Sol - I can sympathise with the situation here but can also see it from the town's point of view.

The zoning laws were not varied for the monastery or the Salvation Army as they pre-existed those laws. It's probable that the town is concerned that, if they vary this law once, the door will be open for further applications in the general area, some of which may be as relevant and sympathetic as that of the Shabbos House.

I can't really see any alternative to legal action here, with all its ramifications. That seems the only way that this house will be allowed to continue without a possible influx of other applications. Best of luck to all concerned.