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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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Garden State Growth Zones Under The Economic Opportunity Act of 2013

December 3, 2013 | No Comments
Posted by admin

The New Jersey Economic Opportunity Act of 2013, signed into law in September 2013, provides significant bonus incentives. The most generous of these incentives are reserved for four (4) municipalities defined as within the Garden State Growth Zone (currently designated as Camden, Trenton, Paterson and Passaic). The Act provides significant bonus incentives for companies and developers to relocate and develop within those municipalities.  In addition to the award of tax credits under the  ERG of up to forty percent (40%) of the eligible project costs (a twenty percent (20%) bonus over other eligible areas), the Act also provides a unique long term tax exemption for qualified developers and projects within a Garden State Growth Zone and permits local municipal approval of a twenty (20) year long term tax exemption on the value of the new improvements for the first ten (10) years after issuance of a certificate of occupancy and thereafter a reduced payment in lieu of taxes on the value of the improvements for years ten (10) through twenty (20) based on a sliding scale percentage of taxes otherwise due on the value of the improvements.  The Act also makes available a unique five (5) year tax exemption for qualifying projects within Garden State Growth Zones for those redevelopers that do not otherwise qualify as a Garden State Growth Zone Development Entity (similar to an urban renewal entity as defined under the New Jersey Long Term Tax Exemption Law).  The Act attempts to address the constitutional requirements for both the long term tax exemption and five year abatement by the legislature finding that municipalities identified as Garden State Growth Zones are “hereby declared blighted areas and areas in need of rehabilitation.”

The Economic Opportunity Act of 2013 – Incentives and Challenges For Residential Developers

December 3, 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).  The Act consolidates these programs into two incentive programs called the Economic Redevelopment and Growth Program (New ERG) and the Grow NJ Assistance Program (Grow NJ).  Grow NJ and the New ERG will provide major incentives for qualifying businesses to stay or relocate in targeted areas in New Jersey, all in an effort to attract and retain jobs and to spur commercial development.  Applications under Grow NJ must be submitted to the EDA prior to June 30, 2019.  For qualified residential projects, the New ERG, which is currently available (until the allocated tax credits are awarded) for applications submitted on or before June 30, 2015, will provide gap financing assistance to residential projects in targeted areas in New Jersey.

For residential developers, the New ERG is well intended and fixes a major flaw in the previous ERG by awarding tax credits that can be monetized to help finance the construction of an awarded project.  Under the previous ERG, qualified projects were awarded up to twenty percent (20%) of the qualified project costs for gap financing shortfalls from up to seventy five percent  (75%) of the new annual tax revenue created from the project but because residential developments (or even mixed-use projects) do not typically create sufficient tax revenue to support such awards and there was no uniform way to monetize the tax revenue for use on the construction of the project, the previous ERG was not, as a practical matter, a meaningful incentive for residential developers.  The New ERG addresses this practical problem by authorizing the issuance of tax credits for the project financing gap subject to a cap of twenty percent (20%) of the qualified project costs with certain targeted areas (such as the municipalities defined as Garden State Growth Zones) qualifying for up to an additional twenty percent (20%) bonus.  A significant benefit to the New ERG will be the ability of developers to monetize the awarded tax credits for use as part of the project construction financing. Read more

Big Changes For Monmouth Property Tax Assessments

July 30, 2013 | No Comments
Posted by Justin McCarthy

Big changes are quickly approaching for every single property owner in Monmouth County. Earlier this year, Governor Christie signed into law Senate Bill-1213 and Assembly-1591 (the “Act”) which taken together creates an “Assessment Demonstration Program” that will substantially change the property tax assessment and appeal process in New Jersey. The program modifies the timing of the appeal season and filing requirements so that assessment disputes are more likely to be settled prior to the filing of the final assessment list with the County Board of Taxation. The law proposed a ‘trial’ period for participating counties to allow for an alternative approach to the traditional assessment and appeal system practiced throughout the state. The goals of the Act are to achieve a more cost-effective and accurate property tax administration process. Monmouth County will be the first county to implement the Assessment Demonstration Program starting this year, 2013, to be effective for the 2014 tax year. By all accounts, Monmouth County is the standard bearer for the implementation of the new pilot program. READ MORE

“Automatic Variance” Bill For FEMA Base Elevations Passes NJ Legislature

July 23, 2013 | No Comments
Posted by admin

On June 20, 2013, the NJ Senate and the NJ General Assembly unanimously approved a bill that would exempt homes affected by Superstorm Sandy from development regulations on building heights. Normally, homeowners must apply to their local municipality for a variance when construction alters the original zoning plan of the property. Given the new base flood elevations from FEMA, this bill streamlines the process for raising homes along the Jersey Shore by eliminating the variance application process under certain conditions. Read more

The Salt & Light Company, Inc. v. Township Of Willingboro Zoning Board Of Adjustment: Variances For Beneficial Use

July 11, 2013 | No Comments
Posted by admin

A recent case involving variances in Burlington County demonstrates that property owners may not always be granted a variance intended for beneficial use. In the case of The Salt & Light Company, Inc. v. Township of Willingboro Zoning Board of Adjustment, the plaintiff originally filed to have the denial of its variance overturned. The Salt & Light Company, Inc., sought to convert a residence to a three-family unit in order to provide transitional housing for the formerly homeless. The original home, which was already being used as transitional housing, has five bedrooms and one kitchen; the company proposed to make room for three kitchens and only four bedrooms. Both the exterior of the house and the number of occupants would remain the same. The plaintiff also applied for a use variance, a site plan waiver, and a parking variance for four parking spaces instead of six.

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High Court Overturns Abolition Of COAH

July 10, 2013 | No Comments
Posted by admin

In yet another chapter in New Jersey’s seemingly unending saga regarding affordable housing, today the New Jersey Supreme Court, in a ruling of five in favor and two dissenting, ruled that Governor Christie does not have the authority to abolish the New Jersey Council on Affordable Housing (“COAH”). In its much-anticipated decision in In Re Plan for the Abolition of COAH, released today, July 10, 2013, the Court held that, “because COAH is [an agency] ‘in, but not of,’” the state’s Executive Branch, it may only be abolished by new legislation – not executive order. The Court “offer[ed] no opinion as to whether COAH’s structure should be abolished, maintained as is, or modified,” but did note that “[i]f the Governor and the Legislature wish to abolish COAH, they must take another path.” Read more

NJ Senate Passes Open-Space Preservation Amendment

June 26, 2013 | No Comments
Posted by Steven Gouin

On June 20, 2013, the New Jersey State Senate passed a proposed constitutional amendment that would, if approved by voters, create a new fund for the preservation of historic sites and open space.  The bill (SCR-138) received support from both parties, receiving only two “no” votes.  It has not yet been brought to the Assembly.

Under the proposed amendment, one-fifth of all state sales tax revenue would be set aside for the preservation of farmland, historic properties, “Green Acres,” and “Blue Acres.”  The Green Acres program acquires land that protects water supplies and preserves open space, including parks, fish and wildlife habitat, and flood prone or affected areas.  “Blue Acres” includes properties that have been damaged by storms or storm-related flooding, that appear likely to incur such damage, or that may buffer or protect other lands from such damage.  Under either designation, structures on properties purchased from willing sellers are demolished, the debris is removed, and the land is preserved as open space.

The program is proposed to last 30 years.  For the first year, the amount collected would be approximately $246 million.  If passed by the Assembly, the proposed amendment would head to New Jersey’s voters, who have historically supported the preservation of open space.

The full text of the proposed amendment is available here:

http://www.njleg.state.nj.us/2012/Bills/SCR/138_U1.HTM.

NJDEP Adopts Emergency Rules to Facilitate Reconstruction of Commercial Development and Marinas Impacted by Hurricane Sandy

June 24, 2013 | No Comments
Posted by Steven Gouin

On April 16, 2013, the New Jersey Department of Environmental Protection (“NJDEP”) adopted emergency amendments to the Coastal Permit Program Rules, N.J.A.C. § 7:7 and Coastal Zone Management Rules, N.J.A.C. § 7:7E that are aimed at facilitating prompt and resilient reconstruction along the Jersey Shore in the wake of Superstorm Sandy.  Among the beneficiaries of the emergency rules are commercial property and marina owners, who face the monumental task of rebuilding and re-opening for the upcoming tourism and boating season after sustaining millions of dollars in Sandy-related damage.

For commercial property owners, the emergency rules:  (1) clarify the exemption under the Waterfront Development Law concerning the reconstruction or replacement of structures in-place; (2) modify the permit-by-rule for reconstruction of commercial development; and (3) add a permit-by-rule for the expansion or relocation (with or without expansion) laterally or landward of commercial development.

For marina owners, the emergency rules:  (1) clarify the exemption to the Waterfront Development Law concerning the reconstruction or replacement of structures in-place; (2) modify and add new permits-by-rule, including a new permit-by-rule for the reconfiguration of any legally existing dock, wharf, or pier located at a lawfully existing marina and a new permit-by-rule for the construction and/or installation of a pumpout facility and/or pumpout support facility; and (3) modify the NJDEP’s coastal general permit for the construction of support facilities at lawfully existing and operating marinas.

The relief is much-needed.  According to a survey conducted by the Marine Trades Association, uninsured Sandy-related losses relating to buildings, property, docks, inventory, equipment, and supplies, for marinas alone, exceed $100 million.  NJDEP believes that these emergency amendments will provide necessary regulatory relief while at the same time facilitating eligibility for Sandy-related relief programs as they become available.

For more information, please visit:  http://www.nj.gov/dep/landuse/

FEMA Releases New Base Flood Elevation Maps

June 19, 2013 | No Comments
Posted by Steven Gouin

On June 17, 2013, the Federal Emergency Management Agency (“FEMA”) released new base flood elevation maps (“BFEs”) – providing much-needed guidance to homeowners still debating how to address flood-related damage suffered during Superstorm Sandy.  The new BFEs substantially revise the advisory base flood elevation maps (“ABFEs”) released by FEMA in December 2012.  Most importantly, the new BFEs remove thousands of coastal New Jersey homes from FEMA’s dreaded “V” (or “Velocity”) Flood Zone.

The “V”-Zone is otherwise known as the “Coastal High Hazard Area.”  These are areas that are subject to high-velocity wave action from storms or seismic sources. According to FEMA, the hazards in “V”-zones include not only inundation by flood waters, but also the impact of waves and waterborne debris and the effects of severe scour and erosion.  By contrast, “A”-Zones are flood hazard areas not within a high hazard area.  Though both “A” and “V”-Zones risk flooding, the severity of the flood hazard is less in “A”-Zones primarily because high-velocity wave action is either not pres­ent or is less significant than in “V”-zones.

Communities, including many in New Jersey, that participate in FEMA’s National Flood Insurance Program (“NFIP”), must regulate three types of building construction in flood hazard areas (including both “A” and “V”-Zones:  (1) new construction, (2) substantial improvements to existing buildings, and (3) repairs of substantially damaged buildings.    Any building falling in one of these three categories must be elevated above the “base flood elevation” as determined by FEMA.  Under the NFIP, the elevation techniques that may be used depend on whether the building is located in the the “A” or “V”-Zone. Read more

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