Since the Great Recession of 2008, New Jersey’s economy has seen the collapse of commercial financing and a substantial slow down of retail and commercial land use development. The recession has caused substantial losses to municipal tax revenues as a result of the diminution of property values. New Jersey has suffered the “double whammy” of high unemployment and decreasing municipal tax revenues.
In the teeth of the Great Recession, New Jersey has further tightened the reins on job-producing commercial development opportunities. Recent cases interpreting the “particular suitability” standard for commercial use variances reaffirm and increase the stringent proof requirements necessary to secure a commercial use variance. Therefore, non “inherently beneficial” use variances have become extraordinarily difficult to secure, and if challenged, difficult to successfully defend on appeal.
The use variance is a power delegated exclusively to the Zoning Board of Adjustment pursuant to N.J.S.A. 40:55d-70(d). A use variance provides a site-specific zoning option for property owners and developers. New Jersey courts have constrained the ability of a private applicant to secure a use variance, through recent tightening of the standards first annunciated in Medici v. BPR, 107 N.J. 1 (1987). In Medici, the New Jersey Supreme Court held that showing of the positive criteria is site specific — the applicant must show that the proposed use is "peculiarly fitted to the particular location for which the variance is sought" (Medici, citing Kohl v. Mayor of Fair Lawn, 50 N.J. 268, 279 (1967)). Proof of the "positive" criteria requires a showing of "special reasons," which are defined by the purposes of zoning listed in the Municipal Land Use Law N.J.S.A. 40:55D-2. Since 1987, the Supreme Court has held that special reasons also required the applicant prove that the property "is particularly suitable for the proposed use" (Medici v. BPR Co., 107 N.J. 1, 17-18 (1987); Saddle Brook Realty v. Saddle Brook, 388 N.J. Super., 67, 76 (App. Div. 2006)).
Case law does not provide a precise definition of the meaning of "particular suitability." In Medici, supra, 107 N.J. at 24, the court concluded that the property for which a motel and restaurant were proposed was not "particular suitability" for such development. The only reason given to support particular suitability was because the site was near an interstate highway interchange. Other properties in the municipality were also near the interchange. In determining this fact was insufficient to show “particular suitability,” the court stated that “particular suitability” contemplated “the development of a site in the community that is particularly appropriate for that very enterprise" (Id. at 18).
In cases following Medici, courts have expanded on the concept of particular suitable location. In Funeral Home Management v. Basralian, 319 N.J. Super. 200, 208 (App. Div. 1999), the Appellate Division held that the subject property was not particularly suitable for a funeral home because "the board made no finding that a funeral home use was not available in other locations in the area, or indeed, that there was a community need for such use" (Id. at 211). The court found particular suitability exists where, generally, the use is one that would fill a need in the general community, where there is no other viable location, and where the property itself is particularly well fitted for the use, either in terms of its location, topography or shape (Id. at 210). In Saddle Brook Realty, supra, 388 N.J. Super. at 81, the Appellate Division reversed the board's grant of a use variance to build a fast food restaurant in a shopping center. The court found the property was not "particularly suitability" for that use because the applicant did not establish the location "is a more suitable location … than any other location in the ... commercial district, which is a prerequisite for finding that there are special reasons justifying a use variance" (Id. at 77).
These cases have understandably led trial courts to conclude that the applicant for a use variance must show that other properties could not be used for the particular use, and the applicant's property must be the site for the proposed use in order to promote the general welfare. This proof standard presents an evidence quandary that is problematic: to prove the negative that there exists no other appropriate location in the municipality for the proposed use, as well as to prove the positive that the particular property is uniquely and well-suited for the proposed use. The result is numerous decisions in which trial courts have reversed the grant of use variances (Kinderkamack Associates v. Mayor of Oradell, 421 N.J. Super. 8, 21 (App. Div. 2011) and unpublished decisions in Wawa v. Old Bridge; Bowie-McCready v. Morristown; Krousos v. Zoning Board Adjustment Paramus; and Iron Mountain Properties v. Twp. of Freehold). In each of these cases, the court relies upon the “particular suitability” standard to find that the zoning board’s action in granting a use variance was not legally sufficient, insofar as the applicant failed to demonstrate that the proposed property was uniquely suitable, and that the proposed use could not have been located elsewhere in the municipality.
This evolution of use variance proof standards is exacerbated relative to property specific zoning issues because of the Supreme Court’s recent reaffirmation that spot zoning is not permitted. Unlike many other states, New Jersey law has tended to view property specific rezoning as impermissible “spot zoning.” See Riya Finnigans v. South Brunswick, 197 N.J. 207 (2008). In Riya Finnegans, the Supreme Court reaffirmed that zone changes affecting particular properties made outside of recommendations of the Master Plan, which either inure to the direct benefit of the property owner (spot zoning) or impose a increased burden on a single property owner not shared by adjoining properties (inverse spot zoning), are legally suspect. In short, property specific rezoning in New Jersey is legally suspect. The Riya case makes planning for particular uses that have unique site characteristics, or which are viewed by the municipality as nuisances, extraordinarily problematic Therefore, property specific zoning relief can only be brought about through the use variance process. Otherwise, a site specific rezoning has a high likelihood of being found to be impermissible “spot zoning.”
With the screws tightening on the ability to legally secure use variance relief, the evolution of the use variance particular suitability standard has had the perverse and unwanted loss of economic and commercial ratables and the jobs associated therewith in the face of the greatest economic recession of our generation.
The time has come for New Jersey to seriously re-evaluate the Municipal Land Use Law, and in particular, the legal standards associated with site-specific relief for commercial uses. To rely on general zoning ordinance changes, particularly in the face of the recent amendment to the Municipal Land Use Law that only requires Master Plan re-examination once a decade. See N.J.S.A. 40:55d-89, as amended by P.L. 2011 C.65. In light of now the 10-year presumptive validity of the Master Plan as it relates to local zoning, it is likely that New Jersey will continue to lag behind the rest of the nation because of its arcane zoning ordinances that are no longer reflective of modern market services and the transformative aspects of retail and commercial development that are at the core of a healthy and functional capitalist system.