The Appellate Division released an opinion today holding that Gov. Christie overstepped his statutory authority in abolishing COAH through the Reorganization Plan. The issue of remedy was very sticky, i.e., whether COAH is now to be “reconstituted,” but the court essentially ignored that issue.
]]> One issue now is whether there is any state agency enforcing the NJ Fair Housing Act (FHA). DCA clearly cannot do it (unless Christie acquires a stay upon petition for certification to the NJ Supreme Court) and there is a question as to whether COAH is an agency with a quorum that can meet. Under the FHA (Section 305(b)) members with expiring terms can serve until their successors are appointed (and I think the terms of all but one COAH member expired). It is not known whether they submitted letters of resignation. Christie could appoint new members if needed, but it’s unlikely he would do so unless he runs out of appeals and stays. We shall see.No matter how that scrum turns out, the bottom line is that DCA is “out of the COAH business” in the absence of a stay, and COAH wasn’t even meeting or doing anything before they got abolished. This seems to provide additional support for the proposition that builder’s remedy suits should not be dismissed even as to towns that filed with COAH, and also additional support for seeking inclusionary development use variances as an inherently beneficial use. Different judges will, of course, look at this issue differently, but there clearly is no effective state administrative remedy to exhaust.
Another question is how this will affect the pending appeals on the COAH regs. I would not be surprised if the Governor moves for a stay of today’s decision, seeks Supreme Court certification of that decision, and then moves to have the Supreme Court hear all such issues together. That could conceivably further delay a decision on the COAH reg appeals and, as we know, the Court was in no rush to decide those appeals even before today’s opinion. This is further complicated by the uncertainty over the confirmation of Christie’s nominees to fill the seats of Justices Long and Wallace, and whether the rest of the Court wishes to wait for that to get sorted out. It is also possible that the Governor will decide to leave matters be without further appeal attempts. Time will tell.
Another possible consequence of today’s opinion is a new push for legislation replacing the COAH process. Today’s opinion makes it clear that COAH can be abolished through legislation (although not by the Governor unilaterally).
]]>In response to Governor Christie's Executive Order No 2, which directs state agencies to implement reforms furthering common sense principles, the New Jersey Department of Environmental Protection (NJDEP) has adopted a new rule that gives NJDEP the flexibility to modify compliance with rules in certain circumstances that do not compromise protections to the environment and public health. Requests for waivers will be accepted beginning on August 1, 2012.
]]> In introducing the new rule, NJDEP Commissioner Bob Martin stated that "[a] lack of flexibility can sometimes produce unreasonable, unfair or unintended results that actually undermine the goal the rule or requirement was intended to attain," and that the rule "provides us with a modest measure of flexibility to manage special circumstances but through a process that will be used under limited circumstances and with total transparency.''To obtain a waiver, an applicant must demonstrate that at least one of four criteria is met:
1. Public Emergency -- There is a public emergency that has been formally declared.
2. Conflicting Rules -- Conflicting rules (between federal and state agencies, or between state agencies) are adversely impacting a project or activity from proceeding.
3. Net Environmental Benefit -- A net environmental benefit would be achieved.
4. Undue Hardship -- Undue hardship is being imposed by the rule requirement(s).
According to NJDEP, there is no automatic right to waivers, and they will be granted only on a case-by-case basis after careful review by technical staff and approval of the Commissioner. Waivers cannot violate state or federal statutes, and NJDEP avers that the rule will not compromise its core mission of protecting public health, safety and the environment.
NJDEP is currently developing standardized submission forms and electronic systems for the receipt and tracking of all requests, as well as on-line reports that will allow the public to track applications to access NJDEP's decisions.
]]>On January 17, 2012, Governor Chris Christie signed into law P.L. 2011, c. 203, which extends the deadline for counties and municipalities to file wastewater management plans by at least 180 days. The legislation, which was passed by the Senate and General Assembly on January 9, 2011, is aimed at averting the “negative economic impacts” associated with New Jersey Department of Environmental Protection (NJDEP) regulations that would have required the withdrawal of numerous wastewater service areas throughout the state.
]]> Under New Jersey’s Water Quality Planning Act, municipal and county wastewater management plans are legally binding documents that identify which areas can be served by public sanitary sewers and which areas can be served only by septic systems or other alternative wastewater disposal mechanisms. In regulations issued in 2008, NJDEP declared (1) virtually all existing wastewater management plans obsolete and (2) that it would invalidate all existing wastewater management plans and prohibit new connections to existing systems unless municipalities and counties submitted revised plans within 9 months. The deadline was later administratively extended to 2009 and again to April 7, 2011.Despite the prior extensions, many counties and municipalities have not finalized their revised wastewater management plans. Since there is no political appetite to upset the fragile economy by implementing a moratorium on new sewer connections, the legislation received strong support from both the Senate and General Assembly.
Specifically, the law provides that wastewater service area designations and sewer service designations remain in effect and shall not be withdrawn for a period of at least 180 days after the enactment of the bill, and gives the NJDEP commissioner the discretion to extend that period “for such longer time as [the commissioner] may determine.” At the end of the 180-day period, however, counties and municipalities must submit the portions of the wastewater management plans that they have completed, and NJDEP will have the discretion to adopt any such portions that are deemed to be in compliance with its regulations.
The legislation was opposed by the environmental lobby, but staunchly supported by the development community. The Legislature passed the measure and the Governor signed it into law over objections by the U.S. Environmental Protection Agency, which stated that provisions of the law that allow NJDEP to consider applications for site-specific amendments to wastewater management plans may violate the federal Clean Water Act.
The New Jersey Senate has passed a bill known as S3156, which would extend the deadline for counties and municipalities to file wastewater management plans by at least 180 days, and potentially up to 2 years. The bill, which was passed by the Senate on January 9, 2011, will now move to the General Assembly, which is also anticipated to pass it in short order.
]]> Under New Jersey’s Water Quality Planning Act, municipal and county wastewater management plans are legally binding documents that identify which areas can be served by public sanitary sewers and which areas can be served only by septic systems or other alternative wastewater disposal mechanisms. In regulations issued in 2008, the New Jersey Department of Environmental Protection (“NJDEP”) declared (1) virtually all existing wastewater management plans obsolete and (2) that it would invalidate all existing wastewater management plans and prohibit new connections to existing systems unless municipalities and counties submitted revised plans within 9 months. The deadline was later administratively extended to 2009 and again to April 7, 2011.Despite the extensions, many counties and municipalities have not finalized their revised wastewater management plans. Since there is no political appetite to upset the fragile economy by implementing a moratorium on new sewer connections, the Senate's bill aims to further extend the submission deadline.
Specifically, S3156 provides that wastewater service area designations and sewer service designations remain in effect and shall not be withdrawn for a period of at least 180 days after the enactment of the bill, and gives the NJDEP Commissioner the discretion to extend that period up to 2 years.
The Senate passed the bill by a vote of 29-7 despite objections by the U.S. Environmental Protection Agency, which stated that a provision of the bill that allows certain sewer extensions into undeveloped areas "defies common sense" and may violate the federal Clean Water Act. The environmental lobby is opposed to the bill, but it has strong support from the development and business communities and is expected to be signed into law by the Governor once it clears the General Assembly.
]]>The New Jersey Legislature is set to introduce a bill that aims to stablize the state’s solar industry, which has been in free fall since early summer. Assemblyman Upendra Chivakula (D-Middlesex) expects to introduce a bill in the lame duck session that would halt the precipitous drop of prices for solar renewable energy certificates (SRECs), which is a major mechanism for financing photovoltaic (PV) systems in New Jersey.
]]> In recent years, New Jersey’s SREC program was a major driver of solar projects, propelling New Jersey to the nation’s number two position for solar capacity, behind only California. However, the rush to develop solar projects has also led to an oversupply of SRECs, which has caused SRECs to lose half their value since June 2011. As a result of the SREC market crash, many domestic and foreign investors have abandoned their solar projects and/or agreements to pursue solar projects.Chivakula’s bill proposes to increase the Renewable Energy Portfolio Standard (RPS), which is the percentage of total electricity that power companies must generate from renewable energy sources. An increase in the RPS would compel power companies to buy more SRECs, a move that would address the current oversupply and increase SREC prices to levels that will once again spur solar development.
The proposed bill has the backing many stakeholders, including the solar industry and an advisory group to the New Jersey Board of Public Utilities. Chivakula anticipates introducing the bill in mid-November 2011.
]]>Today, Acting Governor Kim Guadagno signed a bill into law that extends a prior moratorium on the 2.5 percent non-residential development fee. This law (Legislative Bill S-2974) extends the moratorium for an additional two years, which should provide relief to commercial real estate developers.
]]> Background on the 2.5 Percent FeeAs a result of the ongoing economic crisis and collapse of the real estate market, the New Jersey Legislature passed the New Jersey Economic Stimulus Act of 2009, which was signed into law on July 28, 2009. The Stimulus Act amended the Fee Act to suspend the 2.5 percent non-residential development fee until July 1, 2010, provided that non-residential developers obtain preliminary site plan or subdivision approval by that date, and subsequently obtain building permits by no later than January 1, 2013.
Extension of the Moratorium
Since July 1, 2010, qualifying projects have been subject to the 2.5 percent fee. The signing of S-2974 amends the Stimulus Act and extends the moratorium to July 1, 2013. Thus, projects which have or receive preliminary or final site plan approval prior to July 1, 2013 are again exempt from the 2.5 percent fee provided that building permits are obtained by December 31, 2015.
This law also extends the moratorium back to July 1, 2010, allowing for the reimbursement of fees paid in the interim, unless the fees have already been spent on an affordable housing project. If the 2.5 percent fee has already been paid, the developer has 120 days to claim a refund from the municipality, provided that the money has not been spent. If the money has already been spent, the developer is not entitled to any refund.
In an effort to provide certainty to development projects in the urban and more developed areas of the State, legislation has been adopted that extends general development plan (GDP) protection to large development projects situated on smaller sites.
GDP approval is based upon submission of conceptual plans to the municipal planning board prior to any application for site plan or subdivision approval. Once GDP approval is granted the developer has the right to develop the property in accordance with the GDP regardless of any subsequent changes in local ordinances or other local requirements. This right can extend for as long as 20 years.
The Legislature provided for vertical GDP approvals recognizing the costly and time consuming process to engage in urban area development projects due to challenges such as land assemblage, environmental clean up, slower absorption rates and the difficulty to obtain project financing. Additionally, since the typical application process may extend over many years, it is possible that the views of elected officials or the planning board might change. The implementation of vertical GDP legislation now offers the additional protections to smaller sited projects. In this difficult economic climate, a GDP may be the key to demonstrating stability in the local market and could assist developers with obtaining project financing.
On June 16, 2011, the Law Division of the Superior Court issued a decision in Estaugh Commons v. Haddonfield Borough Zoning Board of Adjustment that makes it harder for municipal land use boards to deny use variance applications by developers seeking to build affordable housing. At issue in the lawsuit was whether an inclusionary development proposed by a private developer should have been considered an “inherently beneficial use” by the Zoning Board of Adjustment when evaluating the developer’s use variance application.
]]> The Use Variance StandardsTo obtain a use variance, i.e., approval for a use not specifically permitted under the zoning ordinance, an applicant must demonstrate that its proposed project meets both the "positive" and "negative" criteria required by the Municipal Land Use Law. To satisfy the positive criteria, an applicant must show that the site is specially suited for the proposed use. The negative criteria requires the applicant to demonstrate that the proposed use will not pose a substantial detriment to the public good and will not substantially impair the purpose of the master plan and zoning ordinance.
Affordable Housing as an Inherently Beneficial Use
In the past, the courts have held that 100% affordable housing projects (developments that consist entirely of affordable housing units) and affordable housing projects included in a town’s COAH-approved compliance plan are considered "inherently beneficial" uses in the same vein as hospitals and schools, with such status presumptively satisfying the positive criteria without the need to show that the site is specially suited for affordable housing.
Implications of the Haddonfield Case
In the Haddonfield case, the Zoning Board of Adjustment refused to consider the applicant's proposed inclusionary project (a development containing both market-rate units and affordable units) as an inherently beneficial use because it was not a 100% affordable housing project, i.e., only 7 out of the 35 total units were to be affordable units. On that basis, the Board determined that the developer failed to satisfy the positive criteria and denied its use variance application.
The court reversed the denial, holding that the "inherently beneficial" status should also apply to inclusionary projects, especially in municipalities that have unmet affordable housing obligations, such as Haddonfield. It reasoned that affordable housing is no less beneficial to society just because it is provided as a part of an inclusionary development rather than a 100% affordable housing project. Importantly, the court determined that the "inherently beneficial" status should apply even though the Borough had already received third round substantive certification from COAH for a housing plan that did not include the proposed inclusionary project.
In light of its holding, the court remanded the matter back to the Board for further consideration of the use variance application. Since the positive criteria have been established by virtue of the "inherently beneficial" status of the inclusionary development, the only issue left for the Board to determine is whether the applicant has satisfied the negative criteria.
At this juncture, it is not known whether the Board intends to appeal the court's decision. If, however, the court's decision is left unchallenged or upheld on appeal, it will be an important tool for developers who seek use variances to build inclusionary developments.
]]>On June 29, 2011, Governor Chris Christie issued a “Reorganization Plan” designed to abolish the Council on Affordable Housing (“COAH”). Unless both houses of the New Jersey Legislature pass a concurrent resolution within 60 days disapproving of the Reorganization Plan (“RP”), the RP will become effective and COAH will be formally abolished.
]]> The Legislature typically recesses for the summer, although it is possible that they will meet in summer sessions this year. Nevertheless, the passage of a concurrent resolution disapproving of the RP is considered doubtful, and it is likely that COAH will be formally abolished on or about August 28, 2011. COAH has not been meeting with any regularity or processing municipal lower income housing plans since October 2010, at which time the Appellate Division invalidated numerous COAH regulations, and it is not clear whether they will meet again.One question is the likely effect of the RP on the New Jersey Supreme Court proceedings in which the Court is considering whether the Appellate Division’s decision invalidating COAH regulations should be affirmed. A related question is the remedy the Supreme Court might employ to address compliance with the Mount Laurel doctrine given the invalidation of the COAH rules and the slated abolition of COAH. It is difficult to imagine, after 12 years of COAH delay in enforcing the Mount Laurel doctrine, and now the RP, that the Court will do anything but appoint a master to oversee compliance with the constitutional obligation. Time will tell.
Builder’s Remedy Suits Now More Viable?
Another question posed by the RP is whether it is now easier to sustain builder’s remedy suits filed against towns that have previously filed fair share plans with COAH. When COAH was a functioning agency, it was routine to transfer such suits to COAH for handling. However, at least one court has recently declined to transfer such a suit to COAH, even when COAH was ostensibly a functioning agency, since COAH did not provide an adequate administrative remedy. Now that COAH is being formally abolished, it would seem that the viability of builder’s remedy suits is enhanced, even as to towns that have filed fair share plans with COAH.
An Impetus to Legislation?
Lastly, observers of the political scene wonder whether the RP will increase the pressure on the Legislature and Governor to agree upon legislation that implements the Mount Laurel doctrine in a constitutional manner. Such legislation would be the preferred solution to the endless litigation over satisfaction of the Mount Laurel doctrine if the legislation does not seek to impose uncompensated burdens on those who are asked to provide lower income housing, and it is otherwise constitutional.
Our Land Use attorneys at Hill Wallack LLP would be glad to answer any remaining questions you may have concerning the RP or related matters.
On June 23, 2011, Governor Christie conditionally vetoed S-2006/A-3125, which would have amended the Municipal Land Use Law ("MLUL") to generally prohibit municipalities from regulating the installation of solar panels on residential properties and to limit the amount of fees municipalities may charge for applications pertaining to solar panel installations. The bill was business-friendly insofar it would have made it easier and cheaper for homeowners to install solar panels.
]]> Governor Christie's conditional veto message recommended the full preservation of a municipality's zoning powers, while seeking to strike a balance between it and the State's policy of promoting renewable energy sources. Specifically, the Governor recommended the removal of Section 1 of the bill, which would have restricted municipal zoning powers pertaining to solar panel installations, and proposed new language to clarify that municipalities may charge reasonable fees consistent with the MLUL and to clarify the definition of a "photovoltaic solar panel."By way of the conditional veto, the bill is now returned to the Legislature for consideration of the Governor's recommendations.
]]>On May 16, 2011, New Jersey Board of Public Utilities (BPU) opened a 29-day window for companies to file applications to build offshore wind projects along the New Jersey coast. The application process represents New Jersey's latest effort to spur the development of the nation's first offshore wind project.
]]> In August 2010, Governor Christie signed the Offshore Wind Economic Development Act, which established financial incentives and tax credits to businesses that construct manufacturing, assembly and water access facilities to support offshore wind projects in New Jersey.Additionally, the Act established an Offshore Wind Renewable Energy Certificate (OREC) program, where energy companies generating power from carbon-based energy sources will purchase certificates from producers of offshore wind energy to offset carbon emissions and avoid fines associated with carbon emissions.
Under the Act, any new offshore wind project along the New Jersey coast must generate at least 1,100 megawatts of wind generation capacity. Applicants must demonstrate that they have financial integrity and sufficient access to capital to complete their projects. Additionally, applicants must submit analyses of the projected economic and environmental impacts of their projects and the effects of their projects on New Jersey's electricity ratepayers.
There are currently no offshore wind projects in U.S. territorial waters, but numerous companies, including several in New Jersey, have expressed interest in building the nation's first offshore wind farm.
The BPU will accept applications until June 14, 2011.
]]>The New Jersey Supreme Court has granted the petitions for certification filed by the New Jersey State League of Muncipalities (NJSLOM) and thirteen municipalities seeking review of the Appellate Division's invalidation of portions of COAH's "third round" regulations concerning municipal affordable housing obligations.
]]> On October 8, 2010, the Appellate Division issued an opinion invalidating substantial portions of COAH's third round regulations on the basis of arguments presented by the New Jersey Builders Association (represented by Hill Wallack LLP), the National Association of Industrial and Office Properties, the Fair Share Housing Center and other litigants. Among other things, the court invalidated COAH regulations that required developers to provide affordable housing without any compensating benefits and that implemented a "growth share" methodology for determining municipal affordable housing obligations for the third round (1999-2018) compliance period.By granting certification, the Supreme Court will review the Appellate Division's decision and determine whether COAH's third round regulations are constitutional under the long-standing Mount Laurel doctrine. It is anticipated that the Supreme Court will hear the matter in the fall of 2011.
]]>Princeton Borough, Princeton Township and Princeton Regional Schools have contracted with the New Jersey consulting firm Gabel Associates to provide a feasibility study to explore the potential for solar installations throughout the municipalities. If all goes well, the entities will enter into a power purchase agreement (“PPA”) with a solar developer to implement the plan.
A PPA is a contract between an electricity generator/provider and a power purchaser for the purchase of electricity generated from a facility. PPAs are most commonly used in the generation and sale of solar and wind energy. These agreements typically range from 15 to 25 years, at which time the project may be renewed, modified or abandoned. The PPA is critical to a solar project because it secures a long-term revenue stream to the seller through the sale of energy to the purchaser, which is often the host of the facility. The PPA sets forth the terms of the electricity rates to be paid to the seller, which may be flat or escalate over time.
Once the seller can determine its revenue stream, it can obtain the necessary financing to move forward with construction of the infrastructure. Currently, there are federal tax credits available that will make the investment worthwhile for the seller. Qualifying tax credits obtained as a result of the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009 can be combined with certain tax exempt financing to reduce the investment required to develop the project.
This exciting news for the Princeton community comes just one month after Princeton University announced its plan to develop a 27-acre solar installation system that could produce 8 million kilowatt-hours per year.
In an opinion issued on February 24, 2011, the Appellate Division ruled that COAH's Regional Affordable Housing Development Program Guidelines ("Guidelines") are actually regulations that should have been adopted under the Administrative Procedure Act ("APA").
]]> The court determined that the Guidelines, which permitted a municipality under the jurisdiction of a regional planning entity (Meadowlands Commission, Pinelands Commission, Fort Monmouth Economic Authority, Highlands Water Protection and Planning Council and Casino Redevelopment Investment Authority) to transfer up to 50 percent of its affordable-housing obligation to another municipality in the region, were not "non-binding" recommendations because they included "specific standards and conditions" and constituted a "statement of general applicability and continuing effect that implements or interprets law or policy."Holding that the Guidelines are actually regulations that are subject to APA procedures for rule-making, the Court invalidated the Guidelines and remanded the matter to COAH to give the agency an opportunity to adopt appropriate regulations.
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