New Jersey Land Use and Environmental Law

Published in January 15, 2009 Special COAH Edition of New Jersey Builders Association Dimensions Newsletter

By Stephen Eisdorfer, Esq.

In a flurry of activity over the past several weeks, COAH has established timetables and procedures for municipalities to file housing plans. These new timetables and procedures create both potential opportunities and potential frustrations for builders.

On September 22, 2008, COAH adopted its amended “third round” regulations. These regulations establish new numerical fair share obligations.

The fair share numbers are considerable, and many municipalities will be looking to the private sector for assistance in meeting their obligations, especially now that “regional contribution agreements” have been banned by A-500 (P.L. 2008, c.46).

The new regulations establish presumptive minimum densities for inclusionary projects. COAH’s regulations specifically authorize towns and builders to negotiate their own terms for increased densities and other incentives for the construction of affordable housing. COAH has facilitated this process slightly by sending a letter to all mayors on October 30, 2008, advising them of the agency’s intention to amend the regulations to provide that, if a town increases the permissible housing densities for an inclusionary project, the additional market rate housing units to be constructed utilizing such a density bonus will not generate an additional housing obligation under COAH’s growth share formula.

COAH’s Petition/Objections Processes

A town that files with COAH enters an administrative process of uncertain duration. Builders interested in re-zonings can participate during that process.

The town may either file a housing plan and petition for COAH to approve that plan — in COAH-speak, to grant “substantive certification” to the plan — or it may simply file the plan without petitioning. COAH has 45 days to determine whether the filing is complete. If the filing is deemed incomplete, the town has another 45 days to correct any deficiencies. If it fails to correct the deficiencies, the town should be dismissed from COAH’s jurisdiction and become vulnerable to exclusionary zoning litigation.
If the town has merely filed a plan, it must petition for COAH review of the plan within two years. The period of any substantive certification ends ten years after the date of the initial filing, however, regardless of when the town petitions for COAH review.

Once a town’s petition is deemed complete, the town must give public notice of its filing. That notice opens a 45-day period for property owners, builders, and other interested persons to file written objections to the petition, with those objections to point out deficiencies in the fair share plan and identify sites proposed for favorable re-zonings. The new regulations establish detailed requirements for a proper objection. If an objection does not satisfy the requirements, COAH may deem the objection incomplete. If so, objectors will have 14 days to correct any deficiencies.

The filing of an objection is a critical step. By filing an objection, the property owner or builder assures itself the right to be involved in all subsequent stages of the agency proceeding. A property owner or builder who fails to file an objection at this point may or may not be able to intervene in the process later on.

The Mediation Process

Where objections are filed, the town and the objectors are obligated to participate in mediation over the objections. This is the next real opportunity for a property owner or builder to induce the town to include a proposed project in the town’s housing plan. In principle, mediation is to begin 45 days after the end of the objection period. The new regulations, however, create opportunities for delay at this point. First, mediation does not begin until COAH staff has prepared a “pre-mediation report” analyzing the housing plan and the objections. The regulations acknowledge that the agency staff may not be able to accomplish this for all the pending petitions within the 45 days between the close of the objection period and the commencement of mediation. The rules therefore permit COAH to postpone mediation indefinitely until it has prepared its pre-mediation report. Even after the agency staff has completed the pre-mediation report, mediation will not necessarily begin. The report may conclude that the plan is deficient or that the agency needs additional information to evaluate it. It may require the town to provide additional information, to supplement its plan, or even to completely revise it and re-petition. There appears to be no limit to the number of times this cycle may be repeated. All the while, mediation would be postponed.

Once it starts, mediation is to be completed within 90 days, although this deadline can be extended indefinitely. Again, however, the end result of the mediation process may be a favorable rezoning for objecting builders, since all towns will have to bring their plans into compliance with the new regulations and satisfy their fair share obligations.

Different Rules for Highlands Towns

On October 30, 2008, COAH modified the above timetable for the 88 towns in the Highlands Region. For towns in the Highlands Region that filed a Notice of Intent to conform their zoning to the Highlands Regional Master Plan, the deadline for filing with COAH is extended to December 8, 2009. This extension may not affect towns in the Highlands Region that have not previously filed with COAH. Towns that have not previously filed with COAH, whether they are in the Highlands Region or not, are free to file housing plans or petitions with COAH on whatever timetable they choose. Once they file, the agency process described above governs. Those towns remain vulnerable to exclusionary zoning litigation unless and until they file with COAH.

Conclusion

The unspoken reality is that COAH is short of experienced staff. Based upon past performance, it is doubtful that it will be able routinely to review housing plans and conduct mediations in accordance with the nominal timetables in its regulations. Only a strenuously aggressive strategy by particular objectors will keep a town moving forward through this process at any reasonable pace. As noted above, towns that have not filed “third round” plans with COAH (and those that previously filed such plans but miss the deadlines described above for the filing of revised plans) are vulnerable to builder’s remedy suits.

Posted by Henry T. Chou, Esq. at 03:50 PM | Permalink | Comments (0) | TrackBacks (0)

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

By: Thomas F. Carroll, III, Esq. and Michael J. Lipari, Esq.

Builders, architects, planners and designers see the increasing need to explore environmentally friendly or “green” elements of construction. But these efforts are sometimes halted by the cost of implementing green systems, the time required to keep up with new technologies, and the time and cost associated with learning about the new technologies. The dilemma of whether to invest in green building in New Jersey may soon be resolved, at least with regard to the use of solar power to generate electricity into new projects. Several initiatives have been introduced in the Legislature that, if passed, will require builders and developers to incorporate solar energy systems into their projects as a prerequisite to governmental approval. At first glance this may appear to be yet another barrier to achieving an economically feasible building project in New Jersey, but certain initiatives such as roof warranty funds and state and federal tax credits are also on the horizon, which may provide enough incentive for building professionals and property owners to “go green.“

New Jersey, which is quickly becoming a pioneer in the world of renewable energy, has already enacted legislation that promises to significantly reduce greenhouse gases and provide 22.5% of its energy through renewable sources by 2020. The State is also set to construct the nation’s first offshore wind farm, which will provide alternative energy to approximately 110,000 homes from a series of turbines located some twenty miles off the coast of Avalon. The Legislature is currently considering additional bills that will, if enacted, further advance the implementation of alternative energy. Solar energy is at the forefront of this movement and examples of such bills include the requirement of solar energy systems in all new public schools (A-3208), green building standards in all new affordable housing (A-1626), solar panels on noise barriers erected on roads and highways (A-3347) and solar energy fields on preserved farm land (A-2859). However, the proposed legislation with the most teeth is aimed at new home building.

Solar Energy Mandatory?

Of particular interest to building professionals is the “Residential Development Solar Energy Systems Act” (A-1558), which was overwhelmingly passed in the Assembly and may pass in the Senate soon. This bill, as recently amended, requires that any developer of “25 or more dwelling units” offer to install, or provide for the installation of, a solar energy system at the point that the “prospective owner enters into negotiations with the developer to purchase the unit.” This obligation will, if enacted, have a significant impact on the planning and building stages of a residential development. Building professionals will be faced with new variables that will need to be addressed at the early stages of the development process. This bill would also require developers to “disclose in any advertising” 1) that a prospective owner may have a solar energy system installed in their unit; 2) the total cost of the system installation; and 3) an estimate of the potential savings associated with the solar energy system as opposed to the standard gas or electric system. The bill also offers some technical challenges, such as how to meet the bill’s requirements when a home does not have a southern exposure.

Another legislative initiative that may cause a change in the approach taken with regard to environmental building design is A-2994. That bill would amend the Municipal Land Use Law to authorize municipalities to require the use of solar energy as a condition of site plan or subdivision approval. Earlier this year, municipalities were given the authority to include a “green buildings and environmental sustainability plan element” in their master plans. Now, A-2994 proposes to go one step further by authorizing municipalities to condition approval of a site plan or subdivision upon compliance with those solar energy standards included in the master plan. This poses many new and previously unexplored issues to builders and developers who may not have planned for such conditions. Building professionals will have to prepare for municipalities that may implement such green elements into their master plans. If there is a green element, builders will also need to bring themselves up to speed on this emerging technology to prepare for the possibility that such conditions are imposed.

Overcoming Obstacles

Additional conditions and requirements imposed upon a project typically result in an increase in expenditures and a decrease in economic feasibility. One of the most significant obstacles facing the expansion of solar energy systems is the installation. Most residential solar systems begin with installation of solar panels to a roof with brackets. This type of installation typically punctures or alters the roof in a way that voids the roof manufacturer’s warranty. With roofs being one of the more expensive home replacement items, that possibility poses a substantial risk for homeowners.

The Legislature is working to provide assistance by proposing a bill that would establish a “Solar Roof Installation Warranty Fund” to provide money to pay claims against solar equipment installers for damage caused to roofs during installation that is not covered by the warranty. This fund would provide additional protection for homeowners against a potential loss from roof damage caused as a result of solar panel installation. It is important to note that the bill in its present form does not yet include residential buildings.

Tax Assistance

Solar energy systems are not exactly new, although they are catching on more and more with builders and property owners. One reason such systems have not become even more commonplace is the cost associated with their implementation. Congress and the New Jersey Legislature have acknowledged this additional burden and they have passed (or proposed) certain tax-based initiatives to ease the financial impact of going green with solar power.

For example, federal tax credits are now available to make green building, and particularly solar energy implementation, significantly more practical. The “Emergency Economic Stabilization Act of 2008”, signed into law on October 3, 2008 (and more commonly known as the “bailout bill”), includes an extension of the Section 25D residential solar investment tax credit. This 30% credit associated with residential solar energy systems used to heat property and generate electricity for use in a dwelling has been extended through December 31, 2016. In addition to the extension, the credit no longer has a $2,000 cap for solar electric property expenditures (the $2,000 cap is still in effect for solar water heating). These credits may now make solar energy an affordable alternative and a worthwhile investment for many homeowners.

While federal tax breaks are already in place, New Jersey is not far behind with proposed legislation that would provide additional tax relief to the environmentally conscious builder. Currently before the Legislature is the “Green Building Tax Credit Act,” which would allow certain tax credits toward the corporation business tax, gross income tax, and certain other specified taxes for builders and owners who design and construct buildings that meet certain "green building" criteria. These types of tax benefits will ease the burden on homeowners and reduce the time it takes to recoup the investment.

Other Bills in the Making

Two other pending bills are of interest. The first, S-1066, would allow developers to qualify for low-interest loans from the New Jersey Economic Development Authority when building a “high performance green building” (as defined according to “LEED” standards or other standards specified in the bill). Another bill of interest is S-702, a bill that would authorize modification of the Uniform Construction Code’s energy subcode and provide for down payment assistance for buyers of homes meeting certain energy subcode requirements.

Conclusion

Until now, certain renewable forms of energy, including solar power, were considered by many as nothing more than the “flavor of the month,” with little chance of sustainability due to the costs associated with their implementation. The State of New Jersey is trying to turn solar power into a legitimate and, in some cases, mandatory option for building professionals and property owners alike. The legislative proposals discussed above directly impact building professionals by creating new challenges that require a change in the thinking and approach from the purchase of the land through the closing of the units.

Legislators are taking an aggressive approach to ensuring that builders can seamlessly implement such technology. The creation of the roof warranty fund would be a step in the right direction. The tax credits provided by Congress, as well as those proposed by the State Legislature, may be just enough to sway those that previously would not have considered making the change. As the State continuously takes steps toward achieving a greener New Jersey, the prudent building professional should keep informed of such legal developments and be prepared to handle the challenge. Some of the above-referenced proposed bills will likely become law, and others will not. Others are already in effect. Moreover, municipalities are beginning to impose such “green” requirements through their ordinances. All such new laws must be carefully monitored in this dynamic area.

Posted by Henry T. Chou, Esq. at 12:06 AM | Permalink | Comments (0) | TrackBacks (0)

By: Henry T. Chou, Esq.

By the end of the day on December 31, 2008, 234 out of 302 eligible municipalities had filed housing elements and fair share plans ("housing plans") with the New Jersey Council on Affordable Housing ("COAH"). By doing so, those municipalities maintained their immunity from builder's remedy lawsuits. With the exception of municipalities in the Highlands that were previously under COAH's jurisdiction, municipalities that have not filed housing plans with COAH are now vulnerable to builder's remedy lawsuits. In mid-December 2008, the New Jersey State League of Municipalities and several legislators requested COAH and Governor Corzine to grant an extension of the December 31 deadline, but the requests were denied.

Posted by Henry T. Chou, Esq. at 11:23 AM | Permalink | Comments (0) | TrackBacks (0)