Real Property & Environmental Law Alert

Real Property & Environmental Law Alert

Transactional Real Estate, Development/Redevelopment & Environmental Law

Russell Bershad Named to the NJBIZ Real Estate Power List

Posted in Transactional Real Estate & Leasing

Russell B. Bershad, Co-Chair of the Gibbons Real Property & Environmental Department, has been named to the NJBIZ Real Estate Power 75, a list of the most powerful people in New Jersey real estate. Mr. Bershad appeared for the first time this year, ranking 55th on the list.

NJBIZ notes, “Russ Bershad is a newcomer to the list. But, according to one fan, he’s been in the mix for quite some time. ‘He was involved in the Roche deal, he represents David Barry in Jersey City. He’s doing a lot of good things there.’ Said another: ‘You know every detail is going to be pored over when you hire Russ.’ Said another: ‘If you’re going to add more lawyers to the list, and that’s a good idea, Russ is one of the people you need to have.’”

At Gibbons, Mr. Bershad leads the firm’s transactional real estate practice, which earned a national ranking in the most recent edition of U.S. News & World Report/Best Lawyers®. He is included among the top band of real estate attorneys in New Jersey by the Chambers USA Guide to America’s Leading Lawyers for Business and was recently listed by New Jersey Super Lawyers as the “Real Estate Lawyer of the Year” for the Newark region. He is also listed individually in Best Lawyers and is one of approximately 20 New Jersey attorneys elected for membership as a Fellow in the American College of Real Estate Lawyers.

N.J.’s Proposed Changes to Low Income Housing Tax Credit Qualified Allocation Plan Limit Projects per Developer and Encourage Development in Smart Growth Areas

Posted in Development/Redevelopment

The N.J. Housing and Mortgage Finance Agency (“HMFA”) recently proposed changes to the Low Income Housing Tax Credit (“LIHTC”) Qualified Allocation Plan (“QAP”). State housing credit agencies, like HMFA, are required to create plans which outline the selection criteria for awarding tax credits for the development of low- and moderate-income housing. The proposed amendments update the QAP to reflect procedural changes to the way in which affordable housing is constructed, but also include some substantive changes to both the allocation of tax credits among developers and the scoring system for awarding tax credits.

To review the full proposed changes to the QAP, as well as the agency analysis of the impact of these proposals, please click here. Comments on these proposed changes are due no later than December 2, 2016.

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Key Insights from Industry Professionals and the NJ Division of Taxation: NJICLE Bulk Sales Webinar

Posted in Real Estate

Did you know that the first and last residential condominium unit sales by a developer are each subject to the New Jersey Bulk Sales Act (N.J.S.A. 54:50-38) even though all other unit sales are exempt? This and other issues were covered by panelists during the New Jersey Institute for Continuing Legal Education’s webinar, Bulk Sales For Real Estate, Corporate and Tax Lawyers on September 15, 2016. Gibbons attorneys Ivette P. Alvarado, a Director in the Real Property & Environmental Department, and Peter J. Ulrich, a Director in the Corporate Department, were joined on the panel by three investigators from the New Jersey Division of Taxation, Bulk Sales Section (the “Division”), Audrey Graham, Elizabeth Hartmann, and Keith Muller.

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Recent New Jersey Case Serves as Warning to Redevelopers of Contaminated Sites

Posted in Development/Redevelopment, Environmental & Green Issues

A recent New Jersey Appellate Division case concerning spoliation of evidence in the context of a contribution action under the New Jersey Spill Compensation and Control Act (“Spill Act”) counsels caution on the part of redevelopers of contaminated sites. The case makes clear that owners of contaminated sites must endeavor to preserve physical evidence related to the contamination as soon as litigation becomes “probable” if they hope to rely on that evidence in a future contribution action.

In Pollitt Drive, LLC v. Engel, Docket No. A-4833-13T3, the owner of a former printing facility site in Fair Lawn, brought action under the Spill Act against several former owners seeking contribution for the costs of environmental remediation related to the site. After purchasing the site in 2006, the owner learned that the site was contaminated and engaged environmental consultants to investigate the extent of the contamination. Those investigations confirmed the presence of significant soil and groundwater contamination.

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Following the Expiration of the Permit Extension Act, Keep in Mind the Impact of Statewide Non-Residential Development Fees

Posted in Development/Redevelopment

With an improving economy, developers who have weathered the storms of economic recession and have projects approved prior to July 17, 2008, the effective date of the Statewide Non-Residential Development Fee Act, N.J.S.A. 40:55D-8.1 et seq. (the “Act”), may finally be in a position to construct many of these projects. However, with changes in the market and demand for certain types of commercial space outpacing those approved in the 1990s and early 2000s, approvals that have been tolled since 2007 by the Permit Extension Act (N.J.S.A. 40:55D-136.1 et seq.) may need to be altered to accommodate new marketplace demands. In seeking amendments of those approvals, developers should be aware of, and consider the potential application of, the affordable housing development fee to those projects.

Application of the Non-Residential Development Fee
The purpose of the Act was to establish a uniform affordable housing development fee for non-residential development throughout the state that provided municipalities under the jurisdiction of the Council on Affordable Housing the ability to collect and use such fees to create opportunities for affordable housing construction within their borders. If a developer made or committed to make a financial or other contribution prior to July 17, 2008, the terms of the Act will impose the 2.5% development fee instead of any previously negotiated contributions, unless the development falls into one of a number of discrete categories set forth in subsection (a) of N.J.S.A. 40:55D-8.6. Those categories include:

  • Non-residential developments where preliminary or final site plan approval was granted prior to July 1, 2013 and construction permits were issued prior to January 1, 2015;
  • Non-residential planned development which secured a general development plan approval, provided that the general development plan (“GDP”) approval requires the developer to pay a fee for affordable housing of at least one percent of the equalized assessed value of the improvements;
  • Non-residential development for which the developer has entered into a developer’s agreement pursuant to a development approval, or for which the redeveloper has entered into a redeveloper’s agreement pursuant to the Local Housing and Redevelopment Law, prior to July 17, 2008, provided that these agreements require the developer or redeveloper to pay a fee for affordable housing of at least one percent of the equalized assessed value of the improvements;
  • Non-residential development that was referred to a planning board by the State, a governing body, or other public agency for review pursuant to N.J.S.A. 40:55D-31 prior to July 1, 2013 and construction permits were issued prior to January 1, 2015;
  • Non-residential development for which a site plan application received approval from the Meadowlands Commission prior to July 1, 2013 and construction permits were issued prior to January 1, 2015; or
  • Individual buildings within a nonresidential phased development that received either preliminary or final site plan approval prior to July 1, 2013 and construction permits were issued prior to January 1, 2015.

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FEMA Amendments to Base Floor Elevation Requirements, When Minor, Do Not Necessarily Give Rise to Hardship Showing for Height Variance Says NJ App Div

Posted in Development/Redevelopment

In its recent decision in Richmond URF, LLC v. Zoning Board of Adjustment of the City of Jersey City, the Appellate Division held that a minor alteration in base floor elevation requirements in the wake of FEMA’s amendments to the regulations after SuperStorm Sandy does not necessarily give rise to showing a hardship in support of a height variance under N.J.S.A. 40:55D-70(d)(6).

In Richmond URF, LLC, the applicant, the owner of a vacant lot in the Van Vorst Historic District of Jersey City, sought a height variance pursuant to N.J.S.A. 40:55D-70(d)(6) to construct a 48.5 foot, four-story, four-unit townhouse building. Buildings of four stories and 40 feet are permitted in the zone. In support of its application, applicant’s experts testified that he faced a hardship justifying a height variance because, in the wake of SuperStorm Sandy, the Federal Emergency Management Agency (“FEMA”) amended its regulations to require that the first habitable floor of a building be 13 feet above sea level in this area of Jersey City – two feet higher than was required before the amendments.

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SNDAs: Often Encountered, Rarely Discussed

Posted in Real Estate, Transactional Real Estate & Leasing

Subordination, non-disturbance and attornment agreements (SNDAs) are often encountered by transactional real estate lawyers, but infrequently discussed.

An SNDA is an agreement among a tenant, the landlord’s mortgage lender and, usually, the landlord. An SNDA provides that a tenant’s lease will be subordinated to a mortgage on the landlord’s property, and the mortgage lender will agree that if the mortgage goes into default and the lender forecloses its mortgage, the lease will continue (i.e., it will not be disturbed).

To read the full article, first published in the October 3, 2016 issue of the New Jersey Law Journal, and to learn more about SNDAs, click here.

Construction Underway on Jersey City Luxury Tower at 90 Columbus

Posted in Development/Redevelopment

Construction is underway on 90 Columbus, the final tower of Ironstate Development and Panepinto Properties Inc.’s multi-phase Columbus Drive development project in Jersey City, New Jersey. The project is designed to embrace modern urbanism and connect the city’s financial district and waterfront with the vibrant Grove Street historic area. The 50-story, 539-unit, luxury apartment tower at 90 Columbus is the fourth tower in the iconic development, following the already-completed residential buildings at 50 and 70 Columbus, the over 900-space parking garage, and the 152-room Marriott Residence Inn at 80 Columbus, which is currently under construction and expected to open this winter. Ground broke on 90 Columbus earlier in 2016, and completion is expected in October 2018.

A team of Gibbons attorneys led by Russell B. Bershad, co-chair of the Gibbons Real Property & Environmental Department, has represented the Ironstate and Panepinto joint venture on the Columbus project since its inception. Shortly after closing on a $170 million permanent financing on 70 Columbus, the Gibbons team completed the $155 million construction financing on 90 Columbus in June 2016. Gibbons also served as counsel in connection with the EB-5 equity investment component for 90 Columbus, supplied through the EB-5 immigration program, which allows issuance of visas to foreign investors in job-creating domestic projects. Gibbons structured the venture between the EB-5 equity investors and the 90 Columbus developer to ensure successful closing of the construction loan. The Gibbons team also completed a $16 million term loan monetizing the income stream derived from the sale of a $28 million Urban Transit Hub Tax Credit (UTHTC) grant awarded to the 70 Columbus project.

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Feds Must Consider All Reasonable Alternatives in Endangered Species Analysis

Posted in Development/Redevelopment, Environmental & Green Issues

Recently, the D.C. Circuit threw out the United States Fish & Wildlife Service’s (“FWS”) approval of a conservation plan to reduce the impacts of a proposed wind turbine farm on endangered Indiana bats. In Union Neighbors United Inc. v. Jewell, et al., Docket No. 15-5147, the Court of Appeals held that FWS failed to consider all reasonable alternatives to Buckeye Wind LLC’s (“Buckeye”) plan to limit bat injuries and deaths resulting from encounters with the proposed turbines as required by the National Environmental Policy Act (“NEPA”).

Buckeye is proposing to construct a 100 turbine, 250 megawatt wind energy facility in Champaign County, Ohio. The site of the proposed facility includes areas deemed to be suitable habitat for the federally-listed Indiana bat and is likely to affect bat populations in the area, including causing bat deaths due to the animals flying into moving wind turbine blades. As a result of these likely impacts, Buckeye was required to obtain an “incidental take” permit pursuant to the Endangered Species Act allowing Buckeye to kill a set number of bats annually.

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New York DEC Finalizes Definition of “Underutilized” Under Brownfield Cleanup Act Amendments

Posted in Development/Redevelopment

On July 29, 2016, the New York State Department of Environmental Conservation (“DEC”) announced that it had finalized the definition of “underutilized” for purposes of the 2015 Brownfield Cleanup Act Amendments and eligibility for redevelopment tax credits. The final rule closely tracks DEC’s March 9, 2016 proposed definition, which attracted numerous comments, mostly adverse, from members of the public and the regulated community.

Prior to the 2015 Amendments, any site in the Brownfield Cleanup Program automatically qualified for tangible property credits for expenses incurred in redeveloping the site. The Amendments restricted eligibility for development (but not cleanup) credits for sites in New York City to those meeting certain additional criteria. One of those criteria was being “underutilized.” The Legislature did not define “underutilized,” instructing DEC to promulgate a definition after consulting with New York City and the business community.

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