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The Children’s Seashore House of the Children’s Hospital of Philadelphia, Inc. v. Atlantic City

2005 WL 1875385 (N.J. Super. App. Div. 2005) (Unpublished)

ZONING; MLUL — Under New Jersey’s Municipal Land Use Law, a zoning amendment that is not substantially consistent with a municipality’s master plan is invalid.

A hospital owned property at the ocean. Adjacent to the hospital’s property was a nine-story condominium complex. Both properties were located in an area that consisted of large, detached family homes. The majority of the area was zoned for single-family residences, except for the two blocks on which the hospital’s property was located. These blocks were in a multi-family medium rise zone. The hospital sought to build an eight-story retirement complex on its property, and received site-plan approval for the development. The residents of the adjacent condominium complex were concerned that the proposed retirement complex would interfere with their views of the ocean. The hospital did not commence immediate construction of the development and a couple of years later the municipality’s council amended its zoning ordinance to change the zone where the hospital’s property was located from a medium rise zone to a low rise zone. The amendment applied to only one of the two blocks that was zoned for medium rise buildings. As a result, the permissible building height on that block was decreased from one hundred feet to forty feet. The residents of the condominium complex supported the amendment because it prevented obstruction of their ocean views. The change in the height requirement resulted in a four million dollar drop in the value of the hospital’s property. The hospital filed a compliant in lieu of prerogative writs on the basis that the amendment constituted reverse spot zoning. The hospital moved for summary judgment, which was granted by the lower court. The municipality appealed, asserting that the lower court should have afforded greater deference to the planning board’s determination.

The Appellate Division affirmed the lower court’s ruling. It found that pursuant to the New Jersey Municipal Land Use Law, a municipality must make zoning decisions based on its master plan. In essence, all zoning ordinances must be substantially consistent with the municipality’s master plan. According to the Court, in order to meet certain housing needs, the municipality’s master plan designated the two blocks with the hospital’s property as a multi-family medium rise use zone in an area that had been primarily zoned for single-family residences. As a result, the Court concluded that the master plan supported the use of the hospital’s property for high-density housing. The Court further held that the zoning amendment was invalid because it was not substantially consistent with the master plan. According to the Court, the amendment constituted reverse spot zoning. Reverse spot zoning occurs when a municipality makes an arbitrary land-use decision singling out a specific property for different, less favorable treatment than neighboring properties. The Court noted that the municipality had previously permitted a height increase for a building located only three blocks from the hospital’s property. As a result, it concluded that because the zoning amendment only applied to the one block containing the hospital’s property, it was clear that the municipality had engaged in reverse spot-zoning.

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