Can a local planning board could disregard its own ordinances and reject a fully conforming application merely because it didn’t like the proposed project? That notion would strike a builder or land use lawyer as the very definition of “ arbitrary, capricious and unreasonable.” Yet, the Hamilton Planning Board did just that, and argued before a trial court and the appellate division that it would be “good public policy” to give local planning boards that power.

On March 7th, the State Supreme Court reviewed the case, Levin v Hamilton Township Planning Board. Defending the builder-developer in oral argument before the State’s highest court was Sills Cummis attorney James Hirschhorn. Mr. Hirschhorn clearly and forcefully argued that long-standing precedent and logic required the Supreme Court to uphold the trial court and the appellate division, whose judges had found that there was no basis in law for Hamilton Township’s position.

Click below to read Hirschhorn’s briefs.
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As seen in the New Jersey Law Journal on January 15, 2007 – As the real estate market begins the inevitable slowdown, the possibility of restructuring and insolvency for developers is also becoming a grim reality. The developers who begin to consider bankruptcy issues at the early stages of a slowdown are best served in case the need to seek bankruptcy protection arises down the road… To read the rest of this article, please click here.

Earlier today, the Appellate Division issued its decision on the challenges to COAH’s Round III substantive regulations, N.J.A.C. 5:94. There are many nuances to the 127 page opinion (and not all of the challenged regulations were reversed), but here are some highlights.

1. COAH has six months to adopt new regulations consistent with the decision. Applications for substantive certification are stayed during this period and, on page 126, the Court “stay[ed] the filing of any builder’s remedy actions for any municipality whose application for substantive certification is affected by this opinion.”

2. Probably most important to the development community, the court ruled that municipalities may not simply pass their affordable housing obligations onto developers without any corresponding benefits. As stated by the Court, on page 96, to impose these obligations “without any compensating benefits violates the fundamental principle of the Mount Laurel doctrine that ordinances create a realistic opportunity for the construction of the region’s need for affordable housing.”

3. The payment in lieu regulation, N.J.A.C. 5:94-4.4(c), which provided that municipalities and developers shall negotiate a payment in lieu of constructing the affordable housing onsite, was invalidated. If COAH is going to permit such in lieu fees, it must adopt standards and guidelines to calculate the amount of the payments. COAH effectively conceded that this regulation would be invalidated when it proposed new regulations imposing some guidance on the amount of fee to be imposed. This rule proposal was discussed on redevelopnj.com on the January 3, 2007 posting but it is unclear how much certainty the new regulations provide.

4. The Court determined that COAH lacked support for its decision to reduce the need of affordable housing through “filtering,” which is the concept that older homes generally become more affordable over time. COAH used filtering to reduce the statewide prospective obligation by 59,156 units and to reduce the prior round obligation by 8,580 units. The Court left the door open on this issue and ordered COAH to consider more recent data on this issue in adopting its new regulations.

5. The Court determined that the growth share approach, as provided in these regulations, is inconsistent with the Mount Laurel doctrine. The Court was concerned that the current regulations empowered each municipality to “control its own destiny” to determine its affordable housing obligations. While the Court left the door open for COAH to develop a reasonable method to use a growth share approach, “[a]ny growth share approach must place some check on municipal discretion.”

6. The Court reversed COAH’s methodology to calculate job growth. COAH cannot exclude new jobs generated through rehabilitation of vacant properties and cannot rely solely on the square footage of new non-residential development to calculate job growth.

7. The Court invalidated COAH’s regulation permitting a municipality to satisfy up to 50% of its growth share obligation by age-restricted housing. The maximum of 25% would be permitted as it was under the Round II regulations, N.J.A.C. 5:93.

If bills recently introduced in the Assembly and Senate become law, municipalities may not have the right to transfer up to half of their affordable housing obligations pursuant to Regional Contribution Agreements (“RCAs”). Both bills, A-3857 and S-2451, will prohibit a municipality to address any portion of its fair share obligation by using RCAs entered into or approved by COAH or a court after June 1, 2006. Instead of using RCAs to fund rehabilitation activity in urban centers, funds will be made available to municipalities for the rehabilitation of substandard units through a new program within the Department of Community Affairs. 75% of those funds shall be allocated to the urban aid municipalities.

On February 18, 2007 Kevin J. Moore, Esq., Co-Chair of the Land Use and Development Law Practice Group, will be a panelist on the Urban Land Institute Program, Historic Preservation Opportunities and Challenges in Urban New Jersey. The moderator of the panel will be Peter Primavera, President of the Cultural Resource Consulting Group. The other panelists are Tim Henkel of PennRose Properties, Allen Kopleson, AIA, Principal of NK Architects, Robert Plotka of CityScape Capital, Ken Kalmis – Chair of the Jersey City Historic Preservation Commission and Frederick Raffetto, Esq. of Ansell Zaro Grimm & Aaron, P.C.

By Eric Peterson of GlobeSt.com

NEWARK-The Newark Real Estate Board, founded at the end of World War I but largely dormant for the past two decades, is back in business. The group has been around in name only for most of that hiatus, but it’s now back in full swing, backed by some of the Garden State’s top real estate figures.

“The NREB is devoted to promoting continued economic investment and development in New Jersey’s largest city,” reads a statement issued by the group. And the reformation comes at a time when the city’s real estate and economic climate has decidedly taken a turn for the better, headed by a new $310-million arena for the NHL’s New Jersey Devils franchise and a surrounding redevelopment zone.

“With more than a billion dollars’ worth of development initiatives currently under way or planned for Newark, now is the most critical time in the city’s history for it to capitalize on the renewed sense of enthusiasm for the future,” says Edward Rytter, the group’s executive director. “We look forward to working closely with the new Booker administration to ensure that this window of opportunity and investment has a positive and lasting impact.”

Mayor Cory Booker took over from long-time Mayor Sharpe James last year. “As we work to rekindle the spirit of change and development in the city and continue to build in a coordinated way, I’m pleased and gratified to see that the Newark Real Estate Board has been re-formed,” Booker says in a prepared statement. “I look forward to working closely with these business leaders in accelerating the pace of redevelopment in downtown.”

As far as those top real estate figures behind the restarting of NREB, the founding members of the new board include Jerry Gottesman, chairman of Edison Properties; Arthur Stern, president and CEO of Cogswell Realty Group; Emmanuel Stern, president and COO of Hartz Mountain Industries; and Joseph Taylor, president and CEO of Matrix Development Group.

Also behind the new board are Stan Gale, vice chairman of the Gale Real Estate Services Co.; Marc Berson, chairman of the Fidelco Group; Chip Hallock, president and CEO of the Newark Regional Business Partnership; Ted Zangari, an attorney with the locally based firm of Sills Cummis Epstein & Gross; Michael Rachlin of Michael Rachlin & Co.; and Manuel Teixeira, CEO of the locally based Portuguese Baking Co. NREB executive director Rytter is also a vice president of Prudential Insurance, which has its headquarters here.

COAH recently proposed new regulations, which among other changes will give it some oversight over the fees municipalities may collect from developers in lieu of constructing affordable housing units onsite. These fees have been one of the most controversial aspects of COAH’s Round Three regulations as was detailed by Thomas Jay Hall, Esq. in his article, “Commercial Development and COAH: A Bad Mix,” published in the New Jersey Law Journal on October 23, 2006.

As initially adopted, COAH’s Round Three regulations permit a municipality to require all developers to build affordable housing units onsite as a condition of their approval or – in lieu of constructing the units onsite – the developer could “negotiate” with the municipality to pay a fee. There are no standards governing the amount that a municipality may charge under the existing COAH regulation.

COAH has now proposed substantial modifications to its regulations. If a municipality collects an in lieu fee, it must be calculated in one of three ways:

1. The municipality may accept COAH’s calculations based upon the average cost of providing an affordable housing unit within the housing region. Depending on the housing region, these fees range from a little over $140,000 to a little over $170,000 per affordable unit, which are a substantial reduction from the fees currently required by some municipalities.

2. The municipality may require an in lieu fee based upon the costs of buying down market rate units to become affordable units.

3. The municipality may propose an alternative valuation method subject to COAH’s approval. Any money received shall be used for affordable housing as set forth in the municipality’s approved spending plan.

It is uncertain how high of a fee COAH will approve under the second and third option. If COAH simply rubber stamps the fees sought to be imposed by the municipality, then these regulations will provide no relief to the development community.

Furthermore, developers may receive the worst of both worlds under these regulations. The region’s average cost will set the minimum fee for all municipalities, even if the actual cost of constructing affordable housing offsite is much lower in a given municipality. In the more expensive communities, the developers will likely have to pay the higher fee.

In a decision released this morning, the New Jersey Supreme Court upheld the Appellate Division decision in Mount Laurel Township v. Mipro Homes, LLC ( Docket A-85/86-05). The Supreme Court affirmed the right of the municipality to use eminent domain for open space, even in the absence of any prior plan designating the land as open space. The Supreme Court found the action reasonable, even though the Planning Board had approved a 22 lot subdivision of the property and the property had been zoned for the use. The Supreme Court did not agree with the trial court, which found that the “public purpose” involved in the acquisition was the voter’s sentiment, expressed at the polls and in conversations with township officials, and that the property needed to be acquired to stop development. The Supreme Court indicated that acquisition of open space was a “public purpose” and that the local government could acquire the property even if limiting development was a factor.

Justice Rivera-Soto strongly dissented, finding that the case presented a clear illustration of a misuse of governmental power in the exercise of eminent domain.

Most attorneys, prior to the Mipro case, would have thought that the Appellate Division had gotten the law right in the case of Monroe v. Noonan ( A-1443-99-T1, 2001), which held that if land were to be acquired for open space or parkland, and eminent domain were to be used, that land should be on the Township’s Master Plan for such uses.

The development community fears that the Supreme Court’s decision today will permit “ambush acquisition” of property, and will lead to the untrammeled right of the municipality to take land, no matter how it was zoned or where it was in the approval process, simply because influential neighbors would rather have open space than development adjacent to their home and businesses. Long term, this could lead to a substantial diminution of development in the State, since investors will be reluctant to spend money to acquire land, hire planners and engineers, and go through the development process only to find that their project has been deemed “essential open space”.

Assemblyman John F. McKeon (D-27th District) has introduced a bill in the New Jersey State Assembly—A-3640—which proposes amendments to the New Jersey State Highway Management Act, N.J.S.A. 27:7-1, et seq., that will expand the New Jersey Department of Transportation’s access permit purview to include the construction and maintenance of a driveway or public street or highway connecting “to a county or local road if the development on the county or local road will generate 200 or more new vehicle trips during any peak hour onto a State highway, whether or not that development has direct access to a State highway.” At first glance, this expansion of NJDOT’s permitting powers appears to be reasonable: it will remedy situations where a large-scale development is located in close proximity to and directly affects a state highway, but nonetheless avoids access permit review because its actual vehicle access is via a county or local connector road. Upon closer inspection, however, it is clear that the expansion is overly broad and could be used to require an access permit for a development on any local or county road, no matter how far removed from a state highway. For example, a development may be far removed from a state highway, but because various local and/or county roads carry traffic from the development to the same state highway, and the development creates, in the aggregate, 200 new vehicle trips on that state highway, an access permit will be required. Also, an access permit may be required if such a development creates, in the aggregate, 200 new vehicle trips on more than one state highway. It is incumbent upon private developers and their trade organizations to contact their legislators regarding A-3640 in an effort to define NJDOT’s access permit powers more narrowly. A-3640 was introduced and referred to the Assembly Transportation and Public Works Committee on November 9, 2006. – by Peter Flannery, Esq., Sills Cummis Epstein & Gross CLICK HERE TO VIEW A-3640