Disputes Over Senior Housing Keep Properties off the Market

Tara Nurin | September 12, 2012 | More Issues
Developers want to sell houses built for seniors on the general market, municipalities argue that younger families will put more strain on school budgets and infrastructure

Credit: Image courtesy of Toll Brothers
Farmington Manor
A rush to build housing for senior citizens in the early part of the past decade stalled when the housing market collapsed in 2008, leaving behind a glut of unfinished, and unsold properties. In fact, some of the projects never got past the planning stage.

Those houses still stand empty. And new owners won’t be moving in until lawsuits that pit private developers and the state of New Jersey against local municipalities are resolved.

The developers want to convert these residences and neighborhoods — originally permitted exclusively for senior housing — into more saleable general-market housing. The dispute can be traced back to a law that then-governor Jon Corzine signed in 2009. Hoping to revise the state’s sagging economy, the legislation forced local zoning boards to approve conversion applications, as long as certain conditions were met.

The law sunsetted in 2011. Meanwhile, the fate of many of these developments remains undetermined. Communities that had only approved them conditionally rely on the courts to settle the question of how much autonomy municipalities can exercise over their own affairs.

Most municipal arguments have hinged on the fact that senior communities don’t increase rush-hour traffic or burden schools, while market-rate housing does. Boards that may have approved senior housing specifically because it wasn’t market-rate complain that they must now shoulder unanticipated costs and infrastructure upgrades. For instance, the price tag to educate one child in New Jersey was $16,000 for the 2010-2011 school year, according to the latest New Jersey Report Card, and that’s without building additional schools.

“When [the developers] were selling us these plans ten years ago they were telling us how great they were going to be as age-restricted units,” said Randolph Mayor Michael Guadagno, whose planning board will hold public hearings this month to decide if an already controversial age-restricted project in a quiet part of town should be converted.

“You balance out your whole town, ” he continued, “You try to place everything where it’s supposed to be. And if this passes, we’ll have schoolkids coming in, school buses coming in.”

When Randolph’s board initially approved the project, it was for one reason only: the town lacks a single unit of senior housing. If after the public hearings the board denies the conversion application, the developer is expected to pursue the matter in court. If the board approves, residents are expected to sue the municipality.

Legal Requirements

The legal issue will hinge on the principle of “substantial detriment,” one of approximately a half-dozen conditions developers are required to meet in order to qualify for a contested conversion. The most controversial condition of the Corzine law required 20 percent of the units to comply with the Council on Affordable Housing regulations.

Because it’s open to interpretation, the provision gives the approval board the right to deny an application if it can be shown to cause “substantial detriment to the public good and will substantially impair the intent and purpose of the zone plan and zoning ordinance.”

That legal stipulation has given some wiggle room to local governments to deny unpopular applications and to residents who oppose the projects. In early 2011, Senators Donald Norcross (D-Camden) and Jennifer Beck (R-Red Bank) introduced an amendment to define “substantial detriment” that would account for the amount of stress a new market-rate development could place on infrastructure and schools.

The amendment never left committee. Because “substantial detriment” remains undefined, Mike Cerra, the senior legal analyst for the State League of Municipalities, says the concept’s susceptibility to interpretation has led to what he calls “a slew of lawsuits.”

One such suit, in Robbinsville, is already proceeding to the appellate stage. The Mercer County township’s planning board is appealing a superior court judge’s ruling that the board’s decision to deny the conversion of a 150-unit development in April 2011– after five contentious public hearings — violated state law. The municipality is claiming that the development would meet the substantial detriment test, while the superior court ruled that it would not.

According to published news reports, Mayor David Fried took a stand against the conversion last March by blocking the extension of a needed sewer line to the site, though he claims he stopped the extension because plans for two other neighborhoods that were supposed to share the sewer lines were not moving ahead.

“We’re not surprised,” Tom Troy, senior vice president of Sharbell Development Corp., which filed the conversion application, told the Times of Trenton. “Given the way that [local officials] have handled this matter from the beginning, this is certainly not unexpected.” Neither Fried nor representatives from Sharbell responded to requests for comment.

Troy was quoted as saying he was confident that the courts would ultimately rule in his favor. But lawyers who specialize in these types of cases say it’s hard to predict outcomes when arguments involve whether a residential development will significantly harm the character and economic strength of a community

“It’s not a slam-dunk case,” said Princeton land-use attorney Christopher DeGrezia, speaking about these types of lawsuits in general and not this one in particular. “They have to meet certain requirements.”

On the other hand, he said, “Despite the legislation, municipalities are still denying these [conversion] applications because they don’t want [more market-rate housing] … But it shouldn’t be discretionary.”

Building for Boomers

Part of the controversy concerns the availability of senior housing. When the New Jersey Builders Association lobbied for the law in the late 2000s, it believed that a burgeoning number of baby boomers would flock to over-55 communities in the coming decades. That demand failed to materialize when the recession made it too difficult for many boomers to sell their homes.

“The market was flooded with age-restricted housing units; so while they were approved projects, they were not being developed,” said Carol Ann Short, the association’s chief operating officer. “We knew there were dozens of projects that were languishing, and this law would put those approved projects into motion and put people back to work.”

Chris Gaffney, group president of the Toll Brothers development firm, added that his company made the decision to convert a planned community in East Windsor after studying the issue every three months for years, as personnel went about the lengthy process of securing all of the requisite preconstruction approvals.

“In the very beginning, that segment of the market was much deeper than a lot of other segments,” he said, referring to age-restricted housing, adding that “2006 or 2007 was probably when the market started to turn … There were several active-adult communities in the immediate area that were almost saturating that area of the market.”
Gaffney’s East Windsor project is among those that didn’t require legal intervention. Although East Windsor’s Mayor Janice Mironov was an outspoken opponent of the move, ultimately the planning board approved the application this past spring, and no further challenges are expected.

While some advocates of the law point to the 67,000 existing seniors-only residential units in the state as evidence of a surplus, their foes maintain that many areas lack sufficient housing for the over-55 population This becomes an acute problem when newer housing-stock prices older homeowners out of the market.

There’s no tally on the number of conversion applications that were filed during the two-year window or the number of court cases that followed. But Cerra says that with local courts issuing divergent rulings, higher courts could decide to hear the cases, if only to establish some consistency and precedent.

“Developers said, ‘We’re having a hardship,’ and some communities accommodated that and other communities for equally valid reasons said no. Then the developers went to the legislature to get the [2009] law changed, and local zoning discretion was taken away for a two year period,” he said.