Meridian Hospitals v. Point Pleasant

• Decision Date: 12 November 1999
• Citation: 739 A.2d 999,325 N.J. Super. 490
• Parties: MERIDIAN HOSPITALS CORPORATION, a nonprofit corporation, Plaintiff-Appellant, v. BOROUGH OF POINT PLEASANT, a municipal body politic of the State of New Jersey, Borough of Point Pleasant Zoning Board of Adjustment, a municipal body of the Borough of Point Pleasant, County of Ocean, State of New Jersey, and John Wardell, Zoning Officer of the Borough of Point Pleasant, Defendants-Respondents.
• Court: New Jersey Superior Court

739 A.2d 999

325 N.J. Super. 490

MERIDIAN HOSPITALS CORPORATION, a nonprofit corporation, Plaintiff-Appellant, v. BOROUGH OF POINT PLEASANT, a municipal body politic of the State of New Jersey, Borough of Point Pleasant Zoning Board of Adjustment, a municipal body of the Borough of Point Pleasant, County of Ocean, State of New Jersey, and John Wardell, Zoning Officer of the Borough of Point Pleasant, Defendants-Respondents.

Superior Court of New Jersey, Appellate Division.

Argued September 27, 1999.

Decided November 12, 1999.

Mark L. First, Princeton, for plaintiff-appellant (Reed Smith Shaw & McClay, attorneys; Mr. First, of counsel and on the brief with Stacy S. Cohen).

Jerry J. Dasti, Forked River, for defendants-respondents Borough of Point Pleasant and John Wardell (Dasti, Murphy & Wellerson, attorneys; Mr. Dasti, of counsel and on the brief).

Steven A. Zabarsky, Toms River, for defendant-respondent Borough of Point Pleasant Zoning Board of Adjustment (Citta, Holzapfel, Zabarsky & Leahey, attorneys; Mr. Zabarsky, of counsel and on the brief).

Before Judges HAVEY, KEEFE and A.A. RODRÍGUEZ.

The opinion of the court was delivered by

HAVEY, P.J.A.D.

In this zoning case, plaintiff Meridian Hospitals Corporation (Meridian) appeals from the denial of its application for a special reasons variance to utilize two floors of the Point Pleasant Hospital for a nursing home. The Borough of Point Pleasant Zoning Board of Adjustment (Board) denied the variance, concluding that the proposed nursing home use was "part of [Meridian's] systematic dismantling" of acute-care services at the hospital "to the greater detriment of the Point Pleasant community." The trial judge agreed with the Board, and upheld the denial.

We reverse. Meridian's proposed plan to decommission the hospital's acute-care services is unrelated to and unaffected by its application for the special reasons variance. The plan was occasioned by a lack of need for acute care at the hospital and cost-saving considerations, and was subject to review by the State Department of Health & Senior Services (DHSS) pursuant to the DHSS's Certificate of Need procedure. The Board's denial of the variance based on Meridian's plan was therefore arbitrary, capricious and unreasonable.

Meridian, a nonprofit entity, owns and operates the Point Pleasant Hospital in the Borough of Point Pleasant, Ocean County. The facility is situate on 11.7 acres and located in the "hospital" zone, which permits hospitals and various accessory uses, but specifically excludes nursing homes. The facility is surrounded by the Manasquan River and residential zones consisting of single-family, detached housing units on individual lots.

Point Pleasant Hospital is presently licensed by the DHSS as an acute-care facility. However, the hospital has been on the decline for a number of years. In 1990, it had approximately 330 licensed beds. In 1997, the number of licensed beds was reduced to 136. As of the time of the Board hearings, only fifty beds were staffed and in use. The third and fourth floors of the building have remained essentially vacant since 1996, when seventy-eight acute-care beds were "delicensed." Each of the two floors has roughly 12,000 square feet.

In 1997, Meridian entered into negotiations with Ocean Convalescent Center, a licensed nursing home operator. Meridian planned to lease the third and fourth floors of the hospital to Ocean Convalescent for use as a sixty-one bed nursing home. On February 14, 1997, Ocean Convalescent obtained approval from DHSS to transfer sixty-one nursing home beds from its Lakewood facility to the Point Pleasant Hospital facility.

Meridian applied to the Borough's zoning officer for an interpretation of the zoning ordinance to determine whether the nursing home was a permissible use. The zoning officer advised Meridian that it was not, and that it was necessary for Meridian to apply for a special reasons variance with the Board. Meridian thereafter made the application pursuant to N.J.S.A. 40:55D-70d.

During the Board hearing, Meridian's Associate Executive Director, John Rauner, testified that the proposed nursing home use did not require changes to the exterior of the hospital structure. Interior alterations were required to comply with state regulations; patient rooms would be renovated, and bathroom facilities and an eating area would be installed. A courtyard enclosed within the perimeter walls of the hospital would be converted to a recreational area. The patients would not have access to the streets or sidewalks, and no additional parking spaces would be needed.

Rauner also stated that ancillary support, such as food service, engineering, maintenance, laundry, laboratory and x-ray services would be provided to the nursing home patients by the hospital. He testified that the nursing home would have no impact on the medical services provided by the hospital. When pressed by Board members and objectors as to the hospital's plan to decommission its acute-care facility, Rauner acknowledged that Meridian was studying a proposal to convert the hospital from an acute-care facility to an urgent-care facility. Rauner explained that such a conversion would require Meridian to obtain a Certificate of Need from the DHSS. Rauner and Meridian's counsel made clear that, whether or not the variance application was approved, Meridian intended to proceed with its plan to decommission its acute-care facility, including the emergency room, at the hospital.

Andrew Shawn, Administrator of the Ocean Convalescent Center, testified that his present facility in Lakewood is a nonconforming wood-frame dwelling requiring a "waiver" from the DHSS. The nursing home's move to Point Pleasant Hospital would comply with the DHSS's standards and permit the facility to serve Medicare patients. Meridian would install a "sophisticated" security system to prevent unwarranted ingress to and egress from the facility by patients. He stated that the quality of life of the nursing home patients "would be greatly enhanced" by the optimum space provided by the wide hallways and larger rooms at the hospital facility. Meridian estimated that the cost of renovations would approximate $1 million.

Daniel McSweeney, a licensed planner, testified on behalf of Meridian. Noting that a nursing home is an "inherently beneficial use," McSweeney was of the view that reuse of the vacant third and fourth floors of the hospital would have a "positive impact on both the hospital and the borough." He testified that the growing aging population in Ocean County was a factor supporting the need for nursing homes. Further, he described the nursing home's shared physical and functional attributes with the hospital, as well as the available facilities such as elevators, delivery locations and existing means of ingress to and egress from the facility.

McSweeney added that, although nursing homes are permitted in a residential zone of the Borough, the zone was fully developed and it was not feasible to demolish existing structures for the purpose of constructing a nursing home facility. He also stated that the nursing home would have a negligible impact on surrounding properties, since no exterior renovations of the building would take place, no additional parking was necessary, and existing ingress to and egress from the site would not be changed. It was his view that there would be no impairment to the intent and purpose of the zoning plan and no adverse effect on the public good.

Several members of the Point Pleasant community testified in opposition to the application, focusing on the detrimental effect to the community if the hospital's emergency room and acute-care services were phased out by Meridian. Board members asked Meridian's counsel whether Meridian would be willing to agree to a condition to the special reasons variance that the level of services at the hospital would not change. Meridian's attorney rejected the offer, reasoning that the nursing home application should be considered on its own merits without consideration of any plans by Meridian to decommission or convert the present acute-care facility.

The Board denied the application. Instead of focusing on the positive and negative criteria associated with the proposed nursing home use, the Board stressed Meridian's plan to phase out acute care at the hospital. In its resolution, the Board found:

the relief requested by applicant ... cannot be granted without substantial detriment to the public good and without substantially impairing the intent and purpose of the zone plan and Zoning Ordinance of the Borough of Point Pleasant, for the following reasons:

1. That the conversion of hospital beds for nursing home beds is part of a systematic dismantling of hospital services at Point Pleasant Hospital to the greater detriment of the Point Pleasant community.

2. Every hospital bed that is replaced with a nursing home bed effectively downsizes or eliminates potential acute care beds to be utilized at that location in the future.

3. The hospital is a greater inherently beneficial use than the nursing home and utilization of the hospital zone for nursing home care works to eliminate the greater inherently beneficial use to the community.

4. The hospital will not commit to, nor guarantee any level of services at the hospital.

Meridian filed an action in lieu of prerogative writs challenging the validity of the hospital zone of the ordinance, arguing that the ordinance arbitrarily excluded nursing homes from the zone. It also challenged the denial of its special reasons variance, claiming that the Board exceeded its powers in considering Meridian's potential plan to decommission acute care at the hospital.

Addressing the denial of the variance first, the trial judge upheld the Board's decision. Applying the balancing test addressed in Sica v. Board of Adjustment, 127 N.J. 152, 165, 603 A.2d 30 (1992), the judge found that the Board...