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

Once created by a municipality (or multiple municipalities) by ordinance, land banks are governmental entities. Land banks are governed by a board of between five and eleven members, at least one of which must be a non-municipal employed resident of the jurisdiction who is a member of a recognized civic association in the jurisdiction. Title to the properties is held in the name of the land bank, and the land bank must make its inventory of properties available for public review and inspection.

Among other things, land banks can:

• Acquire, lease and sell properties for consideration in form and amount as it deems appropriate;
• Accept transfers of properties from the municipalities, tax claim bureaus and redevelopment authorities within is geographic borders;
• Design, demolish, construct, rehabilitate and improve real property; 
• Discharge tax liens and initiate expedited quiet title actions to make the properties more attractive to developers;
• Issue bonds and borrow money from government and the private sector alike in order to pursue its mission;
• Retain management companies;
• Enter into partnerships and joint venture agreements with municipalities and private developers to own, manage, develop and dispose of property; and
• Grant easements and licenses. Land banks do not, however, have the power of eminent domain.

The City of Philadelphia has taken the steps to establish its own land bank as a way of countering the more than 40,000 vacant parcels within its borders. Legislation co-sponsored by City Councilmembers Maria Quinones Sanchez, Bill Green and Bobby Henon was introduced in early 2012 to create the “Philadelphia Land Bank.” Proffered before HB 1682 was enacted, the City’s legislation, Bill No. 120052, is still in committee and will need to be conformed to the new state law.

As currently proposed, the Philadelphia land bank law would, among other things: 

• Create a land bank board consisting of seven members, at least three of whom would be representatives of housing or community development non-profits, or civic associations from low or moderate income neighborhoods;
• Keep an up to date inventory of available property, a map of the locations of those properties, a map of other properties within the City reasonably known to be vacant and a record of the land bank’s conveyances;
• Provide mechanisms for notice and an opportunity to comment to individuals and registered community organizations prior to the use or transfer of a land bank property;
• Permit the land bank to discharge liens and other municipal claims, fines and other charges against its properties;
• Allow individuals to make application seeking to have the land bank request that the City certifies certain properties for upset sale;
• Allow the Councilperson within whose jurisdiction a property is located the opportunity to review and to approve or disapprove of a proposed transaction concerning that property; and
• Permit the land bank to enforce conditions of a sale via mortgage, deed restriction or restrictive covenant.

We will continue to update this blog to track the status of the City’s land bank legislation as it makes its way through Council.

Alfred R. Fuscaldo is a Director in the Gibbons Real Property & Environmental Department.

The definition of “approvals” under the Permit Extension Act covers most permits issued by State rule or regulation, including, preliminary and final approvals for development applications under the New Jersey Municipal Land Use Law. S743 proposes that the definition of “approvals” be amended to include any “agreement with a municipality, county, municipal authority, sewerage authority, or other governmental authority for the use or reservation of sewerage capacity.”

S743 appears to be the bill that may amend the Permit Extension Act to help developers that need to wait a little longer for the economy to bounce back to save projects for which they have spent significant funds in obtaining approvals for development.

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

Specifically, the new law creates a new “Out-of-State winery license,” available to applicants that do not produce more than 250,000 gallons of wine per year and are duly licensed in another state. The new license permits direct sales to New Jersey consumers, including internet sales. Out-of-State licensees will also be permitted to sell directly to consumers at up to 16 tasting-room locations in the State (compared to 15 locations for In-State wineries). Direct sales and distribution to retailers are also permitted for an additional fee. The new law will take effect on May 1, 2012.

Brett S. Theisen is an Associate in the Gibbons Financial Restructuring and Creditor's Rights Department.

With the Governor and many Republican legislators pushing for full privatization, further amendments or even reintroduction of some original proposals might be likely before a final version of the new law is ready for a vote. In any event, retail licensees large and small should be keeping a close eye as Pa. H.B. 11 moves through the law-making process. Whether legislators ultimately agree to proceed with the current public-private competition plan or something closer to full privatization, Pennsylvania’s retail sellers and its citizens seem poised for big changes.

Mark B. Conlan is a Director in the Gibbons Financial Restructuring & Creditors' Rights Department. Brett S.Theisen, an Associate in the Gibbons Financial Restructuring & Creditors' Rights Department, co-authored this post.

Donovan continues an emerging circuit split over how to read Rapanos. Unlike the First, Eighth and (now) Third Circuits, the Seventh Circuit and the Eleventh Circuit have held that Justice Kennedy’s test alone supplies the governing legal standard, applying the Supreme Court’s 1997 decision in United States v. Marks, and concluding that it provides the narrowest grounds for the Supreme Court’s judgment in Rapanos. The Donovan Court and the circuit courts with which it agreed concluded that Marks is inapplicable because either of the two tests in Rapanos could be seen as the narrowest grounds for the judgment -- in some cases, one test would be satisfied but the other would not, and in other cases, the reverse could be true. No circuit court has adopted Justice Scalia’s “wet’ test as the sole governing standard.

John H. Klock is a Director in the Gibbons Real Property & Environmental Department. Paul M. Hauge, an Associate in the Gibbons Real Property & Environmental Department, co-authored this post.

NJDEP will continue to expand its online resources by implementing a system for the submission of wetlands delineations, or Letters of Interpretation, expected later this year.

To access the e-permitting program please visit NJDEP’s website.

Sandro G. Ocasio is an Associate in the Gibbons Real Property & Environmental Department.

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.

If the Senate adopts an identical version of A 2722 (S 2666) and the Governor signs it into law, the report and recommendation of the ALJ would be final, without further review by the department head, in any contested case from:

1. the Department of Community Affairs;
2. the Department of Education;
3. the Department of Environmental Protection;
4. the Department of Children and Families involving placement on a child abuse registry;
5. the Department of Health and Senior Services involving placement on the nurse aid registry, and penalty matters;
6. the Division of Family Development in the Department of Human Services;
7. the Division of Civil Rights in the Department of Law and Public Safety;
8. the New Jersey Motor Vehicle Commission;
9. the Civil Service Commission; and
10. the Department of Law and Public Safety under P.L.1988, c.123 (C.56:12-29 et seq.).

Notably, the Division of Alcoholic Beverage Control and the Department of Transportation are not on the targeted list. Therefore, the Director of the Division of Alcoholic Beverage Control and the Commissioner of the DOT will continue to have the final say in contested cases with their departments. In addition, the bill does not impact a party’s right to appeal the ALJ’s decision to the Appellate Division.

Although the bill is intended to cut red tape and lessen the time between the ALJ’s decision and when the final order becomes appealable, it also eliminates a check on the OAL by the head of the department, who presumably is an expert in the field.

The bill was received in the Senate (S 2666) and referred to the Senate State Government, Wagering, Tourism & Historic Preservation Committee. A vote on the bill has not yet been scheduled.

Jennifer P. Smith is an Associate in the Gibbons Real Property & Environmental Department.

The lack of timely permits can be especially frustrating for potentially responsible parties engaged in the process of site investigation and remediation. When clean-ups involve environmentally sensitive areas such as wetlands, flood hazard areas or riparian lands, companies can be whipsawed between the need to quickly investigate and respond to a perceived threat to human health or the environment and delays while approved clean-up plans undergo environmental permit review.

NJDEP’s announcement promises some relief to this problem. Although this change in procedures is not the “one stop shopping” which the regulated community often seeks, if it proves successful, it can only help speed the pace of clean-ups and may help return distressed real property to productive use.

The Court also invalidated a provision of the ABC Laws that required individuals to obtain a special permit from the ABC before importing more than a gallon of wine for personal use.

To remedy the constitutional violations, the Third Circuit remanded to the District Court to decide between (1) the extension of privileges to all out-of-state wineries and farms, which would allow them to enter the New Jersey market without going through New Jersey wholesalers, and would undermine the three-tier system; or (2) the nullification of the privileges enjoyed by New Jersey farms and wineries, which would force New Jersey producers into and otherwise preserve the three-tier system. Thus, it is up to the District Court to choose the ultimate loser - New Jersey farmers or New Jersey wholesalers.

Jennifer P. Smith is an Associate in the Gibbons Real Property & Environmental Department.

The Court began by stating that New Jersey takes “a liberal approach to standing to seek review of administrative actions.” The Court explicitly found that “[t]he competitors of a party who has received a governmental approval required for a proposed business operation also have standing to appeal the approval.” The Court concluded that the objecting gas station owner had standing both as a nearby property owner and as a business competitor.

The Court also concluded that the objector was an “interested person” because it had standing and the issue involved a public interest (i.e. the increase in traffic congestion and risk of accidents). As an “interested person,” the Court found that the Administrative Procedures Act permitted the objector to submit “data, views, or arguments” to the NJDOT for its consideration. Because the NJDOT rejected the objector’s submission, the Court overturned the grant of the permit and waiver and directed the NJDOT to reconsider Pilot’s application in light of the objector’s data, views, and arguments.

This case may have a wide reaching impact on the land use approval process. Besides making the already lengthy NJDOT permitting process even longer and more contentious, the decision and its holding with respect to the Administrative Procedures Act may open the door to making every administrative permitting process into an objecting business competitor’s playground. Although the ability to challenge the issuance of an NJDOT permit may not prevent a business competitor from opening , it will most certainly make the process of obtaining land use approvals longer and more expensive for the applicant.

Jennifer P. Smith is an Associate in the Gibbons Real Property & 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.

The feasibility review focuses on the ability of the property to function in a manner that will effectively and efficiently serve the Buyer’s needs now and in the future. Attention should be paid, at a minimum, to:

• Access to roadways
• Sufficiency and location of utilities
• Available building area

An environmental review of the property is also essential with a Phase I analysis and, where indicated, a Phase II study being conducted by a reputable consultant.

An understanding of the zoning regulations affecting the property is critical, as those restrictions dictate how the property can be used and developed. Included in the documents that the Buyer should review are:

• The municipal zoning code and map
• The local zoning file for the property
• Prior approvals for the property

The Buyer can also request a zoning compliance letter from the municipality, although the willingness to issue those letters and the level of detail contained in them varies depending on the municipality.

A study of the structural fitness of existing buildings on the property and/or geotechnical studies may also be warranted, depending on the nature of the transaction and the Buyer’s plans for the site.

Other property related items that a Buyer should consider reviewing during the due diligence period include:

• Leases (including subleases, if any) and rent rolls
• Brokerage agreements
• Casualty insurance policies
• Environmental insurance policies
• Service contracts that do not terminate as of closing
• Prior engineering and feasibility studies or reports prepared by the Seller
• Governmental permits and licenses
• Notices of violations
• Third party licenses

Like a used car, every property is unique, with its own individual history, nicks and scratches. There is no “one-size fits all” formula or approach to performing the due diligence on a property. Reps and warranties, title review and property investigation give a buyer the tools to determine whether the property is one which it should acquire. The thoughtful use of those tools is the key to a successful due diligence investigation and deciding whether to drive that car off the lot or look for a different one.

Alfred R. Fuscaldo is a Director 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.

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.