Real Property & Environmental Law Alert : New Jersey, New York, Pennsylvania & Delaware Lawyers & Attorneys for Real Estate Development & Environmental Law

The questions that arise with nearly all new legislation are: (1) when will the law go into effect and (2) who will be required to adhere to the newly promulgated rules and regulations. The Bill as written will contain a four month grace period after its enactment. Therefore, a shopping center constructed prior to the expiration of the grace period will not be obligated to comply with the Bill. The Bill also exempts developers who have filed a site plan application with the applicable municipality prior to the expiration of the grace period. Developers should be aware that the site plan application need only be filed, not approved prior to the expiration of the grace period.

Non-compliance with the Bill will result in penalties to a shopping center owner in an amount of $500 for the first offense and $1000 for all subsequent offenses. The enforcing agency is intended at this time to be the New Jersey Division of Taxation who will have the power to file an action for injunction in the Superior Court to restrain the operations of a shopping center in the event the shopping center owner habitually violates the provisions of the Bill.

The Bill will require developers to evaluate the cost of such “electric vehicle charging stations,” which are defined as an “electric recharging point complete with electric vehicle supply equipment that is capable of providing level 2 charging for plug-in electric motor vehicles,” in connection with their overall budgets for their project. Level 2 equipment which provides charging through a 240 V, AC plug, can take 3 to 8 hours to reach a full charge, adding about 25 miles of range per hour of charging time, depending on the vehicle. Moreover, municipalities, professional planners and land use attorneys may be faced with the issue of whether the Bill impacts municipal parking ordinances and how they are interpreted by local land use boards. For example, if five (5%) of a shopping center’s parking area must be dedicated to EVs, it is conceivable that a municipality may require a developer to provide additional parking spaces for non-electric vehicles to compensate for the lost spaces.

Some other issues that may arise from the Bill are as follows:

• Developers will need to account for the charging stations in overall square footage of the property in terms of what can be utilized for retail space versus parking and ancillary uses/structures.
• Traffic experts may have to opine before local land use boards with respect to the impact the charging stations will have on trip generation at the property as vehicles that may not have entered the shopping center in the ordinary course may now enter the site for the purpose of charging their vehicle.
• The definition of “shopping center development” is fairly vague and simply states that the property be a commercial development with a building or series of buildings with 100 or more parking spaces. Depending on the definition of “commercial development” within a municipality’s zoning ordinance, an argument could be made that the Bill applies to more than just the ordinary retail shopping center, but also to office and/or other commercial developments that normally would not be categorized as a shopping center.

After introduction of the Bill by Senator Linda R. Greenstein (D) of New Jersey Legislative District 14 on March 21, 2011, the Bill was referred to the Senate Environment and Energy Committee. It will be interesting to see if the Bill will move forward as proposed, require amendments, or lack the requisite votes to be passed into law. However, it does seem to be part of a growing “green” trend. Google recently added the location of EV charging stations to its maps and is testing wireless charging stations at its own headquarters in California. The Department of Energy has created a data center on the locations for alternative fuels, including charging stations to serve the plug-in community.

* Photo courtesy of Paul Martin Eldridge - freedigitalphotos.net.

Jason R. Tuvel is an Associate in the Gibbons Real Property & Environmental Department.

Although the case was ultimately decided on a different issue, the court, in dicta, expressed that a certificate of occupancy by itself could not be a determining factor in calculating the start of the 30-day clock required by the statute. The certificate of occupancy, the court stated, is not an official determination that the structure is ready for its intended use, but only a declaration that the building is safe for occupancy and is in compliance with codes and ordinances. The court found that the Millville tax assessor erred by relying on the issuance of the certificate of occupancy alone in determining completion, but fell short of setting forth a standard upon which tax assessors could rely on. The court merely observed that the assessor failed to inspect the property or consider any other factors other than the certificate of occupancy in reaching the conclusion that plaintiff’s project was complete. The court also found that the soft opening by the plaintiff , on its own, was not enough to establish that the building was “substantially ready to be operated as a retail store” on that date. At the end of the day, the court applied the square corners doctrine to the case and found that the abatement and exemption should be reinstated because by providing a misleading and inaccurate notice of the time within which the abatement and exemption application had to be filed, the city failed to act fairly, scrupulously and correctly and the rescission would otherwise unfairly provide the city with the benefit of its bargain but deprive plaintiff of the benefits that motivated the construction of the project in the first place.

The Lowe’s case will likely cause much debate between municipal tax assessors and property owners as to what in fact is enough evidence to show that a project is substantially ready to be operated for its intended use. Yet, there is clear guidance that municipal tax assessors cannot rely on issuance of a certificate of occupancy alone and must engage in more thorough fact finding to make a “completion” determination. Likewise, property owners looking for tax exemptions and abatements need to better document evidence of completion, as opening for business alone is not determinative.

Ivette P. Alvarado is an Associate in the Gibbons Real Property & Environmental Department.

Although this statute may seem clear on its face, it does raise some questions for land use attorneys and developers.

• First, what if a property satisfies the acreage and ownership requirements, does the sole use contemplated for the property need to be a renewable energy facility (i.e. a solar farm)?
• Second, can a renewable energy facility be deemed an accessory use or structure to a principal use that is pre-existing on the subject property?
• Third, does the renewable energy facility have to produce energy to a certain amount of users or can it be for a single user?

All of these questions remain unanswered as the development of renewable energy facilities in New Jersey remains in its infancy. This land use attorney foresees litigation over these unanswered questions on the horizon as local land use boards and zoning officials will have to make critical determinations on whether “use variances” are required despite the fact that the MLUL has been amended to facilitate the development of these types of projects.

Land use attorneys should be aware of this recent amendment to the MLUL because it supersedes municipal zoning laws which may not expressly permit renewable energy facilities in the zone where the subject property is located. Developers seeking out properties for their next solar project should always keep in mind that if a property satisfies the criteria set forth in N.J.S.A. 40:55D-66.11, the land use approval process may become a lot easier and possibly more resistant to challenges on an appeal of the approval by a third-party objector.

Jason R. Tuvel is an Associate in the Gibbons Real Property and Environmental Department.

Wal-Mart’s 2009 development application for the renovation of the existing store was approved by the Planning Board. Thereafter, an objecting third-party appealed the Planning Board’s decision to the Superior Court claiming that the approval was invalid because the applicant did not apply for, and the Planning Board did not grant, a bulk variance authorizing the pre-existing parking area setback non-conformity that would remain in existence at the site. The Superior Court upheld the Planning Board’s decision.

Judge Skillman’s opinion in Cortesini leaves no doubt that a subdivision or site plan approval may be challenged if an applicant fails to obtain a necessary variance. However, as the Court points out, the initial approvals that failed to properly identify and grant the parking area setback variance were not challenged on this issue within the 45-day period following publication of notice of the decision under New Jersey Court Rule 4:69-6.

The third-party objector attempted to circumvent the 45-day appeal period that had long ago lapsed on the 2001 and 2002 approvals by arguing that since Wal-Mart applied for amended site plan approval in 2009 the issue was re-opened. In support of such argument, the objector noted that Wal-Mart was required to obtain a variance authorizing the continuation of the non-conformity of its existing parking lot based on the parking area setback requirement.

The Court’s ultimate rejection of the objector’s argument is predicated on several key facts:

•  The location of the 46 new parking spaces proposed by Wal-Mart’s 2009 site plan application will not violate the parking area setback requirement;
• The existing parking spaces that fail to conform with the parking area setback requirement are all located a substantial distance from the parts of the store where the renovations authorized by the amended site plan approval will be constructed;
• In 2001, the Planning Board noted in its resolution of approval that the layout of the parking area was “consistent with good site design and layout, proper planning, and efficient land use utilization”; and
• The Planning Board’s resolution of approval in 2009 in connection with the development application supported the findings in the 2001 resolution of approval by stating that the existing parking area, including the nonconformity with the setback requirement is “an existing condition that is functioning well and will not have any detrimental impact to the zone plan.”

Based on these facts, the Court made the following conclusions of law:

• There is no basis for arguing that a variance is required because the improvements proposed are not within the vicinity of the parking area setback violation and therefore the existing non-conformity will not be enhanced or affected by the 2009 development application;
• The findings in the Planning Board’s 2001 and 2009 resolutions of approval lead the Court to infer that had the applicant applied for a variance for violating the parking area setback requirement, the Planning Board would have granted the variance; and
• The objector’s claim that a variance is required authorizing the continuation of the non-conformity of the existing parking lot with the parking area setback requirement constitutes a collateral attack on the 2001 and 2009 development approvals.

The outcome of the Cortesini case provides some clarity to developers and land use attorneys on the grey area of how to deal with pre-existing non-conformities and variance conditions that should have been addressed by prior land use applications.

In this land use attorney’s view, the case stands for the proposition that, so long as the proposed development does not impact the pre-existing condition, the applicant need not apply and obtain a variance for its continuation. However, it would be prudent to ensure that the record at the land use board level clearly covers this point through expert witness testimony. Doing so will allow a court reviewing the record de novo to have factual evidence to support a determination that a variance was not required in connection with the new application.

What should a developer take away from this case? - The importance of zoning due diligence. Zoning due diligence and the review of prior land use approvals will most likely uncover the existence of a pre-existing non-conforming condition. Such knowledge will facilitate not only the presentation of a new land use application, but can be significant in negotiating the value of the subject property because a pre-existing non-conformity can have a negative impact on future development.

Jason R. Tuvel is an Associate in the Gibbons Real Property and Environmental Department.

In analyzing the adequacy of the notice, the court stated that the mention of the building being located in an historic district amounted to “basic information that would help an ordinary person determine whether to object to the application or seek additional information.”

Another fact that the court relied upon in its decision was that the Planning Board of Hillsborough Township did not know that the building was located in a historic district until after taking action to approve the application for site plan approval to construct a 6,700 sq. ft. office building where a single family home built in 1897 currently exists. The Planning Board learned of the historic district issue only when debating the language of the approving resolution.

This case raises some very notable issues for land use attorneys and developers.

• First, must the zoning district and possibly a historic overlay district (or any overlay district for that matter) be included in the notice for the public hearing?
• Second, is it the applicant’s responsibility, either through its lawyer or design professional, to alert and educate the municipality of its own zoning information?

The key take-away for this case is that an applicant should always err on the side of caution when drafting its public notice. It is better to be overly inclusive than omit a piece of information that may come back to invalidate the entire proceeding after a time consuming and expensive litigation process. In addition, that over-inclusiveness may at times require the applicant to bring certain zoning issues to a land use board’s attention even where the board’s own professionals have failed to identify the issue. Doing this may save the applicant a lot of time and money in the long run, and could prevent an appeal by an objector.

Jason R. Tuvel is an Associate in the Gibbons Real Property and Environmental Department.

The report states that “Tax abatement should be used carefully and sparingly given the multitude of pitfalls, their far-reaching impact, and the reality that exemption from taxation is a departure from the normal allocation of tax obligations.”

The report outlines recommendations for addressing the deficiencies, including:

• Adjusting the current abatement structure to account for the interests of all affected entities; 
• Granting abatements only when it is in the public interest;
• Ensuring appropriate transparency and follow-up review of abatement agreements;
• Having the State play a more active role in the abatement process through guidance, records and monitoring.

Much more will follow on this topic but, preliminarily, most informed observers would agree that tax abatements, especially under the long term law, have been a significant spur to major development in urban areas that would not have occurred to the extent it has, absent abatements. In short, the program has worked.

Moreover, many of the issues with abatements have been explored previously. Long term exemptions were the subject of extensive litigation until major revisions were made by the Legislature in 2003 that addressed, among other issues, the first bullet above, i.e., that payments are at the expense of counties, districts and other taxpayers, by providing a revenue sharing mechanism. The 2003 amendments appear to have largely if not entirely brought peace on the litigation front.

The issues in the report are worthy of close examination. The need for wholesale changes has to be reviewed very carefully.

Russell B. Bershad is a Director in the Gibbons Real Property and Environmental Department.

There is an exception for owner-occupied one and two family home additions or alterations, which must have zoning approval before plan review can proceed.

Some of the positive impacts of this amendment to the NJ Uniform Construction Code (some of which are noted by the Department of Community Affairs) are:

Next time a building department refuses to review your plans because you have outstanding approvals on the local, county or State levels, make sure you let them know that they are obligated to do so under the New Jersey Uniform Construction Code.

Jason R. Tuvel is an Associate in the Gibbons Real Property and Environmental Department.

Environmentally sensitive areas remain subject to regulation. Although the Bills specifically permit Solar Facilities in the environmentally sensitive Pinelands Region, per the amendment that cleared the Senate Environment and Energy Committee on July 16, 2010, Wind Generation would not be permitted in the Pinelands. Both Solar and Wind Generation Facilities are permitted in landfills and quarries located elsewhere in the State. Notably, the Bills do not regulate height or size of the Solar or Wind Generation equipment, and size or bulk standards are presumably left to municipal zoning ordinance control.

These Bills would allow such unattractive sites as former landfills be put to productive use and encourage the growth of alternative energy sources in the state. This would be particularly welcome in the Pinelands where it is estimated there are 80 old landfills in towns which do not have the money to properly cap them. Under the proposed Bills, these towns would be able to obtain needed revenues from solar energy developers.

Nancy A. Lottinville is Counsel to the Gibbons Real Property & Environmental Department.