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Riya Finnegan, LLC v. Township Council of South Brunswick

386 N.J. Super. 255, 900 A.2d 325 (Law Div. 2006) [Reversed 7/3/07]

ZONING; SPOT ZONING—[The holding in this case was reversed by the Appellate Division on July 3, 2007] A zoning change made during the pendency of a site plan application is permissible even if it is in response to that particular application, but when it affects only one property and is inconsistent with a municipality’s master plan, it constitutes impermissible spot zoning.

[The holding in this case was reversed by the Appellate Division on July 3, 2007] A property owner filed a preliminary and final site plan application with the municipal planning board. The application sought development of a pharmacy. Neighborhood residents objected to the property owner’s application. Later, the objectors petitioned the municipal council to rezone the property owner’s property from Neighborhood Commercial to Office Park, which would prevent the property owner from developing a pharmacy. The municipal council referred the request to the planning board. In turn, the planning board referred the matter to a three-member subcommittee to make a recommendation as to the change in zoning. Upon recommendation from the subcommittee, the planning board issued a memorandum to the municipal council recommending that the property be rezoned from Neighborhood Commercial to Office Park. The applicant filed an action in lieu of prerogative writs, challenging the zoning ordinance passed by the municipality changing the zoning of its property from Neighborhood Commercial to Office Park. The property owner argued that: (1) the ordinance constituted impermissible inverse spot zoning and was therefore arbitrary, capricious, and unreasonable; (2) the ordinance was inconsistent with the land use plan element of the municipality’s master plan; and (3) the ordinance resulted in an unconstitutional taking of the property without just compensation.

A governing body may adopt or amend a zoning ordinance, but any amendment or revision must be substantially consistent with the land use plan element or the housing plan element of its master plan or designed to effectuate such plan elements. Any inconsistency with the master plan requires the governing body to follow two procedural requirements: (1) obtain a majority vote of the full authorized membership of the governing body; and (2) issue a statement of reasons.

The Court determined that the amended ordinance was inconsistent with the master plan. Next, the Court stated that allegations of arbitrary, capricious or unreasonable conduct by the municipal council compelled the court to analyze the basis under which the change was made. In that regard, the Court found the procedural actions of the planning board and the municipal council were consistent with pertinent law. However, the Court found that the substantive basis under which the ordinance was adopted was arbitrary and unreasonable. Arbitrary and unreasonable conduct can be concluded from a lack of support, in the record, for a board’s decision. The Court reasoned that although the municipal council adopted the resolution upon traffic-related considerations, there was no expert testimony in support of the municipal council’s conclusion, nor was there expert testimony provided in support of the ordinance change before the planning board. Moreover, the Court found that numerous reasons upon which the municipal council purportedly relied were insufficiently supported. Therefore, the Court concluded that the action taken by the municipal council in adopting the zoning ordinance change was arbitrary and unreasonable.

The Court also addressed the property owner’s challenge to the ordinance as spot zoning. “Spot zoning” is defined as the use of zoning power to benefit particular private interests rather than the collective interests of the community. A municipality may change its zoning ordinance at any time during the pendency of a site plan application, even if the ordinance is amended in direct response to a particular application. An ordinance enacted to advance the general welfare by means of a comprehensive plan is unobjectionable even if the ordinance was initially proposed by private parties and these parties are in fact its ultimate beneficiaries. The key phrase is “comprehensive plan.” The test of whether a municipality has taken action constituting spot zoning is whether the zoning change in question is made with the purpose or effect of establishing or furthering a comprehensive zoning scheme calculated to achieve the statutory objectives or whether it is designed merely to relieve the lot of the burden of the restriction of the general regulation by reason of conditions alleged to cause such regulation to bear with particular harshness upon it. Inverse spot zoning is defined as a land-use decision which arbitrarily singles out a particular parcel for different, less favorable treatment than the neighboring ones.

The Court held that the change in zoning of the property owner’s property amounted to spot zoning. The Court reasoned that neither the municipal council nor the planning board offered any evidence other than lay evidence presented by objecting residents that the zone change furthered the comprehensive plan of the municipality. Furthermore, the master plan did not make any recommendations regarding the change in zoning of the property owner’s property, but instead contained detailed studies supporting the conclusion that the property should be zoned Neighborhood Commercial.

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