Real Estate

NAIOP NJ Seminar Addresses Critical Regulatory and Legislative Changes

NAIOP New Jersey, the commercial real estate development association, recently hosted its annual regulatory, legislative and legal update seminar at the Rutgers Bloustein School in New Brunswick. Industry experts addressed a range of regulations, legislative initiatives and court actions that are reshaping the real estate development process in New Jersey.

NAIOP NJ CEO Michael McGuinness introduced NJ Department of Environmental Protection (DEP) Commissioner Catherine McCabe, whose opening remarks focused on the Murphy Administration’s economic and environmental priorities. “These goals are interrelated and interdependent,” said McCabe. “We need healthy workers to have a vibrant economy in order to support a clean environment.”

Noting that, “New Jersey is ground zero for climate change,” she spoke at length about Governor Murphy’s clean energy initiatives. These include executive orders aimed at reducing greenhouse gases and rejoining the cooperative Regional Greenhouse Gas Initiative (RGGI) to cap and reduce CO2 emissions from the power sector. The administration is also committed to developing and expanding the use of wind and solar energy, as well as building the charging stations infrastructure needed to support the growth of zero emission vehicles.

Touching on other key environmental issues, McCabe noted that returning brownfield sites to productive use is vital to the state’s economy. She praised the Licensed Site Remediation Professional (LSRP) program as “a brilliant idea” for speeding up the site cleanup process, adding, “The DEP is continuing SRRA 2.0 discussions with stakeholders and legislators to make this program as efficient and effective as possible.”

Impact of Regulatory Changes on State’s Water Infrastructure

Michael Seeve, president of Mountain Development Corp., served as moderator for the Regulatory Update, which began with an overview of the state’s 2018 Uniform Fire Code. Paul McGrath, president of City Fire Equipment Company, said, “Some of the most significant changes address improving firefighter safety as it relates to new technologies like fueling installations for cars and rooftop solar panels.” He also noted carbon monoxide alarms are now required in all facilities with a fuel burning appliance, and all smoke alarms must be updated to 10-year sealed battery models by January 2019.

The first panel discussion of the day addressed key changes affecting the state’s water infrastructure. Kris Krzyston, who manages the T&M Associates Compliance and Permitting Group, discussed the critical importance to developers of effectively managing DEP permit extensions, including Flood Hazard Area Permits, Freshwater Wetlands Letters of Interpretation (LOI), CAPRA and Waterfront Development Permits. “Keep an inventory of when your permits will expire and have a thorough understanding of the different requirements for submitting extensions,” said Krzyston.

Neil Yoskin, chair of the Environmental Practice Group at Cullen & Dykman, reviewed recent revisions to the Wetlands and Coastal Zone Management (CZM) rules. He noted several that were beneficial for developers, such as the Coastal High Hazard Area Rule allowing multifamily residential development in v-zones and hotel and commercial development on piers. “This frees up a lot of development that has been stalled for some time,” Yoskin noted.

In her update on Flood Hazard Area Control Act rules, Kelly McCormick, senior project manager with Langan Engineering & Environmental Consultants, discussed how new “lowest floor” regulations impact site access roads and parking; the “total overhaul” of Riparian Zone Mitigation requirements, including increased allowable disturbance for road or utility crossings; and changes to make remediation easier in Fluvial Flood Hazard areas.

“Storm water is ubiquitous and it affects almost every project we deal with,” said Jeromie Lange, a senior principal with Maser Consulting. Noting that current storm water management standards are subjective and not always well implemented, he discussed details of a DEP proposal to replace these with Green Infrastructure (GI). “GI is an objective alternative that provides more predictability and will make it possible to count infiltration thereby freeing up more space for development,” said Lange.

Site Remediation Reform Act (SRRA) a Success Story

NAIOP NJ championed SRRA and the LSRP program, which, as Commissioner McCabe noted, has been an unmitigated success. Susan Boyle with GEI Consultants cited the program’s specific achievements, including sizeable increases in both the number of contaminated sites being cleaned up and the speed of completing even the most complex remediation. “This program has extended the state’s resources, reduced the backlog of remediation projects and provided more predictable timelines for developers,” said Boyle.

Among the issues that continue to be raised by LSRPs and other stakeholders is the use of alternative fill to help remediation projects progress, particularly in areas susceptible to flooding. “Alternative fill – which should more aptly be called sustainable fill – brings an interesting economic incentive to a project as long as it’s controlled,” said EWMA president Don Richardson. “LSRPs are pivotal in regulating access to donor fill, matching it “like on like” and ensuring that the concentration levels of contaminants meet the regulated threshold.”

Andrew Robins, counsel with Sills Cummis & Gross PC, noted a number of changes that are being considered for the revised “2.0” version of SRRA. These include improving the application process, expanding the responsibility for reporting contamination and eliminating DEP review of Response Action Outcomes (RAO). “Focusing the DEP’s involvement on dealing with complex issues versus simple tasks is key to reducing delays,” said Robins.

Legislation, Court Actions Affecting Developers

On the legislative side, updates were provided on key bills that were recently passed into law. Meryl Gonchar, co-chair of the Sills Cummis & Gross Land Use Practice Group, discussed the Performance Bond Reform bill, which reforms requirements under the Municipal Land Use Law (MLUL) for performance and maintenance guarantees required for developers. “The bill limits municipal bonding to public improvements and will help eliminate the time and expense associated with this process,” Gonchar noted.

Andrew Robins commented on the passage of a bill in January that made significant changes to the Hazardous Discharge Site Remediation Fund (HDSRF) grant and loan program. “The law reduces caps on loans and grants for brownfield remediation and places time limits on completing remediation steps,” said Robins.

Tony Pizzutillo of Pizzutillo Public Affairs LLC outlined three pieces of legislation that are currently awaiting Governor Murphy’s signature:

  • A bill that will expand Economic Redevelopment & Growth (ERG) program funding to provide an alternative source for developers in need of gap financing;
  • Legislation that will create an office of transit-oriented development within NJ Transit to help spur new development opportunities near mass transit;
  • An equity bill that establishes certain credits for and reductions in sewer and water connection fees, including those for all affordable housing.

Pizzutillo said the push for liquor license reform will resume in the fall. “The legislation proposed by Assemblyman John Burzichelli has garnered considerable public attention, and we expect to see strong action later this year.”

The final panel discussion, led by Peter Zipp of Zipp Tannenbaum & Caccavelli, LLC, provided updates on court decisions impacting New Jersey developers. Zipp discussed Valley Forge Towers v. Upper Merion SD, which addressed the practice of municipalities filing appeals to increase property assessments on commercial properties (multifamily residential) in order to raise revenues. “We have over 100 cases in Elizabeth where this type of behavior is being challenged, and we want to limit the scope of when a municipality can file an appeal,” said Zipp.

In Applied Monroe Lender, LLC v. Hoboken Planning Board, trial and appellate courts rejected the claim of property owner in Hoboken who was informed post-purchase that only a designated redevelopment company can file a permit to develop the property. Steven Mlenak of Greenbaum, Rowe, Smith & Davis LLP, advised, “If you are looking to invest in a property, do your due diligence before purchasing it to determine if this will be a requirement.”

In the area of affordable housing, Hill Wallack LLP partner Tom Carroll discussed the impact of a March decision by Mercer County Superior Court Judge Mary Jacobson. The judge’s opinion established a methodology for calculating fair share affordable housing needs in the municipalities of Princeton and West Windsor. Carroll noted, “While not technically binding elsewhere in the state, this decision is likely to impact other municipalities that do not have fair housing settlements in place as required by the New Jersey Supreme Court’s Mount Laurel doctrine.”

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