper scope of judicial review is not to suggest a decision that may be better than the one made by the board, but to determine whether the board could reasonably have reached its decision on the record." Jock v. Zoning Bd. of Adjustment of Wall, 184 N.J. 562, 597 (2005). "Courts cannot substitute an independent judgment for that of the boards in areas of factual disputes; neither will they exercise anew the original jurisdiction of such boards or trespass on their administrative work." Kramer v. Bd. of Adjustment, Sea Girt, 45 N.J. 268, 296 (1965). The Court in Kramer explained:

In these highly controversial and oftentimes debatable zoning cases the courts must recognize that local officials "who are thoroughly familiar with their community's characteristics and interests and are the proper representatives of its people are undoubtedly the best equipped to pass initially on such applications for variance." Ward v. Scott, 16 N.J. 16, 23 (1954). Therefore, the law presumes that boards of adjustment . . . will act fairly and with proper motives and for valid reasons. . . .

Such public bodies, because of their peculiar knowledge of local conditions must be allowed wide latitude in the exercise of delegated discretion. . . . So long as the power exists to do the act complained of and there is substantial evidence to support it, the judicial branch of the government cannot interfere. . . . Even when doubt is entertained as to the wisdom of the action, or as to some part of it, there can be no judicial declaration of invalidity in the absence of clear abuse of discretion by the public agencies involved.

A board is free to accept or reject the testimony of any witness who testifies at the hearing and, when reasonably made, the board's choice is "conclusive on appeal." Id. at 288 (quoting Reinauer Realty Corp. v. Nucera, 59 N.J. Super. 189, 201 (App. Div.), certif. denied, 32 N.J. 347 (1960)). A board can even reject the unrebutted testimony of an expert. Hawrylo v. Bd. of Adjustment, Harding Twp., 249 N.J. Super. 568, 579 (App. Div. 1991). Nevertheless, the testimony relied upon by a municipal board must be "grounded in facts," Finnegan v. Twp. Council of S. Brunswick, ___ N.J. ___, ___ (2008), slip op. at 5, and "[v]ariances to allow new nonconforming uses should be granted only sparingly and with great caution since they tend to impair sound zoning." Burbridge v. Governing Body of Mine Hill, 117 N.J. 376, 385 (1990).

Applying these principles, we disagree with the Law Division judge's conclusions that the Board approved the use expansion because it was fearful of future litigation; because it was following the unsigned settlement arising out of the federal litigation; or because it was coerced into believing that it had to accommodate CPR's residents under the FHAA despite the effects of that expansion on the public good or the zoning laws. The record contains no indication that, at the time they voted, any of those factors impacted the Board members' decisions.

The Board was aware that it might be sued no matter what it decided. At the beginning of the hearings on September 19, 2003, plaintiff Dorothy Gutenkauf asked the following two questions: "Now, to what extent is this Board bound by or does the Board think it is bound by a stipulation of settlement unsigned . . . ?"; and "My question is to what extent does the Board consider itself bound by this resolution as a stipulation of settlement?" At that point, the Board's attorney explained that the Board was "bound" by the terms of the unsigned settlement as far as it identified the necessary variances, and that CPR "would be back into the federal court" if the Board found that it had "fail[ed] to prove their case."

Later in the hearings, plaintiff Philogene threatened litigation if the Board approved the application. He said: "So if [the] Board is to accept this, to approve this thing, we're going to go to court against the Board and against Abbott Manor." And he followed through on that threat with this litigation.

Thus, the Board knew, or at least had reason to suspect, that no matter what the result, its decision would be challenged in court: if it approved the application, plaintiffs would sue; if it denied the application, CPR would sue. The record simply does not support the trial court's conclusion that the Board abdicated its responsibility to fairly weigh the evidence in fear of a lawsuit by the applicant.

Notably, although the Board was advised by its attorney early in the hearings that it had to follow the unsigned settlement concerning the FHAA lawsuit, before it voted, the Board was told by its special counsel that it did not have to accommodate CPR's residents under the FHAA by approving the development application if that accommodation would be unreasonable. Special counsel Eisdorfer told the Board about a March 2002 federal lawsuit, in which CPR lost a similar claim. See Lapid-Laurel, L.L.C. v. Zoning Bd. of Adjustment of Scotch Plains, 284 F.3d 442 (3d Cir. 2002). Eisendorfer had represented Scotch Plains in Lapid-Laurel. In that case, CPR sued the zoning board, claiming that it had failed to make reasonable accommodations as required by the FHAA when it denied CPR's request for variances and site plan approval to expand its Scotch Plains nursing home to ninety-five beds. Id. at 445-46. The Third Circuit found that, although municipalities could be sued under the FHAA, those actions would fail if the municipality could show that the requested accommodations were unreasonable because they would cause an "undue hardship" on the municipality. Id. at 466.

Before the Board's vote, Eisdorfer instructed it on the FHAA, thoroughly explaining that the Board did not have to accommodate CPR's "handicapped" residents if that accommodation would be unreasonable. Indeed, Eisdorfer even suggested reasons for the Board to find that CPR's requests were unreasonable. His advice to the Board defeats plaintiffs' argument, and the trial court's finding, that the Board approved the application because it thought it had to follow the unsigned settlement. "[T]he law presumes that boards of adjustment and municipal governing bodies will act fairly and with proper motives and for valid reasons." Kramer, supra, 45 N.J. at 296. The record contained no credible evidence to rebut this presumption.

We turn next to plaintiffs' argument that the Board did not properly apply the Sica balancing test. Supra, 127 N.J. at 165-66. Despite the parties' arguments over the weight to be attributed to certain facts or the existence of other facts, it was undisputed that: Abbott Manor was an inherently beneficial use in a historic district; expansion of the use would have substantial detrimental effects on the adjoining properties, the historic district, the zoning ordinance and the master plan; CPR agreed to make substantial changes to its proposal except the size of its expansion; and the neighborhood is older and mostly residential, with large nonconforming structures nearby. In this context, the issues are whether the Board was arbitrary and capricious in applying the Sica balancing test; whether the conditions the Board placed on its approval mitigated or reduced the substantial negative effects from the expanded use; and after balancing the positive and the negative criteria, whether the expanded use would not cause a substantial detriment to the public good.

We begin with the positive criteria. We agree with the judge's conclusion that CPR's need for sixty beds to be financially viable was not a positive criterion. We also agree that the Board should not have considered the need for more beds in the region as a positive factor because the DHSS had not yet granted Abbott Manor a CN for the transfer of beds from another nursing home. See N.J.A.C. 8:33-3.4(a)(3) ("the relocation of a portion of a facility's licensed beds or the entire service from one licensed facility to another located within the same planning region requires a certificate of need"); accord, N.J.A.C. 8:33-5.1(a)(11).

We nevertheless agree with the Board that CPR satisfied the positive criteria based upon the public interests that flowed from its application. These interests include CPR's improvements to the mansion, demolition of the present, nonconforming addition, and construction a structure that will conform to all health, fire and safety codes. See N.J.S.A. 40:55D-2(b), (j) (securing safety from fire and promoting the conservation of historic sites are public interests that can be found in the general purposes of MLUL). The trial court failed to recognize these additional factors that benefit the public interest.

Furthermore, the Board included as a general condition of its approval that CPR "must obtain all approvals and waivers from all outside agencies," which would include obtaining a CN, and buttresses the Board's finding that the facility constituted an inherently beneficial use. See Urban Farms, Inc., supra, 179 N.J. Super. at 212 ("a [new] nursing home, whether or not nonprofit, comes within the inherently beneficial category, . . . where . . . a certificate of need has been granted").

As to the negative criteria, we agree with the court's finding that the property's location in the historic district increased the significance of the negative effects of the expansion. "The negative criteria . . . [are] guided by the extent of any undesirable visual impact and any adverse impact on the historic district." Scully-Bozarth Post #1817 of Veterans of Foreign Wars of U.S. v. Planning Bd. of Burlington, 362 N.J. Super. 296, 315-16 (App. Div.), certif. denied, 178 N.J. 34 (2003). We disagree, however, with the court's conclusion that the Board erred by finding that certain conditions would mitigate the negative criteria.

A zoning board "may reduce the detrimental effect [of a variance] by imposing reasonable conditions on the use." Sica, supra, 127 N.J. at 166. That is what occurred here. Although CPR refused to reduce the physical size of its proposed expansion, it did agree to take steps to make that expansion less visible and more in line with the historic aesthetic requirements. The application called for CPR to tear down the existing addition that did not conform to the historic district. Conditions the Board placed upon the approval included additional modification of the facility's roofline, removal of a cupola and modification of a staircase to increase the setback, reduction of the size of the multi-story rotunda at the rear of the building, additional glass expanses in the single-story connector, as well as the addition of tall landscaping.

The judge concluded that those conditions were not reasonable because the detrimental effects of the height and bulk of the new addition were too overwhelming to mitigate. In arriving at this conclusion, the court substituted its judgment for the Board's. The Board had viewed the models, visited the site, and toured Abbott Manor and the neighborhood. The Board heard testimony at approximately nineteen hearings over more than a year. The Board gave extensive reasons for its decision, attaching multiple conditions to the application. The Board's actions were entitled to deference, which the trial court failed to afford. Kramer, supra, 45 N.J. at 296 (decision of local officials "who are thoroughly familiar with their community's characteristics and interests" are entitled to deference). Although the detrimental effects of the expansion were significant, the Board fairly considered those detrimental effects, and took steps to mitigate them by imposing reasonable conditions on its approval.

The Board did not err when, after weighing the positive and negative criteria, it found that, on balance, the grant of a variance would not cause a substantial detriment to the public good. Even eliminating the improper positive criteria relied on by the Board, it still advanced sufficient reasons as to why CPR's project would benefit the public good, and substantial evidence in the record supported its findings. Although we agree with the judge that there was evidence in the record as to why the expanded use would cause substantial detriments to the public good, the historic district, the neighborhood, the zoning ordinance and the master plan, the record also contains substantial credible evidence to support the Board's findings. The court substantially ignored the Board's extensive research, investigation, and experience.

In common parlance, this was a close call. Given the Board's detailed balancing analysis, and the conditions the Board imposed upon the approval, we cannot conclude that its decision to approve the application was arbitrary, capricious or unreasonable. We consequently reverse the decision of the Law Division and reinstate the Board's approval primarily for the reasons expressed by the Board in its memorializing resolution.


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