NAIOP New Jersey Seminar: "Regulatory, Legislative and Legal Issues Continue to Impact Commercial Real Estate"

NEW BRUNSWICK, N.J., July 1, 2015 (Newswire.com) - ​From the State House, to local governments, to courthouses across New Jersey, recent regulatory, legislative and legal issues are impacting commercial real estate. Those issues provided the topics of discussion for a NAIOP New Jersey seminar at the New Jersey Law Center in New Brunswick. “Real estate professionals must keep current with government actions that affect their businesses,” noted Michael McGuinness, CEO of NAIOP New Jersey.

The keynote was provided by Phoebe Sorial, Esq., of the bi-state Waterfront Commission of New York Harbor. Noting that the commission’s primary responsibilities include overseeing hiring practices and fighting criminal activity within the port, “there has been a continental shift regarding questions of jurisdiction,” she said. Other issues of concern to commercial real estate interests in the port include two-percent assessments on businesses, audits of those businesses, and licensing requirements.

"Real estate professionals must keep current with government actions that affect their businesses."

Michael McGuinness, NAIOP New Jersey

The Commission’s jurisdiction has historically encompassed any port-related business within 1,000 yards of the pier, and in response to NAIOP New Jersey-supported legislation to clarify that jurisdiction, that issue has been resolved according to Sorial. “We are currently working on a map to delineate our jurisdiction – and it’s going well,” she said. She noted that the Commission has refined its regulations to require just “a one-page self-certification form for affected warehouse and distribution facilities.”

In a related matter, NAIOP is advocating for a legislative or regulatory solution to rein in local warehouse/distribution permit and inspection fees,” said McGuinness. The problem has been the widely disparate and excessive fees from town to town, Anthony Pizzutillo of Smith Pizzutillo addressed the problem of funding the Transportation Trust Fund for infrastructure repairs, noting that the problem still exists because “the legislature is focused on other things.” He said the ongoing success of NAIOP-backed incentive programs, such as Grow New Jersey, “is making things happen to encourage growth and development.”

Still other issues “on the table,” according to Pizzutillo, include reforming New Jersey’s antiquated liquor license laws to encourage redevelopment, equitable funding for preliminary site investigations from the Hazardous Discharge Site Remediation Fund, and extending the successful Licensed Site Remediation Program (LSRP) model to land use programs.

REGULATORY UPDATE

A Regulatory Update Panel moderated by Susan Karp of Cole Schotz PC addressed the topics of flood control and water quality management planning. As far as the Flood Hazard Area Control Act regarding restrictions on construction and filling, “changes are pending and under discussion,” Karp said. “The proposed regulations have been received well,” she said noting efficiencies in the permitting process and the elimination of some overlapping regulations.

“The state has been regulating development along streams since 1929,” said Ginger Kopkash, assistant commissioner for the New Jersey DEP. More recently, “emergency amendments to the mapping were made in 2013 to incorporate FEMA mapping,” she noted. “Information on flood mapping is available from the New Jersey DEP and FEMA.”

A major objective, according to Tony DiLodovico of Omland Engineering Associates, is to “eliminate the conflicting regulatory oversight of riparian zones” relative to the  naturally occurring acid-producing soil deposits – he presented a map of a stretch along the New Jersey Turnpike – and their impact on local streams, and the need to create buffers.

“Current rules call for a 150-foot riparian zone in areas where these soils exist,” noted Kopkash.

Proposed rules change, however, would “defer to local soil conservation districts” when creating buffers, said DiLodovico.

In general, such buffering falls under the guidelines of the Special Water Resource Prevention Act (SWRPA), Kopkash noted. “Proposed amendments would incorporate standards from the storm water management rule in the Flood Hazard Area (FHA) rules.”

“The proposed changes add flexibility to riparian zone standards and incorporate riparian zone clarifications,” DiLodovico added.

Another important procedural change, according to Kopkash, will be the “instant permit. A total of 13 general permits by rule and 15 permits by certification are available by submitting proposals electronically, getting a quick approval and simply printing out a permit.”

On the subject of water quality management planning, “New Jersey has many regulatory frameworks,” noted Daniel Kennedy, assistant commissioner for the New Jersey DEP. The key is to “understand how projects impact water quality from the standpoint of sewer service,” he said, noting that the issue can be complicated if multiple municipalities, with different rules, are involved. “We need a collaborative effort to manage the environmental impact.”

For starters, “new sewer service area maps have been approved, offering greater efficiency in the overall program,” said Kennedy. “We are working on a regulatory process that will resolve issues of the current framework – we have a problem-solving team in place to provide answers on sewer service areas pending reforms.”

LEGAL ACTION

Moderating a panel on legal action, Meryl Gonchar of Greenbaum Rowe Smith & Davis noted that “most land use decisions are not positive.” She cited the back-and-forth decisions involving a property in Ocean Township where an earlier land use decision for commercial/residential zoning was subsequently rezoned as “environmentally sensitive.” The owner objected, the appellate court overturned that rezoning, and the State Supreme Court subsequently overturned the appellate court ruling. “It was a futile effort and another unhappy outcome,” she said.

On the subject of redevelopment, “until recently, redevelopers had reason to be concerned about areas-in-need-of-redevelopment being challenged,” said Anne Babineau of Wilentz Goldman & Spitzer. The good news: a positive ruling in the case of 62-64 Main Street vs. Hackensack “does clarify that New Jersey is progressive in such designations. The ruling in favor of the redeveloper eliminates some uncertainty,” she said, noting specifically the “positive language of the importance of redevelopment and of municipalities providing incentives.”

The bottom line is redevelopment can’t be done simply to increase the value of the property. Rather, it “must also have economic benefit for New Jersey,” Babineau said.

Richard Ericsson of Cole Schotz PC discussed the much-anticipated decision in Morristown Associates v. Grant Oil Co.

“The State Supreme Court ruled that the general six-year statute of limitations for injury to real property is not applicable to claims made pursuant to the Spill Act. In reaching this decision, the Court noted that the Spill Act sets forth the only defenses available to contribution defendants, and a statute of limitations defense is not included. The Court found that the New Jersey Legislature could not have intended for an unreferenced statute of limitations to impede the Spill Act’s imposition of contribution liability on responsible parties. In other words, “nothing has changed, and  a major crisis has been averted,” he said. As a result, plaintiffs should encounter less difficulty when attempting to recoup some or all of the costs associated with a DEP-approved cleanup.

On the ongoing subject of COAH, municipal affordable housing compliance is under court control, noted Kevin Moore of Sills Cummis & Gross.

And in terms of zoning, as it stands, if a property is zoned for commercial, office, industrial or residential, “an owner can apply for high-density residential and mixed-use,” he said. “But you must act now,” he added, noting that the State Supreme Court is “seeking comments,” and what happens next is uncertain. Positive factors in applying for and obtaining such zoning, he added, include a site having water, sewer and good access.

He encouraged property owners to “cite the New Jersey Supreme Court opinion,” he concluded. Among other things, the Court “specifically approved the trial courts’ use of certain bonus credits.”

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