New Jersey Land Use and Environmental Law

By: Henry T. Chou, Esq.

In response to the State's recession woes, the Legislature has passed an omnibus economic stimulus bill (A-4048/S-2299) aimed at reinvigorating the real estate development industry through innovative tax incentives and fee moratoriums, among other measures.

The bill proposes an Urban Transit Hub Tax Credit Program, which would promote corporate capital investment and development near mass transit centers through a 100% tax credit to companies that invest at least $75 million and create or relocate at least 250 jobs near mass transit stations in nine urban municipalities.

The bill also seeks to revitalize local redevelopment by implementing a new Economic Redevelopment and Growth Grant Program, which would implement new financing mechanisms for redevelopment projects such as credits for future sales and business taxes as an alternative to traditional borrowing.

Perhaps the most important piece of the bill is a provision that would place a temporary moratorium on the 2.5% "affordable housing" fee that all nonresidential developers are responsible for paying under a state law established last year. The proposed bill would suspend the fee until July 1, 2010, provided that developers obtain preliminary site plan or subdivison approval by that date, and obtain building permits by January 1, 2013. Developers who previously paid the fee would be reimbursed. The proposed bill would also wipe away any affordable housing obligations incurred by municipalities as a result of nonresidential growth during the moratorium.

The bill now awaits Governor Corzine's signature, after which it will become law.

Posted by Henry T. Chou, Esq. at 05:43 PM | Permalink | Comments (0) | TrackBacks (0)

By: Henry T. Chou, Esq.

In a unanimous decision styled New Jersey Shore Builders Association v. Jackson Township, the Supreme Court has affirmed the Appellate Division’s ruling that municipalities cannot require builders to set aside open space and recreation facilities or make monetary “in lieu” payments as a condition of receiving development approval under the Municipal Land Use Law (MLUL).

The case arose from ordinances in Jackson Township and Egg Harbor Township requiring builders to either set aside land or make a monetary “in lieu” payment as a condition of receiving approval. The Ocean County judge in the Jackson case determined that the requirement was unlawful under the MLUL, while the Atlantic County judge in the Egg Harbor case held that it was within the municipality’s “implied statutory authority” to make the exaction.

The Appellate Division consolidated the two cases and affirmed the trial court’s decision in Jackson, while reversing the other court’s decision in Egg Harbor. It determined that the MLUL did not provide either explicit or implicit authority for municipalities to require set asides or monetary payments.

In affirming the Appellate Division’s decision for “substantially the same reasons,” the Supreme Court injected a few additional thoughts concerning the limits of municipal power under the MLUL. While acknowledging that one of the enumerated goals of the MLUL is to preserve open space, the Court held that municipalities were going about it the wrong way. It determined that open space could not be exacted from property owners without “just compensation,” and that it could only be required under the MLUL when a developer seeks approval for large “Planned Unit Development” (PUD). Even as to PUDs, however, municipalities would not be allowed to exact money payments “in lieu” of providing actual open space or recreation.

This decision represents a significant victory for the homebuilding community in New Jersey, which has been forced into “donating” open space and recreational facilities or money for many years. It ends an abusive municipal practice and will require municipalities to create fair, new methods for preserving open space.

Posted by Henry T. Chou, Esq. at 10:56 AM | Permalink | Comments (0) | TrackBacks (0)

By: Henry T. Chou, Esq.

After 18 months of negotiations, Senator Ronald Rice (D-Essex) and Assemblyman John Burzichelli (D-Gloucester) have introduced a compromise bill that proposes to maintain the government's ability to condemn property for redevelopment, while attempting to reign in past practices that have been deemed abusive.

The catalyst for the proposed bill was the New Jersey Supreme Court's decision in Gallenthin v. Paulsboro in June 2007. Prior to the Gallenthin decision, many municipalities blighted properties solely on the basis that the properties were not being used for their "most optimal purpose." In the Gallenthin, the Court held that property is not “in need of redevelopment” merely because it is not being used for its most optimal purpose, but also must be found to be "deteriorated and stagnant" under the Local Redevelopment Housing Law.

In the aftermath of the Gallenthin decision, Assemblyman Burzichelli began work on a bill that aimed to safeguard property owners from abusive practices associated with eminent domain. However, that bill would not advance beyond the Senate Community and Urban Affairs Committee, which is chaired by Senator Rice, a proponent of eminent domain.

Subsequently, the two legislators worked together to create a compromise bill that was palatable to both. The bill, which was finally introduced on June 14, 2009, proposes to limit the amount of non-qualifying properties to be included in areas in need of redevelopment, limit the time for takings to occur, assess property values based on the proposed redevelopment use, and impose stricter notice and public hearing requirements on condemning entities, among other measures.

It is anticipated that the Legislature will vote on the bill when it reconvenes in the fall.

Posted by Henry T. Chou, Esq. at 01:34 PM | Permalink | Comments (0) | TrackBacks (0)