January 1, 1900

Kenneth E. Meiser

The New Jersey State Planning Commission exists in large measure as a result of the Mt. Laurel II decision. The New Jersey Supreme Court declared that, if the State did not update the early 1980's vintage State Development Guide Plan, or adopt another state plan, the courts would determine the state's growth areas on a case-by-case basis. In response, the Legislature adopted the State Planning Act in 1985, which called for the adoption of the State Development and Redevelopment Plan ("State Plan") by the State Planning Commission.

The primary goal of the State Plan was to funnel capital infrastructure investment funds into those growth areas designated by the State Plan. No one contemplated that, some 20 years later, the State Plan would, in conjunction with the Council on Affordable Housing (COAH) "growth share" regulations, become a means of derailing Mt. Laurel implementation, as well as other residential development in much of the state.

State Plan Being Abused

The original concept of the State Plan was that it would be both a sword and a shield - a shield to protect municipalities that were outside the path of development, and a means to put growth pressure on the towns that were in the path of growth. In practice, however, the courts have treated the State Plan as only a shield. Recent court decisions stress that the State Plan is not a zoning ordinance, but merely a guideline. As a result, when municipalities depicted as low growth areas in the State Plan want to downzone, the courts uphold those decisions, in large part based upon consistency with the State Plan "guidelines."

However, no court has yet invalidated a municipal zoning ordinance in a State Plan growth area because its densities were too low. Thus far, at least, the courts have concluded that requiring higher densities due to a State Plan growth designation would make the State Plan not a guideline, but a state mandate.

Legal Implications of Use of the State Plan

Our courts have repeatedly recognized that, because the State Plan has no regulatory effect, it is not appropriate to use the State Plan directly to apply regulations or to make individual decisions. Despite this, the Appellate Division has held that the Department of Environmental Protection (DEP) properly used the State Plan as a guideline when reviewing and formulating its CAFRA regulations. In 1997, the Appellate Division upheld the validity of a DEP Administrative Order directing the DEP to apply departmental policies and regulations in a manner consistent with the State Plan. The court upheld the Administrative Order based upon a DEP representation that individual applications will not be judged on the basis of their consistency with the State Plan. The DEP, however, asserted that matters involving policy, such as approval of regional wastewater plans, will be reviewed to determine whether they are compatible with the policies and goals of the State Plan.

Thus, there is a very blurry line between what DEP can and cannot legally do, and the bottom line seems to be that DEP is expanding its reliance upon the State Plan in almost all of its daily operations.

Meaning of the "Planning Areas"

There is a tremendous difference in the State Plan between Planning Areas 1 and 2, on the one hand, and Planning Areas 4 and 5, at the other extreme. The growth areas are Planning Areas 1 and 2. Planning Area 1 is an area in which the State has a substantial investment in infrastructure. It includes New Jersey's cities and surrounding exurban locations. The State Plan encourages development in Planning Area 1. Planning Area 2 is an area that has infrastructure or is planned to have infrastructure. There is more vacant, developable land in Planning Area 2 than in Planning Area 1. Thus, the State Plan envisions that Planning Area 2 (or the Suburban Planning Area) will absorb much of the market demand for growth and new development in the state.

Planning Area 3 (the Fringe Planning Area) is predominantly rural land that is not prime agricultural or environmentally sensitive land, with scattered small communities and free-standing residential, commercial and industrial development. These areas serve as a transition between suburban and rural landscape. Although a stated intent of the State Plan in Planning Area 3 is to accommodate growth and public water and sewer in "centers", centers have proven extremely difficult to get approved by the State.

The minimal growth areas are Planning Areas 4 and 5. Planning Area 4 is supposed to be characterized by large contiguous areas of farmland. Planning Area 5 is supposed to be characterized by large contiguous land areas with valuable ecosystems, geological features and wildlife habitats. The State Plan goals in Planning Areas 4 and 5 are heavily oriented toward preservation and conservation.

New State Plan Now Under Consideration

There have already been two versions of the State Plan, since the same must be reviewed periodically pursuant to the State Planning Act. The third iteration of the State Plan is in the process of adoption. The "cross-acceptance" process, involving State Plan-related discussions by the various levels of government, is now underway. There are concerns that DEP will attempt to implement much of its infamous "Big Red Map" by assuring that all its proposed "red areas" will be incorporated into Planning Areas 4 and 5.

It is apparent that not all properties fit neatly into one planning area category. It appears that, if there is any debate or doubt whatsoever about the appropriate designation, the area is designated outside of, rather than included in, Planning Areas 1 and 2. Furthermore, there are many areas included in Planning Areas 3, 4 and 5 that are heavily developed with full infrastructure, and seem obvious locations for growth. Yet, because these sites are not adjacent to Planning Area 1 sites, or for purely political reasons, they are deemed inappropriate for a pro-growth planning area designation. At one time it was thought that these areas might be made State Plan centers, but that has never happened. The current designation of many of these areas as Planning Area 3, 4 and 5 is incomprehensible.

The initial draft of the State Plan map now under consideration proposed to reduce Planning Areas 1 and 2 by over 130,000 acres. This is critical because the plan would dramatically reduce the areas of the state in which growth is encouraged.

The pressure to further reduce Planning Areas 1 and 2 will almost certainly accelerate. Through the ongoing cross-acceptance process, municipalities are submitting their recommendations to the counties, and the counties then submit their recommendation to the State Planning Commission. Cross-acceptance is a "bottom-up" approach to planning. This means that the initial emphasis for revisions comes from municipalities, then goes to the counties, and finally to the State Planning Commission. The ostensible goal is to coordinate municipal, county, and regional master plans with local visions of growth. Since the State Planning Commission deems home rule as a key component of land use and growth management policies, the Commission believes that municipal plans should be a major focus during cross-acceptance. The counties will compare local plans and policies with the "preliminary State Plan and negotiate to reconcile differences between" the preliminary State Plan and local plans. The emphasis is on local desires as to where to grow, and where to preserve, as compared to the State Plan.

Municipalities have concluded that the best means of reducing growth pressures and COAH growth share obligations for lower income housing is to minimize the amount of their land in Planning Areas 1 and 2. For example, seven municipalities in one county along a major corridor have jointly proposed deleting all the Planning Area 1 and 2 lands in their towns and revising them to Planning Areas 4 and 5 (with very few Planning Area 3 lands). If upheld, this would give those towns maximum relief from "third round" COAH obligations and maximum flexibility to downzone.

After the cross-acceptance process is concluded, the final State Plan Policy Map will be approved, and the State Planning Commission will finally delineate the planning area designation for every property in the state. The original target date for the adoption of the State Plan was July 20, 2005. It now appears that the schedule will not be met.

The Office of Smart Growth has established an inter-agency "Smart Growth Team" made up of representatives of multiple state agencies (including the DEP) charged with reviewing the county cross-acceptance reports. Seven state agencies that have representatives on the State Planning Commission, including the DEP, will be directly involved during the tail end of the cross-acceptance process to determine what the final State Plan will look like. Given the anti-growth policies of the DEP and other state agencies, it is likely that many proposals of municipalities to reduce their Planning Area 1 and 2 designations will be warmly received by the State Planning Commission.

The Need to Engage in the State Plan Process

In short, the municipalities, the counties, and the State each can have a major role in changing areas to Planning Areas 4 and 5. By the time this article is published, it may be difficult to initiate a dialogue with the municipality or the county if there is concern over a particular area. To determine that, inquiries to the counties in questions should be made. In any event, it is still possible to meet with the Office of Smart Growth, which is sometimes receptive. Objections can also be filed with the State Planning Commission. Since every legislator is notified of the proposed State Plan, a friendly legislator might be helpful in preventing an unfavorable planning area change. Some owners of proposed Mt. Laurel development sites are already litigating to challenge a proposed change in the State Plan designation. Moreover, a property's designation in the new State Plan can be challenged on grounds that it is arbitrary, especially in view of the State's population projections. Building the record at this time is crucial if any such challenge is contemplated.

The Plan Endorsement Process

In addition to the cross acceptance process, there will be a continuation of a difficult back-door process known as ãPlan Endorsement.ä There are state monies available to permit municipalities to submit petitions for Plan Endorsement to the State Planning Commission and the Office of Smart Growth. The Plan Endorsement process, which commenced in 2001, will continue both through and after cross-acceptance on the new version of the State Plan. The process means that the State Planning Commission will review the entire municipal development plan, including requests to designate some Planning Areas 3, 4 and 5 lands as centers. This is a long, cumbersome process which in the past has been largely unproductive in producing new growth areas or new centers.

Conclusion

Developers with an interest in land in proposed Planning Areas 3, 4 and 5 should pursue every avenue to get the designation changed. They should also strive to get every possible state and municipal approval before the new State Plan officially takes effect. As a last resort, they should explore a change through Plan Endorsement. If none of this can be achieved, the developer could face an arduous task in obtaining state approvals-especially DEP approvals-for Planning Areas 3, 4 and 5 properties, and could even face problems with the BPU extension of service rules, discussed elsewhere in this issue. The State Plan has long been ignored, but it is certainly not wise to do so.

Kenneth E. Meiser, a Land Use Division partner, serves on the New Jersey Builders Association's Legal Action Committee and is a Member of the Board of Directors of the Land Use Section of the New Jersey State Bar Association. His practice is concentrated in the areas of land use applications and litigation.