January 1, 1900

by Thomas F. Carroll, III

In a major victory for the development industry and other growth advocates, the New Jersey Legislature enacted the Permit Extension Act in the summer of 2008. It will preserve many permits and approvals throughout New Jersey so that those permits and approvals do not lapse during the economic downturn we are currently experiencing. However, it is important to recognize that, per the terms of the legislation itself, the Permit Extension Act does not extend all permits and approvals and, as to the Highlands Region, the Highlands Council has essentially declared that the legislation does not apply in the Highlands (at least not now). This article discusses the Permit Extension Act and some of the circumstances under which it does not operate to extend permits and approvals.

The Permit Extension Act

The Permit Extension Act (PEA) became effective when signed by Governor Corzine on September 6, 2008. 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 (and possibly up to six months thereafter as well, depending on application of the tolling language of the bill).

The PEA extends a wide variety of permits and approvals, including many state-issued permits and site plan and subdivision approvals issued by local planning boards and zoning boards. Essentially, all State, county, regional and municipal permits and approvals are extended (but not federal permits) unless excluded by specific language in the act.

Permits are not extended per the PEA 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 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).

Whether the PEA operates to extend any given permits and approvals should be explored with counsel, but it is clear that countless permits and approvals throughout the state will benefit by the act.

The PEA in the Highlands Region

The Highlands Council has essentially decreed that the PEA does not apply within the Highlands Region—even within the Highlands Region lands where development is to take place per the Highlands Act. Whether the Highlands Council decree was lawful is highly suspect, but the Council’s action must be noted, as follows.

In a notice appearing in the October 6, 2008 edition of the New Jersey Register, the Highlands Council has unilaterally declared that no approvals in the Highlands Region are subject to the PEA. This rather remarkable edict applies, in the opinion of the Highlands Council, to both the Highlands Preservation Area and the Highlands Planning Area.

No less remarkable is the Highlands Council’s reasoning for its decree—the Highlands Council now states that there are no areas designated for growth in the Highlands Regional Master Plan (RMP). From a purely legal perspective, it is highly questionable whether the Highlands Council has the legal authority to decide where legislation does, or does not, apply.

As noted above, the Legislature decided, through the PEA, that permits would not be extended in “environmentally sensitive areas,” with such areas defined to include the Highlands Region, except for lands designated for growth in the Highlands RMP. Put another way, the Legislature decided that permits and approvals within the Highlands Region would be extended if the affected lands are lands designated for growth within the RMP.

The RMP and its mapping lead readers to conclude that, at least on their face, there are some areas designated for growth within the Highlands Region. Indeed, the legality of the RMP itself is highly questionable, for a number of reasons, if it lacks any areas designated for growth, even within the Highlands Planning Area. Nevertheless, the Highlands Council “provided notice” in the October 6, 2008 New Jersey Register that the PEA does not apply anywhere within the 88 municipalities comprising the Highlands Region because the RMP does not contain any areas designated for growth.

The October 6 notice further states that the PEA will not apply in the Highlands Region “until such time as the Highlands Council designates growth areas in the” RMP. The notice further points to a “policy” in the RMP which states that “provisions and standards relating to regional growth activities which increase the intensity of development shall be discretionary for conforming municipalities and counties.” Thus, it is apparently envisioned that municipalities and counties will seek “conformance” from the Highlands Council as to their Planning Area lands, and that the PEA may therefore apply to some unspecified Highlands Region lands if the Highlands Council should “at some future date, designate growth areas” in the RMP during the extension period of the PEA. The October 6 notice also seems to rely, in defense of the Highlands Council’s decree concerning the PEA, on the Governor’s “ordering of additional protections” within the Highlands Region through his Executive Order 114.

The Bottom Line

The Permit Extension Act has already operated to “save” many projects that would otherwise have been torpedoed due to the lapsing of permits and approvals, and more such projects will undoubtedly be saved as time goes on. While economic conditions currently prevent many approved developments from going forward, it is hoped that conditions will improve within the “tolling period” offered by the PEA so that such economic development can take place without the need to re-acquire approvals, cope with intervening changes in the law, etc.

As to the Highlands Region, through its October 6 notice the Highlands Council has taken it upon itself to “rule” that the PEA simply does not apply to the 88 towns within the Highlands Region because of the way it has chosen to characterize the RMP. Even as to mapped Existing Community Zones within the Highlands Planning Area, the Highlands Council has advised, through its October 6 notice, that lands within those zones are not “designated for growth” and that the PEA does not apply therein. The Highlands Council’s position means, for example, that Morristown and Dover are not areas designated for growth in the RMP, and that the PEA therefore does not apply to permits and approvals issued in those towns, or in any other Highlands towns. ,p. The plan conformance process is not obligatory in the Planning Area per the Highlands Act, and will likely take years even if pursued by given municipalities, with the end result of the plan conformance process being uncertain at best. Litigation contesting the terms of the October 6 notice may be the only alternative if permits and approvals are to be preserved. Among the types of development to be negatively affected by the October 6 notice may be developments approved to assist municipalities in meeting their Mount Laurel obligations.

Finally, readers should be advised that the October 6, 2008 New Jersey Register also contains a notice concerning the effect of the PEA within the Pinelands Area.

Thomas F. Carroll, III, is partner-incharge of the Land Use Division of Hill Wallack LLP and Land Use Counsel to the New Jersey Builders Association. He also serves on the NJBA’s Land Use and Planning Committee and its Legislative Affairs Committee, as well as its Affordable Housing Task Force. A past-Chair and Member of the Board of Directors of the New Jersey State Bar Association’s Land Use Law Section, he concentrates his practice in the development application process and the litigation required in the course of land development.