Real Property & Environmental Law Alert

Real Property & Environmental Law Alert

Transactional Real Estate, Development/Redevelopment & Environmental Law

New Jersey Tax Court Alarms Nonprofits in the Morristown Memorial Hospital Case

Posted in Real Estate

In a detailed and closely-watched decision issued on June 25, 2015, Judge Vito Bianco, a New Jersey Tax Court judge sitting in Morristown, denied a property tax appeal of Morristown Memorial Hospital. This case, AHS Hospital Corp., d/b/a Morristown Memorial Hospital v. Town of Morristown, has received great attention in the press for good reason. By holding that a nonprofit hospital is not exempt from paying real estate taxes, the implication is that many hospitals could face this fate as well. For municipalities, this will be welcome news, but for hospitals – and, potentially, other nonprofits – this is a very unwelcome result.

This article, authored by Peter J. Ulrich, a Director in the Gibbons Corporate Department, and Bozena M. Diaz, an Associate in the Gibbons Corporate Department, was originally published as a Gibbons Corporate & Finance Alert, and can be viewed here.

New Jersey Supreme Court Decides 62-64 Main Street, L.L.C. v. City of Hackensack, Clarifies Definition of “Blight” in Context of Redevelopment

Posted in Development/Redevelopment

On March 23, 2015, in 62-64 Main Street, L.L.C. v. City of Hackensack, the New Jersey Supreme Court determined that property does not need to have a negative effect on surrounding properties in order to be deemed “blighted.” Prior to the Court’s decision in this case, it was unclear whether a negative effect on surrounding properties was a prerequisite to a finding of blight, or simply one way to establish it. Because the New Jersey constitution allows municipalities to exercise their powers of eminent domain to redevelop blighted property, the Court’s decision could encourage more municipalities to move forward with the condemnation of property for private redevelopment.

In 62-64 Main Street, plaintiffs owned five lots in the City of Hackensack consisting of two dilapidated buildings and several poorly maintained parking lots. In accordance with New Jersey’s Local Redevelopment and Housing Law (LRHL), the City designated a two-block area that included plaintiffs’ property as “in need of redevelopment.” In doing so, the City made findings of fact that the lots met the statutory definition of blight, but did not specifically find a negative effect on surrounding properties.

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NYSDEC Hears Comments on Proposed Definition of “Underutilized”

Posted in Development/Redevelopment, Environmental & Green Issues

On July 29, 2015, the New York State Department of Environmental Conservation (NYSDEC) conducted a public hearing on its proposed definition of an “underutilized” site for purposes of the 2015 Brownfield Cleanup Act Amendments. As indicated in a prior blog, this definition is critical because being “underutilized” is one of the few ways that a New York City brownfield site can qualify for tangible property credits under the 2015 Amendments.

Approximately 50 people attended the hearing, and NYSDEC heard from five witnesses: Larry Schnapf and me, as Co-Chairs of the Brownfields Task Force of the New York State Bar Association’s Environmental Law Section; Mimi Raygorodetsky, President of the New York City Brownfield Partnership; Michael Brady, Director of Special Projects and Governmental Relations for the South Bronx Overall Economic Development Association (SoBRO); and Linda Shaw, a lawyer in private practice. All but Shaw submitted written statements, and copies of those statements are available through the following links: Raygorodetsky – New York City Brownfield Partnership Statement, Brownfields Task Force of the New York State Bar Association’s Environmental Law Section Memorandum and proposed definition of “underutilized”; Testimony of New York State Bar Association Environmental Law Section; Brady – South Bronx Overall Economic Development Corporation Statement.

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Gibbons Ranked a Top Environmental Law Firm by the American Bar Association

Posted in Environmental & Green Issues

Gibbons P.C. has been named a “Top Regional Environmental Law Firm” by the Environment, Energy, and Resources Section of the American Bar Association in its first “Annual Regional Law Firm Recognitions.”

The ABA recognizes, by geographic region, the largest environmental law firms based on lawyer membership in the Section of Environment, Energy, and Resources as of January 31, 2015. The regional rankings are broken down into six geographical regions, with ten law firms honored in each region. The Gibbons Environmental Team was one of ten firms honored in the Northeast region with eleven attorneys registered in the section.

The attorneys registered in the Environment, Energy, and Resources Section are:

Irvin M. Freilich
Environmental Team Leader

David J. Freeman
Director

William S. Hatfield
Director

John H. Klock
Director

Camille V. Otero
Director

Susanne Peticolas
Director

Paul M. Hauge
Counsel

Adam C. Arnold
Associate

John E. Icklan
Associate

Uzoamaka N. Okoye
Associate

The Gibbons Environmental Team is recognized among the region’s top-tier environmental practices. The Chambers USA Guide to America’s Leading Lawyers for Business has regularly ranked the Environmental Team in the Band 1, top-tier ranking, with clients quoted as saying, “They are experts in the field of environmental law and have a complete understanding of all New Jersey statutes relating to environmental issues. They are also extremely responsive and detailed in their work.” Six of the firm’s environmental attorneys were also individually ranked in the latest edition of Chambers as notable practitioners. They have additionally been listed in Best Lawyers® and selected to the New Jersey and New York Super Lawyers and Rising Stars lists.

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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