New Jersey Land Use and Environmental Law

Published in August 2008 Issue of Builder/Architect Magazine, Greater New Jersey Edition

By Henry T. Chou, Esq.

The New Jersey Department of Environmental Protection (DEP) has adopted amendments to its regulations, scheduled for publication on July 7, 2008, that will reduce the availability of wastewater treatment service and increase the regulation of septic systems. While DEP claims that the rule amendments will improve water quality and protect environmentally sensitive areas, it appears that the only certain consequence of the rule amendments is economic hardship for counties, municipalities, property owners and developers.

The New Requirements Imposed by DEP

The amendments to the existing rules will reassign wastewater management planning responsibility from municipalities and local agencies to the county governments. This regional approach will reduce the number of sewer planning entities from approximately 200 to 21. For the first time, DEP will require mandatory updates of all wastewater management plans (WMPs) -- the plans that govern which properties may be served by public sewer. The compliance period under the rule amendments is very short. Counties must submit a revised WMP within nine months of DEP’s anticipated publication of the rule amendments on July 7, 2008. If, for any reason, a county fails to submit a revised WMP within the nine month period, each municipality within the county will have an additional 90 days to prepare their own WMPs. If there is no compliance within the 12 month period, then DEP reserves the right to impose a sewer moratorium on the whole county with the exception of those areas within a municipality which met its 90-day deadline.

The rule amendments require counties to consider a limitation on development based upon existing zoning ordinances and build-out under those ordinances. They also require downzoning in sewer service areas where treatment capacity would be limited without an expansion of facilities. Definitions are also being changed. For example, the new definition of an “equivalent dwelling unit” (EDU) assumes that a single family home with three bedrooms and three residents will use 500 gallons per day (gpd) of wastewater capacity. This assumption is not in line with the actual average use of wastewater by a family of three in a single family home, which is closer to 250-300 gpd.

Additionally, “environmentally sensitive” land will also be removed from sewer service areas. The DEP’s definition of “environmentally sensitive” land is broad and includes 25-acre contiguous areas of wetlands, steep slopes, buffers of “Category One” waterbodies, riparian zones, habitats of threatened and endangered species and natural heritage priority sites. These areas will have to be serviced by individual on-site septic systems. While DEP claims to support the objectives of the State Development and Redevelopment Plan (SDRP), the rule amendments actually authorize DEP to disregard the designations within the SDRP which – in DEP’s opinion – conflict with its environmental policies.

The rule amendments also change the regulation of septic systems in two significant ways. First, they require municipalities to adopt ordinances regulating septic maintenance of developments that will generate a cumulative total of more than 2,000 gpd of wastewater. Second, new septic systems must meet a standard of 2 mg/l of nitrates, whereas drinking water standards remain at a lower standard of 10 mg/l.

Implications of the Rule Amendments

According to the rule amendments, if a county does not adopt a WMP within the nine month regulatory deadline and municipalities within the county do not adopt their own plans in the ensuing 90-day period, DEP has the ability to declare a moratorium on all new sewer connections in that county. All lands within the WMP’s geographic boundaries not yet receiving sewer service would be automatically re-designated as septic areas with planning flows of 2,000 gpd or less. This would significantly impede the ability to develop property by requiring average minimum lot sizes of five acres. Instead of viewing such a moratorium as punishment, certain counties and municipalities that embrace non-growth policies may purposely choose to not comply in order to stop all residential and commercial development.

While DEP states that the goal of its new septic requirements is to ensure that the density of septic systems will not degrade water quality, the practical effect of the rules is to create large lot developments that will promote sprawl and pose barriers to the extension of utilities, as well as imposing a significant expense upon homeowners with septic systems and municipalities that must create new regulatory bureaucracies. The increased use of septic systems also poses the risk of groundwater degradation in areas deprived of access to public sewer service by the rule amendments.

The new definition of the EDU has the effect of reducing the treatment capacity of sewer plants throughout the State. Instead of assuming each 3-bedroom, single family home uses 250-300 gpd of sewer capacity, treatment facilities will now have to assume that each home uses the unrealistically high number of 500 gpd. The limitation on development based on existing zoning also has the effect of stopping all future development not currently contemplated in current zoning ordinances. Additionally, the removal of “environmentally sensitive” lands from sewer service areas, per the new rule definitions, could eliminate up to 40% of New Jersey’s vacant developable land.

Inconsistency with Other State Policies

Astonishingly, DEP’s rule amendments directly conflict with several of the State’s important public policy directives. For example, they work against Governor Corzine’s pledge to increase the availability of affordable housing. When sewer service is made unavailable, municipalities will lose the ability to adopt new ordinances providing for high density affordable housing. The rule amendments also call for lower density zoning i.e., downzoning, which conflicts with the rules proposed by the New Jersey Council on Affordable Housing (COAH). Those COAH rules direct municipalities to implement “inclusionary” higher density zoning at presumptive minimum densities. In the very near future, the courts may have to address the question of whether DEP has the power to compel a municipality to downzone the very same property that could otherwise be utilized by a municipality to satisfy its affordable housing obligations. In their current form, DEP’s rule amendments could serve as a convenient tool for municipalities to evade their affordable housing obligations. The potential for conflict between the rules of two state agencies, DEP and COAH, will have to be resolved if the State is to have coherent growth policies.

Additionally, the DEP’s rule amendments completely disregard the State’s goal of providing housing opportunities through redevelopment in urban areas. While the rule amendments seek to prevent numerous suburban and rural areas from receiving public sewer service, they are utterly silent on promoting redevelopment and assuring sufficient sewer capacity in redevelopment areas.

Property owners and developers should monitor municipal, county and DEP actions closely in the following year to ascertain how properties of interest are characterized in new WMPs, and to determine whether DEP actually implements the draconian measures discussed above. The development community must also make it clear to the administration and DEP that implementation of the rules as written will devastate the State’s economy in the midst of already difficult times.

Posted by Henry T. Chou, Esq. at 04:18 PM | Permalink | Comments (0) | TrackBacks (0)

By: Thomas F. Carroll, III, Esq.

The New Jersey Legislature has had a busy year passing laws of interest to the real estate development industries. The first such bill is the “Roberts bill” (also known as A-500), now signed into law by Governor Jon Corzine. The Roberts bill makes a number of important changes affecting lower income housing obligations as applied to residential and nonresidential developers and builders.

The second significant bill is the Permit Extension Act. That bill has been passed by both houses of the Legislature but, as of this writing, has not yet been signed into law by Governor Corzine. Assuming it is signed into law as expected, the Permit Extension Act will extend many permits and approvals for the period of time specified in the legislation. A summary of these important legislative developments follows.

The Roberts Bill

Ban on New RCAs

The Roberts bill will disallow regional contribution agreements (“RCAs”) as a valid technique to acquire credits toward municipal fair share housing obligations. RCAs are agreements pursuant to which “sending municipalities” provide funding to “receiving municipalities” whereby affordable housing is rehabilitated or constructed in the receiving municipalities. The “RCA ban” is prospective only; not retroactive. Essentially, the Roberts bill disallows all RCAs that have not been approved by the Council on Affordable Housing (“COAH”), or a court, prior to the effective date of the act.

Increased Densities Required

The bill also amends Section 311 of the New Jersey Fair Housing Act as follows:

Whenever affordable housing units are proposed to be provided through an inclusionary development, a municipality shall provide, through its zoning powers, incentives to the developer, which shall include increased densities and reduced costs, in accordance with the regulations of the council and this subsection.
New 2.5% Development Fee for Nonresidential

The Roberts bill also sets a statewide affordable housing development fee of 2.5% for non-residential development (usually calculated on the basis of equalized assessed value). Municipalities will be able to retain those fees in their own housing trust funds, and spend them, if they are before COAH (or a court) seeking approval of a fair share plan and a spending plan for affordable housing development fees. Fees assessed in towns that are not before COAH (or a court) would be remitted to the State Treasurer to be used for affordable housing purposes and/or be utilized to assist urban aid municipalities in creating affordable housing.

“Very Low Income” Housing Required

The bill also requires that COAH is to “coordinate and review” fair share plans, at least once every three years, to “ensure that at least 13 percent” of all lower income units are affordable to “very low income” persons. “Very low income” is defined as those households earning no more than 30% of the median income for the region. The bill makes clear that “nothing in this section shall require that a specific percentage of the units in any specific project be reserved as very low income housing,” but it does state that municipalities may not acquire “bonus credits” for providing very low income housing unless such municipalities exceed that 13 percent figure.

Impact on Redevelopment

Redevelopers will be required to replace lower income housing units subject to affordability controls, if lost as a result of a redevelopment project, with comparable lower income housing on a one-to-one basis.

“Excludable” Lands

The bill will also allow towns to “exclude” more lands from the category of “vacant lands” that are available for lower income housing purposes. Such lands are to include covenant-restricted agricultural lands, lands that are restricted for development pursuant to environmental laws, reserved recreational sites and historic sites. For example, the lands that can be excluded as part of a town’s vacant land inventory will now include “environmentally sensitive lands where development is prohibited by any State or federal agency.” Depending on how broadly COAH interprets such language, this may allow towns to more easily acquire “vacant land adjustments” from COAH, thereby decreasing the magnitude of the fair share obligations they must satisfy at this time.

Miscellaneous Provisions

The bill also creates the “Urban Housing Assistance Fund,” which is to receive an annual $20 million appropriation from the State portion of the nonresidential development fees paid to the State Treasurer. Also, State agencies must, pursuant to the bill, provide a housing affordability impact statement and a smart growth development impact statement when proposing new regulations. Such statements are to examine how proposed regulations will affect the availability and price of housing, and impact on new construction, in Planning Areas 1 and 2 and designated centers.

The bill creates another commission, to be called the “State Housing Commission.” The 15-member State Housing Commission will be obligated to develop a strategic housing plan for New Jersey, and it will have to provide an annual housing performance report to the Governor and the Joint Committee on Housing Affordability. The Roberts bill also purports to enable certain regional planning agencies to assist municipalities within their jurisdiction in the production of affordable housing. Those entities include the New Jersey Meadowlands Commission, the Pinelands Commission, the Fort Monmouth Economic Revitalization Planning Authority, and the Highlands Water Protection and Planning Council. The bill further provides that, as to lands within the jurisdiction of certain regional planning agencies, “there shall be required to be reserved for occupancy by low or moderate income households at least 20 percent of the residential units constructed, to the extent this is economically feasible.” Section 18(b) of the Roberts bill further provides that:

A developer of a project consisting of newly-constructed residential units being financed in whole or in part with State funds, including, but not limited to, transit villages designated by the Department of Transportation, units constructed on State-owned property, and urban transit hubs as defined pursuant to section 2 of P.L.2007, c.346 (C.34:1B-208), shall be required to reserve at least 20 percent of the residential units constructed for occupancy by low or moderate income households, as those terms are defined in section 4 of P.L.1985, c.222 (C.52:27D-304), with affordability controls as required under the rules of the council, unless the municipality in which the property is located has received substantive certification from the council and such a reservation is not required under the approved affordable housing plan, or the municipality has been given a judgment of repose or a judgment of compliance by the court, and such a reservation is not required under the approved affordable housing plan.
The bill also contains the following language pertaining to the rezoning of land from a nonresidential to a residential designation (“council” refers to COAH):

The council, with respect to any municipality seeking substantive certification, shall require that a minimum percentage of housing units in any residential development resulting from a zoning change made to a previously non-residentially-zoned property, where the change in zoning precedes or follows the application for residential development by no more than 24 months, be reserved for occupancy by low or moderate income households, which percentage shall be determined by the council based on economic feasibility with consideration for the proposed density of development.

The Permit Extension Act

As noted above, the Permit Extension Act (“PEA”) had not been signed into law by the Governor as of the date of this writing but if, as expected, the PEA is signed into law, it would provide the following benefits.

Which Permits are Extended?

Subject to some important exceptions described below, the PEA extends a wide variety of development-related permits and approvals that have been issued by New Jersey municipalities and counties, State agencies, and State regional planning agencies. Among the categories of potentially extended permits are municipal subdivision, site plan and variance approvals, wetlands permits, septic permits, water permits, and others. Essentially, all State, county, regional and municipal permits and approvals are extended (but not federal permits) unless excluded by language in the act.

The PEA applies to extend (or “toll”) such permits that otherwise lapsed on or after January 1, 2007 and extends them through at least July 1, 2010. The PEA provides that certain permits in effect as of January 1, 2007 are extended at least until July 1, 2010, and possibly up to six months thereafter as well, depending on the tolling language of the bill.

Which Permits are Not Extended?

Most significantly, permits are not extended if the lands subject to the permits are located in “environmentally sensitive areas” as defined in the PEA. “Environmentally sensitive areas” are defined in the PEA to include lands within State Plan Planning Areas 4B and 5 as of the date of effective date of the PEA, “critical environmental sites,” the Highlands Region, except for lands designated for growth in the Highlands Regional Master Plan, and non-growth Pinelands areas. Other significant categories of permits not extended by the PEA include federal permits, certifications or approvals or water quality management plan approvals issued pursuant to the Water Quality Planning Act, center designations per CAFRA or the State Planning Act, certain DOT permits, and Flood Hazard Area Control Act permits (unless work has commenced).

The PEA also provides that the NJDEP can continue to revoke or modify its permits when such permits contain language allowing such revocation or modification. The PEA also does not affect any NJDEP administrative consent orders. As to sewer permits, the PEA basically provides that such permits are extended, but that the ability to connect is conditioned upon the availability of capacity in the treatment facility, although priority would be given to those with extended permits as to treatment capacity that becomes available in the future.

As to planning or zoning board approvals allowing for residential uses, such approvals are not extended by the PEA “where, subsequent to the expiration of the permit but prior to January 1, 2007, “an amendment has been adopted to the master plan and zoning ordinance to rezone the property to industrial or commercial use when the permit was issued for residential use. The PEA also has some additional exceptions and qualifications, and the PEA should therefore be studied with respect to any given permits or approvals to determine with certainty whether the PEA will operate to extend/toll them.

Conclusion

The Roberts bill and the PEA contain some very significant changes to the manner in which land use decisions are made in New Jersey. The Roberts bill’s focus on affordable housing issues opens new doors for those seeking favorable rezonings for housing. For example, towns that were previously considering RCAs as a Mount Laurel/COAH compliance tool may have to look more to the private sector when it comes to providing developments including affordable housing, and the bill specifically requires increased densities to achieve that end. Moreover, the PEA will, if signed into law, ameliorate some of the harmful effects of the current negative economic conditions by extending/tolling many permits and approvals. Both bills should be carefully considered to determine their effects on specific projects in which builders and developers have an interest.

Posted by Henry T. Chou, Esq. at 05:15 PM | Permalink | Comments (0) | TrackBacks (0)

Published in August 6, 2008 Issue of New Jersey Builders Association Dimensions Newsletter

By: Henry T. Chou, Esq.

On June 16, 2008, the New Jersey Department of Environmental Protection (DEP) published adopted rules that reclassify 686 miles of waterways in the State to “Category One” status. The rules affect portions (or all) of more than 15 major rivers, reservoirs and their streams and tributaries throughout 14 counties.

The Purported Goals of the New Rules

DEP claims that its reclassification of the waterways to “Category One” – the largest such reclassification in the history of the agency – is necessary to protect the “exceptional ecological significance” of those waterways. In particular, the rules emphasize the need to preserve the habitats of various turtles, mollusks and mussels that are considered “threatened or endangered” species, or to preserve water quality needed to support an “exceptional aquatic community.”

Critics, however, have questioned whether DEP’s stated goals are supported by objective scientific data. When DEP initially issued its rule proposal in May 2007, over 900 miles of waterways were targeted for Category One reclassification. That rule proposal was met with hostility by many local officials, who deemed the rules overreaching and prohibitive of regional growth that had been planned for years. In Sussex County, for example, a number of county and municipal officials objected vociferously to DEP’s proposal to reclassify the Walkill and Pequest River systems. It appears that DEP yielded to this political pressure by removing from the proposed rules 224 miles of waterways, including the majority of the Walkill and Pequest River systems. This begs the question of whether the reclassification of other waterways throughout the state is justified by legitimate scientific data. Ironically, the development community can agree with the recent statement by the Director of the New Jersey Sierra Club that “[t]his is more about political science than sound science.” ("Pequest and Wallkill Removed from C-1", NJ Herald, May 28, 2008).

New Restrictions Imposed by the Rules

Under the new rules, the discharge of sewer effluent or anything else that would degrade the quality of the Category One waterways is prohibited. Additionally, the Category One status triggers the requirements of DEP’s stormwater management rules and flood hazard control rules, both of which impose a 300-foot buffer from the affected waterways, as well as the tributaries of those waterways. No development activity would be permitted within the 300-foot buffer areas, with very limited exceptions for hardships, linear development and previously disturbed areas.

DEP makes clear that the “special water resource protection area” buffer imposed by the stormwater management rules and the “riparian zone” buffer imposed by the Flood Hazard Area Control Act rules are technically separate 300-foot buffers that “overlap” each other, and that compliance with the standards of both rules will be required.

Do the Rules Provide for Grandfathering or Exemptions?

Since any Category One designation triggers the restrictive 300-foot buffers, developers and property owners should be cognizant of any “grandfathering” provisions that might apply. DEP provides for grandfathering only in very limited circumstances as follows: (1) the development project possessed a valid DEP Division of Land Use Regulation (DLUR) permit as of June 16, 2008 and needed no additional DLUR permits; OR (2) as of June 16, 2008, the development project needed an additional DLUR permit but already possessed a valid DLUR permit that included a stormwater management review consistent with the 2004 Stormwater Management Rules; OR (3) the development project was not subject to the Flood Hazard Area Control Act rules prior to the Category One reclassification on June 16, 2008 AND one of the following applies: (a) the project received municipal approval that enabled the commencement of construction prior to June 16, 2008; or (b) municipal approval for construction was not required, and certain construction activities (such as installation of the foundation, subsurface road improvements, or bedding materials for a utility line) were completed prior to June 16, 2008.

While DEP claims to have made an effort to exempt redevelopment projects, it appears that the new rules fall far short of facilitating redevelopment. The standards protecting vegetation in the 300-foot “special water resource protection area” and “riparian zone” buffers do not apply where no vegetation exists, such as previously paved or developed areas. In practical terms, this seems to mean that any redevelopment must be confined to the exact same footprint of the previous structures and paved areas. Clearly, such a restriction severely limits redevelopment options within the 300-foot buffers.

Previously approved wastewater discharges authorized under the New Jersey Pollutant Discharge Elimination System (NJPDES) program, as well as existing wastewater treatment facilities, are not subject to the new Category One antidegradation standards, unless a new or expanded activity is proposed. In the same vein, the renewal of an existing discharge permit does not require an antidegradation analysis under the new Category One standards, unless additional flow or loading is requested as part of the renewal. Thus, an existing wastewater treatment facility that is not expanding and not seeking increased loadings for its discharge would not trigger an antidegradation analysis simply because the receiving waterway is reclassified Category One.

Owners and developers of property near waterways should study DEP’s new Category One rules carefully to ascertain whether their land is subject to the reclassification. If one’s property is affected, he or she should review the status of all DEP permit applications in order to ascertain whether the grandfathering provisions referenced above might apply to the project.

Posted by Henry T. Chou, Esq. at 04:48 PM | Permalink | Comments (0) | TrackBacks (0)