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Philogene v. CPR Holdings, Inc.

A-0156-07T3 (N.J. Super. App. Div. 2009) (Unpublished)

ZONING; HISTORIC DISTRICTS — A property’s location in an historic district may increase the significance of the negative effects caused by a proposed expansion of that property.

The owner of a nursing home located in a historical district, to expand the size of its facility, applied for a use variance, bulk variances and waivers, and site plan approval. The zoning board of adjustment initially denied the application. The owner then sued the municipality in federal court. The parties settled the dispute and the case was dismissed. As part of the settlement agreement, the board agreed to reopen the owner’s application. The board then performed a balancing test of the positive and negative impacts that the project would have on the neighborhood and zoning district and granted the application subject to conditions to mitigate the negative effects of the expansion.

Members of the historic commission and several neighbors of the nursing home challenged the board’s determination. The lower court found that the claims of res judicata, collateral estoppel, lack of jurisdiction, and fraud did not prevent the nursing home’s application from being considered by the board. The lower court also concluded that the board’s fear of a new federal lawsuit had caused it to find that the negative factors would be mitigated by conditions imposed. Thus, it reversed the board’s decision on the merits and found the board’s approval to be arbitrary and capricious.

The owner of the nursing home appealed, contending that the lower court was wrong when it held that the board had acted arbitrarily and capriciously. The owner claimed that the lower court substituted its own judgment for that of the board’s in a factual dispute. The Appellate Division noted that, as a general rule, expansion is not favored, but if the proposed use is inherently beneficial, an applicant’s burden of proof is “significantly” lessened. The Court held that a use variance in this instance would depend on balancing the “positive and negative criteria.” It ruled that it is bound by the same scope of review as the lower court; to reverse only if they found that the board’s decision to be arbitrary, capricious or unreasonable. It also determined that the board gave extensive reasons for its decision and attached multiple conditions. The Court further found that there was nothing in the record to indicate that the board acted out of fear that a new federal lawsuit would be instituted. It found that the board knew that no matter what the result, its decision would be challenged in court. Further, the Court held that it was up to the board to determine the weight to be attributed to certain facts or the existence of other facts. It found that the board correctly identified several positive criteria that were satisfied based upon the public interests that flowed from its application. Although the Court agreed with the lower court that the property’s location in the historic district would increase the significance of the negative effects of the expansion, it agreed with the board that by imposing several conditions in its approval (including that the owner must obtain approvals and waivers from all outside agencies), those negative criteria were mitigated.

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