Real Property & Environmental Law Alert

Real Property & Environmental Law Alert

Transactional Real Estate, Development/Redevelopment & Environmental Law

EPA Issues Directive to Clarify Existing Guidance on Sediment Cleanups

Posted in Environmental & Green Issues

From Portland Harbor in Oregon to New Jersey’s Passaic River, contaminated sediment sites present unique challenges. While the EPA issued guidance documents for addressing contaminated sediment sites in 2002 and 2005, it has since learned many lessons in addressing dozens of such sites. A new memorandum from the EPA’s Office of Land and Emergency Management (OLEM), formerly the Office of Solid Waste and Emergency Response, sets forth 11 recommendations for improving the way the agency’s regional offices handle the complex process of cleaning up contaminated sediments.

The new memorandum, designated as OLEM Directive 9200.1-130 and authored by Assistant Administrator Mathy Stanislaus, was sent to the EPA’s ten regional administrators on January 9, 2017. It builds on two earlier guidance documents, Principles for Managing Contaminated Sediment Risks at Hazardous Waste Sites (2002) and Contaminated Sediment Remediation Guidance for Hazardous Waste Sites (2005), as well as a 2016 Government Accountability Office (GAO) report, Superfund Sediment Sites: EPA Considers Risk Management Principles but Could Clarify Certain Procedures. These are just a few of the many guidance documents EPA has produced on contaminated sediments. It does not supersede existing EPA policy, but instead seeks to clarify the earlier guidance documents based on the agency’s experience at almost 70 “Tier 1” sediment sites.

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New Jersey Supreme Court Decides “Gap Period” Affordable Housing Need is to be Included in Present Need, Returns Cases to Trial Courts

Posted in Development/Redevelopment

The Supreme Court of New Jersey today issued its opinion in In re Declaratory Judgment Actions Filed by Various Municipalities partially affirming the decision of the Appellate Division, but expanding the definition of “present need” to include affordable housing need as it arose during the period from 1999 through the present. This decision recognized that the constitutional obligation to provide realistic opportunities for the construction of affordable housing did not stop in 1999, but has continued ever since, and provides some guidance for trial courts in how to determine the scope of that need. In effect, this decision modifies the decision of the Appellate Division by requiring trial courts to take the gap period need into consideration.

We have previously blogged about this case on July 28, 2016 and May 5, 2016. As we review the opinion in greater detail, stay tuned for further commentary and analysis on how this may impact ongoing negotiations with municipalities or the development of affordable housing in New Jersey.

Cameron W. MacLeod is an Associate in the Gibbons Real Property & Environmental Department.

EPA Proposes First Financial Assurances Rule

Posted in Environmental & Green Issues

On December 1, 2016, following decades of inaction and a court order establishing a deadline by which the proposed rule was to be released, the United States Environmental Protection Agency (“EPA”) announced that it would publish a proposed rule regulating financial assurances required for parties conducting remediation projects in the hardrock mining industry. Section 108(b) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) directed EPA to develop rules requiring “that classes of facilities establish and maintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous wastes.” 42 U.S.C. 9608(b)(1). Although these rules were required to be promulgated by 1985, EPA never published any rules, which led to a deadline of December 1, 2016 being set by court order in response to a lawsuit complaining that EPA failed to comply with the statute. See In re Idaho Conservation League, 811 F.3d 502 (D.C. Cir. 2016). In the absence of such rules, EPA required financial assurance through negotiated settlements, orders, and guidance.

CERCLA requires that EPA create regulations mandating that certain responsible parties conducting remediation activities establish that they have the ability to fund all necessary remediation costs associated with those actions, otherwise known as financial assurances. For years, EPA made no progress in developing and promulgating such rules. Our previous article detailing the legal and regulatory history leading up to EPA’s announcement is available here. Importantly, the newly proposed financial assurance rule is limited to the hardrock mining industry, and EPA estimates that some 221 facilities throughout the country would be subject to the rule.

The proposed rule includes a detailed explanation of financial assurance mechanisms that will be permitted under the rule and provides that the amount of financial assurance must be sufficient to pay for estimated environmental remediation actions, as well as natural resource damages. The proposal allows a responsible party to demonstrate it has the financial wherewithal to cover the cost of a remediation through the use of approved financial assurance mechanisms, which would include trust funds, insurance policies, letters of credit, surety bonds, or a combination of those instruments.
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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.