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The Appellate Division Reverses COAH’s Gap Period Requirement

July 23, 2016 | No Comments
Posted by Marc Policastro

Co-authored by Peter J. Guastella

This is big. Affordable housing in New Jersey has taken another major turn in the Court system due to the latest decision in the Appellate Division handed down on July 11, 2016. Most importantly, the Court’s decision holds that the plain language of the Fair Housing Act of 1985 does not require a municipality to retroactively calculate a new “separate and discrete” affordable housing obligation arising during the so-called “gap-period” from 1999 to 2015, supplementing the decision of the New Jersey Supreme Court in In Re Adoption of NJAC 5:96, 221 N.J. 1 (2015). The Court determined that such a consideration is best left to the legislative and executive branches. This decision brings more uncertainty to developers and municipalities alike. The FHA created COAH (Council on Affordable Housing) to establish an administrative alternative to litigating compliance issues with the Constitutional requirement that municipalities develop affordable housing, arising out of the court decisions in Mt. Laurel I and II. COAH adopted The First Round Rules: a period from 1987-1993; and The Second Round Rules: a period from 1993 to 1999. COAH’s Third Round Rules became the focus of much debate due to its proposed methodology in determining the municipalities’ requirements for developing their fair share of affordable housing. The delay in the promulgation of such rules brought about the “gap period” which is the focus of the Appellate Division’s current decision. Read more

Court Addresses “Catalyst” Requirement under Mt. Laurel Doctrine and Rejects Township’s “All or Nothing” Approach to Builder’s Remedy in Cranford Development Associates LLC v. Township Of Cranford, A-5822-12T2, ___ N.J. Super. ___ (App. Div. 2016).

April 28, 2016 | No Comments
Posted by Marc Policastro

Co-authored by Melissa A. Clarke

In this recent affordable housing decision, the Appellate Division upheld a Union County trial court’s final order granting a builder’s remedy to plaintiff Cranford Development Associates, LLC (the “developer”) for the construction of a 360-unit residential development in Cranford. The court made several noteworthy points, the most significant of which relates to the requirement that the developer be the “catalyst” for change.

First, the appellate court agreed that the plaintiff developer satisfied the requirement to negotiate in good faith before filing the lawsuit. The court found that the underlying record made clear that the Township had no interest in negotiating with the developer, and there is no administrative exhaustion requirement in Mount Laurel litigation. Read more

Due Diligence and the Bermuda Triangle: Getting it Done

April 7, 2016 | 1,208 Comments
Posted by Marc Policastro

Co-authored by Melissa A. Clarke

As published in the Spring 2016 edition of Dimensions

Due diligence can make or break a deal, and there is a lot on the line for those charged with getting it right.  (1)   From an environmental perspective in New Jersey, that can be daunting. The Bermuda Triangle of diligence occurs when on-site sources, off-site sources and “unknown” sources converge. Diligence “death traps” become more than manageable when the developer takes a disciplined approach, staying within the ambit of the Site Remediation Reform Act (SRRA) regulations and the various guidance documents provided by the New Jersey Department of Environmental Protection (NJDEP). (2)

Off-Site Source Groundwater Investigation
One of the most commonly encountered scenarios in due diligence occurs when contamination is found proximate to a contiguous parcel, where the contamination is subject to a prior approval which, miraculously, stopped exactly at the property boundary line. Although the developer’s Licensed Site Remediation Professional (LSRP) is empowered to issue a final approval where the contamination is from an “off-site” source, investors will generally demand that the contamination be cleaned up prior to construction. Read more

Updated DEP Fill Material Guidance To Facilitate Redevelopment

May 1, 2015 | 1 Comment
Posted by Steven Dalton

Developers of brownfields and sites regulated by the New Jersey Department of Environmental Protection’s (“DEP”) Site Remediation Program (“SRP”) often struggle with the issue of testing quarry/mine material used as fill.  Suppliers of quarry/mine material are typically reluctant to and often will not allow testing prior to delivery of the material, leaving developers at risk of enhanced remediation obligations if fill material contains hazardous substances above applicable cleanup standards, even if those substances are naturally occurring at the point of origin.  Testing quarry/mine fill materials also increases the cost of development compared to development at sites that are not regulated under the SRP, as quarry/mine material may be freely used as fill without testing and is not regulated at sites that are not under SRP jurisdiction.

This dilemma has been effectively addressed with DEP’s May 1, 2015 release of revised Fill Material Guidance for SRP Sites dated April 2015.  The guidance clarifies that certified quarry/mine material from a licensed quarry/mine facility may be used as fill at an SRP site without sampling and testing.  There may be case-specific circumstances that trigger a need to test quarry/mine fill material, including if the material comes from a quarry/mine that is not licensed or when the fill material comes from a licensed facility but lacks a certification by the licensed quarry/mine operator that the material has not been subject to a discharge of hazardous substances.  Additionally, the Guidance clarifies that a Licensed Site Remediation Professional has the discretion to evaluate certifications given by a licensed quarry/mine operator and has the discretion to require testing.  However, absent some evidence calling the fill material certification into question, as a general rule, testing of certified quarry fill material should not be required.

DEP’s updated Fill Material Guidance should facilitate and reduce the cost of development and redevelopment while limiting the risk of remediation obligations being triggered by potential naturally occurring conditions associated with the quarry/mine source material.  The Guidance clarifies that certified quarry/mine material is a distinct class of material separate from “clean fill”.  Accordingly, developers and land owners should carefully review their contracts, development agreements, and other transactional documents to ensure they are updated to appropriately account for this distinction.

For more information or questions regarding this update, please contact Steven M. Dalton, shareholder in the firm’s Environmental Department and an active participant member of the New Jersey Builders Association’s Environmental Committee and clean fill coalition responsible for significant contributions to DEP’s release of the Fill Material Guidance for SRP Sites.

Supreme Court Opens Door for Spill Act Claims

January 28, 2015 | 3 Comments
Posted by Marc Policastro

On January 26, 2015, in Morristown Associates v. Grant Oil Co., (A-38-13) (073248), the New Jersey Supreme Court confirmed that the general six-year statute of limitations contained in N.J.S.A. 2A:14-1 does not apply to private claims for contribution made pursuant to the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11f(a)(2)(a).  Consequently, individuals or entities deemed to be “responsible parties” as a result of ownership or operations conducted at cleanup sites, may have an opportunity to seek contribution damages from current or prior owners/operators, or other parties, without the constraints of the State’s general 6-year limitations period, which might have otherwise banned such damage claims.

NJDEP Announces New Guidance On “Unrelated Contamination”

October 7, 2014 | No Comments
Posted by Marc Policastro

The New Jersey Department of Environmental Protection (NJDEP) has announced a specific “Guidance Document” and protocol to assist Licensed Site Remediation Professionals (LSRPs) to address contamination that is suspected to be unrelated to a known discharge undergoing remediation.  In essence, the roadmap provided by NJDEP addresses three basic scenarios where:  (1) contamination is suspected to be unrelated to the subject site is identified on the subject site and the subject site is not a heating oil tank at a residential property; (2) contamination is suspected to be unrelated to the subject site is identified off the subject site and the subject site is not a heating oil tank at a residential property; and (3) contamination is identified either on or off the subject site and the subject site is a heating oil tank at a residential property. Read more

Appellate Division Confirms Illegality of Maintenance “Contributions” that Exceed the 15% Cap Permitted by N.J.S.A. 40:55D-53(a)(2)

August 27, 2014 | No Comments
Posted by Steven Gouin

In its August 7, 2014 opinion in Majestic Contracting, LLC v. Nunziato, Docket No. A-1539-12T3 (App. Div. Aug. 7, 2014) (“Majestic II”), the New Jersey Appellate Division confirmed that municipal ordinances that require developers to pay maintenance “contributions” for certain improvements are unlawful under the New Jersey Municipal Land Use Law, N.J.S.A. 40:55D-1, et. seq. (the “MLUL”).

At issue was a Howell Township Ordinance that required a developer to pay the municipality an “escrow contribution” whenever “continued maintenance of a detention basin is to be the responsibility of the Township,” which the court first considered in Majestic Contracting, LLC v. Nunziato, 2011 WL 5599645 (App. Div., Nov. 18, 2011) (“Majestic I”). The Howell ordinance provided that the amount of the “basin maintenance contribution” was to be based on “an operations and maintenance plan” submitted by a developer, “subject to the review and approval of the [Township’s Planning Board Engineer.” Majestic I at *5. “The amount of the developer’s contribution [was to] be based upon said plan, which will include a detailed cost estimate, outlining the cost of basins, operation, and maintenance tasks, including interim and formal maintenance operations such as mowing, sediment, trash, and debris removal, maintenance of the infiltration layer of recharge basins, storm sewer cleaning, etc.” Id. at *5.

In Majestic I, the court found that this ordinance violated the MLUL for several reasons:

First, it requires a contribution to the municipality, rather than an escrow or security bond to cover maintenance cost.  Although denominated an ‘escrow contribution,’ it is really a payment to the municipality based on the estimated costs of maintenance as to which the developer is entitled to no refund of any unused funds. . .

In addition, although the method of calculation is not set forth in the ordinance, the escrow required by the Township’s engineer was calculated on maintenance costs for ten years, which is beyond the two years contained in N.J.S.A. 40:55D-53(a)(2).

Id., at *6-7 (emphasis added).

According to the court, “[a] municipality ‘must exercise [its] powers relating to… land use in a manner that will strictly conform with [the MLUL].” Majestic I, citing, New Jersey Shore Builders Ass’n v. Twp. of Jackson, 199 N.J. 449, 452 (2009). Specifically, “a municipality cannot require by ordinance, and a planning board cannot impose as a condition of approval, a maintenance escrow in excess of the parameters set by N.J.S.A. 40:55D-53(a)(2).” Majestic I at *8. “A plain reading of… N.J.S.A. 40:55D-53(a)(2) [supports] the conclusion that the Legislature intended the phrase ‘for a period not to exceed two years after final acceptance of the improvement’ to set the outside limits of a maintenance escrow for an improvement, including a drainage basin.” Id. Said the court, “[this] interpretation is fully supported by DCA’s implementing regulation, N.J.A.C. 5:36-4.2, which incorporates the fifteen-percent cap and two-year period in the standardized form [of] performance guarantee.”  Id.

In Majestic I, the Appellate Division remanded to the trial court for a determination as to whether the developer had waived or was estopped from challenging the detention basin ordinance at issue “in light of its failure to exhaust the municipal appeals process and the fact that it had signed [a] basin maintenance agreement during the pendency of the litigation.” See, Majestic II at 5. In Majestic II, the Appellate Division explained the result of its remand:

In [a] written opinion, the trial judge concluded that [the developer] did not waive its right to challenge the basin-maintenance agreement or the amount of contribution it required. He also determined that [the developer] was not estopped from pursuing those challenges. The judge concluded that the basin-maintenance agreement could be enforced to the extent that it did ‘not run afoul of N.J.S.A. 40:55D-53(a)(2).’ Consequently, he held that Majestic could still be compelled to fund an escrow up to the fifteen percent cap permitted by the statute, as long as the amount was not calculated on maintenance beyond the two-year statutory limit.

Majestic II, at 5-6.

Majestic II resulted from the developer’s appeal of the trial court’s order. The developer argued that, in Majestic I, the Appellate Division had invalidated the basin contribution in its entirety. Id. at 6. The Majestic II court explained that, in Majestic I, it had held that “the Township’s ordinance conflicted with N.J.S.A. 40:55D-53(a)(2) by requiring a non-refundable maintenance payment in excess of the two-year statutory period or the ceiling of fifteen percent.” Id. at 7. This, the court held, “conflicted with the MLUL” because it “in fact imposed an impermissible non-refundable ‘contribution’ to the municipality.” Id. at 4. However, the court noted that it did not “invalidate the entire ordinance.” Id. at 7. So long as the maintenance contribution requirement is within the 15% cap permitted by the MLUL then the “enforcement of the basin-maintenance… escrow requirement… is otherwise valid.” Id.

Therefore, under the Majestic decisions, municipalities may not condition land use approvals on the posting of guarantees or payment of contributions for maintenance that exceed the two year limit and 15% cap permitted under N.J.S.A. 40:55D(a)(2). N.J.S.A. 40:55D-53(a)(2) also requires that any required maintenance guarantee be returned by the municipality to the developer after the applicable two-year maintenance period.

Will Governor Christie Extend the Moratorium on Non-Residential Development Fees?

July 29, 2014 | No Comments
Posted by Michael Bruno

Co-Authored By Steven P. Gouin

A new bill (A1907) that would extend the statewide moratorium on the collection of non-residential development fees (“NRDFs”) recently passed both the New Jersey State Assembly and Senate. It now awaits Governor Christie’s signature. If signed into law, the bill would reinstate the moratorium on the collection of NRDFs that expired July 1, 2013, extending it to December 31, 2014. Developers who paid NRDFs during that period would be eligible to seek a refund, which must be granted so long as the NRDF has not already been expended for affordable housing.

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Attention Tenants! Grow-NJ Tax Credits Without Prevailing Wage

July 11, 2014 | No Comments
Posted by Michael Bruno

Co-Authored By Steven P. Gouin

A little known regulation makes a big difference for tenants taking less than 55% of a leased facility. Namely, these tenants may be eligible to receive millions of dollars of monetizable corporate income tax credits under New Jersey’s Grow-NJ Program, without having to comply with that program’s prevailing wage mandate. For many, especially suburban tenants, that equates to a great deal of free money.

Grow-NJ is economic incentive program born out of the New Jersey Economic Opportunity Act of 2013 (L. 2013, c. 161) (“EOA”) and administered by the New Jersey Economic Development Agency (“NJEDA”). The goal of the program is to encourage businesses to either stay in or relocate to New Jersey. The program does this by offering tax credits for each job created or retained that range from $500 to $5000 per job, depending on the scope, location, and industry of the project.

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The Economic Opportunity Act of 2013: Incentives and Challenges for Residential Developers

December 18, 2013 | No Comments
Posted by admin

As of November 18, 2013, the New Jersey Economic Development Authority (“EDA”) began accepting applications for the new state-sponsored incentive programs created under the New Jersey Economic Opportunity Act of 2013 (the “Act”). The Act was signed into law by Governor Chris Christie on September 18, 2013 and serves to replace the previous state-sponsored incentive programs known as the ERG (Economic Redevelopment and Growth Program), the BEIP (the Business Employment Incentive Program), the BRRAG (the Business Retention and Relocation Assistance Grant) and the UTHTC (the Urban Transit Hub Tax Credit).

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