Pacer Inc. v. Planning Bd. of City of Middletown

• Decision Date: 07 December 1995
• Citation: 217 A.D.2d 47,635 N.Y.S.2d 704
• Parties: In the Matter of PACER INC., Respondent, v. PLANNING BOARD OF the CITY OF MIDDLETOWN, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 704

635 N.Y.S.2d 704

217 A.D.2d 47

In the Matter of PACER INC., Respondent, v. PLANNING BOARD OF the CITY OF MIDDLETOWN, Appellant.

Supreme Court, Appellate Division,

Third Department.

Dec. 7, 1995.

Richard Guertin, Corporation Counsel (Alex Smith, of counsel), Middletown, for appellant.

James G. Sweeney, Goshen, for respondent.

Barbara J. Samel, Albany, for New York State Conference of Mayors and Municipal Officials, amicus curiae.

Before MERCURE, J.P., and WHITE, CASEY, PETERS and SPAIN, JJ.

SPAIN, Justice.

Appeal from a judgment of the Supreme Court (Torraca, J.), entered March 1, 1995 in Sullivan County, which granted petitioner's application, in a proceeding pursuant to CPLR article 78, to annul a determination of respondent denying petitioner's application for a special use permit.

Petitioner has been incorporated as a not-for-profit corporation under the provisions of the Not-For-Profit Corporation Law since 1983. In August 1983 petitioner acquired a boarding house located at 24 Roberts Street in the City of Middletown, Orange County, and has used it continuously as a boarding house since that time. After acquiring the property, petitioner became involved in a special needs housing program with the State and provides eight single-room occupancy residential units for low income and homeless individuals. Subsequently, the City, through its assessor, granted a mandatory real property tax exemption for the property pursuant to RPTL 420-a(1). The property is located in a C-3 or general business zoning district which required a special use permit to operate a boarding house.

In May 1994 the City revoked all existing permits for boarding and rooming houses and directed the owners and operators of such houses to apply anew for special use permits; thereafter, petitioner applied to respondent for a special use permit. The City, claiming to be in dire financial condition, had established a policy opposing all projects involving tax exempt property unless the applicants agreed to either give up their tax exemption and restore the property to the tax rolls or agree to an annual "payment in lieu of taxes" (hereinafter PILOT). A public hearing was held wherein respondent took testimony from petitioner and elicited commentary from the public. At the hearing, petitioner introduced evidence to show that it met all the criteria under the City's codes and zoning ordinance for operating a rooming house. The only evidence presented at the hearing with respect to the City's financial condition was testimony from the Mayor that approximately 42% of the assessed property in the City was tax exempt; he also spoke about the City's policy of opposing all projects involving tax exempt property.

On August 18, 1994, respondent denied petitioner's application, stating its grounds, in relevant part, as follows:

1. The applicant refused to take steps to either put the subject property back onto the municipal tax rolls or to negotiate a pilot payment with the City. Given the City's dire financial situation brought on in significant part by the abatement of 42% of the City's property and given the City's present policy not to support further tax abated property for any purpose, the applicant's refusal to pay taxes or a pilot was found to contribute to the deterioration of the quality of life in the City and adversely affect the public welfare by impeding the ability of the City to provide needed services.

2. Testimony revealed that the boarders at 24 Roberts Street pay rent in the amount of $229.00 per month. Given that the payment of taxes or a pilot would result in only a modest increase in rent per boarder, it was found that the applicant's refusal to pay its fair share for the provision of City services was unreasonable and harmful to the financial well being of the City.

Petitioner commenced this CPLR article 78 proceeding seeking to annul respondent's determination on the basis that it was illegal, arbitrary and capricious. Supreme Court annulled the determination and ordered that the special use permit be granted. Respondent appeals.

We are of the view that a municipal planning board is without authority to deny a special use permit solely because of the tax exempt status of the property and that the tactics used by respondent in this case were illegal. "Unlike a variance, a special use permit does not involve a use of property forbidden by the zoning ordinance but instead constitutes a recognition of a use which the ordinance permits under stated conditions" (Matter of Texaco Ref. & Mktg. v. Valente, 174 A.D.2d 674, 675, 571 N.Y.S.2d 328). The inclusion of boarding houses among the uses permitted in the zoning district in which petitioner's property is located "is tantamount to a legislative finding that, if the special exception conditions are met, such a use will not adversely affect the neighborhood * * *. Although there is no entitlement to such a special permit, once the petitioner shows that the contemplated use is in conformance with the conditions imposed, the special permit must be granted unless there are reasonable grounds for denying it that are supported by substantial evidence * * *. Moreover, the petitioner's burden of proof is much lighter than the heavy burden required for a variance * * * " (Matter of C & A Carbone Inc. v. Holbrook, 188 A.D.2d 599, 600, 591 N.Y.S.2d 493).

The Code of the City of Middletown (Zoning Ordinance) § 123-43(B) sets forth the conditions which must be considered by respondent before a special use permit is approved. Included among the conditions is...