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SWL.EMEHTAL DECISION ON THE PETITION OF THORVALD G. LAURITSEN
CITY OF Si:L£ORI9,%!%ECIAL PERMIT FOR 14-14 1/2 CHESTNUT STREET CITY CLERICS OFFICE
SALEM '`ASS
A continued hearing on this petition was held on June 8, 1982 with the following
Board Members present: Douglas Hopper, Chairman; Messrs. Piemonte, Hacker and
Feeherry and Associate Member Luzinski.
This continued hearing was scheduled because of the Board's uncertainty about
the terms of'ajudgment entered by the Court, Bennett, J. in the case Lauritsen
v. .Hopper et al. (Superior Court, Essex County, C.A. No. 80-1873) . Under
the terms of the judgment entered in that case, the Court remanded petitioner's
request for a special permit to allow the conversion of the subject property
to condominiums to this Board for "further consideration of the [petitioner's
special permit] application, as well as specific findings in certain areas,,.
By a prior decision, this Board responded to the Court's Judgment by making
certain additional specific findings of fact. By this supplemental decision,
this Board also records the Board's vote, upon reconsideration, concerning
the petitioner's request for a special permit.
The Board voted 3 - 2 to deny the petitioner's request for a special permit
with Messrs. Hopper, Luzinski and Hacker voting to deny the special permit
and Messrs. Piemonte and Feeherry voting to grant the special permit.
Those members voting to deny the special permit adopt both the findings of
fact stated in all of this Board's prior decisions on this property.
thony M. Feeh rry
Secretary
A COPY OF THIS DECISION AND PLANS HAS BEEN FILED WITH THE PLANNING BOARD AND
THE CITY CLERK
f
0
MI� �
RICHARD W.STAFFORD CITY OF SALEM WILLIAM F.OUINN
CITY SOLICITOR MASSACHUSETTS - ASSISTANT CITY SOLICITOR
93 WASH WGTON STREET 15 DERBY SQUARE
SALEf.4,MA 01570 - - SALEM,MA 01970 _
744.2172 _ 744-2948 .
March 5, 1982
Mr. James Dennis Leary
Clerk, Superior Court
34 Federal Street
Salem, Mass. 01970
ATTENTION: Judge Edward Bennett
RE: LAURITSEN v. HOPPER - DOCKETT n81-1873
- Enclosed herewith please find the brief of the defendant, City of
Salem Board of Appeal, in the above captioned case.
Very truly yours,
!!! Richard W. Staffoyl; Esq.
WS/ec J
Enclosure
{
COMMONWEALTH OF MASSACHUSETTS
ESSEX, SS.
THORVALD G. LAURITSEN, JR., )
Plaintiff )
VS. ) BRIEF
DOUGLAS HOPPER, ET AL )
Defendants )
STATEMENT OF CASE
This action is brought pursuant to Massachusetts General Laws Chapter 40A,
Section 17, to appeal a DECISION of the City of Salem Board of Appeals denying the
Plaintiff's application for a Special Permit to convert an existing two-family house
located at 14 Chestnut Street, Salem, Massachusetts, to a condominium having two (2)
units. The Special Permit was sought under the provisions of Section V B (12) of the
Zoning Ordinance of the City of Salem.
STATEMENT OF AGREED FACTS
1. Thorvald G. Lauritsen, the Plaintiff, is presently, and was at all times
pertinent to this action, the owner of the land and building located at 14 Chestnut
Street, Salem, Massachusetts.
2. The Defendants, Douglas Hopper, James Hacker, Anthony Feeherry, Edward
Luzinski and Jean-Guy Martineau are, and were at all times pertinent to this action, .
members of the City of Salem Board of Appeals.
3. The City of Salem most recently adopted a Comprehensive Zoning
Ordinance which took effect August 27, 1965.
4. On March 12, 1981, the City of Salem adopted an amendment to its Zoning
Ordinance relating to the conversion of rental housing to condominiums, which
ordinance amendment conditioned such conversion upon the issuance by the Salem
Board of Appeal of a special permit.
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ti
5. On May 18, 1981, the Plaintiff, through his attorney, filed a Petition with the
Board of Appeals seeking the grant of a special permit pursuant to the Condominium
Conversion Amendment (hereinafter referred to as the C.C.A.).
6. A Hearing was held by the Board of Appeals after compliance with statutory
notice requirements on June 24, 1981 and continued to July 29, 1981.
7. On July 29, 1981, the Board of Appeals denied the application for a special
permit by a vote of 3 members VOTING TO GRANT and 2 members VOTING TO
DENY. A request for a special permit requires the affirmative vote of 4 members of
the Board.
8. On August Z9, 1981, the Plaintiff, a person aggrieved within the meaning of
Massachusetts General Laws, Chapter 40A, Section 17, by the aforementioned
decision of the Board, filed the present Complaint praying in part that this Court
declare the decsion of the Board of Appeals to be a nullity.
9. The Complaint of the Plaintiff was timely filed.
10. The subject property is located in an R-Z zoning district.
11. The subject property is a two family dwelling.
12: As a two family dwelling, the subject property constitutes a permitted use
within the R-2 zoning district in which it is situated.
_ 13._ The subject property cannot currently be used as professional offices absent
the obtaining of a special permit.
14. Conversion of the subject property into two condominium units will not
permit either condominium unit owner from maintaining a professional office in his
or,her dwelling without first obtaining a special permit from the Board of Appeals.
15. Subsequent to his purchase of the subject property, the plaintiff has been
occupying one of the two residential dwelling units in the subject property for his
personal residence.
16. Other than occupation by the plaintiff as his residence, the subject property
has been vacant and continues to be vacant since the date plaintiff purchased the
subject property.
17. Condominium conversion as requested by the plaintiff shall therefore cause
no hardship on any tenants in the subject building.
18. Because of the vacancy of the subject property, plaintiff has at no time
been under any obligation to alleviate hardship to existing tenants.
19. No vacancies in the subject property had been purposely caused in order to
prepare the project for condominium conversion.
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20. Condominium conversion of the subject property shall have no adverse
affect on the Master Plan of the City of Salem.
21. The subject property is located within the Chestnut Street Historic District,
as created by City Ordinance promulgated pursuant to M.G.L. Ch. 40C.
Z2. Because of the inclusion of the subject property in the Chestnut Street
Historic District no alterations of said building in any way that affects exterior
architectural features can be undertaken without first obtaining approval from the
Salem Historical Commission, except that no such approval is required for restoration
due to fire, storm or other disaster.
Z3. Condominium conversion of the subject property shall in no way change the
requirement for approval from the Salem Historical Commission prior to the
alteration of the subject property in any way that affects exterior architectural
features, except that no such approval is required for restoration due to fire, storm
or other disaster.
24. The subject property and Chestnut Street have been accepted in the
National Register of Historic Places, such Register has been created under the
auspices of the U.S. Department of the Interior.
ISSUES OF LAW AND/OR FACT
I. IS THE CONDOMINIUM CONVERSION AMENDMENT TO THE ZONING
ORDINANCE VALID OR INVALID?
II. IS THE DECISION OF THE BOARD OF APPEALS UNDER THE
CONDOMINIUM CONVERSION AMENDMENT TO THE ZONING ORDINANCE
ARBITRARY, WHIMSICAL, UNREASONABLE AND CAPRICIOUS?
ARGUMENT
L IS THE CONDOMINIUM CONVERSION AMENDMENT TO THE ZONING
ORDINANCE VALID OR INVALID?
Plaintiff's Position
The Plaintiff contends that the Condominium Conversion Amendment
(hereinafter C.C.A.) is invalid for the following reasons:
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1) Failure to comply with Massachusetts General Laws, Chapter 40A in that
it regulates ownership and not use; and,
2) : Is clearly arbitrary and unreasonable and has no reasonable relation to
the health, safety and welfare of the inhabitants of the City of Salem;
and,
3) Is vague and ambiguous.
Defendant's Position
The Condominium Conversion Ordinance constitutes a valid exercise of the
home rule power granted to the City of Salem under Article 89 of the Constitution of
the Commonwealth of Massachusetts; is a valid amendment to the City of Salem
Zoning Ordinance under the provisions of Chapter 40A; and provides sufficient
guidelines to the special permit granting authority.
The standard of judicial review of a municipal ordinance has been clearly
stated by the Courts as follows:
"The plaintiffs bear an onerous burden in seeking to
invalidate the by-law amendments. We have consistently
stated that in the judicial review of municipal by-laws and
ordinances 'every presumption is to be made in favor of
their validity, and that their enforcement will not be
refused unless it is shown beyond a reasonable doubt that
they conflict with the applicable enabling act or the
Constitution: Crall v. Leominster, 362 Mass. 95, 102, 283
N.E. 2d 610,615 (1972), and cases cited."
The availability, adequacy, and affordability of rental housing for persons of
low or moderate income has been the subject of legislative concern within the
Commonwealth of Massachusetts for decades (St. 1953; c.534; St. 1969, c. 774; St.
1970, c. 842; St. 1970, c.843).
The City of Salem enacted the Condominium Conversion Amendment as a
direct response to a serious public emergency endangering the public health, safety
and welfare, due to the substantial and increasing shortage of rental housing
accomodations for families of low and moderate income and elderly persons on fixed
incomes and the fact that condominium conversions, which in the,great majority of
cases change the use of property from rental to owner occupied, adversely impact the
already dangerous rental housing shortage. (Exhibit N23 -see Council records). .F —
-The evidence presented to the Court substantiated the existence of the
present rental housing emergency. The Salem Housing Authority has received 300
Section 8 housing assistance certificates for "lower" and "very low" income families..
Several certificate holders, after diligent search, have been unable to find rental
housing at the fair rental rates established by H.U.D. The Salem Housing Authority
has a present waiting list of 600-800 families for Section 8 certificates and, due to
the remote likelihood of receiving sufficient additional certificates, has for some
time refused to accept new applicants on its list (McSwiggin).
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f -
The Salem Housing Authority's veteran and elderly units presently number
400. A waiting list of at least 600 elderly families presently exists. The S.H.A. has
'received funding, based on need, to construct 90 new units of elderly housing in the
downtown district (McSwiggin; Senko).
The City of Salem is the location of Salem State College. As a result of the
substantial increase in the number of students at the college over the last ten years,
and the very limited dormitory accommodations provided by the College, this student
population has greatly increased the demand for rental housing within the City
(Senko).
During the course of the City's Urban Renewal program in the late 1960's a
downtown neighborhood providing approximately 60 rental housing units was
demolished (Senko).
Present housing conditions, primarily the continued high interest rates and
the diminishing public subsidies for construction of new low or moderate income
rental housing, make the likelihood of any increase in the existing supply of rental
housing for low or moderate income families nonexistent (Senko).
All of the above conditions have contributed to the present rental housing
emergency. The cumulative effect of these factors which create a great demand for
rental housing for low and moderate income families is a city-wide vacancy rate in
rental apartments of 2%. A survey of 110 communities conducted by the
Massachusetts Area Planning Council reveals that Salem's vacancy rate is the lowest
of any North Shore community and is equalled by only a handful of communities in
the survey (Senko). Were one to discount the number of apartment units which are
actually uninhabitable e.g. 45 units in Point Neighborhood rehabilitated under
U.D.A.G. (Nicosia-Rusin), from the total number of vacant units, it might be fairer
to conclude that the actual vacancy rate approximates 0%. The Plaintiff's ownership
experience with 29 rental units at 5 diverse locations throughout the City, which
were 100% occupied, corroborates all of the general statistical data (Mr. Lauritsen).
At a public hearing held by the City Council's Committee on Ordinances and
Legal Affairs on December 2, 1980, testimony was received by the Committee that a
low vacancy rate existed; one citizen testified that he had been evicted to make way
for a condominium conversion (Exhibit m23).
A joint public hearing was held by the City of Salem City Council and the
Salem Planning Board on January 29, 1981. At that meeting letters were received
from the President of Salem State College and North Shore Elder Services supporting
a strong regulatory ordinance. These two communicants represent student and - 00-
elderly populations who are dependent upon rental housing for their housing needs.
Testimony describing the hardship experienced by persons seeking rental properties in
Salem, a situation described as worsening due to condominium convsersions, was
presented to the combined governmental bodies by representatives of Help for
Abused Women and Children, the Salem Housing Alliance, North Shore Welfare
Rights, and North Shore Community Action Program. Several individuals spoke, some
of first hand experience with condominium evictions, and many of the difficulty if
not impossiblility of finding rental housing in Salem (Exhibit #23).
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r
Following this hearing, and, following its receipt of the recommendation of
the Salem Planning Board, the City of Salem City Council unanimously adopted the
Condominium Conversion Amendment on March 12, 1981 and it was approved by the
Mayor on March 24, 1981 (Exhibit #12C).
A. HOME RULE AMENDMENT AUTHORITY
The enactment of the Condominium Conversion Ordinance by the City of
Salem was within the powers granted to municipalities in the Commonwealth of
Massachusetts under Article 89 of the Constitution of the Commonwealth of
Massachusetts (hereinafter referred to as the "Home Rule Amendment"). The Home
Rule Amendment permits any city or town by ordinance or by-law:
"to exercise any power or function which the general court
has power to confer upon it, which is not inconsistent with
the constitution or laws enacted by the general court in
conformity with powers reserved to the general court by
section eight, and which is not denied, either expressly or
by clear implication, to the city or town by its charter.
This section shall apply to every city and town, whether or
not it has adopted a charter pursuant to section three."
(Section 6)
The City of Salem.has determined that the regulation of condominium
conversions is in fact in the best interest of,the health, safety and welfare of the
inhabitants of the City of Salem, for various reasons already detailed, including the
existing shortage of low and moderate income housing, the unlikelihood of any further
new construction of low and moderate income housing to replace units which are
converted to condominiums, and the existence of a vacancy rate so low as to
constitute a direct danger to the public health, safety and welfare. The availability
of adequate rental housing has been the subject of repeated legislation by the general
court, and is a matter of vital public concern.
Therefore, the Condominium Conversion Ordinance must be sustained as an
exercise of a power which the general court has power to confer upon the City of
Salem.
Independent Municipal Power:
Among the limitations on the power conferred upon municipal governments
under the Home Rule Act is the following:.
"Nothing in this article shall be deemed to grant to any
city or town the power to: ..... (5) To enact private or civil
law governing civil relationships except as an incident of
an exercise of an independent municipaloP wer•" (H.R.A.,
Arta 89 Section 7)
Unlike an ordinance regulating and controlling ordinary and usual relations
between landlords and tenants, (see Marshall House, Inc. v. Rent Review and
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Grievance Board of Brookline, 357 Mass. 709, 260 N.E. 2d 200 (1970)), and which
therefore requires State enabling legislation, this Ordinance does not attempt to
regulate or create private civil law governing civil relationships. Since its effect is
only to prohibit the dedication by an owner of his property to condominium,ownership
under Massachusetts General Laws, Chapter 183A, in the absence of a special permit,
no recognizable "civil relationship" is involved. (M.G.L. Ch. 183A, Sec. 2)
However, had the Ordinance attempted to regulate a private civil
relationship, then the City of Salem, nevertheless has the power to regulate
conversion of residential dwellings to condominium use as an incident to its
independent municipal power conferred upon it by the State Legislature through the
enactment of the Zoning Law, Massachusetts General Law, Chapter 40A, (Board of
Appeals of Hanover v. Housing Appeals Committee 363 Mass. 339 (1973), which
specificallyfound the Zoning Act (Chapter 40A to b a
e of '
o ( P ) grant independent
municipal power) which provides in pertinent part:
"The purposes of this Act are to facilitate, encourage and
foster the adoption and modernization of zoning ordinances-
and by-laws by municipal governments in accordance with
the provisions of Article 89 of the Amendments of the
Constitution and to achieve greater implementation of the
powers granted to municipalities thereunder."
"This section is designed to suggest objectives for which
zoning might be established which include, but are not
limited to,:-. . .;
to encourage housing by persons of all income levels; .
and to preserve and increase amenities by the promulgation
of regulations to fulfill said objectives. Said regulations
may include but are not limited to restricting, prohibiting,
permitting.or regulating: 1) uses of land,. . . and . . . 8) the
development of the natural scenic and aesthetic qualities
of the community." (Section 2A of the St. 1975 C. 808).
This ordinance is clearly designed to promote the objectives stated in the
zoning law by insuring an adequate supply of housing for all incomes. The guidelines
established in the ordinance further promote the preservation of the aesthetic
qualities of the community by examining the neighborhood impact of petitions.
The Plaintiff contends that there is nothing in Chapter 40A which authorize
any limitations on the form of property ownership and, therefore, any regulations
designed through indirection to bar condominium conversion is void and
unenforceable. The Plaintiff argues that ownership bears no substantial relation to
the furtherance of the general objects of the Zoning Act (Mass. Gen. Laws, Chapter
40A).
The Plaintiff's narrow construction of Zoning is not consistent with the
languge and intent of the Act. Chapter 808 of the Acts of 1975 repealed Chapter 40A
which was entitled the "Zoning Enabling Act". Under Chapter 809, Chapter 40A is
simply entitled the Zoning Act. Section 2A of that Act denotes a significant change
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from an enabling statute to a sweeping grant of authority to tailor zoning ordinances
to individual community needs under the police power. Thus the language to be
emphasized is the following:
... to the full extent of the independent constitutional
powers of cities and town to protect the health safety and
general welfare of their present and future inhabitants."
(Sec. 2A)
The Plaintiff's artificial and presumed exclusive distinction between
ownership and use has not been adopted by the Courts of the Commonwealth. The
Supreme Judicial Court determined the regulation of condominium conversions to be
a valid regulation of the use of property in the case of _Goldman v. Town of Dennis
375 N.E. Reporter 1212:
"the conversion of a cottage colony to single family use
under condominium type ownership would encourage
expansion of use beyond the short summer season." (Id. at
1213-1214)
The Dennis case cited in support of its characterization of the condominium
conversion as a regulation affecting use, Norsco Enterprises v. Fremont, 54 Cal. App.
3rd 488, 498, 126 Cal. Rptr. 659 (1976). The latter case noted with approval the
conclusion of the municipal ordinance therein attacked as follows:
"That, unlike apartments with.rental units, condominium
developments, with a lack of guaranteed effective and
continuous centralized mangement' and often other
shortcomings, present 'special land use problems involving
potential slum and blight conditions: These and perhaps
other such considerations were undoubtedly before the
Legislature; its classification was not palpably erroneous or
arbitrary, and it must therefore be upheld." ( at 665)
In Flynn v. City of Cambridge 418 N.E. 2d 335, 339-340, a case involving a
challenge to that City's Condominium Conversion Ordinance, the Court persistently
characterized housing as being used for rental housing as opposed to used for owner
occupancy. The Superior Court Judge, who's decision affirming the validity of that
Ordinance was upheld on other grounds, sustained the ordinance of the city of
Cambridge on the additional ground that it was a valid exercise of the city's H.R.A.
powers (see Defendant's Pre-Trial Brief for copy of decision).
M.G.L. Chapter 40C, entitled "The Historic Districts Act," recognizes the
significance of preserving the architectural and historical heritage of the
Commonwealth of Massachusetts and provides an additional independent municipal
authority to regulate civil relationships. Section 2 of the Act sets forth its purpose:
"The purpose of this chapter is to promote.the educational,
cultural, economic and general welfare of the public
through the preservation and protection of the distinctive
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characteristics of buildings and places significant in the
history of the commonwealth and its cities and town or
their architecture, and through the maintenance and
improvement of settings for such buildings and places and
the encouragement of design compatible therewith."
Here, the subject parcel is located in the City of Salem's Chestnut Street
Historic District, duly established in accordance with the requirements of Chapter
40C of the General Laws. Further, the subject parcel is located in the United States
Department of Interior's National Register of Historic Places with the entire
Chestnut Street . The consideration of architectural and historic influences on the _
neighborhood in which property sought to be converted to condominium use is
located, is certainly an appropriate consideration within the guidelines of the
Condominium Conversion Ordinance and is not in conflict with, but rather furthers
the intent and purpose of the Zoning Act and the Historic District Act.
The ordinance is neither vague nor ambiguous. It incorporates by reference
the standards to be applied to all applications for special permits: "The conversion
will be allowed if permission of the Board of Appeals is obtained in accordance with
the procedures and conditions set forth in Section IX-D hereof,...." (Ex. 12C).
Additionaly, the C.C.A. sets forth four (4) additional matters which must be
considered by the Board of Appeals in determining whether or not to grant the
Petition for a Special Permit (Ex. 12C, par. C 1-4). By statute, the criteria for
granting a special permit are extremely broad: "Special permits may be issued only
for uses which are in harmony with the general purpose and intent of the ordinance or
by-law,..."(M.G.L. Ch. 40A, Sec. 9). (See Burnham V. Board of Appeals of Gloucester,
333 Mass., 114, 118)
CONCLUSION
The Condominium Conversion Ordinance of the City of Salem is valid for
the following reasons:
I. A serious public emergency exists due to the present shortage of rental
housing for families of low and moderate income in Salem.
2. The conversion of existing rental housing units affordable by families of low
and moderate income to condominium ownership and use will impact adversely upon
the conditions giving rise to this housing emergency.
3. The C.C.A. is a valid exercise of the Home Rule powers of the City of
Salem under Article 89 of the Constitution of the Commonwealth of Massachusetts;
4. The Condominium Conversion Amendment to the Zoning Ordinance
(hereinafter C.C.A.) does not create civil law regulating civil relationships.
5. If the C.C.A. does regulate civil relationships, it is nevertheless valid as an
exercise of "the City's independent municipal power under Massachusetts General
Laws, Chapter 40A and Chapter 40C; and
6. The C.C.A. regulates the use of property by limiting the conversion of
dwelling units formerly used for rental housing g to owner occupied use.
p
7. The C.C.A. is a valid exercise of the City's Zoning Powers under
Massachusetts General Laws, Chapter 40A;
8. The C.C.A. provides sufficiently explicit guidelines to the Special Permit
granting authority.
II IS THE DECISION OF THE BOARD OF APPEALS UNDER THE -
CONDOMINIUM CONVERSION ORDINANCE ARBITRARY, WHIMSICAL,
UNREASONABLE AND CAPRICIOUS?
Scope of Judicial Review
=Massachusetts General Laws, Chapter 40A, Sections 14 and 17 provide for a
de novo hearing before a Judge of the Superior Court to determine the validity of the
Board's decision on the facts found by the Judge. Josephs v. Board of Appeals of
Brookline, 285 N.E. 2d 436, 362 Mass. 290. The well established standard of review is
that a decision by a special permit granting authority may not be annulled by the
Court unless the decision was based on legally untenable ground or was unreasonable,
whimsical, capricious, or arbitrary. Garvey v. Board of Appeals of Amherst 400
N.E. 2d 880, Golden v. Selectmen ofFalmouth, 358 Mass. 519, 523, 265 N.E. 2d 573;
MacGibbon v. Board of Appeuxbury,-255 N. E. 2d 347, 356 Mass. 635.
Mass. Gen. Laws Ch. 40A, Sec. 17 provides that a judge may "make such
other decree as justice and equity may require." This identical language has been
carried over from pre-Chapter 808 language (M.G.L. Ch. 40A, Sec. 21). The scope of
review under this language is limited:
"... These words do not permit the court to invade the
whole area of administrative discretion. We construe (this
phrase) as (merely) requiring a decree according to law."
Pendergast v. Board of Appeals of Barnstable, 331, Mass.
555, 558, 120 N.E. 2d 916, 918 (1954). In doing so
the judge may not substitute his judgment for that of the
Board. Caruso v. Pastan1 Mass. App. 28, 30, 294 N.E. 2d
501 (1973)" Board of Appeals v. Corporation Tifereth Israel
386 N.E. 2d, 772,773.
Neither the Zoning Act (M.G.L. Ch. 40A) nor the City of Salem Zoning
Ordinance gives an applicant an absolute right to a special permit. The Board is not
compelled to grant a permit. It has discretionary power. Prendergast v. Board of
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Appeals of Barnstable, 331 Mass. 555, 557; Bottomly v. Boar of Appeals of
Yarmouth, 354 Mass 3474, 476-477. Gulf Oil Corp. v. Board of Appeals of
Framingham, 355 Mass. 275, 277. A Board of Appeals' decision is not arbitrary and
capricious per se whenever the Board, on the facts found by the trial judge, could
have granted a permit. Such a standard would eliminate the Board's intended
discretion (M.G.L. Ch.40A, Sec. 17) Gulf Oil, supra at 277-278.
In Massachusetts, the decision of the Board can be disturbed only if it is
based on (1) "a legally untenable ground" or (2) is "unreasonable, whimsical, capricious
or arbitrary." Instances where the Court has ordered a Board to grant a special
permit have been described by the Court as "exceptional." Subaru of New England v.-
Board of Appeals, 395 N.E. 2d 880. The finding of the Board in the present case is, in
essence, a finding that the applicant has not met his burden of showing that the
proposed conversion would not have, an adverse impact on the available supply of
rental housing for low and moderate income families, and would not have an adverse
impact on the neighborhood.
Historically, the exercise by the Court of any affirmative relief it may have.
under M.G.L. Ch. 40A, Sec. 17 has been strictly limited. Although zoning enabling
legislation has existed since 1933, in the landmark case of Pendergast, supra (1955),
the Court observed:
"There have been one or two cases in which the board was
ordered to grant a permit] but that was because the permit
had been denied solely upon anillegal ground, and the
landowner had a right to the permit. D'Ambra v. Zoning
Board of Appeal of Attleboro 324 Mass. 61. Deutschmann
v. Board of Appeals of Canton, 325 Mass. 297 See
Chamberland v. Selectmen of Middleborough, 328 Massa
628, 630-631. (In the first two cases, the Court determined
that the ordinance did not require a special permit for the
contemplated use. In the third case, the Board denied the
special permit solely and exclusively for reasons relating to
traffic, aground which the Court determined exceeded the
Board's scope of review under the ordinance).
We think no one has a legal right to a variance. If a case
should come to us in which an owner had been denied a
variance solely upon a legally untenable ground and the
board should indicate that except for that ground the
variance would have been granted, perhaps the court could _
give relief. But no such case is before us. Neither have we
before us a case where the decision of the board is
unreasonable, whimsical, capricious, or arbitrary and so
illegal. We make no implication as to such a case, if such a
case can arise — -
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So far we have treated the plaintiff's application to the
board of appeals as an application for a variance. If,
however, it should be regarded as an application for a
special permit or for a special exception, as the term is in
the Barnstable by-law, the granting of it was equally a
matter of discretion with the Board, and what has been
said is equally applicable. (underlining addeed) (pgs.559-
560)
Subsequent to Pendergast, the Court has on two occasions annulled a
decision of the Board which denied a special permit application, Mahoney v. Board of
Appeals of Winchester, 344 Mass. 598, 602; Slater v. Board of Appeals of Brookline.
350 Mass., 70. In the former case, the Court reversed a decision of the Superior
Court Judge sustaining the Board's denial on the grounds that the decision was
arbitrary and unreasonable on the facts found by the Superior Court. These decisions
appear to be anomolous and do not reflect the present status of the law relating to
Chapter 40A, Sec. 17.The Court has in certain circumstances approved modifications
of special permits where no useful purpose would have been served by a remand
where it was clear on the record that the same ultimate result would have occurred
from a remand as that effected by decree to superior court. Chera v. Planning
Board of Tisbury (1975) 333 N.E. 2d 204, 3 Mass. App. 433. The Court has the power
to remand to the boards for further findings and/or a statement of the reasons for the
board's decision, Deibel v. Yorke,340 N.E. 2d 897 4 Mass. App. 770. O'Brien v. Board
of Appeals of Brockton 326 N.E. 2d 728, 3 Mass. App. 740, Williams v. Building
Commissioner of City of Boston, 301 N.E. 2d 456 1 Mass. App. 478, MacGibbon v.
Board of Appeals of Duxbury 255 N.E. 2d 347, 356 Mass. 635.
Here, the decision of the board was sufficiently definite, was based upon the
considerations set forth in the ordinance, and remand is not necessary.
t
Plaintiff's Position:
The decision of the Board, to the extent that it is based on a negative
impact on the neighborhood resulting from the conversion, is speculative; and to the
extent it is based on the removal of any existing unit of rental housing suitable te-a -
moderate income family, is unreasonable, arbitrary, capricious and whimsical.
' -12-
Defendent's Position:
The Plaintiff has failed to meet his burden of proof of showing that the
condominium conversion will not have an adverse impact on the neighborhood or on
the supply of rental housing for low and moderate income families. Further, the
subject property has included a rental unit, the fair rental value of which is within
the income limits of a moderate income family. However, the fair market value of
this same unit is beyond the affordable limit of a moderate income family. The
conversion of the subject property, located in a unique historical district, to
condominium use will have an adverse impact on the neighborhood due to reasonably
foreseeable deterioration to the exterior facade and roof resulting from the inherent
problems of dispute resolution inherent in small condominiums.
There are two central issues of fact which must be resolved in order to
determine whether or not the decision of the City of Salem Board of Appeals was
arbitrary, capricious, unreasonable or whimsical:
A. What is the impact of this condominium conversion on the neighborhood?
B. What is the impact of this condominium conversion on the existing stock of
rental units in the-City of Salem for families of low or moderate income and
elderly persons on fixed incomes?
A. .
THE CONDOMINIUM CONVERSION WILL HAVE AN ADVERSE IMPACT ON THE
NEIGHBORHOOD.
In considering anapplication for a special permit the Board is not limited to
considering the public convenience and welfare and the status of the neighborhood
only at the present time or in the immediate future. MacGibbon v. Board of Appeals
of Duxbury, 347 Mass. 690, 692. A Zoning Board of Appeals, in passing upon an
appplication for a special permit may give reasonable consideration to "possible
future effects upon the area in which the premises requesting the exception are
located. Gulf Oil Corp. V. Board of Appeals of Framingham, 355 Mass. 275, 278;-
Dowd v. Board of Appeals of Dover (1977) 360 N.E. 2d 640.
The conversion of this property to condominiums, thereby creating a dual
decision-making process, and the windfall profit accruing to the owner, will result in
two identifiable problems: (a) maintenance of the exterior is more.likely to be
neglected as a result of disputes inherent in a small condominium (an pronounced in
this particular one) between Owners which relate to different economic interest and
aesthetic tastes regarding the common area, and an inadequate dispute resolution
-13-
mechanism; and, (b) intensified market pressure to convert the remaining fourteen
(14) rental units into condominiums, destroying the "rental unit within a home"
character of the neighborhood and multiplying the problems indentified above in (a).
Staley McDermet, a professional architect with substantial experience in
the area of the preservation of historic and architecturally significant buildings,
testified regarding the unique significance of Chestnut Street and the subject home.
While the
predominant architecture of Chestnut Street reflects the height of the
Federal period of architecture from 1800 to 1820, this wooden structure, because of
its comparable size and scale, complements and enhances the other dwellings on the -
street. Chestnut Street, itself, is particularly significant since it was a Tanned
street and unlike its contemporary narrow streets, its unusual width affords breath-
taking views of the street's mansions which otherwise would be impossible.
Fourteen/Fourteen and one-half (14-1434) Chestnut Street is the grandest
example of the Greek revival style to be found in Salem. The monumental Ionic
pilasters framing the flush matched board temple facade of this two-story wooden
gable-end-to-the Street residence make it one of the most visually impressive houses
in the Chestnut Street district (McDermet).
The architecturally significant exterior of this structure and its roof are
common areas to be owned, managed and maintained by the two (2) Trustees
condominium trust (hereinafter "Trust"). (Exhibit 7 - pg. 3).
It is undisputed, that the semi-detached house on the street, as a class,
exhibit relatively more uneven maintenance, and, in a few instances, poorer
maintenance than other homes on the street (McDermet, Wheaton, View). The
testimony showed that if one owner of a semi-detached home is less able or less
interested in maintaining a high standard of care and maintenance with the semi-
detached homes, that owner's decision impacts on the degree and quality of
maintenance that the entire building's appearance which suffers somewhat (Weston,
Shea, Lebel, Scagliotti, 38-40 and 44-46 Chestnut Street for example). On the other
hand, the class of Chestnut Street homes.identified as single family homes with or
without rental units, appears to be the best maintained in terms of exterior facade
maintenance. Therefore, experience indicates that a single family home with its
unitary decision-making process eliminates the inherent unevenness characterizing
joint decision making.
The Condominium Trust requires two trustees (Exhibit 7, page Z, Section
3.1). The condominium consists of two units designed Unit No. 1 and Unit No. 2.
(Exhibit #6, Page 2, paragraph 2). The condominium documents provide that Unit-Nota
1 shall have a 60% interest and voting share and Unit No. 2 will have a 40% interest
and voting share in the condominium association (Exhibit #61 Page Z, Para. 3).
However, the documents are silent with regard to the method of replacement of the
original two trustees and their election following sale of the units. Under the present
documents, it is possible to conclude that the owner of 4097o of the condominium
interest to the common area interest will be effectively disenfranchised and have no
representation in the expenditures or assessments to be made by the Trustees (Exhibit
7, page 3, Section 3.1). As the documents are presently drafted, no sensible buyer
-14-
would ever consent to being the owner of Unit No. 2 since he would have absolutely
.no say in the operation or management of the common areas. In fact, the present -
owner, who indicated that he would retain ownership of Unite #2, incorrectly
presumed that he would control one of the Trustees. (Laurisen)
The exterior surface area of the building directly abutting each unit
approximates the 60/40 interests of Units No. 1 and No. 2. However, the roof is
divided in the extremely anomalous percentages of 2397D directly over Unit No. 1 and
777o directly over Unit No. 2. (McDermet). Therefore, while Unit No, 1, is
responsible for the payment of 60% of the common area assessments, it in fact
benefits directly only to the extent of 231/a of the area of the roof. Therefore, the
Owner of Unit No. 1 has the substantial disincentive of paying 60% of the cost to
maintain a roof in which he has a 23% direct interest. In such a fertile area for the
exercise of economic self-interest, the owner of Unit No. 1, abbetted by his complete
control of the Trustees, may begin to economize at the expense of the structure, to
the chagrin of Owner No. 2, setting in motion the dispute resolution mechanism upon
which this condominium will flounder.
Since M.G.L. Ch. 183A, Sec. 5(a) requires the percentages of undivided
interest to approximate the fair value each unit bears to the aggregate fair value of
all the units, altering these initial percentages requires unanimous consent of all unit
owners. The fact that the statutory ownership interest is so disproportionate
compared to the direct economic interest of each owner in certain common areas is
indicative of the problems which arise when a building, not designed for
condominium use, is converted — trying to fit a square peg in a round hole.
Given the likelihood of disputes due to the disproportionate percentages of
ownership interest in the condominium trust, what is the remedy when disputes arise?
Recourse in the event of impasse over maintenance is only to an arbitrator under the
rules of the American Arbitration Association. No guidelines are set forth in the
condominium documents to guide the arbitrator in resolving disputes. For instance, it
is impossible to determine whether the inability to pay of the unit owner would be
sufficient basis for an arbitrator to conclude that an assessment should not be
untaken even if the failure to maintain or repair will reduce the property values of
both units. Therefore, financial misfortune of either one of the unit owners would
quite clearly launch any decision with regard to maintenance into this vague,
uncharted arbitration process with no navigation guides for the arbitrator.
j �
Equally significant, since the Plaintiff argues that the Trustees will be held
to a high standard of care to all Unit Owners, is the actual standard adopted by the
documents. The standard at law for the review of the decision of an arbitrator is _
that the decision shall be upheld regardless of any errors in law or fact unless the
arbitrator selected is guilty of fraud or exceeds his authority. (Massachusetts
General Laws, Chapter 251 Section ll-18). The major accomplishment, therefore, of
the condominium documents with regard to dispute resolution is to substitute russian
roullette for blindman's buff.
_ -IS-
In any event, a decision by an arbitrator, ordering an expenditure and the
levy of an assessment, would be a pyrrhic victory in the event that the owner of
either Unit No. 1 or Unit No. 2 was unable or unwilling to finanace his share of the
costs. First, no expenditure would be undertaken if the Owner of Unit 1 refused(see
Exhibit *7, Sec. 5.5 (C) (b) ). Since either owner can anticipate benefiting only 60% L
or 40% from the cost of painting the structure, for instance, neither unit owner will
be willing to support the entire cost of such a repair. The result is no expenditure, no
maintenance, and, therefore, deterioration of this significant structure. Such a
result is not unreasonable given the example of uneven maintenance in the detached
houses on Chestnut Street.
When one calculates the additional costs involved in arbitrating or litigating
in order to obtain permission to incur the expenditure to maintain the exterior, it
becomes readily apparent that economically, neither unit owner will pursue this
course of action. And if this course of action is once pursued, and the opposing unit
owner fails or refuses to pay his assessment, then the only remedy available to the
trustees is to place a lien against the unit of the owner who fails to make payment.
when due (Exhibit 4t7, Page 15, Section 4.4 (B). This does not minimize the willing
owner's obligation to pay for the work if it is to be performed. Such a remedy is
clearly no guarantee that the owner who has incurred the debt, will be paid in the
immediate or even foreseeable future.
If a special permit to convert to condominiums, had been issued by the
Board, then the exterior of the building would become subject to a cumbersome and
uncertain joint ownership decision-making process in which, practically speaking,
each owner possesses an economic veto sufficient to defeat a well-intentioned owner
from maintaining the property. Therefore, whereas, when one owner among two
semi-detached single family homes fails to maintain that owner's portion of the semi-
attached building is the only portion which suffers neglect, here, in the case of 14 -
14% Chestnut Street, the entire building would suffer if either one or the other of the
two unit owners was unable to or refused to perform and pay for the necessary
maintenance. All of these problems which have been identified have their, origin in
the bifurcated decision making process unique to condominium ownership.
Where there is a strong sense of architectural unity and a high degree of
preservation of historic architecture as is manifested on Chestnut Street, comprises
in the historic quality of any single building,impacts very strongly on the area as a
whole, and the neighborhood in its entirety suffers. The Plaintiff has maintained�tharc_ _
the exterior is subject to the jurisdiction of the Salem Historic Commission and any
alteration would require that Commission's approval. However, the Commission has
no jurisdiction and no affirmative authority to require maintenance, which is the crux
of the foreseeable problem here. (McDermet; M.G.L. Ch. 40C; Ex. 12B)
-16-
CONCLUSION - A
This small scale condominium is particularly susceptible of the kind of
disputes surrounding maintenance expenditures and priorities which are likely to Iead
to deterioration in the exterior appearance of the building. Since Chestnut Street
evidences a strong sera of architectural unity and a high degree of preservation of _
historic architecture, compromises in the historic qualities of any single building :
impacts very strongly on the area as a whole. The dispute resolution mechanism
provided in the condominium documents is ineffective to deal with a recalcitrant
owner or an owner who encounters unforeseen financial difficulties who will not pay
for necessary or cosmetic maintenance. By subjecting the entire building to the
vicissitudes of a dual veto the conversion to condominiums will place the historic
facade of this building at the mercy of all the human frailties, and compound them.
The Board of Appeals in its wisdom, has foreseen that the resultant increased
likelihood of maintenance deterioration will impact adversely on the unique historic
district and the neighborhood in which the subject property is located.
B.
THE CONVERSION OF 14-14% CHESTNUT STREET WILL REMOVE A RENTAL UNIT
FROM THE EXISTING SUPPLY OF RENTAL UNITS FOR A MODERATE INCOME
_ FAMILY AND THEREFORE HAS AN ADVERSE IMPACT ON THAT SUPPLY AND
THE EXISTING SHORTAGE.
The issue before the Court regarding the nature of this house as a rental
housing trait for a low or moderate income family is obscured by a perception
problem. To comprehend the fact that Unit No. 2 has been and will continue to be a
rental unit affordable to a moderate income family, one has to seethe trees through
the forest. One must look at Chestnut Street and visualize 14 or 15 apartment units,
not simply mansions. . While not an easy task, once accomplished, the different
market conditions for rental and single-family dwelling units easily explains why
these units are affordable by moderate income families for rental use but not for
ownership:
When one views Chestnut Street, with its stately mansions, that view is
understandable dominated by the physical scale and architectural magnificance of the
dwellings. Such a view appears incompatible,with low or moderate income ownership.
Such a view is well founded in fact. However, the rental housing market and the- ..c- -
home ownership market are radically different (Nicosia-Rusin). Certain cosmetic
changes were made to the apartment unit to cushion the shock of a buyer expected to
commit 2% - 3 times the monthly cost to own the apartment as to rent it— the
sanding and polyurethaning of the floors is the most visually striking of these. _.
(View, Nicosia-Rusin, Wheaton)
-17-
In order to determine if 14% was affordable as a rental unit by a moderate
income family at the time of the application for a special permit, it is necesary to
determine what a moderate income family could afford to pay for rent.
The Commonwealth of Massachusetts has adopted the definition of .95 of
the median income through its Department of Community Affairs acting under
authority granted to it by Chapter 774 of the Acts of 1969 (now Chapter 40A,
Sections 20-23B). This was accomplished in regulation 540 C.F.R. 32.02, which
states:
"(i) Low or moderate income housing means any units of housing subsidized
by the federal and/or state government under any program to assist the
construction or substantial rehabilitation of low or moderate income
. housing, as defined in the applicable federal or state statute, whether built
or operated by any public agency or non-profit or limited dividend
organizations. Low or moderate income housing shall include without
limitation units of housing constructed or substantially rehabilitated under
the following programs or under any similar or successor programs:
1. Federal
Public Housing, Housing Assistance Administration, HUD
Elderly Housing,Housing Assistance Administration, HUD
Turnkey I, H, III, IV, Housing Assistance Administration, HUD.
Acquisition and Rehabilitation, Housing Assistance Administration, HUD
Rent Supplement. Secretary, HUD
Home Ownership, Section 22I (h), Federal Housing Administration.
Home Ownership Assistance Payment Section 235 FHA.
Interest Reduction Payments for Rental or Cooperative Housing, Section
236, FHA.
Mortgage Insurance for Moderate Cost Rental and Cooperative Housing
Section 221 (d) (3)/Below Market Interest Rate, FHA Home Ownership
Interest Credit, Section 502, Farmers Home Administration.
Interest Reduction Payments for Rental or Cooperative Housing Section 515,
FMHA.
Z. State
Low Income Veterans Housing, Chapter 200, Department of Community
Affairs.
Low Rent Family Housing Chapter'705, DCA.
Elderly Low Rent Housing, Chapter 667, DCA."
MHFA Mortgage Loans, Chapter 708, MHFA (Ex. tw79)
As the above stated definition indicates, there is no single definition. +
Rather, a range of definitions exists which vary from program to program depending
on the population the program is designed to assist.
-18-
Of the programs cited in the Commonwealth of Mass. Department of
Community Affairs regulations, the ZZ1 (d) (3) and the Section Z35, and Section 236
programs were identified as moderate income programs (Nicosia-Rusin). The income
limits utilized by the United States Department of Housing and Urban Development
(H.U.D.) to determine eligibility for these moderate income programs is 95% of the
median income in the Standard Metropolitan Statistical Area. (Nicosia-Rusin, Senko)
"Median" is defined by Webster's Seventh New Collegiate Dictionary as
follows:
"Z. A value in an.ordered set of values below and above which
there are an equal number of values."
Therefore, almost one-half of the S.M.S.A.'s families are considered to be of
moderate income or less.
While lower income limits for purposes of determining eligibility to
participate in some government-assisted housing programs (e.g., City's Community
Development Block Grant program pursuant to the Housing and Community
Development Act of 1974) are adopted in order to target a lower income group of
beneficiaries, those programs are not intended to reach the entire "moderate" income
family grouping (Nicosia-Rusin, Senko, McSwiggin). The Section 8 housing program is
clearly a "lower" income housing program. H.U.D.'s eligibility limits for Section 8
are defined as "Lower" income and "Very Low" income (McSwiggin). These limits are
expressly and intentionally set below the 80% of median income limits for C.D.B.G.
programs (Nicosia-Rusin, Senko).
These lower Section 8 limits have been incorporated in the Point
Neighborhood U.D.A.G. in response to neighborhood fears of gentrification and
displacement. They are not "moderate" income oriented by program design or
definition but do reach a portion of the moderate income population (Nicosia-Rusin).
The Condominium Conversion Amendment is to be construed liberally to
ensure that the persons sought to be protected receive the benefit of the protection.
Therefore, for purposes of the ordinance, "low or moderate income families" must be
construed to include those families with a gross income of from 0 -95% of median
income for the S.M.S.A.
-19-
i
then: The income limits for eligibility under these various programs is as follows
FY 82 INCOME GUIDELINES
FAMILY SIZE 800/6 MEDIAN SECTION 8 95% of
MEDIAN
1 16,240 15,250 19,300
2 18,560 17,400 22,050
3 20,880 19,550 24,800
4 232200 21,750 27,550 .
5 24,650 23,100 29,250
6 26,100 24,450 31,000
7 27,550 25,850 , 32,700
8 29,000 27,200 34,450
(Chart F)
(McSwiggin, Senko) Ex. F. for Id)
20-
Based upon 950/a of median income, adjusted for family size, what is the
maximum amount of a moderate family could be expected to pay for a 3 bedroom
apartment?
The key criteria in determining the family size which is appropriate to a
particular rental unit is the number of bedrooms. The subject property contains 3
bedrooms presently, with adequate space for 4 additional bedrooms after some
renovations (Longval).
Based on the H.U.D. guidelines under the Section 8 program, this bedroom
size translates into a family of 4 - 6 persons. (McSwiggin; Exhibit No. 14)
In determining the percentage of a family's gross income which may
reasonably be expected to be applied to housing costs, the Congress of the United
States has established by law a minimum of 30% of gross income (Exhibit No.14) in all
federally assisted programs, including the ZZ1 (d) (3), the Section 235 and 236 housing
programs, which have already been identified as "moderate income" programs. . The
real estate expert for the plaintiff testified that one week's gross income was a rule
of thumb but that quite often this fiovure was increased to 301/o or more (Longval).
Therefore, the government's policy appears sound.. Mr. Nicosia-Rusin testified that
40%-50% was not uncommon in his "lower" income rental rehabilitation program.
Therefore, (1) taking the gross income for a "moderate" income family of
4 - 6 persons; and (2) taking 30% of this gross income to be available for housing
costs; and (3) dividing this annual housing contribution by 12 to arrive at a monthly
rent affordable by a moderate income family results in a monthly rent of:
1P persons 950A median x 30% - 12 mos.= rent/Mo.
4 $27,550 x 30% - 12 mos.= $688.75
5 $29,250 x 30977 - 12 mos: $731.25
6 $31,000 x 30% - 12 mos.= $775.00
Taking the facts most favorable to the sustaining of the decision of the
Board then, a moderate income family of 6 could be expected to spend up to $775.00
for a rental apartment including utilities.
The rent for Unit No. 2 was $425.OQ on May 15, 1979, only two years before
the application for a special permit. (Mulvihill). The apartment was rented — 6;--
thereafter to a couple whose single income based upon his occupation as a laboratory
technician appeared to be well within the moderate range (Wheaton). The
inflationary figure of 10% cited by Mr. Longval would have resulted in a rent for the
subject property of $525.00 per month including utilities. Although Mr. Longval
testified to a present fair rental value of $650 - $750 per month (within the moderate
income range established above) he qualified his opinion that if actual arms-length
rentals on the street were less, he would adjust his opinion accordingly. Mr. Longval's
opinion for fair market value must be discounted by 109/6 for one-half (3£) year in order
-21-
to determine the fair rental value of the time of the application. This adjustment
results in a fair rental value of $617.50 - $712.50 per month. Mr. Wheaton testified
that the only other 3-bedroom apartment on the street rented to an elderly couple for
$475.00. Mr. Wheaton's own Z-bedroom apartment rented at $425 - $450 over the
past two years, and during a portion of this time, was rented to an apprentice
seamstress.
Therefore, the Court should find that the actual fair rental value of the
subject property as of July Z9, 198Z is between $475 - $575 per month (Longval,
Mulvihill, Wheaton). While even ;dr: Longval's unadjusted fair market rental is within
the moderate income range, this more realistic monthly rental is well within the
income range affordable by a moderate income family.
The inescapable conclusion that this rental unit is affordable by a moderaate
income family but cannot be purchased by the same family can be more easily
understood in the context of the present housing market in Salem.
The City of Salem's housing supply consists of approximately one-half rental
housing and one-half single family housing. (Senko). The City's housing population,
however, consists of a higher-percentage of elderly persons than surrounding
communities and a large student population due to the location of Salem State
College within the community. The housing needs of Salem's citizenry has resulted in
a serious and severe rental housing shortage,evidenced by a Z% vacancy rate, a rate
duplicated or exceeded by very few communities in the Commonwealth (Senko).
It should come as no surprise that where one-half of the community's
housing supply is rental, and, due to the particular nature of its population, more than
one-half of the community's population requires rental housing, that there is a
shortage of rental housing.
The market value for owner-occupied and rental properties do track one
another (Wheaton, Longval). The better the location, the larger the number of
bedrooms, etc., the greater the value (Nicosia-Rusin, Longval). However, while the
scale of value within each category may go up or down based upon the same factors,
each category operates at a very different octave (Nicosia-Rusin, Wheaton). As a
general rule, a condominium's market value for sale is at least two times the same
unit's value as rental property (Wheaton). The monthly carrying costs for such a unit
reflect this doubling in value. Tax considerations help to reduce this ratio somewhat
by extending to the condominium owner tax deductions not available to the renter for
federal income tax purposes. In other words, the tax structure subsidizes the
condominium purchaser. The increased value resulting from this government subsidy
goes directly to the Developer as realized gain in the artificially inflated marked +( —
value of the condominium. The threshold income a family must have to benefit from
this government tax subsidy is beyond the income of a moderate income family of 4-6
persons in the Boston S.M_S.A.
Rental units in the moderate income range are particularly vulnerable to
being removed from the reach of moderate income families since the rule of thumb
for qualifying buyers for mortgages of between 28-32% of income (Longval).
Doubling the monthly carrying costs for a moderate rental unit will far exceed this
30% limit.
The expert testimony of Mr. Nicosia-Rusin and Mr. Wheaton is amply borne
out of the subject property. Unit No. 2`s condominium fair market value if
determined to be $110,000.00 (I:ongval, Lauritsen), translates into monthly carrying
charges for principal and interest alone of $1,300 -$1,500 — approximately 2% times
the fair rental value. Therefore, this housing unit is not affordable by a moderate .
income family and the net result of the conversion is the same number of families for
a supply which has been reduced by one unit.
From a common sense and economic point of view, it can be reasoned that
single family homes, since they traditionally represent the most highly desired
housing arrangement, are going to be owned by the above median income population.
Since they will go to the highest "bidders", the below median income families will be
"outbid" by families above the median.
Since the rental housing markets and the single family markets are on
different octaves, the mere location of a rental housing unit in a single family area,
even one, dominated by mansion-like structures, cannot remove it from the market
_ conditions applicable to the rental housing market.
It is especially true therefore, that a rental housing unit at the "higher" end
of the rental supply, and for purposes of this case, and the Condominium Conversion
Amendment at the "higher" end of the moderate income family range, if converted to
a condominium will be beyond the range of a rental income family in Salem and will
therefore be purchased by an above-median income family within the "region"
(Wheaton) displacing a low or moderate income Salem family. This Salem family will
be unable to find adequate rental housing in Salem (McSwiggin Re: return of Section 8
certificate holders in 3-bedroom category; Senko Re: Vacancy rate) and will
therefore be forced to relocate to another community where rental housing may be
available. This dislocation is clearly not the choice of the family but is the result of
a government subsidy to developers to convert existing rentals into conominium
ownership.
The City's U.D.A.G. program, as it relates to condominium conversions is
based upon directing the government's subsidy to the low or moderate income
purchaser by granting an interest-free equity loan of Z5% of the condominium
purchaser.price for a unit which would be considered on the lower end of the fair
rental market values within the rental market (Exhibit 017). The properties were in
most instances, unoccupied and in a dilapidated condition and thereforei had little or
no rental value prior to conversion. The incentive to building owners of these
buildings is not so much the government subsidized profit, but the prospect of selling
off problem properties which are not income producing and therefore represent a
loss. While one witness testified that there is no evidence to support the City's
"experiment" with low and moderate income owner occupancy as it relates to
-23-
maintenance of common areas, the uniqueness of the program suggests that there is
no precedent for purposes of comparison (Wheaton). The ability of lower income
-persons to benefit from the income tax deductions granted to home owners should
assist these new owners in meeting the obligations of home ownership. The net result
of this program will be the reduction of 65 Salem low/moderate income families
seeking rental housing, and the reduction of only 5 low or moderate income rental
housing units from the available supply.
Much ffiscussion has centered upon the issue that there is nothing in the law
of condominiums or in these particular documents which prohibits the renting of
these units to low or moderate income families. The actual experience with
condominiums nationwide, is that the 'overwhelming majority" are owner occupied
and that the economics of condominium ownership including the tax advantages,
virtually dictate this arrangement (Wheaton). Further, with regard to this particular
unit at 14% Chestnut Street, which the owner believes has a fair market value of
$129,000, and which the Owners expert real estate witness testified would sell for in
excess of $100,000, the mon`�hly carrying charge for principal and interest, not
including taxes, or utilities (including heat), would be approximately $1,400 per
month. There is no rental market in Salem, which would command a sufficient rent
to cover the carrying charges for this unit. (Longval)
Had the condominium document been structured, as they were not here, to
enable the Board of Appeals to find that this unit would be preserved for a low or
moderate income family as rental property, the language would have been similar to
the following:
"Unit # 2 of the Lee Mansion Condominum shall not be owner
occupied and shall be rented at a monthly rate, including heat
and utilities, which shall not exceed a sum equal to 30% X .95
of the median income for a family of 6 in the boston S.M.S.A.,
divided by 12. This provision may not be altered or waived
without the approval of 4/5 of the Salem Board of Appeal."
CONCLUSION
The decision of the Board of Appeals was based upon the
following reasons:
1) Chestnut Street is a location which has received national
recognition for its unique architecture and for the fact that
the interiors and exteriors of the historic homes on the street
have been preserved.
-24
2) The proposed division of this property into condominium units with the'
inherent problem of dispute resolution which is present in a small
condominium development presents a threat to the stability of the area and
specifically to the preservation of this unique example of Greek Revival
architecture. .
3) The increase in the number of owners of this property increases the
likelihood that this property might be used for professional offices or for
other non-residential purposes.
4) The conversion of this property into two condominiums will have an
adverse impact on the availability of rental units for people with moderate
incomes.
5) There was substantial opposition by the Chestnut Street Association and
abutters to the condominium conversion.
(Exhibit #10)
The evidence produced at trial established as a fact that the subject
property contained a unit of rental housing affordable by a family of moderate
income. This unit would not have been affordable by a family of moderate income
after its conversion to a condominium. Therefore, the conversion would have had an
adverse impact on the available supply of rental housing for moderate income
families. -
The condominium conversion, by virtue of its bifurcated decision-making
form of ownership, and its statistical tendency to increase the likelihood of the
occurence of financial problems is more likely than the present single form of
ownership to result in maintenance problems which would have an adverse 'impact on
the neighborhood.
The decision of the Board is therefore not unreasonable, arbitrary,
capricious or whimsical and must be sustained.
Respectfully submitted,
CITY OF SALEM
SALEM BOARD OF APPEALS
By its attorney,
Richard W. Stafford
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COIaUORITEALTH OF ITASSACHUSETTS
1 Department of the Trial Court
�` Essex, ss. Superior Court
No. 81-1873
Thorvald G. Lauritsen
v.
Douglas Hopper, et al
JUDGMENT
This action came on for trial before the CourtBennett, J.
n
presiding and the issues having been duly tried an'd findings
having beeduly rendered,
It is ORDERED AND ADJUDGED:
The matter is remanded to the Board of Appeals for further
hearing on proper notice, for further consideration of the
plaintiff' s application and specific findings in the foll7aing
( areas:
1. U on what basis can it be found that the locus has ever con-
situted a part of the City of Salem's stock of rental units
available to "families of low and moderate income"?
2. Upon what evidence can it be found that condominium conver-
sion of No. 14 Chestnut Street will contribute to poorer
maintenance than that existing in the case of wooden semi-
detached dwellings on the nor�h side of Chestnut Street?
i
3. For what reasons are two owners less likely to be able to
resolve disputes than multiples of tgo owners, given a condo-1 miniiLm agreement containing a workable dispute mec'aanism?
The Clerk .'Ga istrate of the Court is directed to mail an
attested copy of this judgment within thirty drys from the date
hereof to the City Clerk, Building Inspector, and Board of Appeals,
,i respectively' of the City of Salem.
Dated at Peabody, Massachusetts, this first day of April, 1982.
i;
A Assistant Clea
p.
��,
�; . .
DEPUTY AS . i w
3 1
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COMMONWEALTH OF MASSACHUSETTS
Essex, ss . Superior Court
{
No. 81-1873
i
THORVALD G. LAURITSEN )
V. )
i ) I
DOUGLAS HOPPER, ET AL ) '
FINDINGS, RULINGS AND ORDER FOR JUDGMENT
This is a case brought under General Laws ,
Chapter 40A, Section 17 to appeal a decision of the
defendants (as they constitute the Zoning Board of Appeals
of the City of Salem) which denied an application of the
plaintiff for a special permit to convert a residence � .
located at 14 Chestnut Street, Salem to a condominium i
having two units . The applicable zoning bylaw is Section
• V-5 (12) of the Salem Zoning Ordinances .
J The parties were helpful to the Court in arriving
ata series of facts agreed, and also, under the same
heading, a series of stipulations, all totalling twenty-
five in number, and attached hereto and marked A. f{
Referring to the aforesaid document, which is
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I{ n entitled n Statement of Agreed Facts even though it
contains legal stipulations, some further explanation of '
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i some of the items is in order. — Item -11 states that "the
subject property is a two family dwelling". The fact is,
that under zoning R-2, any house on 'Chestnut Street is
per.-.missibly a "two family dwelling". At the time of
application for the permit, and the hearing before the
Court, and at the time of the .hearing before the Board
of Appeals, there were not two families dwelling in the
, a
subject property, and furthermore , in fact, though the
zoning is R-2, a number of the truly enormous residences on
Chestnut Street in Salem are not occupied by more than
one family.
With reference to Item 7 on Exhibit A, wherein
It appears that the membership, of the defendant Board
voted three to two in. favor of' granting the permit, yet
the permit was denied because the bylaws require an
affirmative vote of four members of the Board, thus denying
a permit to an applicant like the plaintiff who nevertheless
achieves a majority; this rather odd proviso is not the
subject of any legal contest before this Court.
In fact, the legal result of the agreements and
! stipulations set forth in Exhibit A is of service to the
Court in effectively limiting the issues before, the Court
to the real bases of the minority and controlling decision
of the Board of Appeals , to wit:
I "2. The proposed division of this property into
i
condominium units with 'the inherent problem of
dispute resolution. which is present in a small
condominium development. presents a threat to the
stability of the area and specifically to the
preservation of this unique example of Greek
Revival architecture .
3• The increase in the number of owners of this
property increases the likelihood that this
property might be used for professional offices -
or for other non-residential purposes .
4. The conversion of, this property into two
condominiums will have an adverse impact on
the availability of rental units for people
_with moderate incomes . "
The only other issue before the Court is a legal
issue raised by the plaintiff, contending that the ordinance
itself, requiring a special permit for condominium conversion!
is -invalid as not permitted by the zoning enabling statute,'
j to wit, Chapter 40A.
I. VALIDITY OF THE ORDINANCE.
I
This issue appears to be foreclosed by the opinion
of the Supreme Judicial Court in Goldman v. Dennis, 375
Northeast 2nd, 1212, and on this issue, I adopt the
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arguments of the brief for the defendant', except that L
do not adopt dictum contained in Norsco Enterprises v.
Freemont, 54 Cal . App. 3rd, 488, 498. I therefore rule
that the Salem Zoning Ordinance , declaring condominium
ownership a permitted use, but subject to grant of a special
permit, is valid. Therefore, I pass on to the consideration
of the action of the Board whereby a minority effectively
denied the permit, purportedly acting under the terms of
i the zoning bylaw.
II. THE ZONING BYLAW.
A copy of the applicable zoning bylaw is attached
hereto and marked B. So far as this bylaw is concerned,
it will be observed that the numbered conditions to be
considered by the Board of Appeal appear in Subsection 12c,
and that of these four conditions or "standards", only
i the condition numbered "2" applies to this case ; in view ` ,
of the agreements and stipulations set forth in Exhibit A.
Thus, in considering whether or not a permit should or
should not issue, for purposes of this case, and under the
decision of the Board quoted above, the denial of the permit .
involved the application of Subsection 12c 2, now quoted:
"2. the impact of the cooperative or condominium
conversion on the neighborhood and its impact
on the existing stock of rental units in the
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j City of Salem for families of low and moderate
'+ income and elderly people on fixed incomes.
It appears from the decision of the Board previously
referred to that, with the exception of asserted likelihood
of increase of professional offices or other non-residential ,
purposes, the minority rested its decision upon an unfavor-
able impact upon the neighborhood, by threatening the !�
stability of the neighborhood and the preservation of
architecture therein, and an impact on the ,existing 'stock
of rental units for families of low and moderate income i
and elderly .people on fixed incomes , i
III. IMPACT ON EXISTING STOCK OF RENTAL UNITS.
_ There are thirty residential structures on
Chestnut Street in Salem. To the rear of some of these are
structures, locally referred to as ."carriage houses". There
' exists on Chestnut Street fourteen quarters that are used
or have been used. as rental space, occupied currently or
at times in the past by rent paying tenants . Of these
fourteen rental spaces, four are all located in the
structure numbered No . 2 Chestnut Street. Of the remaining
ten, one ,or more are located in so-called "carriage houses" . �
ii One of these fourteen rental spaces is in the locus. The
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only former tenant who testified was a woman in her younger
middle years who did in fact occupy rental space in the
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!1, locus in question, which then and now consisted of a living
iroom, dining room, kitchen, bath, and three occupiable
bedrooms, for which she, as sole occupant, paid .the then
owners $425 a month. This lady declined to disclose her
j income at the time of her occupancy, but she vacated the
premises in order to purchase No. 42 Chestnut Street for
a price of $90,000, having sold out ,her interest in a
certain commercial operation in Salem for a sum exceeding
I� 500 000. Her occupancy of the s ace in the locus was
$ , P y P
succeeded by a couple (no children) , income undisclosed.
The space has not been rented since purchase by the
appellant . There was no testimony before the Court of
i! any other tenants occupying the rental space in the locus .
! There was credible testimony, which I adopt, by
one McSwiggin, the man in charge of placing tenants in
Salem housing either subsidized for or available to families
of low to moderate income under Federal and State guidelines .!
He testified that in his experience in his ,job, dating from i
10,76, no Chestnut Street owner had ever solicited tenants
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from his office, though he maintains a waiting list of about
one hundred families--nor had any family to his knowledge
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ever applied to occupy space on Chestnut Street, nor had
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he ever directed any families seeking lour or moderate rent
apartments to apply at Chestnut Street . In fact, when this
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question was put to him by the Court, he plainly indicated
that the suggestion was almost unthinkable .
McSwiggin further testified, and I find that
sj a private landlord, 'controlling rentable space, , even if
charging current rent falling within the guidelines. of .
authorities setting up appropriate rents for "families
of low or moderate income " remained free (except for laws
against racial discrimination) to reject any applying tenant "
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regardless of their "low or moderate income", and despite
the fact that they may have been referred .to the landlord
by McSwiggin 's Federally funded office .
It appears, and I find that in an area of Salem
' known as the "Point", a substantial number of decrepit former;
apartment buildings are now. being ,renovated with Federal
grants, and that the renovating authorities have determined
to convert one hundred and ten former rental apartment.
units existing therein into condominiums . Since these
buildings had fallen into such disrepair thatmost of
these converted units were not occupied at the time of
conversion, there cannot be a suggestion that the
condominium conversion thereof operates to reduce an
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i existing stock of apartment units. Nevertheless, it is
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observable that it was open to the funding authorities to
!; renovate these units as apartments along with all of the
other decrepit apartments that were being renovated, a matter
that bears upon the issue of "stability" of a neighborhood.
More to the point, perhaps, is that in the past very few
years , one hundred and seventy-nine units, formerly
residences or apartments in Salem have'.been "converted"
into condominium ownership.
The foregoing summary is :not designed in itself
to suggest that the Board' s decision-was arbitrary or
unreasonable, but to bring to the attention of the Board
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1 upon remand that
i 1 . There is very little or no evidence that space
IIII� in the locus is or has ever been available to
"families" of low or moderate income or to
elderly persons with fixed income;
2 . that there is very little or no evidence that
the Chestnut Street area is available to those
needy applicants trying to do business with the
office of Mr. McSwiggin;
3 . that in recent years, for no doubt adequate reasons,
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one hundred and seventy-nine structures or units
.have been permitted to become condominiums .
These observations and suggestions� are brought I i it
up for careful consideration by the Board on remand as to
whether or not in truth the three bedroom apartment in the
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locus is or has ever. been part of a stock of rental housing
available for low and moderate income "families", or
elderly people with fixed incomes--and more pointedly.,
whether or not this issue is genuine
IV. LIKELIHOOD OF MORE PROFESSIONAL OFFICES.
The Court is unable to follow this reasoning .
r
Since the area is zoned R-21 it seems obvious that a. permit
(which is required) could be issued to any person or family
occupying rented. space intone of the structures as of today.
Whether or not a structure were owned as a condominium by
two owners does not seem to present any difference-whatsoever .
The granting or withholding of a permit would continue to
` - be a matter within the powers granted to the Board whether
faced with a two family apartment dwelling, or a two
condominium. I rule that therefore, this stated reason
for withholding _a condominium permit is without a reasonable
basis. -
V. STABILITY OF THE CHESTNUT STREET AREA.
The Court though altogether familiar as a
commuter with the area, nevertheless took a slow and detaile
view of the street, of the locus, and of the interior of
the locus . . Some of the observations derived from theview
are set forth visibly on a chalk permitted to be examined
as "Chalk A", attached hereto . This chalk does not lend .
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itself to accurate reproduction, since it contains different
colors, but the original discloses what was observed in
fact on the view, to some extent, a s follows :
Of the thirty major structures on the street,
eight are what used to be called "semidetached" houses—
that is, what appears on casual glance to be a single
structure is in fact two .or more separate residences,
divided in some instances ,by a permanent party wall . The
street runs from the low numbers, 'almost due west, and on
the south side of the street, brick residences predominate .
There was credible testimony, and I find that residences
of brick do not present problems of maintenance as severe
' as 'those of wood. However, there was credible, testimony,
and it was observable in the case of the semidetached brick
residences lying on the southerly side of Chestnut Street
that there were variations .in the maintenance of these
structures as between the respective owners of sections of
such structures . It was testified, and I find, that within
these structures, there are no enforceable agreements between
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or among the respective owners. That. is, one owner is free
to permit his exterior to fall into a condition of shabbinessi,
where his immediate adjoining neighbor may be most meticulous;
j in his attention to his share of .the structure . It was
testified, and I find, that in the case of these semidetached+
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houses, some of which are most impressive in facade, that
degrees of care in maintenance varied considerably, and that
the respective owners had no means of control of the
neighbor's behavior except by complaint and inducing shame .
` On the northerly side of the street, which also
j contains four large semidetached structures, the condition
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adverted to above is far more .noticeable because the -
northern side contains more wooden dwellings - In fact,
with the exception of three extravagantly large wooden
residences (one of them deeded to the Federal Government
in trust) , most wooden structures are in a state of poor
maintenance, particularly those that. are semidetached
structures . The considerations mentioned above, to wit,
the complete lack of any control of one neighbor over °
the maintenance of the other, exist on the northerly side
of Chestnut Street, and are apparent upon a walking view �.
of the street .
Here again, the attention of the Board is
li directed to this set of circumstances upon remand for
(!' further consideration of whether or not condominium
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ownership is as likely to contribute to disparate maintenance;
as semidetached ownership. I ,
It is observablee from Chalk A, and perhaps more
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clearly shown in an Assessor's Map introduced as Exhibit
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No. 11, that of the non-semidetached structures on Chestnut 1i
Street, the locus , No . -14, occupies a larger ground area I
than any other non-semidetached building with the possible ;
! exception of No. 29, Number 29 is of brick construction,
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!� the facade facing away from the sun, and presents, being
it
brick, a lesser problem of recurrent maintenance than the
locus . The matter of size is adverted to herein for the
obvious point that the more sizeable; the more expensive ,
in terms of operation and maintenance . It is apparent from
It
it
y; a view that maintenance of the wooden structures lying on
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the north side of Chestnut Street is presenting a problem
4� to the owners and residents thereof. It is apparent, as
aforesaid, that the semidetached wooden structures present g
not only the ordinary problem of maintenance of a large
wooden structure , but also a difference in ability or
;j temperament of the co-owners . Recognizing indeed, that i
}1 the street is a unique historical and architectural enclave,
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€ and that its proper preservation :is an asset to the City
f
of Salem, a real question should arise as to whether or not ;
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s .
semidetached ownership is necessarily superior to condominiurq
E: ownership. Apparently, since the City has permitted one
}p
it hundred and seventy-nine conversions, the administration
of condominium ownership does not present an insuperable }
}} hurdle . The notion that disagreement is more likely between ;
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two owners than among, say, six owners of a condominium-
owned structure does not appear to this Court to be
sensible : If any condominium agreement can be found
acceptable to the Board involving multiple common ownership
of a structure, the Court is hard put to see why an
acceptable agreement cannot exist between two owners.
Finally, upon that basis which permits a Jury
to bring to its consideration of a problem "its own
common sense and experience", the Court notes its
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disagreement with any notion that owner ship .by a landlord
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"guarantees effective management" (compare Norsco v. Freemont!,
III 54 Cal, App. 3rd 488 498) p p
p , superior to;:coo erative or
condominium ownership. Credible expert testimony before me
was to. the contrary, and plainly is the basis for the
condominium project underway at the "Point".. ' The attention
of the Board is further'..invited to consideration of
current maintenance of condominium conversions in the Salem
;
! area .
With all respect and due deference, but with a
Ij direction that the plaintiff's application be subject to
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Ii a further hearing, on pro.per notice, the matter is remanded
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to the Board of Appeals for further consideration, and
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specific findings in the following areas :
1 . Upon what basis can it be found that the locus
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has ever constituted a part of the City of Salem'
stock of rental units available to "families of
jlow and moderate income"?
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2 . Upon what evidence can it be found that condominium
(
( conversion of No. 14 Chestnut Street will
i� contribute to poorer maintenance than that
i existing in the case of wooden semidetached
dwellings on the north side of Chestnut Street?
( 3 For what reasons are two owners less likely to y
be able to resolve disputes than multiples of
two owners, given a condominium agreement
containing a workable dispute mechanism?
i Judgment is to enter ordering the defendant Board
f� to conduct a further hearing, on proper notice, of the i
plaintiff's application, and render a decision that includes
the issues numbered and specified above .
Edward H. Bennett, Jr.
Justice of the Superior Court?
e,
Enteredi
A TRUE COPi, ATTE -
( DEPUTY ASP !
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