New Jersey State Real Estate Laws & Regulations : New Jersey Real Estate Lawyer & Attorney : Fox Rothschild Law Firm : Zoning, Commercial Leasing : Atlantic City, Princeton NJ

     The following entry was written by Burton J. Jaffe, Esq., a real estate attorney resident in Fox Rothschild's Princeton office.  Burt can be contacted at (609) 895-6630 or at bjaffe@foxrothschild.com

     On November 3, 2009 the Site Remediation Reform Act, NJSA 58:10C-1 et seq. (the “Act”) becomes effective. The Act materially changes the role of the New Jersey Department of Environmental Protection (“NJDEP”) with respect to the remediation of contaminated property in New Jersey.

     The Act changes the role of NJDEP from direct supervision of the remediation of contaminated sites to a compliance, enforcement and monitoring role of independent professionals conducting such work. The professionals must be licensed by the Site Remediation Professional Licensing Board which is established in NJDEP. The Board’s mandate is to establish licensing requirements for site remediation professionals and to oversee the licensing and performance of site remediation professionals.

     Additionally, the Act requires the NJDEP to inspect all documents and information submitted by a licensed site remediation professional, authorizes NJDEP to review the performance of a clean up under a broad range of circumstances (NJDEP can audit a clean up for up to three years after its conclusion) and mandates that NJDEP undertake direct oversight of contaminated sites under certain conditions and authorizes, but does not require, NJDEP to undertake direct oversight under certain other conditions.

     The purpose of the Act is to improve the speed of site clean-ups and the Act is carefully designed to accomplish this purpose without lessening the stringent remediation requirements already in place in New Jersey.

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     Following the Fair Housing Act (FHA) and the regulations enacted by COAH under the Act, many municipalities believed that they could prevent developers from locating affordable housing in areas not specifically zoned for affordable housing by complying with the FHA and COAH regulations. And that may be true, in part. Municipalities that meet their fair share obligation under the FHA and COAH regulations are immune from builder’s remedy suits. But what about good old fashioned prerogative writ claims? Apparently not.

     In the recent decision of Homes of Hope, Inc. v. Eastampton Township Land Use Planning Board, the appellate court held that affordable housing constitutes an “inherently beneficial use” for the purposes of obtaining a use variance. This is true whether or not the municipality has met its fair share obligation under the FHA and COAH regulations, or not. 

     For practical purposes, if your affordable housing development requires a use variance, you must show that the proposed development satisfies both negative and positive criteria.  The decision in Homes of Hope means that the “positive criteria" requirement for granting a use variance is automatically satisfied, by the very fact that the proposed development is affordable housing. Developers will, of course, still need to satisfy the "negative criteria" requirement, or show that the proposed development would not be detrimental to the municipality in general or to the future residents of the development.

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     One New Jersey county is on the cusp of cracking a Top 10 List that probably leaves little to be desired. 

     As reported in an article by Jim Walsh published in today's edition of the Courier-Post, (follow link here for online article) a new study published by the Washington D.C. based Tax Foundation has concluded that property taxes in Camden County are the highest in New Jersey and 11th highest in the nation (out of 790 "high population" counties) when measured as a percentage of a home's value.  The national median is nearly 1 percent (0.96%) - Camden County's was estimated at 2.33%. Following close behind were Gloucester County (31st), Salem County (32nd) and Burlington County (46th). 

     Not to be outdone, the North Jersey counties fared even better (or worse...) according to the Foundation's ranking of median property tax paid per owner-occupied home in 2008.  New Jersey had six of the top 10 counties (from 1 to 10, Westchester County, NY ($8,890); Nassau County, NY ($8,628); Hunterdon County, NJ ($8,492); Bergen County, NJ ($8,446); Rockland County, NY ($8,430); Essex County, NJ ($7,924); Somerset County, NJ ($7,743); Morris County, NJ ($7,557); Passaic County, NJ ($7,370); and Putnam County, NY ($7,324). The national median is $1,897.

     According to its website,  Tax Foundation "is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937."  Click here to review a copy of the Foundation's press release on the property tax census survey. 

     The question remains - what can be done to fix the problem?  That remains to be seen, but suffice it to say that property taxes are sure to be a hot button issue in the upcoming Gubernatorial elections in New Jersey.  From a practical perspective, the deadline to file an appeal challenging a property's assessment for tax purposes is April 1st annually (unless extended in which case the taxpayer would receive written notice).  It is important to note, however, that pursuant to state statute the property taxes for the 2010 tax year are determined, in part, based upon the fair market value of your property as of October 1, 2009. 

     October 1, 2009 is a week away.  One can only hope that next week will not mark the start of a top 10 ranking for Camden County, or a blue ribbon for the six North Jersey contenders. 

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Several South Jersey communities are exploring the feasibility of solar panel projects on land formerly used as landfills. In a time of economic downturn, the notion of “turning lemons into lemonade” can take on many faces. Although the headlines have been dominated recently with health care related issues, energy issues and the “Green” movement appear to have some staying power. While constructing solar panels is believed to be a viable source of alternative energy, obtaining an approval from the state and local governments for such facilities is not without its challenges. Navigating the extensive regulatory landscape governing solar energy is a delicate balance of public and private concerns. The tightening of the credit markets over the past year has diminished the available capital for such projects; however with care and consideration a project may qualify for grants and incentives from state and federal agencies.

The Borough Council of the Borough of National Park (Gloucester County) recently passed a resolution designating a prospective redeveloper of a closed landfill on property formerly utilized for the disposal of demolition material and local household waste. The parcel is the only undeveloped tract of land in National Park Borough.   As noted by the article published in the August 23, 2009 edition of The Gloucester County Times, although the project is in its infancy stages it appears to have the support of the local community.  According to the proposal submitted by Westfield Energy, the prospective redeveloper, the former landfill could eventually house a 30-acre field of solar panels as well as over 130,000 square feet of office and retail space with an increasing focus on environmentally sustainable buildings.  

It is noteworthy that last fall, Governor Corzine unveiled New Jersey’s latest Energy Master Plan which would provide the blueprint for the state’s energy policies for the next decade. If you need a crash course or even a refresher, follow this link and continue to the bottom of the page for an article by Steven Goldenberg, Esq. of Fox Rothschild LLP which was published in the June 2009 edition of the Mercer Business Journal. 

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On August 6, 2009, Governor Jon Corzine signed into law legislation that authorizes the incorporation of “green building” requirements into New Jersey’s Uniform Construction Code

P.L. 2009, Ch. 106 (the “Act”) authorizes the Commissioner of Community Affairs to amend the Uniform Construction Code’s energy subcode to establish enhanced energy-saving construction requirements, which requirements “may exceed the requirements of national model codes.”

While the Act specifically adds the International Energy Conservation Code as one of the model code alternatives to be used as a basis of the energy subcode (thus ensuring that the State’s code will be based on national standards), it also provides that the Commissioner may amend or supplement this energy subcode at any time, although only once, prior to 2012. 

In amending the subcode, the commissioner must rely upon 10-year energy price projections provided by an institution of higher education, and the added costs of such construction requirements must be “reasonably recoverable” through energy conservation over a period of not more than seven (7) years. 

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The New Jersey Council on Affordable Housing recently published a “NRDF Moratorium FAQ” sheet (available here), advising municipalities that “if a preliminary or final site plan approval was granted prior to July 17, 2008, and said approval includes a requirement for a non-residential development fee under a COAH or Court approved development fee ordinance, that fee can still be collected (i.e. 1% or 2%), provided building permits are issued for the development prior to January 1, 2013.”

At least one municipality is acting on such advice, and refusing to release building permits and/or certificates of occupancy until the previously required ordinance fee is paid. 

But is COAH’s advice consistent with the Stimulus Act? Probably not.

While the statute has yet to be interpreted by the courts, Section 36 (e) of the Stimulus Act states as follows: “The [NRDF Act] prohibits municipalities from imposing their own fees to fund affordable housing on non-residential development, and [the Stimulus Act] is not intended to alter this underlying policy.” (emphasis added).

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On July 27, 2009 Governor Jon S.Corzine signed into law the New Jersey Economic Stimulus Act of 2009. Sections 37 through 39 of the New Jersey Economic Stimulus Act of 2009 suspend the Non-Residential Development Fee Act which was signed into law on July 17, 2008. As a result, developer’s will no longer be required to pay the 2.5 % development fee.

In addition, developers that have paid a non-residential development fee since July 17, 2008, may claim a refund of “the difference between the moneys committed prior to July 17, 2008 and the monies paid.” The Act provides that a developer can submit a claim for reimbursement of non-residential development if:

• the developer paid a fee and the development received preliminary or final site plan approval prior to July 17, 2008; or
• the developer paid a fee and the project was referred to a planning board by the state, a governing body, or other public agency for review prior to July 17, 2008; or
• the developer paid a fee and the non-residential development is not subject to a fee pursuant to N.J.S.A. 40:55D-8.6 (which provides for contractual agreements to pay non-residential development fees)

A developer seeking a refund must submit the claim in writing, and a copy of the proof of payment, to the same entity to which the fee was paid on or before November 24, 2009.

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The Legislature and the Governor recently enacted a number of laws designed to minimize the impact of current conditions on New Jersey businesses and residents, including legislation providing incentives to create jobs and make business investments in this State.

The Economic Stimulus Act of 2009 authorizes developers to enter into agreements in qualifying economic redevelopment and growth grant incentive areas which means Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or a center as designated by the State Planning Commission; a transit village, as determined by the Commissioner of Transportation; and federally owned land approved for closure under a federal Base Realignment Closing Commission action. The redevelopment incentive grant agreement specifies the amount of the incentive grant to be awarded the developer, the frequency of payments, and the length of time, which shall not exceed 20 years, during which that reimbursement shall be granted. In no event shall the combined amount of the reimbursements under redevelopment incentive grant agreements with the State or municipality exceed 20 percent of the total cost of the project, exclusive of publicly-owned infrastructure. Up to 75 percent of the incremental local and state revenues generated and collected from the project  may be pledged towards the incentive grant.

The Act is intended to finance the project financing gap which means the part of the total redevelopment project cost, including return on investment, that remains to be financed after all other sources of capital have been accounted for, including, but not limited to, developer contributed capital, which shall not be less than 20 percent of the total project cost, and investor or financial entity capital or loans for which the developer, after making all good faith efforts to raise additional capital, certifies that additional capital cannot be raised from other sources. This Act is a tremendous incentive to developers in the targeted areas and is similar to laws we have used to help finance major casino expansions in New Jersey.

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Free rent is customarily given by a Landlord to a Tenant as an incentive to lease a particular space. Besides the obvious benefit to Tenant, Landlord also benefits by being able to list the lease on the rent roll starting on the day the lease begins, even if no rent is being collected. But does free rent extend the term of a lease? According to a recent New Jersey Appellate decision, it does.

In R.A.M. Holding Corp. v. Hoboken No. 1 Blimpie, Inc., No. L-1267-08 (N.J. Super. Ct. App. Div. July 24, 2009 ), Landlord and Tenant negotiated a 10 year lease commencing on September 1, 1997 and terminating on August 31, 2007. Because of necessary renovations, Landlord offered to abate rent for the first two months and the parties executed a rider to that effect. The rider also provided for an option to extend the term for an additional five years provided notice was given within 60 days of the date of termination. Tenant gave notice to Landlord that it intended to extend the lease on October 2, 2007, after the original lease term would have terminated. Landlord commenced dispossess proceedings, claiming that the lease had already terminated on August 31, prior to the notice of extension.

The court found in favor of Tenant, and held that the rider provision giving Tenant two months of free rent actually amended the term of the lease and extended the date of termination to November 31, 2007, which in turn granted Tenant an additional 60 days to give notice of Tenant’s decision to extend the lease.

While not all free rent provisions will extend the term of a lease, Landlords should ensure that the language of any lease or rider specifically states that any free rent incentive given is to be taken during the lease term and state the particular date on which the lease is to terminate.

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