New Jersey Zoning Watch

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Archive for the ‘Transportation’ Category

NJ Economic Stimulus Bill Provides New Incentives for Development

Posted by Phil Morin on July 17, 2009

The New Jersey Economic Stimulus Act of 2009 recently passed both houses of the Legislature and was signed into law by Governor Jon Corzine on Monday, July 27th.  The Act is an amalgamation of initiatives designed to reinvigorate New Jersey’s economy and includes several incentives to jump start commercial real estate development. 

According to the Assembly Budget Committee statement in support of the Act, the Act includes the following: (1) an Economic Redevelopment and Growth Grant Program; (2) authorization for certain municipalities to impose special taxes and surcharges to fund redevelopment activities and certain programs; (3) expansion of transferability of tax credits under the New Jersey Emerging Technology and Biotechnology Financial Assistance Program and changes to the “Urban Transit Hub Tax Credit Act”; (4) relief to certain developers otherwise subject to the “Statewide Non-Residential Fee Act”; (5) grants to municipalities for affordable housing; (6) changes to improve the financing of higher education facilities in New Jersey; and (7) relief to certain manufacturing companies taxes and surcharges on energy and utility services.

Below, I have highlighted the portions of the Act with the most impact on the commercial development community: the Economic Redevelopment and Growth Grant progam; the amendments to the Urban Transit Hub Tax Credit Act; and the relief to developers from the Statewide Non-Residential Fee Act which requires a 2.5 percent contribution of the equalized assessed value of new non-residential construction to a state or municipal affordable housing trust fund.

Economic Redevelopment and Growth Grant program

The Act authorizes State and local incentive grants to developers in “qualifying economic redevelopment and growth grant incentive areas,” which includes the Metropolitan and Suburban planning areas (Planning Areas 1 and 2), centers designated under the State Development and Redevelopment Plan and federal land approved for military base closure.  Projects in transit villages are not eligible for State incentive grants but are eligible for municipal incentive grants.  This program replaces the revenue allocation district (“RAD”) financing program which was seen as too complicated and was sparingly considered as an option by developers and local governments.

Incentive grants are intended to help fill project financing gaps in a difficult financial climate.  To qualify, a developer must contribute its own capital for at least 20 percent of the total project cost and must certify that additional capital is not available from other sources.

Project revenues will fund the grants.  For State grants, the Economic Development Authority and the developer will enter into a redevelopment agreement, which would also require local approval by municipal ordinance.  Such agreements would provide that up to 75 percent of State revenues realized from a project would be pledged toward a grant.  For municipal grants, municipalities may pledge their revenues from payments in lieu of taxes, lease payments to the municipality, property taxes and any additional taxes authorized by law (motor vehicle rental taxes, payroll taxes, parking taxes).

An incentive grant can extend up to 20 years and cannot exceed 20 percent of the total cost of the project.  A determination must be made that the revenues will exceed the grant funds.

Urban Transit Hub Tax Credit Act Amendments

Current law allows a business with a certain level of capital investment in a qualified business facility within an urban transit hub and that employs at least 250 people at the facility to qualify for a tax credit equal to the qualified capital investment, which must be taken over a 10-year period against the corporate business tax or insurance premiums tax liability.  Certain tenants were also able to take advantage of a tax credit, provided they met certain thresholds.

The Act makes numerous changes to the Urban Transit Hub Tax Credit program, including the following: 

  • The “urban transit hub” definition is expanded to include in “eligible municipalities”: (1) property located within a half-mile radius surrounding the mid point of one of up-to-two underground light rail stations’ platform areas that are most proximate to an interstate rail station; (2) property adjacent to, or connected by rail spur to, a freight rail line if the business utilizes that freight line for loading and unloading freight cars on trains; and (3) within a half-mile of all light rail stations (and within a mile of the Camden rail station).  “Eligible municipalities” are defined pursuant to the criteria set forth in N.J.S.A. 34:1B-209 as Camden, East Orange, Elizabeth, Hoboken, Jersey City, Newark, New Brunswick, Paterson and Trenton.
  • Adds a mixed use component to definition of “qualified residential project” for purpose of receiving a credit.
  • Lowers the capital investment threshold from $75,000,000 to $50,000,000 for an owner of a “qualified business facility”, and from $50,000,000 to $17,500,000 for a tenant that occupies a leased area of the qualified business.
  • Provides that for a business applying before January 1, 2010, its credit shall not be reduced if it relocates to an urban transit hub from another location or locations in the same municipality.
  • Allows the full-time employee requirement to be met by certain types of contract workers who perform work at the qualified business facility for at least 35 hours a week and allows out-of-State residents working in New Jersey to be counted as “full time employees.”
  • Allows a business to use an affiliate to satisfy the employment or capital investment requirements of the program.
  • Clarifies how tenant investment will be included in the capital investment calculation for the qualified business facility, by providing that the capital investment made by a tenant will be included in the owner’s capital investment to the extent necessary to meet the minimum capital investment threshold. Any capital investment made by a tenant above this amount will be added to the amount of tax credit the tenant is otherwise entitled to receive based on its portion of the net leasable area in the qualified business facility.
  • Allows up to three tenants to meet the 250 employee requirement in the aggregate.
  • Relaxes the 10 percent Statewide full-time workforce reduction trigger before the business suffers a mandatory forfeiture of an annual tax credit by setting the trigger at 20 percent.
  • Expands the urban transit hub credit zones to include business headquarters property that can become a qualified investment facility within a one-mile-wide zone in a qualified municipality.
  • Clarifies that S-corporations and limited liability corporations are included as businesses that may be eligible to participate in the program and clarifies that a tax credit is not to be applied against individual New Jersey gross income tax liability.  An individual who is a holder of a credit may sell their credit, covering one or more years, under the tax credit transfer certificate program for consideration received by the business of not less than 75 percent of the transferred credit amount.
  • Removes the provision that casino licensees cannot qualify for the program.
  • Allows reduction of the credit by 20 percent if less than 200 employees are employed, even if a business relocates to an urban transit hub from another location in the same municipality.
  • Changes the timing of the trigger for forfeiture of the credit so that a business cannot reduce its workforce by more than 20 percent in the last tax accounting or privilege period prior to approval, rather than the greater of the two following periods: in the period prior to approval or in the period prior to the enactment of the original 2007 legislation.

Note that the Act also eliminates any “as of right” qualification and adds subjective criteria for the eligibility for a tax credit, namely that a business shall demonstrate to the EDA at the time of application, that the State’s financial support will yield a “net positive benefit” to the State and the eligible municipality.  Also, a business will not qualify for a credit if the capital investment was the basis for a grant under the InvestNJ Business Grant Program Act.

Additionally, the Act provides for a new credit for “qualified residential projects” under the Urban Transit Hub legislation.  “Qualified residential projects” are defined as a building or buildings, including a mixed use project, consisting predominately of residential units, located in an urban transit hub.  The definition of “residential units” includes rental units, hotel rooms or dormatory rooms.

A developer may receive a credit up to 20 percent of its capital investment for a “qualified residential project.”  To be eligible, a developer shall demonstrate, through a project pro forma analysis, that the project “is likely to be realized with the provision of tax credits . . . but not likely to be accomplished by private enterprise without the tax credits.”

A developer must make or acquire capital investments totalling at least $50,000,000 in a qualified residential project to be eligible for a credit.

Non Residential Development Fee and Affordable Housing

The Act will exempt certain property from the 2.5 percent development fee imposed by the “Statewide Non-Residential Fee Act,” N.J.S.A. 40:55D-8.1 to -8.7 (“SNRF” or “A-500″). 

Development Fee Moratorium: Property which received preliminary or final site plan approval from a municipality or from the New Jersey Meadowlands Commission before July 1, 2010 will be exempt from the fee imposed by the SNRF/A-500, provided that a local building permit is issued prior to January 1, 2013.

Ban on Local Non-Residential Fee Ordinances Remains: The Act does not abolish the section of the SNRF/A-500 which prohibits municipalities through local action from imposing their own obligations on non-residential development.

Refunds: The Act requires that, in most cases, any funds deposited under the SNRF/A-500 with the State or a municipality be refunded to the developer.  The exception is where a developer received preliminary or final site plan approval prior to the effective date of SNRF/A-500 (July 17, 2008) and agreed to pay a fee based upon a local development fee ordinance.  In that instance, only the difference between the local fee and the 2.5 percent statewide fee will be eligible for a refund.

Municipal Obligation: Furthermore, the Act provides that the portion of a municipal fair share affordable housing obligation created as a result of the non-residential development will be reduced or eliminated if the collection of fees are suspended and if there are insufficient funds in the State affordable housing trust fund or other State or federal sources of funding within the next two years following enactment.

For an example of the practical implications of the Act on actual “in the pipeline” development projects, read the text of Senator Raymond Lesniak’s (D-Union) speech to the New Jersey Business and Industry’s Economic Development Forum at NJ Voices here.

Posted in Affordable Housing, Environmental Issues, Ft. Monmouth Redevelopment, Green Legislation, Legislation, Redevelopment, Transportation | Leave a Comment »

NJBIZ Article Highlights Praise and Concerns With “Builder-Friendly” Legislative Enactments

Posted by Phil Morin on July 13, 2009

An NJBIZ.com article written by Evelyn Lee contains an excellent synopsis of “developer-friendlier” legislation authored by the New Jersey Legislature and (mostly) signed into law by Governor Corzine over the last year.  The legislation was intended to extend permit approvals, expedite site cleanups and spur development in down economic times. 

However, the article notes that many industry leaders still have concerns about the practical application and limitations of several of these new laws:

[T]he Permit Extension Act has some limitations, said Tim Touhey, chief executive of the New Jersey Builders Association in Hamilton. The Highlands region has determined that it won’t allow any permits to be extended, although some of the more developed municipalities in the region — such as Dover and Rockaway — have been designated as growth areas by the state, he said.

The Site Remediation Reform Act also has many unknowns, particularly with regard to presumptive remedies that the Department of Environmental Protection will develop for sensitive sites, said David Fisher, vice president of governmental affairs at Matzel & Mumford Organization, an Edison-based homebuilder. Presumptive remedies are expected to be finalized within a year of the law’s enactment, according to DEP.

“If we don’t know how to clean up a site, then we don’t know how costly it’s going to be,” he said. “What value do you place on land when you don’t know how much it’s going to cost to clean it up?”

Others said that legislative changes fell short in terms of addressing flaws in the state’s affordable housing funding methodology and directing new projects to redevelopment areas.

For the full article, click here.

Posted in Affordable Housing, Environmental Issues, Highlands, Legislation, Redevelopment, Transportation | Leave a Comment »

Green Zoning: “No” To Wind Turbines In My Backyard, “Yes” To Solar Power, Transit-Friendly Communities

Posted by Phil Morin on October 10, 2008

In putting together your “keeping on top of the latests land use trends” reading list, include the following two articles written by Andrea Alexander of The Record. Both address some of the challenges and opportunities facing communities as a result of the “green” movement.
In an article from September, Ms. Alexander highlights a recently adopted ordinance in Wayne, New Jersey, that limits the development of wind turbines near residential neighborhoods, schools or day care centers. According to the article:

The Township Council unanimously adopted the measure after a heated debate Wednesday night: Are turbines unsightly intruders with potentially damaging health effects? Or should they be accepted as just part of the skyline of an energy-independent future?

“When you look out your back door, you don’t want to look at a nuclear power plant, you don’t want to look at a wind turbine,’’ Mayor Christopher Vergano said today. “We are protecting the values of residential properties by keeping them [at] a certain setback.’’

Wayne is not the first community to address the issue, however, and won’t be the last. Given the initial reactions of municipalities to regulating the siting of wind turbines (despite their benefits to the community), it appears that obtaining approvals for such facilities will be more like hearings on telecommunications towers and monopoles, than more esthetically “acceptable” projects.

The township isn’t the first in the state to adopt rules to keep wind turbines away from homes. Brick in Ocean County adopted an ordinance in April that allows turbines only in business and industrial zones. At least five towns in the state have adopted ordinances to set guidelines for the location of wind turbines. The regulations generally require setbacks to keep the renewable energy source away from neighbors.

Hillsborough in Somerset County allows residents, farmers and business owners to put up turbines on lots that are greater than 10 acres. Galloway Township in Atlantic County restricts turbines to one-acre residential lots, with a setback from the property line equal to the height of the structure.

Under Wayne’s ordinance, Mayor Christopher Vergano said, turbines could be permitted along sections of Routes 23 and 46 and in the industrial areas off the West Belt Parkway.

For the environmentalists’ perspective of the battle in Wayne and other communities over alternative energy technologies, see the press release entitled “It’s Not Easy Being Green,” at Environment New Jersey here.

Ms. Alexander also wrote an article entitled “Towns Start Reshaping The Landscape for Solar, Wind,” this week on the “green” movement and how municipalities are taking it into consideration in land use planning.

Planning experts say slowing global warming goes beyond putting solar panels on homes and wind turbines on industrial lots. It’s going to take a gradual — but decisive — shift in your way of life.

. . . .

A green community will position new homes near transit, parks and stores, or bring those necessities to existing neighborhoods.

Transportation is the largest contributor to greenhouse gases, and “the most important part about mixing land uses is: People tend to use their cars less, and that is what living green is all about,” said Debbie Alaimo Lawlor, chief of Sustainability and Economic Growth for the New Jersey Meadowlands Commission. The NJMC has land-use authority over parts of 14 communities in Bergen and Hudson counties.

Westwood accepted the connection years ago in zoning the heart of its downtown as a “special pedestrian environment.” The zoning bans new restaurants and sports clubs — destinations people drive to, then leave.

But it welcomes service businesses such as the camera shop, florist and dry cleaners so one walk downtown can fill several errands.

Green planning also was boosted there by another essential: a train station. Houses closest to the station are selling the fastest and holding their value in a down market.

While I’m not particularly a fan of labeling restaurants and fitness centers as “anti-green,” the article does make one re-think how “reducing our carbon footprint” interacts with zoning ordinances in older downtowns which are probably relics of the 1960s (both the downtowns and the zoning).

The article also includes discussion of how the state legislature, regional planning authorities like the Meadowlands Commission and individual municipalities are attempting to provide incentives for (or some might say, force) builders to encorporate green technologies or criteria into their projects, such as solar power or LEED standards.

For the full article, click here.

Posted in Environmental Issues, General, Legislation, Master Plan Review, Transportation | Leave a Comment »

Affordable Housing Bill Passes Senate Committee

Posted by Phil Morin on June 10, 2008

A bill that will substantially amend affordable housing requirements in New Jersey passed the State Senate Budget and Appropriations Committee with a 7-0 vote yesterday. According to the Star Ledger:

A major amendment would allow developers who take part in the construction of proposed “transit hubs” or “transit villages” in 19 cities and towns — centers with housing for all income levels, retail and office space — to avoid paying a 2.5 percent fee on the value of new commercial development. Sen. Raymond Lesniak (D-Union), the bill’s sponsor, said the fee break was proposed out of a concern the fee would hinder development of the hubs.

Among the municipalities where the hubs are proposed are Morristown, South Amboy, South Orange, Rahway, Metuchen, Bloomfield, Bound Brook, Cranford, New Brunswick, Jersey City, Netcong and Elizabeth.

Other amendments would extend the same fee break to commercial developments in Newark and Jersey City and require the state to consider the amount of protected land in a town when deciding how much affordable housing should be constructed there.

Doria told the committee he dislikes the fee break for transit hub developers. He said 20 percent of hub housing must be affordable and any fee collected could be expected to go toward funding that housing. “I think it is a mistake to take the transit villages out,” he said.

For the full article, click here.

For the Asbury Park Press article, which contains more detailed discussion of the bill’s key provisions, click here.

Posted in Affordable Housing, Legislation, Redevelopment, Transportation | Leave a Comment »

Redevelopment Plans Highlighted in “Transit-Friendly Development” Newsletter

Posted by Phil Morin on January 20, 2008

The “Transit-Friendly Development” newsletter, a joint effort of NJ Transit and the Bloustein School’s Alan M. Voorhees Transportation Center at Rutgers University, “aims to enrich the transit-oriented development (TOD) conversation in New Jersey’s diverse communities by highlighting what is happening in the state and around the country: best practices, model programs, legislation and local problem-solving experiences.”

This newsletter is a fountain of information regarding new development opportunities and the January 2008 issue highlights two transit-oriented redevelopment plans:  one for the City of Berkely in Burlington County and the other for the Borough of Somerville in Somerset County.  The City of Berkely, along with the neighboring community of Edgewater Park are working together to take advantage of new light rail service to their communities.  It is expected that Edgewater Park will be preparing its own redevelopment plan to work in concert with Berkley. 

Somerville’s redevelopment plan has been in the public arena since the summer and the deadline for submitting responses to the Borough’s request for proposals is approaching.  The deadline is March 14, 2008.  The link to the landfill redevelopment plan also provides information on other redevelopment areas in Somerville.

For more information on Berkely’s or Somerville’s redevelopment plans, please contact us at pmorin@saul.com.

Posted in Redevelopment, Transportation | Leave a Comment »

New Jersey Transit to provide express service from NYC to Atlantic City

Posted by Phil Morin on February 19, 2007

New Jersey Transit may begin providing express train service from New York to Atlantic City in late 2007 or early 2008.   Details are still being finalized for the new service, dubbed “ACES” for Atlantic City Express Service.   Under the current plan, the trains would travel nonstop on the Northeast Corridor tracks from New York to just north of Philadelphia, then head east and continue nonstop to Atlantic City.  However, the possibility remains that additional stops will be added to the ACES line.  Additional information regarding the ACES line will follow as NJ Transit provides more details.

Posted in Transportation | Leave a Comment »