How should New Jersey’s use-variance standard for inherently beneficial uses under its Municipal Land Use Law (N.J.S.A. 40:55D-70(d)) be applied after the Legislature’s 1997 Amendment? Specifically, what additional role does the negative criterion play, and does that require revising the Sica test?

These were the questions New Jersey’s highest court answered in Monarch Communities, LLC v. Township of Montville.

To understand the new guidance issued by the Supreme Court, one must first understand the history of the use-variance standard for inherently beneficial uses in New Jersey.

Background

N.J.S.A. 40:55D-70(d) allows for the use of land that is otherwise prohibited by zoning ordinance so long as an applicant satisfies both the positive and negative criteria set forth therein. The positive criterion (“special reasons”) is satisfied by showing that the proposed use promotes a purpose of land-use regulation as set forth in the MLUL, or a showing that it otherwise promotes the general welfare. The negative criterion is satisfied by showing that the variance can be granted without substantial detriment to the public good and that it will not substantially impair the intent or purpose of the zone plan and zoning ordinance.

Separately, the MLUL recognizes “inherently beneficial uses” as a special category of variances that are universally considered of value to the community because it fundamentally serves the public good and promotes the general welfare. N.J.S.A. 40:55D-4 lists out some examples of such “inherently beneficial uses” like hospitals, schools, childcare centers, group homes, or a wind, solar, or photovoltaic energy facility or structure.

The Court in Medici v. BPR Co., Inc. (1987) altered the existing framework by imposing an enhanced standard of proof on this negative criteria for non-inherently beneficial uses: specific findings reconciling the variance with the zone plan/zoning ordinance when the use was not inherently beneficial.

The Court in Sica v. Board of Adjustment of Wall (1992) clarified that the Medici enhanced standard of proof on the negative criteria does not apply to inherently beneficial uses. For inherently beneficial uses, the applicant was not required to provide the reconciliation with the master plan and zoning ordinances that applies to non-inherently beneficial commercial uses. Instead, the Court adopted a four-step procedure for the negative criteria in inherently beneficial use cases:

1. Identify the public interest at stake and how compelling it is.
2. Identify the detrimental effects of granting the variance.
3. Consider whether reasonable conditions can reduce those detriments.
4. Weigh the positive and negative criteria and decide whether granting the variance would cause a substantial detriment to the public good.

Following Sica, the positive criterion for inherently beneficial uses was automatically satisfied and negative criterion was addressed through Sica’s four step balancing procedure rather than through Medici’s enhanced standard of proof.

In 1997, the Legislature amended N.J.S.A. 40:55D-70 to state that no variance may be granted “including a variance… involving an inherently beneficial use” without a showing that it:

• can be granted without substantial detriment to the public good and
• will not substantially impair the intent and purpose of the zone plan/zoning ordinance.

From 1997 until the ruling in the Monarch case, Sica still governed inherently beneficial use applications even though the 1997 Amendment made clear that such variances could not be granted without also showing that the use would not substantially impair the intent and purpose of the zone plan/zoning ordinance.

The Monarch Decision

Developer Monarch Communities, LLC was denied an application for a use variance to construct a senior living facility in the Township of Montville. Following their denial, Monarch and another developer, JMC Investments, LLC challenged the Zoning Board’s decision. The trial court reversed and remanded for the Board to consider conditions for the approval of the application and the Appellate Division affirmed. The Supreme Court, thereafter, granted certification to consider how New Jersey’s use-variance standard for inherently beneficial uses should be applied after the 1997 Amendment.

To align the Sica test with the 1997 Amendment, the Court in Monarch decided to revise the fourth step of Sica to incorporate the 1997 Amendment’s statutory language regarding the second negative criterion (“will not substantially impair the intent and the purpose of the zone plan and zoning ordinance”).

Prior to weighing the positive and negative criteria and deciding whether granting the variance would cause a substantial detriment to the public good, boards will need to determine whether the applicant made a showing that the requested variance “will not substantially impair the intent and purpose of the zoning plan and zoning ordinance” under N.J.S.A. 40:55D-70. If the board determines that showing is not made, the variance must be denied, and the board does not need to weigh whether the positives outweigh the negatives.

What This Means

While the Monarch decision reaffirms that inherently beneficial uses still presumptively satisfy the positive criteria and that the Medici enhanced standard of proof does not apply to inherently beneficial uses, it also clarifies that:

• an applicant cannot rely solely on the “inherently beneficial” label to satisfy the second negative criterion, they must present an analysis on the impact of the variance sought on the zoning plan and zoning ordinance,
• a board’s denial of a prior application for variance relief for the same property, while not dispositive, may be considered by boards in making such decisions, and
• municipalities and planning boards should be complying with N.J.S.A. 40:55D-89, -89.1, which requires municipalities and planning boards to conduct periodic reviews of their local master plans and development regulations to ensure they remain responsive to changing conditions and are aligned with state and regional planning objectives (i.e. that municipalities and boards should maintain detailed findings on where and how inherently beneficial uses fit into their zoning scheme).