Real Property & Environmental Law Alert

Real Property & Environmental Law Alert

Transactional Real Estate, Development/Redevelopment & Environmental Law

Gibbons Advises New Jersey Future 2015 Smart Growth Award Winners

Posted in Development/Redevelopment

New Jersey Future, a non-profit, non-partisan organization focused on the promotion of responsible land use policies, has named the Military Park renovation in Newark and 18 Park in Jersey City as two of its 2015 Smart Growth honorees. Gibbons P.C. played a significant role in both of these projects. The awards were given out on Thursday, June 4 at the annual awards gala.

Military Park, a historic, but long neglected 6-acre park in downtown Newark, was selected for revitalization in 2013. The park is home to major sculptures, including ‘Wars of the Americas’ by Gutzon Borglum, the sculptor of Mount Rushmore. Under the guidance of Dan Biederman and Biederman Redevelopment Ventures, best known for Manhattan’s Bryant Park, the Military Park Partnership was formed by the City of Newark, Prudential and the MCJ Amelior Foundation, to bring Military Park to life with a new restaurant, restrooms, beautiful gardens, and free daily programming activities for all age groups, including outdoor concerts, movies, and games. The Military Park Partnership is currently managing the redesign, construction, and ongoing maintenance of the park. Gibbons participated in this successful effort at the behest of MCJ Amelior Foundation and drafted the redevelopment and partnership formation documents as well as the necessary leases and easements, as a pro bono service to the Newark community of which it has been a part since 1924.

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Federal Court Finds Divisibility, Ruling in Favor of Volumetric Approach to CERCLA Divisibility in Fox River Sediment Cleanup Case

Posted in Environmental & Green Issues

In the latest development in the litigation over the environmental cleanup of the Fox River in northeastern Wisconsin, the U.S. District Court for the Eastern District of Wisconsin has found that NCR Corporation’s liability for the remediation of a section of the river is divisible—not joint and several under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The Fox River is a Superfund site contaminated primarily with polychlorinated biphenyls (PCBs) from historic paper manufacturing and recycling facilities along the river. This opinion is believed to be the first such judicial decision that has ruled in favor of a divisibility defense since the Supreme Court’s 2009 decision in Burlington Northern & Santa Fe Ry. Co. v United States. Whether it is an indication of how Courts may address divisibility and apportionment of cleanup costs at complex sediment sites and other sites in the future remains to be seen.

At Trial, Denial of the Divisibility Defense

The District Court’s May 15, 2015 ruling follows a trial and subsequent appeal in which NCR’s potential liability for the remediation of a section of the River known as Operable Unit 4 (OU4) was a primary focus. Following a December 2012 bench trial, the District Court determined that the harm caused to OU4 was not “theoretically capable of divisibility.” United States v. NCR Corp. That determination rested, in part, on the way harm was defined. The Court explained that “during the trial, it was made clear that the amount of PCBs a given party had discharged bore little relation to the harm that existed in OU4.” Id. at 810. Rather, harm was defined by reference to the 1 ppm remedial action level, whereby an area of sediment was deemed harmful “regardless of whether it has 1.1 ppm or 35 ppm of PCBs.” Id. The District Court concluded that “even a very large increase in PCB contamination does not move the needle in making that area any more harmful. Put another way, once an area qualified as contaminated, additional PCB loads do not make that area any more contaminated, at least from a remedial perspective.” Id. The District Court did not find persuasive NCR’s testimony concerning the extent to which its releases alone impacted the overall remedial cost. Thus, the District Court found that the harm was not theoretically capable of divisibility and did not reach the second prong of the analysis, i.e., whether there was a reasonable way of apportioning damages.

The Seventh Circuit Steps In

On appeal, the Seventh Circuit found error in the District Court’s treatment of the harm as binary because the “1.0 ppm remedial action level is not quite the line of demarcation it appeared to be,” noting EPA’s remedial goal is a surface-weighted average concentration of 0.25 ppm, which “drives the ultimate harm with which EPA is concerned, i.e., the harm to human health and the environment.” United States v. P.H. Glatfelter Co. Therefore, the Seventh Circuit explained, the harm is better understood as continuous and not binary because PCB concentrations below 1.0 (and even 0.25) ppm still pose a threat to human health and the environment, and that risk of harm increases with concentrations at higher levels. Id. at 677. The Seventh Circuit concluded that “the harm would be theoretically capable of apportionment if NCR could show the extent to which it contributed to PCB concentrations.” Id. at 678. If NCR could make this showing, the Court anticipated that “a reasonable basis for apportionment could be found in the remediation costs necessitated by each party.” Id.
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2015 Amendments to New York State Brownfield Cleanup Program

Posted in Development/Redevelopment

After a number of failed attempts over the past several years, the New York State Legislature and Gov. Andrew Cuomo reached agreement as part of the 2015-16 state budget on sweeping amendments to the New York State Brownfield Cleanup Program (BCP). This achievement is significant in light of the scheduled expiration of tax credits under the program on December 31, 2015. The attached article published by Bloomberg BNA, reprinted with permission, and co-authored by David J. Freeman, reviews the key elements of the amended statute, evaluates their significance and identifies some of the important unresolved issues that will need to be addressed in implementing the new law.

Jersey City Plans to Limit Chain Stores in Downtown

Posted in Development/Redevelopment

On April 7, 2015, the Planning Board of Jersey City approved Mayor Steve Fulop’s plan to limit chain stores in the downtown area in an attempt to protect small businesses and preserve the character of the area. The City Council must approve the proposed restrictions before they become final.

The proposal would limit chain stores with 10 other locations within 300 miles of Jersey City to 30% of the downtown commercial space. The affected businesses include those with “multiple locations within the region that exhibit standardized characteristics such as logos, menus, store décor” and the like. Grocery stores would be exempt and certain parts of the waterfront would be exempt.

The proposal has triggered debate and controversy among businesses and developers.

Susanne Peticolas is a Director in the Gibbons Real Property & Environmental Department.

New York State Governor and Legislature Reach Agreement on Reform and Extension of Brownfield Cleanup Program

Posted in Development/Redevelopment

Governor Andrew Cuomo and leaders of the New York State Senate and Assembly have reached an agreement with respect to extension and reform of the State’s Brownfield Cleanup Program (BCP), a significant development in view of impending expiration of tax credit eligibility on December 31, 2015.

The essential elements of the deal are as follows:

  • All sites currently in the Program, and those which are admitted prior to December 31, 2022, will be eligible for tax credits if they obtain their Certificates of Completion (COCs) by March 31, 2026.
  • Sites admitted on or after the later of (a) July 1, 2015 or (b) the date on which the Department of Environmental Conservation (DEC) proposes regulations defining “underutilized” (see below) will be subject to newly-enacted limits on tangible property (development) credits.
  • Sites admitted prior to June 23, 2008 will be “grandfathered” into the existing tax credit scheme for development credits if they obtain their COCs by December 31, 2017. Sites admitted from June 23, 2008 until the later of (a) or (b) above will be grandfathered if they obtain their COCs by December 31, 2019. If they fail to meet those deadlines, they can still obtain tax credits under the Program, but only under the more stringent guidelines applicable to newly-admitted sites.
  • Despite efforts to restrict the types of expenses that qualify for site cleanup credits, eligibility for such credits remain broadly defined. The one major new limitation is that applicants will not be able to count expenses of foundations that exceed the cost of cover system requirements under applicable regulations.

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New Jersey Court Invalidates Exaction for Sidewalks

Posted in Development/Redevelopment

In a recent unpublished decision, Jerman v. Township of Berkeley, a New Jersey trial court held invalid an ordinance which required the construction of sidewalks and curbs as a condition of subdivision or site plan approval, or the payment of a fee in lieu of constructing these improvements. The decision serves as a reminder that the legal authority for municipalities to impose exactions is strictly limited as provided by statute, and requires a “rational nexus” between the project and the need for the improvement.

The ordinance at issue, enacted by the Township of Berkeley in Ocean County and codified at § 2.94 of the Township Code, requires the installation of sidewalks and curbing along all street frontages as a condition of any subdivision or site plan approval. It further authorizes the Planning Board or Zoning Board of Adjustment to waive the construction of sidewalks and curbing, subject to the applicant instead making a payment, in an amount equal to the cost of installing these improvements, to the Township’s Pedestrian Safety Fund to be used for unspecified future pedestrian safety projects. The ordinance establishes certain factors that the board must consider in determining whether to grant a waiver, including the presence or absence of curbing in the vicinity of the subject property, practical difficulty in installing sidewalks and curbing due to conditions such as exceptional topographical characteristics or drainage concerns, and the recommendations of the reviewing engineer. However, the ordinance expressly provides that the board is without authority to waive the installation of the improvements and also waive the payment of the fee, but creates a mechanism whereby a developer can appeal to the Township Council for relief from the obligation of making the payment to the Pedestrian Safety Fund.

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New Jersey Supreme Court Appoints Trial Court the Venue for Affordable Housing Disputes

Posted in Development/Redevelopment

Last week, the New Jersey Supreme Court issued a green light to developers and other interested parties to eventually pursue builders’ remedy actions in New Jersey Superior Court. The decision is the latest in a battle over affordable housing that has been in and out of the courts since the Mount Laurel decision in 1975. Most recently, in September 2013, the Supreme Court overturned the Council on Affordable Housing’s (“COAH”) latest attempt at adopting affordable housing regulations and ordered COAH to adopt new regulations within five months. That period was eventually extended to November 2014. COAH, however, did not adopt new regulations. Its inaction prompted a motion in aid of litigants’ rights, whereby parties to the prior action sought to break the bureaucratic logjam. Last week’s decision, designating trial courts as the venue for affordable housing disputes, is the New Jersey Supreme Court’s solution to the logjam.

The Supreme Court recognized that “COAH has had fifteen years to adopt Third Round Rules as it is required to do in accordance with its statutory mission,” and, thus, refused to give COAH additional time. Instead, the Supreme Court dissolved the exhaustion of remedies provision of the Fair Housing Act and designated trial courts as the initial venues for determining whether municipalities have met their constitutional obligations to provide a realistic opportunity for affordable housing. In making such determinations, the Supreme Court referenced the First Round and Second Round COAH Rules as guidelines, as well as select provisions of the Third Round Rules that have been upheld by the courts. Thus, the courts, rather than COAH, will have the task of providing a substitute for “substantive certification,” to shield municipalities from builders’ remedy suits.

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Howard Geneslaw and Jason Tuvel to Speak at the 2015 Land Use Update

Posted in Development/Redevelopment

Howard D. Geneslaw, a Director in the firm’s Real Property & Environmental Department and Secretary of the Land Use Section of the New Jersey State Bar Association, will be participating, as both a moderator and speaker, at the upcoming 2015 Land Use Update on Wednesday February 25, 2015 in West Orange, New Jersey. Jason R. Tuvel, also a Director in the Gibbons Real Property & Environmental Department, will be a speaking when the same program is presented next month at the Legal Center in New Brunswick, New Jersey on March 18, 2015.

Mr. Geneslaw has served on the Board of Directors of the Land Use Section of the New Jersey State Bar Association since 2009. His law practice focuses on real estate development, redevelopment and related issues, including litigation, as well as on alcoholic beverage and liquor licensing matters, in New Jersey, New York, and Connecticut. He is a licensed Professional Planner in New Jersey and a member of the American Institute of Certified Planners (AICP). At the February 25 presentation of the program, Mr. Geneslaw will be moderating the entire program, as well as leading a panel discussion concerning ethical issues in the land use approval process.

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Governor Cuomo Proposes Major Changes to State Brownfield Cleanup Program

Posted in Development/Redevelopment

In his budget proposal unveiled on January 21, Governor Andrew Cuomo included recommendations that would significantly change the New York State Brownfield Cleanup Program.

Among the revisions he has recommended to the Legislature are the following:

  • The deadline for sites to obtain their Certificates of Completion (COCs) in order to be eligible for tax credits under the Program would be extended until December 31, 2025. However, sites currently in the Program will need to obtain their COCs by December 31, 2017 to qualify for the existing level of tax credits.
  • For sites admitted to the Program after April 2015, tangible property (development) credits would be available only for sites in environmental zones, sites where the projected cost of cleanup exceeds the value of the property as clean, or sites containing affordable housing. For sites meeting these criteria, tax credits would potentially be increased from current levels. However, sites not meeting these criteria would be ineligible for any type of development-related tax credit.
  • Tax credits available for site preparation (cleanup) costs would be retained, but new limits would be placed on what expenses would qualify for reimbursement.
  • The definition of “Brownfield Site” would be expanded to include any site which has levels of contamination above cleanup standards established by the Department of Environmental Conservation (DEC).
  • There would be a new, streamlined non-tax credit cleanup program for the sites not seeking tax credits.
  • DEC oversight costs would be eliminated for sites being cleaned up by parties not responsible for the original contamination; for other sites, DEC would be authorized to negotiate a reasonable, flat fee cost reimbursement.
  • Sites classified on the State Superfund list as “Class 2” (representing a significant threat to human health or the environment) would be eligible for admission to the BCP if being cleaned up by a party not responsible for the original contamination, and DEC can find no responsible party available to perform a cleanup.
  • Hazardous waste taxes and fees imposed by the State would be waived for sites being remediated pursuant to a Memorandum of Agreement between DEC and a municipality (e.g., under the New York City Voluntary Cleanup Program).

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5th Circuit Rules that Sale of Chemical is Not Disposal

Posted in Environmental & Green Issues

On January 14, the U.S. Court of Appeals for the 5th Circuit ruled that the sale of a useful chemical did not make the seller an “arranger for disposal” under Superfund, even where seller knew that some of that chemical would be spilled during its use.

Vine Street LLC v. Borg Warner Corp., 2015 BL 8885, involved the sale of dry cleaning machines and PCE, a dry cleaning fluid, by Norge, a predecessor of Borg Warner. Norge equipped the machines with water separators, which it knew were not 100% effective. It continued to work with the dry cleaner to reduce spillage by modifying the separators’ design. Nonetheless, contamination resulted, and Vine Street, a successor landowner, sued Borg Warner for contribution to the cost of cleanup. The District Court held Borg Warner liable for 75% of the cost of cleanup based on its knowledge that some contamination resulted from these sales.

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